The Open Access Debate

Last year, officials from Portland, Ore., first began work on a transfer

agreement with AT&T Cable Services — the behemoth telecommunications

firm that had recently acquired TCI, the city's local provider and the country's

largest cable company. They included a clause that seemed innocent enough

at the time: Give network access to other Internet service providers.

"The

Internet has grown up on the phone system, but everybody has always gotten

to choose their own ISP," explained David Olson, director of the Portland

Office of Cable Communications and Franchising Management. "That choice

has helped make the Internet grow. At the time, we certainly didn't think

it was controversial."

AT&T did. The company, which has an exclusive contract with its

subsidiary Excite@Home to provide ISP services, sued.

Last June, the federal

district court in Oregon ruled in Portland's favor. AT&T appealed, and

the case is still pending before the 9th Circuit Court.

Other localities,

concerned with the lack of consumer choice, are watching the case closely.

Broward County, Fla., rejected a transfer agreement with MediaOne (recently

acquired by AT&T), while San Francisco debated the issue and decided

to reject the open access argument.

Pittsburgh, eager to get its networks

upgraded and running, managed to sidestep the issue by including a "most

favored nation" clause in its franchise agreement and linking it to the

Portland case. If the court rules in favor of the Oregon city, AT&T

must adhere to that ruling in Pittsburgh as well.

AT&T said it's the

one that has no choice at the moment, citing its legal obligations. "We're

committed to being open to other providers once the exclusive contract that

we have with Excite@Home expires in 2002," said Steve Lang, vice president

of communications at AT&T Broadband. And, he said, consumers do have

a choice. They can use another provider, such as America Online Inc., if

they run it in conjunction with the @Home platform.

The Federal Communications

Commission has taken a neutral stand on the case, but spokeswoman Michelle

Russo said the agency's position has always been to tread lightly with

regulations.

"This market for high-speed Internet access and broadband services is

very new. And we think that there should be no regulation on the local,

state or federal level at this point because...regulation would stifle investment,"

she said. "We think that Americans should have a choice, but we'd rather

wait and let the marketplace work it out."

Back in Portland, the stakes have been ratcheted up. AT&T has refused

to offer any broadband Internet service until the issue is cleared up, so

last September, the city put out a nationwide request for qualifications

for a broadband provider willing to overbuild the incumbent system. The

response was overwhelming. Nine companies responded, and at present, four

providers — WideOpenWest, Open Access Broadband Networks, RCN and Western

Integrated Networks — are actively involved in franchise negotiations and

are prepared to offer open Internet access.

"Our cup runneth over," Olson

said. "A lot of people predicted that our open access condition would lead

companies not to want to do business here, but I think we've disproved that

theory with a vengeance."

As a result, he said, AT&T will have to compete for market share

of the basic cable service, and consumers will have a choice for broadband

phone, video, TV and Internet. "We're looking forward to improvements in

quality of service on the part of everybody and better rates and packages

for customers," Olson explained. "The consumers are the real winners here."