An appeals court decision Wednesday evening struck a blow to open cable Internet access advocates and handed another victory to the nation's number one cable operator.
The fourth district Court of Appeals in Washington, D.C., upheld a lower court ruling that stated Henrico County in Virginia doesn't have the authority to force MediaOne, owned by AT&T Corp., to open its facilities to rival Internet service providers (ISPs).
Judge Blane Michael, in his written opinion, reaffirmed the court's insistence that federal regulators, not the states, should decide the issue of opening cable networks to ISPs.
"We do not have to reach the question of whether MediaOne's bundled Road Runner service is a cable service, a telecommunications service or an information service," Michael wrote. "For the time being, therefore, we are content to leave these issues to the expertise of the Federal Communications Commission (FCC)."
In June 2000, the ninth district Court of Appeals reversed a decision in Portland, OR, saying the lower court had overstepped its authority by requiring AT&T to open up its cable network. In the Portland decision, the appeals court ruled the 1996 Telecommunications Act called for federal jurisdiction, not local, to decide whether cable networks should open up, since the ruling dealt with telecommunication services.
This time around, the courts ruled that local entities, Henrico County in this case, could not force MediaOne to open up its telecommunications facilities. It's a slight distinction from the Portland case, but enough for cable network operators to continue controlling the schedule it opens up the network for competitive services.
Mark Rosenbloom, vice president for law at AT&T, said the ruling marks the last local challenge by the lower courts to put conditions on its operations.
"It affirms what we've argued since the forced access debate emerged three years ago in Portland: Federal law very clearly prohibits municipalities from requiring cable companies to provide telecom services or facilities as a condition to obtaining a license to operate," Rosenbloom said. "We hope this puts an end to the argument that municipalities should mandate forced access for cable companies."
Advocates for open access have been trying for years to get a ruling from the FCC, which has been sitting on a notice of inquiry since last year.
Dr. Mark Cooper, director of research for the Consumer Federation of America, said its long past the time when the FCC should step in and make a ruling on open access.
"It's quite clear that the FCC ought to definitively sort out this issue," Cooper said. "The only question is whether this FCC will have the backbone to stand up and try and figure out what it is and how they're going to deal with it, other than just letting it lay out there.
"From our point of view, the important part is to get the cable networks open," Cooper continued. "We have been asking the FCC to make a ruling for several years. The only reason we went to the state level was because the FCC abdicated its responsibility to make a choice."
AT&T and other network owners, like AOL Time Warner and Comcast, have been dragging their feet over open access since the mid-1990s, when scientists found they could offer another high-speed Internet option to copper-based digital subscriber line (DSL) service, this time over the cable network.
From the start, cable companies have said it was technologically impossible to open up the network to competition, despite the successes experienced in Canada with its own open access trials. Only last year, when the FCC threatened to block the merger of America Online, Inc., and Time Warner, did open access trials begin in earnest.
But the FCC hasn't come down with a definitive ruling on open access, yet, other than its stated conditions in the AOL/TW deal, which requires the second-largest cable operator in the U.S. to open up the network to three other ISPs in a particular area before AOL does.
According to Michelle Russo, a spokesperson at the FCC's cable bureau, the agency started proceedings on the open access debate last September. The comment period, which ended in January 2001, gave anyone who had an interest and opinion the chance to be heard.
Seven months later, the FCC is no closer to a decision than it was at the beginning of the year. "We're still reviewing the comments," Russo said.
AT&T, along with AOL/TW and Comcast, has been conducting open access trials throughout the U.S. this year, but don't expect to open up access anytime soon. AT&T doesn't plan to open up their networks before June of next year.
Strategically speaking, it doesn't make financial sense for cable owners to open up their lines any sooner than they have to, since ISPs will then be able to sign up customers cable owners consider their own. It's no coincidence that cable companies refer to the issue as the "forced" access debate.
Advocates have been trying to use the state courts to force the FCC into making a decision. A favorable ruling, they hope, would speed up the timetable to open up the networks. As it stands, AT&T, AOL Time Warner and Comcast already have a commanding lead over the competition.
AT&T and Comcast, among others, have a big stake in Excite@Home, a cable ISP with 3.2 million subscribers. AOL Time Warner owns the Road Runner service, which provides high-speed cable access to 1.2 million users. Cox Cable has slightly more than 500,000 subscribers, while Charter Cable and Cablevision round out the major cable players with more than 300,000 cable Internet users each.
Not surprisingly, Robert Sachs, president and chief executive officer of the National Cable & Telecommunications Association (NCTA), the mouthpiece of the cable industry, was pleased with the decision.
"The Fourth Circuit's decision in the Henrico case offers the strongest judicial affirmation yet that public policy decisions regarding cable modem services are not within the jurisdiction of local governments," Sachs said. "(Wednesday's) court decision will further encourage the rapid deployment of high-speed cable Internet services to consumers."
