Supreme Court: Cable Companies Need Not Share Lines

by adam.m , Michael Deibert, Jun 28, 2005, 6:00 AM

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The U.S. Supreme Court ruled in a 6-3 decision on Monday that cable companies, unlike telecoms, need not share their lines with rival Internet providers.

The case, which pitted Brand X Internet Services against the Federal Communications Commission and the National Cable & Telecommunications Association (whose members include cable giants Comcast and Time Warner), potentially could lead to fewer broadband options for consumers down the road, analysts said. But in the short term, the holding--which preserves the status quo--is seen as unlikely to affect service or availability.

"The FCC seems to be acting in line with what federal regulations allow them to do," said Joe Laszlo, research director for Jupiter Research, who authored a report in May indicating that the total number of U.S. households with broadband had increased 35 percent between 2003 and 2004.

"It's of a piece with the inconsistent way that cable and phone services are regulated in the U.S., but one could say there is adequate growth in the United States at present--it's hard to look at the numbers and find a lot of fault with them."

However, consumer advocates criticized the ruling, saying that the Supreme Court made it easier for a few cable companies to dominate the industry.

"This decision allows the cable companies and the owners of cable networks to kept consumers under their thumb and continue their chokehold on the services they offer over those networks," Matt Hartwig, spokesman of the Washington D.C.-based advocacy group Consumers Union, told OnlineMediaDaily.

"[The FCC] abandoned a fundamental principle that has applied to all means of communications throughout U.S. history: Communications and transportation networks must be available to all on a nondiscriminatory basis if they are to serve the public interest," said the Consumers Union in a statement.

At present, some 32 million households in the United States--a little less than half of all online households and 28 percent of households overall--currently use broadband to access the Internet, said Laszlo. In neighboring Canada, the number is far higher, with 5.5 million households--42 percent of households overall--using broadband.

Cable companies currently account for about 63 percent of the broadband market, with Comcast responsible for 22 percent of broadband households and Time Warner accounting for 12 percent, according to Jupiter Research.

The case has been closely watched by media observers and advertisers, as broadband is seen as an increasingly lucrative method by which consumers use the Internet. A report this month by the research company eMarketer titled "Broadband Demographics & Usage" estimated that 49.5 million U.S. broadband users ages 14 and older (66 percent broadband users overall) made an online purchase last year, and projected that in 2008, 98.8 million broadband users over age 13 (or 72 percent of broadband users in that year) would do so.

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