U.S. Court Sides with AT&T

Champaign bottles might be popping throughout AT&T Corp. headquarters as the much awaited
ruling on a highly-anticipated open access cable case was handed down late Thursday.

The 9th U.S. Circuit Court of Appeals reversed the decision of a lower
court, stating that the city of Portland, Ore., had overstepped its authority and
could not require AT&T to open its high-speed cable network
to competing Internet services.

The three-judge panel unanimously decided that the 1996 Telecommunications
ACT prohibits a local franchising authority from regulating cable Internet
access since the regulation of telecommunications services is under the
jurisdiction of the federal government, not local municipalities.

Jim Cicconi, AT&T general counsel, said the firm was pleased with the
ruling because it clarifies the limits of local authority when it comes to
the provision of high-speed Internet access over cable.

“Now that the court has made clear Congress’ intent to bar ordinances like
the one enacted by Portland, AT&T and other cable companies will be able to
get on with investments that will bring advanced services to millions of
Americans,” Cicconi said. “In particular, AT&T looks forward to bringing
our high-speed service to the people of Portland as soon as possible.”

Cable Broadband service provider [email protected] and AT&T
partner, also applauded the 9th Circuit Court of Appeals ruling.

The firm released a statement on the decision that noted similar decisions
in state courts and legislatures have rejected calls for regulation of
cable access, ” hopefully this will end the forced access debate.”

While AT&T was quick to champion the ruling, but “open access” proponents
say that the top U.S. cable and telecom company’s celebration may be
short-lived, due to the language the 9th Circuit Court used in stating its

“We hold that subsection 541(b)(3) prohibits
a franchising authority from regulating broadband Internet access because
the transmission of Internet service to subscribers over cable broadband
facilities is a telecommunications service under the Communications Act,” the court ruled.

Because the court labeled cable broadband access akin to digital subscriber
line service, “open access” proponents are calling on the Federal Communications Commission to enforce
the same laws that apply to digital subscriber line sharing, to broadband cable networks.

Portland City Commissioner Erik Sten said the municipality would carefully
review the ruling before it would file for an appeal the court’s decision.

“We may have lost the battle but, may have won the war,” Sten said. “The
City must fully consider the implications of the court’s ruling before we
appeal the decision.”

Initially, the decision marks a defeat for Internet service providers like
GTE Corp. , and others,
which argued that AT&T must give rivals access to its high-speed
connections just as local telephone companies must open their telephone
networks to competitors.

Greg Simon, OpenNet Coalition
co-founder said in order for AT&T to benefit from the decision, it must
prove to the FCC that there is competition in the cable access market.

“The court ruled that cable broadband similar to DSL access,” Simon said.
“If they FCC has to forbear for one broadband service, then they have to
forbear for both, and enforce open access as the law of the land for
high-speed communication in the U.S.”

Rich Bond, OpenNet Coalition co-founder, added the FCC has the
authority, but not the disposition to create a consistent open access
system for all high-speed services in the nation.

“The FCC made sur

e people can choose their ISP and their telecom service
provider, bur cable is under different rules,” Bond said. “Clearly the FCC
now has the authority and as a matter of policy must treat Internet access
over cable in the same manner.”

The group is calling on the FCC to take action and enforce the same
statutory laws of the telecom industry on cable firms, making
interconnection rules that apply to DSL, apply to cable modem service.

AT&T avoided taking a stance as to whether its Portland cable franchise was
a cable or telecom service. According to the OpenNet Coalition, until the
FCC takes a stance that differs from the 9th Circuit Court ruling, it is
essentially the law of the land that cable services be treated as telecom
service and have all applicable regulations apply across the communications

The FCC has not responded to the 9th Circuit Court ruling at this time. But
the agency has taken bold steps to ensure that consumers have a competition choice for telecom services. It remains to be seen whether the same will apply to high-speed cable services.

In related news, AT&T agreed to put a hold on to its plans pull the
operational strings of cable access partner [email protected]

AT&T will wait until the end of a trial set for September to determine if
it can continue with its scheme to gain greater control of [email protected]

The deal set in March between AT&T, [email protected], Cox Communications, Inc., Comcast Corp. , and Cablevision
Systems Corp.
has been scrubbed until the court determines the fate of
cease and desist order that alleges breach of contract.

In a statement released Wednesday, Cablevision executives
said the deal “would significantly change the corporate governance of
[email protected] and constitutes a clear breach of Cablevision’s stockholders’

An AT&T spokesperson said that the company does not believe it needs
Cablevision’s consent to take control of [email protected] Meanwhile,
[email protected] issued a statement declaring that the there is no legal merit
to the suit and that the firm would defend the Master Distribution
Agreement Extension as agreed upon with its cable partners earlier this year.

The Cablevision lawsuit comes as AT&T is attempting to use the
Cablevision’s last-mile delivery systems in New York.

Scott Cleland, Legg Mason Precursor
managing director, said Cablevision’s lawsuit is odd.

“It’s a strange lawsuit because AT&T and Cablevision have cooperated in the
past, with AT&T owning one-third of Cablevision, it’s odd to see them file
suite,” Cleland said. It’s hard to say weather communication broke down due
to the March agreement with other cable firms, or a competitive factor over
New York cable services.”

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