November 17, 1999
By Adam D. Thierer
"Broadband" service is as much as 100 times faster than
conventional phone lines and opens the way for greater use of
electronic commerce, "video streaming" (which allows people to view
live events over the Internet), desktop teleconferencing and a vast
array of other Internet-based services. Although not widely
available today, broadband service is the wave of the future for
web surfing and e-commerce.
Cable TV lines provide one of several ways broadband service can
be delivered. Over the last several months, AT&T has invested
more than $140 billion in acquiring cable-TV systems, and the
company will spend billions more upgrading them for broadband
traffic. Subscribers will be serviced exclusively by a subsidiary,
at least through 2002.
Fearing this would mean an AT&T broadband monopoly in their
city, Portland officials used their cable-licensing powers to
require AT&T to open its local cable system to competing
Internet Service Providers (ISPs) at a city-determined price.
AT&T is suing, saying that when it comes to new Internet
technology, the market -- not regulators -- should determine what
constitutes reasonable service and a fair price.
Portland is the first but not the only place this issue is being
fought. Officials from Broward County, Fla., to Fairfax, Va., to
Cambridge, Mass., have followed Portland's lead. Denver may have an
"open access" referendum item on the ballot next year. Miami and
Los Angeles recently rejected similar proposals. The GTE phone
company went to court in Pittsburgh last month, suing for "open
access" nationally. And in St. Louis, the mayor signed a measure on
Nov. 12 that forces AT&T, which owns the local cable franchise,
to open its high-speed lines to all competing ISPs.
Regulators in Portland and other municipalities argue that
there's not enough broadband competition out there right now and
that cable providers should be required to let other companies use
their systems. But many cable companies -- and virtually every
major telecom and Internet player -- are already investing or
planning to invest in broadband capacity. Just two weeks ago, SBC
Communications announced that it will spend $6 billion to speed
deployment of DSL technology, which will give broadband service to
nearly 61 million of its customers over ordinary phone lines.
Earlier this year, Hughes Electronics and America Online announced
a $1.5 billion deal for delivering broadband service via
If the courts allow it, mandated or "open" access will almost
certainly halt this rising tide of broadband competition. As they
await the outcome of the AT&T case, members of the
communications industry can be expected to put their broadband
plans on hold. They will ask themselves whether it makes sense to
risk billions of dollars if any or all of the 30,000 local
authorities across the nation can expropriate their broadband
After all, if broadband cable investments can be regulated in
this manner, won't someone find a way to do the same for satellite,
DSL, wireless and whatever other broadband technologies emerge in
the next several years? The communications industry will look at
this example of Romper-Room economics -- "Sharing is good, private
ownership is bad" -- and say, "Who needs this?"
If Portland regulators prevail in this case, the decision will
give other localities a green light to move forward with "open
access" regulations that mimic those Portland is trying to impose
on AT&T. Eventually, every cable provider in the country could
be required to offer its rivals access to their networks at
regulated rates. This application of old Soviet-style collectivist
decision-making to American communications technology threatens to
lead where it's always led: to lower investments, stunted
technology and higher prices.
The challenge before the Ninth Circuit is to realize that "open
access" is in fact "forced access" that will discourage true
broadband competition and increase the power of regulators over an
industry Congress already started deregulating three years ago. For
the sake of consumers nationwide, let's hope the judges in Portland
understand how much of the future of America's most promising new
technology is riding on their decision.
Distributed nationally by Knight-Ridder Tribune News Service
A Dark Day for the Internet
Adam D. Thierer
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