from: Times Free Pres [1]

Fight for fiber
Thursday, January 03, 2008

By Dave Flessner
Staff Writer

The new year should bring new options for Chattanooga consumers who want high-speed Internet, telephone and cable TV services.

But as the local cable provider, electricity supplier and phone company try to invade one another's traditional turfs in 2008, battles loom in the General Assembly, the courts and ultimately the marketplace among Comcast, AT&T and EPB.

Comcast Corp., which provides most of the cable television service in the Chattanooga area, recently began offering telephone service in Chattanooga in competition with AT&T, which acquired the former BellSouth in 2007.

In response, AT&T wants to provide its own brand of cable television in Tennessee via the Internet through its U-verse system. But before it does, phone company officials say it needs the Tennessee General Assembly to approve a proposed statewide franchising measure that would allow AT&T to expand its service without having to obtain service agreements in each of the more than 300 municipalities across the state.

A similar measure deadlocked in 2007 in Nashville, and another fight is expected when the General Assembly reconvenes Tuesday.

"I think this will be one of the most important bills we take up, and it's probably also going to be one of the most contentious again this year," said state Rep. Steve McDaniel, R-Parkers Crossroads, the prime sponsor of the franchising bill sought by AT&T.

Rep. McDaniel said the bill is needed to help bring more choices to consumers and upgrade broadband services across Tennessee.

The Tennessee Municipal League, which represents cites in Tennessee, and the Tennessee Cable Telecommunications Association, which advocates for cable TV providers, contend that AT&T is trying to bypass a proven system for municipal and county oversight of local cable TV systems.

"The main issue is whether AT&T is going to be accountable to local governments and serve all customers," said Stacey Briggs, executive director for the Tennessee Cable Telecommunications Association.

While AT&T battles against Comcast and other cable TV providers opposed to the measure, EPB in Chattanooga is preparing to enter the fray later this year by launching its own type of cable TV and broadband Internet services to its 163,000 electricity customers in the Chattanooga area.

EPB Chairman Joe Ferguson said the utility plans to hook up the first residential customers of its new "second generation" of faster fiber-optic services by late summer.

"With this system, we're going to be able to move communications -- voice, data and entertainment -- at the speed of light to all homes and businesses in Chattanooga," he said. "We know that will leapfrog Chattanooga ahead of what other communities offer and give us a real business advantage."

EPB's plan faces a court challenge by the state cable TV group, which sued EPB in Davidson County Chancery Court in 2007.

Ms. Briggs said EPB is trying to subsidize its proposed Internet and cable TV business by guaranteeing most of the $219 million in bonds planned to finance the venture with electricity revenues.

"That is clearly improper, and we really have no choice but to challenge what EPB is trying to do," she said.

If EPB is successful in defeating the lawsuit, the utility expects to roll out its fiber-to-home services over the next five years and ultimately capture at least 35 percent of the market, according to EPB's business plan.

E-mail Dave Flessner at dflessner@timesfreepress.com