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Seattle lawmakers vs. AT&T-TCI merger

With a key vote looming, lawmakers are concerned about equal access to the cable operator's network for high-speed Internet service.

With a key vote looming, local government officials in King County, Washington, have recommended opposing the merger of AT&T and Tele-Communications Incorporated over access to the cable operator's network for high-speed Internet service.

Two leaders of the Metropolitan King County Council budget committee yesterday proposed denying the transfer of cable television franchise licenses to AT&T from TCI over anti-competitive concerns.

Approval of the transfer of licenses is up for a vote tomorrow by the county's seven-member budget committee. Denying transfer would effectively render AT&T's purchase worthless in the Seattle area.

Chairwoman Jane Hague, a Republican, and vice-chairman Greg Nickels, a Democrat, want to deny the transfer in the name of consumer protection. County commissioner Ron Sims, King County's executive officer, has previously expressed concern about the impact of the merger on broadband Net access.

The council members--like the city of Portland, Oregon, and many Internet service providers--are concerned that consumers cannot access other ISPs' content via cable without paying for TCI's @Home data-over-cable service. That effectively wipes out any choice in the cable-based broadband Net access industry, they say.

"Approval of the merger would place control of local cable and high-speed Internet access in the hands of one mega-company," Hague said in a statement. "Our proposal would protect the public from predatory pricing and open new technologies to competition."

It is uncertain where other King County officials will come down on the issue.

"We've been working on our colleagues, and they are sympathetic to consumer choice," Nickels said in an interview. "We expect it will be a battle but we're holding our ground."

Portland is currently involved in a lawsuit with AT&T and TCI over its earlier decision to require equal access to cable networks. The city has been granted an extension for its response to the suit.

Meanwhile, ISPs have stepped up their lobbying efforts in Washington, DC, after the Federal Communications Commission (FCC) failed to rule on the controversial issue in a recent report.

Similarly, the Seattle City Council is considering the same open access issues. At least two Seattle city council members spoke publicly about their desire to pursue open access last month.

Councilmembers are negotiating with AT&T and TCI over possible solutions to their anti-competitive concerns, according to city staff members. A resolution is expected later this week.

The situation is more complicated in Seattle in that the city believes TCI is in violation of its franchise agreement, since the company has not finished upgrading its system to "two-way" cable--able to send and receive--capable of handling digital television and Internet access.

Both King County and Seattle must vote on the proposed $48 billion merger by February 16 or the cable franchise license transfers will be deemed approved.

AT&T and TCI shareholders are slated to vote on the deal February 17.