U.S. Supreme Court Rules in Favor of Cable Companies

In their second major ruling on Monday, the U.S. Supreme Court reversed a federal court verdict that would have required cable companies to open up their networks to third party Internet service providers. The decision will severely limit broadband operations for competing ISPs such as Brand X and EarthLink.

"The Bush administration has made it clear that they are hostile toward small, independent service providers like us. And we think that is a big disaster for consumers, and a huge win for the monopolistic phone and cable companies, which spend millions of dollars on lobbying efforts," said Jim Tickrell, president of Brand X Internet.

Under The Communications Act of 1934, cable companies are defined as "information services", allowing them to restrict access to cable lines. This is in contrast to telephone companies, which – under the bill – are required to share their lines with competitors. Companies like Comcast and Time Warner argued that opening up the market to further competition would damage their business and lead to a decline in the amount of money they invested in their networks.

Along with the ruling, the court also reinforced the FCC's ability to make critical decisions when it comes to interpreting the nuances of the Communications Act. Because the case was so technically involved, the court said it was reasonable to defer to the expertise of the FCC.

News source: ZDNet

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In the UK at least (I think it is a similar situation in the US), the main telecoms infrastructure was run by one big company (BT). I think you had similar 'baby bell' companies in the states in a similar, monopolistic competition. It became clear in recent years that new companies were prevented from entering the market and competing because of the high costs of entry, and the fact that existing operators that owned big, cross country networks could just refuse them access. The comparison of saying, hey, why can't i use the big guys factory, is flawed. It's on a much bigger scale, with economic power allowing companies to decide the competition on their terms.


As such, if the old monopolies were forced to open up their networks, competition would be stimulated allowing for more investment, and a better deal for the consumer. That's the idea at least - in the UK, it has worked very well. We've got lots of competition in the ADSL market, BT has cleaned up its act, good job. We've got cheaper internet access, faster internet access - companies are forced to compete and do one better to keep on getting new customers - in doing so, however, we all get a good deal. It would seem like a bit of a raw deal for people in the states today, on this issue, and the Grokster.


Whilst the Grokster issue has nothing to do with monopolies, this is a good example of why they aren't really a very good idea.