While we argue that the recent decision opening up cable to competition actually harms ISPs by increasing uncertainty, Jim Pickrell points out that ISPs have to take a stand.

by Alex Goldman ISP-Planet Associate Editor [October 10, 2003]

On hearing the ruling, most ISPs were jubilant. The general feeling seemed to be that an anti-ISP FCC had lost a key court battle. Jim Pickrell, president of BrandX, the company that filed the suit, posted a note to BroadbandReports saying:

The FCC itself is anti-competition. They tried to exempt the telephone companies and the cable companies from the competitive obligations of the Telecommunications act by declaring that broadband is not a telecommunications service.

We disagree. We don't think the FCC should be able to change laws by redefining a word like telecommunications. If a law is going to be changed, that's a job for our elected officials, not bureaucrats.

We appealed, and the courts agreed.

The Ninth Circuit court hears many Internet cases because it is based in San Francisco. It ruled on the notorious Sex.com case and its ruling was upheld.

But because many of the court's rulings are liberal, it is hated by conservatives, as this posting by a conservative group that meets biweekly at a Denny's shows. The group calls the Ninth Circuit Court "the enemy within" which is language usually reserved for treason.

Most recently, the court has been criticized by conservatives for ruling that the words "under God" in the pledge of allegiance mean that, in schools, it must be reworded.

In general, the decisions of the Ninth Circuit Court have been overturned more often than the decisions of other appeals courts. A detailed legal analysis of the phenomenon is available here.

Since most Ninth Circuit Court decisions are overturned, ISPs should not plan on being able to access cable infrastructure in the near future.

Everybody loses
For years, the telcos have been arguing that the cablecos have an unfair advantage because the telcos have to share their infrastructure. They have been arguing that DSL should, like cable, be able to shut competition out.

When the FCC redefined cable broadband as an information service, not a telecommunications service, ISP-Planet wrote, "the designation not only restricts access to facilities, it also prevents local authorities from charging license fees and enforcing customer service standards."

It seems clear that the Ninth Circuit Court's decision will be reviewed by the Supreme Court. During the legal review process, uncertainty will prevail. Uncertainty is the absence of rules. It harms any broadband provider that has to rely on actual ISP revenues. It helps only the incumbents, who have sources of revenue like wireline phone services and phone directories that have nothing to do with the provision of broadband.

Complaining about the FCC triennial review decision, chief commissioner Michael Powell wrote, "I fear as much or more for competitors as I do incumbents, for the prolonged uncertainty of rights and responsibilities may prove stifling."

The real problem is that there are unclear rules in telecom (but have the rules ever been clear?) and that ILECs and cable companies have flouted the rules while smaller companies have had to follow them. These problems were not solved in this court case. In fact, the decision merely increased uncertainty, harming everybody, but harming incumbents less than competitors.

But there's hope yet
Pickrell disagrees with this pessimism. He feels the lawsuit and the ruling are based on the facts and that the Supreme Court will not overrule the decision. He's certainly put his money where his ideals are.

He wrote to us that he has spent about $50,000, so far, on the lawsuit, and that the appeal will force him to spend more. He doesn't feel he has a choice. "It's easy for them because Michael Powell doesn't have to personally write a check for the legal bill but I do. Unfortuantely, the choice is to either pay it or close. If we allow him to shut off our access to cable and phone lines, then consumers lose choice, and we're out of business."

"This is just a waste of taxpayer's money since the issues are pretty clear. Broadband services used for e-mail or video conferencing or any other kind of communication clearly are telecommunications. That's the central issue here. It's just a shame that everybody's time and money will be wasted on an appeal," he adds.

He feels that a positive Supreme Court decision would help all ISPs, saying, "I guess the only good side to this is that if the Supreme Court rules against them they will have a hard time explaining why they continue with these policies. A Supreme Court decison would have a lot of force."

He points out that cable and phone companies hate competition because they hate change. "Telephone monopolies talk about "regulatory stability" because they want to be entrenched as monopolies. That's not good for consumers. Consumers will get the best service and the best level of innovation from the cable and telephone monopolies when they are in an environment of constant pressure and competition. This stops them from getting fat and lazy."

Combined with one other case, Pickrell says the whole legal landscape could experience a tectonic shift in favor of competition. "There is a very important case now being heard in the Supreme Court, called Trinko v. Verizon. If the Supreme Court affirms the lower court decision, this will have major positive impact for competition. The FCC has been trying to exempt the big monopolies not only from the Telecom Act but also from anti-trust law. Obviously that is bad for competition. If your competitor can violate anti-trust law and the FCC is trying to help them do it, what's the point of us even staying in business?"

ISPs have to fight these battles in court, because the political system has sold out. "You might want to read a little bit about Billy Tauzin, to see how the big companies can completely buy a politician through political donations, favors, and jobs for relatives. SBC is his main donor. His son works for SBC as a lobbyist. Effectively this man represents the views of SBC rather than of citizens. He's bought and paid for. All this stuff is public record. If you take his name and look him up on the Internet you will find out all about it, and if you look at the Tauzin-Dingell bill you can see what kind of representation those donations and favors have bought."

He concludes, "As a small local ISP there is no way we can participate in this kind of politics. We just hope that people will check and see who their elected officials are taking money from, and if it is a big cable company, or a big telephone company, and if the elected officials turn around and start trying to figure out how to exempt those companies from the burdens of competition, well, people should vote the rascals out. When the decisions are made by bureaucrats, then our best option is to challenge them in court."

— End