Appeals court strikes down FCC cable policy

In a decision that may subject the cable industry to the same competitive mandates telcos must abide by, the U.S. Court of Appeals for the 9th Circuit has ruled that cable companies cannot bar other ISPs from their high-speed data networks.

The three-judge panel on Monday overruled the FCC’s policy to leave cable companies unfettered by broadband regulation, a policy intended to encourage the rapid buildout of cable broadband networks. Ruling on an appeal filed by ISPs and competitive carriers, the court said that an early ruling that established two-way Internet service made it more like a telecommunications service than a broadcast TV service and therefore made it subject to telecom regulation.

FCC Chairman Michael Powell said that the FCC would appeal the decision to the U.S. Supreme Court, saying the appeals court did not address the merits of its new policy. The decision, Powell said in a statement, "throws a monkey wrench into the FCC’s efforts to develop a vitally important national broadband policy."

Several cable multiple system operators (MSOs) have already opened their networks to competitor ISPs. While AOL Time Warner was forced to open up Time Warner Cable broadband access due to the terms the FCC imposed upon its merger in 2001, other MSOs such as Comcast and Cox have allowed other ISPs access to their networks without federal mandates.

The National Cable and Telecommunications Association also condemned the decision saying cable industry will fully support the FCC’s appeal. In a statement NCTA senior vice president for law and regulatory policy Daniel Brenner said the court’s decision was a "strained" interpretation of earlier court precedence set in AT&T v. City of Portland, in which the same court ruled that cable modems fell under telecom services. Brenner said that original conclusion was itself flawed. "Well-established U.S. Supreme Court precedence provides that where a statute is ambiguous, the courts are compelled to defer to reasonable agency interpretations," Brenner said in the statement.

The court’s decision, however, does not provide any guidance about how the cable industry should be regulated. Its decision merely stated the FCC erred in its decision to exempt cable companies from broadband line sharing. Nor does the decision compel the FCC to adopt new guidelines detailing how cable companies must open their networks.