ISP Cries Foul Over MSO Ad Refusal

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The local cable company rescinded his advertising order,
said the president of a Stockton, Calif.-based independent telephone company, so he took
beef to the press and shamed the operator into running his ads.

That kind of "monopoly behavior" is another
reason why regulators should force open cable's high-speed-data platform, added Gene
Snider, president of Central Valley Telephone and Telegraph.

But executives from the target of his ire, MediaOne Group
Inc., said the incident was merely a misunderstanding based on a rookie ad salesman's
mistake. The operator took the ads for the telephone company, they added.

The dispute began late last month, when Snider met with an
ad salesman from MediaOne. Snider said he placed a "small order" for cable
avails to publicize the Internet service operated by the local utility. The spots would be
included on The Prevue Channel (now TV Guide Channel), according to Snider. But the next
day, he added, the salesman called back and told Snider the check would be returned.

"He said they no longer accept ads from competitive
ISPs [Internet-service providers]," Snider alleged. "They cover 78 percent of
Stockton. They are unfairly using their monopoly against small local companies."

Snider retaliated by relating his adventure, via e-mail, to
local press. Multichannel News also received a copy, headlined, "MediaOne
Crushes Competition."

After the publicity, MediaOne canceled the cancellation,
Snider said. The ads began running Nov. 15.

"MediaOne never reversed itself," spokeswoman
Gisselle Acevedo-Franco said. "We take all ads, as long as they don't directly
attack MediaOne." The ad salesman, an entry-level employee, didn't understand
the policy, "but we caught it," she added.

Most MSOs leave ad-sales issues up to the local systems,
executives said, and policy regarding competitive media varies. For instance, Pasadena,
Calif.-based EarthLink Network Inc., a major ISP, has tested different types of ads in
different markets, according to spokesman Kurt Ron, and it has not reported problems
gaining access.

Conversely, some competitors repeated Snider's
complaint. For instance, Pacific Bell -- an SBC Communications Inc. unit and the dominant
phone provider in California -- has complained publicly that it can't place ads for
its digital-subscriber-line service with operators in Southern California.

MSOs like Cox Communications Inc. and Time Warner Cable --
but not AT&T Broadband & Internet Services -- have turned away ads from such
telcos as PacBell pitching DSL services that compete with such high-speed cable-modem
services as Road Runner.

A Time Warner Cable spokesman said the PacBell decision was
made by its Los Angeles system, adding, "We don't typically run ads for
competitive services, including satellites."

Cable News Network also turned down ads from
Stockgroup.com's Smallcapcenter.com, a new Internet financial-news service, as part
of a long-standing policy to veto clients that are deemed to be competitors.

Operators cited their First Amendment rights, noting that
ABC Inc. does not accept spots promoting competitor CBS Corp.

"Yes, technically, I'm a competitor," Snider
said. The telco is launching cable-modem service, offering free hardware to customers who
subscribe. "But how far can they go?"

He noted that MediaOne will be absorbed by AT&T Corp.,
and he is fearful of that corporation. He cited a quote by an AT&T executive
predicting that broadband services will kill 50 percent to 80 percent of ISPs, saying,
"That can't be good for consumers."

Jim Forkan contributed to this article.

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