The Supreme Court's decision last week that high-speed, cable-based Internet service is a lightly regulated information technology might mean that cable broadband providers could duck paying into a fund designed to deliver affordable communications to all Americans.
Until the ruling, cable broadband was in regulatory limbo. The industry has not had to contribute to the $6.5 billion Universal Service Fund that subsidizes phone service in low-income and rural areas. Sources said the ruling in the so-called Brand X case leaves it to the FCC or Congress to decide whether cable-modem service should be tapped for the fund.
The FCC, meanwhile, is signaling that it will reclassify telecom-delivered broadband over digital subscriber lines as an "information service" rather than a more heavily regulated "telecommunications service." DSL providers now pay into USF, but under the new classification, contributions would be at the FCC's discretion.
As one source characterized it, DSL goes from a "must" to a "may." DSL would continue to be subject to law enforcement wiretaps regardless of any change.
Whatever the FCC's decides, the Bell companies want parity. "The important thing here is that we be treated on the same basis as cable-modem service," a Bell source said.
The likelihood of broadband providers dodging universal service requirements does not sit well with the leaders of the Senate Commerce Committee.
Commerce Chairman Ted Stevens, R-Alaska, and Commerce ranking member Daniel Inouye, D-Hawaii -- both of whom represent rural states where the USF is an importatn factor -- have made strengthening USF a top legislative priority. In a joint statement issued June 27, they vowed to review the court decision's impact on universal service, 911 emergency calls, consumer privacy, law enforcement wiretaps and communications access for the disabled.
"[A committee review] will permit us to consider what steps may be necessary from the Congress or the Federal Communications Commission to ensure that our communications laws preserve competition and protect the interests of consumers," they wrote.
A congressional source predicted that the Senate Commerce panel would hold hearings on its concerns. A committee spokesman said no decision has been made whether to hold hearings or offer legislation.
Sources said the FCC will review which social obligations should apply to cable- and phone-delivered broadband through pending proceedings on cable broadband, DSL and USF. The FCC had no comment on what, if any, obligations it may impose. But an agency source said, "We still have the ability to impose regulations."
An industry source noted that cable companies already adhere to strict privacy and consumer-protection guidelines. But the source conceded that cable-modem providers could face fewer public-interest responsibilities now that the high court has determined that cable-modem technology is not a telecom service.
"We think the commission should look at the size of the [universal service] fund, and only after it's been right-sized should government consider whether to increase the number of people paying in," said Dan Brenner, a vice president with the National Cable and Telecommunications Association.National Journal
