FCC Confirms Boston Dereg for AT&T

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AT&T Broadband was officially deregulated in Boston in a unanimous action
Wednesday by the four members of the Federal Communications Commission.

The FCC's ruling upheld an order adopted by the Cable Services Bureau last
July. Cablevision Systems Corp. sought relief from the FCC in July 1997, but
AT&T Broadband took over the case after acquiring the Boston system.

Mike Lynch, director of Boston's Cable Office, said the ruling did not
surprise him. He added that a rate agreement reached late last year with
AT&T Broadband covering basic rate increases for the next six-and-a-half
years should soften the impact of the FCC's ruling.

'We reached a rate settlement agreement with them in December,' Lynch said.
'They could have told us to take a walk but did not.'

Nevertheless, under Wednesday's FCC ruling, the city is barred from
regulating AT&T Broadband's basic rates. Congress deregulated upper-tier
rates in 1996 effective March 31, 1999.

AT&T Broadband is also exempt from an FCC rule requiring uniform rates
and another rule that bans rate-regulated cable operators from requiring the
purchase of an upper tier of programming prior to the purchase of premium
networks and pay-per-view events.

The FCC determined that AT&T Broadband was subject to effective
competition based on competition from RCN Corp., which provides both video
programming and local phone service.

Under federal law, cable operators have an easier time proving that they
should be rate-deregulated when the competitor is a local phone carrier. For
example, the law does not require the cable company to demonstrate that the
phone company is serving a certain number of video subscribers to trigger
deregulation.

Yet Boston protested that it was premature to deregulate AT&T Broadband
when the incumbent cable operator served 150,000 subscribers while RCN was
serving about 11,000 in just a few city neighborhoods.

In the nine-page order, the FCC reaffirmed the bureau's conclusion that a
phone company that provides competing video service is not required to wire an
entire city before the incumbent cable operator may seek basic-tier
deregulation.

'In order to establish the presence of effective competition, a cable
operator need not prove that a competing [phone company] is providing [video]
service throughout its service area,' the commission said.

Instead, the FCC said the cable operator must show that the competitor's
facilities substantially overlap the incumbent's. The agency found that RCN met
this test by serving 11,000 subscribers in multiple areas within the
city.

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