Cable Execs: ISP Issue Far from Over

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San Antonio -- Internet-service providers will continue to
press for the unbundling of cable's broadband pipe, despite regulatory indifference at
virtually all levels, experts at last month's Texas Show here said.

Attendees gathered to hear a "Washington Update"
were told that America Online Inc. can be expected to raise the issue in "every
conceivable jurisdiction," including Congress, as well as state and local regulators.

"I'm surprised that this wasn't raised during the
Kosovo peace negotiations," said Dan Brenner, general counsel for the National Cable
Television Association.

However, Brenner added, AOL's argument has been undercut by
the Federal Communications Commission's refusal to address the issue, and by Wall Street's
"point-blank" warning mandating that unbundling would cripple cable's ability to
finance future development.

"It would inject a huge amount of uncertainty into
what is a nascent market and a nascent infrastructure," Brenner said.

AOL is heading the OpenNet Coalition, a group of ISPs with
the new strategy of asking Congress for a law outlawing exclusive contracts between cable
operators and affiliated ISPs.

With the FCC already on the sidelines, Trudi Foushee, vice
president and senior counsel for Charter Communications, said the access issue has also
failed to find an audience among local franchising authorities.

As proof, Foushee said, the controversy "has not
raised its head once" during some 1,000 franchise transfers involved with billionaire
Paul Allen's acquisition of Marcus Cable. (Allen also owns Charter.)

"I'm not sure that the local authorities at the ground
level are as interested in unbundling as some," Foushee added.

Oregon's Portland and Multnomah counties, which are locked
in a legal fight with AT&T Corp. over equal access to @Home Network, are the only
local jurisdictions still pushing the unbundling issue.

Nevertheless, Foushee warned that it's
"paramount" that other LFAs understand the dangers of cable being transformed
into a common carrier.

"Cable operators consider [cable modems] a cable
service, for which local franchising authorities receive a franchise fee," she said.
"I think that you have to communicate that if they lose that, they also lose the
franchise fees that go with it."

On another issue, Foushee called for FCC action limiting an
LFA's review of a transfer request to an examination of the new operator's legal,
financial and technical qualifications.

The idea, she said, is to prevent municipal consultants
from urging their clients to try to "grab more than they're entitled to" by
dredging up old franchise violations.

Also at the session, Steve Broeckaert, a senior attorney
with the FCC's Cable Services Bureau, said that even though rate regulation will end this
month, the agency is still looking at how to handle cable rates enacted before the March
31 sunset date that result in complaints being filed after the date.

It will also study rules determining exactly when an
operator faces effective competition from a local-exchange carrier, he said.

"Congress specifically told us that service actually
has to be offered," he said. "That's something that the commission defined prior
to the '96 Act as being available, having the average citizen aware that there is a
competing service out there.

"Just the fact that an LEC has opened up shop, and it
is maybe serving a test number of subscribers, is a real issue. We've had petitions
saying, 'Hey, that's effective competition,' even though we don't know if the test program
is going to continue, or if anybody besides the employees even knows about it."

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