Ninth Circuit Reverses District Court in AT&T v. Portland

(June 22, 2000) The U.S. Court of Appeals issued its opinion reversing the District Court in AT&T v. Portland. The appeals court concluded that Portland cannot condition approval of the transfer of the TCI cable franchise upon AT&T's granting open access to its broadband cable facilities to competing ISPs.

The Appeals Court reasoned in its Opinion that broadband cable Internet access is not a cable service, as the City of Portland had argued, and District Court Judge Owen Panner had concluded. Rather, the Appeals Court concluded that it is a telecommunications service. While the opinion prevents local governments from imposing "open access" conditions, it greatly expands the regulatory authority of the Federal Communications Commission.

The main issue in the case AT&T v. Portland is whether Portland, and other local cable franchising authorities, can impose conditions on providers of broadband cable Internet access.

AT&T has been spending many billions of dollars to acquire cable companies and upgrade their facilities to provide Internet access and telephony. It acquired TCI in 1999, and then sought approval from local franchising authorities to transfer TCI's cable licenses to AT&T.

The City of Portland adopted an ordinance in December 1998 that required AT&T to open its cable facilities to competing Internet Service Providers (ISPs). AT&T did not want to give its competitors a free ride on its facilities, so it refused, and filed suit in federal court against Portland.

Senior U.S. District Court Judge Owen Panner issued his Opinion in June of 1999, in which he agreed with Portland that it does have authority to impose open access conditions.

The Court of Appeals reversed the District Court, and ruled that Portland, and other local franchising authorities cannot impose open access conditions upon operators of broadband cable Internet access facilities.

Most of the public discussion of "open access" has focused on policy arguments. However, the analysis contained in the opinions of the two courts, as well as in the briefs of the parties, and amicus curiae participants, has focused primarily on the applicable federal statutes.

The Appeals Court began by noting that while the parties and amici had made extensive policy arguments, it was ill prepared to set Internet policy, and would merely interpret the relevant statutes and case law.

The Appeals Court then began its analysis of relevant statutes. The City of Portland based its claim of authority to impose an open access condition upon the Cable Act of 1984. AT&T concurred that broadband cable Internet access is a cable service within the meaning of the Cable Act, but further argued that this Act prevents local authorities from imposing open access conditions.

District Court Judge Panner agreed with both parties that the Cable Act applies in this case, and agreed with Portland the it had authority under the Act to impose open access conditions.

The Appeals Court however, concluded that broadband cable Internet access is not a cable service, and hence, the Cable Act does not apply. And therefore, Portland has no statutory authority upon which to base its imposition of open access conditions.

The Appeals Court explained why broadband cable Internet access is not a cable service:

"The Act defines "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 or use of such video programming or other programming service." 47 U.S.C. § 522(6). For the purposes of this definition, "video programming" means "programming provided by, or generally considered comparable to programming provided by, a television broadcast station, " 47 U.S.C. § 522(20), and "other programming service " means "information that a cable operator makes available to all subscribers generally." 47 U.S.C. § 522(14). The essence of cable service, therefore, is one-way transmission of programming to subscribers generally.

This definition does not fit @Home. Internet access is not one-way and general, but interactive and individual beyond the "subscriber interaction" contemplated by the statute. Accessing Web pages, navigating the Web's hypertext links, corresponding via e-mail, and participating in live chat groups involve two-way communication and information exchange . . ."

However, while this could have concluded the Appeals Court's analysis, the Court went on. It also concluded that broadband cable Internet access is a telecommunications service!

The FCC has wide regulatory authority over telecommunications services. It has less authority over cable services, and it must share that authority with local governments. One interpretation that none of the parties, the FCC, or either court advanced is that broadband cable Internet access is an Internet service, and hence unregulated.

	William Kennard

Before the Portland imposed its open access condition upon AT&T in December 1998, the Federal Communications Commission had already approved the transfer of federal licenses associated with AT&T's acquisition of TCI. In that proceeding the FCC declined to impose any open access condition upon AT&T.

The FCC also filed an amicus brief with the Court of Appeals. However, it declined to take a position as to whether broadband cable Internet access is a cable service, telecommunications service, or what.

After the Appeals Court ruled, FCC Chairman William Kennard released a written statement. He had this to say:

"Today’s court decision recognizes that Congress established a national framework to govern high-speed Internet access. We share the goal of municipalities that consumers should be able to point, click and choose their Internet service provider. Our policies will continue to promote choice among providers for content and conduit, while fostering an environment of investment and innovation."

Jim Cicconi, AT&T general counsel, also released a statement:

"We’re pleased with today’s ruling because it clarifies decisively the limits of local authority when it comes to the provision of high-speed Internet access over cable.

Now that the court has made clear Congress’ intent to bar ordinances like the one enacted by Portland, AT&T and other cable companies will be able to get on with investments that will bring advanced services to millions of Americans. In particular, AT&T looks forward to bringing our high-speed service to the people of Portland as soon as possible."