High-Speed Internet Service Now High Court Case

WASHINGTON —  The Supreme Court agreed Friday to decide whether consumers should have a choice of providers when they buy high-speed Internet service over a cable or phone line.

Cable companies are seeking the right to exclude all competitors from using their cable lines to offer broadband Internet service to their customers.

If the cable firms win in the high court, phone companies say they will demand the same right to exclude competitors from their high-speed DSL service.

“The outcome of this case will, quite literally, determine the future of the Internet as we know it,” said Andrew Jay Schwartzman, president of the Media Access Project, which had opposed the industry’s efforts to rid itself of government regulation.

When Internet service took off in the 1990s, most consumers received their signals through phone lines, which are regulated by the government as common carriers. As such, the phone companies were obliged to open their lines to other providers of Internet service, such as EarthLink or America Online.

In recent years, however, cable television companies have surged into the lead in providing high-speed Internet service over their cable lines. And cable firms maintain that this “information service” is off-limits to regulation by the government.

Two years ago, the Federal Communications Commission adopted the cable industry’s view. “We believe broadband services should exist in a minimal regulatory environment,” the agency said in announcing its hands-off rule for Internet cable service.

FCC Chairman Michael K. Powell said he hoped to promote competition among companies that delivered different modes of Internet service: via phone lines, cable hookups, satellite and wireless. He said forcing the cable and phone companies to permit competition using their own lines might “discourage investment and innovation.”

The California Public Utilities Commission, consumer activists, EarthLink and several independent providers of Internet services challenged the FCC’s deregulatory decision as being in conflict with the Telecommunications Act of 1996. Last year, they won in the U.S. 9th Circuit Court of Appeals.

The 1996 “act creates a general presumption in favor of opening markets to competition,” not in creating a series of monopolies, the appeals court ruled. The FCC could “promote competition and protect consumers” if it required cable companies to open their lines to independent providers of Internet service, the circuit court held.

Bush administration lawyers, acting on behalf of the FCC, urged the high court to take up the issue and overrule the 9th Circuit. Separately, the National Cable & Telecommunications Assn. did the same.

In a brief order, the Supreme Court announced Friday that it had voted to hear both appeals, probably in late March (FCC vs. Brand X Internet and NCTA vs. Brand X Internet).

Big phone companies such as Verizon and BellSouth were technically on the other side of the case from the cable industry, but they nonetheless had filed briefs in the court that supported the cable industry’s call for deregulation. On Friday, they welcomed the court’s announcement. BellSouth said a ruling in favor of the FCC “will clear the way for the commission to finish work on modernizing regulations to allow all Internet service providers -- phone companies, cable companies, satellite companies and independents -- to compete under the same rules.”

Powell also applauded the court’s intervention. “High-speed Internet connections are not telephones, and I’m glad the Supreme Court has agreed to review the 9th Circuit’s ruling that they are,” he said in a statement.

Robert Sachs, president of the cable industry association, said he was optimistic the high court would follow the FCC’s lead in “fostering a deregulatory environment” for high-speed Internet access.

Consumer activists were resigned to the fact that the court would take up the issue. They said, however, they hoped the justices would not allow the FCC to gut any potential competition in providing high-speed service.

“We are confident that when the court examines the facts, it will

“Consumers should be allowed to enjoy the increased choice and lower prices that come with a more competitive broadband market, as they do in the traditional ‘dial-up’ Internet market.”

The United States has fallen to 15th in the world in the percentage of people who have high-speed Internet service, the consumer groups said. “U.S. consumers pay 30 times as much as the Japanese and 10 times as much as the Koreans,” they said.

Schwartzman, of the Media Access Project, said a victory for the cable industry would allow it to limit content on the Internet.

“This is much more than an argument about economics,” he said. “If the Supreme Court rules against Internet open access, cable companies will be able to block content at will for political or financial reasons and deny the public the ability to choose among competing Internet providers.”

Lawyers for EarthLink, an Internet service provider in Atlanta, said they hoped the high court would agree with the 9th Circuit and “give cable modem users a choice in high-speed Internet providers.”

The nation has nearly 30 million subscribers to high-speed Internet service, according to a survey of the 20 largest cable and phone providers released in August. Cable broadband service had 61% of the market, although the top DSL providers had gained more subscribers recently, said the Leichtman Research Group, which conducted the survey.