City Hall Split on Policy for High-Speed Internet Access

The chairman of Mayor Richard Riordan’s Information Technology Commission quietly resigned Monday, a move some City Hall insiders say reflects a major and growing dispute over how Los Angeles residents will secure high-speed access to the Internet.

Essentially, the city’s government is divided into two camps--those who favor so-called “open access” to the Internet and those who support having access supplied to different parts of Los Angeles by a single designated distributor, a system similar to cable TV franchising.

Riordan favors the latter approach; his appointed commission chairman, Alan Arkatov, took the opposite view.

The Los Angeles City Council has gone on record as favoring open access, but Riordan is quietly moving in the opposite direction. The stakes in the debate are monumental and ultimately may determine who controls consumers’ future high-speed access to the Internet, an area of nearly unlimited business potential and one that raises profound issues that are rippling across the nation as cities confront it and courts are asked to weigh in.

The dispute involves some of the nation’s biggest companies, pitting them in a bitter competition for the future of consumer access to the Internet. AT&T;, which has acquired leading cable companies, is asking that it be left to provide its customers with Internet service through those cable hookups. Using currently available technology, cable hookups are able to provide Internet access about 100 times faster than can be achieved over telephone lines.

With such a disparity in speed, Internet service providers, led by America Online, have lobbied to win access to those cable lines, arguing that consumers will benefit if they have more choices for high-speed access.

Countering that, AT&T; and the cable industry have argued that they can afford to invest the billions of dollars required to upgrade their cable lines only if they have some assurance of an exclusive right to market that service. Billions of dollars stand to be made and lost, fueling a national lobbying effort over the dispute.

A recent federal court decision upheld the right of the city of Portland, Ore., to require AT&T; to give access to Internet service providers as part of that company’s cable franchise agreement with the city. The ruling, which is being appealed, does not apply to other jurisdictions, but is being closely watched as other cities weigh their options in the Internet debate.

In Los Angeles, the dispute so far has been waged without much notice, but that, sources say, is about to change. Monday, it claimed its first casualty, Arkatov, who sources say favored open access but felt pressure from the mayor to support the other side.

“It’s very surprising,” said City Councilman Mark Ridley-Thomas, chairman of the council’s Information Technology Committee. “Here we are in the middle of one of the most significant telecommunications policy decisions the city has ever made, and we have this resignation.”

Ridley-Thomas added that the commissioner’s abrupt departure raised troubling questions about Riordan’s willingness to tolerate opposing views from his commissioners and about the City Council’s ability to act as a check on mayoral authority.

“This raises questions about the balance of power,” the councilman said.

Two Explanations for Resignation

Arkatov, whose resignation is effective immediately, is a controversial but respected local leader who runs a pair of Internet companies and who has served on state as well as local boards. According to several City Hall insiders, Arkatov led the charge for open access, then recoiled when Riordan aides told him the mayor favored a different approach.

Sources say Arkatov tried to steer a middle course, but failed to reach a compromise. Then he decided in recent days that he could not reconcile his views with his role as a Riordan appointee.

Others close to Riordan vehemently dispute that description of events. They say that Arkatov asked for an appointment to the Information Technology Commission and was given it only reluctantly, since he previously had clashed with Riordan allies over an unrelated issue. The condition of the appointment, those sources say, was that Arkatov stay for only one year.

Arkatov’s decision to pin his resignation on the policy dispute, some Riordan advisors suggested, was showboating, not a reflection of passionate disagreement.

On the other side, some of Arkatov’s supporters said it was Riordan’s position that was suspect. In part, they attributed Riordan reluctance to endorse open access to his friendship with AT&T; Chairman Mike Armstrong. In an interview, however, the mayor denied that the two men were friends, much less that any connection had influenced his thinking.

“I’ve never socialized a minute in my life with Mike Armstrong,” Riordan said Monday. “I’ve met him twice, once when he was at Hughes and once on this issue.”

Riordan aides pointed instead to a long internal debate over which position to adopt regarding the Internet dispute. Riordan’s chief of staff, Kelly Martin, even provided dates of staff briefings and internal staff documents that led up to the decision.

One briefing paper, dated April 21, detailed the pros and cons of the decision at length. The staff recommendation to Riordan was that the city should “oppose the current concept of ‘open access’ cable systems to multiple Internet service providers.”

Echoing the arguments of AT&T; and the cable companies, the staff memo argues that opening access would discourage major investments in cable Internet service. In the long run, Riordan’s staff argued, it is those investments that would allow “L.A. consumers to benefit from lower prices, improved technology, better customer service and an explosion of innovative new services.”

The mayor and his aides reflected on that recommendation for several days, and on April 26 finally decided that they would go along with that approach, Martin said.

That position was not shared by Arkatov, who wanted to amend franchise agreements with cable companies so that they would have to allow Internet service providers access to their lines in return for receiving the right to control cable services in various parts of the city. That is precisely the position that the city of Portland took with respect to its cable franchise agreement.

Martin stressed that Arkatov’s position was heard by Riordan and his aides. But, she added, the final decision about which approach to take was up to the mayor, not his appointed commissioner.

“This is a huge policy decision,” she said. “At the end of the day, we believe that the commission should support the mayor’s policy judgment.”

Times staff writer Michael A. Hiltzik contributed to this story.