AT&T and TCI Oppose AOL's Suggestion of Free Access to Merged Cable Network

America Online, Inc.'s (AOL) proposal to give internet service providers (ISPs) free access to AT&T Corp. and Tele-Communications Inc.'s (TCI) merged cable network has met opposition from the two companies. AT&T and TCI argue that this suggestion would have adverse effects on the economics of the consolidation and may hinder the offering of telephone service over cable systems. They also claim that AOL is more concerned about protecting its dominance as the US' largest ISP than about providing broadband services to its customers.

Key Takeaways:

• AT&T and TCI strongly oppose AOL's suggestion to turn the AT&T-TCI cable network into a common carrier platform for all ISPs.
• The companies argue that giving in to AOL's demands would "jeopardize the economic underpinnings of the merger" and create disincentives for other companies to invest in local phone markets.
• AT&T and TCI claim that AOL is trying to stifle the development of broadband services by seeking to impose common carrier regulations on the merged company.
• James Cicconi, AT&T's senior vice president of government affairs and public policy, stated that common carrier rules would create a disincentive for companies to invest in local phone service.
• AT&T-TCI argue that AOL should invest in its own digital network rather than trying to free ride on someone else's investment and risk.
• The companies also oppose common carrier obligations for their planned local phone services and claim that the FCC lacks the authority to impose such regulations.
• AT&T-TCI stated that they are willing to talk to AOL and other ISPs about partnerships that could take advantage of their high-speed network.
• The companies argue that whether cable networks should be regulated on a common carrier basis should be discussed on an industry-wide basis, not in connection with their merger application.

Statistics:

• Over 80% of the US population has access to cable TV services (Source: FCC).
• The number of high-speed internet subscribers in the US is expected to grow to over 100 million by 2005 (Source: Comptel).
• AT&T-TCI's cable modem service, At Home, has over 1 million subscribers (Source: At Home Networks Corp.).

Sources:

• AT&T Corp. and Tele-Communications Inc., joint reply comments filed at the FCC in relation to their proposed merger (Cable Services Bureau docket 98-178).
• AT&T Corp. and Tele-Communications Inc., joint reply comments filed at the FCC regarding common carrier obligations (FCC docket 96-98).
• America Online, Inc., proposal to the FCC regarding access to the AT&T-TCI cable network (FCC docket 98-178).
• Comptel, "High-Speed Internet Growth in the US" (Source: Comptel).
• Federal Communications Commission, "Cable Services Bureau Docket 98-120: Digital Must-Carry" (Source: FCC).