Some have hailed last week’s Supreme Court decision in NCTA v. Brand X Internet Services as a triumph for deregulation, particularly in the wake of Chairman Kevin Martin’s subsequent statements to the press that the FCC will move quickly to establish deregulatory parity between telephone and cable companies. That’s extremely welcome news. But there’s more here than meets the eye.
The Court upheld a regulatory regime in which DSL is subject to costly common carrier regulation and cable modems are not. The record showed that the decision to penalize one and reward the other is based on one set of considerations for the telephone companies (history of regulation, in effect) and another for the cable companies (contemporaneous market conditions). Arguments were made that the inconsistency is arbitrary and capricious, but the Court brushed them aside. Nor would the Court consider how the FCC should or lawfully may treat DSL.
Cable modems have enjoyed a substantial lead in the marketplace vis-�-vis DSL since the FCC began keeping track in the late 1990s. Finally, three years ago the FCC issued a notice in which it tentatively concluded that DSL should be treated the same as cable modems. There is still no final decision, and nothing in last week’s Supreme Court ruling forces the FCC to move.
Discovery’s John Wohlstetter observes that if the decision had gone the other way the FCC would have been forced to do something, and that re-regulating cable would not have been an option. As it is, we shall have to see.
The bottom line here is that the FCC is engaged in a form of “industrial policy” – picking winners and losers – and last week’s Supreme Court ruling highlights the limitations of judicial review.