Cable Cos. Face Dilemma

AT&T has spoken out in the cable regulation case in Oregon that could potentially set a legal precedent, and even represent a setback for cable operators, according to market observers. And the giant telecom company has federal regulators on its side.

AT&T, which has spend hundreds of millions of dollars in the past year to become the largest U.S. cable company, has asked a federal appeals court for a quick decision on whether a city has the authority to force the company to open up its high speed cable lines to competitors.

A U.S. District judge ruled earlier this month that the company must do just that, as requested by the city of Portland and Multnomah County.

In a big stamp of approval for AT&T, Federal Communications Commission chairman William Kennard said at the National Cable Television Association convention in Chicago last week that he believes cable companies should be monitored at the federal level instead of at the state or local levels.

Some in the market noted that rules mandating the sharing of infrastructure systems is exactly what happened in the telecom industry, and that it is getting tougher to draw distinct lines between cable and telecom since the firms themselves are trying to capture each other's business.

Companies such as America Online, or any Internet service provider that lacks its own infrastructure, could benefit from similar rulings made in Oregon, analysts said.