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Groups bristle at FCC report on high-speed Net

Federal regulators repeat their stance that the nascent high-speed Internet industry shouldn't be regulated, inciting the ire of pro-consumer groups and rekindling the debate over access to cable networks.

Federal regulators today reiterated their stance that the nascent high-speed Internet industry should not yet be regulated, inciting the ire of pro-consumer groups and rekindling the debate over access to cable networks.

A new staff report from the Federal Communications Commission concluded that regulators should show restraint with regard to the high-speed, or broadband, Internet industry, which is still in its infancy.

Internet service providers (ISP) and consumer groups want regulators to force cable companies to allow competitors to use their networks for high-speed Net access. Without this right, often referred to as "open access," cable operators will maintain a stranglehold on broadband services and could artificially inflate prices, they contend.

But the cable industry is vehemently opposed to open access, saying the billions of dollars companies have invested in upgrading cable networks would be for naught if ISPs were simply allowed to piggyback on networks they don't own.

Although three local governments have passed open access laws in the United States, the FCC has declined several times to issue a formal ruling and has drawn criticism for failing to establish a national policy.

FCC chairman William Kennard already has supported the cable industry's position on the issue in a closely watched court case in Portland, Oregon, scheduled to begin next month.

Today's report underscores the FCC's position, but also serves to discourage local officials in Portland, Broward County, Florida, and Fairfax County, Virginia, who already have imposed open access requirements from regulating cable Net access.

"I hope this will be a useful source of information for local authorities" and that they "come to the conclusion that the best policy for now is watchful restraint," Kennard told Bloomberg.

Because of the unique locally regulated nature of the cable industry, AT&T's ongoing MediaOne Group merger approval process opens Ma Bell to the scrutiny of hundreds, if not thousands, of local government agencies. The cable industry, and apparently the FCC, is concerned many of them are not prepared to make decisions over the intricacies of cable Net access.

"Whether or not the commission intended it for any particular purpose, it's a must-read for any local government considering this issue," said Blair Levin, a former FCC chief of staff and a public policy consultant for Excite@Home, the cable modem service provider in which AT&T owns a significant stake.

See related newsmaker: William Kennard "The FCC looked past the rhetoric and looked at the reality of what's going on in the market," Levin said. "What the facts show is the marketplace is working and delivering services for the betterment of consumers."

But pro-consumer groups were upset with today's report.

In a letter sent to Kennard today, the Center for Media Education, Consumer Federation of America, Consumers Union, Media Access Project, and OMB Watch said they are "distressed" that the commission released a report "evidently intended to dissuade local franchising authorities from insisting that cable TV franchisees offer consumers the opportunity to choose among competing Internet service providers."

Similarly iAdvance, a telco-backed group led by former White House press secretary Mike McCurry and former Congresswoman Susan Molinari, also lashed out at the FCC.

"Unfortunately, what the FCC report doesn't say about deregulation of the Internet is that they continue to reduce consumer choice by restricting the local phone companies' ability to offer complete high-speed Internet services," the group said in a statement.

The ongoing bickering comes only weeks ahead of a widely anticipated federal appellate court case on cable access. AT&T has sued the city of Portland and surrounding Multnomah County for its decision to impose cable access requirements last year.

Opening arguments are scheduled for early next month in Portland.

Bloomberg contributed to this report.