Cable Internet unbundling: local leadership in the deployment high speed access.

• Author: Maher, Marcus

1. INTRODUCTION

   The evolution of law and technology has led to substantial activity in the field of communications law. The growth in popularity and use of the Internet has made it an area of economic, technological, and social interest. This has brought it to the attention and regulatory interest of the Federal Communications Commission (FCC).(1) The Internet, however, poses problems for the traditional regulatory paradigms that the FCC has come to rely upon.(2) This is true not only for the Internet itself, but also for the areas of intersection between the Internet and "traditional" media, such as telecommunications and cable. With the pending merger of TCI and AT&T and their promise of "one-stop" television, Internet, and telephone service, the cable Internet issues move to the forefront. The FCC and Congress responded by trying to induce increased competition in communications fields.(3) The desire of traditional Internet Service Providers (ISPs) to gain access to new high-speed technologies for Internet access led to requests for unbundling or open access to cable systems.(4) Such requirements would allow ISPs to lease elements of the cable company's infrastructure to compete with the cable company's own ISP.

   Despite the focus of most of the attention and advocacy toward the federal level, local authorities took the first regulatory step toward open cable Internet access. Portland, Oregon, and surrounding Multnomah County were chosen for early access to the television-Internet-telephone service package to be offered by the merged AT&T and TCI.(5) To implement this marketing strategy, TCI needed local approval to transfer its existing cable franchises to AT&T. In an effort to meet community needs, however, the local authorities in Portland and Multnomah County conditioned such a transfer on the provision of open access to the "cable modem platform." Unable to reach a compromise with the local governmental bodies, AT&T and TCI filed suit in district court in an attempt to overturn the imposition of the open access requirement. In AT&T Corp. v. City of Portland,(6) the district court held that the actions of the local authorities were justified under existing law.(7) AT&T and TCI appealed this holding to the Ninth Circuit,(8) ensuring that the issue of unbundling of cable Internet access remains in the spotlight in the near future. More directly, however, the lawsuit attempts to settle the question of the legitimate role of local regulators regarding cable Internet access.

   This Comment begins by looking at the technologies that exist for providing Internet access. This includes traditional "dial-up" access using a modem and local phone lines, as well as a variety of technologies to allow high-speed access. The facts surrounding the imposition by Portland and Multnomah of an open access requirement on AT&T and TCI will be considered next. Finally, the merits of open access will be considered, as well as the authority of local regulatory bodies to impose such a requirement.

2. TECHNOLOGY

   Before addressing the specific justifications for unbundling or open access to the cable Internet platform, it is useful to have a basic understanding of the technologies for Internet access. This will begin with a brief consideration of the current narrowband modem over telephone line method. Next, technologies for high-speed access other than cable will be considered. Finally, the technology of cable Internet access, as well as the two major cable ISPs, will be discussed.

   1. Current "Dial-Up" Access

      Currently, the most common method of Internet access among private individuals is the combination of a modem over the regular, twisted-pair telephone line used for telephone access. Users dial up an ISP, which provides the user with a connection to the Internet. Data can be sent and received from the Internet, given the capability of modems currently available, at speeds of up to fifty-six kilobytes per second (Kbps). Factors such as the capabilities of the site the user is visiting or the amount of traffic on the Internet at the moment, however, can make actual data speeds much slower than the theoretical maximum. To download a fifteen megabytes file at fifty-six kilobytes per second would take about thirty-eight minutes.(9) The current price for Internet access by this method is in the area of twenty dollars per month.

   2. High-Speed Alternative Technologies

      One technology that allows higher speed Internet access is the Integrated Services Digital Network (ISDN). The maximum potential speed of the most common type of ISDN connection is up to 512 Kbps.(10) To download a fifteen megabytes file at 512 Kbps would take about four minutes. It costs between one hundred dollars to four hundred dollars to have an ISDN line installed. The user must also provide an ISDN router to connect to the Internet. Finally, for the most common level of service, the cost is around sixty-seven dollars per month.(11)

      The Digital Subscriber Line (DSL) also allows high-speed Internet access. Although there are many variations of this technology, the most common is the asymmetric DSL (ADSL). With a "splitter" version of ADSL, it is possible to use the line for both voice and data simultaneously. This would eliminate the need for a second phone line for Internet access. ADSL works over the regular lines used for phone service, but utilizes a special connection that provides much faster data transfer speeds. Users need to purchase a special type of modem that facilitates this connection, which will cost about $200. Additionally, the user's phone company must act as their ISP. The current cost for this service is about $40 per month for data speeds of 256 Kbps, up to $125 per month for one megabit per second or $875 per month for seven megabytes per second (Mbps).(12) To download a fifteen megabytes file at one megabytes per second would take about two minutes.

      Yet another option for high-speed Internet access is a T1 high-speed leased telephone line, which provides point-to-point service (PTP). A T1 connection allows data transfer at up to 1.5 Mbps.(13) To download a fifteen megabytes file at 1.5 Mbps would take a little over one minute. The cost for this technology is commonly about $330 per month, plus forty-four dollars per mile from the user's computer to the ISP.(14)

      Wireless Internet access is being developed as an alternative technology. One account suggests that Internet access through low-earth orbit satellites will be able to attain data speeds roughly two thousand times faster than traditional modems.(15) This would yield data speeds of about one hundred megabytes per second. At this transfer speed, a file of fifteen megabytes would download in less than one second. At the present time, however, this technology is primarily in the developmental stage.

   3. Cable Technology

      Cable or "broadband" Internet access also allows substantially greater data speeds than traditional phone networks. For true high-speed Internet access, new broadband cable must be installed to allow both reception and transmission of data. Theoretically, cable Internet access can allow data rates of up to ten megabytes per second.(16) Other estimates, however, put the likely data transmission range from two to five megabytes per second.(17) At five megabytes per second, it would take about twenty-four seconds to download a fifteen megabyte file. The monthly cost for this service is about forty dollars. A special cable modem is also required to allow access. Further, most currently installed cable connections only allow reception of data (i.e., for data to be transmitted to the subscriber's television) and thus must be replaced to allow full high-speed access.

      An alternative cable approach would utilize existing cable to provide practical high-speed Internet access. Customers could use existing one-way cable to receive data at high speeds. The transmission of data to the Internet by the subscriber would be accomplished through use of the telephone lines at slower speeds.(18)

      The two main ISPs providing access over cable lines are @Home and Road Runner. @Home has affiliate agreements with leading cable companies, such as TCI, Comcast, Cox, InterMedia Partners, Marcus Cable, Rogers, Shaw, and Cablevision Systems Corp.(19) The combined cable networks of @Home's partners reach roughly forty percent of U.S. households. Time Warner and Cablevision use Road Runner. Reports indicate that Road Runner will combine its service with MediaOne's MediaOne Express, which will change its service name to Road Runner.(20)

3. AT&T CORP. V. CITY OF PORTLAND

   Portland, Oregon, was chosen as a market to test a new marketing agreement from AT&T and TCI to provide a package of local and long-distance phone, cable TV, and Internet services on an upgraded cable network.(21) To do this, TCI was required to transfer the ownership of its cable franchise agreements to AT&T, which will run the company. The Mt. Hood Cable Regulatory Commission (MHCRC) decided that competing ISPs should be able to use the AT&T and TCI network to provide Internet service.(22) "Portland and Multnomah County, following the cable commission's recommendation," voted "to impose the open access condition as part of their approval of the franchise transfer."(23) AT&T claimed that America Online (AOL) and U.S. West, who requested unbundling at the federal level, pushed their agendas on the local authorities, leading to the unbundling requirement.(24) Oregon lawmakers, however, may have been more interested in "smooth[ing] the way for those local ISPs to offer Internet access that addresses specific community needs."(25)

   The first lawsuit in the debate over open cable Internet access arose when AT&T and TCI filed suit in Oregon District Court in an attempt to overturn the unbundling requirement.(26) The issues involved in this dispute are "whether local authorities can preside over far-reaching industry issues and what equals...