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AT&T Takes Its Case to Court

AT&T Corp. Monday continued to defend its position against opening its cable network to Internet providers who accuse the telecommunications giant of illegally keeping them out of the high-speed access market.

AT&T Corp. and Portland, Ore., officials squared off in the Ninth Circuit Court. While the telecommunications giant attempted to head off open access proponents in Portland, more than 120 leading Internet and technology-based companies expressed concerns that the Portland cable access case could stifle Internet growth and innovation, if it is upheld by the court.

In a surprising twist during the oral arguments made before the Ninth Circuit Court late Monday, Erik Sten, City Commissioner of Portland, said that the 3-judge panel was considering whether cable modem Internet access is a telecommunication service or a broadcaster.

"This is significant because if cable modem access is a telecommunications service, then open access would be the law of the land when you apply the same regulations that apply to telephone lines, to cables," Sten said. "AT&T strenuously argued that cable modem access is not a telco service, during their 20-minute allotment to speak before the judges."

The court could narrowly review the legal issue before them simply determine if the City of Portland has the jurisdiction to apply mandated access as a term to AT&T's assuming TCI's license to operate in the area. Apparently, the court's decision could have far more reaching effects on the cable access industry, should they rule that cable access is a common carrier.

Greg Simon, openNET Coalition co-director, said it is not a matter of social policy, but of public policy and that ideally the FCC or Congress will need to act and create a national broadband policy for all parties concerned with the issue.

"Rhe court must ask what does the law require under the Telecom Act," according to Simon. "The law requires open access to networks. When you apply current law to broadband services without creating social policies to promote deployment, you make open access to cable networks the law of the land. The FCC's non-policy is wrong. You do not promote deployment by promoting monopolies."

David C. Olson, City of Portland and Mt. Hood cable director, said it doesn't matter if the court determines that cable modem access is a telecommunications service, he just wants the right decision made for consumers.

"We're less concerned about our local authority to act on the issue than we are concerned about providing consumers with the right to choose their service," Olson said. "If common carrier or not, we want the right policy for consumers."

AT&T (T) executives contend that defeat would stifle their $100 billion effort to retool itself as a high-speed Internet cable service. The case stems from local laws adopted by Portland and surrounding Multnomah County in December 1998 that required AT&T to open its high-speed lines to competitors on a non-discriminatory basis as a condition for getting rights to the cable television franchise in the region.

Companies including Charles Schwab (SCH), Critical Path (CPTH), E*TRADE Group Inc. (EGRP) and WebMD, Monday sent a letter to the Federal Communications Commission asking that Chairman William E. Kennard resolve the local broadband issue.

"As you know, the major issue in the broadband debate today is whether the government should intervene in the marketplace and require cable companies to allow access to their networks to other companies and under what terms and conditions," the industry letter read. "While we have different perspectives on this specific question, we all agree strongly that such questions must be answered at the federal level, not at the local or state level.

One thousand members of the Telecommunications Industry Association, 27 computer, communications, and semi-conducter members of the Information Technology Industry Council, and 60 new media companies comprising the Digital Coast Roundtable voiced their opposition to local government regulation of broadband networks.

"Our intention is not to criticize the role of state or local governments. State and local governments play important roles in exercising their statutory powers," the letter read. "But for the sake of the Internet's future and what it can offer businesses and consumers, the jurisdictional policy questions raised by the Portland case must be resolved at the federal level."

Industry groups contend that heavy-handed local government approach mandating open access to cable networks would only delay deployment of broadband services. Citing Chairman Kennard's opinion that the broadband marketplace would develop best with no regulatory interference, only competitive market forces, the groups favor no regulatory action at this time

"We are also very concerned that the jurisdictional precedent set in the Portland case could have ramifications beyond broadband policy. If the court does not support the FCC's position, we believe that Internet growth will be slowed and that the Internet will face a raft of possible new regulations in the realms of taxation, privacy, quality of service, consumer protection, and other areas," the letter continued.

The group said if the appeals court does not overturn the decision, the Internet's growth could be slowed by inconsistent local policies.

"We believe that a balkanized approach to the development of broadband Internet access would subvert the goals of the 1996 Telecommunications Act, reducing competition and innovation," the letter said.

"The Ninth Circuit case revolves around whether or not local jurisdictions have the authority to impose new regulations affecting the deployment of broadband services. We hope that the court will decide that localities do not have such jurisdiction, since a national policy makes more sense."



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