Sunday, June 26, 2005

Supreme Court Backs FCC Order on Classifying Information Services

The U.S. Supreme Court ruled 6-3 in favor of the FCC in its Brand X Decision, which classified cable modem service as an interstate "information service" and thereby exempted the cable operator from mandatory common carrier regulations. The ruling means that cable operators will not be bound to open their networks to other ISPs. Cable operators hailed the ruling as an important victory, while ISPs and consumer groups warned that network operators would cut off competition and eventually raise prices.

The ruling also provides the FCC with a green light to pursue a new IP regulatory framework that redefines and/or eliminate other common carriage requirements.

Some industry reactions:

"This decision provides much-needed regulatory clarity and a framework for broadband that can be applied to all providers. We can now move forward quickly to finalize regulations that will spur the deployment of broadband services for all Americans." Kevin Martin, Chairman of the FCC

"We really have our work cut out for us now. In the wake of this decision, the FCC confronts the challenge of protecting consumers, maintaining universal service and ensuring public safety in uncertain legal terrain. Today's decision makes the climb much steeper. But this country just has to find ways to promote innovation, enhance competition, protect the openness of the Internet, and return the United States to a position of leadership in broadband penetration. The Commission needs to think anew and act anew to meet these challenges." Michael Copps, FCC Commissioner

"Today's Supreme Court's decision is a victory for consumers and maintains the momentum to advance broadband in the U.S. Classifying cable modem service as an interstate information service, as the FCC did, keeps this innovative service on the right deregulatory path." Kyle McSlarrow , NCTA President & CEO,

"Today's Supreme Court ruling is a blow to consumers and competition. For too long, cable companies and the FCC have denied consumers a choice of broadband providers over cable. Besides keeping prices high, this lack of choice limits the future deployment of innovative voice, video and data services beyond just those offered by the local cable company," Dave Baker, vice president, law and public policy, EarthLink.

"We're pleased the court upheld the FCC's light regulatory touch on cable broadband service. Consumers benefit when companies can freely negotiate their commercial agreements without the government distorting a highly competitive broadband market. Investment in broadband networks and the continued development of innovative pricing and service packages for consumers are best realized without the government looking over the shoulder of companies at the negotiating table." Forrest Miller, Group President, SBC.

"Covad strongly believes that having open networks helps promote broadband growth in the U.S., and that competitive service providers should have open access to incumbent networks to provide service to their customers. In light of the Court's decision, it is clear that Covad offers the only national alternative broadband network to ISPs and VOIP providers." James A. Kirkland, Covad senior vice president and general counsel.

  • The FCC's declaratory ruling, which was issued 15-March-2002, classified cable modem service as an “information service�? rather than a “cable service.�? As an interstate information service, cable modem service would therefore be subject to FCC jurisdiction rather than state or local rules.

  • In October 2003, the U.S. Ninth Circuit Court vacated the FCC declaratory ruling that had classified cable modem service as an "information service without a separate offering of a telecommunications service." The FCC promptly appealed the decision. The Ninth Circuit Court of Appeals has now declined to review the lower court's ruling.

  • The U.S. Ninth Circuit Court of Appeals declined to review a lower court's ruling that had overturned the FCC's classification of cable modem service as an "information service." The case originally arose regarding whether local municipalities could require cable operators to open their networks to other ISPs.

  • In August 2004, the FCC filed papers to appeal the “Brand X�? cable modem case to the Supreme Court.

See also