AT&T Wins Cable Battle, War with RBOCs Continues

AT&T Corp. this week won a key battle in its all-fronts war to keep regulators from forcing open its cable network facilities to all ISPs.

But AT&T's rivals, the regional Bell operating companies, took advantage of AT&T's win to step up their own demands for deregulation of their data and Internet services so they, too, can become bigger Internet players.

In the cable arena, AT&T finally won the approval of the San Francisco Board of Supervisors for the transfer of its cable licenses from the former Tele-Communications, Inc. without an explicit open-access requirement. The board voted 9-2 in favor of the transfer, but said it would reconsider open access when the license comes up for renewal under AT&T's name in December.

AT&T faces more such fights around the country after a judge in Portland, Oregon, earlier this year upheld the right of local governments to place open-access rules on cable lines.

AT&T officials say the local fights are being stirred up by America Online, GTE and others with a larger goal in mind. "The effort that they're undertaking at the local level is really designed to put pressure on the Federal Communications Commission and Congress to change their position," says Jim Cicconi, AT&T's general counsel.

That kind of pressure was exactly what RBOC lobbyists also had in mind last week when they released a report claiming that 12 states lack "high-speed Internet access" because of onerous rules on the Bells.

The report -- from a group that calls itself the Internet Advancement Coalition, or iAdvance, but is primarily funded by SBC Communications and Bell Atlantic -- says the solution for the "disconnected dozen" is to remove federal regulations preventing RBOCs from carrying data traffic beyond local calling boundaries.

Such a change would provide the incentive for RBOCs to build and host many more Internet exchange points, or "backbone hubs," just as non-Bell companies have done, according to the group's study.

Opponents of iAdvance, such as the big long-distance carriers and some competitive local exchange carriers, dismiss the study as a contrived attempt to put an academic gloss on a lobbying effort. They point out that most high-capacity Internet hand-off points are built by ISPs without regard to whether the facility is located in a Bell or non-Bell local calling territory.

The author of the study, telecom economist Erik Olbeter, concedes that two of the biggest factors in locating Internet hubs such as Network Access Points (NAP) and peering sites are population density and income levels. But even after accounting for these factors, Olbeter says he found through statistical models that states whose territories are largely Bell-controlled are less likely to have nearby broadband hand-offs points than those with a lot of traditional non-Bell telephone companies.

To tout the study, the iAdvance group held a press conference hosted by its hired lobbyists, former Clinton White House Press Secretary Mike McCurry and former Republican congresswoman Susan Molinari.

But the presentation seemed to get mired in confusion over the meaning of "disconnected" because the study claimed a lack of availability of backbone facilities, not access lines.

For example, an iAdvance written statement quoted author Olbeter as saying: "The vast majority of Americans in inner cities and rural areas simply do not have access to the high-speed Internet and are unable to reap the full benefits of the digital economy."

Olbeter later backed off that statement, telling Network World: "I don't know if it was me or [iAdvance's public relations representative] who put that in there." But he added that even broadband access facilities wouldn't be worth much if traffic got clogged at NAPs.

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