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RealTime IT News

Is Anyone Minding the Cable Store?

The events surrounding Excite@Home's breakdown this week bear an eerily similar resemblance to the breakdown of NorthPoint Communications last year.

And this time, the Federal Communications Commission and the U.S. government won't be able to do anything about it, a growing concern for the more than six million cable customers in the U.S. today.

Confusion surrounds Excite@Home these days. Customers, not even sure whether their cable network is one scheduled for cancellation or migration, can only sit and wonder what will happen next after service ends for everyone on Feb. 28, 2002.

Earlier this year, digital subscriber line provider NorthPoint Communications was a financially strapped, nationwide company providing high-speed services to a nationwide audience. While in bankruptcy court, creditors looking to get as much return on their investment as they could, convinced the judge to let them shut down the network.

Cable Internet provider Excite@Home is a financially strapped nationwide company providing high-speed services to a nationwide audience. While in bankruptcy court, creditors looking to get as much return on their investment as they could, convinced the judge to let them shut down the network.

In the end, both companies suffered similar fates. NorthPoint's assets were bought out by AT&T Broadband (for its own DSL buildup), while @Home lost its only buyout bid to AT&T Broadband Tuesday.

A person could extrapolate two things from this: one, AT&T Broadband sure does get around; and two, where are the regulations to protect business and residential broadband users in the event of a shutdown?

The answer is not one consumers want to hear.

In the case of the NorthPoint collapse, the FCC stepped in after the fact with regulations that force failing providers to come up with a transition process to avoid service interruptions, normally 30 days notice before shutdown. That's good news for DSL users around the country.

But cable networks, since they aren't considered a common carrier like the telephone industry, aren't under any obligation to give warning of a shutdown, as 850,000 AT&T Broadband customers found out the hard way Saturday morning.

Michelle Russo, a spokesperson for the FCC's cable bureau, said that its hands are tied in a situation like @Home's shutdown.

"It's not the like matter with NorthPoint last year, where we created regulations that prevent that from happening again with common carriers," Russo said. "We don't have the authority to make that decision with cable operators. Only Congress can give us that authority."

The Telecommunications Act of 1996 gave the FCC authority to enforce competitive telephone service throughout the U.S. With the advent of the Internet, the agency has played a crucial role in determining how regional Bell operating centers (RBOCs) like SBC Communications and Verizon Communications treat independent telephone companies.

Advocates and independent companies have been fighting an uphill battle the past four years getting the FCC to recognize cable Internet services as a common carrier service and to open access on the Internet to all independent providers. It's a policy embraced by many Internet service providers (ISPs) and Rep. Edward Markey (D-MA), senior Democrat on the House Telecommunications and the Internet subcommittee.

Colin Crowell, a spokesperson for Rep. Markey, said this week's activities could have been avoided had there been open access on the cable networks.

"The reason why people are going to be left high and dry is that when people get cable modem service, their only choice was @Home," Crowell said. "If there were other providers on the @Home network, consumers could easily have moved to a new ISP."

The cable companies, notably AT&T Broadband (which owns the largest network in the U.S.), have so far successfully bogged down what they call the "forced access" process in appeals courts and in FCC bureaucracy.

The closest open access proponents have gotten to force the issue was the mega-merger between America Online, Inc., and Time Warner, Inc., in January. Both the FCC and the Federal Trade Commission put stringent open access conditions on the merger, one the new company has been slow to embrace.

While the merger forces open access compliance for AOL Time Warner, cable operators like AT&T Broadband, Comcast Corp. and Cox Communications are not obligated to open their networks. A glacially slow timetable for open access has been enough to keep regulators off of their backs.

"Congressman Markey has been encouraging the FCC to (open the networks) for a number of years and feels it is vitally important for the FCC to make sure there are multiple ISPs available to consumers," Crowell said. "It's his position that the current law, the Telco Act, compels the FCC to make this an open cable service architecture. He believes that broadband access to the Internet is a telecommunications service and the FCC should make sure consumers have multiple choices of ISPs over their cable systems.

That's not a feeling shared by all on Capital Hill. There are many legislators and regulators who feel that market forces, not the government, should dictate broadband policy.

FCC Chairman Michael Powell has long been a proponent of competing broadband technologies, not inter-broadband competition. It's a policy he's been brutally consistent with, even though it has spelled the doom for many broadband ISPs and independent telephone companies, called competitive local exchange carriers (CLECs).

It also explains why open access is still lost in the bureaucracy of the FCC's cable bureau. In September of 2000, the FCC opened a notice of inquiry (NOI) into a possible open access policy.

Since then, NOI's have come in from advocates and cable operators around the country and collected dust, figuratively speaking. In a nutshell, after a NOI is taken and debated, FCC staffers compile the data into a notice of proposed rulemaking (NPR), which is then further debated before becoming policy.

Russo, when asked for a timetable on the NOI, said FCC's cable services bureau didn't have a date established, though it was on the board's "front burner." Theoretically, an issue on the front burner could still take more than six months to a year before becoming policy.

Rep. Cliff Stearns (R-FL), is another ranking Republican in Washington, D.C., who has been following the @Home shutdown with interest. But unlike like his colleague on the telecommunications and the Internet subcommittee, Stearns, chairman of the commerce, trade and consumer protection subcommittee, said broadband consumers are best served by letting cable operators determine the best course for broadband policy.

"Although (the shutdown of 850,000 subscribers) is a very serious disruption of service, I do not feel that it is appropriate at this time for Congress to provide the FCC with authority to regulate the cable industry," Stearns said. "In the Telecommunications Subcommittee, we are working toward deregulation of that industry to promote competition and enhanced services. In the long term, consumers and businesses will be served better by allowing market forces to create a stronger, more diverse, and more reliable cable industry."

Numbers are beginning to show that continued confusion and events like @Home's bankruptcy proceedings will keep consumers away from broadband entirely, at least in the short term.

A report by analysis firm ARS, Inc., shows that consumer growth has been slowing the past year. Cable growth, which ARS figures makes up 62 percent of the broadband industry, has dropped from 39.5 percent in the first quarter of 2000, to 14.1 percent in the third quarter of 2001.

That figure will be even worse in the fourth quarter of 2001, predicts Mark Kersey, ARS broadband industry analyst.

"This is certainly another black eye for the industry, especially right after the problems with NorthPoint and Rhythms (NetConnections, which went out of business earlier this year)," Kersey said. "The numbers were already not growing in the direction that we'd like. I would expect the trend of decreasing growth will be even more stark in the fourth quarter, but it should only be temporary."

Kersey added that the three major players in the @Home drama - AT&T Broadband, Cox and Comcast - should fare well in the long term, now that network migrations are under way or in the process of starting. He expects the numbers to pick in the long term as the cable industry irons out its wrinkles.