CYBERLAW CLASS 8

1. CYBERLAW CLASS 8 OPEN ACCESS Professor Fischer Sept. 23, 2002

2. Broadband: End of the “World Wide Wait”? • High Speed internet access • Speeds over 200 kbps – Tauzin-Dingell says “high speed data service” is not less than 384 kpbs in at least 1 direction • Internet connection “always on” • Around 18 bills have been introduced in the House and Senate in the 107th Congress to promote broadband deployment in rural and other underserved communities

3. Broadband: End of the “World Wide Wait”? • What is broadband? What are the main types of broadband?

4. Main Types of Broadband • Digital Subscriber Lines (DSL) use copper telephone connections to send a high bandwidth digital signal to/from homes. Requires updated telephone switches; must live within about 3 miles of an upgraded telephone switching station. ILECS and CLECs (through lines leased from ILECs) • Cable Modem – use coaxial cable lines. Requires cable connection as well as some updates to the cable tv network. • Also (less widely used) satellite, wireless, research into quantum communication methods

5. Law Treats Cable and DSL quite differently! • OPEN ACCESS ISSUE – to what extent can owner of pipe exercise control over how consumers access Internet • Phone companies must provide access to competing DSL providers on open and nondiscriminatory basis – so can’t bundle broadband access with other types of services • Cable companies – thus far have been allowed to control pipes and impose conditions on customers, in particular requiring them to use owned/affiliated ISP

6. Open Access Debate • TO what extent is there a justification in law or policy for giving cable companies special treatment? • What does Lawrence Lessig think? • Be a lobbyist for the open access movement. In a 30 second sound bite, explain why cable modem service should be opened to competitor ISPs • Now argue the other side

7. Open Access Battlefields • Courts – several important cases esp Portland (9th Cir) and Henrico (4th Cir) on ability of local communities to condition cable franchise channels on open access to competing ISPs • Congress- many pending bills on broadband • FCC - approval of TCI-AT&T merger

8. AT&T v. City of Portland • 9th Circuit 2000

9. COURTS: The Portland case • After AT&T TCI merger had to get approval of local franchising authorities where required by local franchising agreements • 12/17/98 Portland & Multnomah County voted to approve transfer subject to open access condition • AT&T refused the condition and request to transfer franchises was denied • AT&T sued seeking a declaration that open access condition violated Telecommunications Act, franchise agreements, and Commerce Clause, Contract Clause, and First Amendment

10. COURTS: The Portland case • Also appeal against a grant of summary judgment, however in this case the summary judgment was in favor of Portland. • How did the 9th Circuit rule and why?

11. COURTS: The Portland case • Also appeal against a grant of summary judgment, however in this case the summary judgment was in favor of Portland. • 9th Circuit reverses • AT&T’s Internet services provided through @home is a “telecommunications service” under the 1996 Act, not a “cable service”. Portland can’t directly regulate them through franchising authority.

12. FCC Approach • What has been the FCC approach to broadband open access since City of Portland? • How does its approach affect cable providers, ILECs, consumers,independent ISPs?

13. FCC Approach • What has been the FCC approach to broadband open access since City of Portland? A “hands off” approach -

14. Recent Developments on Classification • FCC Notice of Inquiry seeking comment on the appropriate legal and policy approach to be accorded to high-speed Internet service provided over various platforms, including cable, wireline, wireless, satellite, broadcast and unlicensed spectrum technologies, as well as whether or not the Commission should require access to cable and other high-speed systems by Internet Service Providers

15. Feb. 14, 2002 • In the Notice adopted on this day, the FCC tentatively concluded the wireline broadband Internet access services - whether provided over a third party's facilities or self-provisioned facilities - are information services, with a telecommunications component, rather than telecommunications services. Information services include such services as voice mail and e-mail, which ride over telecommunications facilities.

16. Declaratory ruling • On March 14, 2002, the FCC adopted another major rulemaking, part of a series of actions, designed to promote widespread deployment of broadband services. The FCC settled a debate over the regulatory classification of cable modem service and launched a proceeding to examine the proper regulatory treatment of this service.

17. Declaratory Ruling • In a Declaratory Ruling, the FCC concluded that cable modem service is properly classified as an interstate information service and is therefore subject to FCC jurisdiction. The FCC determined that cable modem service is not a "cable service" as defined by the Communications Act. The FCC also said that cable modem service does not contain a separate "telecommunications service" offering and therefore is not subject to common carrier regulation.

18. NPRM • The FCC also adopted a Notice of Proposed Rulemaking to examine: • Certain issues in light of the FCC's recent initiation of the Wireline Broadband NPRM, including whether there are legal or policy reasons why it should reach different conclusions with respect to wireline broadband and cable modem service. • The scope of the FCC's jurisdiction to regulate cable modem service, including whether there are any constitutional limitations on the exercise of that jurisdiction. • Whether, in light of marketplace developments, it is necessary or appropriate at this time to require multiple ISP access. • The role of state and local franchising authorities in regulating cable modem service.

19. Consistent? • Is the FCC Declaratory Ruling inconsistent with the City of Portland case? Why or why not?

20. Congress: pending legislation • To understand pending legislation, you must understand a little about the 1996 Telecommunications Act • The 1996 Telecommunications Act partially deregulated the telecommunications industry in a bid to spur competition by encouraging new entrants to take on the former Bell monopolies, offering local telephone and innovative services. The law prevents a Bell company from providing long-distance service in a given market until the Bell can prove that it has relinquished its monopoly over local phone services in that market.

21. Some telecommunications acronyms • ILECs • RBOCs – BellSouth, Quest, Verizon, and SBC Communications • CLECs

22. Should the Act apply to data traffic? • Since Internet communications regularly travel beyond local calling areas, the legislation also restricts the rights of the Bells to carry computer data over long distances. In the years that followed the passage of the act, the Internet exploded and the business of ferrying computer data across great distances emerged as a fast-growing market. The Bell companies began arguing that the legislation should apply not to data traffic but only to the voice communications that it was originally designed to regulate.

23. ILECs Argue • Unfair to have different rules for competing high-speed Internet services • Restoring Fairness to the Marketplace. There is no level playing field for high-speed Internet services today … and consumers are paying the price. Companies that offer high-speed Internet access over cable lines, wireless connections or satellite links are allowed to develop new services and compete free from regulation. But DSL service, offered by all phone companies, is not regulated like other high-speed Internet services - it's regulated like a phone service. That disparity in regulation hurts competition and distorts the marketplace. • A level playing field would guarantee competition and encourage expansion of new networks, boosting the economy

24. Congress: Pending Legislation • H.R. 1542: Internet Freedom and Broadband Deployment Act (Tauzin-Dingell) –passed by House in Feb. 2002 • Would add long-distance, high-speed data connections to list of services regional Bell Companies can offer without prior FCC approval • Also would eliminate FCC regulation of rates that Bells charge long-competitors to lease “last mile” connections. • Bells argue that this will enable them to invest heavily in expanding broadband – but some analysts question whether this will indeed occur in an uncompetitive environment. Bells also argue that consumers will have a greater choice of ISPs because they will be able to compete with cable broadband providers.

25. Tauzin-Dingell • Passed by House Energy and Commerce Committee in May (32-23) • In June, House Judiciary Committee voted to report unfavorably and added Sensenbrenner amendment – antitrust laws fully apply to telecom industry; state PUCs not enough and restored current law with respect to Bell entry into interLATA data • Will go to floor vote in a few weeks?

26. Arguments Against Tauzin-Dingell: Dessert Before Vegetables • What arguments can be made against Tauzin-Dingell? (e.g. harm to competitors, harm to consumers etc.) • Whose side are you on in this dispute? • Note it pits representatives of rural and blighted inner city urban areas vs. representatives of suburban and affluent urban areas. Why?

27. Competing Conyers/Cannon proposed legislation (HR 1697/1698) • These bills would forbid the Bells from offering any long-distance service until their market share drops below 85 percent for both residential and business customers, even if they meet the 14-point requirements of the 1996 Telecom Act. • Erase legal precedent that antitrust does not apply to telecom • Give A-G $3 bnillion over 5 years to provide low-interest loans to bring broadband to underserved areas • Argue they will encourage more rapid broadband deployment (just like Tauzin-Dingell’s proponents)

28. Predictions? • Will Tauzin-Dingell pass the Senate?

29. COURTS: The Henrico case (MediaOne et al v. County of Henrico 4th Circuit – 7/11/2001 What procedural stage had action reached at time of appeal?

30. COURTS: The Henrico case (MediaOne et al v. County of Henrico 4th Circuit – 7/11/2001 What procedural stage had action reached at time of appeal? Grant of summary judgment by E.D. Va . What were the relevant facts?

31. Henrico Case: Relevant Facts Telephone company AT&T acquired MediaOne which had cable franchise in Henrico County. For approval of transfer, county required cable franchise to give access to cable modem platofm to any requesting ISPs. Various DSL providers intervened on the defendant’s side. AT&T & MediaOne sued county and were granted summary judgment. Henrico appealed.

32. Henrico case: Appellate Ruling • How did the Fourth Circuit rule on appeal? • What was the court’s reasoning?

33. Henrico case: Appellate Ruling • How did the Fourth Circuit rule on appeal? Affirmed grant of summary judgment • What was the court’s reasoning? Court held that the open access provision was inconsistent with the Federal Communications Act and was preempted and superceded.

34. Henrico case • Relevant provision: Section 541(b)(3)(D): “[a] franchising authority may not require a cable operator to provide any telecommunications service or facilities, other than institutional networks, as a condition of the initial grant of a franchise, franchise renewal, or a transfer of a franchise.”

35. “Telecommunications Service” • Fourth Circuit: MediaOne’s Road Runner service’s cable modem platform separated from Internet service component is a “telecommunications facilitiy” – a pipe for transmission of information • Doesn’t decide specific regulatory classification of MediaOne’s Road Runner service (cable service?) – the county – wants to regulate provision of Internet access over cable lines – ss. 541-49) Telecommunications service? – Verizon et al – common carrier obligations and contributions to universal service fund as well as regulatory parity with DSL. Or something else? )

36. Of relevance in Henrico • AT&T’s promise to FCC to voluntarily provide open access by December 31, 2001 after exclusive contract with Road Runner expires