The court ruled that federal law allows the Federal Communications Commission to set the rates that telephone and utility companies can charge the cable systems for "any attachment" to a utility pole, even when those attachments are for Internet access rather than TV service.
"Since the inception of cable television," Justice Anthony Kennedy said in Wednesday's majority opinion, "cable companies have sought the means to run a wire into the home of each subscriber. They have found it convenient, and often essential, to lease space for their cables on telephone and electric utility poles. Utilities, in turn, have found it convenient to charge monopoly rents."
The FCC already had regulatory authority under the 1978 Pole Attachment Act to make sure utilities, such as electric companies and telephone companies, charge cable systems rates for hook-ups that are "just and reasonable."
Without such regulation, the utilities' monopolies could charge cable systems a much higher price for hook-ups of television cables, and the higher cost certainly would be passed on to consumers.
Cable television revolutionized how Americans receive home entertainment. The phenomenon has grown steadily since the 1950s, when most homes received a TV signal through an antenna. About 7 out of 10 households with television, around 65 million, now subscribe to cable TV service in the United States.
The technology changed in the 1980s when it became possible for cable systems to provide a other services, including computer access to the Internet.
In addition to an annual $5 charge for each cable TV hook-up, some Texas utilities tried to impose a surcharge of between $50 and $100 for "non-video communications."
The FCC asserted itself and ruled in the Texas cases that federal law allowed it to regulate any type of connection to a utility pole, regardless of the type of service involved. The FCC's interpretation was upheld in a federal court in Washington.
In 1996, however, Congress passed a new Telecommunications Act that restructured markets in a variety of communications industries across the county, and included changes that affected the Pole Attachment Act.
The FCC evaluated the new law, and concluded that it still had the authority to regulate charges for any type of utility pole connections.
Utility companies all over the country appealed that FCC conclusion in a slew of lawsuits. Those separate challenges were consolidated in the U.S. Court of Appeals for the 11th Circuit, headquartered in Atlanta. A divided appeals court panel in Atlanta agreed with the utility companies and ruled that the FCC's interpretation was incorrect.
The panel majority said the Internet was not a "cable service" as defined by federal law, and therefore the FCC had no authority under the law "to regulate the Internet as a telecommunications service."
The National Cable Television Association and the FCC then asked the Supreme Court for review.
The justices agreed, but limited that review to two questions: whether provisions allowing FCC regulation of charges in the Pole Attachment Act "apply to attachments by cable television systems that are simultaneously used to provide high-speed Internet access and conventional television programming," and whether those provisions apply to "wireless telecommunications services" as well.
The Supreme Court heard the case in October. Wednesday, the justices reversed the appeals court.
In the majority opinion, Kennedy pointed out that the language of the Pole Attachment Act gives the FCC jurisdiction over "any attachment" by a cable TV system to a telephone or utility pole.
"Any attachment" means just that, Kennedy said.
"The attachments at issue in this suit -- ones which provide commingled cable and Internet service and ones which provide wireless communications -- fall within the heartland of the act," he added.
Justice Sandra Day O'Connor, who owns extensive utility stocks, did not participate in the decision.
Wednesday's decision reverses the appeals court and sends the case back down for a new ruling based on the Supreme Court decision.
(No. 00-832, Nat'l Cable TV Assn. vs. Gulf Power et al.; 00-843, FCC et al. vs. Gulf Power et al.)