Federal lawmakers on Thursday exempted cable Internet companies from laws that force them to share their lines with other Internet service providers.
The decision will cost the city of Madison $200,000 a year in franchise fees.
Included in Thursday’s decision was a provision prohibiting communities from collecting franchise fees on cable Internet service.
Peter Carstensen, a UW-Madison law professor, said UW students would likely see an impact from this decision if they decide to purchase cable Internet services.
“Students will likely have a maximum of two choices when it comes to telephone and cable, and that’s if they are lucky,” Carstensen said. “A situation will arise where each service provider can take a piece of the market and not face competition. With fewer competitors and in some cases no competitors, there will be little incentive to compete on price and service.”
The cable-Internet industry has operated in uncertainty since the December 2000 merger between America Online and Time Warner.
When the two merged, the Federal Trade Commission forced AOL Time Warner to open its cable lines to independent Internet service providers.
Under Thursday’s decision, cable-Internet companies will not have to share those lines.
Internet service carried over telephone lines is known as Digital Subscriber Line service and is governed by telephone regulations.
Companies like AT&T have to share their lines if they want to be able to sell their services nationally.
The vote classified cable Internet as an information service instead of a telecommunication service.
Telecommunication services are subject to the open-access provision. The vote ensures that cable-Internet companies won’t have to share their lines.
Federal Communications Commissioner Kathleen Abernathy said in a Salon.com interview that the decision would promote the goal of fostering a minimal regulatory environment that promotes investment and innovation in this competitive market.
However, critics argue the move puts cable companies into a regulatory abyss.
Barry Orton, a telecommunications professor at UW-Madison, said the decision would do more for the cable-Internet companies than for consumers.
“Small Internet providers will not be able to get on the cable platform,” he said.
Orton said the decision could go either way in bringing good or bad service to its customers.
“The good is that without regulation the industry will develop faster. It becomes a market driven industry,” he said. “The bad is that if that service is bad, then you can’t complain to anyone. Nobody controls the industry if it goes bad.”
Jeffrey Chester of the Center for Digital Democracy told Salon.com he believes the decision has turned the industry into a discriminatory market.
“Instead of ensuring that the qualities that have made the Internet valuable in the first place, the non-discriminatory environment, FCC Chairman Michael Powell is turning the Internet on its head by in essence turning it over to these major monopolists,” Chester said.
Carstensen said he believes the decision will have little benefit for the consumer.
“This decision is outrageous,” Carstensen said. “It will greatly enhance their monopolies. Prices will increase while at the same time there will be less services and fewer choices. This is exactly the situation we should be avoiding.”
Dave Barford, executive vice president and chief of Charter Communications said the company was satisfied with the FCC’s decision.
“Today’s decision by the FCC reaffirms our position that cable operators have a right and obligation to itemize franchise fees to help customers better understand where their money is going,” Barford said. “We’re also pleased that the FCC accepted our position that a franchise fee on advertising is still an indirect assessment on customers and that the fee should be shown on the customer’s bill.”