This from WSJIE:
AOL Leads Lobbying Campaign to
Gain Access
To 'Broad-Band' Cable-TV Lines
for the Internet
----
By Bryan Gruley
Staff Reporter of The Wall Street Journal
WASHINGTON -- America Online Inc. is preparing to wage a lengthy and
multifaceted regulatory war to gain access to the fat Internet pipelines
controlled by cable-television companies.
In what may be the first sophisticated lobbying campaign by an Internet
company, AOL is leading an effort to assemble a coalition tentatively titled
"Open Net." The group will urge lawmakers and regulators to require that
cable-TV lines be opened to all competitors seeking to provide high-speed
Internet service via "broad-band" technology.
The drive underscores the role that policy makers increasingly will play as
the Internet becomes a mainstream tool for buying and trading goods and
services over the World Wide Web. The rise of electronic commerce raises
lots of public-policy questions involving privacy, copyright protection,
taxation and-the coalition's core issue -- who gets access to broad-band
networks that can deliver Internet access as much as 100 times faster than
what consumers now see.
With the help of telephone giants MCI WorldCom Inc. and U S West Inc.,
and its fellow Internet service provider MindSpring Enterprises Inc., AOL is
recruiting financial, entertainment, retail, travel and other companies that
increasingly are doing business via the Web. Among those approached
recently are Yahoo! Inc., the Internet portal company, and entertainment giant
Walt Disney Co. These companies haven't joined yet, and officials declined
to comment.
To lead recruitment, the nascent group has hired Washington lobbyist Greg
Simon, former high-technology adviser to Vice President Al Gore, and Rich
Bond, former chairman of the Republican National Committee. AOL, based
in Dulles, Va., also has retained Washington grassroots specialist Leslie
Harris to educate consumer groups in the hope that they will reach out to
their members nationwide.
Consumer groups aren't likely to align directly with Open Net, but some
sympathize with AOL's position. They are working on their own effort to
bring it to the public's attention and may announce plans this week. "People
are just beginning to figure out that {regulators} are making some very, very
heavy-duty {decisions} here," says Andrew Schwartzman of the Media
Access Project, a nonprofit telecommunications law firm in Washington.
AOL's lobbyists also have encouraged municipal regulators in Los Angeles,
Denver, Dallas, Seattle and Portland, Ore., to impose "open access"
requirements on AT&T Corp. as the long-distance carrier seeks permission
for its proposed $40.9 billion acquisition of cable giant
Tele-Communications Inc. So far, only Portland has adopted such a
condition, and AT&T has sued in federal court to have it declared illegal.
Seattle city officials have received hundreds of e-mails from citizens
demanding that the city consider such a condition. "There's a pretty strong
call for ensuring in the future that we have open Internet access," says Seattle
city Councilman Peter Steinbrueck.
AOL has been careful to argue that the issue potentially affects many more
companies than just AOL. In a speech in the fall, AOL's chief executive
officer, Steve Case, said, "Over the next five years, I believe the future of
this medium will be determined more by policy choices than by technology
choices."
But the issue clearly is vital to AOL's own future. With 15 million
customers, the company dominates the prevailing "narrow-band" market for
Internet service, funneled through telephone lines at much slower speeds.
Some phone companies are souping up those lines -- and AOL has cut a deal
with Bell Atlantic Corp. -- to deliver broad-band service. But that is still
slower than what can be sent via cable modem.
Opponents, including cable operators, AT&T and such high-tech
powerhouses as Intel Corp. and Compaq Computer Corp., say it's perilous
even to think about rules for the Internet. Decker Anstrom, president of the
National Cable Television Association, an industry lobbying group, says,
"Either you have a view that the online marketplace is competitive and
emerging, and that the government should stay out, or you have a view that
the government should come in. I don't think you can just put your toe in the
water here."
While cable networks currently appear to offer the fastest broad-band
pipeline, companies are busy working on satellite-based and other
alternatives. "It really is preposterous to talk about anybody having any
market position in online data services," Mr. Anstrom says. "We're in the
first inning here."
Even some Internet service providers disagree with AOL and its allies.
"While we support open access, it's dangerous to start a regulatory process,"
says Barbara Dooley, president of a trade association that represents service
providers and related companies. "We believe competition and market
pressure will get better results without the regulatory costs and distortions,"
she says.
AOL first raised the issue in the fall in the Federal Communications
Commission's consideration of AT&T's proposed acquisition of
Tele-Communications. Arguing that AT&T could monopolize highspeed
Internet access through TCI's affiliate, At Home, AOL urged the agency to
open the cable firm's network to rivals, in return for fair compensation.
AT&T and its prospective partners say they aim to bring more competition to
local phone service while investing billions of dollars to offer more
convenient Internet service. The FCC isn't expected to attach an "open
access" condition to approval of the AT&T-TCI deal, but commissioners are
mulling whether to address the matter in a separate proceeding. So far, only
Chairman William Kennard and Commissioner Susan Ness, both Democrats,
have shown interest.
Lawmakers have been reluctant to write rules that might interfere with
growth of the Internet. It is unclear whether current law provides for cable
networks to be "unbundled" like local phone systems. And questions remain
as to whether opening cable lines to unlimited rivals is technologically
practical.
But AOL and its allies are betting that more policy makers will confront the
issue as they learn more about it. And they think momentum is building in
their favor. Entertainment companies, fearing their programs and movies
could get locked out of a super-fast pipeline, have privately expressed
concern in the wake of last week's announcement that At Home would
acquire Excite Inc., one of the Web's busiest sites. Further fomenting concern
are reports that AT&T may sell its Internet-access business, with its 1.3
million customers, to At Home. And policy makers could grow more
concerned if cable rates soar after they are deregulated at the end of March.
Last week, Rep. Edward Markey of Massachusetts, ranking Democrat on a
key House panel, wrote to the FCC's Mr. Kennard expressing his concern
that new broad-band networks, "most notably in the cable industry," appear
"designed to reintroduce bottlenecks to competition, choice and innovation."
Mr. Markey urged that the FCC "move quickly to ensure that no gatekeeper
channels for broad-band access are being created."
It's a delicate position for AOL, which usually echoes Web companies'
insistence that regulators leave the medium alone. AOL has been telling
policy makers that, because the cable network has long been effectively a
regulated monopoly, forcing it open would be deregulatory.
Mr. Anstrom, the cable lobbyist, chuckles at this notion. "If anyone is a
dominant provider," he says, "it's AOL."
---
Internet Lobbying America Online and other companies seeking "open
access" to cable-television lines will make their case in these places:
CONGRESS -- Lawmakers are reluctant to interfere with the Internet, but are
wary of cable companies' monopolistic tendencies. FCC -- Chairman
William Kennard has shown some empathy, but must win over other
commissioners who question the FCC's legal authority in this area. CITIES
-- Municipal cable regulators are showing growing interest, reflecting
pent-up anger with cable operators. |
