Cable broadband industry officials say the ruling could ultimately trigger the same kind of consumer pricing that exists with slower dial-up service.
The 9th U.S. Circuit Court of Appeals refused to rehear a key decision by a three-judge panel that said cable modem service should be classified as a telecommunications service, which is subject to strict regulatory regimes, rather than the unregulated "information service" definition adopted by the Federal Communications Commission.
"The petitions for rehearing and suggestions for rehearing en banc are therefore denied," the court said in a two-sentence order released late Wednesday.
This week’s decision may increase pressure on cable providers that now must deal with having to provide access for independent Internet service providers. And regional telephone companies may feel the impact as well because the FCC was considering classifying DSL service as telephone’s version of broadband.
More than 7.4 million customers signed up for broadband services, bringing the total subscribers to nearly 25 million, according to market tracker Leichtman Research Group of Durham, N.H.
Internet service providers like Atlanta-based Earthlink Inc. pushed for the telecommunications definition, which could require cable companies to open their networks to all competing ISPs.
In a statement to XBiz, Earthlink said that the “decision by the 9th Circuit confirms what EarthLink has been saying for over five years now, that cable modem service contains a telecommunications service. Cable modem users deserve choice in high-speed Internet providers. [The] ruling is another step towards finally affording them that choice."
The U.S. cable industry immediately called for an appeal, but that move could prove difficult and futile. While the FCC still has the discretion to decline from imposing telecom rules on cable modem service, the classification would make it easier for future commissions to reverse course.
And the U.S. Supreme Court may decline to review the case because there is no split in appellate circuit courts and that it only affects narrow administrative rules of the 9th Circuit, based in San Francisco.
The history of the case dates back to a ruling by the 9th Circuit in 2000, upholding a U.S. District Court ruling out of Portland, Ore., that cable modem service is a telecom service required to give non-affiliated ISPs access to its network.
The case is Brand X Internet Services, et al. vs. FCC, No. 02-70518 (consolidated cases).
