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[June 8, 2005]

Waiting on Brand X Decision With Bated Breath

By Ted Glanzer


Some time this month the Supreme Court is expected to hand down a much-anticipated decision that, according to some, could have far-reaching implications as to how broadband services will be deployed and/or regulated.




In Brand X Internet Services v. Federal Communications Commission, the high court is faced with the question whether the Federal Communications Commission should regulate cable broadband service as a “telecommunications service” or an “information service” under the 1996 Telecom Act.

That the question is so dry and technical belies just how much is at stake in defining the future landscape in the area of broadband service.

The Brand X case arose out of a 2000 decision from the U.S. Court of Appeals’ 9 th Circuit in which the city of Portland attempted to prevent AT&T from merging with the city’s local cable franchise because AT&T refused to provide competing ISPs access to its newly acquired cable broadband lines.

In holding that the merger was not subject to local franchising restrictions, the Court of Appeals noted that cable modem services were part telecommunications service and part information service 1996 Telecom Act “includes cable broadband transmission as one of the ‘telecommunications services a cable operator may provide.’”

In 2002, the FCC issued a declaratory ruling that departed from the Court of Appeals’ conclusion by defining “cable modem service” as an information service because the transmission component could not be separated from the data portion of the service.

The net effect of the ruling exempted cable operators from having to provide open access of their broadband lines to ISP competitors.

The FCC, according to a news release, said that its ruling would promote broadband deployment, which should result in better quality services, lower prices and more choices for consumers.

Nevertheless, the FCC’s ruling did not set well with some, particularly with telephone companies, which were classified by the FCC as telecommunications services, and smaller ISPs looking to crack into the cable broadband market.

As such, telephone companies are required to share some of their network services, including DSL broadband lines, with competing ISPs.

In an effort to obtain access to cable broadband lines, Brand X – an ISP company headquartered in California - and several other small ISP companies appealed the FCC’s ruling to the Court of Appeals, which in 2003 held that the FCC did not have the authority to overturn the court’s decision.

While many expect the Brand X decision to have a sweeping impact on broadband providers, Merrill Lynch said in a research report on June 7 that a ruling would not likely have a short-term impact, but would likely spur additional regulatory action by the FCC and eventual legislative action by Congress in telecom issues.

 


Ted Glanzer is assistant editor at TMCnet.


 

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