June 27, 2005

In a 6-3 split decision, the U.S. Supreme Court Monday sided with the Federal Communications Commission, saying cable-modem service is an information service.

The text of the decision is not yet available. The Supreme Court in March heard oral argument in the Brand X cases-the National Cable & Telecommunications Association vs. Brand X Internet Services and the FCC vs. Brand X.

Brand X Services Inc. is an independent Internet service provider that wanted access to a cable system to offer its services to the cable operator's cable-modem customers.

The company was blocked when the FCC declared cable-modem service an information service and thus not required to provide open access to other companies.

"This is a hands-down victory for consumers, maximizing incentives to build competing broadband networks.

The Supreme Court sent a strong message to the markets: Compete, don't look for government handouts," said Kyle Dixon, adviser to former FCC Chairman Michael Powell and now director of Federal Institute for Regulatory Law & Economics at the Progress & Freedom Foundation.

The debate about what constitutes an information service vs. what makes a telecom service has far-flung ramifications for requirements about open access, universal service, enhanced 911 and law-enforcement surveillance.

The FCC recently reached a consent agreement with Madison River Communications of Merbane, N.C., which included a $15,000 fine and an agreement that the local telephone company would stop blocking Vonage Holdings Corp.

Vonage said it has also been blocked by Clearwire. Clearwire is a new wireless Internet service venture backed by cellular pioneer Craig McCaw. Vonage said it has come up with a technical fix for the Clearwire blockage.

It is unclear whether the FCC could come to the same conclusion with cable companies or wireless Internet service providers like Clearwire as it did with Madison River, because Madison River is a telecommunications service, and both cable and Clearwire are information services. The Supreme Court's ruling in Brand X is likely to add more clarity.

"I am pleased that the U.S. Supreme Court has affirmed the FCC’s ruling," said FCC Commissioner Kevin Martin. "This decision provides much-needed regulatory clarity and a framework for broadband that can be applied to all providers.

We can now move forward quickly to finalize regulations that will spur the deployment of broadband services for all Americans."

Source: RCR News