AT&T Corp. has reached an agreement that will eventually allow rival online services to use its cable lines to provide high-speed Internet access.
The plan, which is designed to help win regulatory approval of AT&T’s purchase of MediaOne Group, Inc., would have the telecommunications giant initially open its pipes to number two online service provider MindSpring Enterprises, Inc. in 2002.
The agreement’s impact upon e-commerce is expected to be widely felt, as it will enable more consumers to utilize high speed Internet access. The result is that more dynamic content and sophistication at e-commerce Web sites will encourage new or reluctant consumers to make more purchases online.
Designed To Soothe Concerns
It has been reported that this move by AT&T is designed to mollify the Federal Communications Commission (FCC), which has expressed concerns about AT&T’s pending $62.5 billion (US$) acquisition of MediaOne. If approved, the deal would make AT&T the largest U.S. cable provider.
Regulators had been particularly troubled by AT&T’s agreement to exclusively use [email protected] Corp to provide high-speed Internet services until 2002.
According to reports, AT&T will outline the MindSpring plan in a letter to be sent today to FCC chairman William Kennard. Other companies will be allowed to use AT&T’s cable access once the agreement with [email protected] expires.
The move is seen as an attempt by AT&T to show the FCC that Internet access can self-regulate and does not require government intervention.
[email protected], which holds an exclusive agreement to provide ISP services for AT&T customers, issued a statement supporting AT&T’s commitment and emphasizing that government regulation is not necessary to assure consumers a wide variety of choices for high-speed Internet access.
Exclusive Agreement Details Still Unclear
Although MindSpring applauds AT&T’s announcement, the company disagrees with AT&T’s plan to wait until its exclusivity agreements with companies such as [email protected] (Nasdaq: ATHM) expire. “We are encouraged by AT&T’s efforts,” said Dave Baker, vice president of legal and regulatory affairs with MindSpring. “But consumers should enjoy the benefits of open access sooner rather than later. They should not have to wait for exclusive arrangements between AT&T and its affiliates to expire years from now.”
MindSpring would like the government to strengthen the agrveement with an insistence that open access begin at once. “We hope that federal policy makers will grasp the opportunity that this initial agreement creates because only clear and unambiguous federal policy can make the promise of this agreement real, enforceable and timely,” said Baker. “Otherwise, today’s agreement may not benefit consumers for years to come.”
[email protected] Affirms Exclusivity Agreement
[email protected] issued a statement affirming that government intervention is not necessary in the high-speed access market. The company also stated that AT&T has long planned on opening its access after the exclusivity agreement with [email protected] expires.
“In a marketplace that is highly competitive and spurring investments, the terms by which cable companies provide their facilities to other businesses should be resolved in private business negotiations, not through government regulation.” If the FCC chooses to regulate high-speed access, [email protected] would likely lose its exclusive agreement with AT&T.
Access Battle Has Been Raging
Ever since AT&T bought Tele-Communcations, Inc. in March, the New York-based company has faced a firestorm of opposition over the issue of Internet access. Consumer advocates claim that approval of the acquisition would render consumers subject to a monopoly, while municipalities like Portland, Oregon have sought to force AT&T to open its lines to other Internet service providers. AT&T has filed suit in response.
Until now, AT&T has opposed such open access because it would allow other companies to get a free ride on the billions of dollars it spent in upgrading its cable networks.
AOL Is Biggest Beneficiary
If AT&T does open access to other online providers in 2002, AOL will be the biggest beneficiary. With nearly 20 million subscribers, the number one online service provider has virtually no broadband assets. In fact, only several months ago, AOL feverishly tried to purchase [email protected], but could not come to terms over a price.
Additionally, AOL has been recently negotiating with Bell Atlantic to use its broadband assets.
In the past, AOL has been unsuccessful in cutting an access deal with AT&T, after talks stalled over issues of price and customer control.