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Supreme Court rules for FCC in utility regulation case

By aphrael in News
Wed Jan 16, 2002 at 10:56:15 PM EST
Tags: Internet (all tags)

In a case founded on an obscure clause in a complicated piece of law, the US Supreme Court today declared that the FCC has the power to regulate the price that cable companies pay to attach cables that provide high-speed internet services to telephone company poles.

In many regions, rather than running cable service underground, cable wires are strung on telephone poles much as electrical and telephone wires are. Under FCC regulation, the price that the owners of the telephone poles could charge for the service of holding up the cables was limited. Under an appeals court ruling issued in 2000, the limit was lifted, and in some regions the amount charged by the telephone companies increased by 7 times.

Politically, there are two basic arguments about this: (a) that the phone companies own the wires and should be able to charge whatever they want for the use of their property; (b) that the telephone poles are a local monopoly and should be regulated (and that there is an obvious conflict of interest in terms of companies charging fair prices to allow competitors to use their infrastructure).

Legally, the case was based on two things: the Pole Attachments Act of 1978, in which Congress required that the FCC "Regulate the rates, terms, and conditions for pole attachments", and which defined a pole attachment as "any attachment by a cable television system to a pole, duct, conduit, or right-of-way owned or controlled by a utility" and the Telecommunications Act of 1996, which expanded the term to include "any attachment by a ... provider of telecommunications service." The FCC had argued that high-speed internet attachments were not telecommunications services (they evidently have not classified internet services in general and are open to reinterpreting that decision), but that they were put up by cable companies and so fell under the purview of the law; Gulf Power Company had argued that the law was meant only to apply to attachments used to provide cable television, regardless of whether they were put up by an organization that provides cable television. The Court sided with the FCC.

In a similar issue in the same case, the Gulf Power Company argued that a wireless device attached to a telephone pole was exempt from the rule because the definition of "utility" specified that a utility is an entity whose infrastructure is used in part for wire communications. How that is relevant the Court found difficult to see, as the definition in question determines whose poles are covered rather than which attachments. The court sided instead with the FCC, which argued that wireless devices constitute a telecommunications service. and indicated that the FCC may regulate the rates charged for those attachments as well.

The decision was nearly unanimous. Justice O'Connor did not participate, and there was no dissent. Justices Thomas and Souter agreed with the key holding --- that the FCC has the authority to regulate the rates in question --- but disagreed with the reinstatement of their rates, arguing that while they believed the FCC is correct, they should be required to prove it more carefully --- in essence, they seem to be saying, the FCC is correct, but has failed to prove it, and should be required to do so before their regulations are reinstated. The other 6 rejected this argument, and reinstated the rates as they had existed before being overturned by the Appeals Court in 2000.


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Supreme Court rules for FCC in utility regulation case | 9 comments (4 topical, 5 editorial, 0 hidden)
Gotta love legalese. (4.00 / 1) (#2)
by Happy Monkey on Wed Jan 16, 2002 at 05:46:28 PM EST

Only in law would internet access not be considered telecommunications service.
Length 17, Width 3
Nul (none / 0) (#5)
by duxup on Wed Jan 16, 2002 at 07:22:35 PM EST

Even more strange is that legally you're all a figment of my imagination.

[ Parent ]
No, it's Information service! (none / 0) (#9)
by isdnip on Thu Jan 17, 2002 at 10:30:29 PM EST

The legal status of Internet service per se in the United States is well understood. It is an information service, not subject to regulation. It is also an information service that makes use of telecommunications. So an ISP buys telecommunications, but doesn't provide it.

ISP services can be broken down into different component services, often with different providers. Retail ISPs like "Joe's Internet", who take your $20/month and give you a mailbox and web page, usually don't even rent much wire. They're like timesharing companies of old. Some were... Backbone ISPs, like UUNET and Genuity, sell their services to the retail ISPs as well as to big customers. And many if not most retail ISPs use "rent a modem" services to get their dial-in coverage. Those services are also ISPs, who in turn buy their phone lines from telephone companies. And yes, sometimes phone companies own these ISPs; vertical integration is nice business too.

The case at point discusses whether the rate that cable companies who have internet services on their cables pay for pole attachment rights should be the rate paid by cable companies, the rate paid by phone companies (higher), or any unregulated monopoly gouge that the power companies demand (what the power companies wanted, since there was no defined rate for Internet). Had the power comapnies gotten that third option, then the price of cable modems might have skyrocketed and further rollout might have slowed drastically. The Supreme Court said that (it okay for the FCC to hold that) it was still cable, even if it also carried some Internet(, whose exact status remains undefined because the FCC isn't required to say so).

[ Parent ]

the big question (none / 0) (#7)
by akb on Thu Jan 17, 2002 at 04:01:43 PM EST

First, excellent summary, here's an article from washtech that provides a lil' more background.

The big question still to answer is how internet services will be classified for regulatory purposes. The court apparently has left this up to the FCC. The feeling is the FCC will consider it a data service, which are currently unregulated. So, no open access likely.

Collaborative Video Blog demandmedia.net

Supreme Court rules for FCC in utility regulation case | 9 comments (4 topical, 5 editorial, 0 hidden)
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