-AT&T Corp. v. City of Portland No. 99-35609 U. S. Court of Appeals 9th Circuit, 216 F. 3d 871; 2000 U. S. App. Lexis 14383 -“Citing Pro-Competitive Benefits to Consumers, Commission Approves AT&T-TCI Merger. ” Report No. CS 99-2 FCC News *www. fcc. gov* -Mosquera, Mary. “FCC Approves AT&T/TCI Merger. ” Technology News 17 February 1999 *www. techweb. com/* -“AT&T/TCI Merger Wins FCC Approval. ” Star Tribune (Minneapolis, MN) 18 February 1999, Metro Edition, Pg. 4D -“Cable groups flex muscles for fresh clash: U. S. industry nerves rattled by government pledge to examine AT&T/TCI merger plans.
The Financial Times Limited (London) 7 Dec 1998, sec. The Americas -Briefing The Denver Post 3 February 1999 2D ed. , sec. Business Pg. C-02 -University of Washington, School of Law: Center for Law, Commerce & Technology. 28 June 2000 *www. law. washington. edu/lct/* AT&T v. City of Portland exemplifies the current regulatory efforts of local government to compensate for the federal government’s lack of proactive activity in the broadband market. The struggle between AT&T and the City of Portland began in June of 1998, when AT&T and TCI (Tele-Communications, Inc. nnounced their intent to merge in 1999 (AT&T Corp. v. City of Portland). Under the terms of the merger, TCI became a wholly owned subsidiary of AT&T. AT&T/TCI provided @Home (explained in the next paragraph), a service giving residential cable subscribers high speed, broadband access to the Internet.
Many parties opposed the merger, arguing that, if approved, AT&T/TCI (through the @Home service) will have a substantial head start in the provision of high-speed Internet access and could develop a top position as a monopoly of broadband Internet access services to residential consumers (U. Washington). In December of 1998, the Portland and Multnomah County adopted the country’s first mandatory access provision. AT&T rejected the mandatory access provision, resulting in a denial of its request for change in control of the TCI franchises in January of 1999. AT&T sued Portland and Multnomah County alleging that the denial of the franchise transfer was preempted by federal law, violated the First Amendment, the Commerce Clause, and the Contract Clause (AT&T Corp. v. City of Portland).
TCI offers an optional premium cable service called TCI@Home in several localities, which provides residential cable subscribers high-speed access to the Internet. TCI purchases the right to distribute the @Home service from At Home Corporation and resells the service to individual subscribers. The @Home service comprises a private broadband network and interactive on-line service distributed in part through existing cable infrastructure, using the @Home Network’s high-speed national backbone and a cable modem.
Each subscriber receives a two-way cable modem connection to the @Home network through a cable modem attached to the subscriber’s personal computer (Denver Post). AT&T challenged the City ordinance and the county resolution requiring that AT&T allow Internet service providers not affiliated with AT&T to connect their equipment directly to AT&T’s cable modem platform, bypassing ome, AT&T’s propriety cable Internet service provider (AT&T v. City of Portland). AT&T contends that the mandatory open access provision violates their First Amendment rights. The open access requirement is an economic regulation.
It does not force AT&T to carry any particular speech (The Denver Post). One of the issues that the FCC considered forms the undercurrent of the present controversy: whether to impose a requirement of open access to cable broadband facilities (AT&T Corp. v. City of Portland). The FCC stated that the broadband issue was not merger specific and that, although AT&T/TCI may be able to deploy broadband services more quickly than competitors, other companies such as telephone, satellite, electric utilities, and wireless providers were working toward the same end using alternative technologies (FCC News).
The commission found that the AT&T/TCI merger might expedite the goal of deployment of high-speed Internet access services by providing a quicker rollout of these technologies, and that no regulation of access was required (FCC News). The commission concluded that the proposed merger would not deny broadband subscribers the ability to access the Internet content. On June 3, 1999 the Oregon District Court ruled in favor of Portland and Multnomah County, upholding the mandatory access provision as a condition to the franchise transfer.
AT&T/TCI appealed the decision and the Federal Court of Appeals for the Ninth Circuit reversed the lower court’s decision stating that the mandatory access provision prohibits a franchising authority from regulating cable broadband Internet access, because the transmission of Internet service to subscribers over cable broadband facilities is a telecommunications service under the Communications Act (AT&T Corp. v City of Portland). The outcome of this case could have a major impact on the deployment of broadband Internet access to residential customers.