San Francisco Handing an important victory to AT&T Corp., a federal appeals court Thursday ruled that the city of Portland, Ore., cannot force the company to open its cable network to competing Internet service providers.
Officials in Portland as well as in San Francisco; Broward County, Fla.; and other communities have argued that high-speed access to the Internet through cable should be subject to local regulation, just as cable TV franchises are.
But the 9th U.S. Circuit Court of Appeals ruled that AT&T, which has spent billions of dollars buying cable companies to create a national network for local telephone and high-speed Internet service, does not fit the legal definition of a cable TV network. Instead, it is a telecommunications service, and therefore subject to regulation only by federal law, the court said.
The ruling is a setback for other Internet service providers including America Online which have argued that AT&T should be forced to open its cables to other competitors.
AT&T said it was pleased with the ruling.
"It clarifies decisively the limits of local authority when it comes to the provision of high-speed Internet access over cable," the company said.
Excite@Home, which is partially owned by AT&T, has exclusive rights until 2002 with AT&T to sell high-speed Internet access. It also has agreements with several other cable systems.
Excite@Home stock climbed $1.688 on the news to $20.625 on Nasdaq. AT&T rose 75 cents to $35.688 on the New York Stock Exchange.
AT&T bought Tele-Communications Inc. in 1998, thereby receiving a stake in a cable network that would later merge with Excite. Since then AT&T has invested heavily in cable networks, betting that they would be the dominant way to provide people with high-speed access to the Internet.
AT&T told the appeals court that it should be able to control Internet access to the cable TV network it purchased and that Portland and surrounding Multnomah County, Ore., had no right to make it do otherwise.
Local officials countered that they simply were protecting the city from a monopoly when they voted to force AT&T to open up its network to competitors.