Washington -- America Online Inc. CEO Steve Case is talking
to the Federal Communications Commission about gaining access to high-speed cable-data
networks, with a particular emphasis on @Home Network once AT&T Corp. completes its
buyout of Tele-Communications Inc.
Case took his cause to the FCC last week in a meeting with
chairman William Kennard, who is supporting a move to allow the Baby Bells to build
high-speed-data networks that would not be as heavily regulated as their voice networks.
According to FCC sources, the Baby Bells would have to
create separate subsidiaries that would own the electronics -- but not the wires from the
central office to the home -- that transmit data packets at very high speeds.
Were AOL unable to reach high-speed deals with the Baby
Bells, its access to telephone customers would nevertheless be preserved if it installed
its own high-speed gear. The FCC would ensure that the phone wire itself would be resold
to AOL and that AOL could physically colocate gear at a telco's central office.
But Case is troubled, FCC sources said, that AOL won't
have equal access to cable-modem-service subscribers of @Home and Road Runner. As common
carriers, telcos may control access to their networks, but cable systems cannot.
On the day that AT&T announced its $48 billion takeover
of TCI, Case released a statement saying that AOL "looked forward to entering into a
broadband-reseller agreement with AT&T" after the merger and "to entering
similar agreements with other cable companies as they, too, embrace a truly 'open
Cable-industry sources said AOL subscribers could reach AOL
through @Home and Road Runner. But AOL wants cable-modem subscribers to have access to AOL
on an equal footing with @Home and Road Runner.
FCC and cable sources said the issue is whether @Home or
AOL collects the online-subscription revenue.
"Case is very nervous about that," an FCC source
Cable-industry sources said MSOs would resist any attempt
by AOL to get the FCC to force the resale of high-speed cable services.
The cable industry has not filed oppositions with the FCC
to Baby Bell petitions that seek deregulatory treatment of their high-speed-data networks.
"The cable industry has not opposed any of that,"
a cable source said. "Our business is not to regulate our competitors."
But the industry is watching Case's moves closely.
Cable sources said AOL's efforts to force the unbundling of cable facilities could
"I don't know if [AOL wants] to be in a position
of urging the FCC or Congress to make cable effectively a common carrier, at the same time
that they are telling Congress, 'Don't regulate us in terms of [indecent]
content, don't pay any attention to our rates and let us have propriety
software,'" a cable source said. "Do they really want to open up all of