from: Chicago Tribune [1]

INSIDE TECHNOLOGY
AT&T laying low in bid to launch video services

By Jon Van
Published February 5, 2007

AT&T Illinois is keen to launch video services over its wireline network, but the company is uncharacteristically coy about how it plans to do so.

Meeting with reporters, Paul La Schiazza, the new president of AT&T Illinois, noted that getting video-service agreements with municipalities similar to cable TV franchise arrangements has been difficult. AT&T has reached only three such agreements and is in court feuding with more than a half-dozen suburbs over its network upgrade plans.

With Internet protocol television, or IPTV, video data is delivered over the same lines used for phone and high-speed Internet access. This enables subscribers to have greater flexibility with their television viewing.

A law establishing a statewide video-franchise procedure could streamline the clearance process, La Schiazza said. Such laws were enacted in Michigan, Indiana, Texas, California and a handful of other states, he noted.

So is AT&T backing enactment of statewide franchising in Illinois? That's where the company gets coy.

"We're hoping that Illinois policymakers will say now is the time to bring Illinois into sync with states like Michigan and Indiana," La Schiazza said. But he declines to say whether his company will lobby for statewide franchising.

"It's imperative that we offer [video] in the Chicago market," said Cathy Coughlin, president of AT&T Midwest. "It's our premier market."

Coughlin also stops short of promising a big legislative push.

This newfound reticence is in contrast to the company's bold move nearly four years ago, when it persuaded the legislature to enact a law that effectively raised the rates it could charge rivals for wholesale network service. Federal courts later voided the law.

Suburban municipal officials and cable TV interests say they expect AT&T soon will launch a drive for statewide video franchising.

"They have a lot of influence in Springfield," said Gary Mack, who lobbies for cable TV operators. "We expect a real fight over this."

Rather than openly lobby for statewide franchising, AT&T may elect to use a front group called the Advanced Technology Alliance, which purports to represent consumers, Mack said. The ATA has declined to disclose its funding sources, but the group sponsors an ad campaign touting more video choices.

"There's no doubt where the money comes from," Mack said.

Suburban officials say the large boxes used to house AT&T's advanced network hardware will create eyesores in many neighborhoods. They also worry that AT&T will cherry-pick the most affluent areas rather than offer service to all parts of the cities.

At least one suburb in litigation with AT&T expects a franchising fight in Springfield. Municipal officials are discussing unorthodox lobbying tactics to underscore their contention that AT&T's proposed network upgrade is far from benign.

So far, Indianapolis is the only Midwest city to get U-verse, AT&T's new video service. AT&T plans to bring it to several Illinois communities in the coming year, but only if the company can get necessary government clearance.