FCC reclassifies cable-modem service as information service

The FCC today issued a declaratory ruling that reclassifies cable-modem service as an interstate information service, and not a cable service as defined by the Communications Act.

The ruling means cable companies providing broadband Internet service will be subject to FCC jurisdiction. However, the commission also concluded that cable-modem service “does not contain a separate telecommunications service offering and, therefore, is not subject to common carrier regulation.”

Patricia Hill-Ardoin, senior vice president-FCC for SBC Communications, said in a statement that the commission’s ruling levels the playing field.

“The commission has moved closer to putting all broadband services on the same regulatory footing,” she said. “It makes sense that similar services are classified and regulated the same way. Whether it is DSL, cable modem, satellite or wireless technology, the end product is the same--broadband Internet access service.”

The FCC also issued a notice of proposed rulemaking to examine the following:

1. Whether there are legal or policy reasons for reaching different conclusions concerning wireline broadband and cable modem services. (Earlier this month the commission issued an NPRM that proposed classifying wireline broadband services as “information services with a telecommunications component,” which would require Bell companies to share their high-speed data facilities with competitors at “commercially reasonable” rates set by the FCC.)

2. The scope of the FCC’s jurisdiction to regulate cable-modem service.

3. Whether it is necessary to require multiple Internet service provider access.

4. The role of state and local franchising authorities in regulating cable-modem service.

Bob Blau, vice president-executive and federal regulatory affairs for BellSouth, in a statement praised the NPRM and added what has become a Bell-company mantra.

“We commend the commission’s effort to rethink the type of regulatory framework that should apply to cable-modem and DSL services, and more importantly, whether these services need to be regulated at all,” the statement reads. “They don’t.”

According to Walter McCormick, president and CEO of the United States Telecom Association, the first goal of the NPRM, as stated above, is the most important.

“The important decisions are those that remain,” he said in a statement. McCormick called on the FCC to assure that wireline carriers “do not remain handicapped” by regulations that “disadvantage our offering of functionally equivalent advanced services.”

The cable industry didn’t seem particularly upset by the FCC’s action, which sends “a strong signal that cable Internet services will be able to continue to develop in a business environment that favors competition over regulation, and encourages new investment,” said Robert Sachs, president and CEO of the National Cable & Telecommunications Association, in a statement.

Sachs added: “The commission traditionally hasn’t regulated information services. Given the vigorous competition between cable modem, digital subscriber line and satellite-delivered broadband Internet services, a policy of regulatory restraint is particularly appropriate.”

In other news, the FCC also issued an NPRM to address primary interexchange carrier (PIC) charges. The Competitive Telecommunications Association (COMPTEL) filed a petition in May 2001 that asked the FCC to revise its policies governing the federally tariffed rates that incumbents are allowed to charge end users for changing their long-distance carriers.

The rate was set at $5 in the 1980s. But COMPTEL argued that the cost of PIC changes have dropped dramatically--thanks to automation and standardized processing methods--since then and the rates should drop accordingly. COMPTEL charged that most incumbents still charge $5 per PIC change, though BellSouth charges just $1.49. COMPTEL estimates that if the commission adopted the BellSouth model for PIC rates, consumers and the long-distance industry would save $100 million annually.

“By reducing this arbitrarily set fee, consumers will be able to realize greater savings and there will be fewer barriers to selecting competitive alternatives for their long-distance service,” said COMPTEL President H. Russell Frisby in a statement.