News

Portland May Seek AT&T Alternatives

10/03/1999 8:00 PM Eastern

Portland, Ore., the focus of the open-access wars, will not
wait to see if the courts uphold its authority to unbundle AT&T Corp.'s
high-speed network.

Instead, it's gone looking for a facilities-based
competitor willing to build an open broadband platform capable of delivering Internet
services to area residents.

Meanwhile, the access issue spawned in Portland continues
to ripple throughout the country. It emerged last week in Fairfax, Va., as part of a Cox
Communications Inc. franchise transfer. And in Somerville, Mass., elected officials
reacted strongly to MediaOne Group Inc.'s decision to hold back data-service rollouts
over the access issue.

Portland's "request for qualifications" is
the latest countermove in a fight over AT&T's refusal to open its local cable
network to outside Internet-service providers.

Presumably, a second network would have the high-speed-data
market to itself, since AT&T also refuses to roll out its AT&T@Home
data-over-cable service in Portland because of the city's contested open-access
ordinance.

"We have a company withholding broadband access,"
Portland franchising director David Olson said. "The FCC keeps saying that
there's plenty of broadband competitors out there. Well, rather than sitting on our
hands, let's find out."

AT&T admitted to being "caught between a rock and
a hard place" in its open-access fight with Portland. That battle shifts to the Ninth
Circuit Court of Appeals for oral arguments Nov. 1.

"They have every legal right to do this,"
AT&T spokeswoman Sarah Dussick said. "We would like to be the company providing
those services. Unfortunately, we can't comply with their [open-access]
ordinance."

Sources said the RFQ -- a forerunner to a request for
proposals -- has "been on the street" for weeks. Designed to elicit
"expressions of interest," it has reportedly drawn responses from regional Bell
operating company U S West, competitive local-exchange carriers and other cable
overbuilders.

Another possibility is a municipal overbuild. A source
close to the situation said early respondents included a California-based firm
specializing in helping local governments to fund and build their own telecommunications
networks.

"And the mayor is on record as saying that's
something we would look at," the source added.

The deadline for responses is today (Oct. 4). Councilman
Erik Sten will tentatively report to the Portland City Council on the results at a Nov. 8
meeting.

Observers expect Portland's RFQ to draw more than
causal interest, especially among major power companies with an eye on the
telecommunications market.

"A lot of power companies could well be
interested," Paul Kagan Associates Inc. analyst John Mansell said. "Companies
like Seren [Innovations Inc.] and RCN [Corp.] are showing up from coast-to-coast."

But Mansell added that some potential suitors may be scared
off by AT&T's lawsuit or by fear that the city's proposal is
"gamesmanship involving the case."

"There's no gamesmanship involved," Olson
countered. "These are very serious stakes, just as the litigation is very
serious."

Elsewhere on the open-access front, Somerville officials
said the city would hold public hearings on the access question following MediaOne's
decision not to roll out its Road Runner service in the Boston suburb of 80,000.

The MSO chose to look elsewhere after Mayor Dorothy Kelly
Gay asked the Federal Communications Commission for an advisory opinion on whether cities
can require ISP access as part of the franchise-transfer process. Somerville is
considering a request that would send its MediaOne system to AT&T.

MediaOne spokesman Rick Jenkinson admitted that the
city's filing "clouded" the regulatory landscape, prompting the company to
"stand down" in Somerville, where it planned to introduce Road Runner later this
year.

Kelly Gay responded with a letter promising public hearings
in conjunction with Rep. Michael E. Capuano (D.-Mass.) and the Berkman Center for Internet
and Society at Harvard Law School.

In his own strongly worded response, Capuano said it was
clear that MediaOne's decision was intended as "payback" for the
city's filing at the FCC.

Meanwhile, MediaOne recently got some support for its
position from a special magistrate named by the Massachusetts Department of
Telecommunications and Energy to oversee the transfer of the MSO's 175 franchises to
AT&T.

In his nonbinding report, Judge Charles J. Beard found that
open access should not be an issue considered by regulators weighing a transfer.

Meanwhile, in Washington, D.C., charges of high-speed-data
redlining have been levied at the two companies.

The Telecommunications Advocacy Project filed a petition
against the merger with the FCC, alleging that modem service is deployed rapidly in
high-income neighborhoods, but less aggressively in low-income, predominantly
African-American and Hispanic neighborhoods.

Fairfax, meanwhile, has joined Oregon's Portland and
Multnomah counties and Broward County, Fla., in testing the open-access waters.

The Fairfax City Council voted unanimously last week to
transfer 5,600 Media General Inc. subscribers to Cox Communications Inc., but it then
amended the deal on a 4-2 ballot to require that Cox unbundle its newly acquired network.

Cox closed its $1.4 billion acquisition of Media
General's properties in the area last Friday. "We look forward to providing
high-quality video programming and other advanced broadband services for customers in
northern Virginia," Cox CEO James Robbins said in a press release.

"We were definitely surprised," Cox spokeswoman
Amy Cohn said of the government move. "It had never come up in any public hearing.
Then all of a sudden, it came up last week. We don't think this is indicative of how
customers in Fairfax really feel."

Unless the city reconsiders, the MSO will be forced to pull
back from further deployment of the Road Runner service Media General had begun
introducing in Fairfax, Cohn added.

"Media General had contractual obligations to deploy
Road Runner, and we were going to live up to those obligations," she said.

City officials seemed disinclined to back away from their
decision. "By taking this action and supporting open access, we have ensured that our
citizens will continue to have the freedom to choose their Internet provider,"
Councilman Scott Silverthorne said in a prepared statement.

Want to read more stories like this?
Get our Free Newsletter Here!