Copyright 2002 The Denver Post Corporation  
The Denver Post
May 15, 2002 Wednesday 1ST EDITION
SECTION: BUSINESS; Pg. C-02

LENGTH: 551 words

HEADLINE: Group seeking to stop merger Oversight over AT&T, Comcast called 'disaster'

BYLINE: By Jennifer Beauprez, Denver Post Business Writer,

BODY:
Calling oversight by federal regulators 'a disaster,' a  national consumer advocacy group wants to lobby local  municipalities to kill AT&T Broadband's $ 72 billion proposed  merger with Comcast Corp.

The Consumer Federation of America, one of 38 groups opposing  the merger, has launched a nationwide campaign to appear in a  number of cities, including Denver, San Francisco and Dallas. The  merger between Comcast and Arapahoe County-based AT&T Broadband  would create the nation's largest cable company with 22 million  subscribers.

The Consumer Federation, along with a number of its local and  state members, will encourage local officials to refuse to  transfer cable franchises or insist on tougher conditions to do  so, said Mark Cooper, research director for the federation.

A cable franchise is an agreement between local government  and a cable company to regulate certain services in that area. A  public hearing in Denver is tentatively set for June 17.

'For the cable consumer, Washington regulators and oversight  has been a disaster,' Cooper said. 'Sometimes public policy is  made outside of Washington.'

Cooper said the deal would force the combined firm to cut  costs, and consumers would pay with poor service and rate hikes.  He said local officials should impose stricter quality-of-service  standards, insist on uniform prices and ban the company from  withholding programming, such as sporting events, to fight off  satellite competitors.

AT&T Broadband spokeswoman Sarah Eder said consumers will get  more benefits, innovation, services and choices under the merger.  For competitive reasons, Eder refused to disclose how many cable  franchises AT&T Broadband has or how many require local approval  to transfer control to the new AT&T Comcast company.

The Consumer Federation intends to lobby wealthier cities  that can better fund any legal battles that may result from  arguing against the merger.

'We firmly believe that if you drive a hard bargain, cable  companies will make concessions,' Cooper said. 'If we get enough  cities to say 'no,' then we can get the merger killed. It's a low  probability, but it could still happen.'

Cooper pointed to the power evoked two years ago by the city  of Portland, Ore., which argued that access to the Internet  through cable networks should be subject to decisions by local  government, just as with cable TV franchises.

A federal appeals court ultimately rejected the city's  argument, but it brought to the national forefront the issue of  'open access,' encouraging cable companies to open their networks  to other high-speed Internet providers, he said.

It may not matter if local franchise authorities believe the  merger is in the best interest of consumers. City officials don't  have a lot of legal room to question the merger, said Dean Smits,  director of the Office of Telecommunications for the city and  county of Denver.

City officials must make decisions based only on the merged  company's financial, technical and legal ability to provide  service, he said.

'These consumer groups are well-intentioned, they're  well-researched and they have valid concerns,' Smits said. 'But  the law is the law.'

LOAD-DATE: May 16, 2002