AT&T Defeats Portland Open-Access Requirement

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June 22, 2000 (5:12 PM EDT)

AT&T Defeats Portland Open-Access Requirement

By Mary Mosquera,

The appellate court sided with long distance and cable giant AT&T on Thursday in ruling that the city of Portland, Ore., cannot require cable companies to open their broadband networks to other Internet providers.

The U.S. Court of Appeals for the 9th Circuit reversed a lower court, saying Portland and other local jurisdictions do not have the authority to force cable companies to carry unaffiliated ISPs on their network.

The ruling is a victory for AT&T (stock: T), which has spent more than $100 billion in acquisitions to assemble the largest cable network over which it will deliver high-speed Internet access.

AT&T said the ruling "clarifies decisively the limits of local authority when it comes to the provision of high-speed Internet access over cable," according to AT&T general counsel Jim Cicconi.

"Now that the court has made clear Congress's intent to bar ordinances like the one enacted by Portland, AT&T and other cable companies will be able to get on with investments that will bring advanced services to millions of Americans," Cicconi said.

However, Portland officials and open-access advocates interpreted the court's ruling somewhat differently. The court defined AT&T's cable Internet service as a telecommunications service, and under that definition, AT&T must open its network to other ISPs just like the major telephone carriers, said openNET, a group comprised of the major local phone carriers.

America Online (stock: AOL) was once a vocal member of the organization, but the company has taken a low profile since its announced acquisition of Time Warner (stock: TWX), which owns the other major cable-modem service RoadRunner.

"With today's decision, the court has cast the open-access debate in an entirely new light," said Greg Simon, co-director of the openNET Coalition. "This is a tremendous victory for consumers."

"It's not right that thousands of local authorities have the right to make individual decisions on how we configure our networks, said Mark Rosenblum, AT&T's chief litigator. "That would make it more expensive and difficult to roll out new services."

The appeals court said the Federal Communications Commission is the entity with regulatory authority over cable high-speed Internet access. And even if AT&T's cable-modem service ExciteAtHome (stock: ATHM) were considered a telecommunications service, the FCC has already decided not to regulate open access.

"Today's court decision recognizes that Congress established a national framework to govern high-speed Internet access," said FCC Chairman William Kennard. "We share the goal of municipalities that consumers should be able to point, click, and choose their Internet service provider. Our policies will continue to promote choice among providers for content and conduit, while fostering an environment of investment and innovation."

Both AT&T and America Online have committed to open access in the near future. AT&T has said it will not renew its exclusive contract with ExciteAtHome in 2001.

A federal district court struck down a similar case last month in Henrico County, Va. The 9th Circuit ruling will dispose of two other similar suits in California. One other is pending in Broward County, Fla.

Cicconi said openNET's interpretation is just a way for the group to keep the argument going and to block competition to the RBOCs.

Technical challenges still exist in connecting many Internet providers to the cable plant, Rosenblum said.

"They are daunting," he said. "They haven't been done before on that scale."

AT&T shares ended the trading day up 1, to 36.