Los Angeles -- Road Runner, Excite@Home Corp. and their
cable affiliates are being sued by consumers complaining about paying extra to reach rival
service providers over their cable modems.
The plaintiffs sought class-action status for their suit,
on behalf of about 500,000 cable-modem customers across the country.
Attorneys will attempt to get a preliminary injunction that
will compel the companies to allow users to access alternate providers, such as America
Online Inc.'s service, without paying additional fees beyond what they pay for Road
Runner or @Home.
The defendants include AT&T Corp., Time Warner Cable,
Century Communications Corp., Cox Communications Inc., Comcast Corp., Cablevision Systems
Corp., Garden State Cable Vision LP, Jones Intercable Inc. and their affiliates or merger
targets, including MediaOne Group Inc., Road Runner and Excite@Home.
As of late last Thursday, AT&T had not been served with
the lawsuit, nor had it been able to find anybody in the industry who had seen a copy of
But AT&T spokesman Jim McGann said a press release
announcing its filing contained similarities to a recent antitrust lawsuit filed by GTE
Corp. in a federal court in Pittsburgh, making it likely that both were equally
"We haven't seen it, so it makes it a little
difficult to offer a specific reaction," McGann added.
Meanwhile, Time Warner had also not seen the lawsuit when
contacted. Officials, therefore, declined to discuss specifics, except to say,
"It's ludicrous on its face."
"Obviously, it's not something we agree
with," Time Warner spokesman Mike Luftman said. "This is kind of an abuse of
process that shouldn't be taken too seriously. In hindsight, I think it will be a
minor footnote in the discussion of this [open-access] issue."
A representative of another lawsuit target asked
rhetorically, "Why aren't they suing AOL? They're the one collecting the
The plaintiffs are Fred and Roberta Lipschultz, Arthur
Simon and John Galley III, all cable-modem users from the Seattle area. Three subscribe to
Road Runner, and one is an @Home customer. Each has to pay $9.95 per month or more, in
addition to their modem fees, to access competitive content providers.
Although they are from Washington state, the suit was filed
in U.S. District Court in Los Angeles. Attorney Parker Folse III, the lead
plaintiffs' attorney on the case, said that venue was selected because it is one of
the few markets in the country where both data services were deployed. Also, affiliates of
several of the defendants have franchises in Southern California.
The suit is similar in theory to the action filed in
Pittsburgh earlier this month by GTE. That telco sued several of the same defendants in an
effort to open the cable-modem platform for its gte.net customers.
Folse said that action seeks remedies on behalf of
competing Internet-service providers, while the class-action attempt sought redress for
"We believe that under established principles of
antitrust law, what many cable companies have been doing is illegal, anti-competitive and
anti-consumer. Competition and choice are fundamental to our free-enterprise system. The
complaint we have filed contends that the cable companies named as defendants are
preventing the growing number of consumers who want high-speed Internet access from
enjoying the full benefits a competitive market would bring," he said in a prepared
Users will not find relief from the lawsuit between the
city of Portland, Ore., which has mandated open access, and AT&T, either, the attorney
said. The crux of that suit is whether local governments have authority over Internet
Scott Cleland, a managing director with Legg Mason Wood
Walker's Precursor Group, an adviser to institutional investors, blamed the
"guerrilla war" being waged against cable on all fronts on the Federal
Communications Commission's refusal to step in and establish a national policy
governing control of the industry's high-speed pipe.
"[The FCC is] encouraging a local insurrection,"
Cleland said. "The cities are saying that the FCC has punted, and somebody has to
address the issue in an official manner. So it's a guerrilla war now. And in a
guerrilla war, all kinds of unpleasant and counterproductive things happen."
However, he added, the agency may not be able to "duck
the issue" much longer.
The Ninth Circuit Court of Appeals, which is hearing
AT&T's case against Portland, suggested that it might rule on whether
Internet-over-cable is a telecommunications service or a cable service.
Even if the court accepts AT&T's argument that its
cable wire is a telecommunications facility -- and, therefore, not subject to local
jurisdiction -- it could be subject to the same federal common-carrier requirements
imposed on the regional Bell operating companies, he said. Translation: open access.
"To preserve its jurisdiction, the FCC will have to
act," Cleland added.
It will be up to the court here to determine if the
consumer lawsuit has merit and to establish its class.