AT&T Comcast says customers will have ISP ‘choice’

Regulatory pitch

ComputerWire: IT Industry Intelligence

AT&T Comcast, the company that will form from the merger of AT&T Broadband and Comcast Corp, Friday outlined its intention to give cable customers access to unaffiliated ISPs, but stopped short of committing to fully open networks,

Kevin Murphy writes

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In a document filed with the Federal Communications Commission, which is reviewing the merger, the companies said: "AT&T Comcast is fully committed to negotiating mutually beneficial service agreements with internet service providers, so that its cable customers will have a choice of ISPs."

The companies hope to show that the merger will not adversely affect competition in the US broadband internet market. Together, the companies service about a quarter of the 10 million broadband-connected homes in America, they said, compared to AOL Time Warner Inc's 2 million. The company will be the largest cable operator in the US.

The companies are fearful that regulators will approve the $120bn merger with conditions that force it to open its cable to competitors on "government-mandated terms". This is what happened when AOL bought Time Warner.

Both firms have started to ink commercial agreements with unaffiliated ISPs to show regulators this is not necessary.

"Both AT&T and Comcast already have ample market incentives to make commercially reasonable, customer-friendly arrangements with unaffiliated ISPs," the companies said. "Given the need to compete with DSL and other comparable offerings, AT&T Broadband and Comcast have significant incentives to offer their customers a choice of ISPs."

AT&T Broadband already has a deal in place with EarthLink Inc, finalized last month, under which it will provide broadband access to AT&T customers in Boston and Seattle. Comcast announced an access deal in February with United Online Inc, owner of NetZero and Juno brands.

Many details of the two deals were not revealed. It appears as if EarthLink's is more conventionally an "open access" deal, where it actually provides much of the infrastructure and support, while United Online will just rebrand and market a Comcast-operated service in return for a slice of the subscription fee.

According to sources close to the deals, AT&T agreed to allow EarthLink onto its network more than two years ago. At the time the cable company was bound by an exclusivity arrangement with the now defunct Excite@Home Corp, but said EarthLink could start offering services on ATT cable in 2002.

The deal was evidently hard-won, and there are no announced plans to scale the partnership beyond the initial two cities. In both the Comcast/United deal and the ATT/EarthLink deal, the companies made vague noises about expanding rollouts and bringing in additional ISPs, but gave no specifics.

It now transpires Comcast is also conducting a technical trial of EarthLink on its cable in New Jersey. AT&T Broadband conducted technical trials of multiple ISPs on its cable in Boulder, Colorado, last year, with EarthLink, Juno, WorldNet and Excite@Home.

WorldNet is of course AT&T's in-house ISP, and Excite@Home is dead, which leaves Juno (now United Online) and EarthLink, both of which seem set to provide services on AT&T cable in at least some markets. It is unknown if the company is in talks or trials with other ISPs.

The key to the choice "commitment" outlined in Friday's FCC filings is the phrase "subject to negotiation of mutually beneficial terms". Many believe that only the big national ISPs with significant financial clout, such as EarthLink, can benefit from market-regulated cable access, leaving the hundreds of local and regional ISPs out in the cold.

EarthLink itself is among many ISPs and consumer groups fighting for government regulations that would force all cable firms to open their networks on a non-discriminatory basis. A recent FCC ruling confirmed that cable services should not be subject to the same regulatory framework as DSL, meaning no change in the status quo. EarthLink is among those filing a Court of Appeals challenge to that ruling.

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