AOL Wants Cable-Pipe Access

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Washington -- America Online Inc. is urging the Federal
Communications Commission to intervene and prevent cable operators from discriminating
against unaffiliated Internet-service providers.

The nation's dominant online-service provider is
concerned that cable's high-speed facilities will be off-limits to all ISPs except
those owned by cable operators, which would relegate AOL's subscribers to much slower
telephone lines.

In an FCC filing last week, AOL insisted that its
subscribers should have the right to access AOL over cable-broadband facilities, without
having to pay two subscription fees -- one to the cable ISP and a second to AOL.

"Consumers should not have to purchase two ISP
services to get the one service that they want," AOL said.

AOL and the cable industry are sharply divided on this
question, which is under review by the FCC as part of a regulatory effort to promote the
deployment of broadband networks to all Americans.

Under Section 706 of the Telecommunications Act of 1996,
the FCC is charged with taking immediate action if it finds that the public is being
denied advanced telecommunications services.

The cable industry argued that AOL's proposal, if
adopted by the FCC, would harm the industry's huge investment in plant upgrades that
are critical to providing consumers with broadband Internet access.

MediaOne, for example, has spent $5.6 billion so far to
ensure that 2.5 million cable homes can connect to MediaOne Express, the MSO's ISP,
at 1.5 megabits per second -- 11 times faster than a telco ISDN (integrated services
digital network) line, and 26 times faster than a 56-kilobit-per-second modem, which is
the fastest access speed for AOL subscribers.

The debate, which mirrors aspect of the must-carry fight
with broadcasters, caused National Cable Television Association president Decker Anstrom
to call a press conference last week to launch a pre-emptive strike at any FCC effort to
regulate cable provision of Internet services.

"More government regulation will lead to less rapid
broadband deployment," Anstrom said.

According to NCTA data, cable systems with high-speed-data
capabilities pass 19 million homes today, and by year-end, operators expect to be serving
500,000 subscribers in portions of 40 states.

AOL, in contrast, has 15 million subscribers, or 65 percent
market share of U.S. households connected to the Internet.

Anstrom said FCC regulation of cable's provision of
Internet access was unwarranted in such a marketplace.

"Certainly, we are not the dominant provider of
advanced services, and certainly, imposing new regulation would predictably stifle
investment and deployment," Anstrom said.

AOL president Robert Pittman, quoted by Reuters, told a San
Francisco audience last week that AOL expects to serve one-half of the 7 million new
households that are seen connecting to the Internet over the next 12 months.

But AOL's FCC filing suggested that the company is
worried that Pittman's forecast might not materialize if cable operators become
"electronic gatekeepers" and Internet subscribers are denied equal and
nondiscriminatory access to all ISPs.

AOL suspects that current AOL homes that sign up with
MediaOne Express, Road Runner or @Home Network would drop AOL, rather than paying both the
cable ISP and AOL's monthly subscription.

To avoid such a result, AOL said, the FCC should require
cable to furnish "broadband access" to affiliated and unaffiliated ISPs,
"on a fair and nondiscriminatory basis," which would allow subscribers to choose
their ISP over cable the same way that they choose among nearly 5,000 ISPs over the phone
network.

"This competitive market has thrived because the
telecommunications infrastructure underlying the Internet is one that is open to all
comers," AOL said. "Even though virtually all narrowband Internet-access
services today are delivered over local telephone-company networks, existing regulatory
requirements ensure that consumers may subscribe to the ISP of their choice using those
facilities."

Jeff Krauss, president of a Rockville, Md.-based
telecommunications-consultant group, said AOL is plying the FCC with familiar arguments
that cable operators should be common carriers, with networks open to anyone willing to
pay a reasonable toll.

"It's an old argument that has been applied to
video, and AOL is dredging it up to apply to the Internet," Krauss said, adding that
he felt that AOL would not be successful at the FCC.

Contrary to the NCTA's assertion, AOL told the FCC
that broadband investment and services will not grow rapidly if consumers are essentially
forced to take the cable ISP because the cable operator has refused to make the underlying
network available to AOL.

"The full benefits of broadband-cable Internet access
will be realized only if the underlying transport is deployed in a manner consistent with
the Internet's fundamental demand for an open and competitive marketplace," AOL
said.

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