News

House Has Access Hearing Where ISPs Assail Cable

7/04/1999 8:00 PM Eastern

Washington -- The House Judiciary Committee last week held
the first hearing ever on legislation designed to pry open cable-data networks to
unaffiliated Internet-service providers.

The bill doesn't appear to be gaining much traction -- but
not because the effort to regulate cable has petered out.

The problem is that while the bill calls for regulating
cable, it also calls for massively deregulating the high-speed-data services of the
regional Bell operating companies, entailing a major change in policy.

After a three-hour hearing June 30 that included testimony
from Time Warner Inc. and AT&T Corp. executives, House Judiciary Committee chairman
Henry Hyde (R-Ill.) made it clear that he isn't planning to jam his foot down on the
accelerator.

"Decisions will be made, but there's nothing imminent,
so your anxiety quotient can diminish," Hyde said.

The panel's ranking member, Rep. John Conyers (D-Mich.),
also signaled that he was unwilling to support a bill partly designed to liberate the
Bells.

"The fact of the matter is that I didn't hear a
persuasive call for legislating at this point," Conyers said.

But many cable opponents tried their best to sway Hyde and
Conyers.

GTE Corp. general counsel William Barr called cable's
Internet strategy a flagrant antitrust violation because customers are denied the right to
purchase their ISPs and transport providers separately.

"This is a form of improper tying," said Barr, a
former U.S. attorney general. "You've got to have an open-access rule on the
Internet."

Tim Boggs, Time Warner's senior vice president for public
policy, said his company offers Road Runner on a bundled basis because technically, it is
the most efficient use of a cable system's plant.

Boggs added that there are multiple Internet-access
providers to which customers can turn if they do not like the way Time Warner markets its
Internet services.

"No one competitor has the ability to stand in the way
of the global phenomenon that is the Internet today. For some to suggest that this might
[not] be the case is nothing short of ridiculous," Boggs said.

Barr and Boggs -- testifying before Hyde's panel with nine
other witnesses -- sparred over a bill introduced May 5 by Reps. Bob Goodlatte (R-Va.) and
Rich Boucher (D-Va.), chairmen of the Congressional Internet Caucus.

The bill (H.R. 1686), called the Internet Freedom Act,
would allow unaffiliated ISPs that have been denied cable access to file antitrust suits
against cable operators "with market power in the broadband-service-provider
market."

The bill would also allow the Baby Bells to offer
digital-subscriber-line services across long-distance boundaries without having to
demonstrate to regulators that their local voice networks are open to competition, as
required by Section 271 of the Telecommunications Act of 1996.

The Baby Bell provision is driving a wedge between key
players in the OpenNet Coalition, the lobbying group led by America Online Inc. that is
pushing for government-mandated access to cable's data facilities.

AOL senior vice president George Vradenburg told Hyde's
panel that the Goodlatte-Boucher bill was necessary to accost "real and substantial
threats" to the Internet posed by the cable industry.

But Mike Salsbury, general counsel of MCI WorldCom, a
founding member of OpenNet, said he opposed Goodlatte-Boucher because it would
"eviscerate" the requirement in the 1996 law barring Baby Bell entry to long
distance prior to opening their local phone networks.

"They have chosen to delay opening their markets.
Congress should not reward this choice," Salsbury said, adding that he favored open
cable networks.

A day later, House Telecommunication Subcommittee chairman
Billy Tauzin (R-La.) and Rep. John Dingell (D-Mich.) introduced a bill that would prevent
the Federal Communications Commission and states from regulating virtually any aspect of
firms offering high-speed Internet access.

Importantly, the bill would allow the Bells to transport
data long distance.

The bill would apply to cable and phone companies. Unlike
the Goodlatte-Boucher bill, Tauzin-Dingell would not require cable operators to divorce
transport from content -- a feature that National Cable Television Association president
Decker Anstrom applauded as "a pro-competitive policy toward the deployment of
broadband services."

At a press conference, Tauzin said if AT&T decides to
fight his bill because it doesn't want to compete against the Bells, he would be willing
to allow the FCC and the states to regulate cable provision of high-speed Internet access.

"One of the things we might want to consider in this
bill is a provision that says those regulatory protections don't apply to you unless you
decide on your own to have an open-access platform," Tauzin added.

AT&T, in a statement issued last Thursday with other
long-distance carriers in the Competitive Broadband Coalition, made it clear that it would
not support the Tauzin-Dingell bill.

"If enacted, the bill, in effect, would give monopoly
[Bells] and GTE free rein to enter long-distance data without any safeguards," the
statement said. "At the same time, the legislation dilutes incentives for these
companies to perform and meet their promises to open local markets."

There was some Senate activity last week, as well. Sen.
Ernest Hollings (D-S.C.) introduced a bill that would hit the Baby Bells with stiff fines
if their local phone networks remain closed to competitors after Feb. 8, 2001.

The bill would cost Bell companies $100,000 per day after
Feb. 8, 2001, if more than one-half of their states were not open to competition. If any
Bell states were not open by Feb. 8, 2003, the FCC would be required to order those Bells
to divest their telecommunications-network facilities in those states within 180 days.

The standard for openness in the bill is the 14-point
checklist contained in the Telecommunications Act of 1996.

"Ignoring the 14-point checklist to stop fair
competition in the local market will no longer be tolerable," Hollings said in a
prepared statement. "In fact, it won't be only intolerable, but costly -- to the tune
of $100,000 a day for noncompliance."

As federal legislators wrestled with the issue, across the
country, cable regulators in Washington state dealt a blow to the open-access aspirations
of an affiliate of Internet Ventures Inc.

The Spokane City-County Cable Advisory Board voted 4-3
against extending leased-video rules to compel AT&T Broadband & Internet Services
to open its network to an Internet competitor, which does business as On Ramp.

IVI has a petition pending on the same issue before the
FCC.

The board recommended continued study of the issue.
Competitors will have one more shot in the community, as the board's ruling will be
reviewed by the City Council.

Linda Haugsted contributed to this report.

September