The U.S. cable industry and the government fought Internet service providers before the Supreme Court on Tuesday over whether cable high-speed Internet lines must be opened to rival Internet providers.
At issue is an appeals court decision last year that said cable high-speed Internet service, known as broadband, has a telecommunications component and therefore is subject to traditional telephone network access requirements.
The Federal Communications Commission in 2002 determined cable broadband was an information service and therefore free from most traditional telephone service rules — like requirements to lease network access to rivals.
The government and the general counsel at No. 2 U.S. cable company Time Warner Inc. argued that because cable operators had combined multiple services together to create a new product, they were not subject to legacy regulations.
Cable companies have put together “two ingredients that form a separate product,” said Time Warner general counsel Paul Cappuccio, arguing that the law provided for exempting such an enhanced service from traditional regulations.
But Justice Antonin Scalia appeared unconvinced, peppering Cappuccio and the government lawyer representing the FCC, Thomas Hungar, with questions over why the high-speed Internet service did not contain some telecommunications components.
“It doesn’t explain to my satisfaction why it’s a different product,” Scalia said before a packed courtroom that included Democratic FCC Commissioner Jonathan Adelstein and other agency officials.
The cable industry has about 20 million high-speed Internet access subscribers. Independent Internet service providers like EarthLink Inc. and public interest groups have worried that, without some safeguards by the FCC, consumers would have limited choices for providers or Web-surfing capabilities.
Justice Stephen Breyer challenged the lawyer representing the Internet service providers, Thomas Goldstein, that the combination argument seemed “logical and reasoned.”
Goldstein said that was wrong because the new service still consisted of a telecommunications service. “Telecommunications and something else is involved,” he said.
Goldstein also said the FCC deregulated cable Internet service the wrong way, failing to follow Congress’ instructions to forbear from imposing the rules on Internet providers. Forbearance is often a slow process of declining to enforce agency rules.
In their briefs to the court, the government and cable companies also argued that the Court of Appeals for the Ninth Circuit, which overturned the FCC’s 2002 decision, did not extend the requisite deference to the agency’s decision-making process. But that issue was hardly touched in oral arguments.
Both the cable industry and public interest advocates agreed afterward that it was hard to assess which way the court would decide based on the oral arguments.
A decision on the case is expected by late June.
Last week, Legg Mason’s Washington research office issued a note suggesting that the Supreme Court could go several routes: uphold the lower court ruling, send the case back to the appeals court with orders to apply deference to the FCC, or apply the standard itself by ruling on the FCC decision.
