Copyright 2002 The Seattle Times Company  
The Seattle Times
July 15, 2002, Monday Fourth Edition
SECTION: ROP ZONE; Business; Pg. C1

LENGTH: 894 words

HEADLINE: EarthLink teams up to offer broadband
AT&T opening cable network to other ISPs

BYLINE: Nancy Gohring; Seattle Times business reporter

BODY:
In a move that adds competition to cable broadband in the Seattle area, EarthLink will sell high-speed Internet access through cable modems starting today.

Atlanta-based EarthLink, one of the nation's largest Internet service providers, is using AT&T Broadband's cable-modem network to deliver the service in the Seattle and Spokane markets.

It is the first time AT&T Broadband has opened its cable network to other ISPs, and that has some observers skeptical of the Denver-based company's motives.

For its part, the dominant cable-modem provider in the Seattle area said it's reaching out to ISPs as potential partners to attract more customers to the service.

But the company is also on the verge of completing a merger with Philadelphia-based Comcast AT&T and Comcast shareholders signed off on it last week and some observers suspect opening access and the merger may be linked.

"They're very serious now because they've got lots of incentives to be serious with the merger," said Jeff Kagan, an independent telecom analyst, who suggested the company may want to reassure federal regulators that the merger won't create a monopoly. "The question is, will they be just as serious after the merger?"

AT&T isn't required by law to let other companies use its network. That contrasts with the regional Bell phone companies, which must allow competitors access to the high-speed DSL service they control.

The DSL market's experience has made many observers wary of cable providers' efforts to make deals with other ISPs, particularly because the Bell companies have shown some reluctance in fully embracing open access to their DSL networks.

Some non-Bell DSL providers have complained that the phone companies have thrown obstacles in their way while opening Bell facilities for phone or data services.

Direct competition

EarthLink's offering will compete directly with AT&T Broadband's own marketing of its cable-modem service, but AT&T views the competition as a stimulus to expand the market.

"The more choices out there will drive a deeper penetration of services," said Sarah Eder, an AT&T Broadband spokeswoman.

Including modem rental, the EarthLink offer will cost $44.95 a month, which is $1 less than AT&T's similar service. Currently, however, AT&T has a promotion pricing the service at $21.95 per month for the first four months, including modem rental.

Eder thinks certain customers will want AT&T's offering because it allows them to buy a bundle of services, including cable TV, from one source.

EarthLink said different customers will be drawn to it for essentially the opposite reason.

"We specialize in the Net. That's all we do," said Kurt Rahn, EarthLink's director of communications.

AT&T Broadband has begun contacting other ISPs in the area with partnership offers. In May, it announced a deal with Seattle-based Internet Central, though it's uncertain whether Internet Central will offer the service.

Daniel Solomons, owner and founder of Internet Central, said he hopes to work out some kinks in the deal before he starts selling the service.

Solomons doesn't advertise his little-known ISP, but he has about 500 customers and 500 partners consisting of ISPs or large businesses to whom he sells a variety of broadband services.

"AT&T probably had us on their books because we buy a lot of bandwidth around the country," he said.

He also wonders if AT&T picked him to avoid looking like a monopoly.

"They may have deliberately chosen a company they saw as no threat to their business ... and make it look like they're playing nice," he said.

Intentions came first

AT&T argues that history demonstrates its commitment to opening the network. It originally announced intentions to partner with other ISPs in December 1999, well before the Comcast merger was proposed.

"There wasn't even a glimmer in AT&T Broadband's eye to do a deal with Comcast," said Eder.

Solomons does say the company has been easy to work with, even if it hasn't given him everything he wants. "They said, 'We're new at this so tell us what you want,' " he said.

Speakeasy, the Seattle-based national ISP, has also held discussions with AT&T, but Mike Apgar, its president and chief executive officer, said he didn't find AT&T's offer very palatable.

"The arrangement they are proposing is sufficiently restrictive, so it's an impossible business proposition," said Apgar. He hopes to work things out and eventually offer cable-modem service.

The issue of open access in cable systems has been the subject of conflicting court orders trying to determine whether regional cable providers must open their systems to ISPs. The Federal Communications Commission hasn't required cable operators to do so, but some local commissions have. The debate often concerns the authority of the local regulatory bodies.

Cable operators around the country have been slow to open their networks.

AOL Time Warner was required to partner with ISPs as a contingency for approval of the merger between America Online and Time Warner; it allows EarthLink to sell its service.

In addition to AT&T Broadband and EarthLink, Seattle residents can also get cable-modem service from Digital Millennium, a smaller cable provider based in St. Louis.

Nancy Gohring: 206-464-2140 or ngohring@seattletimes.com.

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