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Cybertelecom Federal Internet Law & Policy An Educational Project |
Cable Open Access
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Cybertelecom Internet
Law Notes: Cable Open Access |
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NCTA v. BrandX, No. 04-277, 545 U.S. __, Slip at (S.Ct. June 27, 2005)
Cable Broadband
(20) the term ''video programming'' means programming provided by, or
generally considered comparable to programming provided by, a television
broadcast station.
47 U.S.C. § 522(20).
Subject to limited exceptions, the Communications Act provides that
"a cable operator may not provide cable service without a franchise." 47
U.S.C. S 541(b)(1). The Act defines "cable service" as "(A) the one-way
transmission to subscribers of (i) video programming, or (ii) other programming
service, and (B) subscriber interaction, if any, which is required for
the selection or use of such video programming or other programming service."
47 U.S.C. S 522(6). For the purposes of this definition, "video programming"
means "programming provided by, or generally considered comparable to programming
provided by, a television broadcast station, " 47 U.S.C. S 522(20), and
"other programming service " means "information that a cable operator makes
available to all subscribers generally." 47 U.S.C. S 522(14). The essence
of cable service, therefore, is one-way transmission of programming to
subscribers generally.
-- AT&T
v. Portland, Case Number 99-35609 (9th Cir. June 22,
2000).
Cable service, defined in section 522, is "the one-way transmission
to subscribers of (i) video programming, or (ii) other programming service,
and subscriber interaction, if any, which is required for the selection
or use of such video programming or other programming service." 47 U.S.C.
§ 522(6)(A), (B) (1994 & Supp. II 1996).(30) The only difference
between this definition of "cable service" and the definition included
in the 1978 Act is the addition of the words "or use." According to the
House Report accompanying the 1996 amendments, the inclusion of the words
"or use" was meant to "reflect[ ] the evolution of video programming toward
interactive services." H. Rep. No. 104-204, at 97, reprinted in 1996 U.S.C.C.A.N.
at 64. This is the only sentence in the legislative history that attempts
to explain Congress' change to the definition of "cable service." Although
what it means to reflect an evolution of video programming toward interactive
service is not exactly clear, it is clear from Congress' lack of discussion
of this change that it was minor in both language and intent. If Congress
by the addition of these two words meant to expand the scope of the "cable
service" definition from its traditional video base to include all interactive
services, video and non-video, it would have said so. Without any substantive
comment, we will not read this minor change to effectuate a major statutory
shift. See Walters v.
National Ass'n of Radiation Survivors, 473 U.S. 305, 318, 105 S.Ct.
3180, 3187, 87 L.Ed.2d 220 (1985) (stating that without substantive comment
"it is generally held that a change during codification is not intended
to alter the statute's scope") (citing Muniz v. Hoffman, 422 U.S. 454,
467-74, 95 S.Ct. 2178, 2185-89, 45 L.Ed.2d 319 (1975)). How then did the
addition of the words "or use" alter the definition of "cable service"?
The statute's plain language and Congress' one sentence explanation suggest
that Congress expanded the definition to include services that cable television
companies offer to their customers to allow them to interact with traditional
video programming.(31)
The Commission first concluded that cable modem service is an “information service,” a conclusion unchallenged
here. The Act defines “information service” as “the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications . . . .” §153(20). Cable modem service is an information service, the Commission reasoned, because it provides consumers with a comprehensive capability for manipulating information
using the Internet via high-speed telecommunications.
That service enables users, for example, to browse the World Wide Web, to transfer files from file archives available on the Internet via the “File Transfer Protocol,” and to access e-mail and Usenet newsgroups. Declaratory Ruling 4821, ¶37; Universal Service Report 11537, ¶76. Like other forms of Internet service, cable modem service also gives users access to the Domain Name System (DNS). DNS, among other things, matches the Web page addresses that end users type into their browsers (or “click” on) with the Internet Protocol (IP) addresses1 of the servers containing the Web pages the users wish to access. Declaratory Ruling 4821–4822, ¶37. All of these features, the Commission concluded, were part of the information service that cable companies provide consumers. Id., at 4821–4823, ¶¶36–38; see also Universal Service Report 11536–11539, ¶¶75–79.
At the same time, the Commission concluded that cable modem service was not “telecommunications service.” “Telecommunications service” is “the offering of telecommunications for a fee directly to the public.” 47 U. S. C. §153(46). “Telecommunications,” in turn, is defined as “the transmission, between or among points specified by the user, of information of the user’s choosing, without change in the form or content of the information as sentand received.” §153(43). The Commission conceded that, like all information-service providers, cable companies use “telecommunications” to provide consumers with Internet service; cable companies provide such service via the high-speed wire that transmits signals to and from an end user’s computer. Declaratory Ruling 4823, ¶40. For the Commission, however, the question whether cable broadband Internet providers “offer” telecommunications involved more than whether telecommunications was one necessary component of cable modem service. Instead, whether that service also includes a telecommunications “offering” “tur[ned] on the nature of the functions the end user is offered,” id., at 4822, ¶38 (emphasis added), for the statutory definition of “telecommunications service” does not “res[t] on the particular types of facilities used,” id., at 4821, ¶35; see §153(46) (definition of “telecommunications service” applies “regardless of the facilities used”).
Seen from the consumer’s point of view, the Commission concluded, cable modem service is not a telecommunications
offering because the consumer uses the high-speed wire always in connection with the information-processing capabilities provided by Internet access, and because the transmission is a necessary component of Internet access: “As provided to the end user the telecommunications is part and parcel of cable modem service and is integral to its other capabilities.” Declaratory Ruling 4823, ¶39. The wire is used, in other words, to access the World Wide Web, newsgroups, and so forth, rather than “transparently”
to transmit and receive ordinary-language messages
without computer processing or storage of the message.
See supra, at 4 (noting the Computer II notion of “transparent” transmission). The integrated character of this offering led the Commission to conclude that cable modem service is not a “stand-alone,” transparent offering of telecommunications. Declaratory Ruling 4823–4825, ¶¶41–43.
NCTA v. BrandX, No. 04-277, 545 U.S. __, Slip at 16-17 (S.Ct. June 27, 2005)
MediaOne's Road Runner service combines the use of a cable modem platform
with access to the Internet. Road Runner's cable modem platform, separated
from its Internet service component, is a telecommunications facility because
it is a pipeline for telecommunications, that is, for "the transmission
. . . of information of the user's choosing, without change in the form
or content." Id. S 153(43) (defining "telecommunications").
. . . . .
The County makes a separate argument that MediaOne's facilities qualify
as a "cable system" that cannot be said to include any telecommunications
facilities. Under the Communications Act a cable system is defined as "a
facility . . . that is designed to provide cable service which includes
video programming and which is provided to multiple subscribers within
a community." 47 U.S.C. S 522(7). The County points out that MediaOne offers
traditional "cable services," like video programming, over its facilities.
It therefore asserts that because its system is "designed to provide cable
service" it cannot be considered a telecommunications facility. According
to the County, providing Internet access over its cable system does not
magically transform the cable system into a telecommunications facility.
We disagree with the County. The Communications Act recognizes that
some facilities can be used to provide more than one type of service.
The Act therefore contemplates that multi-purpose facilities will receive
different regulatory classification and treatment depending on the service
they are providing at a given time. For example, under 47 U.S.C. S 522(7)(C)
the definition of "cable system" does not include a facility of a common
carrier that offers telecommunications services "except that such facility
shall be considered a cable system . . . to the extent that such facility
is used in the transmission of video programing directly to subscribers,
unless the extent of such use is solely to provide interactive on-demand
services." In addition, under 47 U.S.C. S 153(46) the term "telecommunications
service" is defined as "the offering of telecommunications for a fee directly
to the public . . . regardless of the facilities used." (emphasis added).
Therefore, although MediaOne maintains a "cable system," its facilities
can be properly classified as telecommunications facilities when they provide a transmission path to the Internet.
Mediaone
Group, Inc v. Henrico County , 2001 WL 788864, __ F.3d __, at 14
& 15 (4th Cir Jul. 21, 2001), available at http://pacer.ca4.uscourts.gov/cgi-bin/getopn.pl?OPINION=001680.P
Although cable modem service includes a telecommunications component, in that the provider employs telecommunications to deliver Internet access to subscribers, that fact does not demonstrate that cable modem service is a “telecommunications service.” To the contrary, information services are by definition offered “via telecommunications.” 47 U.S.C. 153(20). Under the Act, therefore, a service is not a “telecommunications service” merely because it uses telecommunications. Instead, an entity provides a “telecommunications service” only by “offering telecommunications for a fee directly to the public.” 47 U.S.C. 153(46) (emphasis added). ... There is
no doubt that cable modem service has the characteristics of an information service. The Commission had previously concluded that Internet access service “is appropriately classified as an information service” under the Communications Act, id. at 91a; cable modem service provides the same functions as other forms of Internet access service, such as e-mail, news groups, and web-page hosting, see id. at 93a-95a; and no party to the FCC’s proceeding had suggested that cable modem service is solely a telecommunications service, see id. at 86a-87a n.135. Thus, the remaining question was whether cable modem service, in addition to being an information service under the Act, is in part a telecommunications service as well. - FCC v. BrandX, Petition for Writ of Certiori (U.S.) p. 16
[5] Our holding in Mesa Verde, along with that of the Supreme Court in Neal, requires our adherence to the interpretation of the Communications Act we announced in Portland. There, we concluded that cable broadband service was not a "cable service" but instead was part "telecommunications service" and part "information service." Because the Commission's Declaratory Ruling agreed with our conclusion that cable broadband service is not "cable service," but disagreed with our conclusion that it is in part "telecommunications service," we must
[6] AFFIRM in part, VACATE in part, and REMAND for further proceedings not inconsistent with this opinion.14
-- BrandX v FCC, Sec. III, 9th Cir 10/6/2003
In AT&T v. City of Portland, 216 F.3d 871 (9th Cir. 2000), we reviewed the open access conditions a local franchise author-ity had placed on the sale of a cable franchise. As discussed in detail below, we held that cable modem service did not qualify as a "cable service" and that it contained both information service and telecommunications service components. As a result, the local franchise authority could not impose conditions on the sale. At approximately the same time, a court in the Eastern District of Virginia invalidated a local ordinance that imposed open access requirements on cable modem service, concluding that cable modem involved a telecommunications component and that it also qualified as cable service. Mediaone Group, Inc. v. County of Henrico, 97 F. Supp. 2d 712, 714-15 (E.D. Vir. 2000), aff'd, 254 F.3d 356 (4th Cir. 2001). See also Gulf Power Co. v. FCC, 208 F.3d 1263, 1277 (11th Cir. 2000), rev'd, 534 U.S. 327 (2002) (holding that the FCC could not regulate pole attachments for internet services because they did not qualify as telecommunications services).
-- BrandX v FCC, Sec. I, page 14757, 9th Cir 10/6/2003
Offering
This construction passes Chevron’s first step. Respondents argue that it does not, on the ground that cable companies providing Internet service necessarily “offe[r]” the underlying telecommunications used to transmit that service. The word “offering” as used in §153(46), however,does not unambiguously require that result. Instead, “offering” can reasonably be read to mean a “stand-alone” offering of telecommunications, i.e., an offered service that, from the user’s perspective, transmits messages unadulterated by computer processing. That conclusion follows not only from the ordinary meaning of the word “offering,” but also from the regulatory history of the Communications Act.
Cable companies in the broadband Internet service business “offe[r]” consumers an information service in the form of Internet access and they do so “via telecommunications,”
§153(20), but it does not inexorably follow as a matter of ordinary language that they also “offe[r]” consumers
the high-speed data transmission (telecommunications)
that is an input used to provide this service,§153(46). We have held that where a statute’s plain terms admit of two or more reasonable ordinary usages, the Commission’s choice of one of them is entitled to deference.
See Verizon, 535 U. S., at 498 (deferring to the Commission’s interpretation of the term “cost” by reference
to an alternative linguistic usage defined by what “[a]merchant who is asked about ‘the cost of providing the goods’ ” might “reasonably” say); National Railroad Passenger
Corporation v. Boston & Maine Corp., 503 U. S. 407, 418 (1992) (agency construction entitled to deference where there were “alternative dictionary definitions of the word” at issue). The term “offe[r]” as used in the definition
of telecommunications service, 47 U. S. C. §153(46), is ambiguous in this way.
It is common usage to describe what a company “offers” to a consumer as what the consumer perceives to be the integrated finished product, even to the exclusion of discrete components that compose the product, as the dissent concedes. See post, at 3 (opinion of SCALIA, J.). One mightwell say that a car dealership “offers” cars, but does not“offer” the integrated major inputs that make purchasing the car valuable, such as the engine or the chassis. It would, in fact, be odd to describe a car dealership as “offering” consumers the car’s components in addition to the car itself. Even if it is linguistically permissible to say that the car dealership “offers” engines when it offers cars, that shows, at most, that the term “offer,” when applied to a commercial transaction, is ambiguous about whether it describes only the offered finished product, or the prod-uct’s discrete components as well. It does not show that no other usage is permitted.
The question, then, is whether the transmission component of cable modem service is sufficiently integrated with the finished service to make it reasonable to describe the two as a single, integrated offering. See ibid. We think that they are sufficiently integrated, because “[a] consumer uses the high-speed wire always in connection with the information-processing capabilities provided by Internet access, and because the transmission is a necessary component of Internet access.” Supra, at 16. In the telecommunications context, it is at least reasonable to describe companies as not “offering” to consumers each discrete input that is necessary to providing, and is always used in connection with, a finished service. We think it no misuse of language, for example, to say that cable companies providing Internet service do not “offer” consumers DNS, even though DNS is essential to providing Internet access. Declaratory Ruling 4810, n. 74, 4822–4823, ¶38. Likewise, a telephone company “offers” consumers a transparent transmission path that conveys an ordinary-language message, not necessarily the data transmission facilities that also “transmi[t] . . . information of the user’s choosing,” §153(43), or other physical elements of the facilities used to provide telephone service, like the trunks and switches, or the copper in the wires. What cable companies providing cable modem service and telephone companies providing telephone service “offer” is Internet service and telephone service respectively—the finished services, though they do so using (or “via”) the discrete components composing the end product, including data transmission. Such functionally integrated components need not be described as distinct “offerings.”
In response, the dissent argues that the high-speed transmission component necessary to providing cable modem service is necessarily “offered” with Internet service because cable modem service is like the offering of pizza delivery service together with pizza, and the offering of puppies together with dog leashes. Post, at 3–4 (opinion of SCALIA, J.). The dissent’s appeal to these analogies only underscores that the term “offer” is ambiguous in the way that we have described. The entire question is whether the products here are functionally integrated (like the components of a car) or functionally separate (like pets and leashes). That question turns not on the language of the Act, but on the factual particulars of how Internet technology works and how it is provided, questions Chevron leaves to the Commission to resolve in the first instance. As the Commission has candidly recognized, “the question may not always be straightforward whether, on the one hand, an entity is providing a single information service with communications and computing components, or, on the other hand, is providing two distinct services, one of which is a telecommunications service.” Universal Service Report 11530, ¶60. Because the term “offer” can sometimes refer to a single, finished product and sometimes to the “individual components in a package beingoffered” (depending on whether the components “stillpossess sufficient identity to be described as separate objects,” post, at 3), the statute fails unambiguously to classify the telecommunications component of cable modem service as a distinct offering. This leaves federal telecommunications policy in this technical and complex area to be set by the Commission, not by warring analogies.
NCTA v. BrandX, No. 04-277, 545 U.S. __, Slip at 17-19 (S.Ct. June 27, 2005)
Portland
Against this background, the Court of Appeals erred in refusing to apply Chevron to the Commission’s interpretation of the definition of “telecommunications service,” 47 U. S. C. §153(46). Its prior decision in Portland held only that the best reading of §153(46) was that cable modem service was a “telecommunications service,” not that it was the only permissible reading of the statute. See 216 F. 3d, at 877–880. Nothing in Portland held that the Communications
Act unambiguously required treating cable Internet
providers as telecommunications carriers. Instead, the court noted that it was “not presented with a case involving
potential deference to an administrative agency’sstatutory construction pursuant to the Chevron doctrine,” id., at 876; and the court invoked no other rule of construction
(such as the rule of lenity) requiring it to conclude
that the statute was unambiguous to reach its judgment. Before a judicial construction of a statute, whether contained in a precedent or not, may trump an agency’s, the court must hold that the statute unambiguously
requires the court’s construction. Portland did not do so.
NCTA v. BrandX, No. 04-277, 545 U.S. __, Slip at 13 (S.Ct. June 27, 2005)
[4] Under the statute, Internet access for most users consists of two separate services. A conventional dial-up ISP provides its subscribers access to the Internet at a "point of presence" assigned a unique Internet address, to which the subscribers connect through telephone lines. The telephone service linking the user and the ISP is classic "telecommunications," which the Communications Act defines as "the transmission, between or among points specified by the user, of information of the user's choosing, without change in the form or content of the information as sent and received." 47 U.S.C. S 153(43). A provider of telecommunications services is a "telecommunications carrier," which the Act treats as a common carrier to the extent that it provides telecommunications to the public, "regardless of the facilities used." 47 U.S.C.S 153(44) & (46).
[5] By contrast, the FCC considers ISP itself as providing "information services" under the Act, defined as "the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications." 47 U.S.C.S 153(20) (1996). As the definition suggests, ISPs are themselves users of telecommunications when they lease lines to transport data on their own networks and beyond on the Internet backbone. However, in relation to their subscribers, who are the "public" in terms of the statutory definition of telecommunications service, they provide "information services," and therefore are not subject to regulation as telecommunications carriers. See Federal-State Joint Board on Universal Service, 13 FCCR. 11501, PP BM, CB (1998) (report to Congress); cf. Child Online Protection Act, Pub. L. No. 105-277, S 1403(e)(4), 112 Stat. 2681 (1998) (codified at 47 U.S.C. S 231(e)(4)) & Internet Tax Freedom Act, Pub. L. No. 105-277, S 1101(e), 112 Stat. 2681 (1998) (reproduced at note to 47 U.S.C. S 151(e) (1998)) (defining Internet access services as: "a service that enables users to access content, information, electronic mail, or other services offered over the Internet, and may also include access to proprietary content, information, and other services as part of a package of services offered to consumers. Such term does not include telecommunications services."). Indeed, "information services"--the codified term for what the FCC first called "enhanced services"--have never been subject to regulation under the Communications Act. See Howard v. America Online, Inc., 208 F.3d 741, 752- 53 (9th Cir. 2000); see also 47 C.F.R. S 64.702(a); California v. FCC, 905 F.2d 1217, 1223-25 (9th Cir. 1990) (discussing history of "enhanced services" non-regulation).
-- AT&T v. Portland, Case Number 99-35609 (9th Cir. June 22, 2000).
As the preceding paragraph illustrates, the issue of the proper
regulatory classification of cable modem service, such as Road Runner,
is complex and subject to considerable debate. The outcome will have a
marked effect on the provision of Internet services. The FCC, in its amicus
brief, has diplomatically reminded us that it has jurisdiction over all
interstate communications services, including high-speed broadband services.
The FCC also advises us that it has initiated a proceeding, through a notice
of inquiry, to examine classification and open access issues. See Inquiry
Concerning High-Speed Access to the Internet Over Cable and Other Facilities,
65 Fed. Reg. 60,441 (2000). The FCC's notice seeks comment on whether cable
modem technology should be classified as a cable service, a telecommunications
service, or an information service, and it also seeks comment on the implications
of adopting any particular classification. See In the Matter of Inquiry
Concerning High-Speed Access to the Internet Over
Cable and Other Facilities, No. 00-355, 2000 WL 1434689, P 15 (Sept.
28, 2000). In addition, the notice indicates that the FCC is
interested in determining whether open access to cable modem platforms
is necessary to further the "goals of promoting competition, deregulation,
innovation, and the deployment of high-speed services." Id. P 32. Of course,
the merits of open access are not before us. And, as we have already indicated,
we do not have to reach the question of whether MediaOne's bundled Road
Runner service is a cable service, a telecommunications service, or an
information service. For the time being, therefore, we are content to leave
these issues to the expertise of the FCC.
Mediaone
Group, Inc v. Henrico County , 2001 WL 788864, __ F.3d __, at 17
(4th Cir Jul. 21, 2001), available at http://pacer.ca4.uscourts.gov/cgi-bin/getopn.pl?OPINION=001680.P
No State or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service.47 U.S.C. § 253(a).-Henrico County's open access provision violates the federal Communications Act, 47 U.S.C. S 541(b)(3)(D), by forcing MediaOne to provide its telecom- munication facilities (its cable modem platform) to any ISP as a condition for the County's approval of the transfer of control of the franchise.
Mediaone Group, Inc v. Henrico County , 2001 WL 788864, __ F.3d __ (4 Cir 7/12/01)
Subsection 541(b)(3) expresses both an awareness that cable operators could provide telecommunications services, and an intention that those telecommunications services be regulated as such, rather than as cable services.
[8] The Communications Act includes cable broadband transmission as one of the "telecommunications services" a cable operator may provide over its cable system. Thus, AT&T need not obtain a franchise to offer cable broadband, see 47 U.S.C. S 541(b)(3)(A); Portland may not impose any requirement that has "the purpose or effect of prohibiting, limiting, restricting or conditioning" AT&T's provision of cable broadband, see 47 U.S.C. S 541(b)(3)(B); Portland may not order AT&T to discontinue cable broadband, see 47 U.S.C. S 541(b)(3)(C); and Portland may not require AT&T to provide cable broadband as a condition of the franchise transfer, see 47 U.S.C. S 541(b)(3)(D). Therefore, under the several provisions of S 541(b)(3), Portland may not regulate AT&T's provision of @Home in its capacity as a franchising authority, and the open access condition contained in the franchise transfer agreement is void.
-- AT&T v. Portland, Case Number 99-35609 (9th Cir. June 22, 2000).
The Henrico Ordinance requires MediaOne Virginia to provide telecommunications facilities. This requirement is an unlawful condition placed upon the transfer of control of MediaOne Virginia, the holder of a Henrico County cable franchise. . . . The Henrico Ordinance requires MediaOne to provide "its cable modem platform" facility to any requesting ISPs "unbundled from the provision of content" which the ISPs themselves supply. Ordinance 1(c), 2. Under the Ordinance, MediaOne would be forced to operate its cable modem platform to provide transmission between the points selected by requesting ISPs and their customers, without change in content. The County is therefore requiring MediaOne to provide a telecommunications facility as a condition for the approval of the transfer of control, and accordingly, the Ordinance is in violation of Section 541(c)(3)(D).
-- MediaOne Group, Inc. v. County of Henrico, 97 F.Supp.2d 712, 714 (E.D. Va. 2000)Sec. 544 Transmission Tech
In 1996, Congress enacted the current version of Section 544(e) which provides that "... [n]o State or franchising authority may prohibit, condition, or restrict a cable system's use of any type of subscriber equipment or any transmission technology." Although the exact technology required cannot be determined from the record, in order to provide access to multiple ISPs, MediaOne Virginia would have to make technological modifications to its current system. Accordingly, the Henrico Ordinance requires MediaOne Virginia to use some kind of multiple access technology and equipment that will accommodate requesting third-party ISPs if MediaOne Virginia itself decides to offer Road Runner. Because of this requirement, the Ordinance violates Section 544(e) and therefore the Ordinance is preempted by Section 544(e).
-- MediaOne Group, Inc. v. County of Henrico, 97 F.Supp.2d 712, 715 (E.D. Va. 2000)If Cable, Then Cant Impose Common Carrier Regulation
The district court held that the open access provision is inconsistent with 47 U.S.C. S 541(b)(3)(D) because it would require MediaOne to provide telecommunications facilities as a condition for approving transfer of control of MediaOne's cable franchise to AT&T. See MediaOne Group, Inc. v. County of Henrico, 97 F. Supp. 2d 712, 714 (E.D. Va. 2000). Section 541(b)(3)(D) says that "a franchising author- ity may not require a cable operator to provide any telecommunica-
tions service or facilities, other than institutional networks, as a condition of the initial grant of a franchise, franchise renewal, or a transfer of a franchise." 47 U.S.C. S 541(b)(3)(D) (emphasis added). The term "telecommunications" is defined as"the transmission, between or among points specified by the user, of information of the user's choosing, without change in the form or content of the informa- tion as sent and received." Id. S 153(43). Although the Communica-
tions Act does not define the word "facilities" as used in "telecommunications facilities," it is evident from the language of the statute that these facilities are the physical installations or infrastruc- ture necessary for transmission.
. . . . .
As a condition for approving the change in control of the MediaOne franchise, the County required MediaOne to provide its "cable modem platform (unbundled from the provision of content)" to "any requesting Internet Service Provider." The provision unbundles Road Runner's Internet access service from its cable modem platform and compels MediaOne to offer the platform to unaffiliated ISPs for use as a transmission pipeline for their services. The open access provision therefore requires MediaOne to provide "telecommunications . . . facilities . . . as a condition of . . . a transfer of a franchise" in violation of S 541(b)(3)(D).
. . . . .
The County and Verizon argue that even if the cable modem platform is a telecommunications facility, S 541(b)(3)(D) still does not outlaw the open access provision. Section 541(b)(3)(D), they say, only prohibits localities from requiring cable operators to construct new telecommunications facilities, and the provision here does not impose any such requirement. That argument ignores the statute's plain language. Again, S 541(b)(3)(D) declares that franchising authorities may not require cable operators "to provide any telecommunications . . . facilities" as a condition to the transfer of a franchise.
The section does not limit itself to new construction. Rather, it bars any condition that requires a cable operator to provide telecommunications facilities regardless of whether the facilities are in existence or must be built.
Mediaone Group, Inc v. Henrico County , 2001 WL 788864, __ F.3d __, at 14 (4th Cir 7/12/01)
We simply hold that Henrico County violated S 541(b)(3)(D) when it conditioned the transfer of control of MediaOne's cable franchise by requiring MediaOne to unbundle its Road Runner service and provide open access to its telecommunications facilities, that is, its cable modem platform.
Mediaone Group, Inc v. Henrico County , 2001 WL 788864, __ F.3d __ (4th Cir Jul. 21, 2001), available at http://pacer.ca4.uscourts.gov/cgi-bin/getopn.pl?OPINION=001680.P
While Congress adopted certain narrowly defined requirements that set aside particular numbers of cable system channels for particular numbers of cable system channels for particular kinds of programming, [FN2] Congress prohibited regulatory bodies from adopting access requirements for any additional types of video programming. [FN3] Congress enacted Section 541(c) to prevent the FCC, the states, or the local franchising authorities from imposing any other access, carriage, or related requirements. In adopting Section 541(c), Congress recognized that the provision would prohibit imposition of "the traditional common carrier requirement of servicing all customers indifferently upon request." HRRep No. 98-934, at 60 (1984). Congress determined that the demand of consumers for diverse sources of programming should be best met if "a cable company's owners, not government officials, ... decide what sorts of programming the company would provide." United Video, Inc. v. FCC, 890 F.2d 1173, 1189 (D.C.Cir.1989).
FN2. See 47 U.S.C. § 531 (cable channels for public, educational, and governmental use); 47 U.S.C. § 532 (cable channels for commercial use); 47 U.S.C. § 534 (carriage of local commercial television signals); 47 U.S.C. § 535 (carriage of noncommercial educational television).FN3. See 47 U.S.C. § 532(b)(2) ("Any Federal agency, State, or franchising authority may not require any cable system to designate channel capacity for commercial use by unaffiliated persons in excess of the capacity specified [herein]").The Henrico Ordinance violates Section 541(c)'s prohibition against "regulation as a common carrier or utility by reason of providing any cable service." The Ordinance subject MediaOne Virginia to forced access requirements "by reason of" its provision of its MediaOne Road Runner cable service. By reason of its provision of cable modem services, the Ordinance would require MediaOne Virginia to provide indiscriminate access to its facilities to all ISPs on set terms and conditions. Courts have uniformly held that a requirement that a cable system carry the programs or services of a specified category of users is a prohibited common carrier regulation. For example, in FCC v. Midwest Video Corp., 440 U.S. 689, 99 S.Ct. 1435, 59 *716 L.Ed.2d 692 (1979), the Supreme Court invalidated FCC rules that required cable operators to set aside four channels for use by particular programmers. The Supreme Court reasoned that these earlier "forced access" requirements were common carrier regulations, because they deprive the firm of the right held by a private carrier "to make individualized decisions, in particular cases, whether and on what terms to deal." Id. at 701, 99 S.Ct. 1435. Numerous other courts, [FN4] as well as Congress, [FN5] and the FCC [FN6] have similarly held that requirements that cable systems provide access to third parties constitute prohibited common carrier regulations.FN4. See, e.g., Value Vision Intl., Inc. v. FCC, 149 F.3d 1204, 1206 (D.C.Cir.1998) (leased access requirements place the cable operator "in the position of a common carrier"); Alliance for Community Media v. FCC, 56 F.3d 105, 123 (D.C.Cir.1995) (en banc) rev'd on other grounds sub nom. Denver Area Educ. Telecomms. Consortium, Inc. v. FCC, 518 U.S. 727, 116 S.Ct. 2374, 135 L.Ed.2d 888 (1996) (requirements for access by public, educational, local governmental, and nonaffiliated commercial users impose " 'common-carrier obligations on cable operator' ").Similarly, the Henrico Ordinance requiring MediaOne Virginia to provide indiscriminate access to its cable facilities to all ISPs is prohibited common carrier regulation. Under the Ordinance, MediaOne Virginia would be unable to make individualized decision whether to share capacity on its respective cable systems with any one or more ISP and on what terms. Additionally, MediaOne Virginia would have no control over what content the other ISPs would offer. Accordingly, the Ordinance is forbidden common carrier regulation under Section 542(c).
FN5. See, e.g., Columbia Broad. Sys., Inc. v. Democratic Nat'l Comm., 412 U.S. 94, 104-110, 93 S.Ct. 2080, 36 L.Ed.2d 772 (1973) (setting forth legislative history in which Congress recognized that requiring a broadcast station to provide nondiscriminatory access to its facilities by political candidates would render it a common carrier).
FN6. See, e.g., Transfer of Control of Licenses and Section 214 Authorizations from Tele-Communications, Inc. To AT & T Corp., 14 FCC Rcd 3160, 29 (1999) ("Commenters advocating [access by multichannel video programming distributors to cable capacity] rely on the open access rules applicable to common carriers and seek to expand those requirements beyond traditional common carrier functions. We continue to recognize and adhere to the distinctions Congress drew between cable and common carrier regulation" and deny the request.)
-- MediaOne Group, Inc. v. County of Henrico, 97 F.Supp.2d 712, 715 (E.D. Va. 2000)If Cable then No Programming Regulation
In addition to the Act's ban on common carrier requirements, Section 544(f)(1) provides that "[a]ny Federal agency, State or franchising authority may not impose requirements regarding the provision or content of cable services, except as expressly provided in [Title VI]." 47 U.S.C. § 544(f)(1) (emphasis added). This Section prohibits any statutory interference with programming and related decisions of cable operators. Time Warner Cable v. City of New York, 943 F.Supp. 1357, 1367, 1399 (S.D.N.Y.1996), aff'd sub nom. Time Warner Cable v. Bloomberg L.P., 118 F.3d 917 (2d Cir.1997). According to the Ordinance, MediaOne Virginia and AT & T may not offer Road Runner unless they allow any other requesting ISP to connect with MediaOne Virginia's cable systems no later than December 31, 2000. MediaOnes Virginia's "provision" of the MediaOne Road Runner cable service is what triggers the Ordinance's forced access requirements. Additionally, the forced access ordinance requires MediaOne Virginia to transmit the "content" of other ISPs. Accordingly, the Ordinance's imposition of requirements regarding both the "provision" and the "content" of cable services violated Section 544(f)(1).
-- MediaOne Group, Inc. v. County of Henrico, 97 F.Supp.2d 712, 716 (E.D. Va. 2000)
In part as a response to these decisions, the FCC on September 28, 2000 issued a notice of inquiry, In the Matter of Inquiry Concerning High-Speed Access to the Internet over Cable and Other Facilities. 15 FCCR. 19287, available at 2000 WL 1434689 (hereinafter "NOI"). In the NOI, the FCC announced its intention "to determine what regulatory treatment, if any, should be accorded to cable modem service and the cable modem platform used in providing this service." Id. at 19287. Specifically, the FCC requested comment on whether it should classify "the cable modem platform as a cable service[6] subject to Title VI [of the Communications Act]; as a telecommunications service[7] under Title II; as an information service[8] subject to Title I; or some entirely different or hybrid service subject to multiple provisions of the Act." Id. at 19293. In requesting comment, the FCC noted that "[i]t is particularly important to develop a national legal and policy framework in light of recent federal court opinions that have classified cable modem service in varying manners." Id. at 19288.Internet over Cable NOI
100. In the Notice, we asked generally about the kinds of regulatory structures that would best foster the deployment of broadband and that would best fit the consumer broadband market.229 Few comments addressed these general questions, but many addressed one specific regulatory issue, whether Internet service providers should be given rights of access to broadband systems operated by cable television companies. Many commenters took strong positions favoring230 or opposing231 the placing of such an obligation on cable television operators.Section 706 Proceeding
229 Notice, supra note 11, 13 FCC Rcd at 15308-11.--In re Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, and Possible Steps to Accelerate Such Deployment Pursuant to Section 706 of the Telecommunications Act of 1996, Report, CC Docket No. 98-146 (February 2, 1999).
230 See Comments of America Online, Inc., at 9-11; Comments of GTE at 17 n.44; Comments of Virtual Hipster at 3; Comments of the Rural Policy Research Inst. at 4; Reply Comments of America Online, Inc., passim; Reply Comments of Broadcast.com at 4; Reply Comments of Center for Media Education et al. at 9; Reply Comments of the Internet Service Providers' Consortium at 5; Reply Comments of Mindspring Enterprises, Inc., at 14-23. The Rural Policy Research Institute advocates unbundling for "all competitors . . . where necessary." [Italics in original.] Two parties call for ISPs to have the same rights vis a vis incumbent LECs as competitive LECs. Comments of Verio Inc., at 3-4; Reply Comments of the Coalition of Utah Ind. Internet Service Providers at 6-7.
231 See Comments of AT&T Corp. at 38-42, citing B. Esbin, Internet Over Cable: Defining the Future in Terms of the Past, Commission Office of Plans & Policy Working Paper #30 (Aug. 1998); Comments of Comcast Corp. at 2, 8, 16-17 & nn.28-29; Comments of National Cable Television Ass'n at ii; Comments of the Progress & Freedom Foundation at 8-9, 27; Reply Comments of AT&T Corp. at 13-16; Reply Comments of At Home Corp. at 14-15; Reply Comments of Comcast Corp. at 17-24 & n.35 at 18; Reply Comments of Cox Commun., Inc., at 5-7.
FCC
The FCC also considered the issue of Internet access in considering the merger of AT & T, at the time the nation's largest long distance telephone provider, and Telecommunications, Inc., one of the largest cable television operators. In its order approving the transfer of licenses from TCI to AT & T, the FCC rejected any open access condition, citing the emergence of competing methods of high speed Internet access. It found "that the equal access issues raised by the parties to this proceeding do not provide a basis for conditioning, denying, or designating for hearing any of the requested transfers of licenses and authorizations." See Applications for Consent to the Transfer Control of Licenses and Section 214 Authorizations from TCI to AT & T, 14 FCC Rcd. 3160, 1999 WL 76930 (Feb. 18, 1999) ("Transfer Order"). The FCC concluded that "while the merger is unlikely to yield anti-competitive effects, we believe it may yield public interest benefits to consumers in the form of a quicker roll-out of high-speed Internet access services." Id. at § 94.
Comcast Cablevision of Broward Country, Inc., v. Broward County, Florida, 124 F.Supp.2d 685, 689 (SDFl Nov. 8, 2000)
Bottleneck
In October 1999, the Cable Services Bureau of the FCC released a report on the state of the broadband industry. With respect to broadband cable access, the Report concluded:
[T]he Bureau is not persuaded that consumers are at risk of cable establishing a bottleneck monopoly in broadband services in the absence of immediate regulatory action. There have been no developments since the release of the Section 706 Report earlier this year to alter the Commission's conclusion that no monopoly exists. Moreover the monopoly argument wrongly assumes that cable is the only viable broadband pipe available in the near term to provide Internet access to the home. As deployment of DSL, satellite and wireless advances in large part spurred by rapid cable modem deployment, consumers will have alternative platforms to use for high-speed data access, telephony and video services. We have already seen evidence that these alternative technologies are attracting new subscribers at an exponential rate, and that prices for these new services are falling.
Broadband Today, supra, at 42.
Comcast Cablevision of Broward Country, Inc., v. Broward County, Florida, 124 F.Supp.2d 685, 689 (SDFl Nov. 8, 2000)
Moreover, differential treatment is not justified by some special characteristic of the medium being regulated. In Turner I, the Supreme Court found that when an individual subscribes to cable, the physical connection between the television set and the cable network gives the cable operator bottleneck or gatekeeper control over most (if not all) of the television programming that is channeled into the subscriber's home. 512 U.S. at 656, 114 S.Ct. at 2466. According to the Court, cable operators possessed "bottleneck monopoly" power that threatened the "viability of broadcast television." Id. at 661, 114 S.Ct. at 2468. This was the reason the Court found Tornillo not to control the must-carry provisions.Bottleneck
However, the harm the ordinance is purported to address appears
to be non- existent. Cable possesses no monopoly power with
respect to Internet access. Most Americans now obtain Internet access through
use of the telephone. Local telephone companies provide dial
up Internet access to over 46.5 million customers, whereas all cable companies
combined currently provide Internet services to only about two million
customers. See G. Arlen, 11% First-Quarter Growth Lifts U.S.
Online Audience to 50.27 Million Customers, 5% Use High Speech Access,
Telecom Reports Int'l (April 2000) (available at www.tr.com).
The FCC has predicted that traditional telephone lines "will remain the
principal means of accessing the Internet" in the near term. Broadband
Today at 23. AOL, the most dominant ISP with over 24 million
subscribers, and other predominantly dial-up ISPs have more than 90% of
residential Internet users as customers. See id. at 32.
With respect to advanced
telecommunications capability or broadband, the FCC estimated that there
were approximately one million subscribers as of December 31, 1999.
Of these, approximately 875,000 subscribed to cable based services, 115,000
subscribed to asymmetric DSL, with the remaining attributed to other media.
Since late 1998, cable increased subscribers approximately three-fold and
local telephone companies increased their DSL subscribership approximately
four-fold. See FCC News Release: FCC Issues Report on
the Availability of High-Speed and Advanced Telecommunications Services,
2000 FCC Lexis 4041 (Aug. 3, 2000).
The FCC, the agency charged by
Congress with the responsibility of monitoring the deployment of broadband
technology, has concluded that the preconditions for monopoly in the consumer
market for broadband appear absent. According to the FCC, there
are, or likely will soon be, a large number of potential entrants into
the residential market using different technologies such as DSL, cable
modems, and utility fiber to the home, satellite, and radio.
The FCC does not foresee the consumer market for broadband becoming a sustained
monopoly or duopoly. See Advanced Services Report at §
48, 52.
In contrast to the
FCC, Broward County has conducted no inquiry. The County has
proffered no substantial evidence demonstrating that actual harm exists
that could justify infringement of First Amendment interests. "[T]he
mere assertion of a dysfunction or failure in a speech market, without
more is not sufficient to shield a speech regulation from the First Amendment
...." Turner I, 512 U.S. at 640, 114 S.Ct. at 2458. It has
not been demonstrated that the Broward County ordinance furthers a substantial
governmental interest. Therefore, even applying content-neutral
intermediate scrutiny, the ordinance violates the First Amendment.
-- Comcast Cablevision
of Broward Country, Inc., v. Broward County, Florida, 124 F.Supp.2d
685, 697-98 (SDFl
Nov. 8, 2000)
First Page
TCI and MediaOne acquire or produce news, information, and advertising content and publish it on the respective "first pages" of the @Home and RoadRunner services they offer subscribers. The "first page" is the default screen that TCI and MediaOne subscribers see when they access TCI's @Home or MediaOne's RoadRunner service.
All subscribers to the @Home or RoadRunner programming receive and are exposed to the "first page" and its content when they initially access the service. This is also the case each time thereafter, unless the subscriber changes the "first page."
@Home and RoadRunner subscribers can change the "first page" they see when they access the Internet from MediaOne's "first page," for example, to America Online's or any other ISP's. However, most @Home and RoadRunner subscribers choose to retain the "first pages" produced by TCI and MediaOne as their default start-up screen.
TCI and MediaOne both sell the right to advertise on their "first pages" and use the revenues to subsidize the transmission cost of their cable modem services.
Comcast Cablevision of Broward Country, Inc., v. Broward County, Florida, 124 F.Supp.2d 685, 690 (SDFl Nov. 8, 2000
35. We note at the outset that the Computer Inquiry line of decisions was initiated at a time when very different legal, technological and market circumstances presented themselves to the Commission. First and foremost, the Telecommunications Act of 1996 introduced a mandate that the Commission promote competition, deregulation and innovation wherever possible in the communications market. The Act clearly evidences Congress' intent to involve as many potential providers as possible to bring consumers the benefits of newer, better and more cost-effective products and services. Moreover, the Act introduced for the first time a number of core statutory-based policy objectives associated with the development of the Internet and the deployment of advanced services.Background (how things have changed)