AT&T Wins San Francisco Cable Franchise; 'Open Access' Tabled
San Francisco, July 26 (Bloomberg) -- AT&T Corp., soon to be the largest U.S. cable-TV company, was granted the San Francisco cable franchise without a requirement to open the system to rival Internet services, though the city will revisit the issue later.
The city's Board of Supervisors voted 9 to 2 to grant AT&T the franchise, formerly held by Tele-Communications Inc., which AT&T acquired for $59.4 billion in March. The board reached a compromise imposing so-called ''open access'' only if a pending court case requires AT&T to let rivals such as America Online Inc. use its cable lines for high-speed Internet access.
Today's vote by the city's legislative branch paves the way for AT&T to upgrade San Francisco's cable system so the dominant long-distance telephone company can offer Internet access, local phone and other services. Consumer groups and companies like AOL have lobbied for open access, even as the Federal Communications Commission has urged cities not to regulate the Internet.
''San Francisco is for open access,'' said Supervisor Alicia Becerril. ''The issue is what would be the best vehicle for obtaining that.''
The pending court case began when AT&T filed suit against Portland, Oregon, and surrounding Multnomah County, which had denied a franchise transfers on Jan. 5 after AT&T refused to open its TCI cable system to outside Internet service providers. A federal judge ruled in June in favor of the county, and the company has appealed to the 9th U.S. Circuit Court of Appeals in San Francisco.
The arguments in the case tentatively are scheduled to be heard in October. The city said that it will file a brief in support of Portland and Multnomah County's position and that its compromise requires AT&T to provide the access should it open its systems in another city.
Lobbying Campaign
The board's vote came after weeks of intense lobbying and television and newspaper advertising by both sides.
The supervisors heard more than an hour of testimony for and against open access in a packed hearing room. That included statements from Milo Medin, chief technology officer for Excite At Home Corp., the company that provides high-speed Internet access over cable systems and whose largest shareholder is AT&T.
A resolution also was passed to give San Francisco the right to reconsider the issue by Dec. 15. At that time, the city will examine nationwide policy changes and legal developments on open access.
The Board of Supervisors had been considering competing motions. One would have given AT&T the franchise with few conditions, while another would have required open access.
AT&T wants to let rivals such as AOL offer their services over cable lines for an additional charge on top of their own fees, a proposal that the competitors say amounts to unfair competition.
Internet connections over cable systems are as much as 100 times faster than service over conventional phone lines. Local phone companies such as SBC Communications Inc.'s Pacific Bell have begun to offer high-speed Internet service over some regular phone lines using so-called digital subscriber line, or DSL, technology.
Florida Case
The local government in Broward County, Florida, on July 13 also voted to require cable companies to give Internet providers access to their systems. AT&T filed suit today in U.S. District Court in Miami to overturn that law as well.
Other cities that have considered placing open-access conditions on cable franchises include Los Angeles and Denver.
AOL said a month ago that it will invest $1.5 billion in cash in General Motors Corp.'s Hughes Electronics Corp. to expand the high-speed Internet services it now offers with Hughes, the parent of No. 1 satellite-TV provider DirecTV Inc.
The San Francisco ruling occurred after U.S. markets closed. Shares of AT&T rose 7/8 to 54 7/8. Excite At Home rose 1/8 to 46 3/16. America Online dropped 7 13/16 to 100 1/8.
Jul/26/1999 21:40
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