Mediaone Group, Incorporated Mediaone of Virginia, Incorporated At&t Corporation v. County of Henrico, Virginia, Bell Atlantic Corporation Bell Atlantic-Virginia, Incorporated Bell Atlantic Internet Solutions, Incorporated, Intervenors/defendants, and Gte Intelligent Network Services, Incorporated, D/B/A gte.net, Intervenor-Appellant. Virginia Citizens Consumer Council Consumer Federation of America Center for Media Education District of Columbia City of Tacoma, Washington Montgomery County, Maryland U.S. Conference of Mayors National League of Cities National Association of Counties National Association of Telecommunications Officers and Advisors Virginia Association of Telecommunications Officers and Advisors Texas Association of Telecommunications Officers and Advisors Minnesota Association of Community Telecommunications Administrators Opennet Coalition Hands Off the Internet Federal Communications Commission National Cable Television Association Virginia Telecommunications Association West Virginia Telec
Docket: 00-1680
Court: Court of Appeals for the Fourth Circuit; July 16, 2001; Federal Appellate Court
In the case identified as 257 F.3d 356 (4th Cir. 2001), MediaOne Group, Inc.; MediaOne of Virginia, Inc.; and AT&T Corporation are the plaintiffs-appellees, while the County of Henrico, Virginia, serves as the defendant. GTE Intelligent Network Services, Inc., doing business as GTE.net, is an intervenor-defendant, alongside Bell Atlantic Corporation and its subsidiaries, who are intervenors-appellants. Numerous parties, including consumer advocacy groups and municipal associations, are listed as amici curiae, supporting the plaintiffs' position.
The case originated from the United States District Court for the Eastern District of Virginia, presided over by Senior District Judge Richard L. Williams. The appellate arguments were heard on September 27, 2000, with the court's decision issued on July 11, 2001, later amended on July 16, 2001. The appeals address legal issues concerning telecommunications regulations and the roles of local governments and private corporations within that framework.
Counsel for the appellants, including attorneys from Hunton Williams and Cooper, Carvin, Rosenthal, presented arguments against the Henrico County Board of Supervisors' requirement for MediaOne to allow any Internet Service Provider (ISP) access to its cable modem platform as a condition for approving the transfer of control of its franchise. AT&T Corporation and MediaOne argued that this open access provision was preempted by federal law, specifically the Communications Act, and violated state law. The district court sided with AT&T and MediaOne, granting summary judgment in their favor. The appellate court affirmed this decision, noting that the state law issue did not provide grounds for the case's resolution. Ultimately, the court found that Henrico County's open access requirement violated the Communications Act, as it imposed conditions on MediaOne's telecommunication facilities that are inconsistent with federal law, rendering the provision preempted and superseded. The opinion was authored by Judge Michael, with Judge Wilkins concurring.
Most residential and small business consumers access the Internet via narrowband technology, primarily traditional dial-up modems connected to copper lines. An increasing number are transitioning to broadband technology, notably through cable modem platforms and digital subscriber lines (DSLs), due to the anticipated growth in broadband demand. AT&T initiated a significant push into the broadband market in 1998-1999 by acquiring cable television companies, targeting MediaOne, a major cable operator in Henrico County, Virginia. MediaOne upgraded its systems to offer high-speed Internet via a cable modem platform and created a bundled service called "Road Runner," which integrates its broadband service with ISP offerings. Customers of MediaOne are typically required to subscribe to Road Runner for Internet access, as external ISPs provide similar features with little incentive for MediaOne customers to switch. On May 6, 1999, AT&T and MediaOne merged, granting AT&T control over MediaOne’s cable systems. Following the merger, they sought County approval, which was granted in December 1999 under the condition that by December 31, 2000, MediaOne must allow any requesting ISP access to its cable modem platform on equitable terms. This open access requirement would enable MediaOne customers to access the Internet without needing to subscribe to the bundled Road Runner service.
AT&T and MediaOne filed a lawsuit against Henrico County in federal court, challenging the County's open access condition as a violation of the First Amendment and the Commerce Clause, claiming it is preempted by federal law and void under Virginia law. They sought a declaratory judgment and an injunction against the enforcement of this condition, moving for summary judgment based on the Communications Act of 1934 as amended by the Telecommunications Act of 1996. Verizon, which competes with MediaOne's Road Runner service, intervened on behalf of the County, filing a cross-motion for summary judgment to uphold the condition.
The district court ruled in favor of AT&T and MediaOne, determining that the open access condition was preempted by various sections of the Communications Act. It found that the condition violated 47 U.S.C. § 541(b)(3)(D) by requiring MediaOne to offer its facilities to any requesting ISP, and it contravened 47 U.S.C. § 544(e) by imposing restrictions on MediaOne's transmission technology. The court classified Road Runner as a "cable service," leading to further violations of 47 U.S.C. §§ 541(c) and 544(f)(1) due to the requirement for nondiscriminatory access, thus treating MediaOne as a "common carrier." Additionally, the court ruled the condition void under Virginia law, as the Virginia Code did not authorize the County to impose such a requirement.
The County and Verizon appealed the district court's decision, which centered on two primary questions: the federal constitutional issue of whether the Communications Act preempts Henrico County's authority under Virginia law to enact the open access provision, and the state law question concerning the County's authority to impose such a condition under the Virginia Code.
In Bell Atlantic Md. Inc. v. Prince George's County, the court established that determining whether a federal statute preempts a state statute constitutes a constitutional question. It emphasized that courts should only resolve the state law question if it provides an independent basis for case disposition, thereby avoiding unnecessary constitutional adjudication. The court noted that an independent state law ground could prevent the need to address a constitutional issue, particularly where local governments retain specific powers under federal law.
Under Virginia law, a county's regulatory authority over cable television operators is outlined in Va. Code Ann. § 15.2-2108. This statute grants localities broad powers to regulate cable television systems, including enforcing customer service standards and regulating rates. It mandates that regulatory actions align with the state's policy to ensure adequate and fair cable service delivery while preventing unfair advantages for cable operators. While the statute does not specifically restrict counties from enacting open access ordinances, it does prohibit regulations that conflict with state or federal laws. The court found no Virginia statute or court decision that would invalidate the County's open access provision, indicating that it is not inconsistent with Commonwealth laws. Consequently, the lack of an independent state law ground means the court must still confront the federal preemption question.
The Virginia cable statute prohibits any local cable regulation that conflicts with federal law, specifically the Communications Act. This raises the issue of whether Virginia law, by aligning with federal law, provides a basis for decision that avoids the constitutional question of federal preemption. Under the Virginia statute, the inquiry is whether Henrico County's open access provision conflicts with federal law, a question that parallels a federal preemption analysis. Consequently, addressing the state law question would inherently involve evaluating federal preemption, indicating that the state law basis is not independent.
The district court determined that Henrico County's open access provision contradicts 47 U.S.C. § 541(b)(3)(D), which prohibits franchising authorities from mandating that cable operators provide telecommunications services or facilities as a condition for franchise approval or transfer. The Communications Act defines "telecommunications" as the transmission of user-specified information without alteration. While "facilities" are not explicitly defined, they refer to the physical infrastructure necessary for such transmission.
MediaOne's Road Runner service, which utilizes a cable modem platform for Internet access, qualifies as a telecommunications facility. The county's requirement for MediaOne to provide its cable modem platform, unbundled from content provision, to any requesting Internet Service Provider constitutes a mandate to provide telecommunications facilities as a condition of franchise transfer, violating § 541(b)(3)(D).
The County and Verizon contend that § 541(b)(3)(D) of the Communications Act does not prohibit the open access provision, arguing it only restricts localities from requiring cable operators to construct new telecommunications facilities. However, this interpretation overlooks the statute’s language, which prohibits any conditions requiring cable operators to provide telecommunications facilities, irrespective of whether they are newly built or existing.
The County also claims that MediaOne's facilities qualify as a "cable system" and do not encompass telecommunications facilities, as defined by the Communications Act, because they offer traditional cable services such as video programming. The County argues that the ability to provide Internet access does not change the classification of its cable system.
The analysis concludes that the Communications Act allows for facilities to offer multiple services, leading to different regulatory classifications based on the service provided at any given time. Specifically, while MediaOne operates a cable system, its facilities can be classified as telecommunications facilities when used for Internet transmission.
The text further states that the open access condition violates § 541(b)(3)(D), negating the need for further federal law analysis. However, parties wish to clarify the regulatory classification of MediaOne's Road Runner service. The County asserts it is a "cable service," which would allow local regulation of Internet access over cable lines, while Verizon argues it should be classified as a "telecommunications service," which is defined as offering telecommunications for a fee directly to the public, irrespective of the facilities used.
Verizon seeks regulatory parity for its DSL service, which is classified as a telecommunications service. There is a suggestion that Road Runner may qualify as an "information service" under the Communications Act, exempting it from local franchising and common carrier regulations. The classification of cable modem services like Road Runner is complex and under review by the FCC, which has initiated proceedings to explore whether such services should be classified as cable, telecommunications, or information services. The FCC's inquiry also considers the necessity of open access to promote competition and innovation. However, the court does not need to determine the classification of Road Runner at this time and defers to the FCC's expertise on these issues.
The court holds that Henrico County violated § 541(b)(3)(D) of the Communications Act by conditioning the transfer of MediaOne's cable franchise on the unbundling of its Road Runner service and requiring open access to its cable modem platform, as these requirements are preempted by federal law. Consequently, the judgment of the district court is affirmed. Additionally, the FCC noted that MediaOne committed to open its cable modem platform to unaffiliated ISPs after its exclusive contract with Road Runner expires in December 2001. Judge Widener concurs with the result, noting that Henrico County’s ordinance mandating open access violates federal law.
Virginia Code § 15.2-2108(E) prohibits localities from regulating cable television systems in ways that conflict with state or federal laws governing such operations. This statute reflects Virginia's effort to ensure compliance with the Federal Communications Act. Determining if a local law is preempted by federal law involves interpreting both statutes and assessing any constitutional conflicts, as established in Chicago, NWTR Co. v. Kalo Brick, Tile Co. The authority of counties in Virginia is limited to powers explicitly granted or implied by the Commonwealth, making any conflicting local ordinance invalid, as noted in Bd. of Supervisors of Augusta County v. Countryside Inv. Co. Furthermore, the principle from Ashwander v. TVA states that courts should avoid addressing constitutional issues unless absolutely necessary. It is asserted that the majority decision violates this principle and highlights that the Henrico County ordinance contradicts state law by being inconsistent with federal law under Virginia Code § 15.2-2108(E). The recommendation is to base the decision on the ordinance's inconsistency with state law rather than engaging in constitutional questions unnecessarily, questioning the efficacy of state cooperation if their statutes are routinely overridden by constitutional preemption.
