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The battle over regulating cable broadband has shifted to a new arena, the Federal Communications Commission, now that the 9th U.S. Circuit Court of Appeals has struck down a Portland, Ore., ordinance regulating the new technology. Meanwhile, parties, intervenors and amici to the suit, AT&T v. Portland, No. 99-35609, are interpreting the ruling to bolster their positions. Some contend that the ruling means cable companies that provide broadband transmission cannot be regulated the same way telephone companies are. Others say the ruling means that under federal law, cable service providers must negotiate with rival Internet service providers (ISPs) that wish to connect to a local broadband system. Meanwhile, FCC Chairman William E. Kennard is leaving his options open. “I agree with the municipalities in the goal of an open cable platform,” he said on June 30 in a written statement. “The question is how do we get there, through government intervention or market forces? My preference is market forces, but if the market doesn’t work, then we’ll have to step in.” That same day, Kennard announced his plan to propose that the FCC open an administrative proceeding on getting competing ISPs access to cable companies’ broadband networks. The proceeding, in which briefs will be filed with the FCC, most likely will start in the fall. Broadband data transmission appears to be the key to success for ISPs because the technology allows for multiple transmission — cable TV, Internet and telephone — at high speeds. With broadband, customers can access the Internet at speeds several hundred times faster than with computer modems. In 1998, AT&T, then just a long-distance telephone company, embarked on a strategy to diversify and provide telephone, data and Internet services. That June, AT&T announced that it had agreed to acquire TCI, a cable company. About six months later, the city of Portland and Multnomah County adopted an ordinance mandating that AT&T provide rival ISPs access to its cable network. Portland said that it was trying to create “open access.” AT&T said that the ordinance imposed “forced access.” Soon after, AT&T sued the city and county; it lost at trial and filed an appeal in June 1999. In a June 22 ruling this year, a three-judge 9th Circuit panel reversed the lower court, saying that Portland may not directly regulate AT&T’s cable-modem access under its franchising authority because modem access is not a “cable service” under the Telecommunications Act. The court also said that the act “includes cable broadband transmission as one of the ‘telecommunications services’ a cable operator may provide. … Thus, AT&T need not obtain a franchise to offer cable broadband.” The court categorized high-speed Internet access via cable as both a telecommunications service and an information service — a hybrid that has done little to temper the debate. Under federal law, a telecommunications service is subject to interconnection obligations, requiring it to allow other telecommunications carriers to connect to it. But typical ISPs are information services and, as the court noted, “not subject to regulation as telecommunications carriers.” WHICH IS IT? Whether and how high-speed Internet access via cable is regulated now depends on how the FCC and Congress ultimately decide which category it falls under: telecommunications service, information service or cable service. Portland’s deputy city attorney, Terence L. Thatcher, says it doesn’t appear that the city will appeal the ruling because, even though it lost, it got what it wanted — open access — not by its franchise authority, but by interconnection. Similarly, Nory Miller, of the Washington, D.C., office of Chicago’s Jenner & Block, which represents the Oregon Internet Service Providers Association, an intervenor opposing AT&T, says, “I hope [the FCC] decides to leave the situation alone.” If the FCC fails to decide that interconnection applies, Miller says, she hopes that it devises specific, detailed rules for open access. Christopher Wolf, president of Hands Off the Internet and a partner in the Washington, D.C., office of Proskauer Rose, says he reads the ruling as saying that cable companies providing broadband transmission are not common carriers like traditional telephone companies and therefore cannot be subject to interconnection obligations. He says that at most, such entities can be subject to “must-carry” rules, as are traditional cable operators. He adds that with the alternative means of broadband transmission available — high-frequency digital subscriber telephone lines and satellites — mandatory access isn’t necessary. Wolf filed an amicus brief for Hands Off that argued against the Portland ordinance. “While the phrase ‘open access’ may sound nice, in reality it’s nothing but a terrible way for regulators to tie down Internet access in a confusing patchwork of regulations,” he says. “The ISPs’ claims are frivolous,” says David W. Carpenter, of Chicago’s Sidley & Austin, which represents AT&T. “The only entities that are subject to interconnection obligations are common carriers, and it is elementary that cable operators and other providers of information services do not operate as common carriers. And while there’s nothing in the 9th Circuit’s decision that supports the ISPs’ claims, they’re relying on dictum in its decision. … The nature of the service that AT&T offers to cable modem customers wasn’t an issue.”

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