December 17, 1999

Mr. C. Michael Armstrong
Chairman of the Board and Chief Executive Officer
AT&T Corporation
32 Avenue of the Americas
New York, New York 10013-2412

Dear Mr. Armstrong:

I have followed with interest the release of the December 6^th letter to FCC Chairman Kennard, signed by representatives of AT&T Corporation, Mindspring Enterprises Inc., and the FCC’s Local & State Government Advisory Committee, outlining general principles for providing consumers with a choice of Internet Service Providers (ISPs) for broadband Internet access over cable. That letter, and others sent to Chairman Kennard by representatives of Mindspring and the Media Access Project, raise important policy questions and concerns.

As you know, I have long questioned discriminatory regulatory treatment between and among different telecommunications platforms providing substantially similar services unless compelling technological differences make regulatory parity infeasible. Thus, while the broadband legislation I co-authored with Chairman Tauzin, H.R. 2420, explicitly ensures consumers choice of ISPs when accessing the Internet through incumbent local exchange carriers, we refrained in that legislation from seeking a comparable guarantee for cable consumers because of claimed technological impediments to such a policy. Until recently, your company and others in the cable industry insisted that no more than one ISP could operate on a single cable system. It now appears evident, from the principles submitted to Chairman Kennard, that at least AT&T has abandoned this technology argument, as well as a number of other technical and economic arguments used by the cable industry to oppose open access policies at all levels of government.

To the extent that these principles represent a first step by AT&T toward providing consumers with a competitive choice of ISPs, I welcome them. However, these principles cannot be read in isolation. They must be considered together with the letters submitted by other participants in the process, as well as the fact that three of the original six participants chose not to sign the principles. And while the evident erosion of the technological argument against cable open access should advance the movement toward a marketplace solution for ensuring consumer choice, Excite@Home’s withdrawal from these discussions raises particular concerns about the true basis for any continued resistance to such a policy in the cable industry.

For these reasons, I have a number of questions about the principles themselves and about several issues not explicitly addressed by the letter to Chairman Kennard. I would appreciate your response to these questions:

1) AT&T’s letter to Chairman Kennard states that AT&T is prepared to negotiate agreements with "multiple ISPs . . . that would provide the ISP [with] Internet transport services for high-speed Internet access at prices reasonably comparable to those offered by AT&T to any other ISP for similar services, subject to other terms negotiated between the parties on a commercial basis." (Emphasis added.)

a) What "other terms" are contemplated by this provision, and why would such a negotiation with each individual ISP be necessary? For example, what requirements might AT&T seek to impose on an ISP desiring to reach a customer through a cable connection that an incumbent local exchange carrier would be prohibited from seeking or imposing on the same ISP for a DSL connection? With the technological impediments to multiple ISP access no longer a factor, what is the public policy basis for allowing such disparate regulatory treatment?

b) Nothing in the principles appears to guard against discriminatory treatment by AT&T between and among ISPs. In what ways does AT&T contemplate being able to treat various ISPs differently?

2) The principles do not ensure that ISPs can have access to connections at the cable head-end, and one letter to Chairman Kennard alleges that AT&T insisted that ISPs use AT&T transport facilities "all the way to the Internet backbone." Is this allegation true? If so, what is the basis for AT&T’s insistence on this point? Why should an ISP that owns or has a long-term lease for transport facilities, or that may have built its own regional node at another location, be required to use AT&T’s transport facilities to the extent your company suggests?

3) If AT&T intends to compel ISPs to use its own transport facilities in order to get as far as the Internet backbone, what terms does AT&T contemplate offering ISPs for the use of the backbone itself? In other words, why should the Members of this Committee not be concerned that AT&T will merely use open access at the customer level as a device for increasing concentration in the backbone market?

4) The principles contained in the letter to Chairman Kennard apparently will not become effective until "the expiration of existing exclusive contractual arrangements" – at the earliest, mid-2002 – even though those arrangements exist with entities in which AT&T (or MediaOne, with which AT&T seeks to merge) owns a controlling interest. What explains this delay in open access when AT&T (or the FCC, in the MediaOne merger case) presumably could override these exclusivity arrangements with the stroke of pen? Why should the Members of this Committee not be concerned that AT&T will use this interval to secure for itself and its proprietary ISPs a base of customers who, for a variety of reasons having nothing to do with AT&T’s price or service, may be reluctant to migrate later to other ISPs?

As further analysis of these principles and the process that led to them unfolds in public debate, I may have additional questions for you. In the meantime, I would appreciate your attention to the inquiries above and request that you respond before the close of business on Friday, December 24, 1999. Thank you for your cooperation.

Sincerely,

JOHN D. DINGELL
RANKING MEMBER

cc: The Honorable W.J. "Billy" Tauzin

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