Tale of Two Broadband Cases Illustrates Battle over Net’s Future

6 April 2004

The continuing battle over whether broadband will be a democratic and competitive medium was the subject of two recent federal court decisions. But what both cases illustrate is that the nation’s telephone and cable industries want to extend their monopolistic business models onto the Internet.

In a blow to community control over broadband, the U.S. Supreme Court on 24 March 2004 ruled that states can prohibit municipal governments from operating their own telecommunications networks. In siding with the telephone industry, the court’s 8-1 decision favors the huge corporate interests that have waged a campaign against community ownership of telecommunications, including broadband. The court’s ruling came in the consolidated cases of Nixon v.Missouri Municipal League, FCC v. Missouri Municipal League, and Southwestern Bell Telephone v. Missouri Municipal League.

Telephone companies have gone state to state to pressure too-often compliant state legislators into passing legislation that prohibits communities from establishing their own telecommunications service. Municipal networks, as they are sometimes called, can provide their communities with enhanced service at lower costs. The focus of the Supreme Court’s review was on the interpretation of the wording in a provision of the 1996 Telecommunications Act, and whether that act permitted states to preempt municipal provision of telephone and broadband services.

But the nation’s telephone lobby—including SBC, Verizon, Bell South and the United States Telephone Association—were not interested in legal definitions. Rather, they were concerned with preventing the emergence of community-controlled broadband. For example, in its court brief, SBC decried the idea that a small town in Missouri actually wanted to use some fiber capacity to serve its own telecommunications needs (thus giving the city more control over its voice and data network and offering its citizens cost savings over the phone company’s residential rates).

The case began in 1996 when Missouri passed a law prohibiting local governments from offering telecommunications services. The Missouri Municipal League, representing local governments, asked the FCC to intervene, citing the 1996 Telecommunications Act’s encouragement of all entities, presumably including cities, to compete in the telecom market. The FCC, unfortunately, failed to support the cities. The telephone industry, meanwhile, has been steadily lobbying state lawmakers to pass similar bills. So far there are restrictions on municipal networks in Florida, Texas, Arkansas, Nebraska, Nevada, South Carolina, Tennessee, Utah, Virginia, and Washington.

State bills and this new federal court decision are designed to prevent or weaken a community’s ability to provide broadband and other telecom or cable services. They aim to undermine or prevent broadband from emerging as a public utility, offering the benefits of the Internet to all in a cost-effective and democratic fashion. The cable industry is also pursuing a political campaign against such community networks. Recently, Comcast joined with SBC in a well-funded ad campaign that undermined public support for a community network serving three small towns in Illinois. According to the Tri-City Broadband Coalition, both Comcast and SBC distorted the record. Cities and their supporters will now be turning to Congress for legislation that can restore community ownership of broadband.

Meanwhile, in a separate court decision, the cable industry’s lobbying effort to undermine the Internet’s open architecture (by denying Internet service providers access to cable networks) was temporarily derailed on 1 April 2004. The US Court of Appeals for the Ninth Circuit upheld a decision by one its panels that ruled against a recent FCC policy backed by the cable lobby. By refusing to review the case, the Ninth Circuit upheld a decision ruling that the FCC should regulate cable broadband with the same safeguards required of DSL networks, including choice of ISP and nondiscriminatory service. The cable industry has been threatened by the Internet since the development of the World Wide Web, recognizing that cable’s monopoly business model of controlling both conduit and content would be challenged if any user/viewer could easily download all forms of multimedia content. Cable found a valuable ally in FCC Chairman Michael Powell, who declared in 2002 that cable would not be required to operate in the “end-to-end” open network tradition of the dial-up Internet. ISPs and public interest groups, including CDD, took the commission to court. The Media Access Project represented CDD, Consumer Federation of America, and Consumers Union in what was called the “Brand X” case (the name of the Santa Monica-based ISP calling for the FCC rule to be overturned). The cable lobby is now pressuring the FCC to appeal the decision to the Supreme Court.