Montgomery County has emerged as a battleground in the fight between cable television companies and Internet firms over who controls cable lines, an increasingly important pipeline for the next generation of Internet service.
Across the country, Internet firms are asking local governments to force cable companies to share their lines--an issue known as "open access." Internet providers would then have the ability to offer high-speed access to the World Wide Web and a variety of new features unavailable over common phone lines, most notably video.
But cable companies have fought open-access regulations because sharing their networks allows competition with their own Internet providers--the only choice in some markets for customers who want high-speed Internet service.
The national debate comes to Montgomery as the county evolves from digital-age backwater to full-fledged participant in the technology revolution. A 16-year cable television monopoly in Montgomery recently ended, forcing officials to grapple with issues that ultimately will determine the cost and quality of Internet access for the county's more than 315,000 households.
A dozen jurisdictions in six states have adopted open-access laws--including Fairfax City--and, if it follows suit, Montgomery would be the first in Maryland and the largest in the mid-Atlantic region to do so, according to open-access advocates. Los Angeles and San Francisco also are considering open-access laws, but Montgomery could become a showcase for the trend because of its proximity to Washington and Vienna-based America Online, which is leading the charge among Internet companies to promote open access. The Federal Communications Commission has yet to issue regulations.
The debate in Montgomery is tied to the impending transfer of a cable franchise from Cable TV Montgomery to Comcast Corp., the nation's third-largest cable company. Comcast announced plans last year to take over Cable TV Montgomery and the Arlington County cable franchise from Prime Communications in a deal worth more than $730 million--a move that strengthened its hold on the area cable market.
In the past week, lobbyists from AOL and GTE Corp. have met with county officials to ask that Comcast be made to share its cable lines as a condition of receiving the franchise license, the final step in consummating the purchase. A hearing on the transfer has been tentatively scheduled for next month.
Already, some key Montgomery officials, who for years have complained about the cable monopoly, are suggesting that they may side with open-access advocates against cable companies.
"The cable companies keep coming up with anti-competitive schemes that lock up the market," said Montgomery County Council President Michael L. Subin (D-At Large). "I'm very heavily leaning toward open access."
Council members will likely decide the issue by April after receiving a recommendation from County Executive Douglas M. Duncan (D), a former AT&T executive, who believes market forces will eventually determine whether cable companies share their lines or Internet firms build their own networks.
"The question is how do we get there," Duncan said. "But my first responsibility is to make sure we bring in a good operator for this cable franchise."
Council member Steven A. Silverman (D-At Large), who met this week with an AOL lobbyist, said: "The question for me is what's in it for Montgomery residents. Is this just a battle between corporate giants over market share?"
Internet trade associations say allowing Comcast to have sole control over its network--and offer only one high-speed cable link to the Internet--would stifle competition and limit consumer choice. They note that Montgomery residents have more than 400 Internet companies to choose from today but none that can provide service over the far-speedier cable lines.
"It would be the height of irony that as technology advanced, the choice for Montgomery residents diminished," said Greg Simon, co-director of the openNET Coalition of Internet and e-commerce companies. "We're arguing for what I call the golden rule of Internet access: The cable company should offer every Internet provider that wants to provide high-speed access the same terms it offers its own company."
But Comcast and cable industry groups say the lines should belong to the company that paid for them, warning that government intervention in the wide-open world of the Internet could slow innovation.
Joe Waz, Comcast's vice president for external affairs, said cable companies have accelerated marketplace innovation and prompted faster installation of digital phone lines that also allow for higher-speed Internet service. DSL, or digital subscriber line, is available in most of Montgomery's urban neighborhoods but not nearly as common as cable access throughout the county.
"The entire forced-access campaign is fundamentally anti-competitive," Waz said. "Cable is driving competition in this market."
Waz said he is particularly troubled by the opposition from GTE, an Internet provider merging with Bell Atlantic. He accused GTE of trying to slow down Comcast until the phone company can expand DSL service. But Bob Bishop, a GTE spokesman, said, "The whole open-access issue is about consumer choice.
"There's no reason why the cable system has to limit consumers to only one ISP [Internet service provider] and make consumers pay twice if they want to select an ISP of their choice," Bishop said.
Comcast is inheriting and plans to continue a $140 million program to improve the county cable network, including making it ready for high-speed Internet access. The work is scheduled to be finished by 2002. Comcast owns a share of the Internet service provider Excite at Home and intends to promote it as part of its cable package.
Further complicating matters in Montgomery is the impending entrance of a second cable company in the market. Starpower Communications, half-owned by Potomac Electric Power Co., is building its own fiber-optic network and plans to begin competing for Montgomery subscribers next year. Starpower is part-owned by the corporate parent of Erols Internet, a major Internet provider that Starpower intends to make a feature of its service.
Council members said yesterday that applying an open-access provision to Comcast but not Starpower could unfairly affect competition. At the same time, they said, altering Starpower's franchise agreement to require open access now could bring legal troubles. Broward County, Fla., and Portland, Ore., are defending their open-access rules in court.
"I want it applied to everybody," Subin said. "I don't want anybody forced to take a service that they don't want or be forced to accept a provider they may not want."
CAPTION: County Executive Douglas M. Duncan says market forces will determine whether cable companies will share lines with Internet service providers.