AT&T Broadband’s $20 Million Smokescreen

As AT&T Broadband conducts the first of its cable feasibility tests in
Boulder, Colo., Wednesday, open access advocates are calling for the
government to quickly enforce a national framework for competing Internet
service providers.

Calling the $20 million trials in Colorado a smokescreen, critics take
umbrage to the stranglehold cable network owners have on broadband Internet
access and the delaying tactics employed to provide open access for
competitive services.

Dr. Mark Cooper, Consumer Federation of America director of research, said
it’s proof AT&T is using these trials as a delaying tactic to grab
customers while it can.

“All these tests do is establish how long they can hold off before they are
forced to open up the network to competition,” Cooper said. “The
feasibility of open access has been proven for a couple of years now, up in
Canada. The $20 million they’re spending on these ‘tests’ is a good
investment when you look at the all customers they have exclusive access
to. By the time the networks are opened up, they will have most of the
first generation of broadband Internet users in their pocket.”

AT&T Broadband has a vested interest in cable ISP Road Runner, a joint
venture between AT&T, Time Warner Inc., Microsoft Corp. and Compaq
Computer Corp. AT&T also has a 74 percent voting interest in cable Internet
provider [email protected]

In May, the Department of Justice gave AT&T until Dec. 31, 2001, to divest
it’s ownership in the popular Road Runner service. AT&T Broadband is
taking a very active role in AT&T Road Runner until that date, and between
it and AT&[email protected], has a hold on more than 3 million broadband customers.

The Boulder trials, which gives 500 customers a choice between eight
different ISPs, is being showcased as AT&T’s commitment to open
access. Participating in the trials are EarthLink, Juno, WorldNet,, [email protected], Winfire, Flashcom and Friendly Works.

Sarah Duisik, AT&T Broadband spokesperson, said AT&T Broadband Choice is
being conducted to determine the technical and operational difficulties
involved with including seven other ISPs on its network.

“Included are providers that represent the diverse businesses that will
operate on our broadband network,” Duisik said. “They come in different
sizes, from the regional to nationwide providers and those that use
different content. We’ve got a whole potpourri included, to determine if
we can provide choice. We will be installing the first customers today and
the true measure of the trial’s success is how favorable our customer
experience is.”

She said the trials would last another six months and that at the end of
2001 another trial will be held in Massachusetts.

Duisik stated AT&T Broadband intends to honor its exclusivity contract with
[email protected] for the length of the contract, which coincidentally ends at
the same time as the second trials, in 2002.

The openNET Coalition, comprised of nearly 1,000 ISPs and Internet-related
companies, points to a Oct. 19 report by the General Accounting Office,
which states that of the 12 percent of U.S. broadband Internet users, nine
percent are using cable as their platform.

Rich Bond, openNET Coalition co-director, said the lack of choice will only
get worse for consumers unless the government takes action now.

“GAO reported that on average, less frequent users of the Internet spend 43
percent of their Internet time on their ISP’s home page,” Bond
said. “Given this data, the negative ramifications of closed access to
cable broadband networks are dramatic and far-reaching. In short, this
report demonstrates that the very nature of the Internet and the structure
that supports innovation and entrepreneurship lies at the heart of the open
access debate.

“We renew openNET’s call for the (Federal Communications Commission) to
quickly est

ablish a national and enforceable open access framework that
provides competitive ISP choices for cable broadband consumers,” Bond said.

The FCC has decided to wait for ruling by the Federal Trade Commission,
claiming the open access issue is a consumer issue, not a
telecommunications issue.

The U.S. Senate Antitrust Subcommittee, led by Senator Herb Kohl (D-WI) and
Senator Mike DeWine (R-OH), commissioned the report to see whether the
government should be involved.

According to an aide to Senator Kohl who wished to remain anonymous, the
government is going to wait before making a decision.

“While in principle cable networks should be open, the question is whether
to legislate or to let the market decide what is best,” the aide said. “We
feel that the government shouldn’t dictate by fiat,” the aide finished, but
put faith in the market finding a solution.”

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