Opposition Brief — National Cable & Telecommunications Assn., Inc. v. Gulf Power Co.

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Supreme Court of the Gnited

FEDERAL COMMUNICATIONS COMMISSION AND

THE UNITED STATES OF AMERICA, et ai.,

Petitioners,

GULF POWER COMPANY, et ai.,

Respondents.

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Eleventh Circuit

BRIEF IN OPPOSITION

ROBERT P. WILLIAMS, II

CHARLES A. ZDEBSK!I

TROUTMAN SANDERS, LLP

401 9th Street, N.W., Suite 1000

Washington, DC 20004-2134

(202) 274-2950

Counsel for Atlantic City Electric

Company, Delmarva Power &

Lieht Company, Potomac

Electric Power Company,

Public Service Electric & Gas

Company, Tampa Electric

Company, and Virginia Electric

& Power Company

SHIRLEY S. FUJIMOTO

CHRISTINE M. GILL

THOMAS P. STEINDLER

Counsel of Record

McDERMOTT, WILL & EMERY

600 13th Street, N.W.

Washington, DC 20005-3096

(202) 756-8000

Counsel for American Electric

Power Service Corporation,

Commonwealth Edison

Company, and Duke Energy

Corporation

Additional Parties and Counsel Listed on Inside Cover

December 22, 2000

SP ASSSSSGSSSSSSGASS

WiILSON-EPES PRINTING Co., INC. — (202) 789-0096 - WASHINGTON, D.C. 20001

J. RUSSELL CAMPBELL

ANDREW W. TUNNELL

JENNIFER M. BUETTNER

BALCH & BINGHAM, LLP

1710 Sixth Avenue North

Birmingham, AL 35203-2015

(205) 226-3438

RALPH A. PETERSON

BEGGS & LANE LLP

P. O. Box 12950

Pensacola, FL 32576-2950

(850) 432-2451

Counsel for Alabama Power

Company, Georgia Power

Company, Gulf Power Company,

Mississippi Power Company, and

Savannah Electric Power

Company

JEAN G. HOWARD

FLORIDA POWER & LIGHT

COMPANY

P.O. Box 029100

Miami, FL 33102-9100

(305) 552-3929

Counsel for Florida Power & Light

Company

NEIL ANDERSON

DAVID H. TAYLOR

~WORSHAM, FORSYTHE &

WOOLDRIDGE, LLP

1601 Bryan, 30th Floor

Dallas, TX 75201

HENRY GOLDBERG

JONATHAN L. WIENER

W. KENNETH FERREE

GOLDBERG, GODLES,

WIENER & WRIGHT

1229 19th Street, N.W.

Washington, DC 20036

(202) 429-4900

Counsel for TXU Electric

Company

COUNTERSTATEMENT OF

QUESTIONS PRESENTED

1. Whether the Pole Attachments Act, 47 U.S.C. § 224,

grants the Federal Communications Commission (“FCC”)

jurisdiction to regulate pole attachments used for commingled

cable and Internet service.

2. Whether the Pole Attachments Act grants the FCC

jurisdiction to regulate attachments of wireless telecom-

munications equipment.

(i)

RULE 29.6 STATEMENT

Company, Gulf Power Company, Mississippi Power

Company and Savannah Electric Power Company are wholly-

owned subsidiaries of The Southern Company.

tion is a wholly-owned subsidiary of American Electric

Power Company, Inc

Respondents Atlantic City Electric Company and

Delmarva Power & Light Company are wholly-owned

subsidiaries of Conectiv, a publicly-owned company.

Respondent Commonwealth Edison Corporation is a

wholly-owned subsidiary of Exelon Corporation.

Respondent Duke Energy Corporation has no parent or

publicly-owned company owning 10% or more of the

corporation's stock.

Respondent Florida Power & Light Company, Inc. is a

wholly-owned subsidiary of FPL Group, Inc.

Respondent Potomac Electric Power Company is a

publicly-owned company that has no parent company.

Respondent Public Service Electric & Gas Company is a

wholly-owned subsidiary of Public Service Enterprise Group

Incorporated, a publicly-owned company.

Respondent TXU Electric Company, formerly known as

Texas Utilities Electric Company, is a wholly-owned

subsidiary of TXU Corp, formerly known as Texas Utilities

Company.

Respondent Tampa Electric Company is a wholly-owned

subsidiary of TECO Energy, Inc., a publicly held company.

Respondent Virginia Electric & Power Company is a

wholly-owned subsidiary of Dominion Resources, Inc., a

publicly-owned company.

TABLE OF CONTENTS

Page

COUNTERSTATEMENT OF QUESTIONS PRE-

SENTED ........... wineied i

RULE 29.6 STATEMENT : , ii

TABLE OF AUTHORITIES ................cccceceseseesereseeseeeees iv

COUNTERSTATEMENT OF THE CASE..... 1

REASONS FOR DENYING THE WRIT 6

I. THE ELEVENTH CIRCUIT’S HOLDING

ON ATTACHMENTS FOR COMMINGLED

CABLE AND INTERNET SERVICE DOES

A. The Court of Appeals’ Holding Is Correct... 8

B. There Is No Conflict Between The

Eleventh Circuit’s Decision And The D.C.

Circuit’s Decision In Texas Utilities............ 10

C. The Eleventh Circuit's Decision Is Fully

Consistent With Congress’ Policy Of

Promoting Deployment Of High en

OUTED cenesccsssniniecntniinenstennecteninatiitntinemssnecs 11

D. This ls Net The Proper Case To Determine

The Regulatory Classification Of Internet

Sua nicesetcnsininstdtatenstnenientanetpbianietenatinitennsess 13

Deployment Of High Speed Internet

Services If The Petitions Are Denied........... 15

VEROD cncursnsnsseseinscinsseneseteasncstteneninsinessnesenemastanees 17

TABLE OF AUTHORITIES

CASES: Page

AT&T Corp. v. City of Portland, 216 F.3d 871

CBBd Cale. Tei eccccnscsssccssscsscsccssscsssscessssssssssensesee 14

Crawford Fitting Co. v. J. T. Gibbons, Inc., 482

UB. SBF (BGG T Pcccccsscscscscsscscsscccssscscsssssssseessssessnes 9

FCC v. Florida Power Corp., 480 U.S. 245

fe 1,3

Gulf Power Co. v. United States, 187 F.3d 1324

(3 Beis Cle, BFP rcccccssscsssnsssssccssscscsscssssscsssscessssesse 7, 15

MediaOne Group, Inc. v. County of Henrico, 97

F. Supp. 2d 712 (E.D.Va. 2000) .......ccceseereereeves 14

Morales v. TWA, 504 U.S. 374 (1992)......ccccseeeeeees 9,13

National Cable Television Ass'n v. United States,

oe 9

Southern Co., et al. v. FCC, No. 99-15160GG

(11th Cir. filed Dec. 16, 1999) ..........ccccseereeenes 5

Texas Utils. Elec. Co. v. United States, 997 F.2d

lo: 0 2, 10, 19

United States v. 564.64 Acres of Land, 441 US.

ee 7, 16

United States v. Morton, 467 U.S. 822 (1984)....... 13

CONSTITUTION AND STATUTES:

U.S. Const. amend. V (Takings Clause) ..............«. 3

Pole Attachments Act., Pub. L. No. 95-234, § 6,

92 Stat. 35 (47 U.S.C. § 224)....cccccccccsersssereseenees l

Telecommunications Act of 1996, Pub. L. No.

OO 2,14

47 U.S.C. § 157, Statutory NOUE ...........cceeereeereenes 11

7) | SS 11

eee 12, 13

TABLE OF AUTHORITIES—Continued

LEGISLATIVE HISTORY:

H.R. Rep. No. 94-1630 (1976).....

S. Rep. No. 95-580 (1977)...

ADMINISTRATIVE DECISIONS:

California Water & Telegraph Co., 64 F.C.C.2d

FCC, Federal Communications Commission

Releases Data on High-Speed Services for

Internet Access, at 2 (Oct. 31, 2000)......c..0c00000e

Implementation of Section 703(e) of the

Telecommunications Act of 1996: Amendment

of the Commission’s Rules and Policies

Governing Pole Attachments, 13 F.C.C.R.

In the Matter of America Online, Inc. and Time

Warner, Docket No. C-3989 (FTC Dec. 14,

In the Matter of Federal-State Joint Board on

Universal Service, 12 F.C.C.R. 87 (1997).........

In the Matter of Federal-State Joint Board on

Universal Service, 13 F.C.C.R. 11501 (1998)...

In the Matter of Inquiry Concerning High-Speed

Access to the Internet Over Cable and Other

Facilities, FCC No. 00-355; GN Docket No.

00-185 (Sept. 28, 2000) ...cccesssesssvessseeeeeveeee 8, 12,14

Inquiry Concerning the Deployment of Advanced

Telecommunications Capability to All Ameri-

cans in A Reasonable And Timely Fashion and

Possible Steps to Accelerate Such Deployment

Pursuant to Section 706 of the Telecom-

munications Act of 1996, CC Docket No.

98-146 (FCC Aug. 21, 2000) 2000.....:cccccserseeeeesees

TABLE OF AUTHORITIES—Continued

MISCELLANEOUS:

Christopher E. Duffy, Note, The Statutory

Classification of Cable-Delivered Internet

Service, 100 Colum. L. Rev. 1251 (2000) .........

Los Angeles, Calif., Zoning and Land Regs.

$17.OS(N) (1962) ......ccccccserssssrrrssersseersseersesesseeees

Wash. Rev. Code. § 66.88.410 (2000).........:0+0+0

Marcelene Edwards, Need For Speed Faces

Competition: MetroMedia and AT&T Join

Others Laying Fiber Optic Cables For Internet

Access Downtown, The News Tribune

(Tacoma, Washington), July 26, 2000...............

Stephen C. Fehr, Road Kill on the Information

Superhighway: Rise of Underground Cable

Tears Up the District's Streets, The

Washington Post, Mar. 21, 1999.........00sseeseeres

COUNTERSTATEMENT OF THE CASE

The Pole Attachments Act, Pub. L. No. 95-234, § 6, 92

Stat. 35 (codified at 47 U.S.C. § 224) was enacted in response

to a perceived danger of anti-competitive practices by utilities

in connection with cable television service. FCC v. Florida

Power Corp., 480 U.S. 245 (1987). Cable companies had

complained there were no practical alternatives to stringing

their cables on utility poles, and that some utilities

(principally telephone companies) had exploited their

“monopoly” position over these “bottleneck facilities” by

charging excessive rates for pole attachments. S. Rep. No.

95-580, at 13 (1977). To address these concerns, Congress

granted jurisdiction to the FCC to “regulate the rates, terms,

and conditions for pole attachments to provide that such rates,

terms, and conditions are just and reasonable.” 47 U.S.C.

§ 224(b)(1).' The Senate Report which accompanied the

legislation explained that the FCC’s new jurisdiction was

“strictly circumscribed,” S. Rep. No. 95-580, at 15, and

would be triggered only “where space on a utility pole has

been designated and is actually being used for

communications services by wire or cable.” S. Rep. No. 95-

580, at 16. Congress implemented this jurisdictional restric-

tion by defining a “utility” subject to the statute as “a person

. . » who owns or controls poles, ducts, conduits or rights of

way used, in whole or in part, for wire communications.” 47

U.S.C. § 224(a)(1).

The Act established boundaries for the Commission’s

determination of rates for attachments by a cable television

system, the lower end being the “additional costs of providing

pole attachments,” the upper end being the fully-allocated

costs associated with the portion of the “usable space”

' A specific grant of jurisdiction was necessary because the PCC had

concluded the previous year it had no jurisdiction under existing law to

regulate pole attachments. California Water & Tel. Co., 64 F.C.C.2d 753,

758 (1977), FCC v. Florida Power Corp., 480 U.S. at 248.

attributable to the pole attachment. 47 U.S.C. § 224(d)(1).

The operative term in this formula, “usable space,” was

defined as “the space above the minimum grade level which

can be used for the attachment of wires, cables, and

associated equipment.” 47 U.S.C. § 224(d)(2).

An earlier version of the legislation would have granted the

FCC jurisdiction to regulate “any attachment for wire

communication,” but was changed in the final bill at the

behest of the FCC to “any attachment by a cable television

system.” H.R. Rep. No. 94-1630, at 2 (1976). Thus, as

finally adopted, the Act was narrowly tailored to provide

regulated rate coverage only to the then-fledgling cable

industry, not to other entities that attach wireline facilities to

utility poles.

In the late 1980's, cable companies began to provide

services other than conventional video programming. In

1991, the FCC ruled that cable companies that provided

commingled cable and telecommunications services over the

same coaxial cable were entitled to a single, regulated rate

under the Pole Attachments Act. That rule was upheld by the

D.C. Circuit in Texas Utilities Electric Co. v. FCC, 997 F.2d

925, 927 (D.C. Cir. 1993).

The Texas Utilities decision created a regulatory anomaly,

because cable companies that delivered telecommunications

services were entitled to regulated rates for their pole

attachments, but telecommunications companies seeking to

deliver the same or similar services were not. In 1996,

Congress addressed this regulatory anomaly by adding

telecommunications carriers to Section 224 coverage as part

of the larger Telecommunications Act of 1996, Pub. L. No.

104-104, 110 Stat. 56. Congress accomplished this by

expanding the definition of pole attachment from “any

attachment by a cable television system” to “any attachment

by a cable television system or provider of telecommnications

service.” 47 U.S.C. § 224(a)(4) (1994 & Supp. IV 1998)

(emphasis added). The 1994 Senate Report accompanying

the legislation explains this change was “intended to remedy

the anomaly of current law, under which cable systems

providing telecommunications services are able to obtain a

regulated pole attachment rate under Section 224 of the 1934

Act, while other providers of telecommunications services are

unable to obtain a regulated pole attachment rate under

Section 224.” S. Rep. No. 103-367, at 65 (1994); see also

H.R. Conf. Rep. No. 104-458, at 206 (1996). Congress did

not extend Section 224 coverage to all telecommunications

carriers, but rather excluded incumbent local exchange

carriers. 47 U.S.C. § 224(a)(S) (“[flor the purposes of this

section, the term ‘telecommunications carrier’ * * * does not

include any incumbent local exchange carrier”). Congress

also made a number of other important changes to the Pole

Attachments Act in 1996. These include the following:

First, whereas this Court had held in FCC v. Florida Power

Corp., 480 U.S. 245 (1987), that access to utility poles under

the 1978 Act was voluntary and thus not a violation of the

Takings Clause of the Fifth Amendment, Congress made

access mandatory by adding a new Section 224(f)(1), which

provides that “{a] utility shall provide a cable television

system or any telecommunications carrier with nondiscrim-

inatory access to any pole, duct, conduit, or right-of-way

owned or controlled by it.” 47 U.S.C. § 224(f(1) (Supp. IV

1998).

Second, Congress prescribed two specific pole attachment

rates to be established by the FCC. Before 1996, Section

224(d) had set forth a single standard for determining “just

and reasonable” rates for attachments by a cable television

system. In 1996, Congress provided that the Section 224(d)

standard “shall apply to the rate for any pole attachment used

by a cable television system solely to provide cable service.”

47 U.S.C. § 224(d)(3) (Supp. [IV 1998) (emphasis added).

Congress also provided that the Commission “shall * * *

prescribe regulations in accordance with” a different standard

“to govern the charges for pole attachments used by

telecommunications carriers to provide telecommunications

services.” 47 U.S.C. § 224(e)(1) (Supp. [V 1998) (emphasis

added).

The 1996 amendments did not change the Act's juris-

dictional restriction to utilities which own or control facilities

“used, in whole or in part, for any wire communications.” 47

U.S.C. §224(a)(1) (emphasis added). Nor did Congress

change the definition of “usable space” as “the space above

the minimum grade level which can be used for the

attachment of wires, cables, and associated equipment.” 47

U.S.C. § 224(d)(2) (emphasis added). Indeed, Congress

applied this concept of “usable space” to attachments for

telecommunications carriers through the new rate formula

established in Section 224(e).”

To date, the FCC has implemented the 1996 amendments

to the Pole Attachments Act in four separate rulemaking

proceedings. This case involves one of those rulemaking

proceedings. /mplementation of Section 703(e) of the Tele-

communications Act of 1996: Amendment of the

Commission's Rules and _ Policies Governing Pole

* The new Section 224(e) provides, in pertinent part:

> > > >

(2) A utility shall apportion the cost of providing space on a pole,

duct, conduit, or right-of-way other than the usable space among

entities so that such apportionment equals two-thirds of the costs of

providing space other than the usahle space that would be allocated

to such entity under an equal apportionment of such costs among all

hi +.

(3) A utility shall apportion the cost of providing usable space

among ali entities according to the percentage of usable space

(emphasis added).

Attachments, 13 F.C.C.R. 6777 (1998); Gov't Pet. App. D.’

As pertinent here, the FCC determined that cable operators

are entitled to the benefits of Section 224 when providing

commingled Internet and traditional cable services. The

Commission based this conclusion on the ground that it “is

still obligated under Section 224(b)(1) to ensure that the

‘rates, terms, and conditions [for pole attachments] are just

and reasonable,” and, as Section 224(a)(4) states, a pole

attachment includes ‘any attachments by a cable television

system.’ Gov't Pet. App. at 90a. Further, the Commission

determined that the “just and reasonable rate for commingled

cable and Internet service is the Section 224(d)(3) rate,”

Gov't Pet. App. at 87a, notwithstanding the statute’s

prescription that this rate shall apply to attachments used

“solely to provide cable service.” 47 U.S.C. § 224(d)(3)

(Supp. [V 1998).- The Commission explained that its decision

was based solely on its regulatory authority under Section

224(b)(1), Gov't Pet. App. at 87a, and not on a determination

of whether Internet service was a “cable service” or a

“telecommunications service” under Section 224(d) or

224(e). The Commission stated it “need not decide at this

time * * * the precise category into which Internet services

fit,” Gov't Pet. App. at 89a, although it noted it had

concluded in an earlier proceeding that “Internet service is

not the provision of a telecommunications service under the

1996 Act.” Gov't Pet. App. at 87-88a. The Commission

made one other holding in the rulemaking relevant here. It

determined that the 1996 amendments extend the “benefits

and protections” of Section 224 to attachments of wireless

telecommunications equipment. Gov't Pet. App. at 94a.

* The FCC has completed one other rulemaking, which currently is on

review in the Eleventh Circuit. Southern Co., et al. v. FCC, No. 99-

15160GG and consolidated cases (11th Cir. filed Dec. 16, 1999)

(argument pending).

Electric utility companies filed petitions for review of the

FCC's order in the Third, Fourth, Sixth, Eighth, Eleventh, and

D.C. Circuits. Pursuant to the FCC’s motion (not, as NCTA

asserts, pursuant to a random lottery), the cases were

consolidated in the Eleventh Circuit. The panel reversed the

FCC’s conclusions that the Pole Attachments Act, as

amended in 1996, covers attachments used for commingled

cable and Internet service, as well as the FCC’s determination

that the Act covers attachments of wireless telecom-

munications equipment.

REASONS FOR DENYING THE WRIT

I. THE ELEVENTH CIRCUIT’S HOLDING ON

ATTACHMENTS FOR COMMINGLED CABLE

AND INTERNET SERVICE DOES NOT

WARRANT REVIEW

The first ground on which the petitions seek review is that

the court of appeals incorrectly interpreted the Pole

Attachments Act not to extend to attachments for

commingled cable and Internet service. Petitioners claim this

holding ignores the plain language of Section 224(b)(1)’s

general grant of power to the FCC to regulate pole

attachments, as well as the national policies articulated by

Congress in Sections 706 and 509 of the Telecommunications

Act of 1996 to promote the deployment of advanced

telecommunications services. The petitions assert that

without regulation, utilities will exercise “monopoly” power

over “bottleneck facilities” to charge excessive amounts for

pole attachments, and thus will impair the deployment of

broadband Internet access throughout this country.

None of these claims is sustainable, and none warrants

review by this Court. The petitiuns gloss over the fact that in

1996, Congress changed the Pole Attachments Act to

authorize the FCC to establish rates for pole attachments in

two specific cases, one where the attachment is for “solely

cable service” under Section 224(d), the other where the

attachment is for “telecommunications service” under Section

224(e). No other rates are authorized. Congress’ general

policy pronouncements do not provide such authorization; to

the contrary, Congress specifically excluded the country’s

major providers of Internet service, the incumbent local

exchange carriers (“ILECs”), from rate coverage for pole

attachments in Section 224(a)(5). Facilities-based Internet

service providers which are neither cable companies nor

telecommunications carriers also are not covered. While the

cable television industry may desire a “subsidy” not enjoyed

by its major competitors through artificially low, regulated

rates, their proper appeal for such relief is to Congress, not to

the courts.

Denial of the petitions will simply leave the cable industry

paying the same unregulated rates ILECs and facilities-based

Internet service providers must pay for Internet attachments.

Indeed, because the now-mandatory Section 224 effects a

takings, Gulf Power Co. v. United States, 187 F.3d 1324

(llth Cir. 1999), utility companies are Constitutionally

entitled to charge a market rate for attachments. E.g., United

States v. 564.64 Acres of Land, 441 U.S. 506 (1979). This

will not be affected one way or another by a decision

regarding Section 224 coverage. To be sure, cable attach-

ment rates will go up, but not by much relative to other

components of their cost structures, since pole attachment

rental rates represent a small fraction of total cable company

costs.

Review of this case would force this Court into a premature

determination of whether cable Internet service is a “cable

service” or a “telecommunications service.” The FCC has

previously determined that Internet service is an “information

service,” and not a “telecommunications service.” However,

in the wake of the Eleventh Circuit’s ruling in this case, the

FCC is apparently rethinking its position, opening a

rulemaking specifically for the purpose of determining the

proper classification of cable Internet service. Inquiry

Concerning High-Speed Access to the Internet Over Cable

and Other Facilities, FCC No. 00-355; GN Docket No. 00-

185 (Sept. 28, 2000). The FCC’s notice of inquiry (which has

yet to proceed through the comment and reply process) is

reproduced in the Appendix to this Brief in Opposition

(“App.”). Until the FCC, as a rulemaking body, considers the

public comments and replies, reconsiders the issue and takes

a clear position on the appropriate classification of the

provision of Internet service, this Court should abstain from

being drawn into this debate.“

A. The Court of Appeals’ Holding Is Correct

The court of appeals’ holding that Section 224 does not

cover commingled cable and Internet service is correct. This

case involves four subsections of the Pole Attachments Act.

The first is Section 224(b)(1)’s general grant of power to the

FCC to regulate the “rates, terms and conditions for pole

attachments.” The second is Section 224(a)(4)’s definition of

“pole attachment” as “any attachment by a cable television

system or provider of telecommunications service.” The third

and fourth are the specific standards directing the manner in

which the FCC shall exercise its Section 224(b)(1) regulatory

power: Section 224(d) for “any attachment used by a cable

television system solely to provide cable service,” and

Section 224(e) for “pole attachments used by telecom-

munications carriers to provide telecommunications

services.” The court of appeals held that all four provisions

must be read together; thus, “[flor the FCC to be able to

~ regulate the rent for an attachment that provides Internet

service * * * Internet service must qualify either as a cable

* Of course, the FCC’s discretion in this regard is circumscribed by the

clear language of the Act and once their rulemaking is complete, it then

must withstand judicial review.

service or a telecommunications service.” Gov't Pet. App. at

27a; 208 F.3d at 1276. The court explained:

The straightforward language of subsections (d) and (e)

directs the FCC to establish two specific just and

providing solely cable service and one for

telecommunications carriers providing telecommu-

nications service; no other rates are authorized.

Gov't Pet. App. at 27a; 208 F.3d at 1276 n.29 (emphasis

added).

The court of appeals correctly held that the FCC’s general

grant of power in Section 224(b)(1) to regulate pole

attachments is defined and limited by the specific standards

set out in subsections (d) and (e) for attachments used for

cable service and telecommunications service. As this Court

has repeatedly observed, it is a “commonplace of statutory

construction that the specific governs the general.” Morales

v. TWA, 504 U.S. 374, 384-85 (1992), citing Crawford Fitting

Co. v. J. T. Gibbons, Inc., 482 U.S. 437, 445 (1987).

Petitioners argument that Section 224(b)(1)'s general grant

of power to regulate pole attachments is not limited by

subsections (d) and (e) is without merit. Congress established

highly detailed standards in subsections (d) and (e) to set

boundaries on the FCC’s exercise of its power to establish

just and reasonable rates for cable and telecommunications

attachments. Congress can not reasonably be assumed to

have provided these highly detailed standards for cable and

telecommunications attachments, yet to have provided no

standards for attachments for other services (including

Internet services). Indeed, reading the Act to grant an

unbounded, standardless power to regulate rates for other

services would bring into question whether the statute

violates the non-delegation doctrine, which a proper reading

would avoid. National Cable Television Ass'n v. United

States, 415 U.S. 336, 342 (1974) (reading statutory grant of

power used by FCC to impose fees on cable television

industry narrowly to avoid non-delegation questions).

Ironically, the implausibility of severing the Commission's

general grant of regulatory power under Section 224(b)(1)

from the implementing standards set out in subsections (d)

and (e) is underscored by the Commission's very attempt to

exercise its Section 224(b)(1) power. The Commission

undertook its analysis in two steps. First, it determined

whether it had the power to regulate commingled cable and

Internet attachments, then it considered what rate would

apply. In the first Step, the Commission bifurcated the statute

and determined that Section 224(b)(1), standing alone,

empowers it to regulate commingled cable and Internet

attachments. In the second step, however, the FCC yoked the

Statute batk together, tuming to the specific standards

established by Congress to conclude that the “just and

reasonable rate for commingled cable and Internet service is

the Section 224(d)(3) rate.” Gov't Pet. App. at 87a. Setting

aside that the Section 224(d)(3) rate applies to attachments

solely to provide cable service (which commingled cable and

Internet attachments are not), this exercise shows that in

practice, the FCC found itself compelled to use the standard

set by Congress in Section 224(d) to implement its Section

224(b)(1) power. The Act is no more severable as a practical

matter than it is as a matter of law.

B. There Is No Conflict Between The Eleventh

Circuit’s Decision And The D.C. Circuit's

Decision In Texas Utilities

Contrary to Petitioners’ argument, the Eleventh Circuit's

ruling does not conflict with the D.C. Circuit's decision in

Texas Utilities Electric Co. v. FCC, 997 F.2d 925 (D.C. Cir.

1993). Texas Utilities interpreted Section 224 as it existed

prior to the 1996 amendments; the Eleventh Circuit's

decision interprets Section 224 after the 1996 amendments.

As the Eleventh Circuit observed, the amended statute

presents “an entirely different situation” from that faced by

the D.C. Circuit in Texas Utilities. Gov't Pet. App. at 30a,

208 F.3d at 1277 n.32. Prior to 1996, Section 224 instructed

the FCC to set a reasonable rent for “any attachment by a

cable television system.” 47 U.S.C. § 224(a)(4\(d)(1). It did

not specify the particular services of a cable television system

that were entitled to a regulated rent, and thus the court

deferred to the FCC's interpretation that commingled cable

and telecommunications services were covered. The 1996

amendments changed the situation entirely by specifying in

subsections (d) and (e) that “solely cable services” and

“telecommunications services” are to receive regulated rents.

As the Eleventh Circuit correctly explained in its opinion, to

suggest there is a conflict with Texas Utilities is to ignore the

fact that Congress changed the law in 1996.

C. The Eleventh Circuit’s Decision Is Fully Con-

sistent With Congress’ Policy Of Promoting

Deployment Of High Speed Services

Contrary to Petitioners’ claim, the Eleventh Circuit's

conclusion that the Pole Attachments Act does not cover

commingled cable and Internet service is fully consistent with

the national policies articulated by Congress regarding the

promotion of the Internet and the development of advanced

telecommunications capability. In Section 706 of the 1996

Act, Congress directed the Commission to “encourage the

deployment * * * of advanced telecommunications capa-

bility to all Americans * * * by * * * regulating methods

that remove barriers to infrastructure investment. 47 U.S.C.

§ 157, statutory note. In addition, in Section 509 of the 1996

Act, Congress stated “[i}t is the policy of the United States

* * * to promote the continued development of the Internet

and other interactive computer services and other interactive

media.” 47 U.S.C. §230(b\(1). According to Petitioners,

cannot have intended to “penalize” the cable industry by

eliminating rate regulation for attachments used by cable

companies for the delivery of high speed Internet services.

Petitioners, however, conspicuously leave out the fact that

in 47 U.S.C. § 230(b)(2), Congress further declared that “[i}t

is the policy of the United States * * * to preserve the

vibrant and competitive free market that presently exists for

the Internet and other interactive computer services,

unfettered by Federal or State regulation.” 47 U.S.C.

§ 230(b)(2) (emphasis added). Moreover, the fact that Sec-

tion 224 coverage does not extend to Internet service

attachments merely levels the competitive playing field for

the delivery of Internet service. Since 1978, the cable

television industry has been subsidized by electric utility

ratepayers through artificially low, regulated rates for pole

attachments. In 1996, Congress extended this “subsidy” to

telecommunications carriers, but excluded incumbent local

exchange carriers, 47 U.S.C. § 224(a)(5), and facilities-based

Internet service providers which are not cable companies or

telecommunications carriers. Incumbent local exchange

carriers are the cable industry’s largest competitors in the

delivery of Internet service.’ Cable companies and their chief

competitors in the Internet business thus must pay the same

unregulated rates for Internet attachments, as must facilities-

* The FCC recently reported that “[mJost residential and small business

consumers currently receive Internet service from ISP’s via traditional

‘dial-up’ telephone services provided by local exchange carriers (LECs)

over copper wire.” Jn the Matter of Inquiry Concerning High-Speed

Access to the Internet Over Cable and Other Facilities, PCC No. 00-355,

GN Docket No. 00-185 (Sept. 28, 2000). In the area of high-speed

Internet access, of the 4.3 million broadband lines the FCC recently

reported to be connecting homes and small businesses to the Internet,

nearly | million are served by asymmetric digital subscriber lines (ADSL)

provided by local exchange carriers. FCC, Federal Communications

Commission Releases Data on High-Speed Services for Internet Access, at

2 (Oct. 31, 2000). Moreover, the number of customers served by local

exchange carriers increased 157% during the first half of 2000, id., a trend

which can be expected to continue.

based Internet service providers. Surely it is not reasonable

to assume that Congress intended sub silentio to “subsidize”

the cable industry’s provision of high-speed Internet service,

while simultaneously excluding this “subsidy” for their

principal competitors. That conclusion would be anathema to

a “free market . . . unfettered by Federal or State regulation.”

47 U.S.C. § 230(b)(2) (emphasis added).

D. This Is Not The Proper Case To Determine The

Regulatory Classification Of Internet Service.

Granting the petitions will force this Court into a premature

consideration of the proper regulatory classification of

overrule the court of appeals simply on the basis that Section

224(b)(1)’s general grant of power to regulate pole

attachments covers Internet service, without ever reaching the

issue of whether Internet service falls under the formulas for

“solely cable service” or “telecommunications service” set

out in Sections 224(d) and (e). Controlling principles of

statutory construction, however, dictate that the statute must

be read as a whole, United States v. Morton, 467 U.S. 822,

828 (1984), and that “the specific governs the general,”

Morales v TWA, supra, 504 U.S. at 384-85. Thus, as the

court of appeals correctly held, resolution of this case would

require this Court to rule on whether Internet service is a

“cable service” or a “telecommunications service.” The

resolution of that issue, however, presents ramifications for

controversies well beyond the scope of this proceeding and

with far greater and more pervasive implications than pole

attachments.

As the Government's petition concedes, the proper

regulatory classification of Internet service “is central to a

separate debate concerning whether a cable operator can be

compelled to provide unaffiliated_Internet service providers

with ‘open access’ to its cable facilities.” Gov't Pet. at 15

n.4. The FCC has recently opened a rulemaking proceeding

specifically for the purpose of developing a “national legal

and policy framework” to classify Internet service. I/nquiry

Concerning High-Speed Access to the Internet Over Cable

and Other Facilities, FCC No. 00-355, GN Docket No. 00-

185 (Sept. 28, 2000). App. at 2a-3a. This is necessary, in

part, to clarify the FCC’s prior decisions on the issue. In one

proceeding, the FCC defined the Internet as an information

service. In the Matter of Federal-State Joint Board on

Universal Service, 13 F.C.C.R. 11501, 11532-11533 (1998)

(“Internet service providers themselves provide information

services”). The FCC has also said that Internet service is not

a telecommunications service. See Gov't Pet. App. at 87a

(“The Universal Service Order concluded that Internet service

is not the provision of a telecommunications service under the

1996 Act”); In the Matter of Federal-State Joint Board on

Universal Service, 12 F.C.C.R. 87, 123 (1997) (“Internet

service does not meet the statutory definition of a

‘telecommunications service’”’).

The courts are also beginning to address the proper

Classification of Internet service in the context of the cable

“open access” debate. The Ninth Circuit has held that cable

modem service is a “telecommunications service.” AT&T

Corp. v. City of Portland, 216 F.3d 871, 878 (9th Cir. 2000),

while a district court in Virginia has held that cable modem

service is a “cable service.” MediaOne Group, Inc. v. County

of Henrico, 97 F. Supp. 2d 712 (E.D.Va. 2000) (appeal

pending). Other cases are expected to follow. See generally,

Christopher E. Duffy, Note: The Statutory Classification of

Cable-Delivered Internet Service, 100 Colum. L. Rev. 1251

(2000).

In reviewing the rulemaking at issue here, the Eleventh

Circuit merely applied the FCC’s existing pronouncements

about the nature of Internet services as it found them. This

Court should therefore allow the question of the regulatory

status of the Internet to be addressed by the FCC in its

ongoing rulemaking proceeding (or by Congress) and the

courts, rather than make this decision preemptively in this

case.” This is simply the wrong case for ruling on the

regulatory status of the Internet, and this Court is the wrong

forum. The determination should be made in the first

instance by the policy-making branches of government, on

the basis of a full and complete record, not by this Court.

E. There Will Be No Harm To The Deployment Of

High Speed Internet Services If The Petitions

Are Denied

Petitioners also allege that denial of their petitions will

have “immense practical consequences” and “deprive the

American public of the competitive provision of commu-

nications services.” This is simply not true, for several

reasons. First, the changes made by the 1996 amendments

only mean that the cable industry loses its “subsidy” when it

moves into the business of delivering high-speed Internet

services, thus leaving the cable industry to pay the same

unregulated rates as its competitors with respect to Internet

attachments. Although NCTA no doubt would prefer a

regulatory regime that provides cable operators with preferred

rates for pole attachments used to provide Internet services,

there is no reason to believe that requiring them to pay the

same rates as their competitors will cause them to cease to

provide high speed Internet services or place “substantial

private and public national interests in jeopardy.” NCTA Pet.

at 24. ,

Second, because the Pole Attachments Act is now

mandatory and thus effects a takings, Gulf Power Co. v.

United States, 187 F.3d 1324 (11th Cir. 1999), utilities are

entitled to just compensation for all pole attachments,

° A premature classification by the Court might also affect the “open

access” terms of the consent order recently accepted by the Federal Trade

Commission in the AOL/Time Warner merger. /n the Matter of America

Online, Inc. and Time Warner, Docket No. C-3989 (FTC Dec. 14, 2000).

including commingled cable/Internet. Utilities thus are

Constitutionally entitled to charge a market rate for pole

a..1usuuents, irrespective of Section 224 coverage. E.g.,

United States v. 564.64 Acres of Land, 441 U.S. 506 (1979).

As such, there will be no practical consequences of a denial

of the petitions, since cable companies will be charged a

market rate for commingled cable/Internet attachments in any

event. To be sure, payment of market rates for pole attach-

ments will add to cable companies’ costs, but not by much:

pole attachment rental costs represent a very small percentage

of the cost structure of cable companies, less than one percent

in most cases. See, e.g., Cablevision Systems Corporation,

1999 SEC Form 10-K at 33, 82 (pole rental fees 0.3% of total

operating expenses). Moreover, increased pole attachment

rental costs will be offset by increased revenues generated by

the new Internet service offered by the cable companies.

Third, while utility poles and conduits arguably may have

been bottleneck facilities in the past and in some places, they

are almost never bottleneck facilities today. Cable companies

almost always have alternatives for the deployment of

facilities to provide high-speed Internet access. First, there

are a variety of wireless options, including terrestrial wireless

and satellite. Second Report, Inquiry Concerning the

Deployment of Advanced Telecommunications Capability to

All Americans in A Reasonable And Timely Fashion and

Possible Steps to Accelerate Such Deployment Pursuant to

Section 706 of the Telecommunications Act of 1996, CC

Docket No. 98-146, 99 16-18 (FCC Aug. 21, 2000). In

addition, the simplest and most widely-used alternative is

direct burial. The most recent FCC statistics show that more

than 50% of the wireline facilities of local exchange carriers

are buried underground. FCC, 1999 Statistics of Common

Carriers, at 15 (Aug. 11, 2000). In cities across the country,

from Tacoma, Washington to Washington, D.C., downtown

streets are being cut to accommodate new fiber optic cable

being laid.’ In addition, nearly all electric, cable and

communications wires in new residential and commercial

developments are buried directly underground, and do not use

utility poles or conduits. States and municipalities across the

country require newly installed cable television transmission

facilities to be constructed underground, and many areas of

the country are taking steps to require the placement

underground of existing aerial facilities.*

In short, today, utility poles and conduits are almost never

bottleneck facilities for the delivery of high-speed Internet

services. Petitioners’ predictions of dire consequences if the

court of appeals’ ruling is left standing are unfounded.

For all of the above reasons, the court of appeals’ holding

regarding commingled cable and Internet attachments does

not warrant review by this Court.

Il. THE ELEVENTH CIRCUIT’S WIRELESS

HOLDING DOES NOT WARRANT REVIEW

The court of appeals’ ruling that Section 224 does not

cover attachments of wireless telecommunications equipment

” See, e.g., Marcelene Edwards, Need For Speed Faces Competition:

MetroMedia and AT&T Join Others Laying Fiber Optic Cables For

Internet Access Downtown, The News Tribune (Tacoma, Washington),

July 26, 2000, at D1; Stephen C. Fehr, Road Kill on the Information

\ Superhighway: Rise of Underground Cable Tears Up the District's

Streets, The Washington Post, Mar. 21, 1999, at Al.

"For example, the state of Washington has declared that “the

conversion of overhead electric and communication facilities to

underground facilities is substantially beneficial to the public safety and

welfare,” and is “in the public interest.” Wash. Rev. Code. § 66.88.410

(2000). Los Angeles, California, also requires that utility lines including

cable television, be installed underground in designated zones. Los

Angeles, Calif., Zoning and Land Regs. §17.05(N) (1962).

also does not warrant further review.” Unlike the

commingled cable/Internet issue, the court’s wireless holding

has generated no visible interest from the wireless industry.

Not a single wireless company participated in this case at the

court of appeals, nor has any wireless company supported the

Government’s petition. Indeed, the Government itself has

addressed this issue as an afterthought, devoting minimal

space to it both in the court of appeals and in its petition. In

addition, the petitions do not even allege there is a split in the

Circuits on the wireless issue. These factors alone suggest

the wireless issue is unworthy of the Court’s attention.

Petitioners’ argument for certiorari is that the court of

appeal’s holding is incorrect. This argument is without merit.

The Pole Attachments Act is designed to deal with the

potential exercise of monopoly power over bottleneck

facilities. Utility poles are not, even potentially, bottleneck

facilities for wireless equipment. Wireless equipment can be

sited on virtually any tall building or structure, such as

rooftops, communications towers, water towers, monopoles,

billboards, highway light structures, church steeples, etc.

Indeed, an entire commercial industry has emerged which is

dedicated to siting wireless equipment. As the court of

appeals stated, it is “beyond question * * * that utility poles

are not bottleneck facilities for wireless systems.” Gov't Pet.

App. at 25a; 208 F.3d at 1275. Because they are not, the

court of appeals properly held Section 224 does not cover

wireless attachments.

The Government claims this reasoning to be a “policy”

judgment by the lower court. Gov’t Pet. at 20. It is not. It is

simply reading the Act in a manner consistent with its express

* Wireless attachments to poles “include an antenna or antenna clusters,

a communications cabinet at the base of the pole, coaxial cables

connecting antennas to the cabinet, concrete pads to support the cabinet,

ground wires and trenching, and wires for telephone and electric service.”

Gov’t Pet. App. at 24a.

terms and Congressional purpose, two of the elementary

principles of statutory construction. It is also the exercise of

common sense: what earthly reason would Congress have to

establish a low, regulated rate (typically around $6 a year) for

attachments of wireless equipment to utility poles, when there

is a thriving commercial market across the country for

wireless sites at $1000-$2000 (or more) a month?

Congress’ intent to limit the Act to wireline attachments is

readily discernable from a variety of sources. The Act was

originally drafted to cover “any attachment for wire

communication,” though it was changed prior to enactment to

cover just one particular class of users of wire commu-

nications (cable television companies) at the behest of the

FCC. See Texas Utils. Elec. Co. v. United States, 997 F.2d at

925. The jurisdictional grant to the FCC was defined in terms

of wire communications. Section 224(a)(1) (“utility” means

any person who owns facilities “used, in whole or in part, for

wire communications”). The Senate Report explained this

meant that Federal jurisdiction would be triggered only

“where space on a utility pole has been designated and is

actually being used for communications services by wire or

cable.” S. Rep. No. 95-580, at 16 (emphasis added). Further,

Congress defined the standard the FCC was to use in

determining the attachment rate in terms of the “usable

space” on the pole, which it defined as the “space above the

minimum grade level which can be used for the attachment of

wires, cables, and associated equipment.” 47 U.S.C.

§ 224(d)(2) (emphasis added).

The only pertinent change Congress made in 1996 was to

add telecommunications carriers to Section 224.'° Congress

'° There is not a single mention of wireless telecommunications in

Section 703 of the 1996 Act, which amended Section 224, or in the

legislative history. However, Congress did deal with wireless equipment

in the next section of the 1996 Act, Section 704. P.L. No. 104-104, § 704,

47 U.S.C. § 332.

did not change the basic structure or purpose of the Act, nor

did it change the jurisdictional restriction to utilities who own

or control poles “used, in whole or in part, for wire

communications.” 47 U.S.C. § 224(a)(1). Congress also did

not change the definition of usable space, which continues to

mean space which can be used “for the attachment of wires,

cables, and associated equipment.” 47 U.S.C. § 224(d)(2).

More importantly, Congress applied this term in the new

formula established in Section 224(e) for attachments by

telecommunications carriers. If attachments of wireless

equipment are covered at all, they are covered under this

formula. But this formula is defined in terms of wires, cables

and associated equipment. lt cannot be reasonable to assume

that Congress would define a formula in terms of wires,

cables, and associated equipment if it intended to cover

wireless equipment. The court of appeals’ holding is correct;

review is unwarranted.

CONCLUSION

The petitions for a writ of certiorari should be denied.

'' The Government also claims that the court of appeals’ reasoning is

flawed as a factual matter, since wireless providers use wireline facilities

in certain segments of their networks. Gov't Pet. at 20-21. This claim is

also without merit. Despite some language to the contrary, the court of

appeals’ opinion is best read to hold that Section 224 coverage does not

extend to attachments of wireless equipment. To the extent a wireless

carrier seeks to attach a wireline facility to a utility pole, this wireline

attachment is covered by Section 224. This was the position taken by the

electric companies in the court of appeals, and we believe it to be the

holding of the court’s opinion. In the event there is confusion on this

point at some later date, the Eleventh Circuit or another lower court is

fully capable of clarifying this issue.

ROBERT P. WILLIAMS, II

CHARLES A. ZDEBSKI

TROUTMAN SANDERS, LLP

401 9th Street, N.W., Suite 1000

Washington, DC 20004-2134

(202) 274-2950

Counsel for Atlantic City Electric

Company, Delmarva Power &

Light Company, Potomac

Electric Power Company,

Public Service Electric & Gas

Company, Tampa Electric

Company, and Virginia

Electric & Power Company

J. RUSSELL CAMPBELL

ANDREW W. TUNNELL

JENNIFER M. BUETTNER

BALCH & BINGHAM, LLP

1710 Sixth Avenue North

Birmingham, AL 35203-2015

(205) 226-3438

RALPH A. PETERSON

Beoos & LANE LLP

P. O. Box 12950

Pensacola, FL 32576-2950

(850) 432-2451

Counsel for Alabama Power

Company, Georgia Power

Company, Gulf Power

Company, Mississippi Power

Company, and Savannah

Electric Power Company

Respectfully submitted,

SHIRLEY S. FUJIMOTO

CHRISTINE M. GILL

THOMAS P. STEINDLER

Counsel of Record

McDERMOTT, WILL & EMERY

600 13th Street, N.W.

Washington, DC 20005-3096

(202) 756-8000

Counsel for American Electric

Power Service Corporation,

Commonwealth Edison

Company, and Duke Energy

Corporation

JEAN G. HOWARD

FLORIDA POWER & LIGHT

COMPANY

P.O. Box 029100

Miami, FL 33102-9100

(305) 552-3929

Counsel for Florida Power &

Light Company

NEIL ANDERSON

DAVID H. TAYLOR

WORSHAM, FORSYTHE &

WOOLDRIDGE, LLP

1601 Bryan, 30th Floor

Dallas, TX 75201

HENRY GOLDBERG

JONATHAN L. WIENER

W. KENNETH FERREE

GOLDBERG, GODLES, WIENER

& WRIGHT

1229 19th Street, N.W.

Washington, DC 20036

(202) 429-4900

Counsel for TXU Electric

Company

APPENDIX

BEFORE THE FEDERAL COMMUNICATIONS

COMMISSION

WASHINGTON, D.C. 20554

GN Docket No. 00-185

In the Matter of

Inquiry Concerning High-Speed

Access to the Internet Over

Cable and Other Facilities

NOTICE OF INQUIRY

Adopted: September 28, 2000

Released: September 28, 2000

Comment Date: 45 days after publication in the Federal

Reply Comment Date: 75 days after publication in the

Federal Register

By the Commission:

Il. INTRODUCTION

1. The convergence of technologies that allows the

provision of high-speed services over traditional cable

television facilities, telecommunications lines, and other

facilities raises several fundamental questions concerning the

Commission's traditional approaches to such technologies. In

this proceeding, the Commission will explore issues

}

;

i i Internet provided to

surrounding high-speed access to the .

subscribers over cable infrastructure, so-called cable modem

ices.” i seek to determine what

services. Specifically, we per

regulatory treatment, if any, should be accorded to |

modem service and the cable modem platform used in

providing this service. We also seek comment on the impact

of our approach on other providers of high-speed services.

2. Underlying our inquiry here are several complementary

goals. One of the Commission's objectives under the

Communications Act of 1934, as amended (the Act), is to

promote widespread and rapid deployment of high-speed

services, while at the same time to preserve and promote the

“vibrant and competitive free market” that exists for

Internet.’ With these objectives in mind, we seek to create a

cable modem platform that will foster competitive

deployment of new technologies and services by all entities,

' Several terms, such as cable broadband, cable modem service, and

(Second 706 Report). sain tian

? See 47 U.S.C. § 230(b\(2); 47 U.S.C. § 157; Sec. 706, Pub.

104, Title VII, Feb. 8, 1996, 110 Stat. 153, reproduced in the notes under

47 U.S.C. §157.

including cable operators and Internet service providers

(ISPs) alike. We seek to instill a measure of

stability in the market to encourage investment in all types of

high-speed networks and innovation in high-speed services.

It is particularly important to develop a national legal and

policy framework in light of recent federal court opinions that

have classified cable modem service in varying manners.’

Accordingly, we seek in this Notice of Inquiry (NOI) to

develop a full record to assess the legal issues and

marketplace developments surrounding cable modem service

and access to the cable modem platform, to address whether

to establish a national policy with respect to the treatment of

high-speed services, and to determine how a national policy

will advance the goals Congress set forth in section 706 and

other provisions of the Telecommunications Act of 1996

(1996 Act).

3. To the extent that the creation of competitive market

conditions depends upon competition between all providers of

high-speed services, the Commission seeks to develop a

record that examines the full range of high-speed service

providers, including providers that use cable, wireline,

wireless, satellite, broadcast, and unlicensed spectrum

technologies. This Commission has jurisdiction over all

interstate communications services, including the high-speed

* Compare AT&T Corp. v. City of Portland, 216 F.3d 871, 877 (9th

Cir. 2000) (City of Portland) (holding that cable modem service comprises

both a “telecommunications service” and an “information service.”) with

Gulf Power Co. v. FCC, 208 F.3d 1263, 1275-78 (11th Cir. 2000)

(holding that Internet service is neither a cable service nor a

telecommunications service) and MediaOne Group, Inc. v. County of

Henrico, 97 F.Supp.2d 712, 714 (E.D. Va. 2000), appeal pending, 4th

Cir. No. 00-1680 (concluding that cable modem service is a cable service).

* See 47 CFR. § 15.301 et seq.; 47 CFR. § 15.401 et seg. See also

Second 706 Report at ¢ 55.

services offered by such providers.” In exercising this

jurisdiction, the Commission has sought to reduce barriers to

entry, encourage investment, and facilitate the deployment of

high-speed services.

4. The Commission has heretofore taken a “hands-off”

policy with respect to the high-speed services provided by

cable operators. This regulatory restraint has been premised,

in part, on the belief that “multiple methods of increasing

bandwidth are or soon will be made available to a broad range

of customers.”° Nonetheless, this Commission has stated

that it would revisit this policy “if competition fails to grow

as expected” in the provision of high-speed services.’ We

therefore ask several questions in this proceeding to ascertain

whether our hands-off policy for high-speed services provided

by cable operators remains the correct approach and how the

Commission might introduce a national policy framework for

regulating high-speed services. In light of factors such as the

differing treatment accorded different providers and services

* See 47 U.S.C. § 151 (interstate and foreign communications by wire

or radio); 47 U.S.C. § 521 et seq. (cable communications providers); 47

U.S.C. § 201 et seg. (common carriers); 47 U.S.C. § 332 (wireless

telecommunications providers).

Inquiry Concerning the Deployment of Advanced Tele-

communications Capability to All Americans in a Reasonable and Timely

Fashion and Possible Steps to Accelerate Such Deployment Pursuant to

Section 706 of the Telecommunications Act of 1996, CC Docket No. 98-

146, Report, 14 FCC Red 2398, 2448 at ¢ 101 (1999) (First 706 Report).

To fulfill its mandate under section 706 of the 1996 Act, the Commission

indicated that it would “continue to monitor closely the deployment of

broadband to all Americans.” /d. at § 98.

’ Applications for Consent to the Transfer of Control of Licenses and

Section 214 Authorizations from MediaOne Group, Inc., Transferor, to

AT&T Corp., Transferee, CS Docket No. 99-251, Memorandum Opinion

and Order, FCC 00-202, at ¢ 121 (rel. June 6, 2000) (AT&T/MediaOne

Order).

under the Act itself, however, we note that this national

framework may or may not impose the same regulatory

obligations on all providers.

Il. BACKGROUND

5. Cable modem technology is among several different

means by which consumers may obtain high-speed access to

the Internet. Before inquiring into the appropriate legal

classification of cable modem service and/or the cable modem

platform, as well as alternative policy approaches to achieving

vibrant competition and improving consumer access to high-

speed services, we describe briefly the development of high-

speed services and the Commission’s treatment of such

services to date. We also describe how federal courts have

analyzed the regulatory status of cable modem service.

A. Evolution Of High-Speed Services

6. Most residential and small business consumers currently

receive Internet service from ISPs via traditional “dial-up”

telephone services provided by local exchange carriers

(LECs) over copper telephone lines. Customers purchase

telephone services from LECs at standard tariffed prices and

use such services to gain access to ISPs, and, through them,

the Internet. This “last mile” transmission capability is

available independently of the choice of ISP. In these dial-up

arrangements, Customers use modems with their computers

that are connected to their telephone lines. Increasingly,

customers are using the local telephone network to obtain

high-speed access to the Internet through xDSL technologies

provided by incumbent and competitive LECs." In fact, in

our recent Second 706 Report, we found significant growth in

* While there are multiple variations of xDSL, the most common form

of xDSL used by residential customers is asymmetric DSL or ADSL. See

Second 706 Report at 4 36.

advanced services provided to residential and small business

customers by LECs between 1998 and 1999,”

7. In recent years, industry investment in infrastructure to

support high-speed services has increased dramatically,

driven in part by the rapidly rising demand for such

services.” Service providers are deploying a variety of

networks that rely on different network architectures and

transmission paths, including copper wire, cable, terrestrial

wireless radio spectrum, satellite radio spectrum, or a

combination of these and other media, to provide high-speed

services. In the coming years, analysts predict rapid growth

in subscribership of high- speed services provided using each

of these technologies. |

8. In particular, a number of cable television operators,

both incumbents and new entrants, have Started offering

access to the Internet over their cable plant.' > These services

provide access with much higher transmission speeds than

traditional dial-up services and are offered primarily to

residential customers over the cable systems’ shared media

hybrid fiber coaxial networks.'’ The coaxial cable transmits

” See id. at $ 72.

? Id. at 44 185-202.

"Id.

The incumbent cable operators and new entrants that offer this

service can be part of either small, independent companies or large,

nationwide companies (sometimes called Multiple System Operators or

MSOs). Some local communities, for example, have built cable systems

to compete with the incumbent, and these municipal systems increasingly

offer high-speed Internet services. See Second 706 Report at § 140. Open

Video System (OVS) operators similarly could offer Internet services over

cable plant. See 47 U.S.C. § 571(aX(3)-(4).

'? See Second 706 Report at | 29; Applications for Consent to the

Transfer of Control of Licenses and Section 214 Authorizations from Tele-

Communications, Inc., Transferor, to AT&T Corp., Transferee, CS Docket

signals to the cable modem, which, in turn, is connected to

the computer. For the return path, some cable modem

services require the customers’ computers to send signals

upstream over traditional dial-up telephone connections.

With more advanced cable modem networks, both directions

of traffic are transmitted via the coaxial cable, which permits

the connection to be open at all times and offer higher

transmission speeds.

9. In general, ISPs receive communications from their

customers’ computers and route the communications to other

computers connected either to their networks or other

networks. Some ISPs often combine their services with

proprietary or non-proprietary content.‘ In other words, they

often compete as content providers as well as ISPs. Those

ISPs that combine content with Internet service are sometimes

referred to as online service providers (OSPs).'° America

Online (AOL), Microsoft Network, and Prodigy

Communications Corporation all provide content as OSPs;

AOL is the largest OSP in the United States."®

10. Cable operators offering high-speed access to the

Internet often provide the underlying transmission, the

Internet service, and proprietary content, much like that

No. 98-178, Memorandum Opinion and Order, 14 FCC Red 3160, 3194 q

71 — (AT&T/TCI Order).

'* See Barbara Esbin, Internet Over Cable: Defining the Future in

Terms of the Past (OPP Working Paper Series No. 30, 1998) at 17-18. By

“proprietary content” we mean content that an online service provider

offers on its network exclusively to its own customers. ;

'* Although we identify OSPs here and in other parts of the NOI where

the questions pertain specifically to ISPs that provide content, our general

use of the term “ISP” in this NOI is meant to include OSPs as well.

planet.com/research/ISP_071000.htmil (viewed Aug. 21, 2000);

http://www. jetcafe.org/~npc/isp/large.html (viewed Aug. 21, 2000).

offered by AOL and other OSPs. For example, AT&T's

Excite@Home affiliate, the largest cable ISP in the United

States, provides cable modem services over both AT&T

networks and cable networks owned by other cable system

operators. In a typical arrangement, Excite@Home is the

exclusive provider of Internet service, along with certain

proprietary content, to the cable system, whether or not

owned by AT&T. Excite@Home operates the servers, routers

and other Internet support services and manages the use of the

cable network for data delivery services. Subscribers are

provided with browsing and e-mail functionalities similar in

nature to those offered by other ISPs, allowing the subscriber

to send and receive e-mail and to reach content on the World

Wide Web.”

B. The Commission’s Approach To High-Speed

Services

11. The Commission has shown regulatory restraint with

respect to emerging services in a number of contexts. In the

Computer Inquiries, for example, the Commission refrained

from regulating data processing services, relying in part on

the fact that the market for such services, while still nascent,

was functioning in a competitive manner.’ As another recent

'” See AT&T/MediaOne Order at 4 107; AT&T/TCI Order, 14 FCC Red

at 3196 ¢ 72.

'’ The Commission explicitly considered data processing services

provided via LECs and other traditional telecommunications carriers as

early as 1966, when the first Computer Inquiry was launched. See

Regulatory and Policy Problems Presented by the Interdependence of

Computer and Communication Services and Facilities, Docket No.

16979, Notice of Inquiry, 7 FCC2d 11 (1966) (Computer I), Amendment

of Section 64.702 of the Commission's Rules and Regulations (Second

Computer Inquiry), Docket No. 20828, Final Decision, 77 FCC2d 384

(1980) (Computer Il); Amendment of Section 64.702 of the Commission’ s

Rules and Regulations (Third Computer Inquiry), CC Docket No. 85-229,

Report and Order, 104 FCC2d 958 (1986) (Computer I/1).

example of restraint, the Commission in the UNE Remand

Order declined to unbundle packet switching and DSLAM

functionality used to provide advanced telecommunications

services in the incumbent LEC’s network, except in limited

circumstances. |

: 12. Beginning with our review of the AT&T/TCI merger

in 1999, numerous parties have argued that the Commission

- should require cable operators to provide unaffiliated ISPs

with access to cable networks on nondiscriminatory terms and

conditions.” In the AT&T/TCI Order, the Commission

declined to c.udition the transfer on an open access

requirement based on the Applicants’ representation that

subscribers could continue to bypass Excite@Home’s

proprietary content and reach any content available on the

World Wide Web.”' In its review of the AT&T/MediaOne

merger, the Commission again declined to impose an open

access condition, based on three primary considerations: (1)

the increasingly rapid deployment of alternative high-speed

Internet platforms, especially xDSL; (2) a commitment by

AT&T/MediaOne to negotiate non-exclusive contracts with

unaffiliated ISPs when the Applicants’ exclusive

arrangements with affiliated ISPs (Excite@Home for AT&T,

Road Runner for MediaOne) expire in 2002 and 2001,

respectively, and (3) a consent decree between the

Department of Justice and AT&T/MediaOne requiring the

merged firm to divest its ownership i in Road Runner no later

than December 31, 2001.7 Certain parties have petitioned

"” See UNE Remand Order at 4 306; 47 C.F.R. § 51.319%(c)(3).

“See AT&T/TCI Order, 14 FCC Red at 3197-98 4 75;

AT&T/MediaOne Order at 44 114-15.

*" AT&TITCI Order, 14 FCC Red at 3207 ¢ 96.

* AT&T/MediaOne Order at 4{ 116-23. See also Applications of

America Online, Inc. and Time Warner Inc. for Transfers of Control, CS

Docket No. 00-30 (filed February 11, 2000; amended March 21, 2000).

10a

the Commission to reconsider its decision regarding open

access in the AT&T/MediaOne Order, and the Commission

has not yet acted on this petition.” This Commission has also

considered the question of open access to a cable company’s

cable modem platform in the context of its Section 706

Reports to Congress. We saw no reason at the time of the

First 706 Report to require open access to cable modem

platforms but stated that “[w]e will, however, continue to

monitor broadband deployment closely to see whether there

are developments that could affect our goal of encouraging

deployment of broadband capabilities pursuant to the

requirements of section 706.” -

13. While the Commission has pursued open access

through regulatory restraint, some local governments have

sought to achieve open access through regulation. These

local efforts have resulted in recent federal court cases that

have considered the regulatory status of cable modem service

under the Act. In the context of license transfers involving

AT&T's cable systems, a number of local franchising

authorities (LFAs) enacted ordinances conditioning the

license transfer on nondiscriminatory access to the cable

We note that the Commission rejected a request from an ISP, Internet

Ventures, Inc., asking the Commission to rule that the ISP had a right

under section 612 of the Act to “leased access” to cable facilities. See

Internet Ventures, Inc., Internet On-Ramp, Inc., Petition for Declaratory

Ruling that Internet Service Providers are Entitled to Leased Access to

Cable Facilities Under Section 612 of the Communications Act, File No.

CSR-5407-L, Memorandum Opinion and Order (rel. Feb. 18, 2000).

2° See In the Matter of Applications for Consent to the Transfer of

Control of Licenses and Section Authorizations from MediaOne Group,

Inc., Transferor, to AT&T Corp., Transferee, CS Docket No. 99-251,

Petition for Reconsideration of Consumers Union, Consumer Federation

of America and Media Access Project (filed July 5, 2000).

* First 706 Report, 14 FCC Red at 2449 ¢ 101.

modem platform for unaffiliated ISPs.” In AT&T Corp. v.

City of Portland, the United States Court of Appeals for the

Ninth Circuit confirmed this Commission’s role in

establishing a national broadband policy. The Ninth Circuit

also ruled that insofar as Excite@Home provides subscribers

with Internet transmission over AT&T’s cable network, it was

providing a “telecommunications service,” and insofar as

Excite@Home offers subscribers services traditionally

offered by ISPs, the court held that it provides an

“information service.” *° The court declined to say whether

the Commission should subject the “telecommunications

service” provider to the full range of telecommunications

common carrier regulations under Title II, observing that the

Commission has broad authority to forbear from enforcing

those regulations,” Reaching a contrary conclusion, the

United States District Court for the Eastern District of

Virginia has ruled that Excite@Home’s cable modem service

fits the statutory definition of a “cable service.” * Finally, the

United States Court of Appeals for the Eleventh Circuit has

held that “Internet service does not meet the definition of

either a cable service or a telecommunications service.” ”

* By “unaffiliated ISP,” we mean an ISP in which the cable operator

does not have an ownership or controlling interest, and which is not the

exclusive provider of Internet services for the subscribers of that cable

operator.

* City of Portland, 216 F.3d at 878. We note that the court reached

this conclusion without specifically construing the language of the

Statutory definitions at issue.

”” City of Portland, 216 F.3d at 879 (citing 47 U.S.C. § 160(a)).

*® Henrico, 97 F.Supp.2d at 715.

” Gulf Power, 208 F.3d at 1278. Gulf Power did not deal with an open

access ordinance, but with the question of the rates utility companies may

charge for the use of their poles and ducts under 47 U.S.C. § 224.

12a

iil. DISCUSSION

14. In ascertaining the appropriate legal and policy

environment for cable modem service and the cable modem

platform, we seek to develop a factual record regarding the

services provided by cable operators and the type of access

sought by unaffiliated ISPs. We also seek input on the extent

to which such access is necessary to benefit consumers or

otherwise achieve policy goals that Congress or the

Commission may identify, such as the goals of promoting

competition, deregulation, innovation, and the deployment of

high-speed services. Specifically, we seek comment on

several approaches to classifying cable modem service and/or

the cable modem platform and the implications of classifying

the service and/or platform under each category. Next, we

seek comment on various issues related to open access,

including definitional issues and how market-based and

regulatory approaches potentially affect the availability of

high-speed services. Finally, we seek comment on whether

the Commission should pursue any further course of action,

such as exercising its rulemaking or forbearance authority.

A. The Classification of Cable Modem Service

And/Or The Cable Modem Platform

15. We seek comment on the variety of legal or policy

frameworks that might apply to cable modem service and the

cable modem platform. Indeed, there may be a number of

regulatory approaches possible, from treating cable modem

service and/or the cable modem platform as a cable service

subject to Title VI; as a telecommunications service under

Title I; as an information service subject to Title I; or some

entirely different or hybrid service subject to multiple

provisions of the Act. We also seek comment on the

implications, if any, of adopting a particular framework for

classifying cable modem service and/or the cable modem

platform as it relates to our regulation of other high-speed

13a

service providers, including those that use xDSL, wireless,

satellite, broadcast and unlicensed spectrum technologies.

16. More specifically, with respect to applying Title VI, we

invite comment on whether cable modem service and/or the

cable modem platform is a cable service. “Cable service” is

defined under the Act as “(A) the one-way transmission to

subscribers of (i) video programming, or (ii) other

programming service, and (B) subscriber interaction, if any,

which is required for the selection or use of such video

programming or other programming service.” ** The terms

“or use” were added to the definition in the 1996 Act.”' Does

the legislative history indicate that Congress intended by this

change to include cable modem service and/or the cable

modem platform in the definition of “cable service”?

Specifically, we seek comment on whether the addition of the

words “or use” expanded the category of services such that

cable modem service and/or the cable modem platform fits

within the definition. Notwithstanding the 1996 amendment,

a service that is not “video programming” cannot be a “cable

” 47 U.S.C. § 522(6) (emphasis added).

"The 1984 Cable Act defined “cable service” as “(A) the one-way

transmission to subscribers of (i) video programming, or (ii) other

programming service, and (B) subscriber interaction, if any, which is

required for the selection of such video programming or other

programming service.” Cable Communications Policy Act of 1984, Pub.

L. No, 98-549, 98 Stat. 2779 (1984 Cable Act). We note that, in

amending the definition of cable service in 1996, Congress stated that it

did not intend to eliminate the longstanding regulatory distinction between

telecommunications service and cable service. See Conference Report at

169 (“This amendment is not intended to affect Federal or State regulation

of telecommunications service offered through cable facilities, or to cause

dial-up access to information services over telephone lines to be classified

as a cable service.”).

14a

service” unless it qualifies as “other programming service.

Does cable modem service and/or the cable modem platform

constitute “other programming service” as defined in the Act?

17. We also invite comment on the implications of

classifying cable modem service and/or the cable modem

platform as a cable service. Would classification as a cable

service affect the Commission's ability to establish a uniform

national policy with respect to high-speed services? For

example, section 622 of the Act gives localities the authority

to charge a franchise fee of no more than five percent of the

cable operator's gross revenues.” How would this

requirement apply were the Commission to consider cable

modem service and/or the cable modem platform a “cable

service”? Similarly, local franchising authorities have the

power to establish requirements for facilities and equipment,

and to establish and enforce customer service requirements.

Cable operators also are subject to various requirements

relating to subscriber privacy. We ask for comment on how

these and any other pertinent regulatory provisions might

apply if cable modem service and/or the cable modem

platform were considered a “cable service.”

18. In addition, we seek comment on whether cable

modem service and/or the cable modem platform is a tele-

communications service subject to Title I.” Under the Act,

» 32

” The definition of “other programming service” requires that it be

“information that a cable operator makes available to all subscribers

generally.” 47 U.S.C. § 522(14).

* See 47 U.S.C. § 542.

“ The Act defines “telecommunications service” as “the offering of

telecommunications for a fee directly to the public, or to such classes of

users as to be effectively available directly to the public, regardless of the

facilities used.” © / U.S.C. § 153(46). As described above, the Ninth

Circuit classified transmission over a cable modem platform as a

telecommunications service. City of Portland, 216 F.3d at 878.

i nt component mn

“telecommunications : 4 of cable

modem service or the cable modem platform that represents

pure transmission capability between a subscriber and a

destination which does not alter the form or content of the

information sent? ** If so, should we, if only for definitional

Purposes, sever a telecommunications from other

functions that may be provided? ery ap

subscribers to specify the ultimate points of communication

on the Internet? Does it matter, for purposes of determining

whether the service is a common carrier offering, that the

cable subscriber cannot select ISPs that have not entered into

agreements with the cable operator? If cable modem service

or the cable modem platform contains a telecommunications

component, must the facility used to provide the

telecommunications necessarily be classified as a

“telecommunications facility”?

19. The Act defines “telecommunications " differently

from “telecommunications service.” Assuming that cable

modem service or the cable modem platform contains a

“telecommunications” component, does it follow that the

cable operator is providing a “telecommunications service?”

That is, is the cable operator offering teiecommunications for

a fee directly to the public, or to such classes of users as to be

* The Act defines “telecommunications” as “the transmission, between

or among points specified by the user, of information of the user’s

choosing, without change in the form or content of the information as sent

and received.” 47 U.S.C. § 153(43).

See City of Portland, 2\6 F.3d at 877 (noting that the “telephone

service linking the user and the ISP is classic ‘telecommunications’”).

"Henrico, Amicus Curiae Brief of the Federal Communications

Commission at 13, 18-24 (noting that an open access regime would

compel the provision of “telecommunications facilities” (i.¢., transmission

pipelines) to ISPs).

16a

effectively available directly to the public? To the extent that

the cable operator is providing a telecommunications service,

does this make it a “telecommunications carrier” or a

“common carrier,” or both? ™ Specifically, if a cable

operator provides telecommunications services, does | that

mean that it is also providing common carrier services?

20. We note that the Act imposes a wide variety of

obligations on telecommunications carriers, including

requirements relating to interconnection, universal service

contributions, disabilities access, and privacy of subscriber

™ Under the Act, a telecommunications carrier “shall be treated as a

common carrier under this Act only to the extent that it is engaged in

providing telecommunications services .. .” 47 U.S.C. § 153(44). The

Act defines a “common carrier” as “any person engaged as a common

carrier for hire, in interstate or foreign communication by wire or radio or

in interstate or foreign radio transmission of energy,” other than a person

engaged in radio broadcasting. 47 U.S.C. § 153(10). See also 47 C.F.R. §

21.2 (defining “communication common carrier” as “[a}ny person engaged

in rendering communication service for hire to the public.”).

* We note that the Commission has previously concluded that, because

a particular submarine cable would not be classified as a common carrier

cable under the test set forth in National Association of Regulatory Utility

Commissioners v. FCC, 525 F.2d 630, 641 (D.C. Cir. 1976) (NARUC J),

the submarine cable licensee also would not be providing a

telecommunications service for a fee to such class of users as to be

“effectively available directly to the public” and thus would not be a

“telecommunications carrier” under the 1996 Act. In determining that the

NARUC I! test has continued applicability after the 1996 Act, the

essentially the same as common carrier” and “does not . . . introduce a new

concept whereby we must look to the customers’ customers to determine

the status of a carrier.” See AT&T Submarine Systems, Inc., 13 PCC Red

21585, 21587-88 ¢ 6 (1998), aff'd, Virgin Islands Tel. Co. v. FCC, 198

F.3d 921 (D.C. Cir. 1999); Cable and Wireless, PLC, 12 PCC Red 8516,

8522 ¢ 13 (1997).

17a

information.” How would those statutory provisions, and the

Commission's implementing regulations, apply to cable

operators? ee ee

interconnection obligation apply to cable operators? *'

could Gi Caondiien aaioeie antares taltaen

service was provided at rates that are just, reasonable and not

unreasonably discriminatory? How would the Commission

determine whether the manner in which cable companies

allow unaffiliated ISPs to “interconnect” with the cable

modem platform is just, reasonable and not unreasonably

discriminatory? If the Commission were to adopt a Title I

approach, what would be the implications of such an

approach under sections 201, 202, and 203 of the Act? That

is, as a legal and policy matter, should the Computer I/

unbundling requirements be interpreted to apply to facilities-

based carriers including non-dominant carriers? To what

extent did imposition of unbundling requirements in that

proceeding rely on the presence of market power? Would

applying these requirements to cable operators and other

facilities-based providers of high-speed services be consistent

with the goals of the Computer Inquiry proceedings? Parties

advocating such an approach should discuss the boundaries of

” See, ¢.g., 47 U.S.C. § 251(a) (direct or indirect interconnection); 47

U.S.C. § 254(d) (contributions to the universal service fund); 47 U.S.C. §

255 (telecommunications services for hearing-impaired and speech-

impaired individuals); 47 U.S.C. § 222 (privacy). See also 47 U.S.C. §

1001 et seq. (Communications Assistance for Law Enforcement Act). We

note that telecommunications carriers also are subject to requirements

derived from state law, which may include certification, tariffing,

reporting requirements, and the payment of regulatory fees.

“' These and other questions relating to access to the cable modem

platform incorporate issues contained in the US Internet Industry's Petition

for Declaratory Ruling and Institution of Rulemaking with Respect to

Tariffs for Cable Internet Interconnectivity (filed July 7, 2000).

18a

federal, state, and local authority over access to the cable

modem platform.

21. In answering the foregoing, parties should discuss

whether cable operators should be treated as common carriers,

which provide service indiscriminately to all potential

customers, or as private carriers, which make individualized

decisions whether and on what terms to provide service.”

How should Commission precedent and other relevant

caselaw, including NARUC /, inform the Commission's

inquiry into the nature of cable modem service and the cable

modem platform?

22. We also seek comment on whether the cable modem

platform is an advanced telecommunications capability.”

” We note that the Commission traditionally has applied the two-part

test of NARUC / to distinguish between common carriage and private

carriage, inquiring first whether the carrier is under any legal compulsion

to serve the public indifferently, and second whether there are reasons

implicit in the nature of the carrier's operations to expect that it will hold

itself out to the eligible user public indifferently. Regarding the second

prong, the Commission has determined that the eligible user public is not

limited to end users but may include services offered to other carriers. See

Federal-State Joint Board on Universal Service, CC Docket No. 96-45,

Report and Order, 12 FCC Red 8776 ¢ 785 (1987); Jmplementation of the

Non-Accounting Safeguards of Sections 271 and 272 of the

Communications Act of 1934, as amended, CC Docket No. 96-149, First

Report and Order and Further Notice of Proposed Rulemaking, 11 FCC

Red 21905, 22032-33 44 263-65 (1996) (Non-Accounting Safeguards

Order).

“The Commission has interpreted advanced telecommunications

capability under section 706 of the Act as “high-speed, switched,

broadband telecommunications capability that enables users to originate

and receive high-quality voice, data, graphics and video tele-

communications using any technology” which offers 200 kbps of

bandwidth to and from a subscriber. Second 706 Report at 44 10-11. In

issuing its Second 706 Report, the Commission considered the deployment

of cable modem services. Second 706 Report at { 29.

19a

Are there any differences between advanced tele-

communications capabilities, telecommunications facilities,

and telecommunications services? _ Does defining cable

modem service or the cable modem platform as an advanced

telecommunications capability capture all of the uses of cable

modem service or only the use of a cable modem service to

provide Internet services? To the extent that cable modem

service and/or the cable modem platform constitutes an

advanced telecommunication capability pursuant to section

706 of the Act, how does that classification affect the

Commission’s authority to forbear from regulation under

section 10 of the Act?

23. We also invite comment on another question, that is

whether cable modem service and/or the cable modem

platform constitutes an information service.“ We note that

the Commission has classified the end user services

commonly provided by dial-up ISPs as information services.”

Does cable modem service and/or the cable modem platform

fit within this definition? We seek comment on the

implications, if any, of classifying catle modem service

and/or the cable modem platform as an information service

under the Act. Information service providers as such are not

subject to regulation under Title II as common carriers; the

“The Act defines an “information service” as “the offering of a

capability for generating, acquiring, storing, transforming, processing,

retrieving, utilizing, or making available information via

telecommunications, and includes electronic publishing, but does not

include any use of any such capability for the management, control, or

operation of a telecommunications system or the management of a

ar wasen eran mnaasl 47 U.S.C. § 153(20).

* See Deployment of Wireline Services Offering Advanced

T2lecommunications Capability, CC Docket No. 98-147, Order on

Remand, 15 FCC Red 385, 401 ¢ 34 (1999); Federal-State Joint Board on

Universal Service, CC Docket No. 96-45, Report to Congress, 13 FCC

Red 11501, 11536 ¢ 73 (1998) (Universal Service Report).

20a

fact that information service is provided “via telec-

ommunications” does not alter that conclusion.” With

respect to cable modem service, if a cable operator

simultaneously offers a telecommunications and inform.tion

service, should we, if only for definitional purposes, sever the

underlying telecommunications, or the telecommunications

service, from the information service offering? *” Is there any

reason to treat the cable modem service as if it were solely an

information service? Should the Commission’s treatment

differ depending on whether the provider of cable modem

service also owns or controls the underlying transmission

platform?

24. Finally, we invite comment on whether cable modem

service and/or the cable modem platform is distinct from the

regulatory classifications identified above and would require a

new legal and policy framework. To the extent the

Commission deems it appropriate, under what authority (apart

from the authority cited above) could it require cable

See Universal Service Report, 13 FCC Red at 11508, 11511, 11516,

11520, 44 13, 21, 33, 39. Following passage of the 1996 Act, the

Commission determined that Congress intended the categories of

“telecommunications service” and “information service” under the Act to

be mutually exclusive, and to parallel the definitions of “basic service”

and “enhanced service” developed in the Commission's Computer Il

proceeding, as well as the Modification of Final Judgment. In Computer

Il, the Commission found that enhanced service providers were not

“common carriers” under the Act and therefore were not subject to

regulation under Title II of the Act. Computer I], 77 FCC2d at 430-34, f

120-29.

“’ We note that a company that provides both telecommunications and

information services is classified as a telecommunications carrier to the

extent that it is acting as a telecommunications carrier. See

Implementation of the Local Competition Provisions in the

Telecommunications Act of 1996, CC Docket No. 96-98, First Report and

Order, 11 FCC Red 15499, 15990, 4 995 (1996) (Local Competition

Report).

2la

operators to be subject to the unbundling requirements that

stem from the Commission’s C r Inquiries or impose

similar unbundling requirements? “ For example, could the

Commission use its Title I authority to achieve open access to

the cable modem platform for ISPs?

B. Issues Surrounding Open Access

25. We turn now to the issue of open access. We first

examine definitional issues. We then invite comment on

whether open access is a desirable policy goal. If it is, we ask

commenters to explore whether a market-based approach will

adequately achieve that objective, or whether the Commission

should adopt a regulatory, or prescriptive, approach. If

commenters advocate a regulatory approach, we seek

comment on the jurisdictional basis for the Commission’s

taking regulatory action. We inquire whether the same

approach should apply to other providers of high-speed

services, and what jurisdictional basis would support

application of this approach. We also invite comment on the

_ “We note that the unbundling requirements in the 1996 Act are

distinct from the unbundling requirements adopted in Computer II.

“Unbundling” as used in Computer II means that all facilities-based

service in the same manner as resellers. In the Computer II proceeding,

which preceded the 1996 Act, the Commission classified all services

offered over a telecommunications network as either basic or enhanced. A

basic service consists of the offering of “transmission capability for the

movement of information,” whereas an enhanced service comprises any

offering over the telecommunications network which is more than a basic

transmission service. Computer II, 77 PCC. 2d at 419-20 44 93, 96-97.

See also 47 C.F.R. § 64.702(a) (defining enhanced service). The

Commission has determined that “information services” under the 1996

Act include all services that were considered “enhanced services” prior to

the 1996 Act. See Non-Accounting Safeguards Order, 11 FCC Red at

21955-56 ¢ 102.

22a

technical and operational concerns with achieving open

access.

1. What Is “Open Access”?

26. How should the Commission define “open access” to

cable networks? We seek comment on whether the

Commission should consider, in determining the appropriate

level of access, policy goals that Congress or the Commission

may identify, such as the goals of promoting competition,

deregulation, innovation, and the deployment of high-speed

services. As discussed below, we ask commenters to

recommend specific goals that can and should be

accomp."sned by open access.

27. Currently, there is no universally accepted definition of

“open access.” Most open access proposals entail two broad

requirements, providing unaffiliated ISPs with the right to: (i)

purchase transmission capability, and (ii) access the customer

directly from the incumbent cable operator. Apart from those

general requirements, however, there are numerous different

technological and economic models for what open access

might mean, and technological approaches for how it might

be implemented.” Should we define open access based on

the manner or degree of access we ultimately determine is

necessary to achieve particular goals?

28. Industry participants have different conceptions of

open access. For example, OpenNet Coalition, a group of ISP

and LEC interests, defines open access as “the ability of

consumers to choose the Internet service provider of their

choice . . . Enabling consumers and their chosen Internet

service providers to reach each other requires that Internet

service providers not chosen by the cable company have the

ability to purchase, on a nondiscriminatory basis, the use of

* See infra Section III.B.5.

23a

‘last mile’ communications facilities to reach consumers who

are requesting their service.”*’ AOL and Time Warmer

present an alternative conception of open access in their

Memorandum of Understanding of February 29, 2000. Under

their conception, open access is achieved through negotiated

commercial agreements between cable operators and ISPs

operating in a free market. The prices, terms and conditions

for such agreements may differ depending on the ISP’s needs

and the cable operator’s resources, but will not vary based on

affiliation or lack thereof.”" |

29. In the current environment some cable operators have

entered into exclusive arrangements with one particular ISP

(e.g., AT&T’s arrangement with Excite@Home), and all

cable Internet subscribers must pay the cable operator for the

Internet service of that particular ISP even if they choose to

use an alternative OSP.”* Although we recognize that these

cable operators have recently negotiated access to their

networks by certain unaffiliated ISPs, nevertheless, these

cable operators currently are not legally prohibited from

having an exclusive relationship with one particular Isp.*°

Should the Commission consider the approach of achieving

® OpenNet Coalition White Paper: “Frequently Asked Questions

about AT&T’s Acquisition of MediaOne, Open Access, and the Public

Interest,” at 23 (Sept. 17, 1999).

*' Memorandum of Understanding Between Time Warner, Inc. and

America Online, Inc. Regarding Open Access Business Practices (Feb. 29,

2000) (AOL-Time Warner MOU).

* Because only one ISP (chosen by the cable operator) is providing

connectivity to the Internet, the subscriber who uses an alternative OSP is

in fact paying the alternative OSP for its content, rather than for a

connection to the Internet.

* As discussed below, to the extent that cable modem customers have

grown accustomed to choosing their ISPs in the narrowband context, cable

companies may perceive and choose to satisfy a market demand for such

choice in the high-speed context.

24a

openness through negotiated commercial agreements between

cable operators and unaffiliated ISPs an open access model?

Does this model provide an appropriate level of openness?

30. Based on this background, we ask for comment, in

particular, on three possible models. Under one open access

model, no particular connecting ISP has a privileged or

preferred relationship with the cable operator; rather, each ISP

purchases transmission capability and customer access from

the cable operator on nondiscriminatory prices, terms and

conditions, and the cable operator manages the network on a

nondiscriminatory basis. Under a second open access model,

multiple ISPs purchase transmission capability and customer

access from the cable operator on nondiscriminatory prices,

terms, and conditions, but an affiliated or preferred ISP

manages the network on a nondiscriminatory basis. Under a

third model, multiple unaffiliated ISPs would obtain access to

the cable modem platform according to agreements negotiated

between those ISPs and cable operators. We invite comment

on whether open access should be conceptualized according

to any of these proposed models, or according to some other

model. Under the first two models, should cable operators be

required to provide unaffiliated ISPs “nondiscriminatory”

access, a standard borrowed from common carrier regulation,

or some other standard? We also seek comment on how a

decision to pick any of these open access models for cable-

based networks would affect other providers of high-speed

services. We recognize that an open access environment may

develop using each, or a combination, of these models. In

addition, we ask whether, under the second model, the

affiliated or preferred ISP will have a competitive advantage

over other ISPs. We also seek comment on the impact, if any,

of adopting a particular model of open access on other high-

speed service providers, including those using wireless,

satellite, broadcast, and unlicensed spectrum technologies.

25a

31. With respect to any of the models discussed herein,

including those that allow one ISP to manage the network, we

invite comment on the extent to which affiliated and

unaffiliated ISPs would be capable of accessing network

operations and management capabilities. In particular, we

seek comment on the extent of ISP access to or control over

Operations support systems used in managing the network or

the set top box or cable modem itself, including maintenance

and repair, customer care and other operations functions.

Commenters should also address whether their model

includes identical operations support systems interfaces for

affiliated and unaffiliated ISPs. We also seek comment on

whether the entity that controls the design and deployment of

the set top box or cable modem has an advantage in terms of

access, applications, or content. Specifically, what obstacles,

if any, would the functions embedded in the set top box or

cable modem present to unaffiliated ISPs that seek to deploy

innovative services? For example, would access to the

software or firmware embedded in the set top box or cable

modem increase an ISP’s cost in such as a way as to affect the

ISP’s incentive to deploy new services? We particularly

invite manufacturers of set top boxes and cable modems to

address these and other questions related to the capabilities

embedded in their products.

2. Is Open Access A Desirable Policy Goal?

32. We invite comment on the policy considerations that

should underlie our analysis of open access issues.

Specifically, we invite comment on the desirability of open

access as a policy goal. Should the Commission encourage

open access to the cable modem platform? If so, what are the

appropriate underlying goals that the Commission should

seek to achieve through such openness, and what degree of

openness is necessary to achieve those goals? Is open access

necessary, for example, to benefit consumers or otherwise

achieve policy objectives identified by Congress or the

26a

Commission, such as promoting competition, deregulation,

innovation, and investment in and deployment of high-speed

services? What are the best means for the Commission to

facilitate the deployment of high-speed services in a manner

that benefits consumers? We also ask what costs may be

associated with open access and how those costs compare to

the benefits of open access.

33. More specifically, commenters should address the

services that ISPs currently provide and what new services

will likely be offered by ISPs as the Internet enters the high-

speed era. Which of these new services, if any, will require

ISPs to obtain nondiscriminatory access to the cable modem

platform as opposed to other levels or types of access? To the

extent nondiscriminatory access is required, why is it

required? What are the potential harms of failure to achieve —

open access? In what specific ways is competition among

ISPs important to ensure the widespread availability of high-

speed, high-quality services at competitive rates? What

benefits does a competitive ISP market bring to other areas of

the Internet, such as innovation among content and

application providers? How would competition between ISPs

affect consumer choice and value, including access by

persons with disabilities?

3. If Open Access Is A Desirable Policy Goal,

What Are The Most Appropriate Means Of

Achieving That Objective?

34. If open access is a desirable policy goal, we invite

comment on whether a market-based approach will

adequately achieve that objective, or whether the Commission

should adopt another approach. Commenters should discuss

the implications of our determination of the framework for

cable modem services and access to the cable modem

platform for providers of similar services using other

technologies, such as xDSL, satellite, broadcast, or wireless

technologies.

27a

a. Should The Commission Continue A

Market-Based Approach?

35. We invite comment on whether market-based

approaches are sufficient to achieve the level of access by

ISPs to the cable modem platform that the Commission

determines is appropriate. Considering the current conditions

in the market for cable high-speed services, is there a need for

mandated open access or will market forces operate to

achieve open access? Specifically, how will mandated open

access impact unaffiliated ISPs and OSPs, unaffiliated content

providers, and end users? The decision to provide open

access voluntarily may depend on the degree of competition

in the provision of local facilities. Are the harms from failure

to achieve open access impacted by the presence of

competing local facilities? Are any of these harms likely to

take place without government intervention? If so, why? To

what extent is such regulatory intervention necessary, and

what costs would be associated with that intervention? What

should be the Commission's role, if any, in promoting and

encouraging competition among ISPs?

36. We seek to understand the economic incentives of

cable operators, both outside of and under alternative open

access models. For example, do cable operators have any

incentive to cooperate with multiple ISPs that seek access to

their platforms? Do cable operators have an incentive to

allow non-exclusive access *» order to increase the number of

end users purchasing cable modem services? Do cable

operators that are vertically integrated with an ISP or OSP

have less- incentive to provide open access in order to

decrease competition for the integrated ISP or OSP? How do

might induce a vertically integrated cable operator to provide

open access? We also seek to determine how, in a market-

based approach, multiple ISPs will be provided access, and

how and by whom these ISPs will be chosen. Is the number

28a

of ISPs under a market-based approach likely to be sufficient

to achieve the goals of opeii access? Why or why not? A

vertically integrated cable operator may choose to provide

access to ISPs or OSPs that do not compete with the cable

operator's ISP or OSP, in order to increase the number of end

users purchasing cable modem services. Are there significant

differences in ISPs? In OSPs? How different, if . all, are

those incentives from the incentives of non-vertically

integrated cable operators to offer end users a diverse set of

ISPs and OSPs? What incentives do these operators have not

to frustrate end users’ access to unaffiliated content? What

specific evidence is there that operators have denied their

cable modem customers access to unaffiliated content to

date? Will the incentives to provide open access change as

competition increases in the provision of high-speed access

services by DSL providers and providers of other high-speed

services? What role, if any, do consumer expectations

regarding the availability of multiple, unaffiliated ISPs in the

traditional narrowband wireline context have on cable

operators’ incentives to provide similar availability over cable

modem platforms?

37. We also seek comment on the reported development of

market-based access initiatives. Initially, cable operators

signed exclusive agreements with one ISP (most notably

Excite@Home and RoadRunner). Currently, however, there

appears to be some movement toward allowing access to

additional ISPs. For example, AT&T released a letter, co-

signed with Mindspring Enterprises, Inc., promising to allow

Mindspring and other ISPs access to its cable platform once

its exclusivity agreement with Excite@Home expires in

2002. Similarly, Time Warner, Inc. and AOL released a

“ Letter from David N. Baker, Vice President, Mindspring Enterprise,

Inc., James W. Cicconi, General Counsel and Executive Vice President,

AT&T Corp., and Kenneth S. Fellman, Chairman, FCC Local & State

29a

Memorandum of Understanding promising ISPs open access

to Time Wamer’s cable platform once its exclusivity

agreement with RoadRunner expires in 2001.” There are

allowing other ISPs access to their platform. Time Warner,

for example, recently announced that it had reached an

agreement with Juno Online Services, Inc., whereby Juno will

become the first unaffiliated ISP to use Time Warner cable

systems for the provision of high-speed Internet services.”

38. We seek information on the development and im-

portance of this trend. First, we seek information on the

extent to which cable operators are already providing access

to unaffiliated ISPs.”’ Are new entrants more or less likely

than incumbents to provide access to unaffiliated ISPs?

aspects of allowing access to multiple ISPs. We also invite

Parties to assess the viability of the methods used to provide

multiple access in those trials. We are particularly interested

in the scalability of the configuration of these trials. We are

also interested in the ability of ISPs to offer network

capability, including multicasting, caching, and different

classes of services, as well as services such as streaming

Government Advisory Committee to William E. Kennard, Chairman,

FCC, CS Docket No. 99-251 (filed Dec. 6, 1999).

*® AOL-Time Warner MOU.

* See Time Warner, Inc., Juno and Time Warner Reach Agreement to

Offer Juno Express Over Time Warner Cable Systems (July 31, 2000)

(press release), http://cgi.timewarner.com/cgi-bin/corp/news/index.cgi?

template=article&article_id=200294 (viewed Aug. 24, 2000).

For instance, reports indicate that small cable operators are

partnering with local ISPs in order to share cable plant upgrade costs in

exchange for ISP access to the cable system. See Comments of American

Cable Association (filed April 24, 2000) on Time Warner and America

Online Applications for Transfers of Control and Associated Public

Interest Statement, CS Docket No. 00-30.

30a

media and voice, absent regulatory intervention. To what

extent are these current practices and trends sufficient to

provide the degree and manner of access by unaffiliated ISPs

that is necessary to promote deployment of high-speed

services, competition, deregulation, and other goals

contemplated by the Act?

39. We are further interested in assessments of the current

pledges by cable operators for future open access. Are these

pledges specific enough to guarantee open access once they

are implemented? To what extent is such eventual

implementation necessary to promote deployment of high-

contemplated by the Act? If such pledges are lacking in

necessary specificity, what additional details or commitments

would increase the likelihood that they will eventually be

implemented without government intervention? Can such

additional details and commitments be fleshed out without

favoring certain unaffiliated ISPs or business plans over

others?

40. We recognize that a number of business models for

open access may develop. For example, in one business

model, a cable operator would maintain the billing

relationship with the customer and compensate the ISP.

Under another business model, an ISP would maintain the

billing relationship with the customer and compensate the

cable operator. Alternatively, a cable operator and an ISP

could independently bill the customer. How do these or other

potential business models affect the incentives for achieving

open access?

b. Should The Commission Act To Ensure

Open Access?

41. We now tum to the question of whether the Com-

mission should take action to achieve open access. We stress

that, before we will take any regulatory action on this issue,

to the cable modem platform. Commenters should address

whether and the extent to which such harms will be realized if

ISPs seeking access to the cable modem platform offer

services that are not different from or more attractive to

consumers than those provided by the affiliated ISP.

Commenters should also describe how requiring open access

would alleviate the harms associated with closed access, and

discuss any costs that may result from requiring open access.

In addition, commenters should address how imposing

regulations in this area would comport with the

Commission’s historical policy of not regulating the Internet.

Commenters should compare specifically the advantages and

* See United States v. Southwestern Cable Co., 392 U.S. 157, 172-78

(1968).

324

disadvantages associated with regulatory intervention

designed to prevent future, potential bottlenecks or

impediments to competition and intervention designed to

address such impediments that have clearly manifested

themselves.

4. Should A Uniform Framework Apply To All

Providers Of High-Speed Services?

43. High-speed services are provided using a variety of

public and private networks that rely on different network

architectures and transmission paths including wireline,

wireless, satellite, broadcast, and unlicensed spectrum

technologies.” Wireline incumbent and competitive LECs

currently provide high-speed services in conjunction with

affiliated or unaffiliated ISPs and operate pursuant to Title Il

of the Act. For example, pursuant to the requirements of the

Commission’s Computer Inquiries, certain common carriers

must allow ISPs to purchase basic transmission services on a

nondiscriminatory basis.” As a result, end users are typically

* Depending upon the network, data may travel from the sender to the

recipient over various architectures and transmission paths such as copper

wire, cable, terrestrial wireless radio spectrum, satellite radio spectrum, or

a combination of these and other media. In addition, data may be

direct traffic at different layers of a particular network.

Originally, the Commission in Computer | required all carriers to

provide enhanced services through structurally separate subsidiaries. In

Computer II, while maintaining that “the importance of the control of local

facilities cannot be overstated” in its risk of creating an access bottleneck,

the Commission conducted a cost benefit analysis and concluded that rules

such as requiring facilities-based carriers to unbundle transport from

enhanced service were sufficient to protect the enhanced service market.

Thus, requiring structural separation for smaller carriers would not be

necessary. The Commission concluded that AT&T and GTE had greater

incentive and resources to discriminate in favor of their affiliated

enhanced service providers (ESPs) and could efficiently create separate

33a

given a choice of ISPs, which could be accessed over the

telephone network. Cable operators have traditionally pro-

vided service pursuant to Title VI of the Act and do not

currently operate pursuant to rules requiring end user ISP

choice. Wireless and satellite providers, while subject to the

Commission’s licensing rules and authority to allocate and

manage spectrum under Title Ill, are not currently required to

provide network access to multiple ISPs." Likewise, entities

providing Internet service pursuant to Part 15 of the

Commission’s rules are under no obligation to allow multiple

ISPs to access their networks.”

44. We seek comment on whether uniform requirements

for high-speed services provided using different platforms

would facilitate the deployment of all such services, and

whether we could implement uniform requirements consistent

with our statutory mandate. If we determine that a regulatory

approach is warranted, could the legal framework we

establish apply to incumbent and competitive LECs, as well

as cable operators? Could the legal framework apply to other

providers of high-speed services including those that employ

wireless, satellite, broadcast, and unlicensed spectrum

technologies? If so why? If not, why not? In deciding

whether the legal framework should apply to a particular

high-speed provider, should it matter whether the provider

subsidiaries and therefore required them to operate their affiliated ESPs

through structurally separate subsidiaries. Computer II at $4 18, 215-31.

* See 47 U.S.C. § 332 et seq. (wireless providers); 47 U.S.C. § 151 et

seq. (satellite providers).

@ See 47 C.F.R. § 15.1 et seq.

” By “vertically integrated” we mean a provider that owns both

underlying transmission facilities and owns or controls an affiliated ISP

that provides Internet services to end users over these underlying

ission faciliti

34a

matter that some providers operate under common carrier

requirements to serve the public indifferently? Should it

matter that some providers must set aside a portion of

capacity for purposes other than high-speed services? Should

it matter whether the provider is subject to competition from

other providers of high-speed services in the geographic area

in which it operates?

45. In determining whether to impose the same regulations

on different types of providers of high-speed services, what

impact, if any, should we give to the fact that the Act itself

imposes different obligations on different service providers

and technologies, despite Congress’ expectation that

providers would begin to compete in new markets (i.e., cable

companies entering the local telephone market)? To the

extent the Commission attempts to achieve goals such as

competitive neutrality, how should the Commission define

these goals? For example, should the Commission attempt to

achieve competitive neutrality by imposing the same

particular requirements on competing providers of a given

service, or should the Commission ensure only that the

overall regulatory burdens imposed on such competitors are

roughly equal? Should the notion of competitive neutrality

compensate for market or economic advantages that

incumbent providers may have over newer entrants,

particularly entrants that are beginning to compete in non-

traditional markets (e.g., cable companies carrying data

processing services)? We also ask for comment on how we

should decide which framework should apply when a given

service could conceivably be regulated under more than one

regulatory framework, as might be the case, for example, for

Internet telephony. | What criteria should guide the

Commission’s decision on this issue? In particular, if the

Commission may legitimately choose between regulatory

approaches, we ask commenters to address reasons for

adopting one approach over another and how we should

35a

consider public interest obligations arising under one

approach and not another.

46. In conducting this analysis, should technological

differences affect our analysis of which regulatory regime, if

any, should apply? Are there any differences or similarities in

the inputs used to provide high-speed services over wireline,

wireless, satellite, broadcast, and unlicensed spectrum

platforms? If so, what are these similarities or differences?

5. What Are The Technical And Operational

Issues Associated With Open Access?

47. Various concerns have been raised before the

Commission concerning the technical and operational issues

surrounding open access to the cable modem platform. We

seek comment on similar problems concerning other high-

speed platforms, including those using wireless, satellite,

broadcast, and unlicensed spectrum technologies. At this

point, it is well accepted that some form of open access to the

cable modem platform is possible. It is apparent, however,

that there are remaining technical and operational issues

concerning open access to the cable modem platform. We

seek comment on these issues.

48. To highlight some of the technical and operational

issues, we ask what is the meaning of “interconnection” in

this context? At what points in the cable network can ISPs

interconnect? Are there technically superior locations for ISP

interconnection, either from the ISP’s perspective or the cable

operator’s perspective? Does interconnection at other

locations yield competitively significant disadvantages for

unaffiliated ISPs? If so, what are these disadvantages? Are

there multiple methods for implementing open access to cable

networks, and to what extent is each method scalable to allow

access by the number of ISPs necessary to achieve the goals

underlying open access? Will individual subscribers have

access to multiple ISPs simultaneously, or will a subscriber

36a

have to unsubscribe from one ISP before gaining access to a

second? Does use of the same cable plant by multiple ISPs

create problems of congestion and network management?

What type of bandwidth and quality of service arrangements

will cable operators make available? Who will be responsible

for network management and customer service? Under an

open access regime, what control will the cable operator have

over the Internet content available to subscribers? Who will

control access to the customer? Will ISPs have the option of

marketing and billing their service over the cable platform

directly to the consumer or, alternatively, the option of

contracting with the cable company or third parties for this

service? What standard(s) should the Commission apply in

determining whether access is sufficiently open (non-

discrimination, reasonable opportunity to contract in good

faith, etc.)? What steps can be taken to assure that

unaffiliated ISPs’ access to table networks satisfies such

standards in terms of pricing, service, interconnection, and

other relevant factors?

We recognize that cable systems support both Internet

service as well as analog and digital television channels. We

seek comment on the potential services that may develop that

make use of a combination Internet and television broadcast

channel platform. For example, will problems arise by

allowing the affiliated or preferred ISP the ability to combine

Internet services to the television broadcast channel?

C. The Commission’s Options

50. Depending on the classification of cable modem

service and the cable modem platform, as well as the desired

policy goals, the Commission has various options available to

it. In this section, we invite parties to comment on particular

courses of action, and to propose other possible outcomes. If

market incentivés continue to work to foster a competitive

environment, the Commission may find regulatory inter-

vention to be unnecessary. Alternatively, the Commission

37a

may choose to initiate a rulemaking proceeding or forbear

from enforcing statutory and regulatory requirements.

1. Should The Commission Continue Its

Current Approach?

If the Commission finds that the classification of cable

modem services and/or the cable modem platform does not

introduce additional obligations upon cable operators and that

market incentives will continue to foster a competitive

environment for high-speed services, the Commission may

find further action unnecessary. We invite comment on the

suitability of this course of action, and whether this course of

action ensures adequate deployment and consumer access to

high-speed services.

2. Should The Commission Initiate A

Rulemaking Proceeding?

52. In light of the regulatory classification and desired

policy goals, we ask whether there is a need for the

Commission to initiate a rulemaking to consider adopting

rules, policies, and regulations governing cable modem

service or access to the cable modem platform. We invite

suggestions for changes in our existing rules or policies for

additional regulations pertaining to cable modem services and

other high-speed services, and whether the proposed changes

in our rules and policies ensure adequate deployment of and

consumer access to high-speed services.

3. Should The Commission Exercise Its

Forbearance Authority?

53. If the Commission finds that the marketplace is

working and classifies cable modem service and/or the cable

modem platform as a telecommunications service, it may

choose to forbear from enforcing applicable regulatory

requirements. Section 10(a) of the Act grants the Com-

mission authority to forbear from applying any regulation or

38a

provision of the Act to “a telecommunications carrier or

telecommunications service, or class of telecommunications

carriers or telecommunications services, in any or some of its

or their geographic markets,” if it determines that: (1)

enforcement of that regulation or provision is not necessary to

ensure just, reasonable and nondiscriminatory charges,

practices, classifications or regulations; (2) enforcement of

that regulation or provision is not necessary to protect

consumers; and (3) forbearance is consistent with the public

interest.” To the extent the Commission determines that

cable modem service and/or the cable modem platform is a

telecommunications service, we invite comment on whether

the Commission should exercise its forbearance authority, and

from what statutory provisions or rules it should forbear. Are

there provisions and rules from which forbearance is not

appropriate? °° Parties should address how forbearance from

any particular provision or rule would satisfy the necessary

statutory criteria. Parties should also discuss for which class

of telecommunications carriers or telecommunications

services and in which geographic markets the statutory

showing would be met.

54. Should the Commission forbear from enforcing section

251(a)’s interconnection requirement in this context? In the ~

event that cable operators are found to be common carriers

providing an information service, and therefore subject to the

requirements stemming from the Computer Inquiries, should

the Commission forbear from enforcing the requirement to

unbundle basic service from enhanced? What role in its

* 47 U.S.C. § 160(a). Section 10(e) precludes a state from applying or

enforcing provisions of federal law where the Commission has decided to

forbear. 47 U.S.C. § 160(e).

% See, e.g., 47 U.S.C. § 254(d) (universal service contribution); 47

U.S.C. § 201 (service and charges); 47 U.S.C. § 202 (discrimination and

preferences). s

39a

analysis, if any, should the Commission give to the possibility

that forbearance will provoke competitors to enter the

market? If cable modem service or the cable modem platform

is a local exchange service and defined as telephone exchange

or exchange access service, are providers of cable modem

service or the cable modem platform local exchange carriers

subject to section 251(b) of the Act? Commenters should

address whether forbearance would be appropriate if cable

modem service and/or the cable modem platform is classified

as a local exchange service.

55. We seek to determine the conditions under which the

Commission should forbear from imposing or enforcing open

access obligations. Specifically, should the Commission

forbear if there are potential or actual competing facilities-

based providers of high-speed services? Parties should

describe how competition in the provision of high-speed

services could act to alleviate any harms that may warrant the

imposition of open access obligations. Parties should

describe the specific conditions that may demonstrate to the

Commission that competition is sufficient to forbear from

enforcing open access obligations.

56. To the extent that the Commission finds that

forbearance from statutory provisions or our rules is

appropriate with respect to cable modem service and/or the

cable modem platform, should the Commission also forbear

from enforcing these provisions or rules as applied to other

providers of high-speed services? Should the Commission

use its forbearance authority to achieve competitive neutrality

with respect to all providers of high-speed services? If so,

why? If not, why not? Other than competitive neutrality, are

there other goals the Commission should attempt to achieve if

it decides to regulate in this area? If so, what are these other

goals? Should the Commission emphasize some of these

goals more than competitive neutrality or other goals?

Commenters should provide a detailed explanation of how the

40a

Commission’s section 10 analysis should be applied to

various providers of high-speed services.

IV. PROCEDURAL MATTERS

57. Pursuant to sections 1.415, 1.419, and 1.430 of the

Commission’s rules, 47 C.F.R. §§ 1.415, 1.419, 1.430,

interested parties may file comments within 45 days after

publication in the Federal Register, and reply comments

within 75 days after publication in the Federal Register. All

filings should refer to GN Docket No. 00-185. Comments

may be filed using the Commission's Electronic Comment

Filing System (ECFS) or by filing paper copies.” Comments

filed through the ECFS can be sent as an electronic file via

the Internet to <http://www.fcc.gov/e-file/ecfs.html>. Gen-

erally, only one copy of an electronic submission must be

filed. In completing the transmittal screen, commenters

should include their full name, Postal Service mailing

address, and the applicable docket number, which in this

instance is GN Docket No. 00-185. Parties may also submit

an electronic comment by Internet e-mail. To get filing

instructions for e-mail comments, commenters should send an

e-mail to ecfs@fcc.gov, and should include the following

words in the body of the message, “get form <your e-mail

address.” A sample form and directions will be sent in reply.

58. Parties who choose to file by paper must file an

original and four copies of each filing. All filings must be

sent to the Commission's Secretary, Magalie Roman Salas,

Office of the Secretary, Federal Communications Com-

mission, Room TW-B204, 445 12th St. S.W., Washington,

D.C. 20554. Regardless of whether parties choose to file

electronically or by paper, parties should also serve: (1)

Fed. Reg. 24,121 (1998).

4la

Johanna Mikes, Common Carrier Bureau, 445 12” Street,

S.W., Room 5-C163, Washington, D.C. 20554; (2)

Christopher Libertelli, Common Carrier Bureau, 445 12

Street, S.W., Room 5-C264, Washington, D.C. 20554; (3)

Carl Kandutsch, Cable Services Bureau, 445 12” Street,

S.W., Room 3-A832, Washington, D.C. 20554; (4) Douglas

Sicker, Office of Engineering and Technology, 445 1

Street, S.W., Room 7-A325, Washington D.C. 20554; (5)

Robert Cannon, Office of Plans & Policy, 445 12™ Street,

S.W., Room 7-B410, Washington, D.C. 20554; and (6) the

Commission’s copy contractor, International Transcription

Service, Inc. (ITS), 445 12” Street, S.W., CY-B402,

Washington, D.C. 20554, (202) 857-3800, with copies of any

documents filed in this proceeding. Comments and reply

comments will be available for public inspection during

regular business hours in the FCC Reference Center, Room

CY-A257, 445 12th Street, S.W., Washington, D.C. 20554.

59. Parties who choose to file by paper should also submit

their comments on diskette. These diskettes should be

submitted to Janice Myles, Common Carrier Bureau, 445 12th

Street, S.W., Room 5-C327, Washington, D.C. 20554. Such a

submission should be on a 3.5 inch diskette formatted in an

IBM compatible format using WordPerfect 5.1 for Windows

or compatible software. The diskette should be accompanied

by a cover letter and should be submitted in “read only”

mode. The diskette should be clearly labeled with the

commenter's name, proceeding (including the docket number,

in this case, GN Docket No. 00-185), type of pleading

(comment or reply comment), date of submission, and the

name of the electronic file on the diskette. The label should

also include the following phrase "Disk Copy—Not an

ap riginal.” Each diskette should contain only one party's

pleadings, preferably in a single electronic file. In addition,

commenters must send diskette copies to the Commission's

42a

copy contractor, International Transcription Service, Inc.,

1231 20th Street, N.W., Washington, D.C. 20036.

60. Comments and reply comments must include a short

and concise summary of the substantive arguments raised in

the pleading. Comments and reply comments must also

comply with section 1.49 and all other applicable sections of

the Commission's rules.°’ We also direct all interested parties

to include the name of the filing party and the date of the

filing on each page of their comments and reply comments.

All parties are encouraged to utilize a table of contents,

regardless of the length of their submission. We also strongly

encourage that parties track the organization set forth in this

Notice of Inquiry to facilitate our internal review process.

61. Pursuant to 47 C.F.R. § 1.200(a), which permits the

Commission to adopt modified or more stringent ex parte

procedures in particular proceedings if the public interest so

requires, we announce that this proceeding will be governed

by “permit-but-disclose” ex parte procedures that are

applicable to non-restricted proceedings under 47 C.F.R. §

1.1206. Designating this proceeding as “permit-but-disclose”

will provide an opportunity for all interested parties to receive

notice of the various technical, legal, and policy issues raised

in ex parte presentations made to the Commission in the

course of this proceeding. This will allow interested parties

to file responses or rebuttals to proposals made on the record

in this proceeding. Accordingly, we find that it is in the

public interest to designate this proceeding as “permit-but-

disclose.”

62. Parties making oral ex parte presentations are

reminded that memoranda summarizing the presentation must

contain a summary of the substance of the presentation and

not merely a listing of the subjects discussed. More than a

®” See 47 C_E.R. § 1.49.

43a

one or two sentence description of the views and arguments

presented is generally required. See 47 C.F.R. § 1.1206(b)(2),

as revised. Other rules pertaining to oral and written

presentations are set forth in Section 1.206(b) as well.

Interested parties are to file any written ex parte presentations

in this proceeding with the Commission Secretary, Magalie

Roman Salas, 445 12" Street, S.W., TW-B204, Washi

D.C. 20554, and serve with copies: (1) Johanna Mikes,

Common Carrier Bureau, 445 12" Street, S.W., Room 5-

C163, Washington, D.C. 20554; (2) Christopher Libertelli,

Common Carrier Bureau, 445 12" Street, S.W., Room 5-

C264, Washington, D.C. 20554; (3) Carl Kandutsch, Cable

Services Bureau, 445 12” Street, S.W., Room 3-A832,

Washington, D.C. 20554; (4) Douglas Sicker, Office of

Engineering and Technology, 445 12° Street, S.W., Room 7-

A325, Washington D.C. 20554; (5) Robert Cannon, Office of

Plans & Policy, 445 12” Street, S.W., Room 7-B410,

Washington, D.C. 20554; and (6) International Transcription

Service, Inc. (ITS), 445 12” Street, S.W., CY-B402,

Washington, D.C. 20554, (202) 857-3800.

63. Because many of the matters on which we request

comment in this Notice may call on parties to disclose

proprietary information such as market research and business

or technical plans, we suggest that parties consult 47 C.F.R. §

0.459 about the submission of confidential information.

64. Alternate formats (computer diskette, large print, audio

recording, and Braille) are available to persons with

disabilities by contacting Brian Millin at (202) 418-7426

voice, (202) 418-7365 TTY, or at bmillin@fcc.gov. This

Notice of Inquiry can also be downloaded in MS Word and

ASCII formats at www.fcc.gov/cib/dro.

V. ORDERING CLAUSE

65. Accordingly, IT IS ORDERED, that pursuant to

authority contained in sections 4, 201-202, 303, 403, and 601

44a

of the Communications Act of 1934, as amended, 47 U.S.C.

Sections 154, 201-202, 303, 403, 521 and section 706 of the

Telecommunications Act of 1996, this Notice of Inquiry IS

ADOPTED.

FEDERAL COMMUNICATIONS

COMMISSION

Magalie Roman Salas

Secretary

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.