January 5, 1999 5:45 PM PST

Portland denies cable transfer to AT&T

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Portland city attorneys ruled today to deny the transfer of local cable franchise licenses from Tele-Communications Incorporated to AT&T, according to sources close to the decision.

City officials in Portland, Oregon, made "open access" a requirement of the franchise license transfers as part of TCI's $48 billion merger with telephone giant AT&T in December. The companies said last week they would not comply with the requirements.

Because the companies did not unconditionally accept the terms of Portland's transfer approval, city officials automatically denied the transfers. A formal denial letter is expected to be released as early as Thursday, according to sources.

Similarly, the Denver City Council today decided to meet later this month to consider requiring TCI to allow other companies open access to its cable wires--allowing competitors to pay to use the cable network to offer services.

The council's decision to seek more time and meet for a one-day workshop comes after several Internet service providers and telecommunications companies yesterday lobbied the 13-member Denver City Council to adopt an open access law.

"We as a council need more time and more clarity before making a decision," said councilwoman Ramona Martinez. "We are going to ask AT&T for an extension."

The council had until January 30 to approve or deny the transfer of local cable franchise licenses from TCI to AT&T. Now a decision is unlikely to come until February, Martinez said.

Opponents of the merger insist TCI consumers have no choice but to use @Home, TCI's cable modem partner, as their default high-speed ISP.

The group pushing for open access in Denver includes telecommunications carriers Qwest Communications International and US West, ISPs America Online, MindSpring Enterprises, Verio, and Rocky Mountain Internet, and satellite TV provider EchoStar Communications.

"Unchecked, the AT&T and TCI merger will prevent consumers from having any choice," Rocky Mountain Internet chief executive Doug Hanson said in a statement. "Under their rules, consumers would have no choice but to purchase TCI's Internet service."

AT&T and TCI argue there is no logic to invest in expensive, high-speed cable networks if their competitors can simply use it for a nominal fee.

"We are investing a lot of capital in bringing consumers broadband. That is competition that wasn't out there before," said TCI spokeswoman Katina Vlahadamis. "We are offering consumers choices."

The move, in Denver-based TCI's backyard, has AT&T and TCI upset.

The companies have said local jurisdictions, such as Portland and Denver, do not have the authority to make these kinds of regulatory impositions, arguing the Federal Communications Commission is best equipped to address the ramifications of requiring open access.

"AT&T meets all the financial, technical, and legal requirements to change the control of the franchises," TCI's Vlahadamis said.

More than 900 of TCI's 4,000 local cable franchises must approve any change of ownership; 375 have done so to date, she said.

The deal won conditional approval from the Justice Department last week.

Separately, Internet Ventures has applied for "leased access" carriage on TCI's Washington's cable network in its Spokane market.

Internet Ventures, like AOL and other ISPs, wants to use the networks of cable operators such as TCI to provide its own high-speed data service. The company's PeRKINet service is similar to @Home's and Road Runner's Net access service.

Internet Ventures argues that under the "leased access" provision of the Telecommunications Act of 1996, the company should be allowed to lease a 6 MHz channel from TCI Spokane to provide its competing cable modem service.

Although less adversarial than the open access approach of AOL and other ISPs, the "leased access" proposal seeks to pay TCI to use its broadband pipes.

"Instead of pushing for new legislation, there are existing regulations that say you can commercially lease a channel from a cable operator with the intent to provide the widest possible diversity of information sources and diverse sources of video programming," said Internet Ventures president Don Janke.

 

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