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Consumer Groups Ask FCC to Fine AT&T $2.7 Million

A triad of consumer groups filed a petition with the Federal Communications Commission Thursday asking that the telecommunications watchdog fine AT&T Corp. $2.7 million for violations of FCC ownership reporting rules.

Specifically, the groups contend that AT&T (T) failed to meet FCC requirements that the company certify the impact of cable television system acquisitions on the size of its national cable TV ownership share.

The complaint was submitted to the FCC by the Consumers Union, Consumer Federation of America and Media Access Project.

In August, the groups asked the FCC to dismiss AT&T's application to purchase cable TV operator MediaOne Group, Inc. because AT&T failed to include the necessary certification with its application.

AT&T later responded in writing to the FCC that it construed the rule as merely requiring certification prior to closing on each such transaction.

The consumer groups reviewed AT&T's certification filings and discovered that the telecommunications giant has repeatedly failed to file timely certifications, and that five of the nine certification letters it submitted were not filed until after the transactions had been consummated.

The groups have been very active addressing broadband access issues on behalf of consumers throughout the U.S.

Andrew Jay Schwartzman, Media Access Project founder, worked with other consumer groups to prepare their amicus curaie brief supporting of the City of Portland's right to determine who has access to the municipalities cable networks.

Schwartzman said that the AT&T acquisition of MediaOne violates the FCC's media ownership rules.

In related news, the FCC issued an order Friday that relaxes cable television ownership limits. The new rules are still seen as likely to force AT&T to pare down its acquisition plans for MediaOne Group.

AT&T did appear to gain some useful concessions, including an FCC decision that a cable company shouldn't have to count under the ownership limits any partnerships where it is not involved in decisions about programming.

However, AT&T will still be required to shed millions of subscribers or restructure some of its arrangements with other major operators such as Time Warner, Inc. or Cablevision Systems Corp.

It is possible that AT&T could avoid divestiture when a U.S Appeals Court reviews the constitutionality of FCC ownership limits. Oral argument in the case is scheduled for December 3rd.

Under the current rules, temporarily suspended for the appeals court review, no company may have access to more than 30 percent of the 95 million U.S. homes capable of being hooked up to cable, often referred to as cable homes passed.

As part of the 1992 Cable Act, the rules are designed to prevent any one operator from dominating the market for cable TV programming like sports, news and entertainment channels.

AT&T, which acquired Tele-Communications Inc. earlier this year, is already slightly over the limit and the MediaOne deal would push it above the 50 percent level. If the MediaOne deal is affirmed, AT&T would have more than 32 million cable subscribers would, well above the 30 percent cap would.

AT&T has argued that it is buying cable systems to offer telephone and high-speed Internet service in competition with the regional Bell companies. AT&T has offered no other comments concerning the Friday's FCC ruling at this time.

"We'revery unhappy with the ruling because its a road map for AT&T to complete the MediaOne merger," Schwartzman said. "This decision needlessly busts the Congressional mandate that the FCC to regulate cable ownership."

William E. Kennard, FCC chairman, utilized a baseball analogy as a metaphor to today's ruling. He said if the N.Y. Mets and the Yankees decided to consolidate into one baseball team, everyone in the league would object to the potential powerhouse. But if they consolidated to form a basketball team, few competitors would consider the consolidated team as much of a competitive threat.

"If the big cable companies today wanted to consolidate just their core business, video programming, everyone would find that very troublesome," Kennard said. "But if cable but if cable companies want to enter into arrangements to pursue new competitive interests like local phone service and high-speed Internet access, that's another story altogether. It could be a boon to competition by allowing new services to be rolled out to consumers."



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