Supreme Court Takes Brand X Case

The U.S. Supreme Court Friday agreed to hear a case that will likely decide whether the federal government can shield cable-modem service from access requirements benefiting competing Internet-service providers.

The high court decided to review Brand X Internet Services vs. Federal Communications Commission, a case from the U.S. Court of Appeals for the Ninth Circuit that voided the FCC's March 2002 ruling that cable-modem providers did not have to share facilities at regulated rates.

An appeal filed by the National Cable & Telecommunications Association was also granted and consolidated with the FCC's appeal, sources said.

The Ninth Circuit held that because cable-modem service is partly a telecommunications service and not solely an unregulated information service, traditional open-access telephone policies apply to cable’s data service.

On Thursday, FCC chairman Michael Powell said that if the agency were required to apply traditional telecommunications rules to cable-modem service, cable-modem rates would rise 10%, adding an estimated $1 billion annually to the cost of the product.

“High-speed Internet connections are not telephones, and I’m glad the Supreme Court has agreed to review the Ninth Circuit’s ruling that they are. The Ninth Circuit’s decision would have grave consequences for the future and availability of high-speed Internet connections in this country. As the commission is uniquely charged with the task of promoting the deployment of such advanced services to the public, we look forward to our opportunity to present our case before the high court,” Powell said in a statement Friday.

Cable attorneys said the court has scheduled oral arguments for March 23, but that date could change. A decision is expected to be released by June, before the court’s summer recess.

"We are pleased by the Supreme Court's decision to review this significant case and are optimistic that the court will affirm the FCC's decision that cable-modem service is an interstate information service, fostering a deregulatory environment for cable high-speed Internet access,” NCTA president Robert Sachs said in a statement.

Andrew Jay Schwartzman, an attorney with Media Access Project who is representing the Center for Digital Democracy in the case, said he was disappointed that the court agreed to hear the case.

“The outcome of this case will -- quite literally -- determine the future of the Internet as we know it. If the Supreme Court rules against Internet open access, cable companies will be able to block content at will for political and financial reasons and deny the public the ability to choose among competing Internet providers,” Schwartzman said.

Sources said the high court denied an appeal filed by cities that argued that cable-modem service is a cable service under federal law and subject to the 5% franchise-fee requirement.

Cities said told the court they are losing about $500 million annually because they lost the right to collect franchise fees after the FCC classified cable-modem service as an information service.