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To: Craig Jacobs who wrote (5254)	6/27/1999 10:42:00 PM
From: Craig Jacobs	Respond to of 13157

Regulatory Turf Wars -- Who'll Make the Call on Cable Broadband Access? By Andrew M. Brown Associate with Levine, Blaszak, Block & Boothby, LLP AS THE RACE TO OFFER consumers broadband Internet access literally enters the "last mile," open access to cable systems for Internet Service Providers (ISPs) has taken center stage in telecommunications policy debates. For legislators, regulators, and ISPs, the open access issue has heated up in the wake of AT&T's entry into the cable market through its approximately $100 billion acquisition of cable giants TCI and MediaOne. Once the MediaOne acquisition is complete, AT&T will become the largest cable operator in the country, passing (by its own estimates) at least 25 percent of the cabled homes in the United States. AT&T's competitors say that figure is closer to 60 percent. Fearing that kind of awesome market power, some parties, notably AOL, have urged the FCC to impose "open network requirements" that would prevent AT&T from discriminating against unaffiliated ISPs in the provision of the basic broadband transmission services to subscribers. During FCC review of the AT&T/TCI merger, several telcos claimed that cable systems would have an unfair competitive advantage in the broadband access market if they could offer broadband services unfettered by the same open network requirements that apply to the phone companies. ISPs joined the fray, arguing that Internet service competition would suffer if either telcos or cable operators could leverage their control over transmission facilities to provide preferential access to their own affiliated ISPs. In response, AT&T/TCI claimed that open access requirements would create financial disincentives to upgrade their networks to handle broadband services. So far, the FCC has taken a hands-off approach, refusing to impose open access requirements as part of the AT&T/TCI merger and declining to adopt open access rules for cable in a separate rulemaking. But the FCC's unwillingness to regulate cable access is not universally shared, and two important players are muscling their way into the regulatory arena. First, some 30,000 local authorities across the country have franchising authority over their local cable systems. Recently, one of these authorities, the Mount Hood Cable Regulatory Commission, created a monumental stir by conditioning TCI's transfer of its Portland, Oregon area franchise to AT&T on the opening of TCI's system to unaffiliated ISPs. Just this month, U.S. District Judge Owen Panner upheld Mount Hood's decision. A furious AT&T requested an expedited appeal of the case. But even as that appeal proceeds, the possibility of other local authorities weighing in on open access has dramatically increased, evidenced most recently by the rancorous debate in Los Angeles by that city's Board of Information Technology, resulting in the resignation of three Board members. And while the FCC generally respects local jurisdiction over franchising matters, FCC Chairman Bill Kennard recently blasted local attempts to regulate cable access and seemingly invited the cable industry to seek federal preemption of the Portland open access policy. If this looks like just a little disagreement between federal and state regulators, there's more to the story. Various members of Congress are reportedly cooking up legislation that would require the FCC to take action -- one way or another -- on cable access. Some members would prefer a laissez faire approach across the board, leaving cable operators alone and de-regulating the telcos' transmission services to achieve regulatory parity. Others would have the FCC require cable systems to provide the same non-discriminatory access that telcos are required to offer, and would have the FCC police compliance. And yet another group wants to take a "wait-and-see" approach by directing the FCC and the National Telecommunications and Information Administration (NTIA) to study the extent to which broadband services are being deployed. Notwithstanding rosy industry projections, with few exceptions Internet cable is not quite ready for prime time, and assessments of the competitive impact of cable entry into broadband services are still highly speculative. If other local cable authorities follow Mount Hood's lead and impose additional local conditions on cable Internet access, Congress may have to intervene to resolve the turf war between federal and local regulators. So far, Kennard's position favoring a national policy of deregulation that will allow the nascent industry to develop sounds like the better approach. Investment and deployment of broadband over cable can only be slowed if cable providers have to comply with 30,000 different sets of rules. And delay ultimately hurts residential consumers who are chomping at the bit for high speed Internet access. Mr. Brown is an associate with Levine, Blaszak, Block & Boothby, LLP, a Washington D.C. firm that represents large telecommunications users and providers of information technology products and services. Mr. Brown provides counsel and strategic advice on a wide variety of telecommunications business and regulatory matters to domestic and international service customers and providers. Contact Andrew M. Brown Levine, Blaszak, Block & Boothby LLP 2001 L Street, NW #900 Washington, DC 20036 (202) 857-2550