Minnesota to Separate Access, Transfers

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The Minnesota Public Utilities Commission may open a docket
on open access next month, thereby allowing a separate review of AT&T Corp.'s
acquisition of MediaOne Group Inc.

At its Dec. 8 meeting, the PUC will review a separate
docket proposal ironed out between the MSOs, the Minnesota Department of Commerce and the
state Attorney General's Office.

If approved, the joint stipulation would expedite the
commission's review of AT&T's proposed acquisition of MediaOne, the
state's dominant cable operator.

A coalition of local Internet-service providers headed by U
S West asked the agency to include open access in its review of the acquisition.

Specifically, it wanted the PUC to hold off on transferring
a certificate permitting MediaOne to offer phone service in Minneapolis unless AT&T
allowed competing ISPs onto the high-speed broadband network it's looking to acquire.

MediaOne officials believe that by focusing on the sale to
AT&T -- unencumbered by the access question -- the commission can give the proposed
transfer immediate attention.

"And it gives them more time to review the
forced-access issue," said Brian Dietz, director of communications for MediaOne in
the Twin Cities. "We obviously think there are a lot of issues that need to be
discussed in regard to forced access."

Dietz said MediaOne hopes the PUC will approve the merger
at its Dec. 6 meeting. "That's what's been indicated to us," he added.

DOC assistant commissioner of commerce Tony Mendoza said
his agency believes open access is "good public policy," but it would prefer to
see the complex pricing, technical and operational issues debated in a separate docket.

As part of the agreement, AT&T will not raise
jurisdictional issues during an open-access investigation, which will feature the
DOC's argument that Internet access delivered via cable is a telecommunications
service and, thus, subject to common-carrier requirements.

"Our argument before the PUC, much like in the
Portland [Ore.] case, is that it's a telecom service, not a cable service,"
Mendoza said.

Experts said classifying Internet-over-cable as a
telecommunications service could be a blow to the industry, since theoretically, it would
make the offering subject to the same common-carrier requirements that are imposed on the
regional Bell operating companies.

In the interim, the PUC has granted U S West's request
for intervener status in the case. "It allows them to file comments and information
on whether open access should be approved," PUC spokesman Mark Oberlander said.
"Basically, it lets them present their side of the issue."

However, intervener status also allows U S West to request
a "contested case" on the open-access review -- a process involving an
investigation by an administrative law judge.

The PUC has been grappling with the question of whether it
has jurisdiction to look into the open-access issue. The answer may come in the form of
proposed legislation expected when Minnesota lawmakers reconvene next month.

A proposal is being floated that would shift authority over
cable from municipal governments to the PUC, theoretically allowing it to require open
access.

It also would classify cable as a telecommunications
provider -- something operators object to because it would require them to interconnect
with local and long-distance carriers, as well as ISPs.

If the PUC is handed oversight of cable, the immediate
beneficiary will be local governments, said Bil MacLeslie, head of research development
for Vector Internet Services Inc.'s VISI.com, an area ISP, and spokesman for the
coalition.

"By taking it to the state level, it could turn out to
be good because each individual municipality won't have to fight to impose open
access," MacLeslie said. "This issue isn't as sexy as gun control, but it
does have a lot of passion."

Even so, sources have found little support among individual
local franchising authorities for unbundling cable's high-speed pipe. Many are
apparently waiting for a decision in the AT&T-Portland fight being waged before the
Ninth Circuit Court of Appeals.

MediaOne, meanwhile, is counting on separate PUC
deliberations working to its advantage.

"We would much rather see forced access debated in
much greater detail," Dietz said. "In each location that's looked at forced
access, the more in-depth the review, the less chance there is of passage."

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