updated 10/6/2003 1:18:14 PM ET 2003-10-06T17:18:14

A federal appeals court opened the door Monday to additional rules on high-speed Internet access over cable television lines, overturning a Federal Communications Commission decision that competitors say has kept them locked out of the cable systems.

IN AN OPINION issued Monday, a three-judge panel of the 9th U.S. Circuit Court of Appeals in San Francisco said the FCC made a mistake when it classified cable Internet as just an “information service.”

The judges, basing their ruling on a decision in an earlier case, said cable-based broadband also is a “telecommunications service,” which under current law would make it subject to the steeper rules of the telephone industry.

The FCC voted in March 2002 to exempt cable companies from laws that force phone companies to open their lines to competition. At the time, officials said the move was necessary to spur more investment in high-speed Internet services.

That move left phone companies, which offer the competing digital subscriber line technology, at a disadvantage, critics said. They’re subject to much more regulation, including much-debated rules requiring them to lease their infrastructure to competitors.

“I am disappointed that the court felt that it was bound by its prior decision and did not address the merits of the commission’s classification,” FCC Chairman Michael Powell said in a statement. He also said he will direct the FCC’s lawyers to appeal.

Consumer groups applauded the decision, which ultimately could lead to rules requiring cable Internet providers to open their lines. With only a handful of exceptions, the cable companies act as the Internet service provider for their customers.

“Under the FCC’s decision, citizens using the Internet over cable were not protected from content discrimination and they do not benefit from competition among many ISPs,” said Cheryl Leanza, spokeswoman for the Media Access Project. “Now there is a chance that citizens will be protected.”

Though there are alternatives for high-speed access such as telephone line-based DSL, fixed wireless and satellite, an estimated 60 percent of high-speed Internet users subscribe to their cable company’s service, according to recent studies.

That has been harmful to independent Internet providers who lost customers to the cable and large telephone companies. Consumers Union, the publisher of Consumer Reports magazine, said three-fourths of all independent ISPs have gone out of business in the past five years.

“Many consumers hate their cable companies’ privacy policies and their failure to deal with spam effectively,” said Chris Murray, Consumers Union’s legislative counsel. “Giving consumers a choice of Internet service providers would open the door to more competition, and let people choose services with better privacy and less spam.”

Brian Dietz, spokesman for the National Cable & Telecommunications Association, said the group had not completely reviewed Monday’s ruling by the appellate panel.

“Our only comment at this point is today’s ruling is one step in a long process,” he said. “We have not had a chance to review the opinion and therefore have no comments at this time.”

© 2003 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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