In two weeks, a highly anticipated federal appeals court case in Portland, Oregon, is scheduled to begin, nearly a year after the city incited a national policy debate by requiring AT&T, the new local cable provider, to open its high-speed networks to competing Internet service providers (ISPs).
Called "open access," the contentious issue pits the cable industry against ISPs and consumer groups. ISPs without high-speed access are fearful that they will lose customers to faster offerings by cable providers.
Although the players--America Online and other ISPs on one side, AT&T and cable operators on the other--are fighting over regulations, financial survival in the evolving Internet world is really at stake. High-speed Net users are more apt to make the Internet a part of their everyday lives, because the technology is so accessible, or "always-on." The firm that has direct access to these high-speed surfers will have a distinct business advantage, analysts say.
Following a series of city hearings and consumer protests, the summer was quiet for open access combatants. But now, even as the weather begins to cool, the fight over access to cable networks is heating up.
A number of elements are in the works. While the Portland trials gears up for opening arguments, AT&T is waiting for federal word on its purchase of MediaOne Group. Additionally, the Federal Communications Commission released a report yesterday that angered many open access proponents.
"You just have the sense that something is going to bust in the next few months," said Portland city commissioner Erik Sten. "I don't know if it's going to be a court ruling or a marketplace decision, but it feels like it's churning."
The fight for high-speed networks
Under proposed open access laws, ISPs would be allowed to pay cable companies for equal access to their high-speed networks to market their own Net access services.
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|Internet service providers say that allowing ISPs access to cable networks would end what they call the cable monopoly over broadband Internet access. The companies also realize that as broadband services become mainstream, dial-up ISPs are going to need cable access to continue to grow their subscriber bases.||Cable operators and their affiliated ISPs are against opening their high-speed networks to competing ISPs. They claim that their services do not prevent users from accessing content from another ISP. Cable operators have invested billions of dollars into network upgrades--and allowing competing ISPs to piggyback on their investment, they say, would be unfair.|
In a new staff report, the FCC reiterated its stance that high-speed, or broadband, Net access is a nascent business that does not yet warrant new laws which could hamper its growth.
In addition, Kennard, who has been critical of the push for open access laws, suggested the report would serve as a "valuable resource for those seeking to understand" the issue--among them local agencies weighing the proposed AT&T-MediaOne merger.
Because cable franchises are regulated locally, AT&T is again facing the scrutiny of local regulators as it proceeds with its purchase of MediaOne, similar to the hundreds of local government reviews it faced once it closed its acquisition of Tele-Communications Incorporated (TCI) last year.
Portland passed its open access requirement during a review for the cable license transfer from TCI to AT&T. Broward County, Florida, followed with a similar mandate, although the county did not link its decision to the TCI purchase. The debate reached a fever pitch in July when San Francisco officials considered the issue, yet opted not to impose open access requirements.
Fairfax, Virginia, also imposed open access requirements in a recent decision. The city of Somerville, Massachusetts, is considering the issue as well.
Now, open access hearings are being considered in St. Louis, Richmond, Virginia, and Dearborn, Michigan, according to the OpenNet Coalition, an AOL-led group of ISPs supporting open access laws.
Similarly, the Pennsylvania state legislature will consider an open access bill next week, while Dade County, Florida, and King County, Washington, are expected to issue a ruling and a report, respectively, later this month.
"The ongoing activity at the local level is an expression of interest by those people in government who are closest to Main Street," said Greg Simon, executive director of OpenNet.
But Blair Levin, a former FCC chief of staff and consultant to Excite@Home, said the FCC's latest report should be a clear indication to local governments that the marketplace is working well without new regulations.
"Any local government thinking about [cable access] owes it to their constituents to read it," Levin said, noting that local governments that have carefully studied the issue, such as Los Angeles, have decided against imposing open access laws.
Going to court
Still, the Portland court case stands to draw the most attention this fall.
After months of filing pre-trial briefs, on November 1 both sides will present opening arguments in Portland. The case stems from an earlier federal district court ruling that upheld the right of city officials to mandate open access.
"Depending on which way the court rules, it's either going to give AT&T a huge boost or it's really going to stick a drag on them," said Terry Barnich, a former Illinois state telecommunications and public utilities regulator and president of telecommunications research firm New Paradigm Resources Group. "I suspect either way it will be appealed to the Supreme Court."
AT&T has repeatedly said that local jurisdictions do not have the authority to impose open access laws.
"We're going to go in and make our strong case. The Cable Act simply does not give local governments the authority to make the kind of requirements that Portland did," said AT&T spokesman Jim McGann.
But the ISP groups, including OpenNet, also are confident their position is the right one.
"Sooner or later the FCC and AT&T are going to realize that people want open access," Simon said. "People find open access is a self-evident idea."
The debate for cable open access has become a full-fledged media campaign, with high-priced lawyers and public relations agencies busily trying to curry favor. Portland officials say the issue was hardly as tense last year when they first considered open access and imposed the requirement on AT&T.
"I had no idea of the import of it," Portland's Sten said. "I knew it was important, but not like this."