Cable Count Stands

The U.S. Supreme Court upheld FCC laws stating that no cable operator can have over 30 percent of the market. AT&T is currently over the limit, and its agreements with Excite@Home limit open access to competition.

by ISP-Planet Staff [February 22, 2001]

In a blow to domestic cable companies, the U.S. Supreme Court this week declined to review a suit that challenges a law limiting the number of cable subscribers any one operator can serve.

By rendering a decision not to hear the case, an appellate court ruling stands to have broad implications for the cable industry—potentially giving pause to any further market consolidation.

Crying foul
The case was brought before the court by Time Warner Entertainment, even though it was AT&T Corp., the nation's largest cable operator, that blasted through the cap last year after completing its acquisition of MediaOne Group.

In a parallel challenge, AT&T and would-be rival AOL Time Warner— AT&T's next largest competitor in the cable arena—contested the Federal Communication Commission's rules limiting cable market share to 30 percent.

According to the FCC, AT&T cable currently reaches approximately 42 percent of U.S. Households. When the FCC approved the acquisition on MediaOne, it also ordered AT&T to get below the cap by May 2001.

In order to fulfill the order, AT&T committed to selling its 25.5 percent stake in Time Warner Entertainment and said that it would spin off Liberty Media Group as a separate entity.

High-speed access ramifications
While the FCC has forced AOL Time Warner to open its networks to Internet service providers as part of its approving the two company's merger in January, AT&T has remained relatively free to ignore open access as an operational issue.

EarthLink Inc. stands alone as the only national ISP to secure a deal guaranteeing shared access to AOL Time Warner's cable network—Juno Online Services has yet to cement a similar agreement—no service providers have come to terms with AT&T.

All the same, AT&T is opening its networks to competing ISPs, promising that it would treat competing services as its affiliates.

But the operator has already agreed that Excite@Home will have a preferential status on its network until 2008, after the companies' exclusivity deal expires in 2002.

AT&T has promised that it will set up a multiple ISP pilot in up to three markets in the state no later than the fourth quarter of this year. The issue is how AT&T can treat every ISP equally if it has promised preferential treatment to Excite.

— End