ISPs Argue for Access to Cable Backbone

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Washington -- Some of the nation's largest
Internet-service providers are demanding access to cable's high-speed networks -- and
the Federal Communications Commission is listening.

In the years ahead, the FCC could end up issuing orders
that make cable operators sell high-speed transmission services to unaffiliated ISPs like
America Online Inc. -- the nation's No. 1 online company, with 12 million
subscribers.

This means that companies like @Home Network and Road
Runner would have to sell their excess capacity to ISPs.

The issue was teed up two weeks ago, with the release of a
119-page paper prepared by FCC staff member Barbara Esbin, "Internet Over Cable:
Defining the Future in Terms of the Past."

Esbin's paper concluded that cable Internet services
-- and the multimedia nature of Internet content itself -- do not mesh neatly with
established regulatory concepts like "cable service," "telecommunications
service" and "information service."

She wrote that the FCC -- and perhaps Congress -- might
have to develop a new regulatory road map and language to fit the Internet.

AOL is pitching to FCC officials the idea of giving
unaffiliated ISPs access to cable networks that offer Internet access on the same terms
and conditions.

AOL's main argument is that FCC rules that require the
regional Bell operating companies to offer unbundled interconnection have permitted
virtually anyone to enter the Internet-access business.

AOL, according to FCC sources, is telling the commission
that at some point, the agency should apply open-network rules to cable operators to
ensure that flourishing ISP competition in the narrowband world can migrate seamlessly
over to the broadband world.

The cable industry is adamantly opposed to AOL's
approach, saying that it defeats the purpose of the Telecommunications Act of 1996.

"It destroys the incentive for companies to build
competitive broadband plant, which is a big part of the 1996 Act and a big part of the
FCC's current public policy, which is broadband-to-home," said Daniel Brenner,
vice president of law and regulatory policy for the National Cable Television Association.

AOL representatives declined to respond to questions about
its Internet-policy positions at the FCC. But AOL chairman Stephen M. Case has been quoted
as advocating open access to cable facilities.

@Home CEO Thomas Jermoluk responded by saying that if it
didn't include revenue sharing, the idea was "nuts," and it would transform
cable's plant into "a dump pipe."

AOL's timing couldn't be better, as FCC chairman
William Kennard has decided to make deployment of broadband services a key goal of his
young administration.

And this week, AOL, phone companies and cable operators are
expected to file comments with the FCC regarding the implementation of Section 706 of the
Telecommunications Act. That section requires the FCC to take "immediate action"
to promote broadband deployment if it finds that advanced telecommunications capability is
not being deployed to all Americans in a "reasonable and timely fashion."

The issue could center on defining Internet service. Cable
argues that the Internet is similar to a cable service -- like Cable News Network -- and
that nothing under the act mandates that operators open their networks.

"There is absolutely no basis under the Communications
Act -- particularly under Section 706 -- for the unbundling of the cable plant to provide
access to others who want to get on it, beyond the limited rights that are established for
video programmers under leased access and the PEG [public, educational and government]
requirements," Brenner said.

Esbin's paper posits that it would not be a stretch of
current cable rules for local franchising authorities to require operators to allow
public-access programmers to provide Internet services.

She wondered if leased-access rules could be an avenue for
unaffiliated ISPs to access cable's high-speed plant, as a cable Web service such as
@Home could be considered "a channel of programming."

Brenner said PEG and leased access "are not
common-carrier platforms for data and voice. They were for video programming."

But, the counterargument goes, with the convergence of the
personal computer and the TV, full-motion video over the Internet is close at hand.

Eric Breisach, a cable attorney who has debated the
regulatory status of Internet service with city officials, said operators can expect to
encounter trouble at the local level as far as whether the Internet is viewed as a
"cable service," a "telecommunications service," or an
"information service."

If it is a cable service, Breisach said, existing franchise
agreements would not have to be amended. But at renewal time, cities might insist that
operators provide Internet services.

"If you don't provide it, or you don't
provide it well enough, can it be a basis for nonrenewal of your cable franchise?" he
wondered.

If Internet service is a telecommunications service, he
said, cities could not require the cable operator to provide it in order to obtain
cable-franchise renewal. But the city could require a telecommunications franchise and
collect franchiselike fees.

If Internet service is an information service, Breisach
said, cities could: require a separate cable-modem-service franchise; demand more than 5
percent of revenue; and perhaps decline to renew a cable franchise until the operator
offered Internet services.

"The open policy discussion contained in this [FCC]
paper is going to bring the municipal consultants out of the woodwork," Breisach
said.

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