Copyright 2000 The Chronicle Publishing Co.
The San
Francisco Chronicle
JUNE 23, 2000, FRIDAY, FINAL EDITION
SECTION: BUSINESS; Pg. B1
LENGTH: 978 words
HEADLINE:
Court Rules For AT&T;
Cities can't force open cable lines to ISPs
BYLINE: Carrie Kirby, Chronicle Staff Writer
BODY:
A federal appeals court decision appears to
have doomed plans by San Francisco officials to require AT&T to open its
cable network to competing Internet service providers.
The U.S. Court of
Appeals in San Francisco ruled yesterday that Portland, Ore., has no authority
to make AT&T open its network there. That court has jurisdiction over
Portland and San Francisco.
Redwood City's ExciteAtHome, which is
partially owned by AT&T, has exclusive rights through 2002 to sell
high-speed Internet access over AT&T's networks. Supporters of "open access"
argue that consumers would benefit, with more choices and lower prices, if
AT&T's cable lines were made available to other ISPs. "It's a very
heavy-handed blow to consumer interest," said Supervisor Tom Ammiano, who had
proposed opening AT&T's cable lines in San Francisco within 18 months of his
ordinance's adoption.
San Francisco had filed a "friend of the court"
brief supporting Portland's stance that access to the Internet through cable
networks should be a matter of local governance, just as cable TV franchises
are. Seventeen other cities and counties, including Los Angeles and New York,
signed onto San Francisco's brief.
But the appeals court ruled that
AT&T, which has spent billions buying cable companies to create a national
network for local telephone and high-speed Internet service, doesn't fit the
legal definition of a cable network. Instead, it is a telecommunications
service, and therefore governable only by federal law, the court said.
"We are disappointed, to say the least," said San Francisco Deputy City
Attorney Marc Slavin. "We think that access to the Internet through cable
networks should be a matter of local jurisdiction."
Last July, the San
Francisco Board of Supervisors discussed requiring AT&T to open its cable
lines but ended up putting the decision off until the city Department of
Telecommunications and Information Services could complete an extensive study of
the issue. After completing the study, the department recommended that the
supervisors require AT&T to open its lines by 2003, and the San Francisco
Telecommunications Commission supported that recommendation.
Now that
decision appears moot.
The city attorney's office will examine the
ruling to decide how it affects Ammiano's proposed ordinance, as well as one by
Supervisor Michael Yaki calling for a more-cautious approach to open access,
Slavin said.
One possible response to the ruling might be campaigning
for federal legislation supporting local governments' right to regulate
telecommunications franchises, Slavin said.
The ruling is a setback for
other Internet service providers, which have argued that AT&T should be
forced to open its cable lines to other competitors.
AT&T got into
the cable business in earnest when it bought Tele-Communications Inc., thereby
receiving a stake in the AtHome cable network, which later merged with Excite.
Since then, it has invested heavily in broadband, betting that cable networks
will be the dominant way of providing high-speed access to the Internet.
Shares of ExciteAtHome surged 10.2 percent on the news, rising
$1.94 to $20.88 on the Nasdaq Stock Market.
AT&T shares also rose, jumping $1 to $36
on the New York Stock Exchange.
"This is a significant milestone in our
company's history," said Alison Bowman, spokeswoman for ExciteAtHome. "The
courts have decided that local jurisdictions can't impose forced access
requirements."
The decision also was praised by Peter Arnold, director
of the "Hands Off the Internet" coalition, a lobbying group formed in part by
AT&T. But he said it won't have nearly the impact it would have had a few
months ago.
"The air has gone out of the access movement," Arnold said.
"Since the beginning of the year, nearly a dozen state legislatures have
considered access regulations, and not a single one has even passed it out of
committee."
Lawmakers are realizing that Internet technologies are
evolving too rapidly for regulators to become involved, he said. But the key
reason was America Online's decision to side with AT&T in the case.
"There was a sea change when AOL flipped," Arnold said.
AT&T
told the appeals court that it should be able to control Internet access to the
cable TV network it purchased and that Portland and surrounding Multnomah County
have no right to make it do otherwise.
Portland area officials countered
that they were simply protecting the city from a monopoly when they voted to
force AT&T to open up access to the network to competitors.
U.S.
District Judge Owen Panner ruled last June that the city and county did have the
authority to pass the ordinance. But the San Francisco appeals court reversed
the decision, saying that AT&T is really not a cable service at all, and
instead is a telecommunications network, regulated solely by the Federal
Communications Commission.
The lead attorney for AT&T told the
appeals panel that the FCC has taken a hands-off approach to regulating cable
access to the Internet after the Telecommunications Act of
1996.
"Congress was clear," David Carpenter said, "because it
wanted nothing -- nothing -- to get in the way of that conversion."
AT&T also claimed that if local governments are allowed to regulate
cable access to the Internet, requirements would vary across the nation, forcing
costly changes in equipment and services that would ultimately affect the
consumer.
"You'd have a patchwork of different regulations," Carpenter
told the appeals court. "It would be like having highways of different sizes
running through Portland and running through San Francisco."
The
appellate court said that because AT&T's broadband network doesn't fit the
definition of "cable services" under the Telecommunications Act, it didn't need
to address AT&T's other legal arguments.
LOAD-DATE: June 23, 2000
