Portland Officials Put Faith in Capitalism

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After losing a court fight over open access, Oregon cable regulators now hope competition will force AT & T Broadband to pry open its local cable network.

The Mt. Hood Cable Regulatory Commission, which advises six Portland, Ore.-area communities, authorized franchises last week allowing RCN Corp. and Western Integrated Networks LLC to compete with AT & T Broadband for video, Internet and telephone customers.

The commission acted weeks after the Ninth Circuit Court of Appeals ruled that Portland and Multnomah County could not require AT & T Broadband to unbundle its network in exchange for a transfer of their former Tele-Communications Inc. franchises.

The commission's individual members must approve the agreements-a process that is expected to take only 30 days.

In a related development, WideOpenWest LLC, which had been pursuing a similar deal, asked for more time to review the proposal, putting its request on hold at least until September.

Meanwhile, MHCRC director David Olson said the commission's members will likely vote in favor of RCN and WIN. "None of them has ever rejected an MHCRC recommendation," he added.

First up was the Portland City Council, which voted unanimously last Wednesday to grant temporary permits allowing RCN and WIN to begin building their networks while the city considers the proposed franchises.

WIN spokesman Bill Mahon said the company will immediately start engineering a network that will take five years to complete.

AT & T Broadband spokesman Kevin Mulligan dismissed the expected effects of competition, adding that its open-access tests in Colorado and Massachusetts prove that the MSO is already "moving in that direction."

"I think we'll be offering several ISPs [Internet-service providers in the Portland area] before [competitors] are in a position to light up their first customers," he said.

Mulligan added that AT & T Broadband will not object to the WIN and RCN franchises, provided that the requirements are the same as those imposed on AT & T Broadband.

Despite the Ninth Circuit's recent decision, AT & T Broadband and Portland remain at odds.

The court also ruled that Internet access delivered over cable was a telecommunications service, triggering a new controversy in the process.

AT & T Broadband immediately began rolling out its AT & T@Home service in Portland, ignoring the city's argument that it needed to obtain a telecommunications franchise first.

However, Olson speculated that AT & T Broadband's low profile during the MHCRC's deliberations was the result of the MSO possibly not completing its upgrade and institutional-network construction on time-a development that could cost it a three-year extension of its franchise.

Meanwhile, WOW general counsel Craig Martin said the Denver-based telecommunications start-up asked for a delay because it was still receiving revisions of the franchise just hours before the MHCRC meeting.

Moreover, language in the agreement theoretically allows commissioners to grant future franchises on more favorable terms.

"I'm not saying that the city would do that," Martin said. "But the language does permit it. We don't want to commit several hundred million dollars to a project, then two or five years down the road find ourselves debating a provision in the agreement."

Olson called it "odd that WideOpenWest would tolerate such a long delay and possibly give its competitors a head start."

Nevertheless, WOW's franchise request will be taken up during the next MHCRC meeting, which is not scheduled until September, he added.

WOW's reluctance to proceed came just weeks after it balked at the franchise terms offered by the Metro Area Communications Commission, which regulates cable operators in 14 communities outside of Portland. As a result, that franchise request is also on hold.

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