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11 <br />The federal ownership statutes limit any one cable operator to no more than 30% <br />of the marketplace. AT&T's purchase of MediaOne boosted its national market <br />share to 39%. Although, MediaOne surrendered its management rights to Tirne <br />Warner, this did not deter the FCC from ruling that the transaction exceeded the <br />federal limits. The FCC is not enforcing the rule because a federal district court <br />judge in 1993 ruled that the statute authorizing the 30% cap was unconstitutional <br />because it violated the First Amendment. The matter was appealed to the US <br />Court of Appeals in December 1999 and a decision is expected later this year. <br />The FCC believes that the lower court's ruling will be reversed and the 30% <br />statute cap will be upheld. Consequently, the FCC has advised AT&T that they <br />would have 180 days from the date of decision to come into compliance. <br />Compliance could mean that i) AT&T could exchange its Time Warner stake for <br />a sweet heart contract with AOL-Time Warner to provide phone service over their <br />cable systems or ii) AT&T could divest itself of its Rainbow Media Holdings, <br />Inc., and Liberty Cable properties to comply with the 30% cap rule. <br />MediaOne initially invested $1.5 billion in Road Runner's start-up. This <br />investmerit's current value approaches $15 billiona. Because of RR's exceptional <br />appreciated value; a buyout of AT&T's interest by the new entity, AOL -Time <br />Warner, is extremely unlikely because it is cost prohibitive and assets would be <br />better spent to upgrade existing networks and enhance services. <br />The Open Access Alliance of the Say (San Francisco) Area conducted a study5 <br />and subsequently reported that a cable broadband monopoly would result in <br />higher Internet access prices, $5 to $15 monthly, absent competition. <br />The merger validates Open Access as a solid business model for delivery of <br />Internet and telephony via cable. With AT&T as a major player, there can be no <br />doubt that Open Access is compatible with their care business. This means that <br />the intellectual property and technology issues related to Open Access have <br />become firmly established6. <br />4Talking Up the Deal, Multichannel News, January 24, 2000. <br />SThe Business journal of San Jose, March 13, 2000. <br />6Broadband in the Public Interest, February 10, 2000 -Volume I, No. 7 <br />Franchise Fee U-Tax Auditing & Cable Television Administration <br />101 Pocorio Lane, Cary, North Carolina 27S 13-5316 Voice # 919.467.5392 Fax # 919.460.6868 <br />