Pole Attachment Development (March 29, 2005)
Supreme Court Hears Brand X Case

Date: Mar 29, 2005

The Supreme Court this morning heard oral arguments in the Brand X case, which may shape the future of the Internet and decide whether cable modem providers and others, including perhaps Broadband over Power Line ("BPL") providers, must open their systems to competing ISPs. For pole attachment purposes, the ruling will determine whether utility pole owners may charge cable operators higher pole attachment rates for attachments that are used for both cable television and cable modem services.

As you may recall, in 2003, the U.S. Court of Appeals for the Ninth Circuit held that the transmission component of cable broadband service is a "telecommunications service." That ruling contradicted the FCC's earlier determination that cable modem service is merely an "information service." Information services are lightly regulated under Title I of the Communications Act, but telecommunications providers must comply with numerous regulations under Title II, including a requirement to provide nondiscriminatory open access. With respect to pole attachments, cable operators offering cable modem services are currently eligible for the "cable-only" attachment rate, but would have to pay the much higher "telecom" rate if cable modem service were deemed to be telecommunications.

In reaching its decision, the Ninth Circuit disregarded the 2002 FCC ruling, and instead relied on its own precedent which predated the FCC ruling. The cable industry and the FCC argued that disregarding the FCC ruling violates the Chevron doctrine, which requires courts to give deference to the opinions of an expert agency if a statute is not clear on its face.

Much of the argument this morning focused on whether the Communications Act was clear on its face. The Court seemed considerably skeptical about the FCC's ruling that bundling data service with telecommunications somehow eliminated the telecom feature of the service. Justice Scalia grilled the Commission about whether its decision to regulate cable modem and DSL services as information services was driven by policy than an objective interpretation of the statute. Brand X's lawyer, on the other hand, argued uninterrupted that the Communications Act is clear on its face that cable modem service includes a telecommunications component.

A decision from the Court is expected this Summer. It is impossible to predict the outcome, but whatever the result, we expect the losing side to cross the street to Capitol Hill immediately to seek some sort of legislative solution.

Keller and Heckman LLP attended today's oral argument. If you have any questions or comments, please contact Tom Magee at 202-434-4128 or magee@khlaw.com.