Cable flourishes--FCC to cut red tape
By Reuters
Special to ZDNet News
March 12, 2002, 4:20 AM PT
zdnet.com.com
The number of subscribers to high-speed Internet service via cable rose almost 13 percent, to 7.2 million, in the fourth quarter of 2001, a trade group said Monday, days before federal regulators begin shaping the framework for what rules apply to the service.
More than 800,000 new customers signed up for cable-modem service during the last three months of 2001, up from 6.4 million subscribers at the end of the third quarter, according to the National Cable and Telecommunications Association (NCTA).
"Deployment of, and demand for, advanced broadband services continued to experience strong growth during the fourth quarter of 2001" despite numerous uncertainties including a recession, said NCTA Chief Executive Robert Sachs.
Plus, Excite@Home, one of the biggest cable Internet service providers went bankrupt last fall, forcing subscribers to find new service.
Consumers have not signed up for high-speed service via traditional telephone lines, known as digital subscriber line (DSL), as quickly. The biggest provider, SBC Communications, has 1.3 million subscribers while the biggest cable company, AT&T Broadband has 1.5 million cable-modem subscribers.
At the same time, the Federal Communications Commission is poised Thursday to classify cable-modem service. Analysts have said they expect it will be deemed an information service, subjecting it to fewer regulations.
The classification is a first step in a process for developing fuller regulations for cable Internet service. The FCC is expected to also launch a notice of proposed rulemaking that seeks answers to questions on additional potential rules.
Consumer groups have lobbied for the FCC to safeguard a choice of Internet service providers for consumers while using cable modem service. Meanwhile, cable companies have asked the government to keep regulations off to ensure further deployment.
Another area that will likely evoke heated opinions will be the role of the local franchise authority (LFA)--the local government entity that oversees cable franchises and community public rights of way--related to the emerging service.
Cable companies already pay franchise fees of up to 5 percent of gross revenue to the LFAs for cable service, and many have been paying the franchise fees on revenue from the Internet service as well.
However, if the FCC designates cable-modem service as an information service, as analysts expect, that could spark a big fight over whether that removes the requirement for cable operators to pay that fee.
"If the commission finds that cable modem service is an information service, there is no legal basis or policy justification for subjecting it to local regulation, including franchise fees," NCTA said in a recent filing with the FCC.
NCTA also said 1.5 million households added digital cable service, bringing the total to about 15.2 million subscribers, or 21 percent of all cable customers. And there were 50,000 new subscribers to telephone service via cable, bringing the total to more than 1.5 million, NCTA said.
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