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AT&T’s IPTV Plan OK in Connecticut

5/12/2006 8:00 PM Eastern

Regulators in Connecticut and Oklahoma have given telephone companies tentative support to move forward with plans to deliver video service without cable franchises.

Connecticut’s draft decision will only apply to AT&T Inc., though, because its planned video product, called U-verse, will be delivered via Internet Protocol technology. Verizon Communications Inc., according to the tentative decision by the state’s Department of Public Utility Control, will still need cable franchises for its fiber-to-the-home-delivered services.

Also, this draft will have to overcome the formal opposition of the state’s attorney general, Richard Blumenthal. On May 5, Blumenthal said the proposal, if adopted by the full commission on a vote scheduled in early June, would deny most state residents the benefit of competition because it would allow AT&T to pick the communities it will serve.

AT&T has promised to match some of cable obligations, such as support of local public, educational and government channels. But the attorney general believes regulators must guarantee those promises will be kept. The DPUC panel said AT&T’s plan of picking affluent communities to first launch its product is not “redlining,” but instead similar to the rollout schedule cable companies used during their initial builds.

The IPTV product proposed by AT&T Inc. is “merely another data stream,” the panel wrote.

“There is no difference between bytes traveling over the Internet to become video or become a voice,” commission vice chairman Jack Goldberg, chairman of the panel that rendered the tentative decision, said in a statement. He added: “A byte is a byte is a byte.”

AT&T has argued before regulators across the country that its product will not meet the legal definition of a cable service, because the video will be delivered to individual users on demand in packets of data, not in a continuous stream of information to all subscribers.

Because the regulators have no jurisdiction over Internet services, AT&T’s Connecticut division, Southern New England Telephone, will need no certification from the DPUC, according to the draft proposal.

AT&T’s arguments against municipal cable franchising also were bolstered in Oklahoma, where the state attorney general, Drew Edmondson, issued an opinion May 3 stating that telephone companies are not subject to municipal franchising.

According to the state constitution, municipalities can regulate where telephone equipment is placed. But communities can’t issue cable franchises because the ability to use local rights-of-way has already been granted by the state constitution and the legislature, Edmondson wrote.

The attorney general weighed in on the issue at the request of Rep. Dennis Adkins (R-Tulsa), chairman of the state House Energy & Utilities Regulatory committee. He’d been asked to seek legal clarification by AT&T Inc.

Officials from Cox Communications Inc. — Oklahoma’s dominant video provider and also a telephone company in that state — are examining the decision to determine its impact on the operator’s 38 state franchises.

“To the extent that this opinion serves as a catalyst for a re-examination of the regulatory burdens imposed on video services generally, and promotes competition in a fair and equitable manner, we are all for it,” said Cox vice president of government and public affairs Tim Tippit.

Cox’s franchises currently commit the Atlanta-based operator to payments of $14 million a year in local franchise fees in Oklahoma and free video connections to schools and more than 160 government buildings, as well as local programming support.

 

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