Comments of Dr. Robert Jacobson
Before the King County Expert Review Panel on
High-Speed Internet Access to AT&T's Cable Modem Network
King County Council Chambers, Seattle, Washington
October 18, 1999

COMMENTS OF NETACTION

It's a pleasure to return to Seattle and King County to speak for NetAction, a national nonprofit, consumer-advocacy organization, on the topic of open access to cable communications. By way of introduction, I was a Seattle resident for eight years, from 1989 through 1996. I co-founded and served as associate director of the Human Interface Technology Laboratory at the Washington Technology Center, on the University of Washington campus. Subsequently, I founded and ran my own pioneering VR company, Worldesign Inc., in Ballard - a company that failed, in part, for lack of the very high-speed telecommunications services we are discussing tonight.

I know firsthand the problems of companies - as innovators and employers - without access to high-speed communications. In business, nothing can happen without infrastructure. If you have it, you thrive. If you lack it, you die. Soon you will be asked to recommend policies that will affect the course of infrastructure developments in King County and hence, the economic (and civic and cultural) life of your region. Do so with deliberation. Your future is at stake.

We at NetAction believe that policies encouraging the development of competitive local high-speed services, and competitive local telephone service, must supersede discussions of hypothetical injuries that will be perpetrated against unknown victims by prospective competitors to the current telephone monopolies. For businesses, as I've pointed out, the availability of competitive telecommunications services in the local telephone market is a matter of survival. For consumers, competitive local services will mean better service and lower prices.

Everywhere broadband cable has begun offering these services, the phone companies have belatedly responded - first by trying to block cable's entry into the market, and then by playing catch-up with broadband services of their own. I would not today be enjoying DSL service to my home, supplied by Pacific Bell, were it not for the incipient challenge to PacBell's monopoly posed by AT&T's acquisition of our moribund TCI cable franchise. While TCI's @Home dithered, PacBell was complacent. When AT&T signaled it meant business, suddenly PacBell scrambled. The same situation pertains here in GTE and U. S. West territory, in spades.

The current open-access controversy, which I have written about in a paper published by NetAction and widely distributed, is already passe' - and a diversion from the need to establish a policy encouraging competition in the local telephone market. Competition in the local telephone market would benefit 95 percent of King County's citizens, everyone who uses a phone at work and home. The Internet controversy, however it is resolved, will affect at most a fraction of the population between now and years from now, when it becomes relevant.

Moreover, you can now read in the press about AT&T's own moves toward evolving an open-access policy, one that the company can live with and that will not end up in endless political debate and litigation. Today's Wall Street Journal carries an article describing how AT&T is helping small DSL suppliers to get a share of the broadband market.[1]

Open-access makes economic sense: broadband pipes can carry copious amounts of data and cable companies can make money on the margin, carrying every bit of paying data they can capture. AT&T knows this as well as anyone: the departure of former AT&T Broadband CEO Leo Hindery, a principled gentleman, is credited to AT&T's plans for testing open-access cable in Atlanta, contrary to Mr. Hindery's preference.

What doesn't make sense is for government to impose arbitrary open-access schemes on cable companies, schemes that are prone to political manipulation by aggressive corporations with their own agendas. I'm speaking of the local telephone companies, of course, and the large information-service providers who would like nothing better than to gobble up all of the "open access" that regulation would require, to establish and enlarge their own online monopolies.

As a professional employed in the Internet industry, I find it humorous to witness arm-waving over AT&T's hypothetical bundling of Excite@Home services. In the industry, it's widely known that Excite is not doing so well, having slipped in the ratings from the No. 2 portal site to No. 7; @Home is only a little more successful. Rumors are rife that AT&T would like to have a "more flexible" relationship with both organizations. By the time AT&T is ready to offer broadband cable throughout King County, the relationships among these organizations may have changed dramatically. They are not worth your deep concern.

The issue of open access to cable broadband services is bigger than the fate of Excite@Home, AT&T, or any other individual players. In 1981, I drafted what was termed by the cable industry a "draconian" bill: it would have turned cable in California into a de facto common carrier. Elements of that bill became law. Cable was an out and out monopoly at the time and regulation appeared necessary.

The environment is quite different today. DSL service is becoming abundant. Satellite data services are imminent. And for most regular users of the Internet, wireless broadband data service, not hardwired provision of broadband, is the Holy Grail. Now that 3Com, Intel, and Nokia are combining to make wireless broadband happen, with other corporations following close in their footsteps, can wireless broadband be far off?

The bottom line is that competition is working, not as envisioned by the Congress in 1996, but working nonetheless. Singling out AT&T Broadband for arbitrary regulatory treatment seems like an unwise thing to do. King County's citizens deserve the benefits that come with unimpeded competition in the local telecommunications market, provided by AT&T and other vendors. You have it almost within your grasp. Take it.

  1. "Phone Upstarts Grab Some Turf In a Wild Race to the Internet," by Scott Thurm, Wall Street Journal, October 18, 1999.

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