AT&T, Portland Gear Up for Round 2

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After months of jab and counterpunch, AT&T Corp. and
Portland, 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 a
cramped second-floor courtroom at the Pioneer Court House in Portland, where oral
arguments will unfurl in the most contentious telecommunications lawsuit in years.

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

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

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

"At the very least, what's at stake is a city's
ability 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 Regulatory
Commission, who triggered the access debate by recommending that Oregon's Portland and
Multnomah counties refuse to transfer their Tele-Communications Inc. cable franchises
until AT&T agreed to unbundle its network.

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

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

Others said that in such a thoroughly briefed case, what
matters is which questions the court wants clarified during the 20 minutes allotted to
both sides.

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

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

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

"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 on
alternative broadband technologies in an effort to convince the court that consumers will
continue to have a choice of ISPs, even if cable's infrastructure remains closed.

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

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

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

"If you assume that AT&T takes this to the Supreme
Court, 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 be
forced to seek a negotiated solution or face having one imposed on it legislatively.

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

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

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