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from: Courant.com

AT & T Wins In Court; TV Service To Continue

By MARK PETERS

Courant Staff Writer

November 1, 2007

A Hartford Superior Court judge ruled Wednesday that AT&T can resume signing up customers for its TV service, possibly ending the battle over how to regulate the company's alternative to cable television.

Judge Robert McWeeny overturned a ruling by the state Department of Public Utility Control that required AT&T to follow the same rules as cable companies. McWeeny ruled that AT&T should instead be regulated under a new state law designed to promote TV services that compete with cable companies, something the state hopes will lead to lower rates and improved service.

"The legislature has made a policy determination to encourage competition in the area of cable services by reducing the regulatory burden on providers… The DPUC and [state Office of Consumer Counsel] are created by the legislature to facilitate and implement their policy determinations, not to frustrate them," the judge wrote.

As a result of the recent DPUC decision, AT&T threatened to lay off hundreds of workers, call off hundreds of millions of dollars in construction and shut down the TV service for its 7,000 existing customers.

AT&T now plans to continue expanding its TV service known as U-verse, which is available in parts of 42 towns and cities in Connecticut. The company uses an Internet-like technology to deliver ESPN, HBO and other TV programming over telephone lines.

As part of the new state law, AT&T will have to receive a new kind of license from the DPUC as a competitive video provider. The company said it won't start signing up new customers until it gets the license.

"Connecticut consumers will have a chance for video choice at last. We are proud and pleased today to have gotten clarity from [the court]," Seth Bloom, an AT&T spokesman, said in a statement.

It wasn't clear Thursday whether the state might appeal the ruling. Neither officials at the DPUC nor the Office of Consumer Counsel, which represents TV service customers, could be reached for comment.

Attorney General Richard Blumenthal had argued that U-verse should be treated the same as cable TV companies and abide by the same rules. But he softened his position in recent days, and said Thursday he doesn't believe McWeeny's ruling should be appealed. He may seek legislative changes to ensure competition for TV service is fair.

"We may differ on legal issues, but we share the goal of providing cable consumers with this new service so they, hopefully, have the benefits of lower prices and better service. Continued legal combat ill-serves that common objective," Blumenthal said in a statement.

The battle over AT&T's U-verse service had focused on whether the phone giant should be compelled to get a franchise license for the whole state and provide service to anyone who wanted it, statewide. Cable companies like Comcast and Cox Communications currently have that requirement for their franchise areas, which encompass several municipalities and not the whole state.

The consumer counsel and Blumenthal had argued that if AT&T wasn't required to serve everyone, then only certain areas of the state would benefit from competition. The company could then pick and choose the most lucrative areas, leaving others particularly the poor or those in rural areas with no competitive choice.

AT&T argued that to offer the service to everyone would be burdensome as it entered a market where cable companies have had a decades-old monopoly. If the state wanted competition, the company maintained, it would have to drop the so-called universal service requirement.

The General Assembly did just that in a law passed earlier this year that prevents AT&T from discriminating against low-income areas, but doesn't require the company to offer U-verse to all customers. The law also set up a lighter regulatory system that still included customer service requirements and public access TV funding.

However, that law came into question after a federal court ruled that AT&T was a cable company in a lawsuit brought by the consumer counsel and cable industry. The federal ruling resulted in the DPUC ruling on Oct. 15 that AT&T didn't qualify under the new state law and had to stop signing up customers until it received a cable franchise license.

AT&T balked and appealed the ruling to state court, leading to Wednesday's ruling.

Contact Mark Peters at mrpeters@courant.com.