Open Cable—Cable Companies as Both ISPs and Network Service Providers
Most cable TV companies in the United States use either Excite@Home or Road Runner for the Internet service provider function for their cable modem customers. ISPs provide email, hosting and Web content. Cable TV operators are starting to allow other ISPs, such as AOL and Earthlink, to offer service for cable modem subscribers.
ISP Service for Cable TV
Road Runner and Excite@Home (see Table 8.2) furnish the connections to the Internet backbone as well as content and email service for the majority of cable modem customers in the United States. Excite@Home is made up of two divisions: the backbone network and the ISP functions. At Home provides backbone connections to the Internet, the access network. Excite furnishes the ISP, email, home page hosting and content functions. For example, Excite currently operates email service for Comcast cable modem subscribers. The first page customers see when they log on to the Web is managed by Excite. At Home operates the backbone network of Excite@Home. The backbone network carries signals from individual headends to cable TV data centers and to the Internet. Headends are the point from which cable TV operators transmit television signals and operate transmission systems that convert radio frequencies to signals compatible with the Internet.
| High-Speed Access Provider | Owners | Comments |
|---|---|---|
| At Home Corporation does business as Excite@Home | Controlled by AT&T Broadband. | Excite@Home service to 3.2 million customers offered through 20 U.S. cable providers. Has service in Australia, the Netherlands and Japan. It owns electronic gree†ting card site Bluemountain.com. At Home Corporation may sell the Excite portal part of the business. |
| Road Runner | Controlled by Time Warner Cable. | Road Runner has 1 million subscribers. |
Road Runner and Excite@Home own and operate the routers, servers and optical lines connecting cable company headends with regional data centers. The regional data centers are connected to the Internet or to larger data centers. Road Runner has service in 25 states as well as in Newfoundland, Canada. At Home has super nodes throughout the United States where it stores customers' Web pages, email and media partners' Internet content such as sports scores, travel services, games and shopping information. Some cable TV overbuilders such as RCN, WideOpenWest LLC and Digital Access, which compete with the incumbent cable companies, provide their own content and access to the Internet. They operate their own ISP service.
Open Cable Service—Trialing Connections to Other IPS
Cable modem providers require that customers use the cable TV's own ISP service as well as their cable modem connections. This is different than dialup services where local telephone companies offer the telephone service but customers can choose from a variety of ISPs such as MSN, Juno (part of NetZero) and EarthLink. Until the AOL Time Warner merger, the FCC did not require that cable companies unbundle their network access service from their ISP service because cable companies are regulated as cable TV, not common carrier companies. This creates problems for users as they must either change their email address or continue to pay for their dialup account to preserve their former email address when they change to cable modems. It also locks smaller ISPs out of the cable modem ISP market.
When AT&T bought TCI, Internet service providers such as AOL and MindSpring (now part of EarthLink) protested to the FCC that AT&T and the cable companies would have monopolistic powers on Internet access. Furthermore, the Regional Bell Operating Companies (RBOCs) stated that cable companies should have the same unbundling requirements to open their networks as common carriers. AT&T, who did not want to lose any ISP revenues, countered that opening cable connections to competitive providers would jeopardize its investment in upgrading TCI's network for cable modem and telephone service. The government, which wants to encourage local competition, did not require the cable companies to unbundle their network connections to the Internet.
However, by December 1999, AT&T pledged to open its network to other ISPs by 2002 when its exclusive contract to use At Home ends. Cox Cable also has pledged to open its network to other ISPs. Portland, Oregon; Broward County, Florida and four towns in Massachusetts sued AT&T in separate cases to open its networks to other providers. AT&T won each of these cases. However, the FCC is reviewing its policy on open cable. In the meantime, AT&T is conducting a technical trial of open cable for 500 residents of Boulder, Colorado with eight Internet service providers.
With open cable, when customers log on to the Web, they send a signal to AT&T identifying their ISP and AT&T sends their traffic to the selected ISP. In order for this to work, the ISP and the cable TV company need peering arrangements as in Figure 8.4 where they exchange traffic. (See “Peering—A Way to Exchange Data Between Networks”.) The cable TV providers have expressed concern that ISP traffic will clog their local networks. For example, large amounts of streaming video could create traffic jams. The United States Internet Industry Association (USIIA) has expressed concern about getting fair treatment from cable TV providers. For example, when negotiations between Time Warner and ISPs were initiated, Time Warner sought 75% of ISPs' Internet access fees and 25% of their ad revenues. Time Warner also asked for rights to approve ISP's start-up pages and a spot for Time Warner on each start-up page.
Figure 8.4. Open cable service.
Cable providers point out that telephone companies that provide DSL use mainly their own ISP service. For example, as of 2001, 85% of SBC's DSL service was handled by SBC's own ISP service. Verizon Online, the Verizon ISP, handled 90% of Verizon's DSL traffic. However, in the former GTE area, GTE's ISP entity handled only 45% of its DSL traffic.
The AOL Time Warner Open Cable Agreement
As a provision of approval for its merger, the Federal Trade Commission (FTC) required that AOL Time Warner open its networks to other ISPs and accept continued monitoring of these efforts. The FTC responded to concerns by small competitive ISPs that they would be locked out of the broadband Internet access market. The following is a summary of the FTC rules:
Open Access— AOL Time Warner is required to make its network available to at least one other ISP before it can offer its own service and at least three other ISPs within 90 days.
Content— AOL Time Warner must notify the FTC of notice of complaints that it fails to carry interactive content, signals of television programmers.
DSL Marketing— AOL Time Warner must offer, market and price AOL DSL service the same way in markets with AOL Time Warner cable modem services as in areas without cable modem service.
AOL Time Warner currently has agreements with Juno Online Services and EarthLink, Inc. Open cable trials are underway in Columbus, Ohio. Initially, Time Warner will be responsible for billing and customer service for Juno customers who choose cable modem access.