Uh oh.
Monday June 14 1:57 PM ET
GTE, AOL Say Tests Show Open Cable Systems Work
WASHINGTON (Reuters) - Aiming to force cable television operators to allow competition among Internet service providers over their
systems, GTE Corp. (NYSE:GTE - news) and America Online Inc. (NYSE:AOL - news) said tests on a local GTE cable system proved the
feasibility of opening such networks.
GTE, a leading U.S. telecommunications and cable TV company, said a test on its cable system in Clearwater, Fla., had shown such systems
can be operated on an ''open access'' basis.
Such open access would allow customers to select from an Internet service providers (ISP) of their choice -- rather than being forced to sign on with network's
exclusive provider.
AOL, the world's largest Internet service provider, and its rivals have waged a lobbying campaign with federal and state regulators to force cable operators to offer
competitive rates to companies that are seeking to provide high-speed Internet access, or ''broadband'' services.
The Clearwater test appears geared to embarrass U.S. cable operators including AT&T Corp. (NYSE:T - news) and Time Warner Inc. (NYSE:TWX - news),
which have been reluctant to open their networks to rival service providers on wholesale terms as phone operators have done.
Instead, the cable operators have cut exclusive contracts with high-speed Internet service companies AtHome Corp. and RoadRunner, in which the cable companies
hold substantial ownership interests.
GTE and AOL are working to deliver high-speed Internet access services over both standard phone lines and cable systems.
Over the past two months, the Clearwater project has tested cable delivery of Internet services from AOL, AOL's CompuServe, and GTE's own Internet service,
GTE.net, they said.
While primarily a local phone company with a large Internet services businesses, GTE also owns cable systems in Florida and California. Stamford, Conn.-based
GTE has agreed to be acquired by U.S. local phone giant Bell Atlantic Corp. (NYSE:BEL - news)
Working with several different equipment vendors and ''off-the-shelf'' systems, GTE said it made changes to the company's cable network backbone to allow
competing Internet service providers to have direct access to their customers.
The systems will work whether the cable system is analog or digital, and with all varieties of cable modems, it said.
''Our solution requires a single, one-time investment of $60,000 to give 80,000 customers a choice of ISPs,'' Rick Wilson, president of GTE's Media Ventures unit.
That translates into an investment of less than $1 per potential customer that cable operators would have to make to upgrade their systems in order to allow
competition, he said.
America Online stock fell $6.25 to $93.25 in composite U.S. stock market trading, amid an ongoing sell-off in Internet stocks that has cut the value of AOL stock in
half in recent months.
Prominent among investors concerns has been AOL's failure to strike broadband Internet deals with major U.S. cable operators, potentially threatening its vast
consumer Internet franchise in the energizing high-speed Internet age.
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