Cable: No Leased Access For ISPs

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Washington -- The cable industry last week said third
parties have no right to rely upon federal leased access rules to provide Internet access
over cable systems.

"The current leased access rules were in no way meant
to apply to Internet-related services," National Cable Television Association
spokesman Scott Broyles said in a prepared statement. He said cable's access obligations
extend only to video programmers.

Last Tuesday, Internet Ventures Inc., a small California
Internet service provider, filed a long-expected petition with the Federal Communications
Commission asking the agency to force cable operators to lease channels to unaffiliated
ISPs, sparking another round in the open access debate.

Based in Redondo Beach, IVI sought the FCC's help after a
Tele-Communications Inc. system in Spokane, Wash., rejected its Internet access
application and the Spokane government declined to support IVI's claim that TCI's refusal
was a franchise violation.

The FCC is expected to seek public comment before acting on
the petition. If FCC backs IVI, about 5,000 ISPs would have the right to lease between 10
percent and 15 percent of a cable system's channel capacity, potentially burying cable's
hope of offering just one ISP to consumers.

"I don't think (IVI) will prevail," said Wes
Heppler, a Washington cable attorney with Cole, Raywid & Braverman. "I think it
would require a change in the statute to allow for Internet access."

Congress created the leased access regime in 1984 to allow
independent programmers to pay for cable carriage and to block cable operators from
hand-picking every network their subscribers could see.

Peter Feinberg, a Washington cable attorney with Dow,
Lohnes & Albertson, said leased access was not intended for data services. "I
think (IVI) is trying to fit a square peg in a round hole," he said.

IVI president Don Janke said video streaming over the
Internet is clearly video programming, noting that his company had built a Web portal that
provides access to 75 Internet-delivered TV stations based in the U.S. and abroad.

But the law also says leased access programming has to be
comparable to the programming distributed by TV stations. IVI insists that video streaming
technology is advancing rapidly and qualitative considerations should not be used to
torpedo its FCC request.

"Eventually, I submit what you see through your
computer trough an Internet provider is going to be virtually indistinguishable from what
you get over a TV set," said William Freeman, IVI's Washington attorney with Gurman,
Blask, Freedman.

Heppler disagreed, saying the FCC would decline to put
video streaming in the same category with broadcast TV.

"I think the commission is going to say that at least
for the foreseeable future, this is not video programming," Heppler said.

IVI wants to use cable facilities to offer broadband
downstream access at 10 Mpbs with a telephone line return path, something it says it can
do right now instead of having to wait for cable systems to go fully two-way.

"All we need is the 6 MHz of capacity that the law
entitles us to lease," Freedman said.

IVI has 28,000 dial-up Internet subscribers and 1,600 cable
modem subscribers through revenue-sharing agreements reached with four cable operators,
including Cox Communications Inc. in Humboldt, Calif.

Janke said millions of consumers, especially in rural and
inner city markets unlikely to be served by two-way cable plant, could get instant access
to IVI's broadband Internet service at $29.95 a month. Cable operators, because they would
get paid by IVI under an FCC formula, wouldn't lose.

"Some parasites are good for their host," Janke
said. "We are willing to work with cable on this."

Other ISPs offered only lukewarm endorsements of IVI's FCC
petition because they want equal access to cable's high-speed two-way plant and want no
part of the telco return feature.

"We are taking a different approach," said David
Baker, vice president of legal and regulatory affairs for MindSpring Enterprises Inc., a
Georgia-based ISP. "Our position is that as cable companies upgrade to provide true
two-way broadband, there ought to be open access to that."

"We support all efforts to create a system of open
access. Their approach is different than ours but we support open access. Doing nothing is
not an option," said Sydney Rubin, a spokeswoman for the OpenNet Coalition, a
lobbying group that includes America Online Inc, U S West Inc. and MCI WorldCom Inc.

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