AT&T Gets Speedy Appeal But Must Wait in San Fran

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An expected ruling on the transfer of Tele-Communications
Inc.'s cable properties in San Francisco to AT&T Corp. has been delayed further,
possibly over the issue of opening the operator's Internet platform to competitors.

Meanwhile, the U.S. Court of Appeals for the Ninth Circuit
in San Francisco last week granted AT&T's request for an expedited review of District
Court Judge Owen Panner's decision allowing Portland and Multnomah counties in Oregon to
require that Excite@Home's high-speed network be opened to unaffiliated Internet-service
providers.

The San Francisco Board of Supervisors discussed the
180,000-subscriber transfer in a closed session with municipal attorneys last week. Board
president Tom Ammiano said he would introduce amendments that would require open
high-speed-data access.

No public report of the closed session was made, but Denise
Brady, deputy director in the city's Department of Telecommunications and Information
Services, said amended legislation is anticipated to be announced this week by the board,
with public hearings to follow.

According to an item on its agenda, the board will also
consider a resolution directing the city attorney and municipal telecommunications
department to monitor legislation on the issue at all levels and to "take all
possible action" to promote city rights to regulate.

In the court case, AT&T will have until Aug. 9 to file
its comments, with Portland and Multnomah counties required to respond by Sept. 7. Oral
arguments will be heard in October.

Other interested parties, such as the city and county of
San Francisco, are considering filing "friend-of-the-court" briefs in support of
Portland.

In a prepared statement, AT&T pronounced itself
"pleased" with the court's schedule, "which will permit our case to be
argued and decided by the end of the year."

"We also remain confident that the decision by the
district court will be reversed," AT&T vice president of law and government
affairs Mark C. Rosenblum said.

Veteran industry-watchers speculated that AT&T's
confidence was based on Federal Communications Commission chairman William Kennard's
comments at the recent National Show in Chicago, where he said authority over cable's
broadband pipe rests with his agency, and not with local franchising authorities.

But whether or not that confidence was well-founded
remained questionable.

"Although we personally agree with this view, we note
that his title is not Judge Kennard," Denver-based analyst Janco Partners warned in
an investors' advisory. "Accordingly, we continue to view the ultimate outcome of
this issue [nationally and locally] as uncertain, at best."

In Portland, city councilman Erik Sten welcomed the San
Francisco court's decision to fast-track AT&T's request, arguing that the district
court's "unequivocal" ruling made it unlikely that the ruling would be
overturned.

"We'd like to get this settled," Sten said.
"We'd like to get our open-access principle established. It's obvious that AT&T
is not going to live with a local ruling, so I guess we're going to need a circuit-court
ruling."

Sten added that local officials recently met with Kennard
after months of being put off with the argument that the agency was not going to become
embroiled in the controversy.

"I think it's ironic that for months, we couldn't get
a meeting," he said. "Then we win in court, and it's time to talk."

While he agreed with Kennard's desire for a "national
standard" covering equal access, Sten blasted the FCC chair for spending months on
the sidelines, then coming out in favor of a nationwide policy "while at a cable
show, and after we've won in court."

"I think it will be a travesty if that [national]
standard is monopoly," he said. "We never had any word from the FCC, and now
they're saying that we're wrong to address the issue."

Another question that has arisen is how much support
Kennard will get from his fellow commissioners.

Sten said that during an informal meeting in the spring,
commissioner Harold Furchtgott-Roth said the equal-access issue was "best decided in
court."

"Well, lo and behold, we win, and they're saying that
we're wrong," Sten said. "But I've heard that [Furchtgott-Roth] hasn't recanted
that statement."

Prior to the meeting, Portland officials released a set of
"message points" that were sent to Kennard in advance of his June 21 meeting
with various consumer groups that were concerned about the ISP issue.

Among the points was the city's disappointment that Kennard
had come out "against the unanimous vote of the Portland City Council and the
decision of a senior federal judge," and against "a competitive
telecommunications marketplace."

It accused Kennard of inviting cable operators "to
open a docket designed to pre-empt and attack the decision of the elected officials of
Portland and Multnomah counties," and of authorizing agency officials to instruct
operators "on how to file with the commission to give it legal authority to act
against the decision."

Moreover, it said, Kennard has bought into the cable
industry's assertion that open access is "tantamount to 'regulating the
Internet,'" and it would result in thousands of LFAs setting their own standards.

"Portland's view is that open access provides for
precisely the opposite: a freer market, more competitive entrants, fewer regulatory
constraints, more technological innovation and wider availability of high-speed Internet
access to rich and poor alike," the city said.

"The Portland open-access condition simply requires
that AT&T not discriminate in favor of its own Internet affiliate and against other
unaffiliated providers," it concluded.

In the meantime, Sten said, Portland has been contacted by
staffers from San Francisco and from Broward County, Fla., inquiring about its position on
open access.

"We'd like to see some other cities get into
this," Sten said, "but we didn't get into looking over our shoulder. We did it
because we think it's the right policy."

Sten said the Oregon congressional delegation was growing
increasingly "frustrated" with the fight over equal access, and it may step in
to resolve the issue "in the next couple of weeks."

The primary target of the open-access debate, Excite@Home,
has begun a counterattack.

It paid for expensive full-page ads in prominent newspapers
last week, blasting America Online Inc. for its role in raising the ante in the
open-access debate.

Los Angeles was among the markets chosen because a
committee of the City Council there continues to mull whether it will accept or reject a
staff report advising a "wait-and-see" attitude on Internet-access regulation.

The ads screamed, "Why is America Online spending
millions to slow you down?" They warned consumers that if AOL has its way, 30,000
local governments will regulate, high-speed cable service will be "delayed by
years" and costs will increase.

"America Online wants to protect its stranglehold over
everyone who now pays for slow service and an inferior customer experience," the ads
said.

The campaign was an effort to get consumers, and not just
lobbyists, involved in the regulatory debate.

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