News

Cable May Win Round in Open-Access Battle

9/26/1999 8:00 PM Eastern

If commissioners in Miami-Dade County, Fla., heed the
advice of their professional staff members, they will vote next month not to impose open
access as a franchise-renewal or transfer condition.

This would be a welcome victory for cable in the ongoing
battle over what consumer activists call open access and cable considers forced access.

The access debate continued to simmer in Washington, D.C.,
last week, and consumers in another part of south Florida learned that their government's
vote for access means Road Runner service won't be deployed there anytime soon.

According to recommendations presented during a workshop on
the topic last Thursday afternoon, Miami-Dade officials believe the issue of access is
best, and most consistently, resolved by the action of the Federal Communications
Commission, and not by local governments.

That doesn't mean county officials have made up their minds
on the issue. The meeting included testimony from Portland, Ore., cable regulator David
Olson, whose community's action compelling open access opened the global debate on the
subject. Jesse Juarros, deputy general manager of the Los Angeles Information Technology
Agency, also spoke.

The Los Angeles department's report recommended a
wait-and-see approach. Lobbyists from AT&T Corp., the Florida Cable Telecommunications
Association, the Florida Internet Service Providers Association, the Miami-Dade Chamber of
Commerce and academics also weighed in on the issue.

"Members of the FCC were also invited, but they
declined," said Mario Goderich, director of consumer affairs for the Florida county.
Commissioners have met privately with FCC chairman William Kennard to urge action on the
issue, he added.

The county is still collecting information on the benefit
or need for regulation, the technical feasibility of open access and the effect of
regulation on future telecommunications investments, Goderich said.

The staff report recommended that the county commission
include in future licenses a "most-favored-nations" clause, which would require
operators to open their high-speed-data platforms to other users should the cable
companies open their platforms in other communities.

Cable companies that do business in the county -- including
AT&T Broadband & Internet Services, MediaOne Group Inc. and Charter Communications
-- would be subjected to such terms.

Officials also want future cable licenses to include
reopener clauses on technology issues, language that would promote the fastest possible
deployment of high-speed-data delivery and requirements that all schools be connected. And
the report supported so-called one-click access to users' content of choice.

Goderich said that as the debate on access has gone on,
operators have indicated that they may delay deployment of cable modems in the county if
restrictive legislation is approved.

Indeed, MediaOne confirmed that it would not deploy Road
Runner in nearby Broward County, Fla., citing that county's vote to open the modem
platform to competitors. That vote has been challenged in court.

And other communities requiring or considering open access
-- including Portland and Somerville, Mass. -- have found themselves removed from the
high-speed-deployment calendar by local operators.

Other options before the Miami-Dade regulators, although
not recommended by staff, include imposing open access but with a sunset, triggered by a
specified penetration by a competitor; or an approval of open access with implementation
suspended until national technical standards are set. The county commission should make
its policy decision Oct. 19.

Meanwhile, AT&T and MediaOne jointly filed with the FCC
a 134-page response to parties that want to see their $56.4 billion merger blocked or
conditioned on open-access requirements.

The MSOs said the merger would not lead to excessive
concentration in the cable-distribution market and leave AT&T in an insurmountable
position to decide life or death for new and established programmers.

"The presence and success of DBS [direct-broadcast
satellite] providers -- with their national coverage and 10 million strong (and rapidly
growing) subscriber base -- removes any doubt that an attempt by AT&T to mistreat
programmers would not be merely futile, but suicidal," AT&T and MediaOne said.

"It should therefore come as no surprise that not a
single video programmer filed comments in this proceeding," the two companies added.

The MSOs also asserted that their substantial post-merger
ownership stakes in Cablevision Systems Corp. and Time Warner Entertainment should not
count toward the FCC's 30 percent ownership cap because AT&T will not be making
programming-selection decisions for its partners.

Imposing tight ownership rules would, they added, undermine
their efforts to inject competition into local phone markets -- a key goal of the
Telecommunications Act of 1996.

"It would be absurd and unfortunate if AT&T's
customers were denied the 1996 Act's promised benefits -- competitive local telephony and
new broadband services -- because of needlessly restrictive limits on cable horizontal
ownership," AT&T and MediaOne said.

The FCC is expected to adopt new cable-ownership rules Oct.
8. While some cable-industry sources said the agency was looking to accommodate AT&T,
the company wasn't taking any chances.

AT&T chairman and CEO C. Michael Armstrong paid visits
to the commissioners last Thursday and Friday, and AT&T Broadband CEO Leo J. Hindery
Jr. is expected to make the rounds today (Sept. 27), too, according to FCC sources.

Open access also lingers around the merger approval. But
Kennard has stated repeatedly that his agency should refrain from adopting rules that
could interfere with cable's rollout of broadband facilities.

The FCC's stance hasn't deterred critics from insisting
upon government intervention, though.

Last week, the Consumer Federation of America issued a
study that urged the FCC and local governments to force open cable Internet facilities,
claiming that AT&T intends to turn the Internet into a "private toll road,"
and that the company would require customers to pay higher prices and receive lower
quality of service.

"The closed, private network of the cable industry
poses the greatest threat to the liberating influence of the Internet," the 104-page
CFA report said.

In a statement, the National Cable Television Association
said the CFA report failed to understand that the marketplace is working, giving consumers
a choice at a minimum between cable and the local phone companies for Internet access.

"Consumers, not government, should choose which
technology works best for them," the NCTA said.

While the Floridians continue to gather data, partisans on
the issue continue to stride the city halls in Los Angeles. The issue is on hold in a City
Council committee.

The latest group to join the ranks of lobbyists is the
Digital Coast Roundtable, the membership of which includes content developers from some
Hollywood heavy hitters such as DreamWorks SKG and Paramount Pictures.

That group drafted a two-page position paper urging City
Council members to "say no to forced access."

Programming creators believe technological improvements
will accelerate competition. For example, they noted that GTE Corp. began deploying
digital-subscriber-line technology almost immediately after MediaOne began offering Road
Runner in the Los Angeles market. And other companies are working hard to perfect and
deploy wireless Internet access.

Government restrictions will slow the flow of capital, the
group concluded, agreeing with the city's ITA that there is "no compelling reason
today for the big and often clumsy hand of government to step in."

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