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from: Hartford Business

EDITORIAL
Scrambled Signals

10/29/07

It’s always enlightening to see who owns what. Jay Leno owns several dozen fancy cars. Rupert Murdoch is about to own the Wall Street Journal. And AT&T, it seems, owns Connecticut’s top elected officials.

AT&T wants to make a bundle of money on a service that delivers television via the Internet, all over AT&T’s existing copper phone lines. The service is called U-verse. It’s supposed to be a competitive product to existing cable television.

The state Department of Public Utility Control originally saw it that way, too. A federal judge says AT&T’s U-verse is indistinguishable from a traditional cable company. That’s resulted in a couple weeks of shenanigans in which a nice collection of politicians have fallen out of AT&T pockets and into public view.

But first, some background. When Connecticut Attorney General Richard Blumenthal and state Consumer Counsel Mary Healy joined the New England Cable & Telecommunications Association to challenge the DPUC’s initial decision in court, AT&T decided to hedge its bets. It got Hartford state Sen. John Fonfara and state Rep. Steve Fontana of North Haven to push through legislation aimed almost exclusively to its benefit. That resulted in a new law as of Oct. 1 that lets some companies apply for a “video service provider” designation rather than having to seek a cable TV franchise.

That’s what AT&T did. But because a federal court judge — the only actor in this intrigue, it seems, not owned by AT&T — had ruled the company a cable operator, the DPUC did a Linda Blair spin and dismissed the phone company’s new application, ordering it to apply for a cable franchise by Dec. 31 or stop offering U-verse to new customers.

So AT&T went into full bluster. It threatened to can some 300 of its own employees and halt plans to hire another 1,000. It staged press conferences, worker rallies — its Connecticut president even made biting remarks about the situation while accepting an award in New Haven. Its pet lawmakers started stomping their feet. Even Gov. Rell — who has repeatedly proven there’s no consumer issue that she can’t react indignantly to — called the situation un-competitive.

The worst came last week, when Attorney General Richard Blumenthal collapsed in a stunning display of political knock-knees. Blumenthal led the fight against AT&T’s stand. He argued it in state court. He argued it in federal court. He argued it before the DPUC. And then he basically said that, oh what the heck, AT&T should be able to keep going as it sees fit.

Blumenthal gets a bad rap often enough for taking on fights with businesses that he ostensibly has no right to be in. What saves him in those situations is his credibility — that what he’s doing is in the best interest of the consumers of Connecticut. But what credibility has he now, when he’s forcibly arguing one thing for months, and then abruptly changes his tune because he’s being outgunned politically?

What’s really at issue is the question of real competition. Love ‘em or hate ‘em, Connecticut’s cable operators are major businesses, employing thousands of people and delivering needed services across the state. Their businesses are encumbered by a host of regulations. If a federal court agrees that AT&T’s product is legally the same as theirs, then AT&T should abide by the same rules of competition. But it doesn’t want to do that. It wants an unfair advantage.

The DPUC and the Attorney General shouldn’t cave in to a propaganda campaign of misinformation. Yes, we should be fostering competition — but to the benefit of the consumer. In the same week that AT&T was making such a stink about Connecticut’s actions, its U-verse service suffered a nationwide blackout. Industry analysts say they’re skeptical AT&T’s infrastructure can reliably offer the service it promises, especially as more customers come on-line. Wouldn’t it be great if we had a regulatory structure to make sure AT&T could actually deliver on its promises, the way we do for cable companies? But we don’t — because the cable companies don’t own Connecticut’s politicians. AT&T does.