The Clicker: Was Grokster really the important Supreme Court decision? - Engadget - www.engadget.com

The Clicker: Was Grokster really the important Supreme Court decision? - Engadget - www.engadget.comThe Clicker: Was Grokster really the important Supreme Court decision?

Posted Jul 7, 2005, 7:26 PM ET by Peter Rojas
Related entries: Displays, Features, HDTV, Home Entertainment

Every Thursday Stephen Speicher contributes The Clicker, a weekly column on television and technology:

The key to all good magic, as it has been explained to me, is misdirection. The magician must engage in some large, eye-catching gesture that, when all is said and done, is rather meaningless. Meanwhile, under the cover of the aforementioned grandeur, the real work is performed.

For instance: in the early nineties, David Copperfield would, with pomp and glory, make large jets, the Grand Canyon, even the Statue of Liberty disappear into thin air. These, of course, were just the WOW-type distractions he needed to accomplish his real goal, attracting supermodel Claudia Schiffer.

As it turns out – Justice Rehnquist and the rest of his Supreme Court posse are also fans of the ancient art of illusion. When the Supreme Court delivered the recent raft of decisions it deftly used the attention-grabbing, yet rather meaningless, Grokster case to grab the attention of the public. Meanwhile, a second, arguably more important, ruling has quietly solidified Comcast et. al.’s legal classification as an “information service” and not as a “telecommunication” service. In doing so, the Supreme Court has set the stage for cable giants such as Comcast to, with impunity, disallow such competitive services as Vonage, Skype, and even perhaps Akimbo, MovieLink, and a host of IPTV services.

A small, Santa Monica-based Internet company, Brand X Internet LLC, brought suit against the cable industry claiming that, under common carrier regulations, Brand X had a right to deliver its Internet services over the cable giants’ broadband networks. Brand X argued that, just like DSL, cable lines were telecommunication instruments. As such, just like the Bells are forced to open DSL lines to third-party providers, so too should third-party companies be afforded access to the cable infrastructure.

Brand X’s argument was not without basis: In 2000, the Ninth Circuit Court of Appeals held in AT&T v. the City of Portland that cable modem services were a mixture of both information services and telecommunication services and should be subject to the regulations of both bodies. However, in response to that ruling, the FCC later (2002) issued an opposing statement that cable modem services were information services and that they were not subject to telecommunications regulations. The Brand X case became the Supreme Court’s chance to set the record straight.

In the 6-3 decision delivered by Clarence Thomas, the court re-affirmed the FCC’s classification of cable modem services as information services.

The ruling has caused a lot of speculation about whether the cable industry will use its newly-reaffirmed status to make life difficult for its competitors in the VoIP industry. Under telecommunication regulations, providers must open their networks on non-discriminatory terms. Information services are not bound by the same regulations. Cable companies could engage in port-blocking and other countermeasures used to stop VoIP services from traversing their networks.

What’s even less clear is how the decision muddies the waters with respect to IPTV services. While not yet as developed as VoIP, the emerging IPTV market has just as much to lose. IPTV is also closer to the cable companies bread and butter services. It’s unclear that, without non-discriminatory terms, cable companies would have the proper incentive to allow third-party video services to traverse their networks. Value-add services such as VOD have been at the backbone of nearly all cable battles, and cable companies have fought hard to maintain their monopoly there. It’s unlikely that they wouldn’t at least consider cutting their competition off at the knees.

The matter is further complicated by the dearth of information-service regulations. The FCC has been in a holding pattern with regards to broadband regulations.

The Supreme Court’s decision, according to FCC Chairman Kevin Martin, allows for that to change. Martin said in a statement: “This decision provides much-needed regulatory clarity and a framework for broadband that can be applied to all providers… We can now move forward quickly to finalize regulations that will spur the development of broadband services for all Americans.”

But, until regulations do change, the Brand X decision leaves the Internet in an unusually precarious position. With a) many regions of the country operating under a broadband-access monopoly and b) with access to broadband services becoming more and more important in both communication and entertainment services, the courts just bestowed upon the cable companies a disturbing amount of power.

It’s time for FCC to take some of that power back from the cable companies. It’s time for Martin to enact neutrality regulations. It’s one thing to allow cable companies sole use of their own networks. It’s an entirely different thing to allow them the power to block the competitive services that travel over those networks, and while we’re in limbo that’s what they’ve done.