Justices to hear cable Web case

Supreme Court to decide if FCC has authority over rates

January 23, 2001|By Lyle Denniston | Lyle Denniston,SUN NATIONAL STAFF

WASHINGTON - Stepping into the competition over high-speed Internet access, the Supreme Court agreed yesterday to rule on the fees that cable operators must pay when they simultaneously deliver Internet services and television programs over the same cables.

Electric utilities that own the poles or underground conduits that hold cables have been imposing surcharges when a cable company transmits data services, such as Internet access, as well as TV signals.

The outcome of the case could alter the competition between cable companies and phone companies as each seeks the upper hand in giving customers the means for much faster access to the Internet.

Phone companies have been answering the challenge posed by cable companies by offering high-speed, digital-subscriber line (DSL) Internet service.

The Federal Communications Commission has authority, under a law that dates to 1978, to restrict the rental rates that utilities charge for "pole attachments" when cables are used solely for TV transmission. Now, the agency and the cable industry contend that the FCC may also limit the rental rates for cable companies to deliver Internet access simultaneously over those lines.

The 11th U.S. Circuit Court of Appeals in Atlanta ruled in April that the FCC had no authority to regulate rates that utility companies charge for pole attachments used for links to the Internet. The court also ruled that the FCC had no power to regulate rates for attachments for wireless communications companies.

The FCC and the National Cable Television Association, an industry trade group, filed separate appeals, urging the justices to restore full rate-regulating authority to the commission. They argue that 1996 amendments to the federal Pole Attachment Act make clear that the FCC can regulate the rental rate for any attachment, regardless of how the equipment is used.

Besides taking on that dispute, the Supreme Court moved back yesterday into the battle over local telephone service, and access to it by the former long-distance carriers.

Two years ago, the court upheld the FCC's power to regulate the fees that local companies charge long-distance rivals to use existing telephone networks to compete for the same local customers.

This time, the court agreed to decide how the FCC should devise formulas for connection or access charges. The companies that are seeking to move into local telephone service insist that the charges should be no higher than if the local companies used the most up-to-date and efficient technology - a hypothetical calculation.

The local companies counter that the charges must take account of their historic costs and that their charges should allow them to recoup their investments in existing plant and equipment.

The 8th U.S. Circuit Court of Appeals, based in St. Louis, ruled in July that the FCC need not take into account a local company's historic costs. But it said the commission may not calculate costs based on a hypothetical, most-efficient operator. It must set charges based on each local company's actual costs, the lower court said.

The justices agreed to hear five separate appeals on the dispute, pitting three regional Bell companies - Verizon Communications Inc., SBC Communications Inc. and BellSouth Corp. - against the FCC, AT&T Corp. and other telephone competitors now entering the local phone market.

The Supreme Court will hold hearings in October on both the telephone cases and the Internet access case. It is not expected to rule on either until next year.

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