AT&T Corp. won a key battle for control of its cable network Thursday, as a federal appeals court rejected efforts by Portland, Ore., to open the network to competing Internet service providers.

Officials in Portland, as well as San Francisco, Broward County, Fla., and other local governments, have argued that access to the Internet through cable networks should be a matter of local governance, just as cable TV franchises are.

But the 9th U.S. Circuit Court of Appeals ruled that AT&T, which has spent billions buying cable companies to create a national network for local telephone and high-speed Internet service, doesn't fit the legal definition of a cable network. Instead, it is a telecommunications service, and therefore governable only by federal law, the court said.

In a statement, AT&T said it was pleased with the ruling "because it clarifies decisively the limits of local authority when it comes to the provision of high-speed Internet access over cable.''

The ruling is also a setback for other Internet service providers, which have argued that AT&T should be forced to open its cable lines to other competitors.

ExciteAtHome, which is partially owned by AT&T, currently has exclusive rights until 2002 with AT&T -- as well agreements with several other cable systems -- to sell high-speed Internet access over their networks.

Shares of ExciteAtHome surged 9 percent on the news, rising $1.937 to $20.875 on the Nasdaq Stock Market. AT&T shares also rose, jumping $1.063 to $36 on the New York Stock Exchange.

The decision was praised by Peter Arnold, director of the "Hands Off the Internet'' coalition, a lobbying group formed in part by AT&T. But Arnold said it won't have nearly the impact it would have had months ago.

"The air has gone out of the access movement,'' Arnold said. "Since the beginning of the year, nearly a dozen state legislatures have considered access regulations, and not a single one has even passed it out of committee.''

Similar fears about accessibility were raised when online giant America Online Inc. announced earlier this year that it was purchasing Time Warner Inc., the nation's second-largest cable provider. However, officials at the two companies have said they will give their customers a choice of Internet service.

A spokeswoman for AOL, which initially was one of the most ardent lobbyists against AT&T in this debate but has since backed off, praised the decision, saying the matter should be left to the industry.

"The debate about open access regulation has been overtaken by the tremendous progress in the marketplace, with AT&T and AOL and Time Warner all committed to providing open access and choice for consumers,'' said Kathy McKiernan.

AT&T's opponents in the Internet access debate also praised the ruling as a victory for consumers, predicting that it would prompt federal lawmakers to create a national open access policy.

"We believe that it is now time for policy-makers to implement a policy that guarantees all Americans who want to use their cable company for high-speed Internet service have a choice of Internet service providers,'' said Rich Bond, co-director of the openNET Coalition.

But the Federal Communications Commission has been leery of creating regulations that might stifle this emerging technology. As AT&T argued in its appeal, the FCC has deliberately taken a hands-off approach to regulating cable access to the Internet after the Telecommunications Act of 1996.

AT&T purchased Tele-Communications Inc. in 1998, thereby receiving a stake in the AtHome cable network, which later merged with Excite. Since then, it has invested heavily in broadband, betting that cable networks will be the dominant way of providing people high-speed access to the Internet.

AT&T told the appeals court it should be able to control Internet access to the cable TV network it purchased and that the city and surrounding Multnomah County have no right to make it do otherwise.

Local officials countered that they were simply protecting the city from a monopoly when they voted to force AT&T to open up network access to competitors.

U.S. District Judge Owen Panner ruled in June 1999 that the city and county did have the authority to pass the ordinance. But the 9th Circuit reversed the decision, agreeing that AT&T is a telecommunications network and regulated solely by the FCC.