AT&T/TCI Beset by ISPs In Oregon

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AT&T Corp. and Tele-Communications Inc. have untilmidnight Dec. 29 to agree to open @Home Network to Oregon Internet-service providers, ortheir request for two area franchise transfers will be denied.

Those were the conditions set down by officials in Portlandand Multnomah County last week in approving ordinances that made ISP access to the @Homecable-modem platform a condition for transferring their TCI franchises to AT&T.

The ordinances were drafted by the Mt. Hood CableRegulatory Commission, a local cable-advisory body that is recommending that thehigh-speed network be opened up under federal commercial-leased-access rules.

AT&T and TCI declined to say what their next move willbe, but they repeatedly characterized the action by Portland and Multnomah County as"unlawful."

"No decision has been made, but I can tell you thatwe're not going to accept any unlawful conditions," TCI spokeswoman LaRae Marsiksaid.

Meanwhile, if AT&T doesn't agree to the termswithin 12 days, its request for a transfer of TCI systems serving 31,000 area cablesubscribers will be considered denied.

TCI officials -- who insisted that the FederalCommunications Commission has jurisdiction over the issue, and who want access to @Home tobe negotiated privately, rather than under government fiat -- refused to say whether theFCC will be asked to pre-empt the ordinances or if a lawsuit can be expected.

"I can tell you that this sends a chilling message tothe business community," said Stephen Kipp, spokesman for TCI Cablevision. "Itsays, 'You can build a better mousetrap, but we're going to take the technologyand pass it on to your competitors.'"

Meanwhile, sources predicted that the companies will seekrelief through the courts, rather than waiting for an FCC rulemaking that could take wellinto next year.

The Multnomah County Board of Commissioners passed theMHCRC's recommendation by a 4-1 vote, followed a few hours later by the Portland CityCouncil, which voted 5-0 in favor of the ordinance.

The MHCRC voted 8-0 earlier in the week to forward itsoriginal proposal to Portland and Multnomah County, disregarding an 11th-hourcompromise hammered out between its staff and the two companies over the weekend.

"Not even a motion was made to accept thecompromise," a source close to the situation said. "The commission was not inthe mood to accept it."

In a statement that declared the two sides at "astalemate," Rick Thayer, chief commercial counsel for AT&T, warned that thelong-distance carrier "can't commit to the significant investment required toacquire and upgrade these systems if we are compelled to accommodate demands of ISPs foraccess."

Analysts speculated that if AT&T and TCI acquiesce,they run the risk of other jurisdictions also wanting to dictate the same terms as part oftheir transfer processes. The companies have transfers pending in almost 1,000 TCI cities.

Moreover, it would pave the way for other competitors totry to piggyback on the network, including Ameritech Corp., which has indicated that itwants to use @Home to deliver its own cable service, said John Mansell, regulatory analystwith Paul Kagan & Associates Inc.

While Portland and Multnomah County represent just 31,000cable subscribers, the situation threatened to become even more complicated after TCI andTime Warner Cable unveiled a series of system swaps last week that will send another150,000 Paragon Cable subscribers in the area to TCI.

The MHCRC is expected to recommend that those venues enactordinances with the same ISP-access requirements.

"I can't imagine recommending anythingelse," MHCRC director David Olson said. "This is going to be a countywide issuenow."

Meanwhile, officials for the Los Angeles Board ofInformation Technology held hearings on the ISP issue last week, vowing not to be deterredby any potential legal action that AT&T and TCI might take in Oregon.

"Portland's taken a bold step," boardchairman Alan Arkatov said, adding, "The Internet was born here. We can help to steer[public] policy, too."

Only three ISPs were on hand to address the commissioners:America Online Inc., Pacific Bell Internet Services and a local Internet back-end-serviceprovider.

As a result, most of the support for ISP access came fromthe public, including business groups, homeowners associations, end-users and a statesenator. Each offered similar testimony: In the access wars, it's Goliath versusGoliath. The only Davids are the consumers, end-users said, urging regulators to protectcompetitive choice for consumers.

Allied against the ISPs were TCI, AT&T, Time Warner,MediaOne and the California Cable Television Association, all insisting that accessprovisions in federal law apply to video service only.

They added that open platforms would create a disincentiveto go through with the multimillion-dollar investments that operators are currently makingin Los Angeles to upgrade their networks.

Los Angeles officials said that despite the access debate,they anticipate a vote on TCI's transfer request, with or without an accessprovision, before AT&T's shareholders vote on the acquisition early next year.

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