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Win For US Cable Operators |
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Written by Adam Gosling
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Wednesday, 29 June 2005 |
The US Supreme Court has made the interesting decision that cable companies do not provide a service which could be construed as telecommunications despite the growing use of IP Telephony and the recent FCC decision to mandate E911 calls.
The decision is great news for American cable companies who argue that they have spend millions investing in digital upgrades to their infrastructure and don’t want to be forced to share them with other ISPs.
The rest of the broadband provider industry in the US now looks shaky as cable companies now have a near oligopoly on broadband provision. Consumer advocates warn that prices will inevitably rise and broadband adoption will falter, while small ISPs are predicting most will fail or choose to exit the market.
The ruling overturns a US Appeals Court decision that broadband Internet via cable does have a telecoms component and should be subject to traditional telecoms regulation. That ruling had reversed an earlier ruling that broadband is an information service and should not be regulated.
The Supreme Court puts the matter to rest and the cable companies will not be required to lease capacity to competing ISPs.
But some pundits are warning that the decision against Brand X Internet means that cable companies could freeze out non-ISP companies like Vonage in favour of their own services (when and if they offer them).
It has already happened, or so Vonage alleged back in March when it complained that DSL service providers in North Carolina were blocking Vonage VoIP traffic.
Ironically, such a practice would be illegal as the transmissions are classified as "telecommunications services" and are regulated differently from cable connections.
And this is where the Brand X Internet case becomes important. It has the effect of classing cable broadband as "information service" rather than a “telecommunications service” which would make port blocking quite okay. So carriers that provide DSL broadband are applying for a ruling that their services are information rather than telecommunications.
Now here comes the interesting part, Vonage, for one, doesn’t mind the decision arguing that if broadband communications are informational not telcommunicational ( I made that up), then VoIP needn’t be subject to the same, rules, taxes and fees as traditional telephony. The Supreme Court said it relied on the expertise of the FCC in making its decision, but it was the FCC that mandated emergency 911 calls on VoIP services just last month.
To add confusion to the market, nobody knows how the regulatory environment for IP Telephony might be affected by an up-coming review of the US Telecommunications Act of 1996.
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