FCC Sides with AT&T Broadband in Texas

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With a single order, federal regulators have barred three
Texas communities from lowering basic-cable rates charged by AT&T Broadband &
Internet Services.The Federal Communications Commission has granted AT&T Broadband
emergency stays against franchising authorities in Arlington, Plano and Richardson, Texas
-- communities with a history of battling their former Tele-Communications Inc. systems
over rates.

Arlington and Plano now have four rate orders on appeal
with the FCC, the oldest dating back to 1996. And Richardson -- which won three years
worth of rate cases against TCI last year -- is awaiting the agency's decision on its 1999
rate order.

"It's not an example of efficiency, by any
means," Plano city attorney Diane Wetherbee said.

All three towns are served by AT&T Broadband, which has
until June 25 to file a full-blown appeal with the FCC. In the interim, the MSO has begun
charging the higher basic rate that it proposed in each city.

"We feel like these stays give us more time to work
directly with these communities on a resolution," AT&T Broadband spokesman Matt
Fleury said.

Fleury added that an appeal of the rate orders issued by
each city was likely. "No decision has been made yet, but I'd say it's a good
bet," he said.

Richardson officials objected to the MSO being allowed to
charge its higher prices while it pursues its appeal, noting that the 1992 Cable Act
prevents an operator from raising rates pending a regulatory review.

"Congress specifically addressed that issue and said
local franchising authorities have a 90-day window to review rates," Richardson
franchising and regulatory-affairs officer Brian Davis said. "If they do, then the
operator is prevented from charging a higher rate pending a regulatory review. What the
FCC has done is to say that this is not the case."

The Richardson City Council -- which has seen its previous
rate orders result in TCI having to lower rates for 1996 through 1998 -- has ordered a
35-cent reduction in AT&T Broadband's basic rates for 1999, from its proposed $11.34
per month to $10.99.

Meanwhile, the FCC's latest round of stays was particularly
unsettling for Arlington, which is also being prevented from enforcing an amendment to its
cable ordinance that makes it a criminal misdemeanor for AT&T Broadband not to abide
by the city's rate order.

Arlington had recently ordered that AT&T Broadband's
basic rate of $10.79 per month be lowered to $10.66. The FCC's stay, however, not only
allowed the MSO to implement the higher rate, but it held the city's amended ordinance in
abeyance until the agency rules.

The new provision in the city's ordinance was effective
June 1 -- the same day the FCC issued its stay order.

"I don't think [the stay] was unexpected," said
Jennifer Lowry, assistant to the Arlington city manager. "The City Council was hoping
that TCI would not fight us. We were only 13 cents apart, which is as close as we've been
in several years. So we hoped that this was the year when they met us halfway. But I don't
think the City Council was as angry at TCI as it was at the FCC."

Arlington cable subscribers responded to news of the FCC's
action by filing 32 complaints -- the majority rate-related -- during the first nine
business days of June, Lowry said.

"But our hands are tied," she added. "Once
again, we've been overridden."

Nearby Plano, meanwhile, has also seen its order for a
35-cent cut in basic rates placed on hold. Local officials said the FCC's action was not
unexpected, given that the agency still hasn't ruled on the city's three previous rate
orders.

AT&T Broadband has invited the cities to join it in
asking for a meeting with FCC staffers that would clarify how the agency's rules
"should be applied," Fleury said.

"Our hope is to achieve a mutual agreement," he
added. "But the challenge is reaching an agreement when the interpretation of the
regulatory framework is something we have questions about."

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