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Cable wins in Portland

federal appeals court last week handed the cable industry a shield against attempts by local regulators to require system operators to open their broadband networks to Internet competitors. But it also appears to have opened the door to further legal battles over the need for federal open-access rules.

Open-access proponents took heart in the court's declaration that cable modem services are subject to federal, possibly even state regulation.

A three-judge panel in San Francisco threw out conditions that Portland, Ore., regulators imposed on AT & T's acquisition of the local Tele-Communications Inc. franchise in 1998. A lower court had upheld the local order.

The court stated, in an opinion written by Judge Sidney Thomas, that broadband Internet service does not qualify as a "cable service" under federal law, so local franchise authorities have no power to impose cable-type rules.

Portland's assertion could lead to "absurd results," Thomas wrote, such as cable companies' being required to set aside capacity for public, educational or governmental use.

AT & T and industry officials celebrated the ruling. "If thousands of local franchise authorities around the country have the power to impose these conditions it would be very difficult, if not impossible, to deploy the kind of new services we intend," said Mark Rosenblum, AT & T vice president of law.

AT & T had withheld its Excite@ Home broadband service from the market pending the decision.

"Today's appeals court decision is good news for those who favor allowing the Internet to develop free of government regulation," said NCTA President Robert Sachs.

The decision, binding only in the nine western states of the 9th Circuit, has been anticipated as the primary judicial guidance over local authorities' power to establish open-access rules.

So far, the FCC has chosen to let the market develop unfettered. But open-access proponents note that the judges called cable broadband a "telecommunications service," which would put cable broadband services under the same nondiscrimination rules as telephone digital subscriber lines.

FCC officials are still reviewing the long-term impact of the decision. Said one, "All sides are somewhat disingenuous by claiming victory, because they won't know for a while."