Open access: Appeal showdown set

High-speed Internet movement goes up against AT&T lawyers

AT&T lawyers will face off in court against officials of Portland, Oregon, Monday, in the company's latest attempt to head off a small but growing movement demanding "open access" to high-speed Internet lines.

The telecommunications giant is appealing against a federal ruling that could force it to open its Portland area network to rival Internet service providers, which AT&T executives say would defeat the purpose of its massive £60 billion effort to retool itself as a cable company.

The case stems from local laws adopted by Portland and surrounding Multnomah County in December 1998 that required AT&T to open its high-speed lines to any Internet service provider on a "non-discriminatory" basis as a condition for getting rights to the cable television franchise in the region.

AT&T, which markets high-speed cable access exclusively through its partly owned partner Excite@tHome, refused, making Portland the only community of nearly 1,000 nationwide that refused to ratify its $48 billion acquisition of Tele-Communications, the nation's No. 2 cable provider.

AT&T completed the deal but has refrained from offering the high-speed Internet service to its 200,000 Portland area customers because of the litigation. Lawyers for AT&T and Portland will argue the case Monday in Portland before a three-judge panel of the Ninth Circuit Court of Appeals, which likely will not rule for several months.

Erik Sten, one of Portland's four elected city commissioners, said the issue is one of choice for consumers and economic opportunity for local Internet providers, who contend they will be driven out of business by competition from AT&T's high-speed lines, which can provide Internet access up to 1,000 times faster than standard dial-up modems.

"It's clear to us that monopolies don't serve Portland very well," Sten told Reuters. Sten's view is backed by dozens of phone companies and Internet service providers of all sizes including regional phone giant U.S. West and online access leader America Online, which stand to benefit from open access.

But AT&T and its supporters, including other cable television operators, contend it has no monopoly in the rapidly developing world of high-speed Internet access, known as broadband in the industry parlance.

"Even if we have some special advantage in cable as a form of broadband access, cable is no way the only form of broadband access, and broadband access is no way the only way of getting hold of the Internet," said Mark Rosenblum, AT&T's vice president for legal affairs.Regular and high-speed telephone lines, satellite service and wireless options all provide competition, Rosenblum said. He was careful to characterize the Portland case as having relatively little national significance given AT&T's strong track record of winning local approval for nearly all the cable franchises it acquires.

But with AT&T in the process of becoming the nation's biggest cable provider through its pending $58 billion acquisition of MediaOne Group, more local communities are showing an interest in following Portland's lead. At least two towns in Massachusetts and two in Michigan have adopted open access requirements, and officials in St. Louis and San Francisco are strongly considering the idea.

Some fear such measures could lead to increased regulation of the free-wheeling Internet, ultimately stifling its growth, a concern shared by the Federal Communications Commission and many in Congress. The FCC concluded in a report earlier this year there was no need for regulation because Internet services were being made widely available "on a reasonable and timely schedule."

"Given the rapidly evolving technologies involved here, the court should proceed with caution when it resolves this case," the FCC said in a brief filed with the appeals court.