From...

October 21, 1999
Web posted at: 11:34 a.m. EDT (1534 GMT)

by Anush Yegyazarian

(IDG) -- Who's going to connect AT&T's millions of cable customers to the Internet? AT&T says that it should decide. But an alliance of ISPs -- including AOL and GTE -- and some local governments disagree, and are trying to force the communications giant to open its cable lines to competing ISPs. The battle is raging in court and in Congress, and it may soon be coming to a ballot box near you.

AOL and friends -- who've created the OpenNet Coalition to argue their case -- contend that multiple ISPs should be allowed to offer Internet service via AT&T's cable lines. Right now, cable customers must use Excite@Home -- in which AT&T owns a majority stake -- as their ISP. Open-access advocates argue that letting cable customers connect via other ISPs would maximize consumer choice and keep fees reasonable. Closing the cables to competition, they say, is tantamount to endorsing a cable-access monopoly.

Not playing monopoly

AT&T doesn't oppose open access per se, according to the company's vice president for congressional and regulatory affairs, Kevin Joseph. Instead of renewing the company's contract with Excite@Home when it expires in 2002, Joseph says, AT&T might opt to open the cables to other ISPs. But he contends that in the meantime, closed cables have clearly benefited consumers by forcing local phone companies to accelerate their rollout of Digital Subscriber Line services.

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The Federal Communications Commission shares Joseph's opinion. According to Deborah Lathen, the FCC's cable services bureau chief, a recent study found that DSL was rolled out more promptly and cost substantially less in markets where both cable and DSL were available than in markets that didn't have competition from cable. Citing America Online's recent investment in Hughes (which provides high-speed satellite services), Lathen says the FCC's hands-off policy regarding cable access encourages service providers to explore alternative technologies. The FCC worries that local regulation will discourage cable companies from investing in cable access or will coerce them into offering it only in unregulated markets -- leaving many potential users out in the cold.

Open wide

Representative Earl Blumenauer, a Democrat from Portland, Oregon -- where officials at the county level recently made renewal of AT&T's cable franchise contingent on the company's opening its lines to other ISPs -- agrees with AOL and its allies that open access is the best way to ensure optimum service and choice for consumers. That's why he's introduced a bill in Congress that would require the FCC to establish technical standards for connecting cable systems to the Net. The best-case scenario, according to Blumenauer: "The FCC clears away roadblocks [to open access] and all ISPs end up on a level playing field." The bill would also ask the commission to write rules whereby cable owners could charge ISPs for use of the network.

The controversy will only intensify. AT&T's merger with cable operator MediaOne is now lumbering through the approval process. If the merger goes through, local jurisdictions all over the country will have to approve the transfer of franchises from MediaOne to AT&T, putting those local governments in the same position as Portland and Broward County, Florida (which also tried to tie franchise renewal to an open-access mandate). Petitions are circulating in Colorado and Massachusetts to put open access on state ballots in 2000, and other bills are gestating in Congress. The U.S. Ninth Circuit Court of Appeals is expected to rule in the case of AT&T v. City of Portland by the end of the year (Portland won the first round of the suit).

All parties to the cable access debate claim to agree on two underlying philosophical points: that maximum consumer choice is a good thing and that broadband services should expand as quickly as possible. They simply -- and bitterly -- disagree on how to make it happen.