New Barrier To Cable Access:
War Weary Independent ISP Operators

If your ISP is actively seeking to secure access to a local cable network, your business is part of a very small minority. But all is not lost—a few ISPs are actually making coaxial connections with cable carriers.

by Jim Wagner of internetnews.com [September 26, 2001]

Patricia Roundtree has a problem.

Like most independent Internet service providers in the U.S., Roundtree needed to figure out a way to provide high-speed access for her subscribers that did not depend on the local telecom company for connectivity. Like a few other ISP owners around the country, Roundtree took a leap of faith and sent a letter to Comcast Corp., the local cable carrier in her home town.

Comcast, the third largest cable operator in the country, set a self-imposed deadline to share its cable network with independent ISPs by the end of the year after federal regulators made "open access" a tenant of the AOL-Time Warner merger. Knowing this, Roundtree figured that contacting Comcast headquarters would be the best place to start.

In her letter, Roundtree asked Stanley Wang, Comcast executive vice president, general counsel and secretary, about the best way to affiliate her ISP, Dundee Internet Services, Inc., with the cable company.

"I am writing to request that Comcast provide to Dundee Internet Services, Inc., under nondiscriminatory terms and conditions, access to the transmission element of its cable Internet access service in Dundee, Michigan. We would like the opportunity to offer the transmission services of the cable broadband network in order to be able to offer high-speed broadband service to our customers. We are not seeking access to any ISP service provided by the Comcast or Comcast's affiliated ISP (e.g., Excite@Home). We want an opportunity to continue to service our customers with cable Internet.

What was Comcast's response?

Your guess is as good as Roundtree's, or mine for that matter. Roundtree hasn't heard a word—not a phone call, not a postcard, not a note—since her correspondence was sent to Comcast.

Roundtree penned another letter. This time, she wrote to Brian Roberts, Comcast president and director, making about the same request as she had in the first letter.

What was Comcast's reply to Reoundtree's second letter?

It received the same response as the first—absolute silence.

Naturally, yours truly contacted Comcast officials on behalf of Dundee Internet Services. I was greeted by a nameless voice that inflected a tone of incredulous disbelief. "What's that you say? Something about responding to a letter that was sent several months ago?" It's been a week now, and I still haven't heard anything back from anyone at Comcast.

Disinterested parties
This is a scene that's played over and over again when independent ISPs ask big-name cable operators to share their networks with them. We all hear cable big-cable companies' preach the gospel of "open access," but few actually take steps to begin sharing their networks with independent ISPs—unless required by federal regulators to do so.

The Federal Communications Commission has been willing to allow market forces to determine the path of "open access" in the U.S. Chairman Michael Powell has consistently expounded this belief for years. Powell thinks that broadband technologies—not the companies within each sector—should drive competition in the high-speed service arena.

But it's not just independent ISP owners that are having a hard time with national cable operators. Many of the nation's smaller cable companies are caught between a rock and a hard place when it comes to Internet access and the troubles caused by their larger rivals.

The American Cable Association represents many of these smaller cable companies and the ACA has been pitching its side of the "open access" story to the FCC since the agency first opened up a notice of inquiry (NOI) in January. Matthew Polka, ACA president, says that smaller cable companies have been sharing cable systems with ISPs for years—all during the time when big-cable companies said it wasn't technologically possible.

A recent report by the ACA to federal regulators states that "while the mandated open access debate rages in larger markets, in smaller markets ACA members and unaffiliated ISPs work together without the hoopla." As a matter of fact, Polka says there is a general lack of interest among ISPs desiring to sign-up for cable network carriage.

"In our view, the market is working because we've already shown FCC that operators have negotiated carriage agreements with unaffiliated ISPs," Polka said. "In fact, many cable operators have gone out to those ISPs to ask them if they want space on the system. In some situations, the ISP hasn't shown any interest in wanting space on the network, in others, there haven't been any unaffiliated ISPs in town."

Temporal summation
Scott McCollough, a telecommunications lawyer at Texas-based Stumpf, Craddock, Massey & Pulman, isn't surprised by ISP owners lack of enthusiasm for cable access. After years of fighting incumbent carriers over billing issues, T1 provisioning, and DSL access, McCollough says most independent ISP operators don't have much fight left in them.

"I don't find it surprising, and here's why," McCollough said. "ISPs these days, at least the ones I talk to, are so dang tired. They're tired of having to fight with the telephone companies to get basic dial up, they're tired of having to fight with the telephone company to get DSL and I'm just not sure they're interested in working too hard with individual cable companies to try to get cable access if it means their in for another screwing every day of the week."

McCollough added that ISP owners are actively seeking profitable ways to provide broadband access, but often the terms of these long-term deals offer slim margins via ironclad contracts.

"I think the ISPs are smart enough to know that the cable companies don't have to do this and there's really no place to go if they don't like what they're offered, and can't force them to make a better offer," McCollough said. "The incentives just aren't there for the cable company. The only one that's got to pretend to talk is Time Warner, the others just put up a good front like telling everyone how good their field trials are going."

But this is not the case for all cable companies, at least according to the president of one small firm in Seattle.

Divergent growth
Steve Weed, Millenium Digital Media Northwest president, knows a thing or two about the corporate mindset at big-cable companies. Up until a couple years ago, Weed was president of his own small cable network in the Emerald City before getting bought out by the St. Louis-based Millenium cable.

He realized early on that melding with a larger cable operator would spur growth for his coverage of the Seattle area. Weed knew that providing cable modem services on his own would take too much time and too much money to compete with big-cable offerings. The Seattle cable market lies firmly in the grasp of AT&T Broadband. Those cable customers that don't go with AT&T opt for America Online's T-1 program. Weed's decision to make his cable company a subsidiary of a larger firm was a matter of self-preservation.

Since joining forces with Millenium, Weed has seen annual growth hit triple digits, at least in terms of clients served. This year, Weed said annual growth would be around 300 percent. As a subsidiary of Millenium, Weed's operation serves approximately 3,000 cable Internet users. Services range from 128 Kbps connections for less than $25 a month, to commercial offerings starting at $99 per month.

Echoing the remarks of the ACA president, Weed said that the phone calls from ISPs looking for affiliation with the cable network have totaled nil. In fact, Weed said, he'd like to be able to get an ISP on board to increase the number of cable modem users on his network.

"We'd definitely be interested in talking to ISPs at this point," Weed said. "AT&T's got a million cable users in the Seattle market and we've got 50,000, so when people look at Seattle they think they have to go to AT&T. We don't have anyone that's approached us."

Weed added that he would be interested in just to having someone else sell his product, but that nobody's given him a proposal.

Granted, Weed's cable access solution doesn't help Dundee's Roundtree—who still hasn't heard a peep out of Comcast. Small cable carriage won't help many independent ISP operators provision coaxial access, but it could help a few.

If your ISP is fortunate enough to operate in a market where there is a local or regional cable company, then you might find a willing partner in providing cable modem access for your ISP.

Why not send a proposal out to your local cable company, today?

After all, you really have nothing to lose—and everything to gain.

— End