Save Access

Note: Perhaps AT&T is thinking folks in Alabama haven't heard of Connecticut?

from: AL.com

AT&T fights against local franchise rules for video services
Sunday, January 20, 2008
By BRIAN LAWSON
Times Business Writer brian.lawson@htimes.com

AT&T fights against local franchise rules for video services

Whether Huntsville is going to get the latest 21st century video technology will depend, it seems, on how a law passed in the 19th century is interpreted.

Telecom giant AT&T, which offers voice and Internet services here, has been moving into the video delivery market with Internet Protocol TV, essentially TV that comes through the phone line.

The company's product, U-verse, offers a number of features: more than 300 channels, remote recording of programming and interaction between Internet, phone and TV functions. The system, which is based on running fiber lines to a "node" that completes the transmission over copper lines to the home, includes a set-top box with a built-in digital video recorder that allows recording of up to four programs at once.

U-verse includes more than 40 high-definition TV channels, the ability to customize weather, sports, stock and traffic news on the TV screen and has a Yellow Pages channel for searching out phone numbers. Prices are based on channel packages and connection like with Internet service. The company had more than 126,000 U-verse customers around the U.S. as of last fall and it plans to expand the rollout in 2008.

But it is a wide-open question whether Huntsville customers will ever enjoy the service.

AT&T says it will be reluctant to enter the Huntsville market if the City of Huntsville seeks to require it to enter a franchise agreement for video services, similar to deals the city has with Comcast and Knology.

Dave Hargrove, AT&T's regional manager for external affairs, said the company is willing to pay the city the same rate, up to 5 percent of its annual gross revenues for video services, but it does not want to be subject to "build-out" requirements that are common in franchise agreements, which compel companies to work to offer their services citywide.

"We don't believe a city government should be in the business of telling a business how to deploy its services, where to deploy and at what rate," Hargrove said. "We think the marketplace should decide."

"When cable first started, build-out made sense. In January 2008, we believe it is an antiquated way of determining which video service providers serve your community."

Pushing back

The cable companies and their state lobbying association contend that if AT&T is providing video services via a line into a home, it is acting as a cable company and should be subject to the same rules they operate under. Last year, a federal court in Connecticut agreed that AT&T's video services make them equivalent to a cable operator.

Cable and telecom companies have been encroaching into the other's markets over the past few years and the regulatory environment is still being built.

"The consumer has always benefited from competition," said Tony Palermo, marketing manager for Knology. "In order to have good competition, you have to have a level playing field. That's what we're asking for and the consumer wins."

Under the 1901 Alabama Constitution and federal laws governing cable companies, municipal governments control their rights of way. That means cable TV providers and other right-of-way users, such as telecom companies, have to secure a franchise agreement to gain access.

But AT&T, under other names, has been granted use of Alabama rights of way - access to the state's roads and highways - as far back as 1867. The company's position is that its franchise obligations are to Alabama's Public Service Commission and the Federal Communications Commission, not local governments.

The company's position was endorsed by Alabama Attorney General Troy King in an opinion issued Dec. 14. The opinion says a telecom provider who had obtained a statewide franchise under an agreement that predates the state Constitution can offer new services or adjust its facilities, "absent municipal approval."

Huntsville City Attorney Peter Joffrion said King's opinion is advisory, not binding law.

"The original agreement was for telegraph services, then expanded to the telephone, " Joffrion said. "It's pretty far-fetched to say that means they can do whatever they want on public rights of way."

Playing out

AT&T has made the argument nationwide that it should be not be subject to local franchise agreements. In some states, it has worked out a franchise agreement with state government. In Alabama, the company has secured video services agreements with six smaller Alabama cities. Those towns require the company to pay a 5 percent fee on revenue it collects, but it is not subject to other franchise agreement terms, a company spokeswoman said.

Huntsville City Council President Glenn Watson said the original agreement covered a very different technology. He said the issue may eventually have to go before a jury.

"I would wonder what a group of 12 people in a court of law would think of an agreement made in the 1800s, on the technology at that time," Watson said. "Given we've come as far as we've come, we might have to reconsider what they did in the 1800s. We also had slavery in the 1800s and we're not going to do that again."

The City of Huntsville has been working for the past few months on a new law that seeks to provide a uniform agreement for cable, telecommunication and other similar companies, rather than separate agreements with each company.

The proposal has met stiff resistance, led by AT&T, but companies like Knology, which says it would face new franchise fees for its phone service - unlike Comcast and AT&T - also have objections.

Joffrion said the city now has between eight and 12 franchise agreements and finding a more uniform approach is sensible and cost-effective. He said the proposed ordinance has less restrictive build-out requirements than current Huntsville franchise agreements.

The proposed ordinance is being revised for the third time and the latest version will likely be presented to the City Council for review in the next few weeks, Joffrion said.

"There has been a tremendous amount of public misunderstanding on this," Joffrion said. "AT&T has been very successful in planting seeds in the public's mind that we're trying to destroy competition.

"But the ordinance is designed to ensure continued competition, that the public right of way is protected and that each provider is treated fairly and equitably."

© 2008 The Huntsville Times