Charter Communications: The Lone Piper

May 09 2000

With strong urging from Congress and the Federal Communications Commission, almost all of the major cable operators have voluntarily agreed to allow competing Internet service providers onto their broadband pipes. But there's still one fly in the ointment: Paul Allen's Charter Communications .

Charter, the third-largest cable operator in the country, plans to continue requiring its customers to buy broadband Internet service from an affiliated ISP. That sets Charter apart from the other four major operators - ATT , Time Warner , Comcast and Cox Communications - all of which once favored exclusivity but have agreed this year to various degrees of shared access.

At the National Cable Television Association's annual conference in New Orleans, Charter President Jerald Kent sounded like AT&T chief Michael Armstrong three years earlier, back when AT&T was refusing to share its broadband pipes with ISPs like America Online and EarthLink.

"We allow customers to personalize their start pages, so they can go to AOL literally with the click of a mouse," says Kent, apparently oblivious to the fact that regulators rejected that exact argument years before.

Charter's lone-wolf stand isn't winning many friends in Washington.

So far, the FCC has been content to stand on the sidelines; however, Chairman William Kennard has welcomed the high-profile agreement between AT&T and EarthLink, as well as the commitment of merger partners AOL and Time Warner, to share access to the cable broadband infrastructure with multiple competing ISPs. More recently, Comcast and Cox have made less-formal commitments.

Deborah Lathen, head of the FCC's cable bureau, predicts that market pressure ultimately will force Charter to open its wires and abandon its exclusive ISP strategy. But she warns that the FCC will take action if any cable operator tries to create a bottleneck.

"They'll be dragged along - the marketplace is going to make that happen," Lathen says. "But if we see a marketplace failure occurring, that's the time when we will step in and take action."

Kennard, who spoke before Lathen, stopped short of threatening FCC regulation but warned the cable industry to continue pursuing a policy of openness and urged cable operators to act more responsibly.

The cable industry's credibility on the Internet-access issue has been damaged by the recent spat between Time Warner and Disney, which saw Disney's broadcast television stations yanked from Time Warner's systems for two days.

The Time Warner cut-off "has called into question, whether legitimately or not, the question of whether your industry can be trusted to be an honest gatekeeper to the Internet - the gatekeeper that it says it wants to be to accommodate multiple ISPs," Kennard says. "That concerns me."