MediaOne Battles CFA Over Minn. Waiver

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MediaOne responded last week to a national
consumer-advocacy group seeking to short-circuit its bid to keep control of the
Minneapolis cable market.

In a Federal Communications Commission filing, the company
chided the Consumer Federation of America, which wants the FCC to deny U S West
Inc.'s request for an extension of the waiver allowing it to own the Minneapolis
properties.

In the filing with the FCC's Cable Services Bureau,
Robert Sachs, MediaOne's senior vice president for corporate and legal affairs, said
the Washington, D.C.-based group wanted to impose its agenda on Minnesota consumers
despite several local franchising authorities that have come out in favor of the
extension.

U S West needs the extension while it follows through on a
corporate restructuring that will split U S West Communications and U S West Media Group
(which is being renamed MediaOne Group) into separate companies. The split, it said,
abrogates FCC cross-ownership rules that prohibit a telco from buying cable systems inside
its service territory.

If granted, the extension would scuttle a deal that would
have sent U S West's 300,000 Minneapolis cable subscribers to Charter Communications
Inc. for $600 million, thereby complying with an FCC order that MediaOne divest itself of
the former Continental Cablevision Inc. properties.

In its FCC filing, the CFA maintained that the spinoff
would not prevent U S West from continuing to exert control over both Minneapolis
telecommunications markets.

'No matter how'separate' U S West proposes
to keep the two companies, it would never allow its cable subsidiary to attack its
telephone monopoly or its telephone subsidiary to attack its cable monopoly,' wrote
CFA research director Mark Cooper.

Sachs called that a 'critical misconception,'
insisting that the two companies will have 'no common directors, executives, or
employees,' and that similar divestitures and spinoffs involving the breakup of the
old AT&T Corp. monopoly, as well as the split of Pacific Bell and AirTouch Cellular,
have demonstrated that 'former affiliates readily become active competitors.'

'The split is a'divestiture' in every sense
of the word, creating strong fiduciary responsibilities on the part of each company's
leadership to maximize profitability and shareholder value without regard to any past
alliances,' Sachs wrote.

Also last week, MediaOne Group spokesman Steve Lang said
the Minnesota Department of Public Service -- which recently came out against an extension
for U S West -- is 'a state agency representing consumer interests in
telecommunications and energy issues, which is independent of the Minnesota Public
Utilities Commission and appears before the PUC as an advocate.'

In its own FCC filing, DPS officials characterized the
agency as a prime regulator of the state's local-exchange carriers.

DPS officials last week continued to maintain that
Minnesota 'regulators' oppose U S West's extension requests, since the DPS
acts as the commission's investigative and enforcement arm, making recommendations
that the PUC then acts on.

In a related development, the Northern Dakota County Cable
Commission -- which represents 18,000 cable viewers in the Minneapolis area, and which
previously came out in favor of U S West's extension request -- voted last week to
approve a transfer of its franchises to Charter.

Lang said U S West recommended that the transfer be
approved, since it's still bound by an FCC mandate that it sell off the Minnesota
systems.

But this approval doesn't change its support for U S
West's extension, he said.

'It's a finding that the proposed buyer has the
managerial, financial and technical ability to run the system. It does not mean that the
commission doesn't want us to own the system,' Lang said.

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