Cable Girds for ISP Lobbying Efforts

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Cable trade groups are already eyeing the New Year,
expecting the open-access debate to migrate from City Hall to the State House in 2000.

And despite a federal hands-off policy and the fact that
only a few local governments want competing Internet-service providers riding on cable's
broadband pipe, they aren't assuming that state lawmakers will simply dismiss the matter.

Specifically, they don't want to assume that state
legislators and regulators will defer to the Federal Communications Commission, which
insists that it's too early to regulate access to the Internet.

"It's not something you ever want to take for granted,
so we're doing our homework and plan to be ready," said Dottie Hancock, executive
director of the Indiana Cable Telecommunications Association, which is preparing its
opposition to expected GTE Corp.-sponsored access legislation in the Indiana General
Assembly next year.

At the moment, open access -- or forced access, as
cable-industry executives prefer to call it -- is on the front burner in several states
where proponents like America Online Inc., GTE and hundreds of ISPs have brought their
rhetoric to a boil.

Some include California, Pennsylvania, Massachusetts,
Minnesota, Iowa and Ohio -- venues where legislation has been introduced, where it is
expected, or where committee hearings have been held or are likely.

In Massachusetts -- where as recently as late November,
four communities injected the access question into their review of AT&T Corp.'s
acquisition of MediaOne Group Inc. -- the issue may even be the subject of a statewide
vote.

But for every state where the access cause has seemingly
flourished, there are venues like Texas, Georgia and Tennessee, where its reception has
ranged from lukewarm to outright rejection, or where the odds are with the industry.

One of the early access hot spots will likely be Indiana,
where operators seemingly have the early advantage. The General Assembly, which doesn't
reconvene until Jan. 10, will likely only be in session until late February, limiting the
time GTE will have to rush its bill through the process.

Others states, however, won't be as lucky.

In Michigan, for instance, operators are aggressively
lobbying against S.B. 667, open-access legislation backed by AOL, Ameritech Corp. and GTE
and introduced last spring by Sen. Matt Dunaskiss (R-Oakland County), chairman of the
Senate Energy and Technology Committee.

A hearing on the bill could come as early as February,
Michigan Cable Telecommunications Association spokesman Chris Horak said.

The danger lies in the idea that access proponents, aware
of the legislature's less-than-receptive response, may try to attach their measure to a
pending rewrite of the Michigan Telecommunications Act, which sunsets in 2001. "If
the bill does move, we expect that they might try to insert it into that," Horak
said, adding that so far, "We're not seeing a lot of support for that kind of
regulation."

Minnesota also remains problematic. Not only is the Public
Utilities Commission considering opening a docket on open access, but legislation is
expected to resurface next year that would transfer authority over cable from local
franchising authorities to the state, making it possible for the PUC to order open access.

Adding to the industry's concerns is a provision in the
bill that would classify cable as a "telecommunications" provider and require
that operators interconnect with local and long-distance carriers, as well as ISPs.

Meanwhile, the PUC remains under pressure from a coalition
of ISPs headed by U S West. Originally, the group wanted the commission's review of the
AT&T/MediaOne merger delayed while regulators considered whether to make the access
question part of their deliberations. It has since agreed to a compromise that will allow
the commission to review the two issues separately.

But an added wrinkle has popped up. With the idea of
putting his own stamp on the state's future, Gov. Jesse Ventura is readying what has
comically come to be known as "The Big Plan" -- a review of what's needed to
spur the development of industry in Minnesota, including telecommunications.

"We're waiting to see what comes out of that,"
Minnesota Cable Telecommunications Association executive director Mike Martin said.
"But what it tells you is that [Ventura administration officials] feel like they have
a role to play in deployment of telecommunications services. We're talking to lawmakers
and making our interests known. And we're preparing for a legislative session where
telecommunications issues are going to be discussed."

Meanwhile, Iowa operators are gearing up for their
open-access fight. MCI WorldCom Inc. lobbyists have indicated that they plan to resurrect
the issue during next year's legislative session, Iowa Cable Telecommunications
Association executive director Tom Graves said, adding, "They said they're going to
run it again."

The issue surfaced earlier this year in the form of a bill
"that nobody took too seriously," principally because its prime sponsor, GTE,
was selling off its telephone operations in the state, Graves said.

If the bill is introduced, cable should benefit from the
legislature's historic reluctance to address any issue that is under litigation, as is the
open-access question at the Ninth Circuit Court of Appeals. The court is weighing
AT&T's bid to overturn a lower-court ruling that upheld Oregon's Portland and
Multnomah counties' rights to impose access conditions.

"So it's going to be a nice time to say, 'Hey, let's
wait and see how that situation turns out,'" Graves said.

An access proposal in California surfaced once this year in
committee, spurred along by GTE and Pacific Bell, an SBC Communications Inc. subsidiary.
It did not muster enough support for a vote out of committee. But Los Angeles-area
assemblyman Richard Alarcon vowed to resurrect the issue in 2000.

The California Cable Telecommunications Association has put
the interval to good use. Some 60 state officials will attend the Western Show and walk
through technical demonstrations to give them a better understanding of the issue, vice
president of governmental affairs Dennis Mangers said.

Decision-makers have also visited Fremont, Calif., where
AT&T Broadband & Internet Services has installed cable modems and is testing
residential telephony over cable. And Cox Communications Inc.'s Orange County, Calif.,
system -- a hotbed of digital cable, modems and telephony -- has been an educational
destination, as well.

The outreach is extensive, because cable executives have
picked up rumblings of an attempt by GTE to sponsor a statewide initiative on access,
Mangers said, adding, "We are preparing."

In Pennsylvania, a bill has already been introduced in the
state House Consumer Affairs Committee. Another hearing should be held Dec. 14, but no
vote is scheduled.

"There were two co-sponsors. We've already picked off
one," Pennsylvania Cable & Telecommunications Association president Bill Cologie
said. One legislator -- a rural representative -- removed his name from potential
legislation when he realized that high-speed data is available to his constituents, and
cable brought it there, cable lobbyists claimed.

But Cologie conceded, " If they voted today, I think
we'd lose, but we are making progress."

State operators including Comcast Corp., Adelphia
Communications Corp., Armstrong Cable Services and Suburban Cable Inc. are lobbying hard,
and some have hired extra manpower just for this issue, Cologie added. "We're pulling
out all the stops," he said.

The industry is also making use of opinion pieces in the
media, such as one in the Pittsburgh Post-Gazette that was designed to counter the
ISPs' arguments. As a result, legislative offices "are getting a lot more calls for
our side. Consumers aren't really talking about this. AOL and GTE are the only ones
talking," Cologie said.

In the Northeast, the New England Cable Television
Association is staging "pre-pre-emptive strikes" in each of the six states it
represents.

"This is the time of year [when legislators] are
looking for bills to introduce. The people who understand telecommunications want
information," NECTA executive vice president and chief counsel Bill Durand said.

The tone is important. If industry members "run around
like the sky is falling," opponents pick up on that, Durand said. NECTA's strategy is
to spread around educational materials developed by the National Cable Television
Association to public-utility and service commission members. If the other side
approaches, NECTA asks, "Just give us a chance to explain, too."

The association expects the most activity in January and
February. In some of its states, bill titles like "A Bill to Regulate the
Internet" have already been reserved.

Legislative excitement has not filtered up from cities in
some states such as Oregon and Florida, according to local cable associations there.

Although Portland is leading the charge for municipal
rights, its legislature adjourned without seriously picking up on forced access, said Mike
Dewey of the Oregon Cable Telecommunications Association. The legislature won't reconvene
until 2001, and cable executives hope court cases or the FCC will have resolved the
conflict by then.

Florida operators expect a push for a bill by GTE next
year, but Florida Cable Telecommunications Association president Steve Wilkerson noted
that legislators there are overwhelmingly Republican, adding, "They have a healthy
respect for private-property rights."

The cable industry conducted surveys during a debate on the
bill in Miami-Dade County, Fla., last year. Respondents said they considered cable to be a
private industry, not a utility, Wilkerson said. Further, citizens were against forced
sharing, he added.

Despite those factors, "We will not underestimate the
GTE effort. We'll be prepared," he said.

Associations in states where the issue hasn't surfaced said
they are keeping their antennas up. Since 2000 is a national election year, cable
executives are on the lookout for potential candidates in search of "sound-bite"
issues who might find telecommunications sexy. If it arises, associations will fight back
through their political-action committees.

"We've been active in electoral politics. We will do
it again," Washington Cable Telecommunications Association executive director Ron
Main said.

The industry was aided in its arguments against open access
when an advisory committee formed by the Metropolitan King County Council in Tacoma,
Wash., came down against regulation last month. The panel said the broadband market is
still too undefined and regulators should wait until next year, at the earliest, to
consider requiring access.

"Still, we know it's an issue that can flare up,"
he added. Lobbyists for regional phone company U S West and GTE are fixtures in the halls
of the capitol.

So far, Tennessee operators have avoided any legislative
headaches involving open access, as lawmakers have been too busy grappling with proposals
that would implement the state's first income tax to worry about whether cable should
unbundle its high-speed infrastructure.

As a result, two-thirds of Tennessee's cable franchises, or
800,000 of the state's 1.25 million subscribers, have been transferred this year, with the
access question causing only a "slight delay" in the transfer of an InterMedia
Partners system to Charter Communications Inc. in Sullivan County.

Moreover, unlike other states, there have been no
indications that AOL or GTE plan to approach lawmakers with any open initiatives.

"We're pretty happy about that," Tennessee Cable
Television Association executive director Stacy Burks said. "But right now, the
legislature is a little preoccupied with taxes."

However, unwilling to take any chances, the TCTA has also
been distributing NCTA materials to its members, in case sudden courtesy calls have to
made on legislators or the Tennessee Regulatory Authority.

Texas cable operators may be among the luckiest in the
nation. Identical open-access bills introduced earlier this year died in committee without
a hearing, as did a subsequent attempt to insert access language into a subsequent
telecommunications bill.

"It was the usual posturing and pandering," Texas
Cable Telecommunications Association president Bill Arnold said.

The prime backer of the proposal was FlashNet, an
Arlington, Texas-based ISP with ties to OpenNet, the Washington, D.C.-based open-access
coalition headed by AOL. Behind the scenes, however, the measure was being touted by GTE
and Southwestern Bell under the guise of, "We don't have a dog in this fight, but we
think it's good policy," Arnold said.

Even though Texas lawmakers won't reconvene until 2001, the
issue will likely be the subject of various studies between now and then, guaranteeing
that the problem will not go away. "We're actively worrying about it," Arnold
said. "Right now, we're trying to decide what we can do proactively that makes
sense."

Colorado and Missouri, meanwhile, are apparently going in
different directions when it comes to attempts to impose access requirements.

In Colorado, Denver voters have approved a new 10-year
franchise for AT&T Broadband, without the access requirement that was sought by a
coalition of ISPs. Moreover, there have been no signs of the access question being raised
in the legislature.

But things have not gone so well in Missouri, where an
access ordinance raced through the St. Louis Board of Aldermen, and it is now the subject
of a petition by AT&T Broadband to try to force reconsideration.

"St. Louis is a rare breed when it comes to local
government," Missouri Cable Telecommunications Association executive director Charlie
Broomfield said. Nevertheless, despite St. Louis' entry into the access wars, support for
legislation mandating open access has been virtually nonexistent.

In Georgia, meanwhile, the issue has been relatively quiet
with the exception of Atlanta, where Mayor William Campbell indicated in September that he
planned to look at the access question before authorizing a transfer of 170,000 local
MediaOne subscribers to AT&T.

By mid-November, however, both sides were still in
negotiations, with no signs that open access would become a stumbling block. Moreover,
more than one-half of MediaOne's 60 franchises in eight surrounding counties had agreed to
ship their subscribers to AT&T.

"It's been pretty quiet here," said Nancy Horn,
who heads both the Georgia and South Carolina cable associations. "Let's just hope it
stays that way."

Open access has also failed to gain any momentum in Ohio,
where draft legislation that would force operators to unbundle their networks has met with
lukewarm acceptance, at best.

The reception in the Ohio General Assembly has been so
tepid, in fact, that the lawmaker who originally planned to introduce the bill has
withdrawn his support, according to Ed Kozelek, executive vice president of the Ohio Cable
Telecommunications Association.

"But I wouldn't be surprised to see somebody try to
introduce the bill next January," Kozelek said. "AOL has hired a lobbyist here,
and now that the SBC/Ameritech merger is complete, SBC may try to refocus its efforts on
open access."

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