News

Open Access Battles Ignite in Denver

8/01/1999 8:00 PM Eastern

Denver -- Proponents of unfettered access to cable's
high-speed pipe unveiled a new strategy last week, which industry watchers characterized
as a potential winner.

A coalition of Internet-service providers are backing a
November ballot initiative here designed to coincide with a citywide vote on whether to
renew the cable franchise held by AT&T Broadband and Internet Services.

The measure would amend AT&T's proposed new franchise
by declaring Internet services "essential to consumers," and order that they
made available "in a competitive atmosphere."

If approved, it could force AT&T BIS, which is
headquartered in Denver, to allow unaffiliated ISPs to offer their services over its
AT&T@@Home Network. Going directly to the voters may signal a new approach for
open-access supporters, who so far have failed to talk scores of local and state officials
into unbundling cable's high-speed platform.

And Denver is not the only community facing a possible
referendum. Supporters of open access in San Francisco are vowing to launch a similar
petition drive following their defeat last Monday before the city and county board of
supervisors.

The Colorado coalition, reportedly headed by U S West Inc.,
is aligned with OpenNet, a Washington D.C.-based consortium that wants to force open
access nationwide.

On July 23, it submitted some 4,500 signatures to the
Denver Election Commission, which certified 2,763 of them, or 305 more than needed to
place the initiative on the ballot.

AT&T has 25 days to challenge the initiative, which
sources said could tie up the issue up court for years. The Denver City Council has
scheduled a final vote on the AT&T franchise for August 16.

Experts, meanwhile, called the ballot initiative a
"fallback" strategy in case the U.S. 9th Circuit Court of Appeals
overturns a lower court decision upholding a local franchising authority's right to
require open access as a way of promoting competition.

Analysts predicted AT&T faces an uphill struggle to
sway Denver voters, noting that AT&T and Tele-Communications Inc. (now AT&T BIS)
make "good villains."

"When people think of AT&T, they think
monopoly," said Janco Partners cable analyst Ted Henderson. "When they think of
TCI, they think of not a lot of service. Combine those two things in the consumer's mind,
and it paints a big target on the chest."

Meanwhile, legal experts said even if the appeals court
overrules the lower-court decision that would not vacate an election victory for the
Denver coalition. AT&T would have to sue to overturn the election results, said Joe
Van Eaton, a partner with Washington D.C.-based firm Miller & Van Eaton.

Even worse for AT&T, any Colorado court hearing the
case would have to consider the election results, said John T. Soma, professor of law at
the University of Denver.

"This (initiative) changes the dynamics," Soma
said. "A court has got to give more latitude to voters wanting open access than to a
bunch of city council people."

That won't prevent AT&T from taking its case to the
voters, said Thomas C. Pelto, vice president of law and government affairs.

Pelto said the company will stress that the city council
rejected calls for open access during the transfer of Denver's cable franchise from TCI to
AT&T, and that it now proposes to spend $200 million upgrading its local network.

However, Chris Melcher, vice president and general counsel
for RMI.Net, said the equal access coalition will concentrate on informing voters that
recent developments indicate that other jurisdictions "are taking this seriously, and
are no longer worried about AT&T's threats of lawsuits.

"Since the (Denver) franchise was transferred,
Portland has voted against this type of monopoly arrangement, and a Federal District Court
has defeated AT&T's argument," he said. "And now Broward County (Fla.) has
voted to open up the cable. We believe that once voters know the facts, there will be a
very different result."

In San Francisco, meanwhile, the board of supervisors voted
7-4 last week to transfer TCI's system to AT&T without an open access provision. The
majority was more interested in assuring that the city finally got an upgrade of its
antiquated, 54-channel, system than delaying basic video improvements over Internet
issues.

As promised, board president Tom Ammiano supported an
amended version of the transfer that required immediate open access. It failed on an 8-3
vote. A more conservative proposal by Supervisor Michael Yaki gained the support of the
majority, which approved it, 7-4.

That version includes re-openers, which allow the board to
revisit technological issues, if necessary, but does not demand that AT&T open its
platform, even if local jurisdiction is upheld by the Court of Appeals.

In return, San Francisco gets a system upgraded to 750
megahertz, with two-way capability throughout. AT&T will invest $50 million and
anticipates completing the upgrade in four years.

"I think this is a fair outcome. This really serves
the best interest of the citizens of San Francisco," said Jim Cicconi, AT&T
general counsel.

But San Francisco opponents of AT&T vow the issue is
not dead. Katie Roper, president of the Bay Area Open Access Coalition, said her
organization collected 25,000 signatures from area residents during the unbundling debate.
Those petitions solicited signatures from people who supported a choice in high-speed data
providers.

An initiative would require 15,000 new signatures. But
given the interest in the issue, Roper expressed confidence that competitors could collect
the minimum necessary within 30 days. The goal is to place the issue on the November
ballot.

AT&T officials would not offer a time frame for
deployment of telephony and Internet services throughout the community, but added they
anticipate launching AT&T@Home in some areas by year-end.

Cicconi. meanwhile, said he didn't expect opponents to
"fold their tents and go away," but predicted that competitors will enjoy
"limited success" persuading local governments to intrude on the issue.

So far, AT&T has funded media blitzes and marched out
the lobbying troops in Portland, Broward County, Los Angeles, Dade County and San
Francisco. In fact, it convinced so many supporters to jam the boardroom in San Francisco
that the fire alarms went off and part of the crowd had to be moved to an overflow room.

March