Battle over Internet access is heating up
South Florida is on the front lines
By GREGG FIELDS
Miami Herald Business Writer
South Florida is emerging as a key battleground in
determining how American homes will receive and use the
Internet.
In a decision likely to have national significance, Broward
County commissioners on Tuesday passed a law requiring
cable television companies, which also can use their lines
to provide Internet access, to make their wires available to
other companies that want to link households to the World
Wide Web.
Miami-Dade commissioners will revisit the issue today after essentially avoiding it earlier this year.
They could take action in the coming weeks.
In simple terms, the Broward decision means that cable companies would have to allow firms like
America Online, GTE, or innumerable smaller companies to use their cable system to provide
Internet access. Companies would have to pay a small fee to the cable company for access.
Cable companies, meanwhile, don't want to share their lines. They must invest billions of dollars to
upgrade their cable systems to provide high-speed Internet access, and they aren't eager to share
their customers.
Depending on whom you ask, the decision will mean either cheaper, faster and better Internet
service from a bevy of companies trying to outdo one another or a dangerous detour for the
Information Superhighway, much of which is still unpaved.
Critics of the Broward decision say intense competition will whittle profit margins to the point where
few companies want to be in the business of providing Internet access.
''Fundamentally, this comes down to more regulation,'' says John Schneidawind, a spokesman for
BellSouth, a telecommunications giant that is a major Internet player. ''The more you regulate, the
less investment you're going to get.''
Battle has just begun
One thing is certain: South Florida may be at the forefront of the revolution, but the battle is far from
over.
For one thing, the Broward vote is going to be challenged in court. ''We intend to seek judicial
review of the ordinance,'' said a spokesman for AT&T.
In something of an unusual twist, longtime AT&T rival GTE has offered to pay the county's legal
expenses. It won't be responsible for any damages if the county is held liable, however.
AT&T is likely to be the company most affected by the Broward ordinance. It is in the process of
purchasing, for roughly $60 billion, the cable provider MediaOne.
MediaOne is at the moment the only provider of high-speed cable lines in Broward. By various
estimates, these high-speed fiber-optic networks make surfing the Internet 50 to 100 times faster than
standard phone lines.
AT&T, once known as Ma Bell, is in some circles being referred to as Ma Cable, by virtue of its
purchase of both MediaOne and also Tele-Communications Inc., for which it paid $59 billion.
The current controversy reflects how quickly technology has blurred lines that were once clearly
delineated in the American home. Once upon a time, the phone service came in on a line,
television transmission was through the air and no one had heard of the Internet.
Now, the differences between cable, phone and Internet companies are increasingly blurry.
Oregon also has law
At the moment, the momentum appears to be against AT&T in its efforts to keep its state-of-the-art
lines, also known as broadband, to itself.
Before the Broward ordinance, Portland, Ore., passed a similar law that was upheld in a federal
court. That decision is now on appeal.
Meanwhile, AT&T -- and local governments, for that matter -- can expect little help or guidance
from the Federal Communications Commission. FCC Chairman Bill Kennard steadfastly maintains
that the FCC doesn't want to get involved.
''If we've learned anything about the Internet in government over the last 15 years, it's that it thrived
quite nicely without the intervention of government,'' he said in a recent speech. ''So with
competition and deregulation as our touchstones, the FCC has taken a hands-off deregulatory
approach to the broadband market.''
What's clear is that AT&T, and any other cable operator, must make significant investment in order
to provide high-speed cable access to homes. In Miami-Dade alone, for instance, the company has
estimated it would cost $360 million to provide high-speed Internet lines.
A huge investment
Should an investment that large allow AT&T to be the only company to use the lines?
C. Michael Armstrong, chairman of AT&T, believes that's only fair. In a hearing before the Senate
Judiciary Committee Wednesday, he warned that ''we would have little incentive to undertake the
considerable expense of upgrading our lines if they are merely to become a pipe through which
others -- who have paid nothing -- deliver service.''
Armstrong also said the cable industry's monopoly of high-speed Internet access likely will end in the
near future as new technologies such as satellite connections and wireless phone networks, become
widely available.
''Monopolies just can't survive long in this fast-moving industry,'' he said.
But Jonathan Sallet, chief policy counsel for MCI Worldcom, an AT&T competitor, says consumers
shouldn't have to wait that long.
''It's better to protect Internet competition now than try to revive it later,'' said Sallet, evoking a
scenario similar to when AT&T's virtual monopoly on the nation's phone service was broken up in
the 1980s. ''The history here is clear: Monopolies are bad for consumers.''
A vote for equal access
Robert Talucci, head of Worldwide Internet Services, a Broward Internet service provider, said
allowing a company with the unlimited resources of AT&T to gain a lock on American households
would mean small firms like his would disappear.
''If this vote didn't pass it would definitely have put us out of business,'' he said. ''I just hope and pray
every other municipality will vote for open Internet access.''
One industry analyst believes that will happen, for a simple reason: Equal access votes are likely to
be viewed as consumer protection.
Furthermore, cable providers may complain about unfairness, and even take the matter to court. But
in the end, they can't afford to walk away from millions of customers.
''They're saying, 'If we can't have a monopoly we will take our marbles and play elsewhere,' '' said
Scott Cleland, an analyst with Legg Mason Precursor Group. ''But they can only hold their breath so
long.''
e-mail: gfields@herald.com
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