San Francisco Latest City to Challenge TCI

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San Francisco may be the next major city to become
embroiled in the controversy swirling around whether Internet-service providers can ride
on the high-speed @Home Network.

City attorney Louise Renne was examining an
"open-architecture" plan for cable last week that could force AT&T Corp. to
allow ISPs onto the @Home platform -- a demand that AT&T and Tele-Communications Inc.
are already fighting in two other cities.

Meanwhile, King County, Wash., said it will make ISP access
a condition for transferring 100,000 TCI subscribers to AT&T, while the city of Denver
received a legal opinion affirming its authority to impose similar requirements on the
MSO's 112,000 customers there.

In more bad news for the companies, Portland and Multnomah
County, Ore., officially rejected a transfer of their franchises, citing AT&T's
refusal to permit nondiscriminatory ISP access under federal commercial leased-access
rules.

As the city's sole cable provider, Renne's plan
would initially apply to TCI's 189,000-subscriber system, but it could ultimately
include other video-service providers that have contacted the city, deputy city attorney
Jane Lee said.

AT&T and TCI are already at odds with local officials
over whether the city has approval authority over the transfer of TCI's franchise.

Apart from considering an open-architecture plan for cable,
Renne will also file comments with the Federal Communications Commission asking that the
agency look at the ISP issue, Lee said.

TCI officials in the Bay area said they were unaware of any
move to impose new requirements on the MSO's local operations.

Tom Ammiano, a member of the city's Board of
Supervisors, which has been briefed by Renne, said it was too early to tell how the board
would vote on the open-architecture issue.

Either way, the board "will go to the mat" to
ensure that it's allowed to sign off on the transfer of TCI's franchise, Ammiano
added.

In Oregon, meanwhile, Portland and Multnomah County said
AT&T's and TCI's "modified" acceptance of ordinances requiring ISP
access had triggered the transfer denials.

However, the two companies offered an olive branch by
noting that litigation should not be "inevitable or a necessary result of this
denial."

Debra Luppold, executive director of franchising for TCI
Northwest, said the companies want to resolve the issue, but they also "have no
choice but to ensure that we protect our rights."

"We're looking at every option, including
litigation, which is the last thing that we want," Luppold said. "But we do not
think that the cities have the grounds to deny these consents."

In King County, where officials admit to "going a
number of rounds with TCI" in the past, county executive Ron Sims is backing an
ordinance that would open up @Home.

"It appears that the other council members agree with
my position," Sims said. "Now we'll see what AT&T's position is.
If they don't agree, we will not transfer the franchise."

Sims said TCI subscribers are concerned about having to
accept TCI@Home as their ISP in order to access the MSO's high-speed cable-modem
platform.

"We want to separate the cable-modem platform from the
cost of the ISP," he said. "We didn't just come up with this. Our
constituents brought it to our attention. They're asking, 'Why should this be
allowed?'"

TCI spokesman Steve Kipp argued that consumers already have
other ways of accessing the Internet, including U S West's
asymmetrical-digital-subscriber-line service and conventional phone lines.

"AT&T and TCI are taking a tremendous risk
here," Kipp said, noting that $300 million will be spent on upgrading networks in the
Puget Sound area. "All that we ask is that you let us roll it out before you take the
technology and give it to our competitors."

Kipp added that lost in the ISP "debate" have
been the benefits of the merger between AT&T and TCI, including an opportunity to
bring competition to the local loop.

"Local-phone-service competition will reach a lot more
people than Internet access," he said.

In Denver, meanwhile, a coalition of ISPs -- including U S
West, America Online Inc., Qwest Communications International Inc., Rocky Mountain
Internet and MindSpring Enterprises -- asked the city last week to condition the transfer
of TCI's franchise on their being allowed onto @Home.

Afterward, Denver assistant city attorney Andy Weber told
the Public Works and Amenities Committee that while local officials have the authority to
order ISP access, the FCC could "ultimately decide something else."

"It's not a black-or-white, all-or-nothing
answer," Weber said. "And it's in that vacuum that people are offering
theories about whether you can or can't place requirements on ISP access."

The committee put off any action pending a Jan. 19
workshop, during which it will brief the entire City Council.

"There are other cities making such stipulations, so I
think that there's going to be some fact-finding going on," Denver City Council
legislative analyst Debra Bartelson said.

TCI spokeswoman LaRae Marsik said @Home should not be
opened to companies like U S West that are already "100 percent-penetrated in the
market."

"And they're asking for regulatory parity? If we
had that kind of head start, absolutely. But we're the new entrants," Marsik
added.

Marsik said forcing ISP access would endanger the
MSO's plans to invest $178 million on upgrading its Denver infrastructure, along with
another $30 million to make it telephony-ready.

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