Regulators in Los Angeles -- acting just days after their
counterparts in Portland, Ore., voted to order @Home Network to be opened to paid access
by other Internet-service providers -- have signaled their intention to study the issue.
Los Angeles Board of Information Technology commissioners
voted last Monday to schedule a public hearing so that ISPs -- including America Online
Inc. and locally based EarthLink Network Inc. -- can "offer us their vision for the
future in Los Angeles."
The hearing is the result of an industry push spearheaded
by AOL to convince local franchising authorities to make ISP access to the @Home platform
a condition of transferring Tele-Communications Inc.'s franchises to AT&T.
The Mt. Hood Cable Regulatory Commission, an advisory panel
to six Oregon municipalities, became the first LFA to buy into the proposition one week
earlier, when it recommended that local officials in Portland and Multnomah County adopt
ordinances requiring ISP access.
BIT chairman Alan Arkatov said the board's action does
not indicate that it is predisposed in any direction, but he added that he was impressed
by information that he received from David Olsen, director of the Mt. Hood panel.
Other commissioners said they are interested in anything
that will be good for consumers.
The board set the public hearing for mid-December.
The hearing will not delay the 120-day mandated schedule
for completing the transfer, but action by TCI will. The city and the incumbent are
jousting over access to franchise financial records, and city regulatory officers said the
relationship is "strained." The parties had anticipated an interim agreement on
the transfer by Nov. 20, but the city was disappointed by a request from TCI for another
delay, officials said.
Instead of a transfer agreement by the end of the year,
closure will not be reached until Jan. 15.
Back in Oregon, MHCRC director David Olson said early
reaction among his municipal colleagues has been "extremely supportive, almost
congratulatory." And most said they planned to monitor developments in the @Home
And after several days of "being browbeat" by
AT&T and TCI, Olson was elated to hear that Los Angeles will also examine the issue.
Jane Lawton, president of the National Association of
Telecommunications Officers and Advisors, said some "large" jurisdictions were
looking at what the MHCRC did in order to meet "an overwhelming desire by their
constituents for choice among ISPs."
"The franchise is where you try to meet the broad
needs of the community," Lawton said, "and a case can be made that constituents
benefit from choice."
Both sides tried to solicit support on Capitol Hill, but
Sen. Ron Wyden (D-Ore.), one of the architects of the Telecommunications Act of 1996, is
not taking sides, spokesman David Seldin said.
Close to Portland, support for the commission's
position was hard to come by.
One day after the MHCRC acted, the Metropolitan Area
Communications Commission, a advisory body for 15 nearby Oregon cities and Washington
County, voted to recommend that its members approve the transfer of their 85,000 cable
subscribers from TCI to AT&T.
MACC administrator Bruce Crest said proponents of ISP
access did not make their case until the "11th hour," and they even failed to
attend the meeting when the transfers were recommended.
"I didn't hear anything that would have swayed me
to their position," Crest said. "I've always been a staunch believer that
there are three criteria enshrined in the transfer process: the legal, technical and
financial qualifications of the new operator."
Meanwhile, the city of Casper, Wyo., disregarded a request
by U S West that it hold off on a transfer until the City Council could review the Mt.
Hood ordinances. Instead, it went ahead with a final reading on an ordinance shipping
16,000 TCI subscribers to AT&T.
"They fully understood that this was a change of
control of a Title 6 cable franchise, and that many of the issues raised by Mt. Hood were
not within Casper's authority to address," TCI spokesman Steve Croper said.
Barry Orton, professor of telecommunications at the
University of Wisconsin-Madison and a municipal cable consultant, predicted that support
for the MHCRC will hinge on "who is ready to get sued."
"Los Angeles has never been worried about getting
sued," Orton said. "I would like to see other cities jump in on this, and I
think that those with deep pockets may."
Ultimately, Orton argued that TCI may find itself skewered
by its insistence that @Home is a cable service and, therefore, that it is immune to the
Title 2 common-carrier requirements contained in the 1934 Telecommunications Act.
"The feds have always been clear that the delivery and
marketing of cable service has to be a fair one," he said.
Orton and other consultants asserted that the transfer
process was a valid venue to discuss the issue, arguing that if AT&T won't assume
any new obligations, then municipalities have the right to deny the transfer.
However, TCI spokeswoman LaRae Marsik said legal counsel
for the MHCRC acknowledged a failure to find a reason to deny the transfer request.
"It's a bit baffling to us why the commission
would not deem the advice of their counsel appropriate in this matter," Marsik said.
Will consultants urge their clients to broach the issue?
Those contacted by Multichannel News were cautious. Most wanted to review the exact
language that the MHCRC adopted and wait for some of the fallout. Some also suggested that
client cities might hold off until refranchising talks if they are interested in
intervening on behalf of locally owned ISPs.
Ted Henderson, a Denver-based cable analyst with Janco
Partners, predicted that the Federal Communications Commission will not allow the
AT&T/TCI deal to be derailed by a municipal push to force ISP access.
"I think that they'll step in and have a voice,
because it's contrary to what the FCC wants: to get somebody into the market to
compete with the RBOCs [regional Bell operating companies]," Henderson said.
"You have to let competition take hold. Then, if five years from now, it turns out
that every computer screen has @Home on it, they can step in and address it."
David Krone, TCI's senior vice president of government
affairs, said the recent FCC filing by AT&T and TCI did not reflect any change in
AT&T chairman C. Michael Armstrong's position that the @Home platform would be
open to all. Rather, Krone said, it repeated his view that access should be the result of
a straight business negotiation, and not government fiat.
"This shouldn't be discussed in the context of
this merger," Krone said. "That should be discussed when [AOL chairman] Steve
Case calls [TCI president and chief operating officer] Leo [J.] Hindery [Jr.], or Mike
Armstrong and says, 'Hey, I have a proposal. Can we sit down?'"
Krone then attacked the "hypocrisy" of the ISPs
and AOL, saying, "First, they come in and scream that the government should stay out
of the Internet ... Now, they suddenly want regulation. When it suits their needs, they
say, 'Regulation works.'"