Access Advocates Say See You in St. Louis

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The city of St. Louis fired a shot across the bow at
AT&T Broadband & Internet Services last week, as the so-called forced-access issue
has spread from franchise transfers to renewals.

In a surprise move, a city official proposed an ordinance
requiring AT&T Broadband to open its network to unaffiliated Internet-service
providers in exchange for the right to continue operating in the city.

If enacted, St. Louis would become the fifth local
franchising authority to require open access from its cable operator, joining
Oregon's Portland and Multnomah counties; Broward County, Fla.; and Fairfax, Va.

"By opening the city's cable to competition, both
consumers and small businesses will benefit from lower prices, a wider selection of
providers and a greater variety of services," board of aldermen president Francis
Slay said in a statement after pitching the ordinance.

With a renewal involved, observers believe St. Louis will
be particularly scrutinized, since it may be the first community to argue that open access
to cable's broadband pipe is crucial to its future telecommunications needs.

"And you can look for it to happen in many other
places," an observer said. "It's logical to [demand access] during the
renewal process, because you can make it part of your community-related needs."

Under Title XI of the Communications Act, cities with
renewal proposals can conduct needs ascertainments to determine their future
telecommunications requirements. If demands are reasonable, cities can deny renewals if
operators balk -- a right that was upheld by the courts in a landmark decision involving
Sturgis, Ky.

In the four other communities in the access debate, the
question has come up in terms of franchise transfers to new operators.

The board of alderman's public utilities committee met
for almost five hours on the ordinance last Thursday before voting to send the measure on
to a second reading last Friday.

During the marathon session, it heard from Rachelle Chong,
a former commissioner at the Federal Communications Commission, who said requiring open
access would discourage investment in digital-subscriber-line technology by SBC
Communications Inc., the state's dominant local-exchange carrier.

"That means consumers will end [up] paying higher
prices for fewer services," Chong said.

AT&T Broadband officials speculated that the Slay bill
was orchestrated by SBC, and they were incensed that it came just 10 days after the FCC
said the regional Bell operating companies don't have to unbundle their asymmetrical
DSL services.

"It definitely took us by surprise," AT&T
Broadband spokeswoman Deb Seidel said. "Slay had previously indicated that open
access was something he wasn't interested in. But he's announced [that he's
running] for mayor since then."

Sources said the bill contained particularly onerous
provisions, including one that would designate Internet access as a telecommunications
service, making it subject to a fee of 10 percent of gross revenue.

Another clause would declare the bill an "emergency
measure" that would go into effect immediately, rather than the typical 90 days after
passage.

"It's really ugly," one observer said.

Meanwhile, a second ordinance has been introduced granting
AT&T Broadband a six-month franchise extension, as the first one expires today (Oct.
18).

"But some of the alderman didn't even want to
extend the franchise," one source familiar with the situation said.
"They're not looking at it as AT&T. They're still looking at it as
Tele-Communications Inc. And TCI's service record in St. Louis is abysmal."

Some industry followers worried that AT&T will delay a
proposed $19 million upgrade in St. Louis, thereby delaying the introduction of
cable-modem service to some 55,000 customers.

"They took Portland off the top-10 list, didn't
they?" one source said.

In a statement issued following last Thursday's
committee meeting, AT&T Broadband played a conciliatory tune, saying it would work
with the city to upgrade its local network and "give consumers a real choice in local
phone service, high-speed Internet access and better cable TV."

The MSO said it planned to inform the board how open access
would "create barriers to launching advanced services."

Seidel noted that St. Louis County has also been looking at
the access question, but it delayed action until Dec. 21 to give both sides a chance to
make their cases. County officials will vote on the issue Jan. 20.

Elsewhere, the open-access question apparently died in
Denver last week, where U S West dropped its support for a coalition of ISPs seeking to
convince voters to reject an AT&T Broadband franchise that does not include
open-access requirements.

The RBOC withdrew its support after learning that other
members of the group were not donating funds to the campaign.

However, sources speculated that U S West feared that
consumers would believe its participation in the coalition was a bid to protect its local
telephone monopoly.

"We took a look at it and decided not to move
forward," U S West spokeswoman Anna Osborn said. "We're going to focus on
serving customers and competing in the marketplace."

U S West's withdrawal killed plans for a full-scale
media blitz designed to defeat the franchise and virtually assured that area residents
will approve the new 10-year deal Nov. 2.

AT&T Broadband officials said they plan to keep touting
the benefits of their franchise. "We're not taking anything for granted,"
spokesman Mark Trierweiler said.

However, Portland director of franchising David Olson said
he expects more LFAs to join the open-access wars once the Ninth Circuit Court of Appeals
upholds a lower-court decision affirming local jurisdictions' rights to impose open
access.

"We expect a favorable decision from the Ninth Circuit
by February," Olson said. "And if you think you see dominoes falling in place
now, wait until that happens."

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