The stakes are high--AT&T has committed more than $120 billion to buying cable companies. At the heart of the matter, however, is the question of who ultimately has the authority to regulate the nascent high-speed Internet.
The search for the answer to that question took a prominent role at a meeting of state utility regulators this week. Many regulators, who have watched from a distance as the companies have taken their fight to the courts and to Congress, now believe that the controversial topic will be theirs to face before long.
"This issue will come to us," said Allan Thoms, chairman of Iowa's public utility board. "We will have to do it in Iowa sooner rather than later, I think."
The cable "open access" debate has been driven by America Online and other ISPs that want direct access to cable TV networks, just as they reach subscribers over telephone wires. Today, most cable companies require their Internet customers to subscribe to a cable-affiliated ISP service, such as Excite@Home or Road Runner before they can access a competing ISP.
The ISPs have fought for open access on the federal level to no avail, but locally, officials in both Portland, Oregon, and Broward County, Florida, have ruled that local cable companies need to share their high-speed wires with ISPs, prompting lawsuits by cable companies in each case.
At the state regulators' meeting this week, the open access issue was primed by MCI WorldCom chief policy counsel Jonathan Sallet, who used a discussion on broadband technology to argue that state utilities boards should join the debate.
"There's been a lot of attention on the municipal authority, but very little on what role state commissioners have," Sallet told regulators. "The question is a very serious one, and requires your study."
MCI WorldCom is considering petitioning state regulators to rule on the issue, Sallet added later. "We're going to think about it, and talk about where and how to raise the issue," he said.
The debate is complicated by the lack of regulatory guidelines for high-speed Internet services. In some cases--including the federal court case in Portland--cable Internet access is considered a "cable" service, which falls under the jurisdiction of federal and local policymakers.
But MCI WorldCom and other companies have argued that because Internet access is a two-way service (information is downloaded as well as uploaded), these products should be regulated as "telecommunications" services, under the authority of state regulators.
Opening the cable Internet to an entirely new regulation could complicate AT&T's efforts to roll out voice, video, and data packages over cable lines. But it could also allow many new competitors to use the giant's cable lines for their own high-speed Net services.
An AT&T attorney later warned commissioners that they risked undermining their own state economies if they addressed open access at the state level.
"As state regulators, you're not just worried about consumers. You're worried about economic development," said Ken Joseph, an AT&T vice president for regulatory affairs. Imposing requirements to carry other ISP service over cable lines would be "one of the quickest ways to stop investment in local markets," he said.
"It's obviously an issue at the forefront," said Bill Gillis, a Washington state commissioner. Under current state law, the commission has no authority over cable, but he said it "certainly could come up" at the commission or in the state legislature.
Others agreed that their state legislators would bring them into debate, or that the companies would approach the commission in an attempt to influence state lawmakers. "We have influence with the local legislators," noted Laska Schoenfelder, a commissioner from South Dakota.
But many commissioners said they were loath to weigh in on the issue yet.
"We are interested, but it's very controversial," said Anne Boyle, a commissioner on Nevada's state utility board. "This is such a technical issue. It's difficult to do anything as quickly as some people would like. Once something is done, it's difficult to undo."