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Supremes Sing Cable's Praises

Light Reading
News Analysis
Light Reading
6/27/2005

The Supreme Court ruled Monday that cable companies are not required to share their broadband access loops with independent ISPs. And the sworn enemies of the cable companies -- the RBOCs -- are cheering the decision as a sign that telecom deregulation is coming soon.

The Court's 6-3 decision in the case of The National Cable & Telecommunications Association v. Brand X Internet Services agrees with a 2002 Federal Communications Commission (FCC) ruling that cable broadband is an “information service,” not a “telecommunication service,” and as such not subject to the same infrastructure-sharing regulations as the phone companies.

“The court specifically said DSL and cable modems look a lot alike, and there were arguments made in the case saying its wrong if you don’t regulate them in the same way, but... the court said the FCC does not have to regulate DSL and cable modem the same way, period,” says Washington D.C.-based attorney Dana Frix. Frix was present at the Supreme Court during oral arguments at the end of March.

In 2003, a 9th Circuit court in Washington state took issue with the FCC’s determination and ruled cable broadband a telecom service. The FCC, with the Department of Justice, appealed and the case was accepted by the Supreme Court.

The FCC has reasoned that because the cable companies built their network infrastructures using only investor equity, while the phone companies had help from the federal government, they are entitled to a different regulatory approach. Attorneys for the cable industry used the same argument in front of the Supreme Court.

“Our networks were not built under the same assumptions as the PSTN was, and should not have the same regulatory regime,” National Cable & Telecommunications Association (NCTA) spokesman Brian Dietz told Light Reading on Monday.

The Supreme Court's decision means it is business as usual for the cable industry, but for the FCC the decision is a strong vote of confidence.

“This decision provides much-needed regulatory clarity and a framework for broadband that can be applied to all providers," said FCC Chairman Kevin Martin, in a prepared statement. “We can now move forward quickly to finalize regulations that will spur the deployment of broadband services for all Americans.” [Ed. note: We've heard that before.]

The decision reverses an earlier assumption in legal circles that the decision of a court trumps any ruling by a regulatory agency, and makes a strong statement that the FCC is best positioned to regulate the industry, says attorney Dana Frix.

Justice Thomas wrote for the majority in the opinion: “The Commission is in a far better position to address these questions than we are. Nothing in the Communications Act or the Administrative Procedure Act makes unlawful the Commission’s use of its expert policy judgment to resolve these difficult questions.”

Frix believes the court was also making a direct comment on the original intentions of the Telecommunications Act of 1996.

“The Supreme Court has said... the ’96 Telecom Act is in itself ambiguous and designed to have the FCC fill in the interstices,” Frix says. “This is a case about how much deference this agency will be given by the courts.”

SBC Communications Inc. (NYSE: SBC) released a statement applauding the decision – a position that seems counterintuitive at first glance. But, as SBC spokesman Michael Balmoris explains, the FCC’s original intention in NCTA v. Brand X was to free both telecom and cable broadband providers from the Title II regulations that require infrastructure sharing with ISPs and others.

Balmoris says the FCC decided to anchor its case on the cable industry and wait for the blessing of the courts before proceeding with the deregulation of telecom broadband.

"The Commission's decision appears to be a first step in an effort to reshape the way the Commission regulates information service providers; that may be why it has tentatively concluded that DSL service provided by facilities-based telephone companies should also be classified solely as an information service," notes Justice Thomas, in the Court's majority opinion.

— Mark Sullivan, Reporter, Light Reading

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Frank
Frank
12/5/2012 | 3:09:10 AM
re: Supremes Sing Cable's Praises
The Brand X decision will likely do little to bolster good will for the incumbent service providers. At the same time, it will probably serve to inspire the planning and creation of facilities-based fiber and mext generation wireless networks by municipalities and others. Surely the cable cos could have been more imaginative. Now the telcos are following suit, hoping to have their common carriage responsibilities removed by claiming that their fiber- and dsl- based services are also information services and not telecommunications services. Do these folks know what they're in for?
rjmcmahon
rjmcmahon
12/5/2012 | 3:09:09 AM
re: Supremes Sing Cable's Praises
At the same time, [the Brand X Supreme Court decision] will probably serve to inspire the planning and creation of facilities-based fiber and next generation wireless networks by municipalities and others.

Can you elaborate on this a bit? Also, does the ruling have any implications towards future muncipal projects considering RUS as a funding source? Thanks in advance.
OldPOTS
OldPOTS
12/5/2012 | 3:09:08 AM
re: Supremes Sing Cable's Praises
rjm
I kind of remember your'e the one that suggested that the cabelco and telco might be considering accepting a truce to share the market, like telco voice & internet, cabelco video & internet. Hm!

OldPOTS
ozip
ozip
12/5/2012 | 3:09:06 AM
re: Supremes Sing Cable's Praises
Packetcable, the scheme used to provide voice services by cable operators has CALEA support although Im not sure I can comment on the specifics of the law, most of the operators are licensed CLEC's so believe they have to provide CALEA.


OZIP
alchemy
alchemy
12/5/2012 | 3:09:06 AM
re: Supremes Sing Cable's Praises
Green_Acres writes:
Since Cable Internet is now officially not a "telecommunications service" the Communications Assistance for Law Enforcement Act(CALEA aka Lawful intercept)requirements do not apply to the MSO's. In other words, the MSO's do not have to embed lawful intercept technologies into the network. Therefor the law enforcement agencies will have to supply the technology and insert it into the network as required on a targeted basis.

The MSOs already have a CALEA solution for PacketCable VoIP. I'd think they're so terrified of being regulated that they wouldn't dream of scrapping CALEA support.
Green_Acres
Green_Acres
12/5/2012 | 3:09:06 AM
re: Supremes Sing Cable's Praises
I understand that the Department of Justice was watching this closely.

Since Cable Internet is now officially not a "telecommunications service" the Communications Assistance for Law Enforcement Act(CALEA aka Lawful intercept)requirements do not apply to the MSO's. In other words, the MSO's do not have to embed lawful intercept technologies into the network. Therefor the law enforcement agencies will have to supply the technology and insert it into the network as required on a targeted basis.

I wouldn't be surprised to see the DoJ push for a bill to force Lawful intercept into the networks bypassing the FCC.
paolo.franzoi
paolo.franzoi
12/5/2012 | 3:09:05 AM
re: Supremes Sing Cable's Praises

I think both of you are right.

Packetcable is a voice carrier aka a telecommunications service. In this mode, the Cable Companies are required to provide CALEA.

Broadband Access, being an information service, is specifically excluded from CALEA. Thus, a cable company that is carrying Vonage service does not need to provide CALEA. However, I think Vonage still needs to provide CALEA (although I would say this is less clear).

seven
Green_Acres
Green_Acres
12/5/2012 | 3:09:05 AM
re: Supremes Sing Cable's Praises
The DoJ is also confused by what is covered and what is not. The FBI, DoJ and USDEA jointly filed a petition for "expedited rulemaking" to the FCC.

Request #2 is "formally identify the services that are considered packet-mode services" and #6 "establish benchmarks and deadlines for CALEA packet-mode compliance"

ETSI has done a good job detailing the Lawful Interception Requirements.








fgoldstein
fgoldstein
12/5/2012 | 3:09:05 AM
re: Supremes Sing Cable's Praises
To the extent that they are providing local dialtone via PacketCable, the cablecos are typically regulated as CLECs, so CALEA applies. It's cable modem ISP services that were in the case at bar.
OldPOTS
OldPOTS
12/5/2012 | 3:09:04 AM
re: Supremes Sing Cable's Praises
Could this be a problem for voice-over-IP providers like Vonage? Remember they sell phone service that depends on cabelcos access lines?

Could the unregulated cable access lines and the possibility of deregulated phone lines lead to widespread blocking of VoIP traffic by cabelcos and telcos looking to 'protect' their turf and not share with others.

Port blocking is presently illegal on the telco's digital subscriber lines, since those transmissions are classified as "telecommunications services" and are regulated differently than cable connections.

But cable service is regulated as an "information service," so port blocking isn't as clearly illegal. Which part of the access line/port is "information service" and which part is "telecommunications services"?

Some cabelcos have pledged not to engage in the practice. But the possibility exists that they could, or that they already are.

OldPOTS

Commentary;
Seems like that fight is continuing many years later! I remember when we could declare a line primarily "information service" and get a much better rate than "telecommunications services", twenty years ago.
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