Confusion over cable modem service


Local governments are up in arms over FCC ruling that deems cable system and its modem service as an interstate information service, and not a telecom or a cable service. Local governments stand to lose as much as $470 million dollars per year in cable modem franchise fee revenue, which should have been paid as a result of the cable operator’s use of the public’s property. Five national organizations have asked the Supreme Court to review the decision of the United States Court of Appeals for the Ninth Circuit, and to also review the underlying decision of the Federal Communications Commission (FCC). The National League of Cities, the United States Conference of Mayors, the National Association of Counties, the International Municipal Lawyers Association , and the National Association of Telecommunications Officers and Advisors, formed the Alliance of Local Organizations Against Preemption to pursue legal and regulatory actions as a result of the FCC’s ruling that cable modem service is not a cable service. In October 2003, the Ninth Circuit ruled that cable modem service is not a cable service but has separate telecommunications service and information service components. This development could have some serious ramifications for the VoIP players as well. If cable modem-based services are forced into following the same regulatory rules as phone companies, much of the inherent advantage of VoIP players is going to go away.

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