After lying dormant for a couple years, the Internet access monster has reawakened to threaten cable. Following a federal appeals court's ruling last week, cable operators once again face having to open their high-speed Internet platforms to competing ISPs.
The FCC and the National Cable & Telecommunications Association vowed to appeal the ruling of a three-judge panel in San Francisco, and the outcome of that fight is expected to profoundly shape the cable access service and its profitability. "At the end of the day, we believe this decision is unlikely to stand," NCTA President Robert Sachs told reporters.
An access mandate, cable operators say, will make it harder for them to earn an attractive return on so-called cable-modem service by forcing them to share their facilities with third-party ISPs.
Activists and Web service providers such as Earthlink, on the other hand, say cable companies are likely to restrict the types of Internet content and services consumers receive unless they are forced to lease capacity to rivals.
The San Francisco-based appeals court threw out a 2002 FCC decision declaring that the federal government is not obligated to open up cable broadband platforms the way telephone companies must for their high-speed digital subscriber lines.
The court said its decision two years earlier that cable-modem service is, in fact, bound by telephone-style access requirements was improperly ignored by the FCC when it claimed the right, but not the obligation, to impose open-access rules.
Since then, the FCC policy has been to wait and see if cable companies use control over their platform to block Web users' access to rival content before issuing any mandate.
"I am disappointed that the court felt that it was bound by its prior decision," said FCC Chairman Michael Powell.
Among the fears of cable's critics is that operators will restrict cable-modem users from downloading movies from sites that compete with them or will offer their own content at higher speeds than what unaffiliated sites will be permitted to provide.
Harold Feld, attorney for Media Access Project, which opposed the 2002 FCC rule in court, said the cable industry can predict victory only by ignoring the facts. "The statute is not ambiguous, and the FCC isn't entitled to deference."
In MAP's view, the 1996 Telecommunications Act, which governs cable-modem service, spells out clearly that any point-to-point service should be subject to the same strict access requirements as telephone carriers.
MAP's allies in the fight include Internet providers Earthlink and Brand X, as well as regional Bell companies SBC and Verizon.
The San Francisco court found in 2000 that cable-modem service is both a telecommunications service bound by telephone's strict competitive access rules and an information service, which faces a less rigorous access regime. It rejected calls by some to declare the business a cable service subject to access rules imposed by local governments.
NCTA predicted that, even if the court's classification of cable-modem service is upheld, the FCC has authority to "forbear," or hold off from imposing a regulation.
Again, MAP's Feld disagrees. Although the FCC is permitted to forbear when it deems telecommunication regulations unnecessary, it can do so only when a market is considered competitive. "Even the FCC's own studies," he said, "have concluded that residential broadband is incredibly concentrated."