The Federal Communications Commission yesterday overturned a Nebraska state regulation barring Cox Cable Communications Inc. from providing high-speed voice and data services in competition with local telephone companies.
Industry experts said the decision could set a precedent if the commission were to apply yesterday's ruling to other states.
The Nebraska Public Service Commission had ruled earlier that a subsidiary of Cox Cable Communications of Atlanta could not provide high-speed data services within the state without special certification required of telephone companies. The services in question included video teleconferencing, electronic mail and high-speed facsimile services.
The cable company, which had been handling MCI Communications Corp. long-distance calls within the state, was experimenting with transmitting the calls along its cable lines.
Whether the FCC decision creates a far-reaching precedent or concerns only Cox was a subject of debate among commission members themselves. But commission sources said the decision has far-reaching implications for other cable companies that have run into trouble with at least a dozen states over the provision of data services.
"It's certainly a precedent," said one FCC source. "It's not too difficult to imagine other cable systems wanting to do what Cox is doing. . . . To the extent we allow competition, that will be a benefit to everybody."
Cable companies earn only about $4 million from high-speed data services out of $8 billion in revenue they take in yearly. Industry experts do not expect cable companies to immediately take advantage of the Cox precedent because of the large quantities of money it takes to build reliable high-speed data systems that will win the confidence of large business users.
The commission preempted Nebraska's policy because it said the policy "infringed" on federal policies. Cox had argued Nebraska's action restricting data services it could provide within the state had adverse effects on the marketing of interstate services it provides and that the FCC regulates.
Cox had argued it needed revenue from in-state data services to continue to provide MCI interconnection services, said FCC sources.
Two commissioners voted for the decision, one recused himself, one has not yet voted and one dissented. The decision could still be voided if Commissioner Dennis R. Patrick, who did not vote, votes against it.
The decision, in effect, could set a precedent for cable companies to compete directly with phone companies in the area of voice traffic, said experts. "The big implication on the cable side is, you've allowed cable companies to become telephone companies free of state telephone regulation," said Nicholas Miller, a lawyer with Washington law firm Miller & Young, who represents municipalities in cable cases.
On the data services side, telephone companies could argue that cable companies can "cherry pick" the best business customers away from the local phone company and divert revenue that subsidizes basic residential rates, which could then rise, he said.
Commissioner James H. Quello dissented in the decision, citing fears that it could set a precedent for cable companies to take away business from local telephone companies, which in turn would cause local telephone rates to rise. The local telephone companies claim that local telephone rates are subsidized by their other commercial services.
In a separate action, the FCC ruled the Fairness Doctrine, which requires broadcasters to air contrasting views on controversial subjects, does not serve the public interest, but the agency said it would continue to enforce the rule because only an act of Congress could change it.
Also yesterday, FCC Commissioner Henry M. Rivera announced his resignation, effective Sept. 15. Rivera, who joined the FCC in 1981, told the commission he will be returning to private law practice here.