Cable Internet Service Not Common Carrier

l2718 writes "The U.S. Supreme Court has agreed with the Federal Communications Commission that cable Internet service is an 'information service' rather than a 'telecommunication service.' This means that cable companies don't have to make their infrastructure open for competing ISPs to use. This is in distinction to the case of telephone companies and long-distance service, for example. For more information try the Center for Digital Democracy or read the Telecommunications Act."

Comments

The Real Problem Here

[Nom du Keyboard]

The real problem here, and why the court was wrong, is that the cable system is a monopoly granted by the city. Only they are allowed to run cable to your home. As such, there is no true competition -- and we are screwed by it!

Re:The Real Problem Here

[91degrees]

I don't think the court was wrong. I think this is a different problem. As a granted monopoly, the cities should have insisted several requirements were met, including allowing other services to lease bandwidth.

Re:The Real Problem Here

[jratcliffe]

Except for a VERY small number of cases (mostly subdivisions), cable is _not_ a monopoly by law. For the vast majority of local cable franchises, the franchise agreement is explicitly NOT exclusive - other providers are welcome to build networks and offer service. The problem is, nobody wants to. The economics of the cable business are such that, one provider will make good money - add a second provider, and both lose money. You need at least 40+% penetration of homes to justify the costs of building the network, and a secondary provider is highly unlikely to capture that many customers.

Re:The Real Problem Here

[ThosLives]

Seeking an audience with God Himself is much easier, actually.

(Apologies if someone else beat me to this observation).

Re:The Real Problem Here

[FauxPasIII]

> But how do you guarentee quality when the government owns the network?

Vote. Failing that, run for office.
Now, how do you guarantee quality when the network is controlled by a closed boardroom at one corporation?

Re:The Real Problem Here

[nine-times]

Personally, I think that the government should buy up the cable AND phone line networks, and let any company capable have service on it, but that's my "let everyone be equal" stance.

I think this is a compelling idea. I don't know enough to know if it would work well, but I could see an argument that communication lines are comparable to roads. You could still have the ISPs handing things like hosting, dns, dhcp, setup and support, without them being the group that actually lays down the lines.

Considering we're moving more and more toward having one network which provides all telecommunication (telephone, television, and internet on one line), I find it increasingly disturbing to imagine only one company (or only a couple) having a monopoly over how that network works.

I don't really want the government controlling my internet/tv/telephone network either, but I wonder if that would be a good compromise: the government lays down high-speed lines, and you get to choose a service provider who uses those lines.

Re:The Real Problem Here

[mugnyte]

"Everybody can run their own wires if they want to offer service" ??

I'm like to see your model extended to power and water. "everybody gets the chance to install" doesn't make much sense. The only concept your free-for-all has going for it is the lower impact of running wires on poles, than in digging for pipes and rigging transformers for power.

You may be surprised at this, but by removing the burden of maintaining the infrastructure, companies often excel at the service level. They pay only a fraction of the physical cost, since the market shares the burden, and they strive to offer more innovative value-added concepts to the service level. Phone companies demonstrate this, but so does the new availability of sat. radio, wireless ethernet, etc. The infrastructure commoditizes, so "what else you got?" comes out of the consumers mouths.

Also, the maintenance of said infrastructure can be sub-contracted out through bid and term-contracts by area. If standards of performance are not kept, a new vendor is selected to run the show for the term. I call this a more even balance. It doesn't remove the (existing) potential of cronyism and abuse, but it fragments the market based on specialization of service (wires/electricity/physical versus routing/bandwidth/add-ons). This is a similar model to that proposed to run public schools in many places.

Markets already naturally fragment in this fashion, where a new competitor springs up that "only does X, so we're cheaper". In the power industry, I write software to track accountability between users of shared infrastructure (lines). Not only does this model work, but the cost of your power depends on it.

Re:The Real Problem Here

[Olathe]

There is a huge problem with your argument. You focus, like a lot of people, way too much on the methods of doing something. They rarely matter.

Even if cable services are a natural monopoly, it doesn't matter. People do not want cable services. They want television programming and high-capacity Internet connections. There is no monopoly, natural or otherwise, in providing those (note DSL, satellite, home-grown wireless networks).

Even more important: if you think cable is a monopoly now, just wait until it's a "public" one. For a case study on that, look at letter delivery in the United States. The USPS is forced on people not because competition is impossible, but because it's outlawed.

Every government service moves unstoppably toward inefficiency and customer maltreatment. "Public" "servants" have no incentives to do well. The only known means of reliably providing such incentives is competition. Governments make sure they don't have it.

Re:The Real Problem Here

[wallykeyster]

You're probably right that cable is a natural monopoly. It doesn't necessarily follow that public ownership is the answer.

The alternative is to say a monopoly is okay and consumers don't need choice or competition in this huge market. A natural monopoly is not caused by illegal collusion and is not fixed by market forces.

Even a monopoly has to respond to market forces. Given that 80% rather than 100% of Americans have cable suggests that cable companies have found a point of maximal profit, but they don't set prices arbitrarily.

Why does a natural monopoly have to respond to market forces? Plenty of studies have shown significant price differences between cable markets with competition and those without. They only have to keep their prices within reason, based upon comparisons to cable service elsewhere or (only in the past few years) satellite service.

Furthermore, cable can't be a true monopoly in the sense that there are numerous imperfect substitutes, e.g. satellite, xm radio, broadcast tv, the internet, etc.

Somewhat true, but they don't compete in the same spheres. There are plenty of areas that can't get satellite or broadcast TV and the cable provider is their only broadband provider. Even satellite hasn't brought down the price of cable, although they have slowed the price gouge a bit. I watched my cost for service increase over 100% in only three years before switching to satellite. When the wife couldn't stand missing the locals any longer and the trade-in-your-dish deal got sweet enough, we came back to cable. I currently have DSL for Internet service, but will have no choice but cable once I move this summer.

Also, we're not talking about a vital service. Roads, water, power, etc. are vital services.

Why are these vital? I grew up in a rural area and I am preparing to move back there. Many of our roads are not maintained by the government, we aren't provided public water or sewage, and most everyone has a generator and wood stoves for the power outages that occur most winters. Today's economy relies on the "vital services" you listed, but any of us could do without if necessary (in theory, although many of us don't believe it possible). Today's economy is nearing the point where ubiquitous broadband is expected. You or I could do without it, but the economy needs it (or nearly does).

Cable TV is entertainment.

And this discussion happened only because those cables are being used for more than cable television service. Pay attention.

Re:The Real Problem Here

[h4rm0ny]

I don't understand why this should be shouldered by the tax payer, or can't be handled by private providers.

Well the customers of the corporate version are still tax payers. It's the same people. The question is one of which will cost them less.

In the corporate version,
cost = running costs + company profit.
In the publicly owned version,
cost = running costs.

The theory of capitalism is that competition drives down the running costs variable enough to balance out the profit part which is also limited by competition. This can be true.

But as stated previously, in a natural monopoly such as this, there is no real competition.

Now you can argue that it is not a natural monopoly, but you can't really argue that private ownership reduces costs without the competition.

It would be fair to say that the tax payer is "shouldering the burden" if the infrastructure benefits only a minority, but I think this is unlikely. Even the luddites will benefit from the fact that their society uses this infrastructure. So really, everyone pays one way or another, and what we really care about is what offers us the best price - private or public ownership.

Just to clear something up though - I've been using the term public ownership throughout, which some have taken to be synonymous with government management. It is not. There are two other options: One is that the government simply hires a private company. This preserves the competition aspect as private companies fight for the juicy contract. Two, is a community owned infrastructure.

There are difficulties to overcome with both to be sure, but they are certainly viable alternatives means to implement public ownership. It's dangerous to argue from pure theory. There are many successful examples of publicly owned infrastructure in many countries outside the USA.

Re:The Real Problem Here

[nine-times]

That it was done badly in Europe doesn't mean that it can't be done well. I myself am not in favor of big government, but I think all options should be considered. There are all sorts of roles the government might possibly play in the entire process of connecting people to the internet; they wouldn't necessarily need to take over the entire weight of it. For any pitfall you come up with, we could at least look for possible solutions (such as the phone company being run by the post office problem... you could choose not to have the post office run the phone company).

I agree entirely that the problem with the idea of a government-run ISP is the lack of competition brings about inefficiency and lack of innovation. However, privately-owned monopolies tend to suffer the same ills, and I'm not so sure that government-enforced private monopolies are any more healthy than government-enforced government monopolies.

Re:Let them keep their network!

[Leroy_Brown242]

" Cable providers also sell digital phone services over the same cable. Why then is this not a 'telecommunication service?'"

maybe because that is not their primary function?

Re:Let them keep their network!

[IAmTheDave]

Besides the parent's thoughts, let's not forget that this supports the idea that VOIP is in fact not V. That is, with this ruling, anything that travels over broadband is information and not telecommunications, so it supports keeping federal regulations of VOIP off of VOIP providers.

IP Telephony...

[FosterSJC]

I can see the case now for declaring cable internet lines to be informational services. But what about in 5-10 years when a substantial, if not majority, portion of telecommunication will occur over these cable lines? Can their purpose be reclassified? And not only will cable internet lines be home to VoIP and Internet... TV and movies on demand will also move to the internet domain. I'm not sure how long this decision will remain accurate.

Re:May Be Good News If...

[Anonymous Coward]

how does it force the telcos to do anything?

This is inconsistent

[Nom du Keyboard]

This is inconsistent. With two-way cable and VOIP,

By this same logic, your telephone company should be able to only let you dial into their own ISP -- and at whatever prices they decide to charge.

And regarding the court's other goof last week, if why not Free Speech also being regulated at the local level. If your local municipality doesn't like your speech, let them use eminent domain powers to take it away from you. Wouldn't that go over well?

Of course, since many of us have our Free Speech through the Internet (web-pages, blogs, message boards, and the like), we are being restricted in it by this ruling to a single provider, and whatever ToS rules they decide to impose.

Why don't telcos refute "common carrier" status?

[wsanders]

For all telco law experts out there, what would it take for the telcos to refute their "common carrier" status? And lose/gain the same legal standing as the cable companies? Voice==data and data==voice so it seems like it owuld be an even playing field.

Ok. So I'm confused

[DanielMarkham]

There's a difference between a "communications service" and a "data service"?
But wouldn't you have to communicate data in order for it to appear? And wouldn't communications be meaningless without data to communicate?
Sometimes I wonder if it's the court that doesn't understand technology, or maybe its us technology guys that don't understand the courts. This ruling doesn't make any sense to me.

Re:Ok. So I'm confused

[srmalloy]

Sometimes I wonder if it's the court that doesn't understand technology, or maybe its us technology guys that don't understand the courts. This ruling doesn't make any sense to me.

Well, given the two court cases wherein in one trial President Harding's Secretary of the Interior, a Mr. Fall, was convicted of receiving a bribe from a financier named Doheny, who was acquitted in the other trial of paying the bribe to Fall, I'm not sure that 'sense' has any meaning when it comes to court judgements.

Re:Let them keep their network!

[l2718]

Cable providers also sell digital phone services over the same cable. Why then is this not a 'telecommunication service?'

In fact, there have been recent court rulings that internet telephony is a telecommunicaiton device, and subject to FCC regulation. For example, this has been used to force VoIP to include 911 service. However, just because the VoIP part is a regulated service doesn't mean that the underlying infrastrcture is -- that depends on the definitions in the telecommuncations act, which the FCC is in charge of interpreting. The supreme court decided that their interpretation is not unreasonable and therefore due deference from the judicial branch.

Competition? In the next few years...

[WebHostingGuy]

There might not be competition right now, however, in the next few years there will be. Satellite TV is already a direct competitor to TV for cable companies. And broadband access is in the same market as DSL right now. And when FIOS gets going it will be a direct competitor of both TV and broadband potentially offering more than cable could. I would not say life is all rosy at the cable companies.

Great!

[Anonymous Coward]

So since it's an "information service" and not a "telecommunications service", does that mean the feds have just forfeited their right to perform surveillance on these networks? That would be neat.

Or is this just yet another situation where a win for libertarianism is a win for both big business and big government?

This could be bad for Cable too

[denis-The-menace]

How many times have the telcos been able to hide behind the "common carier" status when crimes are commited using their networks?

Will Cable ISPs have to now police their networks or be responsible for acts by their users?

Or maybe, just maybe, that's the idea and they are in cahoots with the media mafias?

Re:Let them keep their network!

[pete6677]

This ruling doesn't change anything. It states that cable companies don't have to open their lines to competitors, which is the way things are right now. Service won't get worse because of this ruling, and I really don't think it would get better had they ruled the other way. Look at how well "competitive" DSL worked, or more like didn't work. Hardly anyone can sell DSL other than the local telecom monopoly since they have priced competitors out of the market even if they do allow access to their lines. The only way broadband will be truly competitive is when wireless broadband over a large area is widely available and affordable, and not surprisingly the phone and cable companies are trying very hard to prevent this.

Re:Complete Ruling Online; Read for Yourself

[prgrmr]

"Fair" is not outcome-based; "fair" is an equal application of a known set of rules. Cable infrastructure has never been regulated in the same manner as telephone infrastructure. This ruling continues that seperation of regulation, despite the growing overlap in functional use.

Re:Let them keep their network!

[pr0nbot]

That is, with this ruling, anything that travels over broadband is information and not telecommunications, so it supports keeping federal regulations of VOIP off of VOIP providers.

Pesky regulations such as that dialling 911 works.

Many unintended consequences....

[FellowConspirator]

This is one of those rulings that will have a number of unintended consequences. There are some practical ramifications of not being common carrier (mostly, it will ultimately mean a lower grade of service and high consumer costs for cable service), but the court didn't end there.

Their conclusion was that cable internet and phone service wasn't a telecommunication service under the law. Economic issues aside, this is interesting from the standpoint of taxation (the argument that a web-based site is a mail-order busines by virtue of conducting business over the phone and thus subject to state sales tax, for instance). How about E991 -- it no longer applies to cable companies because their service is not phone service or even telecommunication service. Cable companies wouldn't need to feign neutrality on site access either -- preferred content providers get bandwidth, where others get none, etc.

In the short term, I'm sure this is considered a win for the cable companies, but I suspect in the end it will sink them.

Re:Let them keep their network!

[Little Pink Bunny]

Personally, I say hooray for the cable companies. They get to keep control of their equipment and the users who are utilizing it.

I don't know a lot about the subject, so please enlighten me if you do. I know that we, the taxpayers, basically paid for phone lines to be run to each house (regardless of how SBC et al stamp their little feet and scream "my copper! Mine!"). Is it common for taxpayers to have subsidized cable rollouts, or were they typically paid for by the cable companies and/or their customers?

The answer to that question completely governs my eventual opinion on the subject. If they bought and paid for their own network, then more power to 'em. If I paid for it, though, I expect to have some say in how they allow other companies to access it.

Anybody know how this works out?

VOIP port blocking

[rlds]

Since cable companies are not to be considered common carriers for their internet access services, they could now proceed to block ports used for VOIP by other providers. That is, if you want VOIP, you can only get it from the cable company. The reason I say that is that in previous cases of port blocking the FCC have used the common carrier provisions to get some ISPs (that happen to be part of traditional common carriers like telcos) make them desist of their port blocking practices.

New laws are needed to bring some sanity to this.

Re:Let them _keep_ their network?!

[markhb]

Because cable companies have monopolies granted by local government....

This canard aggravates me no end. If you were to go down to your local franchising authority (FA) and actually look at the franchise contract, you will probably see the words non-exclusive. This means that the FA is allowed at any time to grant a franchise to any capable competitor who wants to do a build-out (where "capable" means "actually able to do what they say"). The effective monopoly comes from the fact that in almost all cases (Manhattan Island being an exception, IIRC), there is not nearly the population density to support two competing cable systems. But an effective monopoly is not the same as having an actual one granted by government.

Local Mandated Monopoly

[Bob_Robertson]

Both cable and telephone systems have enjoyed a merchantilist "mandated monopoly" status in most of the country. The same reasonings were made in both cases, that market competition would make profit margins so low that service would not be rolled out for marginal customers. Same for "rural electrification" and lots of other services. Profits were, and are, legally mandated to occur regardless of the desirability of the services offered.

The ruling is a contradiction, because the cable companies continue to enjoy legal monopoly status. Their only competition in the wired IP field is in fact the phone companies, with VoIP and DSL bringing the two systems closer together in functionality every day.

Don't get me wrong, I utterly oppose anyone mandating that I provide my infrastructure to other people whether I like it or not. What I loath is the hypocrisy involved.

Now we have another judicial fiat defining differences in how they are allowed and/or required to do their business. Instead of competition driving prices down and service quality up, the companies are being limited to someone else's ideas of what they should be.

You're right that the two systems have never been regulated exactly the same. The problem is that they are regulated. As with every merchantilist scheme, we the customers are the losers.

Bob-

censorship downside

[DunbarTheInept]

One possible outcome of this is that it means the rule that your ISP is not resposible for filtering content might not apply to cablemodem service anymore.

One consequence of being a "common carrier" is that the common carrier company is not legally responsible for having to know what kind of content they are sending around. If someone uses their service to speak a slanderous comment, the communication provider can't be held legally responsible for spreading that slander. If someone uses a telephone to make a prank call, you can't sue the phone company for the offensiveness of that call. These are all consequences of being called a common carrier. The definition includes an absolution of all blame for the content being carried - the blame lays only with the people at the ends of the connection, not the people carrying the connection.

Now, if that goes away for cable ISPs, that could mean they have to start censoring to cover their own ass, legally.

Re:Scalia gets it right

[jd]

I'm impressed - I don't usually regard him as having much in the way of understanding, but he seems to actually have a good grasp of technology here.

Actually, the companies involved are likely to start screaming for a reversal soon. Think for a moment - the main reason they've been able to avoid massive penalties for not monitoring everyone and for allowing illegal content is because they've claimed "common carrier" status.

They have now had that status well and truly removed, which means they are now potentially liable for ALL such content that they carry.

In the end, they have a choice - keep the legal protection, but lose the monopoly on the wires, or keep the monopoly but lose the protections. The former might cost them some profit, but the latter will (sooner or later) cost them their independence and maybe their existance. not much of a swap, if you ask me.

Re:Complete Ruling Online; Read for Yourself

[X0563511]

Not when you consider they no longer have common carrier protection when it comes to things like illegal content flying around on their network. Now they have to spend the money and blood actually trying to stop that. And if the measures against it get too obtrusive, they will loose customers.

** Did not read the ruling... assuming the protections went away with the status

Re:Let them keep their network!

[DreadfulGrape]

re: Anybody know how this works out?

Yes indeed. It is not common at all for taxpayers to subsidize a cable system rollout; in fact I don't know of any place where that's actually happened. At most, the local community or county might give them a one-time tax-break of some kind or another.

Here's the big difference -- if I build a house out in the middle of complete bumfuck and I want phone service, the phone company must run a line to my house. Seriously, it's the law. That's why you pay a "rural exchange carrier" tax on your phone bill, and have been since waaayyy back in the 20th century...

Many, many years ago, the FCC ruled that Ma Bell was a public utility, and had a certain of obligations thereby. That's what meant by "common carrier," a definition SCOTUS has ruled (correctly, I might add) doesn't apply to the cable industry.

So you have your phone out in east bumfuck now, and you call the cable company. They say "Sorry, we don't provide service where you live." That's it. End of conversation. They don't have to provide you with service, and nobody can make them.

That's why cable is not a "common carrier." How they themselves go upstream to the internet cloud is irrelevent (in reply to someone else's earlier comment). They own, really own, all the cable (or fiber, or whatever) that extends to your property line. So they don't have to open up their network to any 3rd party.

I'm not making a judgement here as to whether this is a good thing or a bad thing. I don't own any cable or telecomm stock; if I did I might actually give a damn. But in this case the Supremes interpreted the law correctly, as it exists right now. Indeed, it was probably the only correct decision the court handed down today (just my opinion, of course...).

-- DG