In the way of open access, 12/27/99

The fight for open access

Almost everyone has heard of the political marriage pairing Republican strategist and conservative talk show host Mary Matalin with colorful Bill Clinton defender James Carville.

But Matalin and Carville aren't the only Washington power couple who must be having political shouting matches over dinner these days.

Take a look at Susan Molinari and Bill Paxon, married former members of Congress who are suddenly on opposite sides of a most unlikely issue — broadband Internet access.

Molinari, a former rising star from Staten Island, N.Y., and keynote speaker at the 1996 Republican National Convention, is co-executive director of a group called the Internet Advancement Coalition. Paxon, who gave up his Buffalo, N.Y., seat shortly after Molinari did, is a paid consultant to a group called the Competitive Broadband Coalition (CBC).

Sounds innocuous enough until you realize what these two groups are all about. The Internet Advancement Coalition, or iAdvance, is heavily funded by regional Bell operating companies SBC Communications and Bell Atlantic to lobby for a change in telecom law that would enable RBOCs to build long-distance data networks — in other words, Internet backbones — before they have long-distance voice authority. The CBC is heavily funded by AT&T, MCI WorldCom and others precisely to stop the RBOCs from gaining this authority.

Of course, neither group publicly states its goals that way. The iAdvance group says it's all about "Bringing the Internet up to speed for all Americans!" The CBC says it is "dedicated to protecting the competitive environment in which the Internet was born and continues to evolve."

But those aren't the only players. Consider a third group with the provocative name "Hands Off the Internet." In ads and on the Web, the group describes itself as "a coalition of 'Net users" who believe "the Internet's phenomenal growth stems from the ability of entrepreneurs to expand consumer choices and opportunities without worrying about government regulation." But critics charge that the group is nothing more than a front for AT&T to lobby against regulations forcing it to open its vast cable networks to ISPs.

"Hands Off the Internet is a completely AT&T-funded puppet," says Greg Simon, co-executive director of yet another group — the openNET Coalition.

Oh, and what's that group? The openNET Coalition says it is "dedicated to promoting the rights of all consumers to obtain affordable, high-speed access to the Internet from the provider of their choice." But its critics say the coalition is just a lobbying front for America Online, which lacks AT&T's last-mile links, and GTE, which habitually fights AT&T in court, so the companies can reach end users via the cable plant that AT&T is spending billions to upgrade.

Figuring out the code words

Confused? You needn't be. Here are the basic rules of how big corporations jockey for position in the Washington telecom power struggle, and how this struggle will really affect your users' ability to get high-speed access in the future.

Each of these four groups — and several others — uses the universally expressed desire to improve the Internet as its raison d'être, even when what each group is really aiming at is a technical change in the nation's telecom laws.

Each group employs former members of Congress and top officials of the Reagan, Bush or Clinton administrations to pitch its message. But forget Republican vs. Democratic distinctions — you can't predict which party partisans will join which group. Some of the groups have hedged their bets and hired well-known operatives from both parties.

Code words are important. Each group appears at first blush to embrace the almost universal desire of 'Netizens to be "deregulated."

Yet if you look closely, the words "competitive" and "open" usually wind up meaning "Let's put more regulations on our opponents," while "freedom" is often a euphemism for "Don't regulate me, regulate the other guy."

Make no mistake, though: These groups are getting through to somebody on Capitol Hill. There are currently no fewer than seven bills in Congress with titles including the words "Internet Freedom," "Internet Growth" and "Broadband Internet Relief." Yet most of them have little or nothing to do with e-commerce taxes or the regulation of Internet content. Instead, they're actually bills loosening or tightening regulations on different types of telecom giants.

Some political insiders say all this activity is nothing more than an attempt by enormous carriers to leverage an interest in the Internet in order to get politicians to pick winners and losers in the ongoing guerrilla war of telecom regulation. To see how this works, take a look at the four principal lobbying groups, what companies support them and their policy goals.

chart

Notice how AT&T, now the nation's largest cable company, supports a deregulation effort (Hands Off the Internet) for cable modems but takes a proregulation — er, "competitive" — stance for digital subscriber line services (CBC). For most of the Bell companies, it's the reverse. They support a deregulation group (iAdvance) for DSL but a proregulation — er, "open" — stance on cable modems (openNet Coalition)."These companies have done everything to increase competition for their competitors and decrease competition for themselves. That's all it's been about," says Neils Erich, co-chairman of the Telecom Task Force for the San Francisco Planning & Urban Research Association.

I left my lobbying in San Francisco

For an example of how this game played out in 1999, take a look at San Francisco. Last summer, the city's Board of Supervisors had to figure out whether to impose new regulations on AT&T after the carrier bought Tele-Communications, Inc. (TCI), which held San Francisco's cable franchise. The antagonists: Hands Off the Internet and the openNET Coalition, the two groups principally concerned with the cable-access issue. The result: a lobbying frenzy by supposed "consumers."

"It was a shameful display of money badly spent," Erich says. "Both sides gave a lot of walking-around money to political consultants who bused in people who didn't know why they were there."

Even now, the two sides are still engaging in Bosnia-like recriminations. OpenNET's Simon, a former top aide to Vice President Al Gore, accuses Hands Off the Internet of arranging a fake demonstration in front of the Board of Supervisors that was nothing more than a "human chess game." Hands Off simply paid college students and employees of Excite@Home, AT&T's consumer ISP affiliate, to protest, Simon charges.

By contrast, he claims, members of the openNET Coalition who appeared before the board and other local governments have been the group's own members — employees and customers of hundreds of ISPs angered by AT&T's refusal to open its cable networks.

Hands Off Executive Director Peter Arnold — himself a former speechwriter for President Bush — will have none of it. AOL and what he calls "the local phone monopolies" are "spreading all sorts of absurdities," Arnold says.

Not only in San Francisco but elsewhere where such fights have broken out, "elderly people have gotten up to testify saying their use of the Internet could be shut off by the cable companies or that they wouldn't be able to get to certain sites," Arnold says. "We've seen considerable numbers of people come to us with grossly misinformed views of what cable access would mean to them."

No potential argument was left untouched in the debate. In one San Francisco hearing, one open access advocate speaking for the openNet Coalition cast the issue as a gay-rights matter. For its part, AT&T — that is, Hands Off the Internet — hired a former FCC commissioner to speak on its behalf. Hands Off also took out ads in the San Francisco Chronicle — with no mention of AT&T funding — headlined: "What are AOL, PacBell & GTE really afraid of? COMPETITION."

In effect, the two sides simply neutralized each other with all the wrangling, Erich says: "They alienated the Board of Supervisors, and they were put on notice not to do this again."Whose hands off the Internet, exactly?The most incendiary issue is disclosure of funding and, by general consensus, the worst offender is Hands Off the Internet. In its initial announcement last July 1 — just as the San Francisco controversy was heating up — Hands Off the Internet describ-ed itself as "a coalition of civic organizations and high-tech associations" designed to "protect the Internet from increasing regulatory efforts pushed by state and federal public officials." Only at the end did the group mention AT&T as one of 15 initial members. Then it began running ads mentioning nothing about AT&T.

Even Hands Off members say AT&T is the group's instigator. One of the members is a San Francisco-based activist organization called NetAction, which in the past has attacked Microsoft for alleged antitrust violations and worked to get mostly liberal groups trained to use the Internet for organizing. "Hands Off the Internet — that's primarily supported by AT&T," says Audrie Krause, NetAction executive director.

Hands Off leaders are squeamish about the issue. After first telling Network World that Hands Off "gets all its money from members," Arnold eventually said: "You can say that we're backed by the cable industry. You're absolutely right in saying that." But openNET's Simon charges that Hands Off "keeps misrepresenting itself as representing the consumer," noting that Consumers Union and the Consumer Federation favor cable open access.

For its part, openNET says it fully discloses its funding, which comes from more than 700 organizations, mostly ISPs that want access to AT&T's cable lines. But NetAction's Krause says that's hardly the whole picture. For example, she charges GTE is paying the bulk of the coalition's legal expenses in certain local cable access fights.

The two principal groups involved with trying to change — or retain — the DSL laws have been more circumspect. From the beginning, iAdvance Executive Director Mike McCurry — President Clinton's former press secretary — has been open about the fact that the group receives most of its funding from SBC, Bell Atlantic and computer maker Gateway.

Its opponent, the CBC, makes clear on its Web site and in press releases that long-distance carriers and competitive local exchange carriers carry the freight. But CBC also runs a Web site that appears more grass-roots, just as openNET runs a separate site.

Talkin' DSL and cable with Don Imus

And political insiders say these stealth sites employ code words that are euphemisms for "regulation." CBC's advertising repeatedly accuses the RBOCs of seeking a "loophole" in the Telecommunications Act of 1996 without stating exactly what that loophole is. (In fact, it's a move to get data long-distance approval prior to voice long-distance approval.) The headline of one of CBC's ads reads: "Don't let big local phone monopolies squash competition in rural America." The unnamed "loophole" would "help 'em squash competitors who are ready to bring high-speed Internet access to rural areas." Meanwhile, "gatekeepers" is largely seen as an AOL-backed code word against AT&T's cable strategy.

Those words are particularly telling in Washington, where all of these groups have found more fertile ground for their advertising barrage. For example, iAdvance — the group lobbying to let RBOCs in data long-distance — advertises on Washington's all-news radio station, as well as in Roll Call and The Hill — two newspapers that primarily go to Capitol Hill staffers — and even on the "Imus in the Morning" radio show. Why? Not so much to reach consumers but to reach policy-makers.

"It's the level of attention," McCurry explains. Democrat McCurry and Republican Molinari together are running iAdvance, and they want Hill staffers to know that. "[That way] when you walk into a Congressional office, they don't roll their eyes and say, 'Oh, God, another telecommunications issue. I don't want to deal with it.' Instead, they say, 'Wow, I see you're doing this thing with Susan Molinari,' " he says. The radio ads particularly grab attention among policy wonks. "We're getting them on the way to work and on their way home," McCurry adds.

The political dilemma for cities

All this presents a huge challenge for policy-makers because different people are charged with ruling on telecom and cable matters. For example, many city governments believe they have the right to force open cable systems by requiring nondiscriminatory pricing but have no authority to do the same with telephone companies — something that's already been fought out among the federal and state governments and in the courts.

"Policy-makers have to avoid picking winners and losers," says Erich of the San Francisco Planning & Urban Research Association. "You can't just draw the line at the cable system. But if cities require the cable operator to do something with its pricing that they cannot compel the telephone company to do, they're picking winners and losers."

For example, AT&T's opponents — including Pacific Bell — are complaining that in certain cable-modem trials, AT&T is charging $49 per month for broadband service that includes Excite@Home Internet access, but charges the same $49 per month for consumers who wish to choose another ISP, bringing those users' cost to $69 per month or more. AT&T's opponents argue that this violates the principal of nondiscriminatory pricing, which is what Erich believes they really mean by "open access." Yet PacBell does much the same thing itself.

It charges $39 per month for a DSL line in a package requiring only an additional $10 per month for its ISP service. Yet if users pick another ISP, they will be socked with an additional charge of at least $20. "The entire industry is headed for open access in some form," Erich says. He points out that AT&T inherited the open access agreement with Excite@ Home when it purchased TCI, and that it will expire before cable-modem access really becomes widespread.

To be sure, to some extent regulators at the local and national levels recognize the dilemma. "There are millions being spent in dual efforts to define the issues in terms of open or closed access," said Deborah Lathen, the Federal Communications Commission's Cable Services Bureau Chief, in a November speech in Los Angeles. "You hear the sound bites: Open is good. Closed is bad. Forced is bad.

Regulate. Don't regulate. I want to put aside all the rhetoric and talk about the reality." That reality comes down to two technologies: cable modem and DSL.

Some who are playing it pureBut there are two big carriers — BellSouth and MCI WorldCom — that aren't playing the game the same way. Unlike its RBOC brethren, BellSouth does not support the openNET Coalition. Instead, it supports deregulation of DSL and cable modems, saying AT&T should be allowed to do what it wants with its cable network so long as BellSouth gets regulatory freedom for data carriage. "We agree with AT&T — we don't believe that open access means what it says. It's just a euphemism for more regulation," says John Schneidawind, a Washington spokesman for BellSouth. "But we also think we shouldn't have to sell our advanced services to every Tom, Dick and Harry."

MCI WorldCom, meanwhile, takes the exact opposite tack: It's a member of the pro-AT&T CBC but also the anti-AT&T openNET Coalition. All the other companies are inconsistent because of their investments, says Washington spokesman Peter Lucht: "They all want open access to the technology that they are not deploying, and they don't want open access to the technology that they are deploying. We want to horn in on both."

One of the biggest names in the lobbying fight says he's trying to work toward a settlement. The iAdvance group's McCurry concedes that the group is fighting for deregulation of Bell DSL lines but is also in favor of open access — that is, at least temporary regulation of AT&T cable lines.

McCurry says he agrees that it would be better if both sides argued for more deregulation for all players. The problem, he says, is that the RBOCs start from a much heavier degree of regulation than the cable companies — cable TV players have never before had to provide local loops to competitors the way the RBOCs do.

But all that has involved some explaining to his backers that they need to show some real market interest in DSL. McCurry says he can't even get DSL at his home in Montgomery County, Md. — one of the nation's richest area. "I've yelled at the guys from Bell Atlantic," McCurry says. "I've said: 'Hey, I'm the head of this coalition. Give me DSL.'"

Related links

Contact Senior Editor David Rohde

Recent articles and columns by Rohde

Face-off: Cable open access
AT&T and GTE squared off in our online debate last October.

SBC lobbyists undercut by DSL rollout
RBOC's three-year Project Pronto appears to weaken call for DSL service deregulation.
Network World, 11/01/99.

SBC pushes toward converged net
$6 billion upgrade should mean broadband access to most customers.
Network World, 10/25/99.

RBOC lobbyists claim a dozen states are 'disconnected'
Network World Fusion, 07/28/99.

SBC, Bell Atlantic launch broadband lobbying effort
New group to be led by former Clinton press secretary.
Network World Fusion, 06/30/99.

D.C. marauders
Network World, 01/04/99.

Competition and deregulation: Striking the right balance
A speech by FCC Chairman William Kennard to the U.S. Telecom Association.
October 1999.

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