Investment Firm Blocks Cable Access for Regional ISP

A tangled web of investment and influence nips rural broadband access plans in the bud.

by Patricia Fusco ISP-Planet Managing Editor [October 26, 1999]

The cable access policy debate has been playing all summer long on industry new stands nationwide. It doesn't matter if you call it open, non-discriminatory, forced, leased, or mandated access, AT&T has played a starring role in the public policy theatre this season.

Excit@Home performs in a good supporting role and is never short on lines deliberating the issue. Last month, Cox Communications was thrust into the spotlight in a guest appearance repudiating mandated access, after the Fairfax, Va. City Council placed an open access condition on the transfer of the Media General, Inc. cable system to Cox in Virginia.

Internet Ventures, the champion of leased access petitions, has mounted an alternative production in search of breaking through private cable network barriers all year long. IVI recently filed with the Federal Communications Commission for a declaratory ruling as to whether Section 612 of the Communications Act requires that cable operators provide leased access channels to ISPs. The matter is currently under review, and IVI has been keeping a low profile out of the limelight while the commissioners consider the merits of their argument.

Although the open access coalition believes that IVI's attempt to gain leased access to cable networks is entertaining, they don't believe its leased access argument carries much weight. Both proponents of non-discriminatory access agree that they don't want federal regulation over cable services, just the ability to provide consumers with the ISP of their choice over cable modems.

Broadband wannabe
WebShoppe Internet Solutions is a regional ISP that offers dial-up services to 50 southern U.S. cities in Alabama, Georgia, Florida, Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee. Over a year ago WebShoppe stepped on stage to wrangle access to the local cable facility in the Lake Martin area of Alabama.

The ISP is also a member of the openNet Coalition, and found the organization to be a valuable ally in its plea for cable access in their markets. Earl Baumgardner, WebShoppe owner, said IVI also proved to be an invaluable resource and coach in their drive to provide cable access services to the rural communities they serve.

Baumgardner said when WebShoppe first asked Charter Communications about providing cable modem service to the Lake Martin area, it seemed likely that they would get the green light to bring broadband access to their customers that were out of range to digital subscriber line services.

"When Charter notified us that they had channels available for use, we said sure," Baumgardner said. "We'd like to bring high-speed Internet access to the area, our customers want broadband services."

Sudden change of climate
But the business climate changed when Paul Allen and Vulcan Ventures, Inc. invested in the High Speed Access Corp. late in 1998. Jerald Kent, Charter Communications president and chief executive officer, Stephen Silva, Charter vice president of corporate development and technology and William Savoy, Vulcan Ventures president, head up HSAC.

Savoy is individually responsible for handling the fund that holds much of billionaire Paul Allen's investments. As a cofounder of Microsoft, Allen is one of the richest men in the world reported to possess $22 billion in assets.

Over the last several years, Allen and his fund have achieved a high profile in the technology and media world. At the core of Allen's holding is a huge bet on cable modem access to the Internet. Charter Communication, his cable-holding company, is now the fourth-largest cable operator in the United States.

Enter Allen; exit access
Baumgardner said WebShoppe's plans to provide high-speed services with Charter Communications, quickly unraveled when Allen and Vulcan Ventures entered the picture.

"We had just asked Charter for access to provide cable modem services in June. They came back and said we could have a channel, but we couldn't provide Internet access with it," Baumgardner said. "About a month later, HSAC was exclusively offering Internet access with Charter Communications through the Charter sales pipeline."

Baumgardner said that somewhere between 50 and 60 percent of WebShoppe's customers are out of range for DSL services and that the only broadband solution they can provide is cable modem access.

DSL-challenged
"In a town our size, DSL service in not an option," Baumgardner said. "For us, cable modem access is the only solution. Why should somebody else be able to provide the service, but not us? We need someone to look at the small towns and offer consumers regulatory relief now."

Baumgardner added that all WebShoppe has ever wanted to do is to provide customers with a choice of high speed Internet services.

"WebShoppe is willing to pay a fair price for a cable channel to bring consumers high-speed services," Baumgardner said. "Regulators say that cable access is such a small part of the current Internet access market that they don't need to step in and level the playing field; they want to let the market develop of two or three years. But a local monopoly is operating right now in the Lake Martin area and we want to bring consumers a real choice for broadband access to the Internet today, not years from now."

Baumgardner has made the home page of WebShoppe one online petition for open access so customers can let their opinions be known. He said mobilizing public opinion on the issue is just another step in their process to secure access to their local cable network.

Courting public opinion
"Customers want a choice and they're letting us know online," Baumgardner said. "We've talked to our congressman, we've talk to our local PUC, we've talked to Charter, and now it's time to put it to the public and let them decide how they want their access to the Internet served."

Agreed, bringing rural communities broadband Internet access without offering a choice of providers is better than not having the capability to provide high-speed service at all. But WebShoppe's general public is being under-served because an investment firm has prohibited the ISP from offering consumers diverse channels of broadband access.

Growth of the high-speed access market is not going to be determined by high-powered investment managers. It is going to be determined by consumers that demand access to their provider of choice and public policymakers that have the vision to open the marketplace and provide diverse broadband solutions.

—End

Related stories by Pat Fusco
AT&T, FCC Wheel & Deal
A Regulatory Fairytale for the 21st Century