Access Wars Break Out On Two New Fronts

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The open-access cable wars surfaced in two new locations
last week.

In Virginia, Cox Communications Inc.'s bid to transfer
240,000 Media General Inc. subscribers in Fairfax County was put on hold when the county's
Board of Supervisors voted 7-3 to wait until Sept. 13 while it studied various issues,
including open access.

And in Massachusetts, where AT&T Broadband &
Internet Services wants to transfer more than 170 MediaOne Group Inc. franchises, a
petition drive was launched aimed at placing an open-access initiative on the November
2000 statewide ballot.

The latest developments in the battle to unbundle cable's
broadband pipe were welcome news in Portland, Ore., which triggered the access dispute by
requiring AT&T Broadband to unbundle its local network.

Portland franchising director David Olson was not surprised
by the developments in Fairfax County, noting that the National Association of Counties
has endorsed open access as its national policy.

"I can't say that I've lost count, but there are a lot
of people looking at this," Olson added. "This issue has legs."

But whether unaffiliated Internet-service providers will be
allowed access to Cox's network is not the only question Fairfax County officials are
mulling.

"Open access is being discussed, but it's not the only
issue," Department of Telecom and Consumer Services director Ron Mallard said.
"It's not the only reason why the board delayed its deliberations."

Nevertheless, the board's decision could make Cox the
second major MSO under the equal-access microscope. AT&T Broadband is fighting the
controversial proposal in Oregon, Florida and Colorado.

A wealthy suburb of Washington, D.C., where household
incomes approach six figures, Fairfax County is the crown jewel in Cox's $1.4 billion
acquisition of Media General's northern Virginia cable systems.

Cox officials were "surprised and disappointed"
at the board's action, noting that open access was never raised during public hearings on
the proposed franchise transfer.

"The board wants some peace of mind that there are
options down the road," Mallard said.

Meanwhile, as a way of promoting competition, the board
also wants some 80,000 local multiple-dwelling units freed from life-of-the-franchise
contracts they entered into with Media General.

Cox senior vice president of operations Claus Kroeger
argued that the agreements are nonexclusive, which allows owners of the MDUs to
"bring in a competitor." Nevertheless, he added, Cox has agreed to "look at
the agreements" - an answer that didn't entirely satisfy local officials.

"The board remains concerned that a willingness to
negotiate when you hold all of the cards may not mean much," Mallard said.

The county is also concerned about technological features
involved in Cox's planned $300 million upgrade, and it wants an 8.6 percent rate hike
recently imposed by Media General scaled back.

Mallard said the rate hike was greater than what would have
been allowed under defunct federal rate regulation, and it completely negated a one-year
rate freeze that Media General imposed for 1998. "Some members of the board feel like
the rate freeze was disingenuous because the size of the rate hike recovered what the
company lost," he added.

Kroeger argued that Cox planned to upgrade the Fairfax
system in a "consumer-friendly" manner, and he defended local rates as
"fair and reasonable," based on the system's "channel-rich" lineup.
"We don't think it's an issue that needs further addressing," he added.

Kroeger predicted that open access will not become a
problem in Fairfax County. "I don't have any indication that it will be," he
said. "They just want to know what the story is, and that's certainly
legitimate."

Analysts speculated that the OpenNet Coalition - a group of
ISPs seeking open access nationwide - is behind Fairfax County's sudden interest in the
issue, since America Online Inc., the driving force behind the consortium, was once based
there. "It's their home ballpark," Paul Kagan Associates Inc. regulatory analyst
John Mansell said.

Mallard said OpenNet had not contacted the county, but Bell
Atlantic Corp. - the state's dominant local-exchange carrier - had urged it to consider
requiring equal access.

Either way, any move to target other MSOs besides AT&T
Broadband may indicate that the equal-access issue is gaining momentum.

"Every situation is reaching the national business
press, and not just the trade press," Mansell said. "Based on the amount of
media publicity it's getting, I'd say it's gaining momentum."

Meanwhile, the Massachusetts petition drive was launched by
Christopher Grace, CEO of Grace Venture Capital, who called the issue
"analogous" to opening the long-distance market - a move that resulted in a 70
percent drop in rates.

Under state law, once the necessary 58,000 signatures have
been collected, lawmakers can pass the measure this fall. If the legislature does not act,
however, the initiative would appear on the November 2000 ballot.

Elsewhere, the waiting game has begun in Denver, where ISPs
with ties to OpenNet are readying a citywide ballot initiative that would amend AT&T
Broadband's new franchise to require that Internet service be available "in a
competitive atmosphere."

AT&T Broadband - which has 25 business days, or until
Aug. 27, to challenge the initiative - said last week that it was still
"evaluating" how it would oppose the measure.

Despite the MSO's opposition, the election commission could
allow the referendum to go forward. This would force AT&T Broadband to sue in Federal
District Court to overturn the results if voters side with open-access supporters. Even
then, the election results would still be valid pending the outcome of the court case,
sources said.

Denver officials, meanwhile, continued to argue that the
franchise the city negotiated with AT&T Broadband promotes competition by introducing
the AT&T@@Home service into a market currently controlled by U S West, a member of the
ISP coalition.

Dean Smits, director of the Denver Office of
Telecommunications, said residential consumers can currently only obtain high-speed
Internet access by subscribing to U S West's asymmetrical-digital-subscriber-line service.

"You can't get it from Sprint [Communications Co.],
Qwest [Communications International Inc.] or MCI [WorldCom Inc.]," he said. "You
have one choice: ADSL service from U S West. And it's not even provided in the entire
community. Here in Denver, that's the reality. I would submit that this franchise will
promote more choice, not less choice."

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