BUSINESSWEEK ONLINE : JULY 5, 1999 ISSUE
NEWS: ANALYSIS & COMMENTARY

The ABCs of Open Access


High-speed Internet access, also known as broadband, is the Holy Grail of the high-tech industry. But as cable operators upgrade their systems for super-fast Internet communications, a battle has erupted, with the cable industry and AT&T on one side and with Internet service providers (ISPs) such as America Online Inc. and local telephone companies, including the Baby Bells and GTE Corp. (GTE), on the other. The issue: Should big cable operators be obligated to let let rivals use their networks?

What is the fight between AT&T (T) and the Internet service providers about?
AT&T and the cable companies own the cable pipe going into people's homes. The question is whether they are obliged to let others such as America Online (AOL) use that fast pipe to deliver their services. Currently, customers of AT&T's cable service pay about $40 a month for a speedy Internet link bundled with the online service At Home (ATHM), which AT&T controls. To get content from other online companies, such as America Online, At Home subscribers have to pay an extra fee--$9.95 a month in the case of AOL.

AOL and other Internet service providers would like to be allowed to lease space on AT&T's cable line at a wholesale rate. That way, they could sell Internet access and content directly to customers. AT&T says it will negotiate but that it doesn't want to be forced to do it.

Do consumers have an alternative to the cable companies to get high-speed Internet access?
They can get high-speed Web access from such competitors as phone companies or satellite broadcasters. Both are rolling out technologies to offer fast Web connections--and customers can pick their own Internet provider. But cable today is typically faster than beefed-up phone lines and easier than satellite access. So, for now at least, it is proving more popular.

Why are the cable companies against the idea of opening up their networks to competitors?
Cable operators have spent $36 billion to upgrade their systems for such services as zippy Internet traffic. They say that's all private investment and that they shouldn't be forced to sell capacity on that network at cheap rates. AOL and other ISPs say they would pay a fair price to lease part of the cable system.

Is it technically feasible for cable operators to offer consumers a choice of Internet providers?
AT&T and others say they don't have the technology to chop up their network and sell the pieces to thousands of competitors. Phone company GTE Corp., however, says it has the technology that would allow AT&T to share its network.

If subscribers to AT&T's cable service also get their phone service via AT&T's cable system, why couldn't they just dial up their old Internet provider by phone?
They could. But the phone service AT&T offers through its cable system won't travel at the high speeds that its Net service does. So consumers may not get their ISP much faster.

Will the federal government mandate open access?
For now, the Federal Communications Commission is opposed to forcing cable companies to share their networks. The agency fears any regulation at the early stages of the budding broadband market may scare away investment dollars needed to develop cable's high-speed Internet capabilities.

By Catherine Yang in Washington

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