Prodigy Stumps for Access to Cable

An executive at Prodigy Communications is among those calling for AT&T to give ISPs access to its cable network at competitive prices.

Marc Jacobson, senior vice president of corporate development at Prodigy Communications believes the way to bring a truce in the escalating war of words
over open cable access is to let Prodigy and other ISPs connect to AT&T’s
cable plant for the same price it gives to [email protected].

“We’re willing to pay fair share. Whatever @Home pays, we’ll pay,” said
Jacobson.

Not so fast, said Milo Medin, [email protected]’s chief technology officer. If
ISPs want what he has — partnerships with 21 cable operators worldwide — it will take more than sharing a little subscriber revenue. According to
Medin, @Home’s advantage is based on the fact that four years ago, when
nobody took cable access seriously, @Home had the foresight to trade equity
in its company to cable operators in exchange for the rights to their
infrastructure.

“Everybody wants the same terms and conditions that we have. But the
revenue is only a small portion of that. Cable operators own something like 75 percent of our equity. If Prodigy wants to offer them that, they may be able to make a deal.”

But according to Jacobson, Prodigy can’t even get a foot in the door at
cable companies. Six weeks ago, Jacobson sent certified letters to 50 of the biggest operators in the nation, proposing an access partnership, and to date none have even bothered to reply.

“We think monopoly power is being exercised here across the board without
any hesitation or sense of how important it is to consumers to be able to
use the ISP of their choice.”

But @Home, which currently serves more than 500,000 subscribers, doesn’t hear
consumers clamoring for more cable ISPs to choose from.

According to Medin, “There’s no huge ground swell out there. What people want is any cable
modem service, because they don’t have squat today.”

Medin said if Prodigy and other ISPs don’t like the current situation,
instead of running to regulators for help, they should get behind DSL or
wireless or satellite access. Or, if they’re so keen on cable, said Medin,
they should string their own wires, or “overbuild” as its called in the
cable industry.

“Mr. Jacobson could write a check and go build. But the problem here is
that he wants in essence to piggy-back on the investment that other people have made.”

While Federal Communications Commission Chairman William Kennard is
promulgating the merits of a nation policy of unregulating broadband,
Prodigy and other members of the OpenNET coalition are lobbying for a
vastly different national policy. According to Jacobson, they support a
proposal being drafted by Massachusetts Congressman Ed Markey that would
mandate that cable operators provide non-discriminatory access to other
ISPs over their lines.

“We think that is extraordinarily consumer friendly and is a national
policy that should be adopted.”

Medin said he’s confident regulators will recognize that competition in
broadband is healthy, and that government intervention will hinder rather than help accelerate the deployment of high-speed Internet access.

“This is all about whether the government should dictate a particular
business model and cost structure to infrastructure providers, or whether the marketplace will naturally work this kind of thing out.”

Both Medin and Jacobson agreed that it may be months before the legal
issues are sorted out. Key will be a ruling by the Ninth Circuit Court in
AT&T’s appeal of the forced-access ruling by the City of Portland, Ore.,
expected in October at the soonest.

But what if ISPs get their way, and begin sending hoards of new subscribers
onto the already fragilecable infrastructure? Jacobson says there’s no
reason to fear such an outcome will degrade the broadband experience for all.

“Would we welcome the problem AOL had a year ago when it was America On
Hold? That’s the exactly the problem we’re looking for. If consumers want multiple ISP access over the cable line, I’m sure the guys who write the
code like Mr. Medin can find a way to solve the problem in a reasonable and
economical fashion.”

For the complete RealAudio debate between Medin and Jacobson, click here.

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