WASHINGTON -- After listening to oral arguments in the controversial Grokster case Tuesday, the U.S. Supreme Court stayed firmly in tech territory as it considered whether cable operators should be forced to open up their broadband data pipes to competition.
The case in question pits the National Cable & Telecommunications Association and the Federal Communications Commission against internet service provider Brand X Internet of Santa Monica, California. The outcome of the case could determine whether consumers can someday choose among different ISPs when receiving broadband access over cable lines.
Cable operators have resisted the concept of "open access" for years, arguing that it would unfairly saddle the industry with new regulations and create potential technical problems.
Critics argue that the industry simply doesn't want to face competition from new broadband ISPs riding its wires.
"More broadly, (the Brand X case) will determine whether a wide variety of innovative voice, video and data services become available, or whether internet users will be limited to only those services their cable company provides," said Dave Baker, vice president for law and public policy at EarthLink, a longtime advocate of open access.
The case largely hinges on arcane regulatory definitions.
Service over traditional telephone lines is considered a "telecommunications service" subject to common-carrier regulations that require telcos to provide access to third-party ISPs.
But in 2002, the FCC defined cable-modem service as an "information service," a designation that allows a cable operator to make itself the exclusive internet access provider over its own cable lines. The vast majority of cable operators have done just that.
The definitions stem from the 1996 Telecommunications Act, which broadly defined the two categories but deferred to the FCC on how to apply them to specific cases.
Brand X -- supported by the wider ISP community and consumer groups -- wants the court to affirm an October 2003 decision by the 9th U.S. Circuit Court of Appeals, which favored Brand X when it found that cable-modem service is partly a telecommunications service.
Shortly after that decision, the government and the NCTA appealed to the Supreme Court.
During oral arguments Tuesday, several justices probed in detail into the supposed logic of the two regulatory classifications, often questioning why cable operators should be treated differently than telcos.
"The question is whether you're still offering a telecommunications service to the public," said Justice Antonin Scalia.
Thomas Hungar, deputy solicitor general in the U.S. Justice Department, cited the different regulatory histories for cable operators and telcos, and pointed out that phone companies -- unlike cable operators -- offer telecommunications services on a stand-alone basis.
NCTA's lawyer, Paul Cappuccio, argued that cable-modem service involves both telecommunications and data services in a bundled offering, which in turn makes it a "separate product" worthy of its own classification.
"We view it as two ingredients forming a product that is a distinct product," he said, arguing that the court should defer to the FCC on such definitional matters.
Brand X's attorney, Thomas Goldstein, said the cable industry's argument "becomes completely circular" if taken to its logical conclusion: Any bundled service can therefore be classified as something different by virtue of its bundled nature.
He said that under such logic, retailers could circumvent laws against selling cigarettes to minors by simply bundling cigarettes with other products and calling it a "smoking service."
Furthermore, Goldstein said such reasoning allows companies to bundle offerings in an effort to "self-deregulate."
After oral arguments, observers said it was unclear how the court might rule.
"It's very hard to read," said NCTA lawyer Neal Goldberg. "I don't think today's oral argument moved the needle one way or the other."
Randolph May, senior fellow and director of communications studies at the Progress & Freedom Foundation, said it was "puzzling" that justices didn't ask more questions about whether the FCC was best suited to tackle the definitional questions so central to the case.
"The cable industry and the FCC have to be a bit concerned that there wasn't more discussion about deference," he said.
But Goldberg cautioned against reading too much into the absence of questions on deference.
"I think that was really laid out in the briefs ad nauseam," he said.
Consumer advocates, who support opening cable wires to competition, said they were pleased that some justices seemed perplexed about the FCC's classification of cable-modem service as an information service.
"The FCC wanted to play a shell game and misdefine basic internet connectivity," said Kenneth DeGraff, policy advocate at Consumers Union.
A final decision in the Brand X case is expected before the Supreme Court recesses in June.
