Equitable Use of High-Speed Online Access Causes Sparks

The Los Angeles City Council is expected to weigh in today on one of the most controversial aspects of cable TV, and it isn’t even about television.

It’s about the Internet and who will control its delivery at high speeds to millions of households in Los Angeles over cable television lines.

Cable TV operators, who are pouring billions of dollars into upgrades to allow them to deliver the Internet up to 100 times faster than ordinary telephone lines can, say they have the sole right to sell the service to their customers through their lines. One local cable operator, Media One, has already begun offering Internet service to its customers, and a Time-Warner system in the east San Fernando Valley plans to make it available this summer.

But the current front-runner of Internet providers over telephone lines, America Online, and smaller services have banded together nationally to claim that the cable companies’ control over cable lines is unfair competition. They want the right to offer their own services via the same high-speed cable lines, at a fair cost to them.

The issue that comes before the council today specifically concerns a 94,000-subscriber system in the East Valley owned by Tele-Communications Inc. (TCI), but it is likely to affect almost every cable system in Los Angeles.

Those effects will not be felt for some time. The council votes on a resolution, hammered out over the last several weeks by the city’s Information Technology Agency, which calls for “nondiscriminatory access” to cable “for all providers of Internet and online services.”

What that wording means is open to so many different interpretations that the resolution calls for a 90-day study period to determine how it is to be implemented.

The cable operators claim that there is already sufficient competition in the high-speed Internet field, and that their control of the cable lines does not constitute a monopoly. AOL and its allies say that if they are not given equal access to cable, customers will be left with only one choice--the one their cable operator decides to provide.

Overlaid on these arguments are a myriad of legal, technical and financial issues that are far from settled in the brave new world of cable Internet access. And there is a trump card--at some point the FCC might weigh in with a decision that would settle the matter, nationwide. Until, of course, the issue went to court.

“It’s so complicated and moving so quickly,” said Alan Arkatov, president of the city’s cable agency, “that sometimes it makes your head spin like Linda Blair.”

The East Valley system has come before the council because it plans on going through a change in ownership, which requires council approval. The tentative new owner is AT&T;, the original Ma Bell, which plans to acquire TCI in a deal worth more than $40 billion that will give it access to lines running to about one-third of homes hooked up to cable TV in the country.

The AT&T; deal to absorb the cable giant is still awaiting approval from the Federal Communications Commission.

If the deal is ratified, AT&T; executives said they plan to offer subscribers TV, Internet and telephone service, all through cable lines.

The Internet service it plans to provide is the already existing @Home, an online entity similar to AOL in that it has its own exclusive features and also offers a gateway to the Internet at large. It can sell advertising that will appear on the @Home service and links to shopping sites.

If the merger goes through, AT&T; also will control @Home.

Most of the TCI systems nationwide that needed local government approval for the changeover got it with little fanfare. Then last month Portland announced its decision that @Home cannot be the only service offered--AOL and others must get equal access to the cable system, for a fee.

“No one has argued that AT&T; should not be compensated for the use of their system,” said George Mihlsten, a Los Angeles lawyer representing AOL. “The argument is that they should allow the system to be used on an equitable basis.”

TCI and AT&T; not only refused to accept the Portland decision, last week they sued the city, saying it had overstepped its regulatory bounds.

AT&T; also maintains that its control of the cable lines in TCI systems will not constitute a monopoly, because AT&T; cables are not the only option for high-speed Internet access. Some telephone companies, including Pacific Bell, are now offering customers in select areas high-speed Internet access via ordinary telephone lines. And consumers nationwide can obtain high-speed access through satellite service delivered through a small rooftop dish, although that system has complications.

“Customers are not being denied choice if they want high-speed access to the Internet,” said Cathi Oram, an AT&T; spokeswoman. “With this merger, they get more choice.”

AT&T; also maintains (and some Internet companies dispute) that giving access to multiple providers will drastically slow down Internet delivery over its lines, thus negating cable’s benefits.

The path Los Angeles takes through this morass will probably be closely watched, for several reasons.

“L.A. has the toughest consumer standards, bar none,” said Arkatov. Last year, for example, it fined Century Cable $12.3 million, the biggest penalty ever for a cable operation.

And there is the city’s position in the media hierarchy.

“We are the second largest city in the country and the entertainment capital of the world,” he said. “What happens here matters everywhere.”