Legal Briefing: Net Neutrality, Yes; Broadband Competition, Not Really

A daily look at legal news and the business of law:

FCC Promises Net Neutrality, But Stops Short of Broadband Revolution

Do you remember when local phone service was cheap, long distance calls were expensive, and Ma Bell had a telecommunications monopoly? OK, maybe you don't: It was 26 years ago. Regardless, a crucial part of the AT&T (T) break-up, which enabled today's competitive telecom environment, was the requirement that Ma Bell allow competing phone companies access to its phone lines at reasonable rates. If new phone companies had had to build parallel infrastructures, the extraordinary costs involved would have severely limited or even prevented competition from developing. (Note: In the 26 years since, mergers have reversed much of what the break up of AT&T accomplished, but the evolution of the telecom industry, most especially the growth of cell phones, has made land-line carriers far less important than they were back then.)

A current parallel is Verizon's (VZ) decision to build its FiOS network to compete with cable companies. Cable companies don't have to share their wires, so it has taken decades for any competition to develop in their business, and then only a few competitors have arrived, namely satellite TV and in limited places, Verizon's FiOS and AT&T's similar U-verse service. Anyone wanting a case study in the benefits of competition need only look at consumers' experience of telephone service versus cable service.

So what does all this have to do with net neutrality -- the principle that ISPs shouldn't be able to favor their own content and services while reducing bandwidth for their competitors? Well, to give itself the ability to enforce rules on net neutrality, the Federal Communications Commission is reclassifying Internet services into the same regulatory "box" that phone companies are in, as DailyFinance reporter Sam Gustin explained on Wednesday. Once those Internet service providers are in that box, the FCC will have the power, among many others, to force them to grant competitors access to their wires at reasonable rates. If the FCC used that authority, consumers could have access to competing providers of broadband service virtually overnight in the same way that the break-up of Ma Bell suddenly gave Americans access to competing phone companies. The result would likely be cheaper and better broadband service, at least for a couple of decades.

Unfortunately for consumers, the FCC has ruled out taking such action. In announcing its "third way" forward on net neutrality -- the original two being phone company-style regulation or traditional Internet regulation -- the FCC took off the table the idea of forcing internet providers to grant access to their networks at reasonable rates. This third way is an echo of the approach that the FCC took to cell phone regulation, and as the many frustrated users of cell phones can attest, that's not necessarily a good thing.

At least net neutrality will be preserved.

The Department of Justice Sues Arkansas Under Americans With Disabilities Act

With all the hullabaloo lately about the states suing the federal government over health-care reform, it would be easy to forget that the roles can be reversed. On Thursday, the DOJ filed a suit against Arkansas charging that the state systematically fails to comply with the Americans with Disabilities Act. The ADA requires states to provide individuals who have developmental disabilities with appropriate services while allowing them to live in the most integrated settings possible (i.e.: with non-disabled people). According to the Department of Justice, Arkansas deliberately doesn't provide such services. Said Thomas E. Perez, the assistant attorney general in charge of the Civil Rights Division: "Arkansas' lack of community services requires individuals with developmental disabilities to choose between receiving services in segregated institutions and receiving no services at all."

German Academics Sue to Block Greek Debt Deal Under EU's "No Bailout" Clause

Five German economists and law professors filed an apparently quixotic lawsuit to block the Greek rescue, according to Bloomberg. The treaties that formed the European Union prohibit the EU or any member nation from assuming the liabilities of another member nation, a provision known as the "no bailout clause." Alleging that the Greek, um, bailout, violates the treaties, the professors have asked the German Constitutional Court to block it. However right or wrong the professors may be on the merits -- and I admit I have no clue -- apparently they lack the standing to file the suit.

Goldman Notes

• The Wall Street Journal reports that despite Goldman Sachs's (GS) tough talk, the firm has begun settlement negotiations with the SEC.

• The New York Times reports that the public exposure Goldman's practices are receiving is impacting its client relationships: American International Group has just dropped Goldman as the primary advisor on its pending reorganization. AIG (AIG) has instead turned to Bank of America (BAC) and Citigroup (C).

Successfully Fighting Red Light Camera Tickets

More and more municipalities are installing cameras to ticket people who go through red lights. Well, a Portland, Oregon red light camera gave a lawyer a ticket for going through a green light, and he proved it, reports the ABA Journal. Turns out the cameras measure a car's speed and calculate whether the it will enter the intersection before the red light turns green, something the camera did incorrectly in this case. So if you've gotten one of these tickets and think it was undeserved, investigate the camera's math skills.

And in the Business of Law...

New York Attorney General Andrew Cuomo is suing a lawyer for fraud. Allegedly, the lawyer sold the use of his own name to a debt collector for $141,000, which then used it to illegally threaten people with litigation. The lawyer did no actual work for the debt collector.