A Lift for Cable?

Court ruling aims to spur broadband competition.

A federal appeals court ruled last week that cable broadband networks must be opened to rival ISPs to spur the kind of competition envisioned by the countrys telecommunications law. The ruling was widely welcomed by cable broadband users and consumer advocates, who see hope for improved reliability and customer responsiveness through competition.

Cable companies have lately been reaching out to the SOHO (small office/ home office) market and offering a variety of targeted services in selected areas of the country. Over the summer, Cox Communications Inc. made multiterminal home networking available to users in northern Virginia, and Comcast Communications Inc. rolled out nationwide its High-Speed Internet Pro, which helps telecommuters and SOHO users transfer files between offices. Time Warner Cable Inc. offers Road Runner Business Class, which can include managed security, private lines and Web hosting.

Before the SOHO market is widely sold on cable, however, operators will have to show they understand more than their legacy entertainment business. The monopolylike industry has a ways to go before overcoming a less-than- stellar reputation for customer service and reliability.

If Hurricane Isabel was any test of customer service, Comcast did not receive a passing grade from Helene Sugarman, principal with Dynamic Communications Inc., in Silver Spring, Md. Sugarmans neighborhood lost cable broadband service when Isabel knocked out electricity Sept. 18. The local electrical utility repaired its own damage in the area in two days, but Comcast took 19 days before cable service was fully restored throughout the neighborhood Oct. 7.

"Were not talking about entertainment here. Were talking about livelihoods," said Sugarman, whose company helps organizations manage change. "From the business point of view, whats important is the irreplaceable work time."

Lost productivity irked Sugarman, but worse, she said, was Comcasts failure to provide useful information about the service outage when she repeatedly called for help. After she had lodged numerous complaints, Comcast credited her account $30, she said.

Sugarman blamed the unsatisfactory experience on corporate processes and lack of communication within the company, not on its workers in the field. "The only information we were able to get was when we went down the road and talked to technicians in the street. They have very skilled and very polite technicians," she said. "But when I call customer service, dont tell me you dont know where your trucks are. That is just not acceptable." Comcast officials declined comment.

To spur competition, the Telecommunications Act of 1996 applied traditional telephone regulations—for example, the duty to interconnect with rivals at reasonable and nondiscriminatory rates—to all telecom service providers regardless of the delivery technology. The Federal Communications Commission, not wanting to subject cable operators to the traditional regulatory regimen, ruled last year that cable broadband is an information service, not a telecom service. Last week, the U.S. Court of Appeals for the Ninth Circuit vacated the FCCs decision.

Circuit Judge Sidney Thomas, in a concurring statement, said that applying the principles of nondiscrimination and interconnection to cable modem service "would enhance independent ISP access to telecommunications facilities, almost certainly increasing consumer choice."

Unlike most ISPs, cable operators own the connection between the Internet and the user, retaining the power to limit other ISPs access to the user, and thus limit competition. The Ninth Circuit ruling, unless it is overturned on an appeal that FCC Chairman Michael Powell immediately promised to pursue, takes away the power to limit rival access.

A Comcast spokesman in Philadelphia declined to comment on the ruling, directing inquiries to the National Cable Television Association, in Washington. Calling the ruling a "strained reading" of an earlier Ninth Circuit case, NCTA Senior Vice President Daniel Brenner said the association supports an FCC appeal.

The Consumers Union, in Washington, however, praised the court ruling, arguing that it will spur needed competition—a stance many users share.

"Hopefully, if they have competition, they wont be able to get away with this," Sugarman said about her cable broadband experience in Isabels wake. "This was monopoly behavior."