AT&Ts Top Man in Washington

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Washington -- On Jim Cicconi's office bookshelf -- theone stationed between wall-mounted photos inscribed by Ronald Reagan, James A. Baker IIIand Arnold Schwarzenegger -- rests a copy of Safire'sNew PoliticalDictionary: The Definitive Guide to the New Language of Politics, by William Safire.

Although Cicconi could scour that famous lexicon for hours,he would never be able to dig out a reference to "cable unbundling" or"open access to cable facilities" -- the hottest issues swirling aroundcommunications-policy circles here these days.

"They ain't there, I have news for you," theUniversity of Texas-trained lawyer said, as he took out a pen and methodically crossed outcolumns of words on a yellow legal pad.

As AT&T Corp.'s general counsel and chiefWashington lobbyist -- a post that he assumed only this past July -- Cicconi's job isto ensure that cable unbundling and open access don't go mainstream.

But that won't come easily, because companies likeAmerica Online Inc., U S West and MCI WorldCom are spending heavily here to popularize thenotion that traditionally closed cable networks need to be wedged open to conform with theopen-door ethos of the Internet.

In Cicconi, 46, AT&T has chosen as its politicalmessenger a Republican Party heavyweight who has been around Washington long enough toknow how to parry the AOL-led challenge.

So far, he's been successful. Despite intense lobbyingpressure from the AOL side, the Federal Communications Commission last month declined toinvestigate the open-cable question. Although FCC chairman William Kennard promised tomonitor the broadband Internet market, AOL and its backers clearly wanted more.

For years, AOL, the world's biggest Internet-serviceprovider, has begged the FCC to stay out of the Internet arena. But as soon as AOL senseda threat to its 15 million narrowband-subscriber base from the infant broadband-cableplatform, its chairman and CEO, Steve Case, decided that it was time for the government tostep in.

Cicconi said AOL failed because its message became fuzzy.

"I absolutely think that they have ended upcontradicting their own arguments here," Cicconi said. "It ended up looking morethan a little self-serving."

Cicconi's side scored another direct hit recently whenKennard announced that the FCC would not require AT&T to sell the @Home NetworkInternet-access service separately from its high-speed transport component -- that is, tounbundle the two products -- as a condition for approving AT&T's $48 billionpurchase of Tele-Communications Inc.

AT&T and TCI told the FCC that an unbundling mandatewould "seriously jeopardize" the deal. But Cicconi said what really persuadedFCC officials was the force of AT&T's analysis, which questioned the FCC'slegal basis to intervene, exposed AOL's motives and emphasized the fact that cableplant is not configured to serve 5,000 ISPs like the phone network does.

"I don't think that we ever thought that thevotes were there [for unbundling]," Cicconi said. "We do have confidence in ourargument here."

PRAISE FROM

THE FCC

Helgi Walker, legal advisor to FCC commissioner HaroldFurchtgott-Roth, said she was impressed with Cicconi's willingness to stake out aposition and to hold to it.

"I think that he is good because he is willing to takea fairly hard line with the commission. I think that it's nice to see somebody with aspine," Walker said.

FCC approval of the AT&T-TCI merger is expected at anymoment. The Department of Justice has already approved the deal.

Rich Bond, co-director of the OpenNet Coalition, which wasformed recently by AOL and others to challenge cable's Internet strategy, warned thatthe fight is far from over.

"I won't concede the 'W.' I think thatit's a fair characterization, though -- that it's trending in [Cicconi's]direction, for the time being," Bond said.

Bond pitched AOL's case in a recent meeting withSenate Commerce Committee chairman John McCain (R-Ariz.) that also included GeorgeVradenburg, AOL's senior vice president for global and strategic policy.

Cicconi and Bond have been friends and political allies for20 years, but the fact that they are now on opposite sides of a high-stakestelecommunications debate hasn't cracked the cement.

"As they said in The Godfather, it'snothing personal," Bond said.

BELTWAY INSIDER

Cicconi has one of those Washington resumes that few whohaven't served in a Cabinet can match.

Starting in 1981, at age 29, he was a senior staffassistant to President Reagan, reporting directly to chief of staff Baker, who wasarguably the most powerful White House staffer of the 1980s.

Cicconi took a time-out from government in 1985, when heleft the White House for Washington law firm Akin, Gump, Strauss, Hauer & Feld, hometo Democratic Party chieftains Vernon Jordan and Robert Strauss.

In late 1989, he jumped back into the political mix,joining the Bush administration to handle President George Bush's schedule andofficial correspondence.

"He handled all of the official documents that went inand out -- most anything that needed [Bush's] signature," said John Sununu,Bush's first chief of staff.

After the second White House stint, Cicconi returned toAkin, Gump. He stayed there -- doing legal work for AT&T, among other clients -- untilformally joining AT&T in mid-1998, soon after the arrival of new chairman and CEO C.Michael Armstrong.

Cicconi arrived at his new AT&T office just as the AOLeffort was beginning to snowball. He's been beefing up the staff even since, mostrecently hiring Kevin Joseph away from Senate Commerce Committee ranking member ErnestHollings (D-S.C.). For the record, AT&T would not disclose how many people work forCicconi.

BATTLE ON THE HILL

The AOL forces, having struck out at the FCC, havereorganized and taken their message to Capitol Hill. OpenNet's legislative goal isclear: passage of a bill that would prevent cable operators from signing exclusive dealswith their affiliated ISPs -- modeled to some extent after the 1992 Cable Act'sprogram-access provisions.

AOL's concern is that once consumers pay about $40 permonth for cable's high-speed access and for either @Home or Road Runner, they'llbe tapped out, and they won't pay an additional $9.95 for AOL'sbring-your-own-access plan. AOL derives 80 percent of its revenue from monthlysubscription fees.

"If anybody thinks that AT&T isn't capable ofleveraging [@Home] into a dominant service in the next few years, they haven't metMike Armstrong," said OpenNet's brash co-director, Greg Simon, a former seniortelecommunications advisor to Vice President Al Gore.

From a commercial standpoint, Armstrong said recently thatAOL has nothing to fear, insisting that his company's cable networks will be openunder a network-utilization model.

"The way that you make money in networking is to havethe most traffic over your facilities," Armstrong said. "The way that you havethe most traffic over your facilities is to attract the most content. And so, the ideathat the cable industry is going to maintain some closed, proprietary system, like somecontent providers do, is probably not in our self-interest."

From a legal standpoint, Cicconi said, AOL is basicallyasking Congress to unwind valid contracts -- something that he's convinced lawmakerswould never do, probably because such a move would clash with the constitutionalprotections that are afforded them.

"What on earth is the public-policy rationale foroverturning a contract between two independent companies so that you can advantage a thirdcompany?" he asked.

Should AT&T find itself embroiled on Capitol Hill --something that he doubts -- Cicconi said he would fire back at AOL by demanding anexamination of that company's exclusive deals.

"AOL exists today with exclusive contracts. They havetheir preferred bookseller, Barnes & Noble, which shuts out Amazon.com," he said."I promise you that if that issue is opened, it won't be confined to thecontracts that they want it to be [confined to]."

MERGING INTERESTS

Away from the AOL clash, Cicconi has to integrate AT&Tinto the Washington cable community, traditionally led by the National Cable TelevisionAssociation.

"We're still feeling our way in terms of ourplace within the cable industry. We'll be the new kids on the block for a littlebit," he said.

Asked whether a huge company like AT&T might be temptedto exercise too much influence over cable-industry policy, Cicconi said AT&T would not"try to assert anything of that nature." AT&T had $51.3 billion in 1998revenue, compared with about $37 billion in 1997 revenue for the entire cable industry.

NCTA president Decker Anstrom said he's not worriedthat AT&T's interests in long-distance phone service, wireless-phone service andother ventures might cause it to part company with its cable brethren that do not havesimilar interests.

"Does AT&T have a different agenda than TCI oncable? I don't see it," Anstrom said. "There is no doubt in my mind thatAT&T will support that agenda, given the fact that it spent $48 billion to get intothe cable industry."

Going forward, Anstrom said, the NCTA's policy goalsare seeing the March 31 sunset on FCC cable regulation occur, opposing common-carrierregulation of cable systems and defeating digital must-carry.

AT&T, he added, supports all three. "We are lockedat the shoulder," he said.

Cicconi promised cooperation. "This is a new industrythat we are entering, and we're going to join the club with at least a measure ofhumility," he said.

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