CT: AT$T's TV service suffers a setback in federal court

from: Stamford Advocate [1]

AT&T's TV service suffers a setback in federal court
By Brian Lockhart
Staff Writer

October 3, 2007

AT&T lost some ground yesterday in its ongoing battle with cable and satellite television.

The telecommunications giant's efforts to compete through its fiber-optic U-verse, available in several Fairfield County communities, were dealt a setback by a federal judge in New Haven.

According to the state attorney general, U.S. District Court Judge Janet Bond Arterton issued a final judgment that the U-verse television service must be regulated by the state like cable.

Her decision overturns a state Department of Public Utility Control decision from June 2006.

"AT&T has been operating a cable service illegally without a franchise for almost a year," Attorney General Richard Blumenthal said yesterday. "It must immediately get a lawfully required franchise to comply with federal and state law."

In a statement issued yesterday, AT&T said it disagreed with the court's conclusion and was considering its legal options. An AT&T spokesman said the company would like the judge to consider a new state video-service provider law that went into effect Monday.

AT&T yesterday applied for a DPUC permit allowing it to operate as a video service provider. That law was passed earlier this year by the legislature in response to AT&T's emerging U-verse technology. The DPUC has 45 days to decide.

Supporters of the new legislation said it would help provide more cable competition. But critics counter it does not provide as many consumer protections as the law regulating cable companies.

Blumenthal and the state Office of Consumer Counsel, which took DPUC's original U-verse decision to court, yesterday called on the department to stop AT&T from signing up new customers until it has received a state cable license.

DPUC spokeswoman Beryl Lyons had not seen Arterton's ruling but said it could affect AT&T's application for a video service provider's license.

The DPUC in June 2006 ruled that U-verse was not cable and AT&T did not need to apply for the necessary franchise.

The Office of Consumer Counsel took the DPUC's decision to court, arguing AT&T should be held to the same consumer protections as cable companies.

Blumenthal has said he was concerned that AT&T did not have to offer U-verse throughout the state and may cherry-pick wealthier areas. AT&T has denied the allegation.

U-verse's 300 television and music channels are now available in 40 municipalities, including Stamford, Norwalk, Westport, Fairfield and Old Greenwich.

Last year, AT&T hailed the DPUC's initial decision as a victory for consumers seeking alternatives in the state's limited and increasingly expensive television market.

AT&T has employed novel advertising methods. In Norwalk, home of Cablevision's Connecticut operations, the company unleashed "stealth" marketing in the form of a character named "Bobby Choice."

The stocky, balding Choice had a Web site and made personal appearances at city nightspots, claiming he was a resident who for years had suffered with cable television until U-verse arrived.

In the meantime, the legislature passed a law requiring new television providers like AT&T to apply with DPUC to be licensed as a "certified competitive video provider."

The new law was touted by lawmakers and the governor's office as providing competition to cable and satellite television. But it was opposed by Bill Vallee, the Office of Consumer Counsel attorney who fought to classify U-verse as cable.

Vallee said the legislation has even weaker consumer protections than what he considers the state's already watered-down cable regulations. He said the new law does not provide a level playing field.

"Nobody wants competition more than the Office of Consumer Counsel," Vallee said.

AT&T spokesman Seth Bloom yesterday said the company has asked the judge to review the new video provider law and factor it into her ruling.

"If you are providing video service in Connecticut, you apply for a (video provider) certificate from the DPUC. It doesn't matter what technology you're using," Bloom said. "The only exception is companies that have been operating in the past with a cable franchise in Connecticut. That's not us."

Vallee disagreed.

"A federal judge has decreed quite expressly that they are a cable operation, pure and simple, which is what I've maintained all the time," Vallee said.

Bloom yesterday would not speculate whether AT&T ultimately would decide to apply for a cable franchise but said the company has no intention of abandoning the Connecticut market.

"We remain solidly committed to providing a choice to consumers in Connecticut," he said. "We've invested significant amounts of money and added jobs. . . . We are singularly committed to remaining in the market place with this product."

Vallee agreed U-verse customers should not worry about AT&T pulling up stakes.

"There is no way AT&T is going to give up the Connecticut market . . . the richest state in the United States," he said.