GTE Files Suit Over Internet Access

AT&T, Comcast, Excite At Home Accused of Illegal ‘Tying’

An intense national battle over control of high-speed links to the Internet flowed into another arena yesterday, as local telephone company GTE Corp. asked a federal court in Pittsburgh to force cable companies to offer their customers an equal choice of Internet service providers.

GTE filed an antitrust lawsuit against two cable companies--Tele-Communications Inc., now owned by AT&T Corp., and Comcast Corp.--as well as a third company, Excite At Home, which connects customers to the Internet over cable lines. AT&T and Comcast both own substantial interests in Excite.

By Peter S. Goodman
Washington Post Staff Writer
Tuesday, October 26, 1999; Page E01

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For years, people have connected to the Internet using computer modems and telephone lines, dialing in to the Internet service company of their choice. But as sophisticated services such as video-on-demand and teleconferencing flood communications networks with computer data, industry leaders are racing to provide faster access to the Internet, with no dialing required.

Upgraded cable television lines have emerged as a direct path, competing with another route being rolled out by local phone companies, DSL, or digital subscriber line, which effectively transforms regular copper phone lines into swift arteries of information.

Cable companies have sought to leverage their established links with millions of homes into market share in the burgeoning Internet world.

AT&T has led the way, spending more than $100 billion to acquire TCI and other cable franchises throughout the country.

A key to the equation: AT&T and Comcast offer their customers a single portal to the Internet--the Excite At Home service. If customers prefer a different Internet provider, they can go there, but they still must pay for Excite.

And that, GTE argues in the suit filed yesterday, amounts to an illegal "tying" under federal antitrust law, a policy that forces customers to buy two products to get the one they want.

"This is an issue of fundamental telecommunications policy," William P. Barr, GTE's general counsel and a former U.S. attorney general, said at a news conference. "Open access should be the rule."

In a blistering statement AT&T's general counsel, James W. Cicconi, portrayed the suit as a frivolous attack lobbed by a local telephone franchise concerned that cable will allow customers to bypass its monopolistic grip on its markets.

"The overwhelming majority of customers must access the Internet over dial-up facilities from GTE and the other local telephone monopolies," Cicconi said.

"It is preposterous and ironic for a monopoly like GTE to use the antitrust laws to block emerging competition."

For months, open access has comprised a central fault line of lobbying and litigation within a communications world being refashioned by technology. GTE and other local phone companies say they can't fairly compete for high-speed Internet customers if cable lines are not open to all. Dulles-based America Online Inc., the nation's largest Internet service provider, has made the open access fight its own, as it seeks a fast route into homes.

Consumer advocates have portrayed the open-access debate as one that will determine the very future of the Internet--one that is freewheeling and open, or compromised by electronic fences and controlled by powerful corporations.

To date, the debate has played out in cities and counties across the country as some local authorities--Portland, Ore., most notably--have refused to transfer TCI's cable licenses to AT&T unless the company allows customers to link up with any Internet provider. AT&T has maintained that opening its lines would be technically challenging, costly and unnecessary.

AT&T's opponents have sought to persuade federal regulators to intervene. In the new realm of communications, they argue, cable systems are indistinguishable from phone systems, serving as conduits for the same services.

Indeed, AT&T plans to sell phone service over its cable lines. Just as federal authorities have forced local companies to lease their networks to rivals, they argue, cable companies should be forced to do the same.

But the Federal Communications Commission, led by Chairman William E. Kennard, has declined to regulate, arguing that "broadband," as high-speed access is known, is a nascent area, one best nurtured by market forces. Cable has no monopoly, Kennard argues, since DSL and satellite systems offer other means of moving fat loads of data fast.

Moreover, Kennard says, strong cable companies offer the best prospect for local telephone competition.

But yesterday's action elevates the open access debate to a new federal arena, while providing cable opponents with a shiny tool in their fight, analysts said.

"It gives GTE the power of legal discovery to find out the facts it hasn't been able to find out in a political regulatory debate," said Scott Cleland, an analyst with Legg Mason Precursor Group.

"Internal [memorandum.] Think of all the documents the government used against Microsoft. That's what they're looking for: Smoking guns."

© Copyright 1999 The Washington Post Company, of  Modified by using "clever quotes" in #8216-7 form 20 Oct 00
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