Lawmakers want to ban exclusive cable Internet pacts
WASHINGTON, May 6 (Reuters) - A bill proposed on Thursday by two members of Congress from Virginia would prohibit AT&T Corp. (T - news) and other leading cable operators from striking exclusive service provider arrangements for their new high-speed Internet offerings.
The bill drew strong opposition from the cable industry, however, and some leading Republicans are said to oppose it already.
The proposal, authored by Democrat Rick Boucher and Republican Bob Goodlatte, comes as Dulles, Va.-based America Online (AOL - news), other Internet service providers and consumers groups are demanding that cable operators provide more open access to high-speed Internet offerings.
AT&T currently offers high-speed Internet access over cable wires it acquired when it bought Tele-Communications Inc., and IT will have an even broader reach if it completes the purchase of MediaOne Group Inc. (UMG - news) announced this week.
But unlike high-speed access offered by local phone companies, AT&T requires its Internet customers to purchase access and Internet services like e-mail and Web page hosting for a single price from its AtHome Corp. (ATHM - news) affiliate.
AOL and others say the exclusive bundled deal threatens to shut them out of the high-speed arena, since consumers are unlikely to want to pay twice for Internet services.
AT&T and other cable companies respond that they need the revenues from Internet services to offset the high cost of upgrading their systems for Internet access.
Goodlatte and Boucher rejected that claim, noting that the Internet's success to date was due to its unfettered, free-wheeling nature.
''Congress must act now to ensure that the qualities that made the Internet a revolutionary tool for both businesses and families - openness, competition, and easy consumer access - remain fundamental components of the Internet for future generations,'' Goodlatte said.
The bill, which also contains provisions removing some regulations from regional Bell company high-speed Internet services, modifies existing antitrust law to prohibit cable firms from striking exclusive deals.
The provision only applies to large operators with ''market power'' in the high-speed Internet business.
AT&T spokesman Jim McGann said the proposal ''would have the unfortunate result of slowing both the development of local telephone competition and the deployment of advanced broadband services.''
Local telephone companies including BellSouth Corp. (BLS - news) and GTE Corp. (GTE - news) said they would support the bill due to the provisions deregulating some of their data-oriented service offerings.
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