AT&T Wins Court Victory on Cable Connections - TheStreet

A federal appeals court gave

AT&T

(T) - Get Report

, the nation's largest cable systems operator, a significant legal victory Thursday, ruling that the company cannot be forced by local communities to lease high-speed cable connections to rival Internet service providers.

The

Ninth U.S. Circuit Court of Appeals

overturned a judge's 1999 decision that upheld efforts by Portland, Ore., to force AT&T to open its cable lines to rivals of

Excite@Home

(ATHM) - Get Report

, which is partly owned by AT&T. The court ruled that the city had overstepped its authority, since AT&T, as a telecommunications company, is governable only by federal law.

Wall Street was pleased with the ruling. AT&T's shares rose 1, or 3%, to close at 36, and Excite@Home jumped 1 15/16, or 10%, to 20 7/8.

The ruling is a setback for other Internet service providers in the fight over "open access." Such companies as

America Online

(AOL)

and

Earthlink

(ELNK)

have been lobbying local governments to give them access to cable lines, arguing that Excite@Home has an unfair advantage over them in reaching customers via the faster cable hook-ups.

Several cities, including St. Louis and some Boston-area municipalities, followed Portland in adding similar cable-access laws to the books. Other cities, Los Angeles and San Francisco among them, are considering adding open-access policies themselves.

Portland city officials said they have not decided whether to appeal to the

U.S. Supreme Court

.

Excite@Home has an exclusive distribution contract with AT&T through 2002, as well as with some other cable systems that provide high-speed Internet access.