Washington -- The Federal Communications Commission is
planning to hold cable operators to their word that consumers will have access to multiple
Internet-service providers over facilities run with open technical standards.
Both AT&T Corp. and the pending combination of America
Online Inc. and Time Warner Inc. have pledged to open their systems once exclusive
contracts with their respective affiliated ISPs expire in late 2001 and mid 2002,
"We have been encouraged by these developments,"
said Deborah Lathen, chief of the FCC's Cable Services Bureau, in Feb. 27 remarks to the
National Governors' Association. "However, these are only first steps."
Lathen told the NGA's Committee on Economic Development and
Commerce AT&T and AOL Time Warner Inc. had to do more than just profess support for
"Unless more is done to ensure that a monopoly does
not develop and closed systems are not built, these announcements are just rhetoric. We
will be vigilant to ensure that this industry moves beyond rhetoric and to make openness a
continuing reality," she said.
Lathen made her comments prior to last Tuesday, when AOL
and Time Warner announced a more detailed version of their pledge to allow consumers
access to several ISPs via their cable plant after Time Warner Cable's exclusive
arrangements with Road Runner expire at the end of next year.
Lathen said the FCC is also concerned that no one gains
control over the Internet through proprietary standards.
"We want open protocols. We want interface standards
that anyone can write to," she said. "If we see that not happening, then I think
we have to take a step and say, 'Well, maybe it's time that we might want to say
Addressing the same group, AT&T general counsel Jim
Cicconi said his company had a sound business reason for not denying consumers choice
among ISPs: to prevent frustrated Internet subscribers from turning to telephone companies
and other providers that offer access to multiple ISPs.
"If you deny them choices, then they are going to go
to your competitor," he added.
Cicconi said AT&T was negotiating deals with ISPs for
access after July 2002 and for immediate access to AT&T fixed-wireless Internet-access
Since early 1999, the FCC has adopted a hands-off policy
regarding ISP choice over cable, despite heavy criticism from the ISP community and some
local regulators. FCC chairman William Kennard has said marketplace forces, rather than
regulation, should govern the structure of the nascent broadband arena.
The first sign that Kennard's policy was bearing fruit came
in December, when AT&T reached an agreement with MindSpring Enterprises Inc. -- which
was later sold to EarthLink Network Inc. --that called for open access, but not until
after AT&T's exclusive contract with Excite@Home Corp. begins to expire in July 2002.
EarthLink vice president of legal and regulatory affairs
David Baker told the NGA panel the December agreement was a good first step, but little
else. He claimed that AT&T, which has 57 percent voting control in Excite@Home, wants
to retain its exclusivity to use the next 28 months to attain broadband Internet-access
Baker said there would be 14 million broadband
Internet-access subscribers within two years, the bulk of them cable customers. He urged
support for open-access legislation to maintain robust competition in the ISP market.
"There would be significant, huge and, we feel,
irreversible first-mover advantage if only the cable companies' affiliates can offer
broadband access, and unaffiliated companies and their customers don't have this access
for another two years yet," Baker said. "What we will continue to do from this
point is to continue to negotiate with AT&T in the hopes that we can urge them to
accelerate the end of this exclusivity period."
Although acknowledging that the Excite@Home contract was a
barrier, Cicconi replied that the exclusivity had to be honored because Excite@Home took
the risk to build the high-speed-data network, and it deserved a return on its investment.
Cicconi said access legislation was unnecessary because
Internet access was a competitive business characterized by facilities deployment and
falling prices. He added that cable-modem subscribers had unrestricted access to all
Excite@Home spokesman Matt Wolfrom said Baker's first-mover
theory had a faulty premise; namely, that AT&T calls the shots at Excite@Home. Under a
corporate agreement that took effect last May, AT&T is barred from terminating
exclusivity unless it has the consent of either Comcast Corp. or Cox Communications Inc.,
Another sign that Kennard's stance on access is working
came in January -- one month after the AT&T-MindSpring agreement -- when AOL announced
its $152.8 billion acquisition of Time Warner and pledged to open its cable systems to
At the time, an AOL spokeswoman said open access meant
consumer choice of ISPs without having to buy the cable-affiliated ISP as a prerequisite.
About three weeks ago, in their merger application, AOL and
Time Warner promised access for "multiple" ISPs as part of an "irreversible
process of achieving solutions to these problems" after Time Warner's exclusivity
deal with Road Runner expires Dec. 31, 2001.
Lathen, though, said she wanted to hear more about AOL Time
Warner's access plans. "I have to tell you that we are very interested in getting
more details from them on what openness means," she added.