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US court rejects FCC bit-carrier claim

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A US court of appeal has rejected a request by the Federal Communications Commission (FCC) to take another look at its October decision which defined cable TV companies as bit carriers, thereby falling under the FCC guidelines for telecommunications services.

If this court decision remains unchanged, it will mean that all of the wholesale and network sharing rulings that apply to US telcos will now apply to cable companies.

This is the reason that all the telco DSL providers in the US work hand-in-glove with ISPs, but so few of the cable TV companies deliver their services through ISPs. The same applies to Competitive Local Exchange Carriers (CLECs).

Different kettle of fish

In the past, the FCC made a ruling that said that the cable firms are a completely different kettle of fish and are not categorised as communications companies, but as information providers.

This decision has been strongly supported by FCC chairman Michael Powell, who insists that it has been done to maintain strong competition in broadband lines in the US. Cable firms have been able to ignore ISPs and CLECs because of their previously privileged status, more or less outside of the FCC remit.

If the FCC still wants to fight the Ninth US Circuit Court of Appeals, then it must take its appeal to the Supreme Court, something Powell is clearly considering by his statement on the subject: "I am disappointed that the Court declined to address the merits of the Commission's policy that was carefully developed over the past several years.

"The Commission has worked tirelessly to advance economic growth and investment in high-speed Internet networks. By standing on a prior decision, this court, as Judge O'Scannlain noted in October, 'effectively stops a vitally important policy debate in its tracks'. This decision also prolongs uncertainty to the detriment of consumers. That is why we will study our options and explore how to continue to advance broadband deployment for all Americans."

Powell has just 90 days to decided if he wants to appeal which will have to be heard in the US Supreme Court.

Arduous conversations

The cable TV companies, led by Comcast, have certainly responded under Powell's regime, with most of them coming to the end of arduous conversions from analogue systems to digital over the past four or five years, having invested something like $75bn in their networks, in many cases putting the companies heavily into debt.

But the old RBOC companies, such as Verizon Communications, SBC Communications, Bell-South and Qwest Communications will be delighted with the decision, as were one or two of the other FCC Commissioners who are known to have differing views to Powell. Commissioner Michael Copps said in a statement: "This is a good day for consumers and Internet entrepreneurs, I look forward to the start of a fresh dialogue on broadband service at the FCC."

The FCC will now have to decide how to treat both telephone operators and cable firms together and may now need to open up access to ISPs and other competitors such as Competitive.

Dragging heels

Local Exchange Carriers that want to attach directly to their networks. At the moment the FCC stance is that it will use any carrot to get network operators to upgrade their networks and offer more advanced services. It feels that cable operators have made the shift to digital networks, and that telcos have dragged their heels.

But the only reason that cable operators have made expensive upgrades is due to the reward of being able to offer three services over them, TV, local phone connections and high-speed internet lines, without any fears that their investments will be hijacked by others at cost or below.

Some cable companies have seen the decision coming and have begun to invite participation into their networks anyway, with Comcast opening its doors to AOL and Earthlink, as well as local ISPs.

Copyright © 2004 Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of events that have happened each week in the world of digital media. Faultline is where media meets technology. Subscription details here.

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