AT&T Wins Cable Case on Points

WASHINGTON (06/23/2000) - A federal appeals court last week threw bones to AT&T Corp., which wants to keep its cable networks essentially closed to its own cable-modem services, and independent ISPs who want AT&T to open up its cable plant.

But on balance analysts said the complex ruling means that for the time being any residential user - or corporate network manager setting up high-speed telecommuter programs - will have to use AT&T's own cable-modem services in AT&T's extensive cable territories.

In one key part of its ruling, the court nullified the right of local governments such as the city of Portland, Oregon, to mandate open access in exchange for granting AT&T a cable franchise. That action hands the issue exclusively to the U.S. Federal Communications Commission, which has been reluctant to push the cable open-access issue.

But the court also ruled that cable-modem service is functionally a telecom offering rather than an extension of TV service. That led AT&T opponents to claim victory, because it opens a path for the FCC to decide if access to cable lines is the same as access to Bell company local loops, which are open - or are supposed to be open - to all service providers.

Still, analysts handed the overall victory to AT&T because local governments have been much more militant about open cable access than the federal government. And time is on AT&T's side to run limited cable-access trials with the ISPs it hand-selects while the FCC decides how to react to the decision.

Despite the fact that the appeals court threw the cable ball back in its court, no significant change in the FCC's current hands-off posture is considered likely until after the presidential election, which could result in a change in several of the FCC's five seats.

One more factor colors any court-decision aftermath in AT&T's favor: the changing position of AOL. AOL originally demanded access to all of AT&T's properties. But "AOL seems to have quieted its public lobbying in the wake of its pending Time Warner acquisition," analyst Jack Grubman of Salomon Smith Barney wrote in a note to investors last week.

The current biggest single agitator for cable open access is GTE, which last week signaled that it would wave the appeals court's designation of cable-modem service as a telecom offering in the FCC's face. "As a telecommunications service, AT&T and the cable industry are now required to open their cable modem networks to competitive ISPs on a nondiscriminatory basis," GTE associate general counsel John Raposa claimed immediately after the ruling. But GTE is set to merge into Bell Atlantic, which has tended to put its lobbying emphasis elsewhere.

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