Local cable regulators can require cable TV companies to open their high-speed Internet service to competition, a federal judge in Portland, Ore., ruled yesterday.
The case arose because regulators in Portland had put that condition on AT&T Corp.'s purchase of the cable systems of Tele-Communications Inc. (TCI), which runs Portland's system. AT&T sued to try to force removal of that condition.
The decision, which AT&T said it would appeal, is an important victory for consumer groups and Internet service providers such as America Online Inc., which contend that through multibillion-dollar purchases of cable TV companies, AT&T is monopolizing an emerging conduit into U.S. homes for Internet service, cable TV lines.
Most Internet service is now provided via telephone lines. But the transmission speed is limited, leading to frustrating delays before material appears on-screen. The industry wants to bring on a new generation of "broadband" access that would make graphics appear instantly and easily handle video signals.
AT&T, which paid dearly for TCI, wants to recoup some of the purchase price by providing such access through the cable networks, but to offer only the AT&T-owned At Home Corp. service. It says that requirements that other services be able to buy carriage on its systems are illegal under federal laws regulating cable television and violate the First Amendment, Commerce Clause and Contract Clauses of the U.S. Constitution, as well as the cable company's franchise agreements.
AT&T officials also argue that multiple high-speed routes into U.S. homes are coming into use, such as the telephone service known as digital subscriber line (DLS).
U.S. District Judge Owen Panner sided with the city and county officials in Portland. "I conclude that the open access requirement is within the authority of the City and County to protect competition," Panner wrote.
Panner's summary-judgment decision was a "a win on all points, going away!" said David Olson, Portland's cable communications director.
AT&T quickly announced that it would appeal the "inexplicable" decision. Local officials far overstepped their legal authority, AT&T Vice President Mark Rosenblum said in a company statement.
The Frontiers of Freedom Foundation, a group that has attacked America Online and other service providers for their stand against AT&T, said that forcing AT&T to open its networks "kills the incentive for people to invest in the technology -- and that's bad news for consumers."
But the Consumers Union and Internet companies were gleeful at the news. "Consumers should have the same choice in broadband that they've always had in narrowband," said Dave Baker, vice president for legal and regulatory affairs at nationwide Internet company MindSpring Enterprises Inc. Narrowband refers to access over a telephone line.
Other cities have taken up the issue of open access with AT&T, but the politically powerful company has lobbied heavily in every case and the cities have backed down, said Portland City Council member Eric Sten. Portland, however, decided to fight; "We'd rather be right and lose in court than roll over," Sten said.
The Federal Communications Commission declined to mandate an open access requirement when considering AT&T's purchase of TCI (AT&T had declared it would be a deal breaker). Yesterday a FCC spokeswoman would only say, "We've received a copy of the court's decision and we're studying it at this time."