AT&T Fights for Control in Struggle Over Internet Access

February 15, 1999

AT&T Fights for Control in Struggle Over Internet Access

By SAM HOWE VERHOVEK

EATTLE -- It is an unusual movement, one that mixes populist and free-market appeals with the high-technology abbreviations of the age, like ISP and DSL, and so far, anyway, it seems to have taken hold mostly in the well-wired cities of the Pacific Northwest. But in the legal debate over the future of Americans' high-speed connections to the Internet, some public figures clearly think they have found a potent political issue.

Larry Davis for The New York Times
AT&T's acquisition of Tele-Communications Inc. is making it a cable giant. In Seattle, a worker strung new cable for the TCI system.
"This is a pipe, a pipe for critically important information, and we're simply taking the position that no one should be allowed to monopolize it," said King County Executive Ron Sims, a likely Democratic contender next year for U.S. Senate. Sims is describing cable-television lines, which can provide Internet access up to 100 times faster than what most consumers now get through conventional phone lines.
On Wednesday, a committee of the County Council here voted unanimously to reject the transfer of the county cable franchise to AT&T. Members said they believed AT&T would have a monopoly on cable access to the Internet and should instead be forced to open the cable lines to other Internet service providers, much as the telecommunications giant was once required to lease its telephone lines to competing long-distance carriers.
The same condition has already been imposed by city and county officials in Portland, Ore., which recently became the first place in the nation to develop such "open access" requirements for cable lines. That move prompted a legal challenge from AT&T, and a similar fracas is expected here if the County Council votes on Tuesday to adopt its committee's recommendation. County and AT&T officials said this weekend that they hoped to reach a compromise that would leave the access issue open for future negotiation and avoid a lawsuit.
The fight over access to the cable lines is taking place amid a lobbying blitzkrieg, pitting AT&T and the huge cable company it is planning to acquire, Tele-Communications Inc., known as TCI, against local phone companies and an array of Internet competitors, including America Online and dozens of smaller Internet service providers.
But it is also raising a core philosophical issue, one that is already being debated in other communities around the country and that will become all the more consequential as Americans increasingly use their cable lines to connect to the Internet for work, education, shopping and entertainment. Should the cable lines, in which private companies have invested billions of dollars, be treated like public rights-of-way?
To AT&T, which ultimately plans to pay for cable upgrades in nearly half the nation's homes, the notion is outrageous. In addition to suing Portland, the company has pointedly said that it can hardly move "as aggressively" to improve cable service where it may be forced to lease its lines to competitors. AT&T also points out that under its plan, cable consumers will indeed be able to connect to any Internet provider they want, though they will have to go through the company's Internet affiliate, known as At Home, to get there. In AT&T's depiction, that is hardly different from the common procedure now, in which a consumer pays the phone company for a line and pays another company, such as America Online, for content and access to the Internet.
Still, in many ways, AT&T may face an uphill battle in the future to keep total control over its cable lines.
For one thing, it is hard to be on the other side of a debate in which public officials are using terms like "share" and "open access" and railing against monopolies. In endorsing the rejection of AT&T's license, Jane Hague, the chairwoman of the Metropolitan King County Council budget committee, said: "Approval of the merger would place control of local cable and high-speed Internet access in the hands of one mega-company. Our proposal would protect the public from predatory pricing."
For another, in acquiring or contracting with cable-television providers around the country, AT&T, which has a relatively good reputation for customer service, is now allied with some companies that consumers -- and politicians -- love to revile.
Here in Seattle, for instance, TCI is already embroiled in a major dispute with both the city and the county over delays in promised improvements in cable lines and is also the subject of numerous complaints over customer service.
At a public hearing before the Seattle City Council this month on how to punish the company for failing to meet its deadlines for the improvements, angry residents unloaded numerous complaints about TCI service. One man called the company "unconscionably bad, totally irresponsible, arrogant," a comment that drew sustained applause.
No one doubts that cable access to the Internet is a huge and promising field, in which customers may soon be able to pull up World Wide Web pages with the ease and immediacy they now enjoy as they retrieve television channels. Roughly half a million Americans now have high-speed Internet access at home through cable or phone lines; by 2002, according to Forrester Research Inc., that number is expected to grow to 16 million, about 80 percent through cable. "It's like a fire hose as opposed to an eye dropper," said Gary Gardner, executive director of the Washington Association of Internet Service Providers (ISPs), a Seattle-based group of Internet companies around the state that want access to the cable lines.
AT&T rejects the notion that it is developing any sort of monopoly on hookups to the Internet anyway.
"Cable-modem technology is an attractive way of providing high-speed access, but it is by no means the only way," said Scott Morris, an AT&T vice president in charge of negotiations with Seattle officials. "The sooner At Home is deployed, the more aggressively local phone companies will roll out DSL, and the more reasonably they will price it." DSL technology, named for digital subscriber lines, is used for high-speed access over standard telephone lines.

Clearly, the company has prevailed for now in hundreds of communities that have granted approval for it to take over their local cable franchises from TCI, but regulators in many of those places say they eventually want to impose "open access" rules on cable.
Here in Seattle, the City Council, also due to vote on license approval Tuesday, appears ready to say yes, with the general understanding that it may negotiate access rules later.
"It does absolutely no good for anybody in Seattle to have TCI and AT&T not invest money here, to have them stop because they're stuck in litigation," said Tina Podlodowski, a former Microsoft executive who is now chair of the City Council's public safety, health and technology committee, which oversees cable matters. Federal regulators have taken much the same position for now, saying they don't want to do anything that would deter companies like AT&T from upgrading cable lines.
AT&T also says that even providing for "open access" would be far more complicated and expensive than opening up its long-distance lines was, a contention that other Internet companies reject. "Feasibility, schmeasibility," said Chris Miller, an employee of Mindspring, a rival Internet service provider, at the recent City Council hearing.
Morris, of AT&T, said new regulations would hamper access for everybody and were unnecessary. "The whole point here is, the Internet is morphing even as we speak," he said in an interview. "Yesterday's Internet is not today's, and it certainly won't be tomorrow's."
But that has not stopped hundreds of people here, in an impassioned campaign partly whipped up by AT&T's Internet competitors, from flooding city and county officials with letters and e-mail messages, imploring them to require open access for cable lines. Sims, the county executive, shared many of those e-mails, including one in rhyme: "I need to pick my own Web provider," wrote one of his constituents, "not limited by a cable service monopolizer."

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King County Council, Washington
AT&T
Tele-Communications Inc.
America Online
At Home
Washington Association of Internet Service Providers

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	Larry Davis for The New York Times
	AT&T's acquisition of Tele-Communications Inc. is making it a cable giant. In Seattle, a worker strung new cable for the TCI system.