The
second opportunity: TCI and AT&T asked the City to approve the proposed buy-out of TCI
by AT&T. Coincidentally, both events came to the attention of the City at the
beginning of the year. Many local activists saw this as a joint opportunity to leverage
even further concessions from TCI than were negotiated in the earlier franchise agreement.
Unfortunately, this didn't happen.On the top of the
list of concessions was the desire to open AT&T's cable modem infrastructure in
Seattle to all providers. The issue most important to activists was open and equal access
to all Internet service providers (ISPs) ranging from small, local commercial ISPs to
nonprofit organizations such as the Seattle Community Network. The City was already a test
market for the @Home Internet offering via TCI's cable infrastructure. For high-bandwidth
offerings such as DSL provided by the local phone companies, wire connection and ISP
service are purchased separately. In contrast, TCI offered Internet service only through
@Home, a company founded by a consortium of investors including TCI. When the franchise
agreement was signed three years ago, the huge opportunities and popularity of
high-bandwidth Internet access via cable was not anticipated. Therefore, at that time,
accepting @Home as the only high-bandwidth service over the cable infrastructure didn't
seem unreasonable.
However, the landscape had changed dramatically in three
years. The importance of allowing fair, open, and equal access to the cable modem
infrastructure was obvious to a wide range of concerned citizens and local ISPs.
Constituents expressing concern included the City of Seattle's Citizen's
Telecommunications and Technology Advisory Board (CTTAB). Members of CTTAB and other
activists were aware of an earlier recommendation in Oregon issued by the Mt. Hood Cable
Regulatory Commission (MHCRC) which stipulated open and equal access to the cable
infrastructure as a requirement for transfer of control from TCI to ATT. The Portland City
Council passed this recommendation. Spurred on by the bold move of MHCRC and the City of
Portland, Seattle citizens approached the city with a similar proposal. However, AT&T
and TCI soon made it clear that the Portland decision was unacceptable and they
subsequently sued the City of Portland Ð claiming they had no right to put such a
requirement in the transfer agreement.
Unfortunately, the Seattle City Council got cold feet.
Portland appeared to be headed towards a legal disaster with AT&T's suit, so the
Seattle City Council decided to try and negotiate an agreement that would not precipitate
a similar lawsuit. The Council had already heard from a number of concerned citizens and
ISPs in public hearings, so it was difficult to dismiss the concerns altogether.
However, as is the case with most negotiated agreements,
the results were less than satisfying. TCI agreed to allow subscribers of their @Home
service to get on the Internet without having to go through the @Home portal (i.e., you
don't see the @Home screen). In addition, all ISPs can obtain access interconnection
points to the @Home infrastructure, thus enabling them to provide the same high-bandwidth
access that @Home can offer. This technically provides "equal access" to TCI's
infrastructure. However, if a consumer wants to use an ISP of their own choice and not go
through @Home, they will still pay the same price to TCI as if they were using @Home
anyway. Thus, it will cost the consumer more to use an ISP of their choice, if that
choice is any provider other than @Home.
For example, a consumer would first pay $40 per month to
get access to the @Home infrastructure -- the onramp. Then, in addition to that cost, the
consumer then pays another $20 per month or so in addition for an independent ISP Ñ
totaling $60 per month for high-bandwidth access over cable. However, if that consumer
simply chose to use @Home as their ISP, all they would pay is $40 per month Ñ that's it.
In other words, the city did not ask TCI to unbundle the
price of Internet service and access to their cable infrastructure. Unbundling is a key
strategy for regulators at all levels to ensure broad competition in telecommunications.
However, the concept seems to have been missed when it comes to cable, even though
AT&T clearly intends to use its acquisition of TCI to broaden its dominance in the
telecommunications marketplace.
In the words of Seattle Councilmember Nick Licata, a
vigilant supporter of open access: "[Unbundling] is an important issue. It would be
best if a subscriber would pay one price for AT&T's cable hookup and then another for
the @Home Internet service. I would like the City to require that price structure on
AT&T. But the city cannot require this unbundling because the Telecommunications Act
of 1996 does not make cable service a utility."
In total, the City Council passed four pieces of
legislation to handle the rebuild and transfer of control. They are:
- TCI Rebuild Extension
- Approving Transfer of Control from TCI to AT&T
- Cable Customer Bill of Rights
- Resolution to explore alternative ways of providing the
citizens of Seattle telecommunications services
More information can be found at www.ci.seattle.wa.us/cable/cableleg.htm
.
One interesting criteria included in the Transfer of
Control legislation was a series of "triggers" to reopen the franchise. These
triggers would empower the City Council to re-negotiate franchise terms if certain
conditions were to change. One such trigger would be changes in federal legislation that
would allow the City to impose pricing unbundling criteria on AT&T. Another trigger
event might occur at such a time that AT&T captures more than 2/3 of the
high-bandwidth market through cable-modem or other high-bandwidth offerings (e.g., DSL).
These reopener provisions are unique to the City of Seattle and members of the Council
consider these concessions to be a victory for public-interest. However, from another
public interest perspective, very little benefit was obtained from these
"concessions." The $20 per month (or more) "penalty" to use an
independent ISP is a huge barrier to open and equal access.
