August 29, 2000

Forcing cable TV to share its Internet pipeline is unjustified
Competing Internet service providers trying to "piggyback" on cable's investment, study says

WASHINGTON-Cable-television companies are investing heavily to bring high-speed Internet access to consumers through new broadband cable networks. Some competing Internet service providers (ISPs) think this practice is "uncompetitive" and want to force the cable companies to open up their systems to other ISPs. But a new Cato Institute study says the proponents of "open access" cannot make a good case that new broadband networks justify antitrust-style intervention. Nor can they get around the fact that the First Amendment bars the government from dictating which voices should be carried on new broadband networks.

The broadband issue arose in 1998 when a coalition of ISPs persuaded the city of Portland, Ore., to grant them open access to AT&T's planned cable modem service. Claiming that cable modem service providers hold a monopoly on an "essential facility," the ISPs demanded equal access to the cable infrastructure. But Lee says the use of the term "essential facility" masks an effort "to use government power to advance private interests." He says cable companies hold no monopoly in the broadband market since they already face competition from DSL (digital subscriber line) and wireless broadband services.

Open-access rules also violate the First Amendment, Lee says, although the appeals court that later ruled on the Portland dispute did not address this issue. Lee contends that since bandwidth is finite, ISPs take up space that could otherwise be used by cable owners to disseminate content of their own choosing.

A broader concern is how this debate is changing the culture of the Internet, Lee says. "Just like more established media, Internet firms are now seeking to influence politicians through Washington-based associations, government relations departments, and political action committees," he says. "Anyone who thinks this process will benefit the Internet need only examine the history of broadcasting and cable regulations to see how regulators deform the marketplace."

"Open Access, Private Interests, and the Emerging Broadband Market "