AT&T, Portland Gear Up for Round 2

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After months of jab and counterpunch, AT&T Corp. andPortland, Ore., take their open-access fight to the Ninth Circuit Court of Appeals today(Nov. 1).

An estimated 200 spectators will jockey for 50 seats in acramped second-floor courtroom at the Pioneer Court House in Portland, where oralarguments will unfurl in the most contentious telecommunications lawsuit in years.

Before a three-judge panel, AT&T will look toshort-circuit an Oregon District Court ruling issued in June that would force thetelecommunications giant to allow unaffiliated Internet-service providers onto its localhigh-speed platform.

In a nod to overwhelming interest in the case, thecourthouse will open 15 minutes early to accommodate the overflow crowd, while the judgeshearing the case have taken the virtually unheard-of step of allowing a local broadcasterto tape the proceedings.

The stakes will be high on both sides. Portland wants topreserve the authority it won under the lower-court ruling, and AT&T wants a victorythat will discourage other local franchising authorities from joining a list ofopen-access-advocate communities that is already approaching double-digits.

"At the very least, what's at stake is a city'sability to protect its citizens and promote competition on its cable platform,"Portland franchising director David Olson said last week.

It was Olson, as director of the Mt. Hood Cable RegulatoryCommission, who triggered the access debate by recommending that Oregon's Portland andMultnomah counties refuse to transfer their Tele-Communications Inc. cable franchisesuntil AT&T agreed to unbundle its network.

Arguing first before the Ninth Circuit will be AT&Tcounsel Mark Rosenblum, followed by Portland deputy city attorney Terry Thatcher.

With AT&T up first, some believe Thatcher will have thebenefit of knowing the opposition's arguments before addressing the court.

Others said that in such a thoroughly briefed case, whatmatters is which questions the court wants clarified during the 20 minutes allotted toboth sides.

Experts are split over who has presented the best case tothe court.

University of Denver law professor John Soma favoredPortland, arguing that legally, it makes sense for LFAs to claim authority over theplayers in their telecommunications markets.

AT&T's response, he said, has been to try to dazzle thecourt with a string of alleged statutory violations. They include claims that federal lawpre-empts LFAs from imposing equal access; that the Cable Act bars cities from makingtransfers contingent on cable operators providing telecommunications services to thirdparties; and that open access violates the ban on imposing common-carrier requirements oncable.

"They're throwing out a lot of different claims,hoping that one will be their magic bullet," Soma said.

Industry supporters hope AT&T focuses its argument onalternative broadband technologies in an effort to convince the court that consumers willcontinue to have a choice of ISPs, even if cable's infrastructure remains closed.

"That's what I would do," said Ted Henderson, acable analyst with Janco Partners in Denver. "You want to show that there are viablebroadband options like satellite, wireless and DSL [digital subscriber line], and that ifyou open up cable's pipe, it makes all of the investments in those other technologies seemlike folly."

Henderson speculated that the other side would trot out the"monopoly" argument by insisting that overturning the lower court would giveAT&T monopoly power over the Internet. This would allow it to drive independent ISPsout of business by requiring that consumers subscribe to its AT&T@Home service inorder to reach existing ISPs.

No matter who comes out the winner, the Ninth Circuit'sdecision is expected to only be the latest step in a process that promises to extendbeyond the courts.

"If you assume that AT&T takes this to the SupremeCourt, you can say it's only a first step," said Joe Van Eaton, a partner with Miller& Van Eaton, a Washington, D.C.-based law firm that represents Portland.

But with more and more LFAs joining the open-access fight,Van Eaton said, "The case is being overtaken by events," and AT&T may beforced to seek a negotiated solution or face having one imposed on it legislatively.

"The Portland case is an important issue, but it'spart of the greater debate," he added. "And it's one that's not going to goaway, no matter what happens [at the Ninth Circuit]."

But even if AT&T ultimately has to unbundle itsnetwork, it will be years before ISPs can actually climb aboard, as then, the questionbecomes at what price they are granted access and who sets that price, Paul KaganAssociates Inc. regulatory analyst John Mansell said. MCN

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