Open Cable Access Solutions Sent To FCC

An ex parte filing on behalf of independent Internet service providers was
sent to the Federal Communications Commission Tuesday, calling for the halt
to what many consider Time Warner’s anti-competitive broadband Internet
access practices.

In a report to the FCC titled, “An Open Access Business Model For Cable
Systems,” author Stephen Heins, director of marketing for Oshkosh, WI-based
ISP NorthNet, called for Time Warner to rescind the requirements it is
placing on ISPs to provide independent cable Internet access.

The white paper was drafted after William Kennard, FCC chairman, asked for
a business model ISPs and cable network owners could abide by to ensure
open access standards for cable Internet services.

The conference call, held Oct. 19, was also attended by Gene Crick, Texas
ISP Association executive director, David Robertson, vice president of
south Texas-based ISP STIC.net and Douglas Hanson, Rocky Mountain Internet
president and chief executive officer. Heins expects the other three ISP
representatives will give its blessing to the ex parte filing, as fair and
open access for all is the end result of the report.

“The cable companies should certainly be allowed to manage their networks
to ensure service quality,” Heins said. “But they should not be allowed to
dictate and control the business of unaffiliated ISPs, and they certainly
should not be allowed to charge outlandish prices for using they network.”

The report calls for Time Warner to adopt the standards as part of an open
access policy based in part on recommendations made by AOL to the city of
San Francisco last year.
The major points in the report call for Time Warner to:

  • ISPs should be free to provide any service that is compatible with the
    chosen form of interconnection without prior approval from the network owner

  • The network owners should make technically feasible and reasonable
    modification to accommodate new functionalities and be compensated for the
    costs incurred

  • ISPs should be required to provide only the minimum technical
    information necessary to implement new functionalities and services in a
    manner that does not disrupt network management

  • Information for network management purposes should not be used by
    network owners to develop competing services

  • Data passing to or from a customer to a competitive Internet Service
    Provider shall be considered private and proprietary and may be logged or
    analyzed by the cable network provider for network management only

The term sheet, a copy of which was given to internetnews.com staff last
month, gave Time Warner sweeping powers over the financial, marketing and
network operations of individual ISPs on its cable network.

In addition to a $50,000 upfront fee, ISPs would have to pass on to Time
Warner 75 percent of its subscription revenues and 25 percent of its
cable-access, Web hosting and e-commerce advertising.

Moreover, the cable network owner would have direct control over the
customer, setting the termination policy, handling the billing and
enforcing standards.

“Cable companies have proven they will not provide truly nondiscriminatory
access voluntarily,” Hein said in his report. “If the remarkably
competitive and innovative environment of the narrow-band Internet is to be
preserved on the broadband Internet, the Commission must make open access a
binding obligation. The combination of offline content, the dominant
narrow-band Internet service provider and the nation’s second largest cable
operator in the AOL Time Warner merger makes the need for an open access
obligation especially critical as a condition of the merger.”

Hein points to a history of words and deeds Time Warner and AOL officials
have made in the past year that belie the company’s official statements of
competitive willingness to the FCC.

“There’s a

historical pattern to what they’ve said in the public and what
they’ve said to the FCC that they should be aware of,” Hein said. “A week
ago, I hear (AOL chairman and chief executive officer) Steve Case said he
couldn’t see a reason to put conditions on the merger between AOL and Time
Warner. I’m putting together a history of their words and deeds and making
an ex parte filing to the FCC tomorrow.”

But it’s unclear how much effect the report will have on the FCC, which
said last month it will wait for a ruling by the Federal Trade Commission
before making its own decision. The decision came after the FTC asked the
>FCC to put a halt to the merger process after seeing a copy of the terms
>being imposed by Time Warner.

Quyen Truong, associate bureau chief for the FCCs cable system bureau, said
the commission’s stand isn’t required by law, but one the government agency
decided to take in everyone’s best interests.

“We have decided that it’s in the best interest of both processes to wait
for a ruling by the FTC,” Truong said. “We have been coordinating
information with the FTC since the beginning and will pass on any
information we receive when it comes to us.”

The FCC stance is based on the premise that cable networks do not fall
under the purview of telecommunications regulation, which the commission
oversees. This despite AOL’s own assertion that open access for cable is
simply a connection between two networks, which network owners and ISPs
could easily implement.

Dave McClure, U.S. Internet Industry Association president, said the FCC is
stalling until a new administration in November is elected to deal with the
problem.

“The FCC has really put themselves into a corner from a policy standpoint,”
McClure said. “If they come down too hard on AOL and Time Warner and don’t
approve the merger, people are going to wonder why they rubber-stamped the
merger of AT&T and MediaOne. But they’re also in a bad position if they
approve the merger because there are so many issues that haven’t been
addressed as far as open access is concerned.

“It’s a lose-lose situation for the FCC,” McClure stated. “In either case,
we’re not getting the crisp, authoritative FCC we should have.

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