Consumer and public interest advocacy groups are expressing concern over AT&T’s agreement to begin opening its new cable broadband networks to
rival Internet service providers.
According to the Consumer Federation
of America, Consumers Union and
the Center for Media Education, AT&T’s
actions offers no assurances that it will treat all ISPs equitably.
Jeffrey Chester, Center for Media Education executive director, said it was
unfortunate that AT&T’s announcement has more to do with public relations
than with the public interest.
“It’s not surprising that three of the six parties to the agreement refused
to sign, which underscores the need for FCC action in this area,” Chester said.
Chester added that the principle at stake is how to open access to cable
networks in a way that facilitates the diversity and democracy of the
Internet to high-speed broadband access.
“The battle to ensure open access to cable broadband networks must
continue,” Chester said.
C. Michael Armstrong, AT&T (T)
chairman and chief executive officer, said the groups’ should understand the delay is just a matter of AT&T’s attempt to honor its exclusive contract with Excite@Home
through 2002.
“They’re frustrated that Excite@Home (ATHM)
and the cable industry created a new business and a new technology to
develop a new market and new lines of distribution and in doing so, crafted
an exclusive arrangement facilitate it,” Armstrong said. “When we acquired
TCI we acquired the exclusive contract with Excite,” he added.
Open access proponent Greg Simon, OpenNET Coalition co-director,
said a more reasonable transition period for open access to AT&T’s cable
networks is to convert the closed system in a matter of months, not more
than two years.
“The OpenNet Coalition welcomes the AT&T-MindSpring agreement because it
ends the debate as to whether open access is good for business and
consumers,” Simon said. “AT&T concedes that the technology to share cable
network access is available and that deployment should take place as
quickly as possible.”
Industry analysts speculate that because AT&T owns as much as 58 percent of
Excite@Home’s voting stock. AT&T could, in theory, renegotiate their
exclusive contract with Excite@Home to readily facilitate deployment of
cable services through many different Internet service providers.
Armstrong said it was true that AT&T does own a majority of the voting
stock of Excite@Home, but that renegotiating the contract was not an option.
“We do have voting control per say,” Armstrong said. “But if there was to
be a redefinition, someone would have to pay.”
Jim Cicconi, AT&T’s general counsel, added the deal with
Excite@Home is a valid contract with the people that built the cable
network and that their shareholders have earned a return on their investment.
The consumer groups and open access advocates agree that the FCC Chairman William E. Kennard was right to
take action and start the ball rolling with AT&T and national ISPs by
asking industry leaders what cable access would be like when the exclusive
contract with Excite@Home expire.
Representatives for each of the groups cite the fact that Kennard’s cue to
AT&T means that market forces have failed to open proprietary cable systems
and government intervention is required to level the playing field.
Amy Cohn, Cox Communications (COX)
director of corporate communication, said that AT&T’s move to open their
networks to competitors clearly indicated that market forces were at work
creating competition within the industry.
“We believe AT&T’s announcement is in line with what we’ve said all along,
give business a chance to work and the marketplace will work,” Cohn said.
“AT&T’s policy is good for business, and Cox intends to do what’s good for
business when their exclusive contract with Excite@Home expires in June 2002.”
Industry analysts allege that AT&T made the deal with MindSpring to keep
the FCC and other federal regulators at bay. Cicconi said that there is no
underground movement at work to regulate the cable industry.
“The fact is there has never been a serious possibility of anything like
that occurring,” Cicconi said. “The FCC has been adamant for a year that
regulation is counter productive to their policy goals. Similarly, there
has been no prospect of Congress passing legislation that would pass common
carrier regulations on to cable. A regulatory threat did not motivate us to
take action.”
Armstrong said AT&T’s decision to share
access with MindSpring is not the result of their fear of federal or local
regulators intervening to the regulate cable industry.
“We have set AT&T’s business policy as to how we plan to operate our cable
infrastructure,” Armstrong said. “The only way to make money is to have
more subscribers. We’re not doing this out of fear of regulation or
perception, but because it makes good business sense for AT&T to open access.”
At the same time, MindSpring made
it clear in a separate letter to FCC Commissioner Kennard that even with
their AT&T agreement in hand, the progressive ISP still wants the FCC to
establish a coherent national broadband policy in support of open access to
cable systems.
Dave Baker, MindSpring (MSPG) vice president of legal and regulatory affairs, said the company applauds AT&T’s commitment to create choice for high-speed Internet access consumers,
but that open access should be the law of the land.
“AT&T recognizes the inevitability to open access,” Baker said. “They have
taken a big step in the right direction and that is a good thing. Its no
longer a matter of can you do it and should you do it, but a matter of how
you do it.”
Cicconi said AT&T was not surprised that MindSpring sent a separate letter
to Kennard asking for a national broadband policy in lieu of
their intent to deal with AT&T.
“We always had an understanding that we were going to agree to disagree
about open access,” Cicconi said. “That’s the main point of MindSpring’s
belief that government regulation is the only way to break our exclusive
contract with Excite@Home.”
Cicconi said that other advocacy groups, including the OpenNet Coalition,
sought to define open access differently than AT&T.
“We choose to define open access in consumer terms and provide consumers
with a choice of ISPs, be it fixed wireless or cable” Cicconi said. “It’s
up to each company to work out terms with us that suit them should they
choose to go down this road,” he added.
Simon said AT&T’s announcement only accepts open access in principle, and
by no means should ISPs stand aside and wait for 2002 to demand access to
closed cable networks.
“AT&T’s recognition of the value of open access needs to be re-enforced by
quick and decisive federal action to make this commitment real,” Simon
said. “This agreement should be enforceable and it should apply to the
whole industry.”
Simon added that less than a year ago, AT&T said that the technology to
share cable access did not exist and this it was impossible to open their
networks to competitors.
Cicconi said
that at the time, AT&T did not believe that shared cable
access was feasible without a massive infrastructure rebuild.
“I don’t think anybody in the company ever said that technology is static
and does not evolve,” Cicconi said. “At the time, it was not feasible. Now,
we feel we have figured out a way to solve the technical tasks entailed in
doing this, although we still have some technological hurdles to overcome.”
Another hurdle to enforced open access is AT&T’s pending appeal with the
9th Circuit Court. Commonly known as the “Portland Decision,” last December
the municipality decided to mandate open access as a condition of AT&T’s
assuming TCI’s local cable franchise.
David Olson, Portland City Council chairman, asked if AT&T has taken such a
strong step toward open access, why are we still in court?
“The people of Portland are asking if AT&T has embraced open access, then
why are we still in court and why is their lawsuit forcing the citizens of
Portland to spend more than $200,000 of their hard-earned money to defend
themselves,” Olson pondered.
Olson added that AT&T’s agreement with MindSpring may be a first step, but
that the city would like to see open access fully implemented in Portland.
“In June, AT&T lost their case in district court when they challenged local
authority over a cable issue. In the appeals court they have recast open
access as a telecommunications case,” Olson said. “We again see this as a
tactic, a bit of a ‘Hail Mary’ approach. The best way to settle this is
between the FCC, local regulators and ISPs. We need to provide consumers
the same choice for cable access as they have for ISPs.”
When asked what AT&T would do if it was to lose its appeal in Portland,
Cicconi said, “we never anticipate losing and we don’t speculate, either.”
Banter and rhetoric aside, AT&T has set in motion the likelihood that their
once closed cable systems will be open to competing ISPs sometime in 2002.
What happens between now and then remains open to speculation.
