Robber Barons Battle Over Cable Access
Michael Givel
** Topic: Robber Barons Battle Over Cable Acce **
** Written 10:50 PM Aug 14, 1999 by labornews in cdp:public.broadca **
August 13, 1999 New York Times
Fight For Internet Access Creates
Unusual Alliances
---------------
Former Foes Find Profits in AT&T Cable
Lines
By STEPHEN LABATON
WASHINGTON -- Unimaginable as it
might have seemed a year ago,
President Clinton's top private lawyer
and the former senior aide to Kenneth
W. Starr in the impeachment battle
recently joined to argue on the same
side of one of the biggest legal
fights in years.
The two men,
David E.
Kendall and
Brett M. David Kendall, once
Kavanaugh, President Clinton's
are but one private lawyer, finds
example of himself on the same
the unusual legal side as an old
alliances adversary.
being forged ------------------------
in the dispute over which companies
will end up dominating high-speed
Internet service delivered through
cable systems.
Kendall, representing America Online,
and Kavanaugh, whose firm represents
G.T.E., are among a legion of advisers
who are quickly finding business in
the dispute, which has turned into the
latest full employment act for lawyers
and lobbyists here and in many cities
around the nation.
Their common adversary in the fight is
AT&T, which is rapidly acquiring cable
systems and offers high-speed Internet
access over those lines exclusively
through a company, Excite@Home, in
which it owns a major stake. Led by
America Online and G.T.E., a coalition
of Internet service providers and
other telephone companies have mounted
a nationwide campaign to force AT&T to
let cable customers use Internet
providers other than Excite@Home
without additional fees.
The AT&T opponents have several
business interests with billions of
dollars in future revenues at stake.
G.T.E. is developing a rival
high-speed Internet service, and many
smaller providers believe that if
AT&T's system proves popular, they
will be doomed if they are shut out.
Some of the other telephone companies
in the fray are either competitors of
AT&T or are using the issue to press
for greater deregulation and the
ability to compete with the company's
long-distance service.
AT&T contends it would have little
incentive to upgrade its cable systems
to provide high-speed Internet service
if it must serve as a carrier for all
providers, and that in any case,
comparable telephone- and
satellite-based services will insure
competition.
While a precise figure on spending on
the lawyers and lobbyists and for
campaign contributions is not
available, executives and lawyers
involved in the case estimate that it
is already in the tens of millions of
dollars.
"In a field where exaggeration is
common, it is fair to say that this
issue is regarded as the most
important public policy question in
telecommunications for the decade,"
said Andrew Jay Schwartzman, president
of Media Access Project, which
promotes consumer rights and diversity
on the airwaves and has taken sides
against AT&T.
"In the near term," Schwartzman said,
"there's billions of dollars in
revenue at stake. Over the longer
term, the outcome of this fight will
play a large role in determining who
will be the dominant
telecommunications and Internet
players for the next decade. As a
consequence, the bedfellows are
stranger than strange."
When Kendall and Kavanaugh found
themselves on the same side recently,
for instance, "their eyes were like
saucers," recalled William P. Barr,
the general counsel at G.T.E. and
former United States Attorney General,
who was in the same room with them.
For their part, consumer groups have
joined the anti-AT&T side but
acknowledge that they are in an
awkward position, allied with
telephone companies that they have
sharply criticized in the past. The
consumer advocates have also
criticized William E. Kennard, the
chairman of the Federal Communications
Commission, after lobbying fiercely to
get him appointed two years ago.
Kennard has in essence sided with AT&T
by formulating a policy that only the
Federal Government, and not local
authorities, has jurisdiction, but
ruling out intervention for now.
There have been high-stakes struggles
over telecommunications policy in the
past, but perhaps never one fought on
so many fronts, including a number of
localities where approval is needed --
and conditions on the Internet issue
can be attached -- if AT&T is to
assume the franchises of the cable
companies it is acquiring.
One reason cable has become a focus of
the Internet battle is that it is
expected to be a dominant source of
high-speed service, at least in the
near term. Today fewer than 1 million
homes have such connections, offering
speeds 10 to 80 times those of
conventional phone lines. But by 2002
the number of high-speed customers is
expected to reach 10 million to 16
million, industry analysts say, with
60 percent to 85 percent using cable
connections.
The current dispute is also notable
because it involves a convergence of
technology that has far outpaced laws,
court opinions and regulatory
decisions, all of which treat cable
and telephones differently and, for
better or worse, have said little
explicitly about the Internet.
-------------------------- On one front
A convergence of where AT&T's
technology that has opponents
outpaced laws and have scored
regulations. their
-------------------------- biggest
gains, the
issue is heading to a Federal appeals
court. It will hear oral arguments in
October over a decision by local
authorities in Portland, Ore., to
require AT&T to open its cable lines
there to any Internet company on the
same terms as Excite@Home.
The dispute also is moving to a new
group of cities that are considering
whether to permit AT&T to acquire the
cable franchises controlled by Media
One. Among other places, new
skirmishing is expected in the suburbs
of Boston and in other parts of
Massachusetts, where a drive to get
the issue on a statewide ballot in
2000 began this week, as well as
Minneapolis-St. Paul, Richmond and
major parts of Florida.
In Washington and cities around the
nation, both sides have retained
battalions of advocates. This week,
for instance, the anti-AT&T forces
announced that in addition to Kendall,
they had retained Lloyd Cutler, the
former White House counsel, and Bruce
Ennis, a leading Washington lawyer.
For its part, AT&T and the cable
industry have retained many of
Washington's lobbyists, including Vin
Weber, the former Republican
representative from Minnesota, and the
lobbying firm founded by the late Dan
Dutko, a major Democratic fund-raiser
who died in an accident two weeks ago.
More than 50 lobbyists for AT&T and
the cable companies showed up at an
organizational meeting last December.
"A lot of people have told me that
they owe me thank-you notes," said
Gregory Simon, a former top aide to
Vice President Gore, who is
collaborating with Richard Bond, a
former chairman of the Republican
National Committee, in directing the
anti-AT&T coalition. "They were
retained just so I couldn't hire them.
In Washington it took weeks to find
somebody who was not lobbying for
AT&T. I could not find three firms
that had not been retained on this
issue."
Nonetheless, the regional Bell
telephone companies have managed to
retain some well-known Washington
figures for the fight, including Haley
Barbour, a former chairman of the
Republican National Committee; Michael
D. McCurry, the former White House
press secretary; and Susan Molinari,
the former Republican Congresswoman
from Staten Island. They say that
Congress and Federal regulators should
eliminate restrictions on their
clients to make it easier to offer
high-speed Internet services to
compete against AT&T.
The experience in Florida is
illustrative of the magnitude and
fervor of the struggle. Local records
show that AT&T and the cable companies
have retained more than 40 lobbyists
in the state. G.T.E. responded by
persuading officials in Broward County
to adopt an ordinance requiring AT&T
to open its cable system to other
Internet service providers -- and by
agreeing to pay the county's legal
costs if AT&T sued over the issue.
AT&T lawyers say they are preparing to
challenge G.T.E.'s legal assistance to
the county.
There have also
been Potemkin-like
attempts at local
organizing, a
process that is
known by some
consumer advocates
as Astroturf
campaigns, in
contrast to grass
roots. Contrived
rallies were staged
in front of San
Francisco's City
Hall, for instance,
and both sides have
made extensive use
of telephone banks
to gin up support
by asking loaded
questions and
making alarmist
predictions.
Executives and
lobbyists from all
sides are pouring
campaign
contributions into the coffers of the
major Presidential contenders,
although none of the candidates have
stated a clear preference. (The issues
have transcended party politics,
although some of the major players
have been identified with particular
candidates. For example, James W.
Cicconi, general counsel and head of
government relations for AT&T and a
former aide to President George Bush,
was recently co-chairman of a
fund-raiser in Washington for George
W. Bush. George Vradenberg, the
general counsel for America Online, is
a top adviser and fund-raiser for John
McCain. And Simon has been raising
money for his former boss, Vice
President Gore.)
Lawyers on both sides say the
candidates are not likely to take a
position that could jeopardize more
donations.
While competing legislation over the
issue was introduced in Congress in
recent weeks, both sides acknowledge
that there is nothing the lawmakers
will likely do any time soon. As a
result, the anti-AT&T forces have
embarked on a strategy of trying to
find support in states and
municipalities, hoping the issue may
then begin to resonate with more force
in Washington.
Despite the intensity of the fight,
there is a widespread assumption that
it will be settled either at the
corporate bargaining table or by a
Supreme Court decision, which could be
years away.
"Everybody's got a business motivation
here and everybody likes cloaking
their arguments in terms like open
access," Cicconi said, "but what's
really going on here is AOL has a
business plan and wants the government
to put its thumb on the scale to tip
the balance in its favor." He said the
opposition has been "going in at the
local level and hiring as many people
as possible who have connections with
city commissioners and local
officials."
But consumer groups and AT&T's
corporate rivals say the battle is as
much over principle as it is over
business.
"I'm in awe of the magnitude and money
involved," said Donna N. Lampert, who
had to leave her law firm, which
represents major cable companies, to
continue her work for America Online.
"But at its core this is really about
an important principle. This involves
a lot more than whose garage the
Mercedes will be parked in, as the
saying goes about big money cases. It
involves who will control the
Internet."