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from: Ars Technica

Illinois to become latest state to give telecoms statewide video franchise

By Eric Bangeman | Published: June 20, 2007 - 12:02PM CT

Illinois has become the latest state to give new entrants into the cable television market a statewide franchise. Passed by the Illinois State Senate yesterday and sent to Gov. Rod Blagojevich for signature, the High Speed Internet Services and Information Technology Act will give AT&T a green light to deploy its U-Verse broadband and IPTV service throughout the state, regardless of the wishes of local municipalities.
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The Chicagoland area had become a battleground between AT&T, which wants to run fiber and offer U-Verse in a manner consistent with its best interests, and suburban governments, which wanted to ensure that AT&T did not cherry-pick the most desirable neighborhoods. Some of the disputes got ugly, with AT&T pulling out of one suburb once the local government insisted on a franchise agreement that would prohibit the telecom from cherry-picking.

The legislation will allow AT&T to go ahead with deployments without negotiating local franchise agreements, but the company will be forced to offer its services in low-income neighborhoods. By way of example, 40 percent of homes passed by U-Verse within the city limits of would have to be in lower-income areas.

There are also some consumer protection measures built into the bill, which would provide cable customers a small measure of satisfaction for missed appointments. Video providers that fail to show up for installation or other service calls within the promised four-hour window will have to give those customers a $25 credit on their account for the missed appointment. In addition, cable contracts would be limited to one year instead of two. The bill also creates a new nonprofit corporation called Connect IL to implement a "comprehensive, statewide" broadband deployment strategy along the lines of the successful Connect Kentucky. It also gives municipalities the ability to deploy their own broadband networks if they so desire.

Most consumer groups in the state appear to be giving the bill a thumbs-up, citing the consumer protection clauses and the potential for increased competition. The cable industry isn't as excited, however. Calling it a "now-you-see-it, now-you-don't bill," Illinois Cable Television Association counsel Richard Prendergast told the Chicago Tribune that there are a number of "back doors" in the bill that would allow AT&T to avoid build-out requirements.

Both AT&T and Verizon have been lobbying for federal legislation that would give them a national franchise, allowing them to bypass local governments and pay a flat five-percent franchise fee for the privilege of offering broadband service. So far, attempts to pass such legislation have failed, although the Federal Communications Commission recently introduced new rules which would make it more difficult for local governments to influence or block deployments of new video service. With Illinois becoming the 18th state to remove local governments from the decision-making process by passing a franchise reform bill, the need for federal legislation appears to be diminishing.