January 19, 1999 4:25 PM PST

AT&T, TCI file lawsuit over cable license

AT&T and Tele-Communications Incorporated today filed a federal lawsuit over the recent decision by city officials in Portland, Oregon, to deny the transfer of local cable television franchise licenses to AT&T from TCI as part of their merger.

AT&T has requested a declaratory judgment in U.S. District Court seeking a resolution to Portland city officials' requirement that the company "unbundle" TCI's cable wires. In the court documents, the company argues local governments, such as Portland, do not have the authority to impose so-called open access requirements.

Portland and Multnomah County officials approved the license transfers with one condition: that TCI allow competitors to pay the cable television giant to use its network to deliver high-speed Internet access, similar to the TCI-controlled @Home Network cable modem service.

When AT&T and TCI declined to comply, the city denied the license transfers.

"Throughout the process, we've had constructive discussions with local governments to try to negotiate a solution," AT&T vice president Scott Morris said in a statement. "However, it has become apparent that there is an honest difference of opinion on this issue that further negotiations cannot resolve.

"The only alternative is to ask the court to settle this difference," Morris said.

"We received the complaint today and we're evaluating it. We think we'll prevail in the litigation," said Ben Walters, a deputy city attorney for Portland, who declined to comment further.

Portland officials, and other critics of the $48 billion deal, argue that AT&T will hold a monopoly in the high-speed Internet market after the merger is complete.

AT&T and TCI, however, contend that they will bring competition to the local voice market and that forcing the companies to unbundle TCI's networks leaves little incentive to invest in the expensive cable infrastructure.

The open access issue has spawned similar debates in several cities across the country, including Seattle, Los Angeles, Denver, and Oakland, California.

The Denver City Council held a workshop to explore open access today and an Oakland City Council finance committee vote on the issue was postponed today until next week.

 

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