Ma Cable?

In St. Paul and its suburbs, an unlikely coalition battles telecom giant AT&T

Picture it, says Bil MacLeslie: One single corporation owns all the information flowing into and out of your house. It controls the wires through which you get phone, TV, Internet, and any other digital data streams the cyber-economy may create; it also provides the content, drawing on its megamedia allies' stores of movies, magazines, and music, and swinging billion-dollar deals with advertisers for exclusive access to your screen. If it doesn't want you seeing certain information, well, it may just make it difficult to get to competitors' Web sites, or cause movies from other providers to download at a snail's pace. "A single gatekeeper will be able to stop any thought, any discussion, or any conversation they want," MacLeslie says.

Big-brother horror scenarios have been staple fare among conspiracy theorists since the days of, say, Brave New World, 1984, and Fahrenheit 451. But MacLeslie is no media critic or left-leaning political activist: As the director of research and development for Minneapolis-based Vector Internet Services Inc. (visi.com), one of the largest Internet Service Providers (ISPs) in the state, he has business on his mind. He's part of a coalition of telecommunication firms trying to force the cable provider for St. Paul and other metro-area cities to open its network to competition.

That cable provider is MediaOne--or rather, its new corporate parent, AT&T. MacLeslie and his allies hope to make the Twin Cities the latest battleground in a nationwide fight featuring AT&T on one side and unlikely coalitions of ISPs, phone companies, activists, and politicians on the other. At stake, say all those involved, are billions of dollars' worth of business--and, perhaps more important, a prime position in the telecommunication marketplace of the 21st Century.

While the fight has so far attracted little attention locally, in some cities the issue has made front-page headlines, prompting giant corporate players to spend millions on advertising and lobbying campaigns designed to position them as embattled underdogs. In San Francisco the ISP America Online (AOL) recently sent canvassers to grocery-store parking lots to make its case against an AT&T "monopoly." AT&T quickly countered that move by hiring students to dress up as chess pieces and hold signs reading: "Don't Be a Pawn in AOL's Game."

While the lobbying tactics echo old-fashioned street theater, the conflict itself stems from recent advancements in technology. Back in the good ol' days--until about two years ago--there were only two telecommunication services most people could afford to have delivered to their homes: telephone service and cable television. If you wanted to get online, you had to do it over the phone wires, using a modem transmitting data at speeds no more than 56 kilobits per second (kbps).

But recently companies have developed equipment capable of giving regular Joes the kind of high-speed access previously available only to businesses. The phone company U S West last year unveiled a technology dubbed Digital Subscriber Line (DSL) that turns ordinary copper telephone lines into data pipes carrying signals at speeds up to ten megabits per second (mbps). (In practical terms, U S West's various DSL options feature speeds between 256 kbps--five times faster than the now-standard 56-kbps modem--and 7 mbps.) Similar technologies have been developed for cable networks: Last fall MediaOne rolled out a service that can handle data at speeds up to 1.5 mbps. Paragon Cable, the cable provider for much of the western metro area, offers a similar package in most of its service area.

While DSL modems currently offer faster connections than cable modems, the higher-capacity TV wires are the conduit of choice for the most profitable services--"broadband" packages that combine digital telephone, Internet access, and standard cable TV. And it is those services AT&T has been positioning itself to provide in the last few years. With its recent purchases of MediaOne and other cable firms, the AT&T has become both the largest long-distance phone company and the largest cable provider in the world; in the Twin Cities it serves some 325,000 cable subscribers, or roughly 60 percent of the market.

But under the federal laws governing the cable industry, AT&T can't just take over the local cable-franchise agreements MediaOne inked with the cities in which it operates: It must renegotiate its contract in each city where it wants to provide cable service. Nationwide, many local governments have simply extended the old deals, hoping that AT&T would reward them by investing in network upgrades. But some municipalities--notably Portland, Oregon and Broward County, Florida--demanded that as part of a new contract, AT&T allow competitors access to its cable network, much the way phone companies must share their wires. In the resulting lawsuits, federal courts have twice ruled against AT&T; the company is appealing the decisions, and the Portland case is expected to find its way to the U.S. Supreme Court.

Locally, MacLeslie and what he calls his "guerrilla" coalition have been lobbying municipalities to follow in Portland's footsteps. Members of the group include phone giant U S West and Minnesota ISPs such as Onvoy.com, Gofast.net, and Wavefront.com. "It's kind of like getting in bed with a tiger," MacLeslie says of the alliance, noting that many of its members compete with each other and with U S West, which itself has long operated as a monopoly.

But there, MacLeslie adds, is the difference: U S West was a monopoly, but the Telecommunication Act of 1996 forced it and other local phone companies to open their wires and their switching stations to competitors; that's why, shortly after U S West rolled out DSL service in the Twin Cities, other companies began offering similar packages. Cable companies, on the other hand, are not regulated by the Act and can keep their networks closed. In cities where it already offers broadband access, AT&T is the only choice for consumers who want cable television and Internet access via cable.

MacLeslie says separate regulations for phone companies and cable providers may have made sense in the Eighties, when politicians were breaking up "Ma Bell" by creating long-distance provider AT&T as well as U S West and other "Baby Bells." But at a time when phone, cable, and Internet companies all strive to provide similar products, MacLeslie says, "it's like the FCC is looking at the situation through antique glasses."

Scott Brener, U S West's Minnesota director for public policy, concurs: "It sounds kind of funny coming from us," he says. "But as it stands, the laws are fundamentally discriminatory and give AT&T an unfair advantage in the marketplace."

Like MacLeslie, Brener has a penchant for Big Brother imagery: AT&T's Road Runner ISP service, he notes, is a joint effort with Time Warner, Microsoft, and Compaq--high-tech heavyweights that may use the service to promote their own products while discouraging competitors. "There's a screen between the Internet and the customer," Brener charges. "That screen is Road Runner."

But Charles Ward, AT&T's vice president for governmental affairs, balks at the critics' freedom-of-information rhetoric: "It's like they should have 'The Star-Spangled Banner' playing in the background," he scoffs. In reality, Ward argues, AT&T is the underdog battling powerful U S West: For years the two companies have been locked in a dispute over how much AT&T should pay to provide local telephone service using U S West's wires. Ward claims that buying MediaOne was the only way for AT&T to break into the local market. "It's U S West that's exhibiting monopolistic behavior," he concludes. "Our goal is to make best use of our assets in order to give customers another choice." One way to do that, he argues, is to sink more than $200 million into upgrading cable networks in Minnesota alone--an investment the company needs time, and protection from competitors, to recover.

Tom Creighton, a telecommunication attorney representing most of the suburban communities currently serviced by MediaOne, doesn't care who's the bigger bully--it's hard enough, he notes, to keep track of who's who. "It's kind of like in the Appalachians where everybody marries their cousins," he laughs, pointing out that U S West sold MediaOne several years ago and now finds itself in direct competition with its former subsidiary.

Creighton says he is advising his client to follow the route chosen by San Francisco: Rather than starting another costly lawsuit against AT&T, he recommends that they agree to a closed network, then wait out a Supreme Court decision in the Portland case. "It's not the role of city governments to foster competition," Creighton says. "Nobody's going to die on the operating table if they don't get high-speed Internet access. The companies can fight this one out amongst themselves."

But the open-access proponents haven't given up on turning the Twin Cities into another Portland. Between now and November 15, the deadline for the new cable agreements, they plan on making their case to members of local franchise commissions in each suburb served by MediaOne--and, probably, to members of the St. Paul City Council, who govern the cable franchise in that city. (Holly Hansen, St Paul's cable officer says the city has just started reviewing AT&T's proposal.) And if U S West's Brener has his way, those discussions will center not on his and other companies' desire to make more money, but on philosophical considerations: "In future generations, access to data and information will become a basic necessity," he argues. "It will decide who makes it from a business perspective. It may well determine social standing. Even today, open access to data and information is basically becoming as important to society as the availability of bread and water."

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