re: Open Access for ISPs on Cable TV Systems, as presented in the April 1, 2000 issue of America's Network Magazine. Copied below for pposterity, although it's a better read (more complete with all of the sidebars) when you go to the url below.
Note in the opening line below: ISPs and Telcos want...
Enjoy, FAC
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americasnetwork.com
April 1, 2000
Open-access lockout
ISPs and telcos want open access to cable networks, but it might be a year or two before they get to market.
By Paul DeVeaux
he debate over open access is more heated than ever. The issue - whether
cable companies should be required to open their 'pipes' to other Internet
service providers (ISPs) - is currently pending before more than a dozen state
legislatures, as well as in Congress.
If recent proposed mergers go through, it's expected that two cable companies,
AT&T-TCI-MediaOne and America Online (AOL)-Time Warner, will own the
biggest chunk of the nation's cable subscribers. These merger proposals have
created uncertainty about who gets to interconnect and when that will happen,
even though both companies have made comments in support of open access.
Residential uptake of cable and digital subscriber line (DSL) services is
expected to grow tremendously in the coming years (see Figure 1). But there's
more at stake here besides just Internet access. It is estimated that cable
systems, which serve as many as 60% to 70% of all households, will be able to
deliver telephone service in competition with traditional local telephone
companies. The advent of telephone service via broadband cable is not far
away.
AT&T opens things up
Local efforts to open cable access to competing ISPs have sprouted across the
country (see sidebar, "Open access at the local level"). AT&T initially opposed
opening access, yet by early December, the company outlined plans to allow
consumers a choice of ISPs using AT&T's cable and fixed wireless systems.
AT&T put forth its open access intentions in a letter to FCC Chairman William
Kennard, stating in part that "[in] a marketplace that is highly competitive and
spurring investments, the terms by which cable companies provide their facilities
to other businesses should be resolved in private business negotiations, not
through government regulation."
In the letter, AT&T also agreed to
work toward, and implement,
high-speed Internet access over cable
that will provide consumers with:
o The ability to choose their ISP; o A
choice of Internet connections at
different speeds, and at prices
reasonable and appropriate to those
speeds; and o Direct access to all
content available on the World Wide
Web without any AT&T-imposed
charge to the consumer.
The final document was signed by
AT&T General Counsel Jim Cicconi,
Dave Baker, vice president of legal
and regulatory affairs at MindSpring,
and Ken Fellman, Chairman of the
FCC State and Local Advisory
Committee. MindSpring is set to
become one of the first new AT&T
Internet transport service partners
when AT&T's exclusive contract with
Excite@Home expires in mid-2002.
Same as it ever was
AT&T's position has been the same
whether arguing before the FCC or
state regulators: Mandatory access
will undermine its financial incentive
for undertaking the expansive cable
network upgrades required to support
high-speed data access and
cable-telephony service. It has been
estimated that upgrading AT&T's
cable network will cost as much as the
$120 billion AT&T paid for TCI and
MediaOne's properties.
"We went to the cable companies,
marketed the idea, raised the money,
built the system, and everybody who
sat on the sidelines is now coming in
belatedly and saying thank you very
much, we want to be able to take
advantage of the investment and the
forward thinking that @Home used
here, and we want it at cost," says an
AT&T spokesman.
Free the market and the rest
will follow
The AT&T-MindSpring agreement
has received high praise from those
who oppose government regulation in
the broadband arena.
"The AT&T announcement clearly
shows that the market is working,
which is a good thing. That
announcement, along with the
AOL-Time Warner merger, were
proof positive that government doesn't
need to get in the business of
regulating Internet access," says Peter
Arnold, executive director of the
advocacy group, Hands Off the
Internet. (See the sidebar, "Get your
advocates here!" on page 30 for a
description of the various lobbying
groups.)
Arnold argues the marketplace offers the answer to the open access debate.
"The Internet has a wonderful way of cutting off monopolies very quickly," he
says. "I think if you just let these systems continue, you will see that happen in
this case too, whether the eventual winner is DSL, cable, wireless, satellite or
whatnot."
Chairman Kennard calls the AT&T-MindSpring agreement "a good first step
toward providing consumers with a choice of Internet service providers without
paying twice," and praises AT&T, MindSpring and other participants.
Too much, too little, too late?
Greg Simon, codirector of the openNET Coalition, a Washington lobbying
organization for AOL, Mindspring, MCI WorldCom, Verio and hundreds of
other ISPs, also gave support for the agreement.
"The openNET Coalition welcomes the AT&T-MindSpring agreement because
it ends the debate as to whether open access is good for business and
consumers," Simon says. "AT&T concedes that the technology to share cable
network access is available and that deployment should take place as quickly as
possible."
We're not going to let AOL or Time
Warner forget what AOL has been
saying. ú Andrew Schwartzman,
Media Access Project
However, the group does not seem completely satisfied with AT&T's
announcement, and posed several questions in response, including:
o Will AT&T treat all ISPs equally? o Why should consumers have to wait two
years for the benefit of open access when AT&T has a reported 58%
controlling voting interest in Excite@Home with whom it has these "contractual
obligations"? o What makes this announcement enforceable?AT&T's decision
to wait until 2002 to open its network to other suppliers could be extremely
detrimental to other ISPs, says Brianna Gowing, a spokesperson for GTE. "We
think that the middle of 2002 is too late. In the meantime, they can do something
proprietary, or capture a large share of the market - in the process, locking up
customers and advertising dollars."
GTE, in addition to being a member of the openNET Coalition, has people in
many of its 28 states working locally on the access issue, according to Gowing.
"We've had several people testify on different bills. We have worked with state
coalitions to help get legislation introduced, and, in the case in Broward County,
we are paying the legal bills."
GTE's efforts in Broward County, Fla. were successful. Last July, the Broward
County Board of Commissioners voted in favor of mandated access for ISPs.
Broward became the second county in the nation to force AT&T to open its
cable networks (see sidebar, "Open access at the local level").
Andrew Schwartzman, director of the Media Access Project, believes that the
AT&T-MindSpring agreement doesn't go far enough. "Basically the AT&T
model falls short of providing the necessary assurances that there will be real
competition," he says.
"Some folks, including AT&T and @Home, called it impossible at one point,
which is obviously ludicrous. Open access its technically challenging but it can
be done. It's just going to take a little while to get the proper implementation in
place."
Last June, Excite@Home accused GTE and AOL of making misleading claims
about cable modem access. Excite@Home stated that it believed that a
document issued by AOL and GTE failed to address a number of issues critical
to volume rollout of cable modem services, and was an effort to utilize vague
technological claims to make broader business assertions. (In February,
Excite@Home announced that it will consider providing broadband via DSL.
The company's exclusive right to provide service on AT&T's cable network is
up for renegotiation in 2002.)
Exercising regulatory restraint
FCC Chairman William Kennard has stated that the FCC would be acting
prematurely if it decided to regulate the broadband market as it exists today.
"Right now, the broadband market is fertile but still undeveloped," he said in a
speech last July before the Federal Communications Bar. "I believe it's not in the
national interest to regulate this nascent and maturing industry."
The FCC offered several preliminary findings about the broadband industry in a
staff report released last fall, entitled Broadband Today. Among the findings:
o Cable modem deployment has spurred alternative broadband technologies,
such as DSL. The Commission believes that the number of cable users online
will be significantly higher than DSL users (see Figure 2, page 32). o Regulation
or threat of regulation ultimately slows deployment of broadband. o Market
forces will compel cable companies to negotiate access agreements with
unaffiliated ISPs.
A spokesperson close to the FCC
contends that the Commission's stance
on open access is in keeping with the
1996 Telecommunications Act.
"The 1996 Telecom Act tells us to be
deregulatory in spirit, and, if there's a
time to regulate, it's when there is
evidence of harm in the marketplace.
What the chairman has been saying all
along is that there's no evidence of
harm in the marketplace. Sure, there's
a lot of fear. But so far, fear is all that
this has been about," she says.
Harris of Kinetic Strategies supports
the FCC's approach, as well as the
vision that the Commission has for the
future.
"The broadband market is evolving at
such a rapid pace that government
trying to impose regulation in what you
might call a nascent phase of the
business might be potentially stifling.
I'd much [prefer] a choice of three or
four facilities-based broadband
providers than fifty ISPs over one
cable pipe. If I'm unhappy with my
cable modem service, I'd love to be
able to dump them entirely and get
DSL or fixed wireless or satellite. I
think that's the world that the FCC is
interested in seeing," he says.
Schwartzman of the Media Access
Project is skeptical of the notion that
the marketplace will drive open
access.
"We don't think that the market forces
are going to deliver the kind of
nondiscriminatory true open access
that we think is the fuel that has driven
the explosive growth of the Internet
and the economy behind it. Rather,
the market is likely to deliver the same
kind of limited choice that we've seen
in media markets."
AOL Waffles?
For more than a year, AOL had been
one of the loudest voices in the chorus
calling for open access. The company
was adamant in its warnings that
AT&T and other cable companies
offering similar services possessed
illegal monopolies, and should
therefore be forced to open their
systems to competitors. When AT&T
bought cable operator Tele
Communications Inc., and again when
it proposed buying cable firm
MediaOne Group, AOL filed
comments with regulators seeking
mandatory open access.
AOL's staunch legislative advocacy drew harsh criticism from AT&T.
"AOL was essentially trying to play catch up and use the government to compel
a private company to allow it to take advantage of us. That is not the function of
government, to put its thumb on the scales in a business-to-business
negotiation," says a spokesman for AT&T.
When AOL and Time Warner announced the details of their $350 billion
merger, the effects were felt in several different industries. AOL's stance on
open access seemed to be affected as well. In the wake of the deal with Time
Warner, AOL was not as vocal in its lobbying.
"We remain a charter member of the openNET Coalition," said AOL
spokesperson Kathy McKiernan. "But we're not pushing regulation at this time -
our focus is on the marketplace."
In February, AOL declined to act as two bills mandating open access died in
the Virginia General Assembly and told its lobbyists in several other states not to
advocate similar legislation. Additionally, the company quieted its demands that
federal authorities condition approval of the merger of AT&T and cable giant
MediaOne Group Inc. on promises of open access.
In response, some open access proponents declared that AOL had jumped
ship. Don Janke, president of Internet Ventures Inc., a Southern
California-based ISP waging its own battle for access to cable pipes, offered a
stern rebuke.
"AOL's stark abandonment of its advocacy for cable access reveals not only
that it is now a cable operator, but, sadly, that it has quickly learned precisely
how to act like one," he says.
Internet Venture's battle for cable access faltered when the FCC ruled that
programming diversity does not obligate cable companies to give ISPs access to
their networks.
In response to the AOL-Time Warner deal, the Consumers Union, the
Consumer Federation of America, the Media Access Project and the Center for
Media Education expressed hope that AOL's Chairman and CEO Steve Case
would continue to advocate for open access. Schwartzman of the Media
Access Project promised to refresh AOL's memory.
"AOL has told the FCC that open access is the appropriate model to promote
competition and to preserve the growth and connectivity and open entry that
have been the characteristics that have made the Internet what it is," says
Schwartzman. "We're not going to let AOL or Time Warner forget what AOL
has been saying."
iAdvance, a Washington-based coalition cochaired by former Clinton press
secretary Mike McCurry and former congresswoman Susan Molinari, maintains
that the AOL-Time Warner merger will bring more attention to the open access
debate. According to Donald Trigg, a spokesperson for iAdvance, McCurry
and Molinari believe the merger will "lay the groundwork for some sort of
significant movement on open access in the near term."
At the end of February, AOL and Time Warner announced a memorandum of
understanding that would enable competing ISPs to use their cable pipes. The
companies pledged the following:
Consumer choice among ISPs, with no need for consumers to subscribe
to an AOL-Time Warner ISP affiliate;
No limit on the number of available ISPs;
Open customer relations for both the ISP and cable operator, meaning
that
ISPs can sell broadband services and bill customers directly; and
The ability of ISPs to offer video streaming.
Perhaps the memorandum will calm the ire of some critics, as well as appease
the FCC. However, all of the details haven't been worked out. Time Warner
has a preexisting agreement with Road Runner that it serve as the exclusive ISP
on Time Warner's cable network until the end of 2001. In a hearing on the
merger before the Senate Judiciary Committee, Time Warner Chairman and
CEO Gerald M. Levin said that the company would try to persuade Road
Runner to revise the agreement.
The vital question for ISPs and telcos is just exactly when they will gain access
and begin providing services over cable networks. For them, getting to market
late is a tough proposition. |
