Originally created 05/18/99

Merger plan heats up Internet debate



WASHINGTON -- AT&T's plan to buy cable company MediaOne is intensifying debate over whether to regulate cable TV companies' Internet services.

The planned merger would turn AT&T into the nation's largest cable TV company and biggest provider of high-speed Internet access over cable TV lines and modems.

Bell Atlantic, which is merging with GTE, wants the Federal Communications Commission to block the AT&T-MediaOne deal, Bell Atlantic chairman Ivan Seidenberg told reporters at a consumers conference here Monday.

Bell Atlantic, which wants to be a major player in the high-speed Internet access market, as well as other Baby Bells' Internet services, are regulated. That puts them at a competitive disadvantage because it makes it harder for phone companies to quickly respond to consumer demand by adjusting prices and offering new service packages, Seidenberg contends.

"It is a discrepancy -- there's no question about it," concedes Bill Kennard, chairman of the Federal Communications Commission, which will review the AT&T-MediaOne deal and has been monitoring the development of the small, but fast-growing cable Internet services market.

The FCC, in recent decisions, has declined to force cable companies, including AT&T through its takeover of cable giant Tele-Communications Inc., to share their high-speed lines with competitors -- something America Online, consumer groups and some phone companies want. But the FCC has said it would keep watch.

"One way or another we need to make sure it's open and competitive," said AOL chairman Steve Case.

AT&T and the cable industry oppose regulating cable's high-speed Internet services, preferring voluntary arrangements with companies.

The FCC is monitoring to ensure cable companies providing high-speed Internet services aren't freezing out competitors or restricting consumers' options for Internet service. Beginning next week, the FCC is to begin holding a series of meetings on the issue, Kennard said.

"I do want to make clear that this is a debate that isn't over yet," Kennard said.

"My position in the past has been that we have to be very, very careful about injecting government in a marketplace like the Internet which has thrived quite well without a lot of government intervention. We need to proceed very cautiously ... before we say yes regulate or don't regulate."