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The 3d U.S. Circuit Court of Appeals has upheld a ruling by the Federal Communications Commission that effectively deregulated high-speed Internet access service provided over traditional telephone lines. Time Warner Telecom Inc. v. FCC, No. 05-4769. In its September 2005 ruling, the FCC relieved telephone companies of decades-old regulations that required them to grant competing Internet service providers “nondiscriminatory” access to their wirelines in order to reach consumers. The order allows telephone companies to enter into individually negotiated arrangements with companies seeking access to their broadband facilities. Independent Internet service providers, competing telecommunications service providers and cable modem providers challenged the FCC, arguing that its order effectively allows telephone companies to deny competitors access to their wirelines, resulting in decreased consumer choice in the market for broadband Internet service. Time Warner argued that, if the dominant telephone companies were not forced to make their transmission lines available to competitive providers of Internet access, they would be free to target their investments in network upgrades so that they would be available only to their own Internet access services. The result would be a disparity in service between the broadband Internet access service offered by telephone companies and their competitors, giving the telephone companies “the ability to raise prices unilaterally on their higher-quality services without fear of losing market share.” The FCC argued that the agency properly decided to abandon the regulations because they “imposed significant costs” on telephone companies, “thereby impeding innovation and investment in new broadband technologies and services.” The 3d Circuit affirmed, ruling that the FCC’s decision simply extended the logic of the U.S. Supreme Court’s National Cable & Telecommunications Association v. Brand X Internet Services, 545 U.S. 967 (2005), which upheld a previous FCC ruling that said cable companies provide an “information service” rather than a “telecommunications service,” and therefore should not be forced to share their infrastructure with Internet service providers. The FCC then handed down its “Wireline Broadband Order” to extend the same rules to telephone companies. The FCC said it had determined that “like cable modem service . . . wireline broadband Internet access service combines computer processing, information provision, and data transport, enabling end users to run a variety of applications” such as e-mail and Internet surfing. The FCC concluded that, due to the similarity between how end users perceive Internet access � whether provided by wireline or cable modem providers � its decision to classify wireline broadband Internet access service as an “information service” logically flowed from Brand X. The 3d Circuit agreed, finding that the FCC was entitled to deference. Writing on behalf of the court, Judge Julio M. Fuentes said, “[F]rom the perspective of the end-user, wireline broadband service and cable modem service are functionally similar and . . . should be subject to the same regulatory classification under the Communications Act.” Fuentes also rejected the argument that the FCC’s ruling was improper because it conflicted with past agency decisions. “To the extent that the FCC’s current classification of wireline broadband Internet access service conflicts with past agency rulings,” Fuentes said, “ Brand X makes clear that ‘an initial agency interpretation is not instantly carved in stone. On the contrary, the agency . . . must consider varying interpretations and the wisdom of its policy on a continuing basis.’ “

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