Here's the Dow Jones article...AOL Lobbying Move In
Cable Fight Is Paying Off
By THOMAS E. WEBER
Staff Reporter of THE WALL STREET JOURNAL
When America Online Inc. saw its dominance of cyberspace threatened by
giant cable-TV companies, it swiftly assembled an effective lobbying team.
Now it appears the effort is paying off.
The OpenNet Coalition, the lobbying group formed by AOL earlier this
year, enjoyed a sweet victory Tuesday when a commission in Florida's
Broward County voted to force local cable companies to open up their lines
to Internet companies. The triumph had OpenNet leaders gloating
yesterday.
"Local officials get it," said Jonathan B. Sallet, chief policy counsel for MCI
WorldCom Inc., a core member of OpenNet and a key AOL ally. "The
history is clear: Monopolies are bad for consumers." Added Greg Simon,
co-director of the lobbying group: "We think we're going to have more
decisions like this in the weeks ahead."
Such confidence is a remarkable turnaround from last fall, when AT&T
Corp., Time Warner Inc. and other big cable operators appeared to have
AOL on the run. Though AOL is the biggest online operator, with more
than 17 million members for its flagship service, nearly all of its customers
dial in over traditional phone lines.
But the future is in high-speed broadband connections, and right now the
most successful broadband providers are companies like Excite At Home
Corp., which pipes Web pages over cable-television lines.
Because these cable-modem services are typically partnered with or
controlled by cable companies, AOL's supporters feared it would be shut
out of the broadband, or high-speed, future unless it could cut deals with
AT&T, Time Warner and others to use their lines.
AOL wants cable companies to sell the high-speed connections to AOL,
which would then resell both the connection and membership in AOL's
service, in one package. The cable companies say customers of the
cable-modem services are free to link to AOL -- if, that is, they want to pay
for an AOL membership on top of the monthly fee from a service like Excite
At Home.
Though the battle is far from over, AOL and its allies are clearly making
headway judging by the Broward County decision. "Things are definitely
moving toward openness," said A. Michael Noll, a professor who studies
telecommunications issues at the University of Southern California's
Annenberg School for Communication.
Leading the charge has been OpenNet. When the effort was launched early
this year it was a novelty. Apart from a freespeech battle over the
Communications Decency Act in 1996, Internet companies had been able
to stay largely out of the lobbying fray.
But AOL showed it meant business with OpenNet. Though the coalition's
operations are tiny relative to the huge government-relations teams at the
cable companies, AOL brought in Mr. Simon, a former adviser to Vice
President Al Gore, and Rich Bond, former chairman of the Republican
National Committee, as co-directors. And it recruited telephone giants GTE
Inc., MCI WorldCom and U S West Inc. to join the battle.
Now OpenNet has transformed the open-access issue from a dry
technological debate over whether an Internet connection is different from
an Internet service into a simple battle that depicts cable companies as
monopolists who want to thwart Internet free-marketers. "The more the light
shines on this issue, the more people get it, and the more they become
committed to choice and competition," said George Vradenburg, AOL's
general counsel.
Lobbying skills aside, OpenNet has been aided by some major factors. The
first is that cable companies, saddled with reputations for giving poor service
at high prices, are an easy target, especially when the opposition is
championing an idea dubbed "open access."
"They've got a winning issue," said Scott Cleland, a telecommunications
analyst with the Legg Mason Precursor Group, who argues that OpenNet's
progress owes more to a powerful argument than skilled lobbying. "The
issue has legs, because OpenNet is trying to give the consumer something,
and a closed system, the cable companies, are trying to deny consumers
something."
OpenNet also got a big, serendipitous boost in May, when AT&T cut a
$54 billion deal to acquire cable operator MediaOne Group Inc. On top of
AT&T's previous deal to acquire Tele-Communications Inc., and given
AT&T's role as one of Excite At Home's largest shareholders, the
MediaOne buy has made the long-distance giant appear more fearsome
than ever.
Still, the battle is far from over, despite the victory in Broward County,
which AT&T plans to appeal. OpenNet must not only convince scores of
municipal and county regulators to see its position, it must also hope that
federal regulators will eventually settle the matter on a national level.
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