Open-Access Rules Have Mass. Appeal

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Open-access wildfires continued to break out in
Massachusetts last week, where two new communities derailed AT&T Corp.'s bid to
obtain MediaOne Group Inc. franchises.

Using different tactics, the Boston suburbs of Somerville
and Quincy defied AT&T by demanding access to its high-speed platform for competing
Internet-service providers.

In denying a franchise transfer, Somerville Mayor Dorothy
Kelly Gay also questioned the company's technical and managerial capabilities -- a
strategy identical to that used by Cambridge, Mass., one week earlier.

In Quincy, Mayor James A. Sheets agreed to the transfer,
but only if AT&T Broadband & Internet Services granted access on terms "at
least as favorable" as those it provides to affiliates, meaning exclusive data
provider Excite@Home Corp.

The two communities are the third and fourth in
Massachusetts to spurn AT&T, joining Cambridge and North Andover. Nationwide, nine
communities are now fighting access wars, including Oregon's Portland and Multnomah
counties; unincorporated Broward County, Fla.; Fairfax, Va.; and St. Louis.

As a reference point, industry figures indicated that more
than 1,300 local franchising authorities have approved transfers to various MSOs WHEN without
any open-access requirements.

MediaOne officials noted that only four of 175
municipalities in Massachusetts have opted for open access, with the rest approving
transfers to AT&T.

"We're done [with the transfers]," MediaOne
spokesman Rick Jenkinson said. "A 98 percent approval rating isn't bad."

But MediaOne expects to appeal the four denials to the
Massachusetts Department of Telecommunications and Energy as early as this week. The DTE
has declared open access off limits to LFAs considering transfers. "It's either
that, or a lawsuit," Jenkinson said.

In a letter to AT&T, Kelly Gay said the "statutory
criteria" for considering a transfer is to weigh the technical and managerial
abilities of the transferee (AT&T), not the transferor (MediaOne). "In the course
of such review, I have found that AT&T has no direct management of a cable system in
the Commonwealth of Massachusetts or elsewhere," she wrote.

She also dismissed AT&T's claim that it will
derive experience from its MediaOne personnel, countering that the incumbent's
management style has not exactly been "beneficial to Somerville cable
subscribers."

That was a thinly veiled shot at MediaOne's decision
not to upgrade its network in Somerville after Kelly Gay asked the Federal Communications
Commission to decide whether the city had the right to consider open access as part of its
transfer review.

Paul Trane, head of Telecommunications Insight Group, a
local consulting firm advising the city, said Somerville denied the transfer after the FCC
"didn't even have the decency to write back. It ignored the request of a duly
elected official and a U.S. congressman."

In her most ominous conclusion, Kelly Gay said
AT&T's rejection of city-ordered open access may "rise to the level of an
actionable antitrust violation," given a federal court decision, now on appeal, in
the MSO's dispute over the Portland denial.

"The city cannot condone, and certainly cannot be a
party to, such anti-competitive behavior," she added.

Elsewhere, MediaOne scored a win in Michigan last week when
the Detroit suburb of Dearborn -- one of 44 LFAs in the area considering transfers --
agreed to the AT&T transfer without tacking on an access provision. So far, 24
communities have signed off on transfers.

"The [Dearborn] City Council, cable commission and
administration studied this issue and realized that regulating broadband would reduce,
rather than enhance, customers' access to the technology in Dearborn," said a
statement issued by MediaOne vice president of law and public policy Greg Cannon.

AT&T did not fare as well in St. Louis, where Mayor
Clarence Harmon has signed an ordinance imposing open access on the MSO's
55,000-subscriber system. The company responded by circulating a petition that would force
the local Board of Aldermen to either reconsider the ordinance or put it to a public vote.

AT&T has 30 days to gather 4,102 signatures, or 2
percent of the registered voters in the last mayoral election. If it succeeds, it will
have another 30 days to collect signatures representing another 5 percent, for a total of
14,357.

"Which, believe it or not, is not that hard to
do," said Celeste Vossmeyer, vice president of government relations with Charter
Communications, which is backing AT&T.

If the board affirms its decision, or does nothing, the
issue goes to the voters sometime next year. In the interim, the city is prohibited from
enforcing its access ordinance "until the process plays out," Vossmeyer said.

City officials, meanwhile, were complaining about how
AT&T was gathering signatures for its petition.

"They're telling people, 'Sign this and your
telephone and cable bill will go down,'" said Board of Aldermen president
Francis Slay, author of the open-access ordinance. "They can't make that
statement, but they're making it anyway. And people will sign anything if you tell
them their cable and telephone bills will go down."

While new cities continued to pop up in support of open
access last week, FCC chairman William Kennard took his campaign against Internet
regulation to Virginia, where he told the Fairfax County Chamber of Commerce that now
"is not the time to waltz into the marketplace and start micromanaging."

In the audience was Scott Silverthorne, city councilman in
Fairfax, Va., which has slapped an access ordinance on the former Media General Inc.
system recently acquired by Cox Communications Inc.

Silverthorne told Kennard that Cox responded by initially
refusing to continue deploying high-speed Internet access in Fairfax, prompting the FCC
chief to declare such actions "outrageous."

"He acted like it was a problem, but he didn't
signal that regulation was the way to solve the problem," Silverthorne said.

Silverthorne also complained about Kennard's statement
that he wasn't hearing about consumers being hurt by cable operators.

"I told him that people are upset about their cable
service," he said. "And [LFAs] are closer to it. We're the ones who have to
field the phone calls."

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