PSINet Breaks ISP Ranks on Cable Networks
Breaking ranks with his fellow Internet service providers, the chief executive of PSINet Inc. urged Congress not to force cable companies to open their high-speed networks to others.
The admonishment from PSI President William Schrader came Tuesday at a Senate Commerce Committee hearing as Congress comes under mounting pressure from America Online Inc. and other Internet service providers to intervene in an industry battle over whether cable companies should provide equal access to their networks.
While AOL, MindSpring Enterprises Inc. and some other online access providers have blamed the lack of high-speed Internet service on the cable industry, Schrader argued that the real villain is the telephone industry. He said telephone companies have been even slower than the cable industry to deploy their own high-speed data services that have been available for a decade or more. The lack of deployment, Schrader argued, has left cable with little reason to invest in and aggressively market competing high-speed Internet access.
“I am not for changing the rules in any way,” he said. Instead, he added, “the problem we have right now is that the phone companies’ ” promise to compete against cable and other high-speed networks “never materializes” despite reforms in telecommunications regulation.
Under federal law, cable operators are treated differently from phone companies, which are required to open their communications networks to all comers.
AOL President Steve Case and MindSpring Enterprises CEO Charles Brewer told members of the Commerce Committee that the regulatory disparity has created a disturbing imbalance: While more than 4,000 independent U.S. firms offer Internet access over the open public telephone network, only a few dozen cable companies offer high-speed Internet access over a cable network that now passes more than 90 million American homes.
Worried that they will be relegated to a towpath along the information superhighway, Case and Brewer pressed lawmakers to quickly intervene on their behalf.
“I urge you to take immediate action,” Brewer said, adding that if Congress did not see fit to pass legislation it should urge the Federal Communications Commission to clarify its rules, which require telecommunications companies to provide “reasonable” network access to competitors. But AOL and MindSpring face an uphill battle marshaling political support to force cable companies to open up their networks.
While an outcry among the nation’s 67 million cable subscribers prompted Congress six years ago to impose strict regulations on the cable industry, the nation’s 30 million households with Internet access have yet to mount a similar groundswell.
What’s more, at between $30 and $50 a month and about $200 for equipment installation, most current forms of high-speed Internet service are about twice the price of traditional telephone dial-up Internet access. As a result they have proved to be a tough sell even in technology strongholds such as AOL’s backyard in northern Virginia.
Lawmakers at Tuesday’s hearing seemed cool to additional legislation.
