Supremes Sing Cable's Praises

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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rjmcmahon 12/5/2012 | 3:09:03 AM
re: Supremes Sing Cable's Praises Port blocking is presently illegal on the telco's digital subscriber lines

Illegal or not, for me SBC blocks port 25. The reasoning was to minimize spam. Their opt out policy never worked. So, it looks like they can and will peform traffic discrimination based on its perceived value. With that said, I think the FCC ruled recently that VoIP port blocking wasn't allowed.
OldPOTS 12/5/2012 | 3:09:03 AM
re: Supremes Sing Cable's Praises Then there are those VoIP providers that thinks that this strengthens the position that they are not a telecommunications service and, therefore, should not be subject to the same rules, taxes and fees as traditional phone calls? Is there a site that has the exact legal ruling?

rpk3 12/5/2012 | 3:09:02 AM
re: Supremes Sing Cable's Praises When did the FCC rule port blocking was
illegal? The only instance I can recall
was the slap on the hand to Madison River,
who chose to enter a consent decree due to
impending intentions to go public.

Telcos, such as Madison River, are ISPs
no different than other ISPs, in the sense
that they are required to purchase the
underlying transmission from their ILEC

ISP port blocking is currently outside of
the scope of the FCC. ISPs are not common

I think Madison River decided it was cheaper
to enter the consent decree than have the FCC
on their heals.

End game, confusion as usual. ISPs may block
whatever ports they wish provided they can
convince the marketplace the service they
provide is worth the price they (individually)
are asking.

ozip 12/5/2012 | 3:09:02 AM
re: Supremes Sing Cable's Praises Speaking with MSO's, what I hear is that they think they are on shaky legal ground /wrt port blocking. That said, some do....

alchemy 12/5/2012 | 3:09:00 AM
re: Supremes Sing Cable's Praises ozip writes:
Speaking with MSO's, what I hear is that they think they are on shaky legal ground /wrt port blocking. That said, some do....

I suspect MSOs don't do port blocking and traffic shaping of parasitic services because they're afraid of getting their data services business regulated.

In an ideal MSO universe, MSO content would be QoS-enabled and the network would have enough congestion that parasitic services wouldn't work very well. For voice, all you have to do is make sure that the DOCSIS upstream has congestion at peak busy hour and all those Vonage users will be out of luck. Web surfers will hardly notice it.
Frank 12/5/2012 | 3:08:59 AM
re: Supremes Sing Cable's Praises Apologies for the late reply, rjmcmahon. I see that the topic of the thread has shifted to VoIP and CALEA in the meantime, which is just as well.

You asked:

"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."

To answer your last question first, the Brand X decision makes no references to RUS or anything having to do with rural treatment, whatsoever, but it does go into pizza deliveries and how to walk your dog:


You ask why I feel that the decision will inspire a movement toward municipal networking. I can't answer that question entirely or even adequately within the scope of a LR post. What I can say is that the decision is only one of a growing number of mounting pressures that end users will begin to feel where choices are being systematically removed from them.

Think of a world where you have but two SPs capable of delivering very high speed braodband: MSOs and ILECs. And trailing behind them, with ever increasing albeit dubious at times capabilities, a number of wireless plays capable of satisfying only a single of three types of services offered by the other two. See my prefatory note to a BW article I posted to my forum on SI:


"The more I think about the absurdity of this decision the more bizarre and surreal it becomes in my eyes, given all that has been first theorized and then realized about competition since the divestiture of the Bell System over twenty years ago ... Elsewhere this morning I wrote on this topic: Taken to the next level, if half of all future Internet users are on cable and the other half are on a re-regulated telco IP framework, the Internet loses the attribute for which it is arguably best known: NETWORK SURVIVABILITY. Not to mention, the basic element of choice that allows for checks and balances in both technological and economic terms. But you know what they say about necessity, right? To paraphrase, necessity is the mother of all interventions... If the industry must go forward in a manner keeping within the FCC's "intermodal" competition definitions, then perhaps a new MODE of delivery must be established based on an open access infrastructure. This would most likely be fostered by a new breed of service provider that recognizes the inherent shortsightedness and consequent shortcomings of having only a two walled-garden system, thus finding new causes for being. Such an emergence of a layered service provider community would best be achieved, IMO, through cooperation with municipalities, if offsetting the status quo advantages of facilities ownership by the incumbents is to be achieved.

Gotta go, later ...


dljvjbsl 12/5/2012 | 3:08:59 AM
re: Supremes Sing Cable's Praises
In an ideal MSO universe, MSO content would be QoS-enabled and the network would have enough congestion that parasitic services wouldn't work very well. For voice, all you have to do is make sure that the DOCSIS upstream has congestion at peak busy hour and all those Vonage users will be out of luck. Web surfers will hardly notice it.

AT&T thought that they could ban acoustic modems by claiming the possibility of network harm. Then came the Carterfone decision and AT&T arrogance fell away with its monoply profits.

It would be very very unwise for MSOs to develop the same sort of arrogance of the sort that plagued AT&T. Not only will it bring down government regulation on them, it will also drive them to the same sort of internally-focussed self-defeating strategies that killed AT&T, Lucent etc in the marketplace.

The worst thing about the Carterfone decision for AT&T was that it took government action to force then to do what they should have been doing in their own self-interest. Even then, they could not change.
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