Federal regulators are considering appealing a federal judge's ruling that local governments can force cable TV systems to open their lines up to multiple Internet service companies.
In a speech prepared for delivery today in Chicago, Federal Communications Commission Chairman William Kennard argues that only the FCC can make such a determination. For now the agency is declining to, saying there is no evidence of restraint of competition in this new Internet market.
"A lot of people say we have a monopoly or a duopoly," Kennard said in an interview. "We don't have either. We have no-opoly. It's really too soon to issue a verdict" on whether a monopoly will arise in this business.
In his speech, Kennard calls on the cable industry to "act responsibly" and open its wires to competition.
Kennard is responding to a heated debate over whether cable companies have the power to restrict who can provide Internet service over their lines, which are being upgraded as high-speed Internet conduits into millions of American homes.
Internet service providers such as America Online Inc. contend that allowing cable companies to control who can use their lines will create a monopoly. They note that telephone companies aren't allowed that control when access is by phone lines and say this has helped the Internet market bloom.
In Portland, Ore., a federal district court ruled earlier this month that the city government had authority to force its cable TV company to open access to all Internet service providers. AT&T Corp., which acquired the city's provider, Tele-Communications Inc., in April, is appealing the decision.
Kennard indicated the FCC might join in. "I'm concerned that this Internet market will be frustrated if 30,000 franchising authorities start writing the rule of the government," he said.
The FCC's decision not to regulate is "slowing the development of the Internet," said George Vradenburg, senior vice president for global and strategic policy at AOL. AOL officials said it will allow companies such as AT&T to monopolize.
Defenders of the current system say that without freedom to control who uses their lines, cable companies will not put in the tremendous investment required to upgrade their systems, which in their new form can handle phone calls. "It's the market that should make the choice, competition that spurs development, and customers who will determine what they want," AT&T chief executive C. Michael Armstrong told a news conference yesterday in Chicago.
Currently, At Home, an Internet service provider that is an AT&T affiliate, is the primary ISP for the company's cable modem service. Users of At Home who want to access another Internet service provider can do so through the cable modem, if they first subscribe to At Home, said AT&T spokesman Jim McGann.
Vradenburg said that is not open access. "In the cable world, consumers don't have a choice. Consumers have to pay twice" to connect to an ISP other than At Home, he said.
Kennard pointed out that the cable-modem service is not the only way to tap into the Internet. Other options such as satellite transmission and the telephone companies' new DSL (digital subscriber line) service are coming into use.
Yet statistics show cable access as the high-speed leader. Roughly half a million modem users nationwide subscribe to a cable-modem service, compared with DSL's 75,000.
In a related development, GTE Corp. and AOL announced yesterday a technology that they said allows cable-modem service providers to let consumers freely choose their own Internet service provider.
The company recently finished a trial in Clearwater, Fla., with 50,000 GTE cable-modem users.
AT&T's At Home network chief technology officer, Milo Medin, said the technology does not seem to introduce any new capability.
CAPTION: Chairman William Kennard says the issue should be left up to his agency, the FCC.