Commerce Gives Charter Leg Up

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The Clinton administration will oppose U S West Inc.'s
bid to maintain control of the Minneapolis cable properties it acquired from Continental
Cablevision.

The Department of Commerce last week asked federal
regulators to deny the regional Bell operating company's request for an extension of
a waiver from federal cross-ownership rules prohibiting a telco from buying cable systems
inside its service territory.

In a Federal Communications Commission filing, the
agency's National Telecommunications and Information Administration said such action
'promises no public benefit' that justifies extending a waiver meant to give U S
West time to find a qualified buyer for the properties.

U S West wants an extension while it splits U S West
Communications and U S Media Group (soon to become MediaOne Group) into separate
companies, thereby obviating FCC cross-ownership rules and scuttling a proposed sale of
the systems to Charter Communications Inc. for $600 million.

'The question presented by U S West's petition is
simple,' wrote Larry Irving, head of the NTIA. 'Having given U S West ample time
to find a buyer for the Minnesota systems, a buyer that U S West once found to be
suitable, should the commission give the company additional time to effect a transfer that
serves U S West's private interests?'

U S West responded with a filing of its own in which it
noted that the NTIA's letter came more than seven weeks after the FCC's original
comment period.

Moreover, it said the Commerce Department filing does not
address testimony from Minneapolis regulators who support the company's position, nor
does it offer 'any evidence' of anti-competitive behaviors by U S West during
the time it has owned the systems.

St. Louis-based Charter immediately welcomed the NTIA
filing.

'It confirms what we've been saying all along:
that no public interest would be served by the extension, and that it would only serve U S
West's private interests,' said Charter president Jerry Kent.

Kent said Charter remains on schedule to close on the
Minneapolis properties later this month.

The company recently said it had obtained 100 percent of
the necessary franchise transfers needed to close the deal, either through approvals from
area regulators or in the form of letters from consultants recommending the deal.

There are two remaining transfers to be approved this week,
both which have been recommended by municipal consultants and the local cable commissions,
Kent said.

'In fairness, the cities are not bound by the
recommendations, but we don't see any reason why the transfers wouldn't be
approved,' he said.

Unless the FCC moves to grant U S West's petition,
industry sources believe Charter will try and force the telco to sell the properties, or
face violating a federal divestiture order.

Meanwhile, U S West's position has run afoul of some
prominent Congressional leaders.

Colin Crowell, an aide to Rep. Ed Markey, (D-Mass.), one of
the principal architects of the anti-buyout provisions in the 1996 Telecommunications Act,
said Markey 'flat out' opposes granting U S West an extension.

'Could you imagine the effects if a company was
allowed to decide when it will comply with an FCC order?' Crowell said.

The Senate Commerce Committee has also made it known that
it 'expects the FCC to enforce the 1996 act,' according to a senior staffer.

U S West responded by saying that the public interest
'will be harmed not at all if we're allowed to maintain ownership of these
systems after the spinoff.'

'We plan to be an aggressive competitor,' said U
S West spokesman Steve Lang. 'And we hope we get the opportunity to demonstrate
that.'

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