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Editor's Notes: No. 99-35609 IN THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT Appellants, v. CITY OF PORTLAND, et al., Appellees. ON APPEAL FROM THE UNITED STATES DISTRICT COURT AMICUS CURIAE BRIEF OF THE
IN THE UNITED STATES COURT OF APPEALS No. 99-35609 AT&T CORPORATION, et al., v. CITY OF PORTLAND, et al., AMICUS CURIAE BRIEF OF THE Pursuant to Rule 29(a) of the Federal Rules of Appellate Procedure, the Federal Communications Commission ("FCC" or "the Commission") respectfully files this amicus curiae brief. As the agency charged with implementing federal communications policy, the FCC has a special interest in this case, which raises important issues regarding the deployment of high-speed methods of Internet access.
The FCC has been studying the use of telecommunications facilities to provide access to computer-stored data for more than 30 years, although this inquiry has taken on a more urgent focus in light of the recent growth of the Internet. At present, the vast majority of small businesses and consumers use relatively slow "narrowband" services to access the Internet. In 1996, Congress directed the Commission, in section 706 of the Telecommunications Act, to monitor the development of broadband capability and, if necessary, to take steps to accelerate the deployment of broadband capability. See generally Advanced Services Report, 14 FCC Rcd 2398 (1999) (Exhibit 1). Section 706(c) emphasizes that the "advanced telecommunications capability" that the Commission is to monitor may "us[e] any technology" and therefore is defined "without regard to any transmission media or technology." Pub. L. No. 104-104, Title VII, § 706(c), 110 Stat. 153 (1996) (reproduced in the notes under 47 U.S.C. § 157). Although this case involves only facilities owned by cable operators, to understand the open access issue it is necessary to recognize that broadband capability may be provided through the use of facilities owned by wireline telephone companies and wireless operators, and through the use of satellites as well.
In 1966, the FCC initiated an inquiry into the use of computer-based services over telephone lines. Although basic telephone service is subject to extensive common carrier regulation pursuant to the terms of Title II of the Communications Act (see 47 U.S.C. 201 et seq), the FCC has largely refrained from regulating computer data services that are provided over telecommunications facilities. See generally California v. FCC, 905 F.2d 1217, 1223-30 (9th Cir. 1990) (discussing the history of the FCC's three Computer Inquiries). Thus, the FCC has long distinguished between basic "telecommunications" or "transmission" services, on the one hand, and "enhanced services" or "information services" that are provided by means of telecommunications facilities, on the other hand. Congress in 1996 codified the FCC's long-standing distinction by adding new definitions to the Communications Act. The Act now 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). The Act defines "information service" as "the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications." 47 U.S.C. § 153(20). As these definitions make clear, an information service is distinct from, but uses, telecommunications. For example, lawyers regularly use telecommunications lines to access Westlaw, which is an information service. Similarly, many Internet service providers (ISPs) provide both access to the Internet and proprietary content, and their subscribers use telecommunications lines to access their services. Applications for Consent to the Transfer of Control of Licenses and Section 214 Authorizations from TCI to AT&T, 14 FCC Rcd 3160, 3192-96 (¶¶ 63-72) (1999) ("TCI Order") (Exhibit 2). Commission staff believe that the FCC's regulatory restraint with respect to information services has significantly facilitated the explosive growth of the Internet. See Oxman, The FCC and the Unregulation of the Internet, FCC Office of Plans and Policy, Working Paper No. 31 (July 1999) (as Exhibit 3).
Between 1993 and 1997, the number of computers linked to the Internet grew from 1.3 million to over 16 million. By 1998, 51 percent of the nation's public school classrooms had Internet access. And in 1998 alone, commercial transactions on the Internet generated $300 billion and 1.2 million jobs in this country. Oxman, The FCC and the Unregulation of the Internet, at 4. Widespread deployment of "broadband" capability is expected to accelerate the growth rate of the Internet and make it even more useful. As noted previously, Congress in 1996 anticipated the increasing importance of broadband technology and, in section 706 of the 1996 Telecommunications Act, directed the FCC to monitor its deployment and, if warranted, to take steps to accelerate its deployment. Section 706(b) of the 1996 Act provides:
Pub. L. No. 104-104, Title VII, § 706(b), 110 Stat. 153 (1996) (reproduced in the notes under 47 U.S.C. § 157). Section 706 is entitled "advanced telecommunications capability," which Congress defined "without regard to any transmission media or technology, as high-speed, switched, broadband telecommunications capability that enables users to originate and receive high-quality voice, data, graphics, and video telecommunications using any technology." Pub. L. No. 104-104, Title VII, § 706(c), 110 Stat. 153 (1996) (reproduced in the notes under 47 U.S.C. § 157). The FCC, in turn, defined "broadband" as "having the capability of supporting, in both the provider-to-consumer (downstream) and the consumer-to-provider (upstream) directions, a speed (in technical terms, ‘bandwidth') in excess of 200 kilobits per second (kbps) in the last mile" of the transmission. Advanced Services Report ¶ 20. [1] The FCC explained that it chose "200 kbps because it is enough to provide the most popular forms of broadband -- to change web pages as fast as one can flip through the pages of a book and to transmit full-motion video." Id. As noted, broadband access is generally available to medium and large businesses at present, but not to small businesses and consumers, which overwhelmingly use slower "narrowband" technology. Id. at ¶¶ 26-33; see also TCI Order ¶ 67. The Commission made clear that "broadband service does not include content, but consists only of making available a communications path on which content may be transmitted and received." Advanced Services Report ¶ 23. The Commission also observed that the proliferation of broadband capability holds the promise of substantial benefits for numerous sectors of American society: "Broadband makes it possible to send and receive enormous amounts of digital information at high rates of speed. Widespread access to broadband capability can increase our nation's productivity and create jobs. Access to broadband can also meaningfully improve our educational, social, and health care services." Id. at ¶ 2. For example, broadband capability could dramatically expand opportunities in the burgeoning field of electronic commerce, enable consumers to download full-length movies in a matter of minutes, and allow Americans to learn, work, and obtain health care in the comfort of their own homes. Id. at ¶ 3. The agency also emphasized that "whether a capability is broadband does not depend on the use of any particular technology or [the] nature of the provider." Advanced Services Report ¶ 23. In fact, consumers currently can obtain high-speed Internet access from a wide array of providers using various technologies: cable operators, wireline telephone companies, providers of wireless telecommunications service, and a satellite communications firm. See Advanced Services Report, 14 FCC Rcd at 2431 (Chart 2). Because "different companies are using different technologies to bring broadband to residential consumers," and because "each existing broadband technology has advantages and disadvantages as a means of delivery to millions of customers," the Commission saw the potential for "intermodal competition, like that between trucks, trains, and planes in transportation." Id. at ¶ 48. In light of this possibility, the Commission concluded: "[W]e do not foresee the consumer market for broadband becoming a sustained monopoly or duopoly." Id. at ¶ 52.
Many commenters in the section 706 proceeding advocated the imposition of an "open access" requirement on cable operators.[2] However, because the record in the Advanced Services Report suggested "that multiple methods of increasing bandwidth are or soon will be made available to a broad range of customers," the Commission saw no reason "at this time" to require cable operators to open their broadband systems to all ISPs. Advanced Services Report ¶ 101. The Commission therefore concluded that, for the time being, mandatory open access to cable modem platforms was unnecessary to promote broadband deployment: "We 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." Id. More generally, the Commission concluded in the Advanced Services Report that "the deployment of advanced telecommunications capability to all Americans appears, at present, to be proceeding on a reasonable and timely schedule." Advanced Services Report ¶ 91. The Commission noted that broadband deployment at this stage compares favorably with the market penetration rates for other communications services at similar points in their development (e.g., the original telephone in the 1870s, over-the-air black-and-white television in the late 1940s, color television in the 1950s, and cellular service in the mid-1980s). Id. at ¶¶ 31-33, 91-92. [3] At the same time, the Commission acknowledged that its tentative conclusion regarding broadband deployment was "based partly on actual deployment and partly on certain assumptions and predictions." Advanced Services Report ¶ 7. The Commission also recognized that its assessment of deployment reflected "a static snapshot taken at the present moment." Id. at ¶ 93. To fulfill its mandate under section 706, the Commission indicated that it would "continue to monitor closely the deployment of broadband to all Americans." Id. Specifically, the Commission announced plans to issue reports on broadband deployment during each calendar year. Id. at ¶ 19. It also declared that it would take action "to reduce barriers to competition" in the market for broadband capability "so that companies in all segments of the communications industry have the incentive to innovate and to deploy new technologies and services to all Americans." Id. at ¶ 18.
The FCC declined to order open access when it approved the transfer of TCI's federal licenses to AT&T. In so concluding, it relied upon the undesirability of undermining the potential for intermodal competition at this nascent stage in the development of broadband capability and the fact that the AT&T-TCI merger, in and of itself, would have no effect at all on open access issues. 1. Whenever communications companies seek to merge, they must apply to the FCC for permission to transfer control of federal licenses. See 47 U.S.C. § 310(d). If the Commission determines that the proposed merger would serve the public interest, it approves the transfer of control. See, e.g., SBC Communications Inc. v. FCC, 56 F.3d 1484 (D.C. Cir. 1995). When AT&T and TCI decided to merge in 1998, they therefore applied to the FCC for consent to transfer control of various licenses and authorizations from TCI to AT&T and contended that the transfers would serve the public interest. In February 1999, the Commission granted this transfer application, subject to certain conditions. [4] In the course of reviewing the transfer application filed by AT&T and TCI, the Commission considered, in some detail, whether to require these companies to provide ISPs with nondiscriminatory access to TCI's cable modem platform. See TCI Order ¶¶ 60-91. Like other cable operators, TCI recently has been upgrading its facilities so that, in addition to sending video signals on a one-way path to its subscribers' televisions, it also may use its facilities to send data to and receive data from its subscribers' computers. This "cable modem service" provides "Internet access with much higher transmission speeds than dial-up services." TCI Order ¶ 70. For TCI's cable systems, its @Home affiliate "is the exclusive provider of Internet access and its proprietary content." Id. at ¶ 72. Thus, @Home provides both transmission capability and content: (1) "@Home provides the servers, routers, and other Internet access support facilities and manages the use of the cable network for data delivery services;" and (2) "In addition, @Home directly and through partnerships also offers unique content, including audio, video, and interactive functionalities." Id. In the FCC's proceeding on the proposed AT&T-TCI merger, a number of parties argued that, if the merger were approved, "there is a significant risk that AT&T-TCI (through @Home) will have a substantial head start in the provision of high-speed Internet access and could develop an insurmountable position as a monopoly provider (or duopoly provider together with incumbent LECs) of broadband Internet access services to residential customers." TCI Order ¶ 75. Citing these concerns about AT&T's potential dominance of the Internet access market, opponents of the merger contended that the FCC should not approve TCI's transfer of control to AT&T unless AT&T provided competing ISPs with open access to TCI's cable modem platform. Id. AT&T and TCI opposed the imposition of conditions of that sort, arguing that such conditions would "impose substantial investment costs and expenses on @Home, which will only delay and diminish its deployment of broadband services to residential customers." TCI Order ¶ 89. In support of AT&T's position, the National Cable Television Association submitted a report concluding that "‘exclusive bundling' by @Home is needed to reduce risk and provide adequate revenue streams to support investment in broadband cable upgrades." Id. at ¶ 90. Several members of the financial community agreed that "equal access would harm the deployment of advanced telecommunications infrastructure." Id. 2. After evaluating the competing arguments concerning open access, the Commission decided to approve the AT&T-TCI merger without imposing an open access condition. In reaching this conclusion, the Commission relied in part on AT&T's and TCI's representation that TCI subscribers could continue to bypass @Home and gain direct access to other providers of Internet content services through a "bring-your-own-access" plan: "Based on this representation, we conclude [that] nothing about the proposed merger would deny any customer (including AT&T-TCI customers) the ability to access the Internet content or portal of his or her choice." TCI Order ¶¶ 95-96. In other words, nothing would change as the result of the transfer of the licenses from TCI to AT&T. The Commission added that "the open access issues would remain equally meritorious (or non-meritorious) if the merger were not to occur." Id. at ¶ 96. It accordingly concluded that "the equal access issues raised by parties to this proceeding do not provide a basis for conditioning, denying, or designating for hearing any of the requested transfers of licenses and authorizations" from TCI to AT&T. Id. The Commission also saw no need to condition the AT&T-TCI merger on mandatory open access because, as it previously found in the Advanced Services Report, "many other firms already are deploying or seeking to deploy high-speed Internet access services to residential customers using other distribution technologies, and ... some of these firms may emerge as competitors in markets served by @Home." TCI Order ¶ 74. In particular, the Commission noted that: (1) "[i]ncumbent LECs have been developing the capability through xDSL technology to deliver high-speed Internet access services over their twisted-pair wires connecting most homes to their networks"; (2) Hughes' DirecPC now offers satellite-based high-speed Internet service in every State except Alaska and Hawaii; (3) "[i]n several cities, electric utilities or ‘wireless cable' companies are also providing high-speed Internet access services" to residential customers; and (4) a number of other companies are actively exploring entry into residential markets for high-speed Internet access services. Id.
After the FCC approved the merger between AT&T and TCI, the two companies applied to the relevant local franchising authorities to transfer control of TCI's local cable franchises to AT&T. The franchising authorities for Portland and Multnomah County, Oregon, refused to transfer TCI's cable franchises unless AT&T agreed to comply with local ordinances that conditioned the transfer on compliance with an "open access" requirement. [5] AT&T filed this lawsuit challenging the condition. The district court rejected AT&T's claims (AT&T Corp. v. City of Portland, CV 99-65-PA (D. Ore. June 3, 1999)), and AT&T appealed. INTRODUCTION AND SUMMARY OF ARGUMENT AT&T principally argues that the imposition of an open access requirement by the local franchising authorities is contrary to various provisions found in the "Cable Communications" title of the Communications Act. That Act created the FCC for the purpose of "mak[ing] available ... a rapid, efficient, Nation-wide, and world-wide wire and radio communication service with adequate facilities at reasonable charges ... and for the purpose of ... centralizing authority." 47 U.S.C. § 1. The Supreme Court recently emphasized that the FCC is entitled to considerable deference in its interpretation of provisions of the Communications Act. AT&T v. Iowa Utilities Board, 119 S. Ct. 721, 738 (1999). By bringing its dispute directly to federal court rather than seeking relief from the Commission, AT&T has put this Court in an awkward position. Each of AT&T's statutory arguments is premised on its view that cable modem service is a "cable service" within the meaning of section 602(6) of the Communications Act rather than an "advanced telecommunications service" within the meaning of section 706 of the 1996 Telecommunications Act. The local franchising authorities accept AT&T's premise that cable modem service is a "cable service" within the meaning of section 602(6) -- otherwise, they would have no authority to order open access. But the Commission has noted the existence of a serious dispute concerning the proper classification of cable modem service, although it has not yet resolved the issue. See TCI Order ¶¶ 82-83; Advanced Services Report ¶¶ 100-101. Similarly, AT&T contends that various provisions of the Communications Act preempt the local franchising authorities in and of themselves. But even if that is not so, in City of New York v. FCC, 486 U.S. 57 (1988), the Supreme Court held that a federal agency acting within the scope of its authority may preempt local franchising authorities even if the statutory provision giving it authority does not by its terms preempt. As the Court explained, "a 'narrow focus on Congress' intent to supersede state law [is] misdirected,' for '[a] pre-emptive regulation's force does not depend on express congressional authorization to displace state law.'" Id. at 64 (quoting Fidelity Federal Savings & Loan Ass'n v. De la Cuesta, 458 U.S. 141, 154 (1982)). The FCC has not had occasion to address any of the particular arguments advanced by AT&T in this case. However, the Commission has cautioned against regulatory actions that could skew the development of broadband capability or delay broadband deployment. Those concerns support as narrow a resolution of this case as possible.
It is understandable why the district court in this case assumed that the provision of Internet access through a cable modem is a "cable service" subject to Title VI of the Communications Act. Both plaintiffs and defendants agreed on that premise, and no party to this case suggested that Internet access via cable could be anything but a cable service. In proceedings before the FCC, however, many parties have vigorously contested the notion that Internet access provided by a cable system is a cable service. See TCI Order ¶ 83. According to these parties, cable modem service is more properly categorized as a "telecommunications" or "information service." To date, the Commission has not decided whether broadband capability offered over cable facilities is a "cable service" under the Communications Act, or instead should be classified as "telecommunications" or as an "information service." The answer to this question is far from clear. The statute itself does not provide a definitive answer. And even Portland and Multnomah County recognize that the legal status of Internet access is not free from doubt. Both of the challenged ordinances state that certain requirements will apply to cable modem service only "[s]o long as cable modem services are deemed to be ‘cable services'" governed by Title VI of the Communications Act. Strong arguments have been advanced in support of the argument that Internet access via cable is not a cable service. As an initial matter, the Court should be aware that not every service offered over cable facilities is a "cable service" under the Communications Act. Congress first defined the term "cable service" as part of the Cable Communications Policy Act of 1984, Pub. L. No. 98-549, 98 Stat. 2779 ("1984 Cable Act"). Initially, Congress 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." 47 U.S.C. § 522(6) (1984). For 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), while "other programming service" means "information that a cable operator makes available to all subscribers generally." 47 U.S.C. § 522(14). As the legislative history of the 1984 Cable Act makes clear, the original definition of "cable service" did not include the types of services that are now commonly associated with Internet access. The House Report on the legislation emphasized that the Act's definition of "cable service" restricted subscriber interaction to the selection of categories or options provided by the cable operator or the programming service provider: "By contrast, interaction that would enable a particular subscriber to engage in the off-premises creation and retrieval of a category of information would not fall under the definition of cable service." H.R. Rep. No. 934, 98th Cong., 2d Sess. 42-43 (1984) ("House Report"). In other words, under the 1984 Cable Act, "services providing subscribers with the capacity to engage in transactions or to store, transform, forward, manipulate, or otherwise process information or data would not be cable services." Id. at 42. The House Report on the statute went on to identify several services that would not be cable services, including "shop-at-home and bank-at-home services, electronic mail, one-way and two-way transmission [of] non-video data and information not offered to all subscribers, data processing, video conferencing, and all voice communications." Id. at 44.[6] In 1996, Congress amended the statutory definition of cable service. As amended, the Communications 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) (emphasis added). AT&T and TCI have argued that Congress, by adding the words "or use," intended to expand the definition of "cable service" to include the wide range of interactive services encompassed by Internet access. See TCI Order ¶ 82. The legislative history of the 1996 Telecommunications Act provides some support for AT&T's and TCI's position. The Conference Report on the statute declares: "The conferees intend the amendment [of the definition of cable service] to reflect the evolution of cable to include interactive services such as game channels and information services made available to subscribers by the cable operator, as well as enhanced services." S. Conf. Rep. No. 230, 104th Cong., 2d Sess. (1996) ("Conference Report") (emphasis added). The Conference Report's references to "information services" and "enhanced services" suggest that the amended definition of "cable service" may include the types of interactive cable broadband services that were previously excluded. The statute defines "information service" as "the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications." 47 U.S.C. § 153(20). And the FCC's rules define "enhanced services" to include services that "involve subscriber interaction with stored information." 47 C.F.R. § 64.702(a). On the other hand, notwithstanding the 1996 amendment, one basic aspect of the definition of cable service remains unchanged: A service cannot be a "cable service" unless it qualifies as "video programming" or "other programming service." The 1996 Telecommunications Act did not alter the definitions of "video programming" or "other programming service." Unless Internet access fits one of these definitions, it cannot qualify as "cable service." Proponents of the view that Internet access is a form of "cable service" generally do not argue that it is a form of "video programming" comparable to that offered by a television broadcast station (see 47 U.S.C. § 522(20)), but instead contend that Internet access fits the definition of "other programming service" -- that is, "information that a cable operator makes available to all subscribers generally." 47 U.S.C. § 522(14). But it is not clear that Internet access meets this description. Arguably, the "information" that an individual subscriber obtains via Internet access -- for example, E-mail or access to a specific web site chosen by the subscriber -- is provided only to that particular subscriber. In that respect, this information may not be made "available to all subscribers generally." AT&T and TCI appear to argue that a cable operator makes information "available to all subscribers generally" simply by providing subscribers with the capability to gain access to the Internet. Under this broad statutory interpretation, however, "other programming service" would arguably include any transmission capability that enables subscribers to select and receive information, including basic telephone service. And Congress stated that its 1996 amendment of the definition of cable service was not intended to eliminate the longstanding regulatory distinction between telecommunications service and cable service: "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." Conference Report at 169. A number of parties have argued that Internet access services "are information services or telecommunications services covered by Title II" of the Communications Act. TCI Order ¶ 83. Currently, when Internet access service is provided over telecommunications facilities, the Commission treats that service as an information service. See Federal-State Joint Board on Universal Service, Report to Congress, 13 FCC Rcd 11501, 11536-40 (¶¶ 73-82) (1998) (Exhibit 5). If the same type of Internet access service is offered over cable systems as well as telephone networks, it is not readily apparent why the classification of the service should vary with the facilities used to provide the service. Alternatively, Internet access over cable could be classified as the sort of "advanced telecommunications capability" identified by section 706 of the 1996 Telecommunications Act. Functionally, Internet access provided through cable modems is no different from the broadband capability provided over other facilities such as the wireline telephone network, wireless telecommunications systems, or satellite facilities. If the Commission were to treat cable modem service as "advanced telecommunications capability," it would have the opportunity to develop a coherent regulatory policy that took into account the full range of broadband service providers, including cable systems. Local franchising authorities would have no such opportunity because they have no regulatory authority over broadband service providers other than cable systems. Thus, local regulation of a cable system's broadband services as "cable services" might pose a significant risk of regulatory disparity with respect to all other broadband service providers. Any such disparity might undermine the objectives of section 706 by impeding the reasonable and timely deployment of advanced telecommunications capability to all Americans. More generally, on a conceptual level, an argument can be made that Internet access is more appropriately characterized as an information or telecommunications service rather than a cable service. At the most basic level, there are two kinds of communications service networks: (1) broadcast (one-to-many) networks, in which the distributor chooses the content and sends it to all customers; and (2) switched (one-to-one) networks, in which the customer chooses the content and sends it to the person(s) of his or her choice. The first type of network best describes cable service; the second type of network most accurately depicts telecommunications and information services. Some have argued that Internet access more closely resembles the switched network. However, the Commission has not yet conclusively resolved the issue.
The district court erred when it stated that local regulation of cable service can only be preempted by an "unmistakably clear" statutory provision. See slip op. at 7. The Supreme Court has held that even in the absence of express statutory preemption, the FCC may preempt local cable regulations that conflict with federal policy, so long as the Commission acts "within the scope of its congressionally delegated authority." City of New York, 486 U.S. at 63 (quoting Louisiana Public Service Commission v. FCC, 476 U.S. 355, 369 (1986)). In City of New York, various municipalities argued that the FCC could not preempt local technical standards governing cable television because the pertinent statutory provision on that subject, section 624(e) of the Communications Act, 47 U.S.C. § 544(e), did not expressly authorize federal preemption. The Supreme Court disagreed. It concluded that in cases involving preemption by federal regulation, "a ‘narrow focus on Congress' intent to supersede state law [is] misdirected,' for ‘[a] preemptive regulation's force does not depend on express congressional authorization to displace state law.'" City of New York, 486 U.S. at 64 (quoting De la Cuesta, 458 U.S. at 154). Thus, with or without express Congressional authorization, the FCC may preempt local cable regulations so long as it is "acting within the scope of its congressionally delegated authority," and so long as it "explicitly state[s] its intent to exercise exclusive authority ... and to pre-empt state and local regulation." City of New York, 486 U.S. at 63, 65 (internal quotations omitted).[7] So even if Internet access via cable is properly characterized as a "cable service" under the Communications Act, the FCC would have authority to preempt local regulation of that service to the extent such regulation conflicted with a permissible federal policy. Although this case does not involve a question of agency preemption of the sort that was at issue in City of New York, the Court should be aware that its decision will be widely read. It therefore would be preferable if the Court recognized the possibility of agency preemption even in the absence of express statutory preemption, and thus eliminated any confusion caused by the district court's discussion of this issue.
In the Advanced Services Report (¶ 74, footnotes omitted), the Commission emphasized the need for caution by regulators: "[W]e need to be particularly careful about any action we take to promote broadband deployment, given the nascent nature of the residential market for broadband. At this time, the dimensions of broadband and the upper limits of market-based supply and demand are unclear." In particular, the Commission observed that "some actions could contravene the intent of section 706 that our broadband policy be technologically-neutral and could skew a potentially competitive marketplace." Id. This last point bears emphasis. The FCC is the only agency with jurisdiction over all of the current providers of broadband technology -- cable operators, wireline telephone companies, providers of wireless telecommunications service, and satellite communications firms. Local franchising authorities, in contrast, are in no position to implement technologically-neutral policies with respect to all these competitors. Those considerations support a narrow judicial resolution of the dispute before this Court. Ultimately, given the rapidly evolving technologies involved here, the Court should proceed with caution when it resolves this case. As Justice Souter observed in a related context, when "we cannot be confident that ... it will continue to make sense to distinguish cable from other technologies," and when "changes in these regulated technologies will enormously alter the structure of regulation itself," the courts "should be shy about saying the final word today about what will be accepted as reasonable tomorrow." Denver Area Educational Telecommunications Consortium v. FCC, 518 U.S. 727, 777 (1996) (Souter, J., concurring). For the foregoing reasons, the Court should recognize that there is an
unresolved controversy concerning the proper characterization of cable modem
service, keep in mind the possibility of agency preemption pursuant to City
of New York, and resolve the dispute presented in a narrow fashion.
August 16, 1999 [1] The Commission used the term "last mile" as shorthand for the local facilities and services that are used to complete Internet access transmissions. Advanced Services Report [2] There is no precise generally agreed upon definition of "open access." See TCI Order ¶ 86. Indeed, there is no agreed upon terminology, since what some parties refer to as "open access" others call "equal access" or "forced access." But as the ordinances at issue illustrate, the key requirement involves nondiscriminatory access to what the ordinances call the "cable modem platform" for ISPs that are not affiliated with the cable operator. Or as the FCC put it, open access is generally understood to require a cable operator to "offer broadband Internet access services unbundled from content so that subscribers may purchase one without the other" or to permit ISPs to purchase "transmission service" from the cable operator. Id. [3] In fact, investment in alternative platforms of broadband pipes has recently picked up significantly. For instance, America Online has made arrangements with several telephone companies to offer its services over DSL lines and has invested $1.5 billion in Direct PC, a satellite-based broadband service. See Corey Grice, AOL Sows High-Speed Seeds Around AT&T, July 22, 1999 <http:\\www.news.com\News\Item\9,4,39608,00.html>. [4] Previously, the Department of Justice had agreed to approve the AT&T-TCI merger so long as the merged company divested its interest in Sprint PCS, a firm that provides mobile wireless telephone services. See United States v. AT&T Corp., D.D.C. No. 98-3170 (proposed consent decree filed Dec. 30, 1998). [5] The Portland city council passed an ordinance that required the franchise "Transferee" -- i.e., AT&T -- to provide "non-discriminatory access to Franchisees' [i.e., TCI's] cable modem platform for providers of Internet and on-line services, whether or not such providers are affiliated with Transferee or Franchisees, unless otherwise required by applicable law." The Board of County Commissioners for Multnomah County adopted a resolution that included an identical "open access" provision [6] For a more detailed discussion of the 1984 Cable Act's definition of cable service, see Esbin, Internet Over Cable: Defining the Future In Terms of the Past, FCC Office of Plans and Policy, Working Paper No. 30, at 66-72 (August 1998) (Exhibit 4). [7] See also Lowest Unit Charge Requirements of Section 315(b), Declaratory Ruling, 6 FCC Rcd 7511, 7512 (¶¶ 9-14) (1991). | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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