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January 17, 2002, 9:00 AM ET, Alert No. 348.
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Supreme Court Holds FCC May Set Rates for Pole Attachments for Broadband Internet and Wireless
1/16. The Supreme Court issued its opinion [PDF] in NCTA v. Gulf Power, the pole attachments case. It reversed the decision of the U.S. Court of Appeals (11thCir). The Supreme Court held that the Federal Communications Commission (FCC) can set rates that cable companies pay for access to the utility poles of phone companies for lines that provide both cable TV and high speed Internet access. The opinion also covers rates paid by wireless telecommunications companies.
Introduction. Justice Anthony Kennedy wrote the opinion of the Court. He began with the observation that "Since the inception of cable television, cable companies have sought the means to run a wire into the home of each subscriber. They have found it convenient, and often essential, to lease space for their cables on telephone and electric utility poles. Utilities, in turn, have found it convenient to charge monopoly rents." The Pole Attachments Act prevented the charging of monopoly rents by instructing the FCC to set rates for pole attachments by cable TV companies and telecommunications providers. This case addresses the question of whether the FCC continues to have authority to set rates when the lines used by the cable companies provide both new broadband Internet access services and old fashioned one way programming.
Section 224. Congress has addressed the question of pole attachments in several bills, which are now codified at 47 U.S.C. § 224. § 224(b)(1) provides, in part, that the FCC "shall regulate the rates, terms, and conditions for pole attachments to provide that such rates, terms, and conditions are just and reasonable, and shall adopt procedures necessary and appropriate to hear and resolve complaints concerning such rates, terms, and conditions." Sec. 224(a)(4), in turn, defines the term ''pole attachment'' as "any attachment by a cable television system or provider of telecommunications service to a pole, duct, conduit, or right-of-way owned or controlled by a utility."
Proceedings Below. The FCC asserted in an order that Section 224 applies to traditional cable TV service, as well as to commingled TV and Internet service. However, pole owning utilities petitioned the U.S. Courts of Appeal for review of this FCC order. The 11th Circuit sided with the phone companies. Cable companies then petitioned the U.S. Supreme Court for writ of certiorari. The Supreme Court agreed to hear this case.
Broadband Internet Service. Justice Kennedy wrote (in Part II of the opinion) that "No one disputes that a cable attached by a cable television company, which provides only cable television service, is an attachment ``by a cable television system.´´ If one day its cable provides high-speed Internet access, in addition to cable television service, the cable does not cease, at that instant, to be an attachment ``by a cable television system.´´ The addition of a service does not change the character of the attaching entity -- the entity the attachment is ``by.´´ And this is what matters under the statute. This is our own, best reading of the statute, which we find unambiguous."
Justice Kennedy added that "Even if a cable company is a common carrier because it provides telephone service, of course, the attachment might still fall under the second half of the ``pole attachments´´ definition: ``any attachment . . . by a provider of telecommunications service.´´ "
Justice Kennedy also noted that the FCC's order did not determine whether broadband Internet access services over cable are a "cable service" within the meaning of Title 47. However, Kennedy continued that it was not necessary to resolve this question to reach a decision in the present case.
Wireless Telecommunications Services. Justice Kennedy wrote (in Part III of the opinion) that "A provider of wireless telecommunications service is a ``provider of telecommunications service,´´ so its attachment is a ``pole attachment.´´ "
Dissent. Justice Clarence Thomas wrote a separate opinion, in which Justice Souter joined. Thomas concurred with the analysis in Part III of the opinion, regarding wireless service. However, he wrote that "The Court's conclusion in Part II of its opinion that the Act gives the FCC the authority to regulate rates for attachments providing commingled cable television service and high-speed Internet access may be correct as well. Nevertheless, because the FCC failed to engage in reasoned decisionmaking before asserting jurisdiction over attachments transmitting these commingled services, I cannot agree with the Court that the judgment below should be reversed and the FCC's decision on this point allowed to stand. Instead, I would vacate the Court of Appeals' judgment and remand the cases to the FCC with instructions that the Commission clearly explain the specific statutory basis on which it is regulating rates for attachments that provide commingled cable television service and high-speed Internet access. Such a determination would require the Commission to decide at long last whether high-speed Internet access provided through cable wires constitutes cable service or telecommunications service or falls into neither category."
FCC Chairman Michael Powell stated in a release that "I am pleased by the Supreme Court's decision upholding the FCC's authority to set rates for attachments to telephone and electric poles. It is important that the Court rejected an interpretation of the Communications Act that could have raised the rates that consumers pay for high-speed Internet access services and derailed the broadband revolution."
FCC Releases Annual Report on Video Programming
1/14. The Federal Communications Commission (FCC) released its 8th Annual Report [122 pages in PDF] on the status competition in the market for the delivery of video programming. The report finds that "competitive alternatives continue to develop. Cable television still is the dominant technology for the delivery of video programming to consumers in the MVPD marketplace, although its market share continues to decline. As of June 2001, 78 percent of MVPD subscribers received their video programming from a franchised cable operator, compared to 80 percent a year earlier."
It further found that "The total number of subscribers to both cable and non-cable MVPDs continues to increase. A total of 88.3 million households subscribe to multichannel video programming services as of June 2001, up 4.6 percent over the 84.4 million households subscribing to MVPDs in June 2000."
The report also states that "The most significant convergence of service offerings continues to be the pairing of Internet service with other service offerings. There is evidence that a wide variety of companies throughout the communications sector are providing multiple services, including data access. Cable operators continue to expand the broadband infrastructure that permits them to offer high-speed Internet access. The most popular way to access the Internet over cable is still through the use of a cable modem and personal computer ..."
Verizon CEO Advocates RBOC Deregulation
1/16. Verizon President and Co-CEO Ivan Seidenberg gave a speech to the U.S. Chamber of Commerce in Washington DC in which he argued for less regulation of services provided by Verizon.
He stated that "Unlike those of Microsoft or AOL Time Warner or AT&T Comcast, our regulated assets are subject to a long list of price regulations, sharing obligations, and separate subsidiary requirements that put us on an unequal footing in the marketplace and remove the incentives for investing in new technologies."
He continued that "Traditional policies have shifted value, growth and innovation away from the incumbent telephone companies to less-constrained segments of the industry. And, since they are based largely on resale and the forced sharing of telephone company assets, they do little to promote the robust competition among multiple technologies and service providers that would benefit American consumers and businesses."
He concluded that "It's time to take down the ``do not enter´´ signs at the entrance to the broadband future. ... Now it's time for the FCC, along with the Congress, to take action to open the gates to broadband investment and let us put our resources to work where they can do the most good for America."
Seidenberg also advocated passage of legislation giving the President trade promotion authority. He also advocated legislation that would provide incentives and tax breaks for businesses that reinvest in lower Manhattan.
People and Appointments
1/16. Paul Otellini was named President and Chief Operating Officer of Intel. See, Intel release.
1/16. Lawrence Ricciardi, IBM's general counsel, will retire in July, 2002.
More News
1/16. The Department of Justice published in its web site a redacted copy of its brief filed with the U.S. Court of Appeals (10thCir) in USA v. American Airlines, an antitrust case involving Section 2 of the Sherman Act, (15 U.S.C. § 2). At issue is whether American violated Section 2 of the Sherman Act by adding money losing capacity to drive lower cost competitors out of four of American's Dallas Fort Worth Airport.
1/15. The U.S. Court of Appeals (FedCir) issued its opinion in EZ Dock v. Schaffer Systems, an patent infringement case involving interpretation of the on sale bar. The U.S. District Court (DMinn) held that EZ Dock's  U.S. Patent No. 5,281,055 invalid under the on sale bar, codified at 35 U.S.C. § 102(b). The Court of Appeals reversed and remanded.
1/16. The Federal Communications Commission (FCC) extended the deadline, from February 1 to March 8, for submitting comments in response to its Further Notice of Proposed Rulemaking regarding the current state of the market for local and advanced telecommunications services in multi tenant environments. See, FCC notice of extension of deadline [PDF]. This is WT Docket No. 99-217.
1/16. The FBI's National Information Protection Center (NIPC) released a report titled "Best Practices for Wireless Fidelity (802.11b) Network Vulnerabilities". It warns that "Computer security experts have successfully intercepted and broken the security built into the IEEE 802.11b Wireless Local Area Network (WLAN) standard. The software tools used to exploit the vulnerability are simple to use and available on the Internet as freeware." It refers 802.11b users to a set of best practices recommended by the Wireless Ethernet Compatibility Alliance (WECA).
1/16. The USPTO published in its web site the January issue of USPTO Today [PDF].
1/16. Sen. Ted Kennedy (R-MA) gave a speech [PDF] in Washington DC in which he advocated delaying tax cuts enacted by the Congress last year. Sen. Charles Grassley (R-IA), the ranking Republican on the Senate Finance Committee, responded in a release that "If the Democrats succeed in raising taxes, they'll cost even more Americans their jobs. I believe the American people will oppose Senator Kennedy's bad idea, and it won't gain traction in the Senate."
Thursday, Jan 17
9:30 AM. The Federal Communications Commission (FCC) will hold a meeting that will focus on a review of FCC policies and procedures by the Commissioners and senior agency officials. There will be three panel presentations. Panel One will include Chiefs of the Mass Media Bureau, Cable Service Bureau and Common Carrier Bureau. Panel Two will include the Chiefs of the Consumer Information Bureau and the Enforcement Bureau. Panel Three will include the Chiefs of the Office of Engineering and Technology, the International Bureau, and the Wireless Telecommunications Bureau. See, FCC release. Location: FCC, Commission Meeting Room (Room TW-C305), 445 12th Street, SW, Washington DC.
7:00 PM. Jim Dempsey (Deputy Director of the CDT) and David Cole (Georgetown law school) will discuss the newly revised and expanded edition of their book titled "Terrorism and the Constitution: Sacrificing Civil Liberties in the Name of National Security". See, Amazon listing. Location: Politics and Prose Bookstore, 5015 Connecticut Ave., NW, Washington DC. (This is at the corner of Connecticut and Nebraska. It is one mile north of the Van Ness Metro stop.)
Friday, Jan 18
12:30 - 1:30 PM. The Progressive Policy Institute (PPI) will host a lunch briefing to release two papers that call on government to dramatically increase the use of information technology to prevent terrorist attacks and to facilitate coordination between local, state, and national law enforcement authorities. The speakers will be Robert Atkinson (VP of PPI), Shane Ham (senior policy analyst, PPI's Technology & New Economy Project), and John Cohen. RSVP to John Bray at 202 608-1247. Location: 600 Pennsylvania Ave., SE, 4th Floor.
Monday, Jan 21
Martin Luther King Day. The FCC and other federal agencies will be closed.
Tuesday, Jan 22
10:00 AM - 12:30 PM. The FCC's Office of Engineering and Technology and Corning Incorporated will host a tutorial on optical communications. See, FCC notice. Location: FCC, Commission Meeting Room (TWC-305), 445 12th Street, SW, Washington DC.
12:15 PM. The Federal Communications Bar Association's Common Carrier Practice Committee will host a brown bag lunch. The speaker will be Dorothy Attwood, Bureau Chief of the FCC's Common Carrier Bureau. RSVP to Rhe Brighthaupt Location: Wiley Rein & Fielding, 1750 K St., NW, 10th Floor Conference Room.
Wednesday, Jan 23
The House reconvenes at 12:00 NOON.
Ken Feree, Chief of the FCC's Cable Services Bureau, will participate on an afternoon panel titled "The Rules: Can Government Policy Keep Pace?" at the Broadband Outlook 2002 Conference. Location: Four Seasons Hotel, Washington DC.
12:15 PM. The Federal Communications Bar Association's Global Telecommunications Development Committee will host a brown bag lunch. Doreen McGirr (Department of State) and John Giusti (FCC International Bureau) will speak about preparations for the ITU World Telecommunications Development Conference. RSVP to Kent Bressie. Location: Wilkinson Barker Knauer, 2300 N Street, NW, 7th floor, Washington DC.
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