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Away From Home

Monday, June 27, 2005

Brand X decision

The Supreme Court today handed down a ruling in FCC v. Brand X, ruling in favor of cable companies (MSNBC, Full text):

The Supreme Court ruled on Monday that cable companies may keep rival Internet providers from using their lines, a decision that will limit competition and consumers' choices.

The 6-3 decision is a victory for the Bush administration, which sought exclusive control to promote broadband investment from deep-pocketed cable companies.

Judges should defer to the expertise of the Federal Communications Commission, which concluded that limited access is best for the industry, the high court said in an opinion by Justice Clarence Thomas.

The question in the case was a highly legalistic one -- whether cable internet is a "telecommunications service" or an "information service." While this may seem to be just a matter of terminology, the difference is quite substantial.

"Telecommunications services" are subject to regulations that require local providers to allow other companies to use their lines. This is why you have a choice of local telephone service (for instance, in Manhattan, you can choose Birch rather than SBC, even though SBC owns all of the lines). This is also why you have a choice of DSL

By contrast, "information services" have no such regulation. They do not have to permit other companies onto their lines. This is why you do not have a choice of cable television -- you either buy it from the one provider (in Manhattan, Cox), or you do not buy it at all.

The argument was this: Cable companies contended that since they are providing internet on the same lines as their television services, the internet offerings should be classified the same as television. The counterargument is that the internet services are so similar to the services provided by DSL companies that it should be classified the same way.

The FCC ruled that cable internet is an "information service," and as quoted above, the Court deferred to the FCC's determination. The biggest result, of course, is that you still will not have a choice of companies to get cable internet from. (There are a whole host of other effects as well, but this post is getting too long as it is. If you're interested in these other effects, let me know in the


  • I wonder... if the companies are providing both television and Internet services on the same lines, and Internet services clearly amount to telecommunication services rather than information services... why can't the lines be open to competitors for the sole purpose of television and/or other information services?

    It's fairly inconsequential, really. In 15 years, the technological integration of television and computer/Internet services will end up classifying TV/Internet services as telecommunication services, thus opening up the way for competition... Of course, they'll find some way to rework the books on this in that eventuality.

    By Blogger ChrisHarrop, at 6/27/2005 11:44:00 AM  

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