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.
