Cable Fight Continues

AT&T Corp. and MediaOne Group have filed a complaint in the U.S. District Court in Richmond, Va., challenging a Henrico County ordinance that mandates open access to its cable network.

James C. Roberts, Mays & Valentine attorney and AT&T-MediaOne counsel, said late Thursday the Henrico County ordinance violates several provisions of state and federal law.

"Federal law precludes local and state authorities from imposing common carrier regulations, such as the so-called 'open access' or 'forced access' requirement included in the Henrico ordinance on cable systems," Roberts said.

AT&T (T) and MediaOne (UMG) had planned to upgrade their Henrico Country cable facilities to provide high-speed Internet access to residents in the area. During the proceedings to transfer control of the cable franchise from MediaOne to AT&T, the County Board of Supervisors granted conditional approval to the deal only if AT&T agreed to open access of its cable network to competing Internet service providers.

Ken Dye, MediaOne Richmond general manager, said in order to be in compliance with the county's open access ordinance, it would have to re-engineer its cable system.

"We need to resolve the legal issues before we can move forward confidently with our business plan to offer residents in Henrico County the competitive choice for high-speed Internet access that we are bringing to customers in all of our other local jurisdictions in the Richmond area," Dye said.

Joe Rapisarda, Henrico County attorney, said the county is fully prepared to let the court decide the issue.

"Open access was vigorously debated at public hearings before the ordinance was issued, we knew what happened in Portland, Oregon and Broward County, Florida, so we knew this was coming," Rapisarda said.

Virginia is divided on the issue of open access to cable networks. Local officials in Richmond, Hanover County and the Town of Ashland approved the MediaOne cable franchise transfer to AT&T last year without the stipulating an open access requirement.

This week Bill Kennard, Federal Communications Commission chairman, declined to step into the debate, citing the America Online Inc. and Time Warner Inc. proposed merger as an indication that competitive forces are working in the high-speed cable marketplace.

Kennard said the FCC's "hands off" regulatory stance is working to let the industry create competition and that the FCC has no interest in requiring cable companies share access to their networks.

Dye concurred with the top federal regulator, stating that competitive forces are at work in Virginia.

"Customer demand for a competitive choice for their high-speed Internet access service has been just terrific in other Richmond local jurisdictions," Dye said. "We are looking forward to the issues being resolved in Henrico County so we can provide service there too."

In related news, Internet Ventures Inc. Thursday restated its demand that the FCC mandate "leased access" to cable networks in accordance with its petition filed last summer.

William D. Freedman, IVI legal counsel, said if the FCC denied its petition, the federal agency would be perpetuating cable's monopolistic stranglehold on broadband Internet access in the U.S.

Freedman cited the FCC's Jan. 14 release of its Sixth Annual Report to Congress on the status of competition in markets for the delivery of video programming. Freedman said the federal agency should be compelled to grant the IVI petition for leased access.

"The Report provides ample evidence why, notwithstanding the strong and growing demand for video programming over the Internet, the service has not fully developed to its potential," Freedman said.

Conversely, the FCC reports that the economic health of the cable industry is excellent. Although 65 percent of U.S. Internet users connect through standard dial-up modems, the FCC observed that Digital Subscriber Line technology is a significant competitor to cable broadband services.

The FCC report also states that there are three cable providers competitively operating to provide broadband access to the Internet. AT&T owns 21% of the market. Time Warner (TWX) and potentially America Online (AOL) operate 16 percent of the market, while Comcast Corp. (CMCSA) cable services comprises 8 percent of the market.

IVI filed the petition (CSR-5407-L) with the FCC on June 2 invoking the "must carry" clause of the 1996 Federal Communications Act. IVI contends that cable operators must carry independent Internet services on their networks under the same rules requiring cable companies to offer subscribers all local broadcast channels.

IVI seeks to open up a new legal front in the battle for open access to cable modem networks, even though the must-carry provision of the legislation has never been interpreted to apply to ISPs.


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