Local Internet firms want a ride on AT&T's cable

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Local Internet firms want a ride on AT&T's cable

Tuesday, October 12, 1999

By Ken Zapinski, Post-Gazette Associate Editor

Local Internet companies are beginning a public lobbying effort to force AT&T Corp. to allow them to use the company's cable television lines to provide high-speed Web access.

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The group, which has its own Web site, is targeting Pittsburgh City Council, which must approve a new cable-franchise agreement with AT&T. The current agreement, which AT&T acquired when it purchased Tele-Communications Inc. for $54 billion early this year, expires at the end of the month.

Stargate Industries, Telerama, Nauticom and other local Internet service providers (ISPs) want the city to require AT&T to open its system as a condition of renewing the agreement, which permits the company to run its cables along city-owned property.

AT&T Cable customers in certain areas can receive always-on Internet access that can be dozens of times faster than conventional dial-up modem service. But AT&T requires those customers to receive Internet access from Excite@Home, an Internet company in which AT&T owns a controlling stake.

The local ISPs, as well as national companies such as GTE and America Online, want a model akin to the telephone system: Bell Atlantic telephone customers can use their phones to access Bell Atlantic's own ISP, or any other ISP of their choosing, such as AOL.

Not all of AT&T Cable's 450,000 customers in Western Pennsylvania can receive the high-speed Internet service, though it will become available everywhere, including the city of Pittsburgh, as the company updates its lines.

The company said it has to be assured of an adequate return on its investment or such improvements are not worth the billions of dollars that they cost. "We have always said we'd be willing to sit down with anybody and ... discuss terms for access to our cable systems," AT&T spokesman Jim McGann said. "It is not the role of government to step in and mandate anything."

Pittsburgh City Council is sympathetic to the open-access argument. But council members stopped short of requiring it during their approval of the AT&T-TCI deal earlier this year for fear they would be sued.

AT&T has filed suit against officials in Oregon and Florida because they have tried to force AT&T to open its network to competitors.

The Federal Communications Commission has largely backed AT&T's position, because it does not want 30,000 local communities across the country coming up with 30,000 different sets of rules. For now, the FCC has decided to sit back and watch how things develop rather than try to implement new requirements.

Participants in the Pittsburgh cable negotiations refused to discuss the status of the talks, citing confidentiality agreements by both sides. But both AT&T and city officials said that no one's TV will go black at midnight Nov. 1 if a new agreement is not reached by then.

AT&T Cable spokesman Dan Garfinkel said it is not unusual for communities to go years without new, permanent agreements in place. "Obviously we would not disrupt service to our customers," Garfinkel said.

The city of Pittsburgh receives nearly $3 million a year from AT&T for use of city rights-of-way. But federal law restricts what locales can demand from cable companies in their franchise agreements; for instance, payments are capped under law, and communities cannot dictate rates.

Executives at Stargate, the region's largest locally owned Internet company, believe that AT&T eventually will cut a deal to let ISPs on their system.

They said the company can make a lot of money carrying data to and from customers, whether those customers get their Internet service from Excite@Home, AOL or Stargate. AT&T has already acknowledged past discussions with AOL.

That's why Marcus L. Ruscitto, Stargate's CEO, and Shawn McGorry, its chief operating officer, discount the public rhetoric of AT&T executives who say the company won't build a new state-of-the-art network if they are forced to open it to others.

"They're coming to recognize that the transportation piece of the pie is very, very, very big and something they know how to do very, very, very well," McGorry said.