ACCESS DEBATE SPREADS

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The open-access debate migrated to Minnesota and
Massachusetts last week, where it threatened to break out on several fronts.

At the Minnesota Public Utilities Commission,
Internet-service providers headed by regional Bell operating company U S West asked state
regulators to include equal access in their review of AT&T Corp.'s proposed $60
billion acquisition of MediaOne Group Inc.

Specifically, the group wants the PUC to delay the transfer
of a certificate that allows MediaOne to offer local telephone service in the Twin Cities
area until AT&T agrees to open up its high-speed platform to all comers.

The Minnesota Department of Public Service, as well as the
attorney general's office, has also considered whether the PUC should address the
access issue.

A spokesman for the ISP coalition said cable's closed
architecture prevents telecommunications providers from offering 320,000 MediaOne cable
subscribers a host of new services, including Internet access, telephony and even new
cable programming.

"I can pick a different local phone company, I can
pick a different long-distance company," said Bil MacLeslie, head of research
development for Vector Internet Services Inc.'s VISI.com, a Minneapolis-based ISP.
"I'll even be able to pick a different electrical or natural-gas company. What I
can't pick is a different cable company."

The PUC has given the coalition until Oct. 11 to submit
comments. Reply comments are due Nov. 1, followed by a commission hearing the week of Nov.
15.

MediaOne vice president of law and public policy David
Seykora said that when considering such transfers, the PUC historically limits its review
to the technical, financial and managerial capabilities of the entity acquiring the
certificate.

"And we believe that's the appropriate scope of
the review here," Seykora added. "The PUC regulates telephone service in
Minnesota, not cable service. And our Internet-access service is clearly a cable
service."

This could change, however, under a bill that is expected
to resurface in the Minnesota Legislature early next year.

The proposal would classify cable as a
"telecommunications" provider and require that it interconnect with local and
long-distance carriers, as well as ISPs.

Moreover, it would shift authority over cable from
municipal governments to the PUC -- a move that could theoretically give the agency the
power to require open access.

"We've really backed into this thing,"
Minnesota Cable Telecommunications Association executive director Mike Martin said.
"The bill was originally written from a telephone point of view until this
open-access thing came floating down the river."

MacLeslie accused federal regulators of failing to see the
obvious when they insist that open access should be left up to a competitive marketplace.
"I can't compete because I can't get on the wire," he said, "so
where is the competition?"

He conceded that the ISPs have had little success in making
their case before local franchising authorities, which he characterized as afraid
"that AT&T will sue everybody to death" if they try to impose open access.

Tom Creighton -- a Minneapolis-based lawyer whose clients
include franchise authorities that represent 55 percent of MediaOne's Twin Cities
subscribers -- confirmed that most cities reviewing AT&T requests for transfer of
their MediaOne franchises are settling for agreements that allow them to revisit open
access at a later date.

"If David Olson wins his court case, we can all jump
on the bandwagon," Creighton said, referring to AT&T's lawsuit against
Portland, Ore., one of three LFAs trying to require open access. Olson is director of the
Mount Hood (Ore.) Cable Regulatory Commission.

Meanwhile, Martin said, industry officials will participate
in upcoming hearings on Senate File 2133, which would eliminate all Minnesota
telecommunications laws governing service providers and lump them into one category as
telecommunications companies.

Sponsored by Democratic Sen. Steve Kelley, the bill would
then make the PUC responsible for formulating telecommunications rules and regulations,
including deployment of infrastructure serving voice, video and data, along with promoting
customer choice, consumer protection and resolution of disputes between carriers.

But it's the interconnection requirement that rubs
cable the wrong way, because it would effectively mean "that we would have to open up
our systems," Martin said.

"We absolutely oppose that," he added.
"We've talked to Kelly about this, but he feels that it should be in the bill,
that we should be required to open our platforms to open access."

In Massachusetts, meanwhile, Attorney General Thomas Reilly
certified a statewide initiative on open access, despite the objections of attorneys for
the cable industry.

Under Massachusetts law, the attorney general must approve
the form and topic of an initiative first, then let proponents gather signatures.

Supporters of open access -- which some cable lobbyists
call "forced access" -- must now collect 57,100 signatures by Dec. 1 to send the
initiative to the legislature for consideration.

If lawmakers do not take up the issue by May, proponents
have to collect 9,517 more signatures before July 5 to put the issue on the November 2000
ballot.

Cable attorneys argued that the initiative, submitted by a
Boston venture capitalist, violates each requirement in Article 48 of the state
constitution.

That provision requires that each petition be in the proper
form; that it be substantially different from any proposals that appeared on ballots
during the last two statewide elections; and that it does not address any matter
specifically excluded from the initiative process by the state constitution.

Moreover, attorneys for MediaOne and AT&T argued that
legislated open access would constitute an "unlawful taking" of property. To
connect with the cable-modem platform, competitive ISPs would have to colocate hardware on
cable property, they indicated.

Reilly rejected each argument. In a letter to the
attorneys, he said cable's representatives had not demonstrated that physical
connection is the only way to implement the initiative, if approved. The data provided to
support the invasion argument are "several years old," Reilly noted, and from an
industry that changes on "almost a daily basis."

Reilly also said he had not seen proof that sharing
bandwidth would interfere with other services, cause financial losses or decrease expected
financial gains. Furthermore, the proposed law would provide for reasonable rates to
compensate for the "taking," in Reilly's view.

The attorney general's office told operators it might
file suit against the law if the legislature or voters approve it.

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