Broadband battle: what's in a name?

IF A CABLE company provides high-speed Internet access, is it offering a "telecommunications service" or an "information service"? The future of broadband could turn on how the Supreme Court answers that question.

"Telecommunications services," such as phone companies, are subject to "open access" rules requiring them to make their facilities available to competitors. Hoping to encourage cable companies to invest in broadband, the Federal Communications Commission decided in 2002 to classify cable Internet as a relatively unregulated "information service."

But in what outgoing FCC Chairman Michael Powell has called "the scariest and worst decision that exists on the books today for the future of the Internet," the U.S. Court of Appeals for the 9th Circuit overruled the regulatory body in Brand X internet Services v. FCC. The Supreme Court agreed in December to hear an appeal by the National Cable & Telecommunications Association, with oral arguments slated for late March.

The passions of partisans on both sides of this debate are stoked by deep disagreements over the preconditions for competition and free speech. Mark Cooper of the Consumer Federation of America, one of the petitioners, argues that the open access principle is "deeply embedded in the DNA of capitalism," noting that "the existence of competition never excused the obligation for common carriage in other areas--telephone, telegraph, steamship, railroad."

But the Manhattan Institute's Thomas W. Hazlett, formerly chief economist at the FCC, believes consumers are best served by "real competition, not government-sponsored Potemkin competition." According to Hazlett, "we've already had a real-world test of which policy works best, and the market test has been won by cable companies; they've been much more aggressive in their investments." A 2004 FCC report shows that the share of high-speed lines provided by cable rose from 56 percent to more than 75 percent between 2001 and 2003.

Opponents of unregulated broadband also worry that cable companies will leverage their control over Internet infrastructure to control content. A brief in the original Brand X case from the American Civil Liberties Union echoed that argument. But Hazlett argues that, as with bookstores, "competition will drive as much openness as consumers are willing to pay for, and so far it seems like they want a lot."