High Court overturns pole-rate decision - Broadcasting & Cable

High Court overturns pole-rate decision

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The Supreme Court Wednesday shot down power companies' bid to raise the rates
cable operators pay to string lines to utility poles.

The decision -- which retains rate caps when cable companies add Internet
service to their offerings -- is a critical victory for the cable industry
because most operators have added or are planning to add high-speed-data
service.

The decision not only affects pole rates, but also gives the Federal
Communications Commission leeway to decide how cable Internet service is
regulated in general, including whether cable companies will be forced to carry
unaffiliated Internet-service providers on their high-speed lines.

That makes the court's ruling a double victory for the cable industry, since
the FCC is expected to tentatively conclude that cable Internet offerings are
'information services' -- a classification that could have eliminated protection
of pole-rate caps.

Gulf Power Co. and other utility companies argued that a federal law capping
rates for cable pole attachments does not apply when broadband services are
added. In April 2000, a federal appeals court in Atlanta agreed.

Following the lower court's ruling, power companies tried to raise monthly
per-pole rates from an average of roughly $7 to as high as $50. The FCC had
suspended rulings on most rate increases after the cable industry appealed to
the high court.

The justices reversed the earlier decision on a 6-2 vote. The 1978 law caps
rates 'by who is doing the attaching, not by what is attached,' Justice Anthony
Kennedy wrote.

The court refused to grant the Bell telephone companies' request to classify
Internet service in a way that would either free them from current access rules
for their high-speed digital subscriber lines or impose similar obligations on
cable.

The lack of direction from the court on open access frustrated
representatives of regional Bell companies, who bristle under access rules for
their high-speed DSL while cable is free from a similar mandate.

'This is an issue of enormous importance to the future of our economy and
American consumers, and we will continue to push to have this issue resolved by
Congress or the FCC,' United States Telecom Association chief executive Walter
McCormick Jr. said.

Although the cable industry prefers the service to be deemed a 'cable
service' and, thus, shielded from access requirements, the Supreme Court's
ruling and FCC chairman Michael Powell's reluctance to impose Internet-carriage
obligations shields the industry from a likely downside to the commission's
pending information-services classification.

Utility companies had attempted to raise rates after cable began adding
Internet service. They argued that the FCC has no authority over the new
business.

The National Cable & Telecommunications Association sued Gulf Power and
others, claiming that the price hikes would thwart the will of Congress by
dissuading cable companies from rolling out new services.

'Utility companies cannot charge arbitrarily higher prices for cable
attachments to utility poles,' NCTA spokesman Marc Smith said. 'Today's decision
overcomes a potential impediment to broadband deployment, especially in rural
areas.'

Justices Clarence Thomas and David Souter dissented from the decision to
reverse the lower court's ruling. Instead they wanted their colleagues to remand
the ruling to the lower court until the FCC decides how it will regulate cable
Internet service.

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