Cities Cheer FTC Move

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City officials last week applauded the Federal Trade Commission's bid to make open access part of the merger between America Online Inc. and Time Warner Inc.

Ironically, it's believed that talks between the two sides will goad the Federal Communications Commission into acting on the access question, if only to protect its jurisdictional turf.

"We are gratified, and most regulators I've spoken with are very pleased, that the FTC is moving strongly toward open access 'with teeth'-a position wholly abandoned by the FCC," said David Olson, franchising director for Portland, Ore.

Portland triggered the access debate two years ago by demanding that AT & T Corp. unbundle the local cable network it acquired from Tele-Communications Inc.

Olson speculated that acceptance of open access by the nation's second-largest MSO could even encourage other cable operators to "fall in line."

But with talks in the early stages, it's unlikely that the negotiations will figure into

Portland's decision on whether to appeal a Ninth Circuit Court of Appeals ruling striking down the city's open-access ordinance, he said. The city only has until next Wednesday (Sept. 20) to decide whether to pursue an appeal.

Meanwhile, the question becomes: Which of the two federal agencies embroiled in the access issue is going to blink first?

"One of these federal agencies is going to have to yield to the other," said Ron Mallard, incoming president of the National Association of Telecommunications Officers and Advisors. "Right now, it seems like the FTC is exercising authority that rightfully lies with the FCC."

Another local official warned that the FCC will consider this "turf war" a threat to its jurisdictional authority. "You can be sure that somebody [at the FCC] will go screaming to the White House saying, 'Telecommunications is our deal,'" said the regulator, who requested anonymity.

Another worry involves whether imposing open access on the merging companies will cause problems for cities where Time Warner is not the sole operator. In those markets, the MSO would claim that it's being placed at a competitive disadvantage, since any settlement would not apply to other operators.

That's unlikely, said Paul Janis, assistant general manager for the Information Technology Agency in Los Angeles, where Time Warner is one of five cable operators. Since each operator in Los Angeles has it own territory, and the five don't directly compete against each other, requiring open access of Time Warner would not put the company at a disadvantage, he said.

More likely, that problem could surface in communities where an overbuilder will serve the entire city and will therefore be competing head-to-head with Time Warner, he added.

In New York, the access question was addressed during a hearing that approved the merger between the two telecommunications giants. The city signed off on the deal with the agreement that Time Warner would live up to a memorandum of understanding contained in merger documents where it promised to treat independent Internet-service providers in a nondiscriminatory manner.

"The understanding was that we were expecting Time Warner to live up to that agreement," said Bruce Regal, acting deputy commissioner for the city's Department of Information, Technology and Telecommunications. "If they don't, they would be in default of their franchise."

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