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Local Governments Want Cable Internet Authority

A federal advisory panel comprised of local officials is urging the Federal
Communications Commission to retain local regulation of Internet services
provided by cable-system operators.

The recommendation -- coming as the FCC nears a decision on the regulatory
classification of cable-provided Internet access -- was prepared by the FCC's
Local and State Government Advisory Committee in a Feb. 5 communication.

The LSGAC's members include Boston Mayor Thomas Menino, Dearborn (Mich.)
Mayor Michael Guido and Arvada (Colo.) Mayor Kenneth S. Fellman, who signed the
recommendation for the LSGAC in his capacity as chairman.

In the three-page recommendation, the LSGAC urged the FCC to classify cable
Internet access as a cable service. That classification, the panel said, would
continue the tradition of local oversight of cable operators.

'Local communities and the capital markets need the predictability and
certainty of established legal precedent to understand the various rights and
responsibilities of a cable-modem-service provider,' the LSGAC said.

When the FCC began studying the regulation of cable Internet service in
September 2000, the National Cable & Telecommunications Association agreed
with cities on the cable-service classification.

The NCTA took that approach on the basis that federal law barred a city from
requiring cable operators to carry unaffiliated Internet-service providers.

In its FCC recommendation, the LSGAC indicated that if cable-modem service is
a cable service, local governments might have the authority to require cable
operators to carry unaffiliated ISPs.

'[Federal cable law] provides the FCC and local franchising authorities with
sufficient authority to ensure that cable operators do not restrain competition
between affiliated and unaffiliated content providers,' the LSGAC said.

Cable-industry sources and other observers are expecting the FCC in March to
rule that cable-modem service is an information service, which have historically
been unregulated by the FCC as far back as 1966.

The pending move to classify cable Internet as an information service, and
not a cable service, has triggered a dispute between cable operators and local
governments over the local governments' authority to apply traditional forms of
cable regulation -- including franchising mandates and collection of franchise
fees -- to information services offered by cable operators.

The LSGAC's letter maintained that cable services and information services
offered by cable operators are not mutually exclusive. Since they are
effectively the same, they both can be regulated by local governments, the LSGAC

But the LSGAC's letter indicated that local governments fear that the FCC
will permit continued local regulation of cable operators' video services, but
pre-empt local governments from regulating information services on the grounds
that information services fall within the FCC's jurisdiction.

That division of authority, the LSGAC warned, would 'generate litigation,
delay and further investment uncertainty.'

The cable industry's position -- assuming that the FCC adopts the
information-services classification -- is that local governments would be barred
from requiring cable operators to obtain franchises to provide information
services or pay franchise fees on cable-modem revenue.

Cable operators typically pay 5 percent of cable service revenue to local

Cable operators claimed that franchise fees on their information services
would be discriminatory because competing ISPs do not pay such