Battle Over High-Speed Net Access

In the high stakes game of providing high-speed access to the Internet, providers such as America Online are battling with cable giant AT&T in various City Hall hearings on the issue.The outcome of issue on a national level is one of the defining moments for the future of the Internet with some of the biggest names in the telecommunications and media industries launching a multimillion-dollar war over how consumers will get high-speed access to the Internet. The prize: the billions of dollars consumers will spend for lightning-fast Net service access.While the City of Los Angeles is besieged with an outpouring of lobbying expenditure to influence an upcoming City Council vote on whether to force cable companies to lease space on their high-speed networks to outside Internet providers, San Francisco is the first major city to vote not to open cable to Internet firms. Cable companies, including AT&T, the nationís leading cable provider after its recent acquisition of Tele-Communications Inc., are loath to turn over their high-speed networks to independent services such as AOL. They argue that they need the exclusive right to sell high-speed service to their own subscribers to justify the billions they are investing to upgrade their networks.But AOL and other independent Internet service providers argue that high-speed transmission is such a critical technology that they should be permitted to reach subscribers over cable lines, just as they now sell their services over telephone lines.Advocates on both sides say that consumersí interests are very much at issue, with each side arguing that its approach will offer consumers choice and reliable service. Those wanting to make cable firms offer space to providers say that competition between providers will drive down prices and give consumers the option of selecting between rival services.Critics of ""open access,"" which they say is really ""forced access,"" argue that imposing such a requirement would have the opposite effect. Forcing the cable companies to open up their systems would inhibit the spread of high-speed access by preventing the cable companies from capitalizing on their investment in offering the service and that forcing open access would risk the right of municipalities to regulate cable companies as well, thus costing cities the annual revenue they receive from franchise fees.In San Franciscoís case, the Board of Supervisors reached an agreement with AT&T which will require the cable company to promptly upgrade the cityís cable infrastructure so that it can handle Internet services as well as television signals, an effort that will cost an estimated $50 million, but reserved the right in the future to require AT&T to provide open access in San Francisco should it become available in any other municipality. The San Francisco model could influence Los Angeles and other municipalities nationwide now confronting the issue. The option to impose open access at a later date while at the same time requiring cable companies to upgrade their infrastructure is appealing to municipalities, who now regulate cable providers, which generally hold monopolies on local cable TV franchises. In San Francisco, the local government also will require AT&T to provide free high-speed Internet access to libraries and insure that Net access is offered to poor neighborhoods as well.AT&T, which is the largest shareholder in the Excite@Home Internet service with 650,000 subscribers nationwide, has approved a program through Excite in which competing Internet providers can use the Excite network for a fee paid by their consumers on top of the $39.95 per month collected by @Home. In this way AT&T intends to protect its investment in its cable networks to handle Internet traffic.The San Francisco action preserves the concept of cable monopolies. Advocates of open access argue that the Excite@Home approach of requiring additional fees on the part of competing Internet provider users would hinder competition with those users having to pay unnecessarily high fees.A growing fear is that government regulation on the local level will be detrimental to the growth of the Internet with upwards of 30,000 different municipalities deciding how to regulate the Internet. Some predict that the Federal Communications Commission or Congress will have to step in to define a national policy.