National Cable&Telecommunications Association

The MPSC has requested comments on whether to classify cable modem service as a cable service, information service, or telecommunication service. The NCTA believes that under no circumstances is cable modem service a cable service. Currently cable has evolved beyond the traditional provision of video programming and distribution into advanced service as information service just like most ISPs today. Thus, any forced access requirement is unlawful for cable or information service.

Cable operatos providing broadband accesse to the public by using telecommunication facilities does not mean it provides a telecommunication service, therefore, required access or any direct or indirect interconnection will be inappropriate. The NCTA further explained that even if cable operators provided a separate transport function to unaffiliated ISPs, that service still would not be a telecommunications service. Thus, the trial negotiations between some ISPs and cable systems still were counted as a cable service, and not a telecommunication service.

As for the trial served to multiple ISPs, cable should be considered as:

• Private carriage: cable provider accommodates those ISPs using proprietary cable network to connecting the Internet backbone.

• Different legal contract to different ISP: There are non-discriminatory issues happened in cable's negotiation with each ISP.

• Cable provides information services to ISPs in some circumstances.

Under the regulatory classification of cable, Federal law prohibits forced access requirement:

• Section 621(C) of the Communication Act bars common carrier or utility regulation of cable services.
• Type II of the Communication Act confirms that cable operators should not be subject to the requirement.
• Under the regulatory classification of information service, Federal law prohibits forced access requirement. FCC Computer I data processing, Computer II unbundling, Computer III open network architecture have proved to be inapplicable and inappropriate for cable modem service.

Even if cable modem service was defined as a telecommunication service, cable operators would still not be required to provide interconnection or unbundled network to others because those obligations are only subject to ILECs and have limited requirements to CLECs, ISPs or cable.

NCTA separates cable into the classification of cable service and information service and explicitly describes the different regulations in different situations and comments that it is unlawful to put forced access on cable service.

From the Commission's point of view:

• Section 706 of the Telecommunication Act of 1996 requires regulatory forbearance in order to encourage the deployment of advanced telecommunication capability and promote investment in the necessary infrastructure.

• The commission has no jurisdiction to create a new regulatory category for advanced telecommunication capability because there have been distinguished regulatory schemes within the Telecommunications Act 1996.

• Cable operators engage in and transmit speech and they are entitled to the protection of the speech and press provision of the First Amendment. Forced access deprives the cable operator of editorial discretion over its programming.

• The current policy of "vigilant restraint" was working.

The First and Second 706 Report from the FCC have confirmed that competition among the broadband market is competitive and continuing to grow prospectively. There is no doubt that the current commission's policy of "vigilant restraint" was working and continues to be the right course.

The NCTA pointed out the provision of multiple ISPs on a cable system raises a number of technical, operational and logistical issues that the government should not intervene and should let the market naturally develop with negotiated business arrangements rather than with government intervention.

Currently, ISP Earthlink has agreements to launch a high-speed cable Internet trial with Cox communication and AOL/Time Warner. ISP Juno Online strikes a pact with AOL/Time Warner in a high speed trial over cable network. Juno also has an agreement with another cable operator, Comcast. From the study of "The Incentives of Cable Operators to Carry Multiple ISPs" released by Charles River Associates Inc for NCTA shows that there's incentive for big MSOs to offer a cable platform for more ISPs to use.

• Cable operators have strong incentives to offer unaffiliated ISPs to their subscribers. There are two reasons that cable will not discriminate against unaffiliated ISPs from using cable systems. First, Cable operators are facing strong competition from DSL, Satellite, WLL providers and other potential competitors, and only cable has no affiliate ISP to provide service to the end user. Cable's great competitors, DSL, can simply attract users to upgrade from current dialup to broadband access without changing their favorite ISP. Second, there are existing concerns about the monopoly acquisition from the deployment of cable Internet service, if cable wants to limit subscribers to seek service from other providers, the result may not only risk a loss of customers, but also stimulate the growth of the customer base for alternative competitors.

• Customers have no preferences to receive access from another access platform, but they do choose which ISP they want. Just like other alternative broadband Internet providers, cable providers would like to provide one stop shopping to its customers. People can buy a cable package including program, high speed Internet or telephony. Customers can purchase more upcoming services from one ISP instead of seeking different ISPs for different services.

Not only is cable thinking about negotiating an agreement with ISPs or other potential regional providers, but DSL, Satellite, terrestrial wireless all want to compete with each other in this strong competitive market. Further, we can predict that cable operators will continuously strike deals with more ISPs in the future. Cable operators have no monopoly in the provision of video service, and in any event, such a monopoly could not be leveraged into the provision of broadband service.

Charter points out that:

• Cable does not monopolize the provision of video programming.

• Competitors can easily replicate any benefit that cable might obtain from offering both video and broadband service. For example, ILECs can provide video dial tone and DSL service to subscribers.

• There is no economic incentive to use a monopoly in video to subsidize the broadband offering.

Because a cable operator already is charging monopoly prices for video services, this would not dissipate its monopoly profits to underprice broadband services unless it could be assured of a monopoly in broadband. But in fact, if the cable tries to monopolize by raising broadband prices, customers can freely switch to other alternatives like DSL or satellite companies. The Commission also concluded that from the merger of cable operators and Internet provider such as AT&T/TCI or AOL/Time Warner, they are unable and have no incentive to raise prices to subsidize vigorously after the competitors were driven out of the market.

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