Cable Lobby Tells Supreme Court: Forget About the Broadband Needs of Cities:

Local Governments Highlight Cable’s Power over Broadband Content
November 11, 2004

The battle over the future of cable broadband is now before the U.S. Supreme Court. The high court will soon decide whether to review a key case involving U.S. broadband policy (known as the Brand X decision [PDF]). Recent filings to the court by municipal governmental groups and the cable lobby reveal important issues at stake for communities in the U.S.

The National League of Cities, the U.S. Conference of Mayors, and the National Association of Counties have asked the court to accept a review of the Brand X case. Local government groups argue that cable broadband service should have the same obligation to serve the needs of a community as cable television systems now have. In their legal brief (see below), they summarized the “enormous potential fiscal consequences” to local government of cable industry-backed policies created by the FCC.

Under a 2002 FCC ruling, now subject to legal challenge, cable operators are no longer required to provide local governments with a 5 percent franchise fee from cable modem service revenues. For decades, cities have charged cable companies 5 percent of gross revenues as compensation for access to city streets (often called “rights of way”). The franchise fee is the principal financial support for public access channels, as well as other community-related technology projects. But because of the FCC decision, cities and counties are now losing “as much as $470 million” each year. Cable’s broadband ISP service is a huge profit center for companies like Time Warner, Comcast and Cox, with estimated revenues around $9.4 billion.

The cities also warned the court that cable could, at will, exert “absolute control” over the content flowing over their broadband lines. The FCC, in developing its 2002 ruling that freed cable from national and local obligations, had claimed that the industry did not have “editorial control” over access to broadband content in the same way it has with multichannel television. But in a strongly worded statement, the cities said: “That cable operators have, so far at least, voluntarily chosen not to exploit that control more fully by blocking some Internet content--or, more accurately, that operators have made the editorial decision that, at this time, it is in their marketplace (or strategic regulatory) interest to provide unfiltered Internet access content—does not, and cannot, alter the fact they possess such control.”

Not surprisingly, a group of leading cable companies, including Time Warner, Cox, Charter, and the trade group National Cable Telecommunications Association, asked the Supreme Court (see below) to ignore the petition from the local governments. They raised all manner of objections, including a technical one that the cities had missed a legal filing deadline. But the industry’s motive is clear. They want to remove cable from all regulation, locally and nationwide. The industry wishes to reap the digital fortunes without having to provide any public interest quid pro quo. Such a position harms the ability of local communities to use the power of broadband to advance the needs of civic discourse, economic growth, and social equity.

Unfortunately, the city position is at odds with the perspectives of such groups as Media Access Project, Consumer Federation, the ACLU (and CDD), and such companies as Earthlink. They have fought successfully in the courts to reverse the FCC by having cable modem service regulated as a “telecommunications service.” That classification would require cable Internet service to operate in a nondiscriminatory manner towards all broadband content and provide the public with a choice of Internet service provider. The Ninth Circuit U.S. Court of Appeals recently supported our position in the Brand X case. The Powell FCC and Bush administration have appealed this decision to the Supreme Court, claiming that cable broadband should basically have no regulatory obligations at all.

But what the cable versus city legal argument really illustrates is the urgent need for the U.S. to develop a new policy for broadband (covering cable, DSL, and wireless). We must combine the best aspects of two, now-separate approaches. First, broadband networks must be required to serve their community, through some form of local agreement (for "community bandwidth," public telecommunications services, etc.). Second, they must also be required to also operate in an open and nondiscriminatory manner, reflecting the heritage of the Internet itself.

As the Congress begins the lobbying free-for-all in its reworking of the 1996 Telecommunications Act, the issue of how broadband serves the public interest should be at the core of the debate.