Cable-modem classification needs to be resolved quickly

Last week's decision by the Supreme Court to hear an appeal of the "Brand X" cable-modem classification case generally was expected, but what the high court decides to do with the matter seems to be anyone's guess.

A little more than a year ago, the 9th Circuit Court of Appeals ruled that cable-modem offerings included a telecommunications component, meaning this form of high-speed Internet access is subject to the many telecom fees and regulations, potentially including unbundling. The court didn't look at the merits of the case, citing precedent -- a precedent established before the FCC classified cable modems as interstate information services.

The idea that the merits of an issue this important has not really been argued is a shame, so Supreme Court review certainly is warranted -- and providing clarity on the issue would be extremely helpful as the FCC and Congress try to tackle telecom policy during the next couple of years. But whether the high court actually will clarify the matter in its ruling -- expected next June -- is a matter of debate.

Typically, the high court does not deal with the merits of cases, only whether the lower court acted properly. In this case, the question is whether the 9th Circuit should ignore its precedent and consider the merits of the FCC's classification ruling and grant "expert agency" deference. If the Supreme Court agrees with the 9th Circuit ruling, the FCC may have to revamp its deregulatory strategy for broadband access. That's not something the FCC or broadband providers want, but at least everyone would know what laws apply -- and may need to be changed.

If the Supreme Court disagrees with the appeals court, some legal experts believe the court is limited to remanding the issue back to the 9th Circuit with orders that it consider the merits. That could mean waiting until 2006 for the appeals-court ruling and possibly 2007 for another Supreme Court appeal.

Such a delay is not what the broadband industry needs right now. Everybody needs to know the rules of the game, so they can begin making the investments necessary to play it effectively. To that end, it would be helpful if the high court could consider the merits in this case and make a ruling that classifies cable-modem services, so we can save a couple of years of legal briefs and thousands of trees.

Such action is within the realm of possibility, according to Legg Mason telecom analyst Blair Levin.

"The beauty of being the Supreme Court is that they can do pretty much anything they want," Levin said. "Can they do that? Yes. Will they do that? I don't know."

If the Supreme Court chooses the remand route, Congress should consider putting the item on its already lengthy telecom to-do list. Otherwise, lawmakers risk having an unfavorable judgment mess up legislative efforts or worse, stalling those efforts as they wait for the matter to be resolved in the courts.

E-mail me at djackson@primediabusiness.com.