Court Verdict Threatens Future of Internet

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Washington, D.C., October 8, 2003—A federal court decision this week has thrown the commercial future of the Internet into question, opening the telecommunications industry to the possibility of increased regulation and price controls for cable modem service.  The verdict reclassifies Internet service provided by cable companies as a “telecommunications service,” a more highly regulated category than an “information service,” the category the Federal Communications Commission had previously placed it in.<?xml:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” />


“The ruling by the U.S. Court of Appeals for the Ninth Circuit is bad news for those wanting more predictable rules and fewer lawyers determining the fate of an entire industry,” says Competitive Enterprise Institute Technology Counsel Braden Cox.  “The decision opens the floodgate to further judicial interpretation of regulatory actions by any one of 94 federal judicial districts at the expense of certainty.”


The Ninth Circuit decision also raises a fundamental policy question of whether judicial review or agency rulings are a more appropriate way to regulate industry and, as Judge O’Scannlain stated in his concurrence, affect an “admittedly complicated and highly technical area of telecommunications law.”  Government regulations are not very good at accommodating new technologies in ways that benefit consumers to begin with, but when even the advantage of their predictability is removed, complying with the rules while providing the service customers desire most becomes next to impossible.


“I hope Congress will view this case as yet another indication that it needs to revisit the 1996 Telecommunications Act and craft a new set of regulations fit for the 21st Century,” says Cox.  “The possibility of this service laboring under the same heavy-handed controls that currently hold back other telecom services is too troubling to ignore.”