News

FCC Rejects Leased Access for ISPs

2/13/2000 7:00 PM Eastern

Washington -- The Federal Communications Commission has
rejected a request that would force cable companies to lease channels to Internet-service
providers under a 1984 set-aside program intended for providers of traditional video
programming, according to agency sources.

FCC sources said the request -- a petition filed in June by
Internet Ventures Inc. of Redondo Beach, Calif. -- has been voted on by the FCC
commissioners, and an order announcing the decision would be released soon.

The commission went ahead with the vote despite a
last-minute attempt by Rep. Rick Boucher (D-Va.) to persuade the FCC to grant IVI's
petition.

"Independent ISPs now present a major source of
competition to the programming offered by cable providers. Granting the petition would
clearly meet the statute's goals of providing greater diversity and competition in
the programming choices available to consumers," Boucher wrote in a one-page letter
to FCC chairman William Kennard Feb. 9.

IVI spokesman Paul Schneider declined comment. "We
can't comment until we see some pronouncement from the FCC," he said last
Friday.

The cable industry strongly opposed IVI's request,
claiming that leased-access rules were never intended for ISPs.

America Online Inc., a champion of open access, supported
IVI's petition, but not to the same extent that it supported access to cable
facilities on the same terms as cable-affiliated ISPs.

At a press conference last month, Kennard virtually buried
any remaining hope for IVI. He said he did not think cable leased-access rules would
accommodate ISPs, even though IVI operates a Web portal, PeRKInet, which provides links to
more than 100 cable and broadcast channels that stream video programming over the
Internet.

Kennard called the IVI petition a "square-peg,
round-hole problem."

The FCC's decision is expected to be narrowly crafted,
saying ISPs are ineligible because they do not provide video programming in a manner
consistent with the definition of video programming in communications law.

The law says video programming must be comparable to the
programming generated by TV stations. Webcasting is generally not considered to be the
qualitative equal, in terms of picture quality, of a TV-station signal.

FCC sources have said in recent months that ISP provision
of e-mail and other Internet services also fell outside of the scope of video programming.

Under the 1984 law, cable operators are required to set
aside between 10 percent and 15 percent of their channels, depending on overall system
capacity, to unaffiliated third-party programmers.

The FCC, which regulates leased-access rates, allows cable
operators to reclaim unused leased-access channels.

Ironically, at the same time the FCC is rejecting
IVI's petition based on the inferior quality of Web video streaming, some opponents
of IVI's petition -- including cable operator Time Warner Entertainment -- are suing
TVRadio Now Corp.'s iCraveTV Web site for streaming TV stations in Buffalo, N.Y.,
over the Internet.

In a letter to Kennard Feb. 10, IVI said TWE had created an
inconsistency between what it is telling the FCC in the context of the IVI petition and
what it is telling a federal court in Pittsburgh in connection with the iCraveTV case.

"The FCC should demand and obtain from Time Warner a
clarification of its stance on the matter and a full explanation for the
inconsistency," IVI attorney William Freedman wrote.

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