Mass. DTE Sides with Cable on Access

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The cable industry is converging on New Orleans for the National Show this week fresh off a major victory in Massachusetts over proponents of open access.

The state Department of Telecommunications and Energy said last week that the communities of Somerville, Cambridge, North Andover and Quincy went "beyond the scope of the transfer-review process" in trying to impose open access on AT & T Broadband.

Massachusetts law does not allow municipal governments "to require open access as part of the transfer-review process," the agency said in its decision.

Both North Andover and Quincy had agreed to transfer their MediaOne Group Inc. systems to AT & T Corp., but only if the latter agreed to unbundle its network. Somerville and Cambridge denied AT & T's license-transfer request outright.

MediaOne officials applauded the decision. "As we've said in the past, AT & T and Media-One firmly believe that the market, and not the government, should drive competition in this quickly changing industry," MediaOne vice president Kevin Casey said in a prepared statement.

However, still to be addressed by the DTE are questions raised by Somerville and Cambridge concerning AT & T's managerial ability to run the Massachusetts cable systems it is acquiring from MediaOne.

"But as far as open access is concerned, the DTE has taken that question off the table," MediaOne spokesman Rick Jenkinson said. "The ball is in [Somerville's and Cambridge's] court. But as of today, we're proceeding as if those franchises have been transferred."

The cities may still ask the DTE to reconsider its decision.

Meanwhile, sources close to Somerville Mayor Dorothy Kelly Gay said the DTE's decision was not unexpected.

"The mayor feels that this decision is anti-consumer and anti-municipality," said Paul Trane, president of Telecommunications Insight Group, a Somerville-based municipal consulting firm.

Trane said the mayor's request for a Federal Communications Commission ruling on whether local governments have the right to demand that cable operators unbundle their networks has gone unanswered.

"The danger of AT & T creating a high-speed monopoly over the Internet is greater now than it was two months ago," Trane said. "With its acquisition of [Cablevision Systems Corp.'s] property in Massachusetts, it will control 90 percent of the market."

The DTE had already determined that the 175 communities in the state holding Media-One licenses could only evaluate AT & T's legal, financial, technical and managerial qualifications when considering a transfer request.

Moreover, a DTE-appointed special magistrate had ruled that AT & T satisfies the three criteria, and that open access is not "relevant" to the transfer process.

"The DTE has a long history of siding with the cable industry and against municipalities," Trane said.

While it was a victory for cable, the DTE ruling failed to impress most industry observers, who are anxiously awaiting a Ninth Circuit Court of Appeals ruling on a lower-court decision upholding the right of Portland, Ore., to demand open access as a condition for transferring its Tele-Communications Inc. franchise to AT & T.

"It's a sideshow," said Scott Cleland, an analyst with Legg Mason Wood Walker Inc.'s Precursor Group. "It's a victory for cable, but what they need is a victory at the Ninth Circuit. That's going to be a more definitive answer to the open-access question than a ruling by a state agency."

During oral arguments last year, the three-judge panel hearing AT & T's appeal of the lower-court ruling indicated that it may have to decide whether Internet-over-cable is a cable service or a telecommunications service.

If the court rules that it's a cable service, then local franchising authorities have jurisdiction. But if it's a telecommunications service-as AT & T executives insist-cities cannot require open access, since Section 621 of the Telecommunications Act of 1996 prohibits local governments from forcing operators to provide telecommunications services or facilities to third parties as a condition for franchise transfers.

However, if Internet-over-cable is a telecommunications service, it could still fall under the same myriad common-carrier requirements imposed on the regional Bell operating companies, which would effectively force cable operators to unbundle their cable plant.

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