FCC Wants No Regulation of Cable Access for 'Net

While local governments have asked the U.S. Federal Communications Commission to force cable operators to open up their cable networks to competing Internet access providers, the FCC is now saying it prefers a hands off approach and that regulation by local governments will deter competition.

In a speech at a Federal Communications Bar Association meeting in San Francisco yesterday FCC Chairman William Kennard said the agency wants to ensure a "deregulatory approach" for its national broadband policy.

On the same day 4,000 members of the National Association of Counties at an annual meeting in St. Louis, Missouri, passed a resolution urging the FCC and U.S. Congress to promote open access to cable systems, according to a statement by the association issued yesterday.

When local authorities demand open access to the cable networks at the insistence of competing Internet access providers -- as in Portland, Oregon, and parts of Broward County, Florida -- the adoption of Internet connectivity over cable will be hampered, said Kennard. Today less than two-thirds of a million homes access the Internet via cable out of the 30 million homes using the Internet.

"So how do we get Americans broadband pipes?" Kennard asked. The FCC expects that cable operators will open up their networks for access when the cable market matures, he said, adding that normal competition mechanisms also will secure consumers a choice of providers.

"Where cable modem service has been introduced, DSL (digital subscriber line) has followed," he said. DSL is a technology for carrying digital information over older, copper telephone wires. Kennard also mentioned the options of wireless access and connectivity via satellites.

The FCC will intervene in a court case in Oregon in order to establish a no-regulation policy nationwide, Kennard said.

"Disturbed by the effect that the actions of local... authorities could have on this policy and on the deployment of broadband, I have asked our general counsel to prepare a brief to be filed in the pending Ninth Circuit case," he said.

In that case, AT&T has appealed a federal judge's ruling last month that local regulators can force AT&T to open its cable network. AT&T sued after the city of Portland demanded AT&T to do so. AT&T executives claim the ruling will discourage the company from making future infrastructure investment. [See "Florida Vote on 'Net over Cable Could Signal Trend," July 14.]Kennard said the no-regulation approach to the Internet has resulted in the U.S. being far ahead of other nations when it comes to the competition in the Internet service provider (ISP) market, conditions for consumers and penetration of Internet use.

He referred to a study done by the FCC Office of Plans and Policy entitled "The FCC and the Unregulation of the Internet", released on Monday. According to the study, consumers and businesses in more regulated countries are charged higher rates for Internet access, resulting in fewer people being online.

However, the National Association of Counties (NAC) believes that it is essential that local government authorities have the authority to require that all cable companies provide open access, according to a written statement from the Washington-based organization. NAC members come from 1,800 counties representing more than 75 percent of all counties in the U.S.

According to a letter from an NAC official addressed to the participants of the St. Louis-based convention, cable companies are threatening to withhold services from communities where local authorities demand that they open their cable networks to competitors.

"We should not and cannot stand by silently," wrote Rene Mansho, Honolulu city councilwoman and chairwoman of NAC's Transportation and Telecommunications.

NAC officials said they passed the resolution partially because the FCC had hinted that it might support AT&T's position in the appeals court.

AT&T is a dominant player at the cable market after acquiring two of the market's largest cable companies, Tele-Communications Inc. and Media One Group Inc.

Meanwhile, the OpenNet Coalition, representing about 200 Internet service providers, issued a statement today calling the FCC's hands-off policy a "surrender", an "abdication of responsibility", "not a policy."

Such a policy will only help AT&T turn a "cable monopoly into and Internet monopoly," the group said.

OpenNet now expects rates for cable Internet access to "skyrocket," just as rates for cable TV have gone up substantially, according to the statement.

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