Next Stop: Supreme Court

"Brand X" Case will Shape Broadband's Future

 

3 December 2004

The Supreme Court's announcement today that it will review the "Brand X" case concerning cable Internet service sets the stage for a landmark telecom decision--one that will help shape the future of the broadband Internet.  So named for the Santa Monica-based Internet service provider (ISP) that was rebuffed in its efforts to offer service over cable's high-speed data lines, the Brand X case will focus squarely on the way in which the FCC classifies cable modem service (by far the most popular means of broadband access, reaching some 19 million US homes).

Traditionally, dial-up Internet access has been classified as a telecommunications service, under which network operators must “charge just, reasonable, and nondiscriminatory rates”; ensure interconnection with independent ISPs; and support universal service goals related to closing the digital divide and expanding educational access.

The cable service classification, in contrast, comes with no such nondiscriminatory guarantees--although cable operators are obliged to pay a 5 percent franchise fee to the communities in which they enjoy their near-monopoly status.  (Such fees, amounting to as much as $470 million in potential cable modem franchise fees, have put cash-strapped cites in the unfortunate position of having to choose between open access and increased revenues).

For its part, the FCC in March 2002 took a cable-friendly "neither-fish-nor-fowl" approach to the matter, declaring that cable modems fall under an unregulated information service category--with neither franchise fee nor ISP access requirements standing in the way of broadband monopoly profits.

The FCC's decision was successfully challenged in the Ninth Circuit US Court of Appeals by public interest groups including the Consumer Federation of America, ACLU, CDD, and the Media Access Project (serving as counsel).  The court ruled that Internet access, whether by dial-up or cable modem, is essentially a telecommunications service, requiring network operators to operate in a nondiscriminatory manner towards all broadband content and to provide the public with a choice of Internet service provider.

Arguments on the Brand X case are expected to be heard by the Supreme Court early next spring, with a decision possibly coming in June.