Ready to Rumble: Getting Tough on Access

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Just imagine it as a playground fight.

"You hate Mike Armstrong, and I hate Mike Armstrong,
so we ought to be pals," said the Steve Case gang to the Bernie Ebbers gang.

"Yeah, we can beat him up together."

And suddenly, a multitude of AT&T-bashers -- an
unlikely bunch, all with a common enemy -- are getting together. The "OpenNet"
lobbying coalition -- ostensibly organized to assure Internet-service providers access to
cable's high-speed networks -- includes communications and Internet companies that
are building significant business relationships even as we speak.

In other words, this is not just about beating up AT&T
Corp. chairman C. Michael Armstrong and his Tele-Communications Inc. buddies on the
unsettled Washington turf.

Meanwhile, the playground monitor -- let's call him
"Mr. Bill" -- chooses to look the other way. "Boys will be boys," he
says, and these kids should just play nicely.

OpenNet is a handy smoke screen for the real alliances
taking shape among the anti-AT&T forces. OpenNet's tough guys are rapidly forming
a variety of substantial pacts, with vast broadband objectives. Their dealmaking in the
past month makes playground warfare look simple.

For example, MCI WorldCom has unveiled a new consumer and
small-business ISP package bundled with portal content provided by CompuServe, an America
Online subsidiary. The nonexclusive deal -- part of AOL's strategy to license its
various content brands to Internet carriers -- adds more cement in the growing
relationship between WorldCom and AOL, which are already intrinsically tied through the
backbone.

The arrangement also marks the quick return of MCI to the
ISP ranks, after unloading its relatively small consumer Internet-access business to Cable
& Wireless as part of last year's merger with WorldCom.

Separately, MCI WorldCom teamed up with Bell Atlantic Corp.
-- another OpenNet gang member -- to resell local dialtone in the northeast states.
Although this isn't a broadband play, it adds an extra link in the growing grid of
alliances; Bell Atlantic and AOL already have a pact regarding distribution via the
telco's soon-to-be-deployed ADSL service (using the Clintonesque definition of
"soon" -- in other words, undefined).

And the deals go on. AOL and CNET forged a pact last week,
making the online and video computer network an exclusive supplier of computer shopping
services across AOL's distribution formats. And by the way, CNET is now also
considering a role in OpenNet. Now remember, NBC owns a sizable stake in CNET's
spinoff, the portal service called Snap!. And Snap! allied last month with Bell
Atlantic's ADSL plan.

Would that -- could that -- bring NBC into OpenNet?

Wow, a conspiracy theory of gang warfare -- and lobbying,
too.

The OpenNet cabal is still deciding who will hold AT&T
down and who will punch it. Unsurprisingly, MCI (now the junior portion of the
MCI/WorldCom gang) certainly will resume its historical role by taking hard swings at
AT&T.

In the briefing about its new portal deal with CompuServe
(that is, AOL), MCI proudly took advantage of the fin-de-siécle opportunity to say
that it wants to take business away from AT&T. In fact, it proudly asserted that its
goal has always been to drive AT&T's long-distance market share down to 0
percent. But that's another battle.

The business alliances -- with more sure to come, since
this is Internet turf -- underscore the strength that AOL's massed legions will
insert into this rumble against AT&T and its allies. While the lobbying war picks up
steam, the foes will be competing -- or trying to compete -- in the marketplace, which
should make Mr. Bill very happy.

For example, AT&T's telephone-services deal with
Time Warner seems to pave the way for a head-to-head bash against the new MCI- Bell
Atlantic gang on the mean streets of New York. It's not just a West Side story.

The new MCI WorldCom Internet service offers some clues
about how tough these guys will play. For starters, this is a bundling package, with MCI
phone customers receiving a $3 per month discount on Internet access (down to $16.95). For
that fee, they'll get a customizable portal, drawing from CompuServe's content.

And as a reminder of its ability to call in gangs from
other turf, MCI plans to leverage its airline frequent-flyer relationships. The new MCI
WorldCom Internet users will be able to earn frequent-flyer miles online, as well as
obtaining (if they want) personalized travel services through their portals.

It's the kind of value-added content that Internet
gangsters call "sticky" -- features that make customers stick with the service.

The marketplace alliances bolster the resolve of the
OpenNet cabal to win the regulatory rumble. The dealmaking also gives cable stronger
reasons to maintain its exclusionary policy.

Now who would want to be part of a gang like that?

I-Way Patrol arbitrator Gary Arlen asks, "Do you want
a piece of me?"

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