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

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

“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

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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