AT&T's acquisition of cable giants TCI and Media One has triggered a fierce debate over who should have the right to provide consumer Internet access via cable lines.
On one side of the battle is America Online (dossier). With support from the Baby Bells, Internet service providers and consumer groups, AOL has been campaigning in cities and states across the country, demanding that cable companies open their networks to competition.
So far, ATT (T) has held them off, with a little help from other cable networks and federal regulators. But the fight will be won or lost in the courts, where Ma Cable is contesting a spate of rulings by local jurisdictions ordering AT&T to provide "open access."
The next round begins Nov. 3, when oral arguments in the case of AT&T vs. the City of Portland are scheduled to start in Portland Pioneer Courthouse. It may be the most important trial in the Internet Economy since the U.S. Department of Justice hauled Microsoft (MSFT) into court.
The legal issue at hand is whether the City of Portland, Ore. - or any other local government, for that matter - can impose conditions on companies that provide broadband Internet access via cable-television systems. In January, Portland officials ordered AT&T to make its cable pipes available to ISPs other than ExciteAtHome, in which AT&T has a large ownership stake. A federal judge in Portland upheld the city's right to mandate open access.
Last month, however, AT&T and its allies filed briefs with the 9th U.S. Circuit Court of Appeals, arguing that Portland should not be able to require open access because, among other reasons, only the Federal Communications Commission has the right to regulate broadband Internet access. Portland, supported by an assortment of Bells, ISPs and consumer groups, hit back, asserting that the city's local franchising power over cable derives not from federal law but from traditional authority over businesses that seek to occupy public rights-of-way.
Whichever way the appeals court rules, its decision in the Portland case will shape the future of the broadband industry for some time to come. What follows is a guide to the case: the stakes, the players, the legal arguments and the possible outcomes.
The Stakes
This case is bigger than the sum of its legal arguments. It's more than a fight over local vs. federal jurisdiction. It's more than a fight over the future of the Internet and cable modems - which can cut a 15-minute download to 1 second. In fact, this case has turned into a fight over the future of telecommunications services in America - because both sides expect phone, cable, video and Internet services to be digitized and bundled by the keepers of the broadband pipes that extend to our homes. The Bells joined the battle in fear that AT&T will be able to furnish local telephone service via cable modem without the same regulatory constraints the local phone companies face.
"There is so much money at stake in broadband that the cable open-access issue has swept in all of the large political players in communications," observes Kevin Werbach, a former FCC official and now managing editor of the Release 1.0 technology newsletter. "The combatants see this as an important issue not just because of what it says about cable open access, but for the future business model for broadband and the regulatory framework on the federal and local level."
Some key players in the case are surprised by the way it has unfolded. "Before AT&T bought TCI, this was really about data or Internet service," says AtHome founder Milo Medin. "The Bells don't care about data. If they did, they would have rolled out DSL years ago. But when AT&T bought TCI, people started looking at this as voice. That's where they get all their money. It's great to see David Kendall [attorney for the AOL-led OpenNet Coalition] writing legal briefs, but where was he a year ago?"
Kendall,
