August 31, 2004

Huh? [9:04 am]

Some questionable economics and policy expressed in this statement by the chairman of the FCC, raising the real question — why should telephones get century-old regulation anyway? And how is monopoly and deregulation consistent with lower prices? High Court Petitioned on Cable Net Access Rule [pdf] [via GigaLaw]

In the past year, the U.S. Court of Appeals for the 9th Circuit in San Francisco has ruled twice that the Federal Communications Commission erred when it allowed cable companies to bar rivals from their networks. However, those decisions have been put on hold while the Bush administration considered its options. If the Supreme Court rejects the Justice Department’s appeal, cable companies would be required to share their lines with rivals, potentially creating more choice for consumers and a vast new market for independent Internet service providers.

FCC Chairman Michael K. Powell issued a statement yesterday praising the administration’s decision. He argued that if the lower court’s ruling stands, the FCC will be forced to treat cable Internet service under the same regulatory framework that applies to the telephone industry. “Applying taxes, regulations and concepts from a century ago to today’s cutting-edge services will only stifle innovation and competition,” Powell said in a prepared statement.

“A successful appeal of this case would ultimately mean lower prices and better service for American consumers,” Powell said.

Rival Internet service providers were critical of the administration’s decision. “They are just delaying the inevitable,” said Dave Baker, EarthLink Inc. vice president of law and public policy. “Instead of fighting to protect cable monopolies, the FCC should recognize that cable modem and other broadband users deserve choice in high-speed Internet providers.”

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