The line that comes into your house and provides you with telephone service, by law, is open to competition. As a result, homeowners can shop for the best deal for long distance and DSL services. The line that comes into your house and provides you with cable TV, on the other hand, is insulated from competition, based on a 6-3 Supreme Court ruling in NCTA v Brand X Internet Services. (Dissent: Scalia, Souter and Ginsburg)

The crux of the ruling is this: telephone companies are regulated as “telecommunications services” and are required to open their lines to competition. As far as internet services are concerned, this means that independent ISPs buy access to the network at wholesale and then sell that access to their customers.

This became a Supreme Court ruling because, in 2000, the 9th Circuit Court of Appeals ruled that cable provided both information and telecommunications services. Subsequently, the Republican-led FCC ruled that cable is only an information service, exempting cable companies from opening their lines to competition. Anyone who uses the Internet today or who has heard of Voice Over IP knows that this ruling flies in the face of reality.

Consequently, telephone companies must compete not only with cable firms but also with alternative DSL providers. It was the competition with alternative DSL providers that spurred innovation. I’ve had DSL since late 1998, provided by Covad over a Qwest phone line. That’s the only way I could get DSL — Qwest told me that I was too far from its central office. And at that time, the local cable provider did not offer cable-modem service.

Thus, in an Orwellian twist of logic, a ruling that limits competition is being touted as a benefit for consumers. From the National Cable and Telecommunications Association, the industry’s principal trade association:
Continue reading →