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Phone companies began offering residential high-speed Internet service through digital subscriber lines, or DSLs, when cable companies like AT&T announced plans to wire the nation for broadband. The phone industry is now racing against cable companies to upgrade equipment and win markets. In October, Southwestern Bell announced a $6 billion plan to bring DSL to 80 percent of its Midwestern customers within three years. The company began offering service in St. Louis in July, but availability is spotty. You can't get DSL unless you live within three miles of a transmission center, and those centers tend to be in neighborhoods where folks own computers. That leaves areas like the North Side largely without DSL service. Southwestern Bell has not set a date for bringing DSL to the entire city. Before passage of the open-access law, AT&T had promised to upgrade the city's cable system by the end of 2001.
The FCC likes this race between phone and cable companies and is loath to do anything that might slow it down. The feds want multiple information pipelines so consumers can choose among cable, telephone and wireless systems, which are still being perfected. Once there's a choice of pipeline, the feds believe, the free market will make the open-access question moot. Though the feds favor open access, they're willing to put up with closed systems on the theory that government interference will slow investment in upgrades. In a September speech at an Atlanta telecommunications conference, FCC Chairman Kennard made his position clear.
"What I am hearing on this issue is a lot of rhetoric that the sky is falling, but when I look out in the marketplace and see only a million cable-modem subscribers and about 200,000 DSL subscribers, my first reaction is to allow this marketplace to play out for a while before we step in and start regulating," Kennard said. "If there are competitive problems, we will step in."
In other words, the FCC is saying, "Trust us." That's not good enough for St. Louis and some other local governments. County Council Chairman Jeff Wagener predicts St. Louis County will mandate open access as a condition for renewing AT&T's franchise in January. AT&T serves about 10,000 households in the county. "We don't want to enter into a 10-year agreement with the cable company that doesn't have open access in the event the feds would not act quickly," Wagener says. "We can't be certain that they're going to do anything. Then we're locked into a 10-year agreement without open access."
Charter Communications, with 240,000 customers, is the dominant cable provider in the county, which extended the company's franchise for 10 years late last year. Open access never came up, but Wagener says it will if the company seeks any modifications to its franchise agreement, even on unrelated issues. Meanwhile, the company says it is upgrading its system for high-speed Internet service and has begun offering it in the county.
It's too early to say how open access will play in St. Charles, where the city's franchise with AT&T is up for renewal next spring. "We're not to the point of negotiations yet," says Brent Schulz, assistant to the city administrator. "My assumption is, it will be an issue and it will come up." AT&T has 20,000 subscribers in the city of 60,000.
The main function of an Internet service provider (ISP) is providing an e-mail account and getting you on the Web. Open access means America Online or any other ISP would have the same access to cable lines as AT&T's own @Home, so computer users could choose any ISP. Under AT&T's business plan, everyone would be forced to have @Home and pay additional fees if they wanted a second ISP.
Open access wasn't on anyone's radar screen until Portland mandated it a year ago. The issue arose as a result of AT&T's acquisition of Tele-Communications Inc. (TCI) last year, a $48 billion deal AT&T says was primarily designed to get the company into the local residential telephone business. In theory, local phone companies, which must open their telephone lines to competitors, already have competition. In practice, however, rivals of the Baby Bells have gone after large corporate accounts rather than offering phone service to individual homes.
Hundreds of local governments got the chance to review their cable franchises as a result of the TCI-AT&T merger. In Portland, the city made open access a condition of franchise transfer. In St. Louis, the issue came up because the city's cable franchise is up for renewal, allowing the city to define the services it wants.
Phone companies would have you believe that they're looking out for your best interests. "The company believes very strongly in open access," says Jonathan Wilcox, a Southwestern Bell spokesman. "And the company believes to its core that open access is an issue of fundamental fairness and consumer choice, and that is what the company stands for and believes in all places. What they (AT&T) want is the monopoly deal. Frankly, there is never a good time, never a justification and never any reason to have a monopoly preference on any telecommunications service. Consumers must always have choice."