AT&T to Allow Broadband Cable Internet Access Customers Choice of ISP

(December 7, 1999) AT&T and Mindspring delivered a letter to FCC Chairman William Kennard dated December 6 which states that AT&T will allow broadband customers a choice of ISP without having to subscribe to any other ISP, starting in mid 2002.

In a letter which coincided with AT&T's annual analyst meeting, AT&T VP and General Counsel James Cicconi, wrote that AT&T will allow high speed Internet access over cable customers a choice of ISPs, starting in 2002, when its contract with Excite@Home expires.

The letter was co-signed by Cicconi, and Mindspring VP David Baker, and Kenneth Fellman, Chairman of the FCC’s Local & State Government Advisory Committee.

The letter stated the AT&T will allow its high-speed Internet access over cable customers the following:

• a choice of ISPs;
• the ability to exercise their choice of ISPs without having to subscribe to any other ISP;
• a choice of Internet connections at different speeds, and at prices reasonable and appropriate to those speeds;
• direct access to all content available on the World Wide Web without any AT&T-imposed charge to the consumer for such content;
• the continued ability to change or customize their “start page” and other aspects of their Internet experience;
• the functionality of their ISP comparable to that which such ISP has on competing high-speed systems, subject to any technical constraints particular to, or imposed upon, all ISPs using AT&T’s cable system to deliver high-speed Internet access.

Michael Armstrong

 "We have said repeatedly that we are committed to provide maximum choice to our customers along with the world-class service they associate with AT&T, and that’s just what we’re doing," said AT&T Chairman and CEO C. Michael Armstrong in a press release. "Our customers will get a choice of ISPs for high-speed access to the Internet. That will happen next year on our fixed wireless systems. We'll also provide a choice of ISPs on our cable systems when technical issues are resolved and once our current exclusivity contract with Excite@Home expires."

"I also want to make clear that we’ve begun discussions with a number of ISPs and portals about offering their services on our fixed wireless and cable systems, and we're open to discussions with others as well," said Armstrong. "We look forward to successfully concluding those discussions."

AT&T is a large telecommunications company that is in the process of transforming itself from a long distance voice telephone company into a diversified company providing voice, data and Internet services. One part of its strategy is to acquire cable companies, such as TCI and MediaOne, which have cable lines into millions of homes.

AT&T's goal is to use these cable networks to provide not only traditional cable entertainment, but also broadband Internet access to the home, and telephony services directly into the home. Providing cable Internet access puts AT&T in competition with phone companies' DSL service.

Internet Service Providers (ISPs) and Regional Bell Operating Companies (RBOCs) have argued that AT&T should provide "open access" to its broadband cable Internet access facilities. Until now, AT&T has rejected these efforts, which it has referred to as "forced access."

Many ISPs and RBOCs, and their trade groups and lobbyists, have attempted to compel AT&T to provide open access. They have lobbied local cable licensing authorities to impose open access conditions upon AT&T when it applies to transfer cable licenses as a part of its acquisitions of cable companies.

Several local authorities, including the City of Portland, have imposed open access requirements. AT&T challenged this action in federal court. The District Court issued an opinion upholding the action of the Portland. The case is currently before the U.S. Court of Appeals for the Ninth Circuit.

These open access proponents have similarly gone to the Federal Communications Commission and requested that to impose open access requirements. However, to date, the FCC has sided with AT&T.

FCC Chairman William Kennard applauded the letter. "Today's agreement is a good first step toward providing consumers with a choice of Internet Service Providers without paying twice. I applaud the companies," said Kennard.

He added that "government regulation now would only slow down broadband deployment."

Finally, open access proponents have lobbied the Congress for open access legislation.  Rep. Earl Blumenauer (D-OR), who represents Portland, has introduced an open access bill. However, no action has been taken on it.

The Congress is examining a wide range of broadband Internet access issues. There are many bills pending in the Congress that pertain to the deployment of broadband Internet access services. The purposes of these bills variously include speeding broadband deployment, increasing competition, and assuring that rural areas do not lag behind urban areas in the availability of broadband services. However, none of these bills have passed either the House or Senate.

For example, Rep. Bob Goodlatte (R-VA) and Rep. Rick Boucher (D-VA) introduced the Internet Freedom Act, HR 1686 IH, in May 1999.

Rep. Goodlatte said Monday that despite AT&T's announcement, he will still seek passage of his bill.

"While I am pleased that AT&T has indicated its intention eventually to allow competing Internet Service Providers to pay for access to its cable lines to provide broadband Internet service, I hope that open access will become a reality sooner than 2002," said Rep. Goodlatte in a press release. "In Internet time three years is an eternity. Although AT&T has led the opposition to open access policies in the past and argued that it is technically and economically impossible, it now appears that AT&T has abandoned those claims."

Rep. Bob Goodlatte

"My goal is affordable Internet access for all Americans. The only way we get there is through an enforceable national policy, which is created in the Internet Freedom Act." stated Rep. Goodlatte.

Open access proponents reacted cautiously. "While this agreement 'in principle' sounds good, there are still a number of serious questions that the investment community, the Federal Communications Commission and others must ask in order to ensure that this a real step forward," said Rich Bond of the OpenNet Coalition in a press release. "Without persuasive answers to these questions, this is just a speech, not a change of policy."

Bond also asked "What makes this announcement enforceable?" and "What will happen to the rest of the cable industry?"

AT&T also made a number of other announcements on December 6 beyond its plans for opening access to its broadband cable Internet access facilities.

At a meeting with securities analysts on Monday, Armstrong and other AT&T executives announced new appointments to AT&T’s top management team, a major expansion of its fiber optic network for high-speed bandwidth and Internet-based services, and plans to increase revenue in the company’s key high-growth businesses – Internet protocol (IP), data, networking management and outsourcing, broadband cable, wireless and all-distance communications services.