S.F. body rejects forced 'open access'
Measure would have forced AT&T to cede space to rivals
By Bambi Francisco, CBS MarketWatch
Last Update: 9:48 PM ET Jul 26, 1999
SAN FRANCISCO (CBS.MW) -- In what many viewed as a test of fair competition in the digital age, the San Francisco Board of Supervisors on Monday evening rejected forced "open access" to cable lines for high-speed Internet access. Proponents of the proposal vowed to take the fight direct to the city's voters in a ballot measure in this November's municipal elections.
Given the high-profile legal tussle between AT&T (T: news, msgs) and Internet service providers, the vote may temporarily stifle the cable-access debate, or it could escalate it. Both sides claimed that they were fighting for consumers' best interests.
"We need competition and the right to choose any ISP," said Katie Roper, executive director of the Bay Area Open Access Coalition, an advocacy group for some eight Internet service providers, including Verio (VRIO: news, msgs), and phone companies Pacific Bell and GTE (GTE: news, msgs).
If cable lines aren't open to competing ISPs, incumbent Internet access providers via cable, such as ExciteAtHome (ATHM: news, msgs), of which AT&T is the largest shareholder, will limit the consumer experience by capturing them right from the moment they dial up, Roper said.
"The first thing people see on the Web will dictate their experience," said Roper, whose concern is that ExciteAtHome will win the lion's share of new consumers accessing the Web.
Freedom to click
While AtHome's customers do see Excite's home page first, they're not blocked from surfing on competing sites, such as those of America Online (AOL: news, msgs), argued Milo Medin, ExciteAtHome's chief technology officer. "It's easy; there's no impediment. The real issue is that AOL wants to own the customer from end to end."
Owning the user from end to end is a tactical course both AOL and ExciteAtHome are pursuing. Both sides say their competitors are attempting to arrange a monopoly on high-speed Web access.
The issue now is about delaying competition, said Medin: "To the extent that they can slow us down, it just slows down the day cable can be a viable competitor to DSL." Currently, consumers can access high-speed Internet service via DSL, or digital subscriber lines, in the city of San Francisco.
If competition is in the best interest of the consumer, Medin added, then opening the cable network will only hurt consumer choice because there won't be the option of high-speed Internet access via cable anytime soon. Medin, who feels the whole open-access lobbying effort by ISPs and AOL is a mere "negotiating ploy," said that ISPs don't necessarily want access to the cable plant; they just want to stop cable companies in their tracks.
AOL, however, has said in the past that it would strike the exact deal that ExciteAtHome has with cable companies.
Even so, "this isn't a debate about what's good for any two companies," said Cathy McKiernan, an AOL spokeswoman. "It's about what's good for consumers and the growth of the Internet, and that's why the national consumer groups, ISPs across the country and increasing numbers of local governments are standing up for open access.
"Open access means more choice for consumers and faster consumer adoption of cable Internet service," said McKiernan.
Possible outcomes
While the battle between the ISPs and cable companies heats up, the San Francisco vote may not bring it to a rolling boil.
There are several outcomes to the decision on whether the local government has the right to refuse or put conditions on the transfer of TCI's cable franchises to owner AT&T. The city's supervisors could require AT&T to open its lines as a condition of a transfer, it could approve the transfer with no strings attached or it could delay a vote on the matter.
The board could also require the "Portland Clause," which essentially means that if Portland, Ore., prevails in its suit, then AT&T will have to open its lines in San Francisco, according to Roper.
Recently, a federal judge ruled that the city of Portland had the right to require AT&T to open its cable network to ISPs in return for approval of the TCI franchise transfer. AT&T is appealing the decision.
Following the Portland ruling, grass-roots coalitions such as the Bay Area Open Access Coalition, and the AOL-backed OpenNet Coalition, a group of more than 200 ISPs, have been asserting their support for cable access.
Last week, the OpenNet Coalition fired back at the Federal Communications Commission's decision to not have local governments regulate open access. The group called the decision an "abdication of responsibility."
Other cities currently debating high-speed Internet access include Los Angeles and Miami.
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