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from: Journal Sentinal

AT&T U-verse access debated
City's low-income areas often lack cable alternative

By RICK BARRETT and BEN POSTON
rbarrett@journalsentinel.com
Posted: Dec. 10, 2007

Offering more than 300 TV and music channels, plus high-speed Internet access, AT&T's new U-verse video service provides a dizzying array of features, such as the ability to program its video recorder via the Internet. Unlike its major cable-television rivals, it also offers the Big Ten Network and NFL Network.

U-verse appears poised to become serious competition for cable and satellite TV services across Wisconsin - although it is available in only a few areas of the state, including selected neighborhoods in Milwaukee and its suburbs.

Delivered into homes over the same copper wires that carry AT&T's telephone service, U-verse could be a portal for new technologies, according to the company.

Yet even as AT&T irons out some technical glitches, such as occasional video and Internet lockups and problems with sound-picture synchronization, U-verse finds itself in a statewide debate over competition and access in the video and Internet businesses.

Today, the state Assembly is scheduled to vote on legislation that proponents say would open Wisconsin to real competition in cable and video services.

The legislation would give cable and video providers a single statewide franchise and scrap the present system that forces them to negotiate separate contracts with each community they serve.

But opponents say the measure lacks adequate consumer protection, and they point to the rollout of U-verse in Milwaukee as evidence that AT&T has been "cherry picking" neighborhoods where it wants to offer the service.

Milwaukee Mayor Tom Barrett says he's worried that AT&T will exclude some parts of the city from U-verse.

"I don't want to see a service map with a huge doughnut hole in it," he said.
240 locations, 15 in poorer areas

A Journal Sentinel analysis of U-verse "service cabinet" locations that have been approved or are awaiting approval in Milwaukee shows that significant parts of the city aren't covered. The cabinet locations are "nodes" that provide U-verse to a neighborhood.

Of 240 locations, only 15 are in census tracts where the median household income is less than $24,130, the 2007 federal poverty threshold for a family of five, according to the analysis.

There are 40 of those tracts, which accounted for 11.3% of the city's population in 2004, but account for only 6.25% of the approved or pending U-verse cabinets.

"These trends are very disturbing to me," Barrett said Monday. "We will be talking with AT&T about filling in the gaps and reversing the trends shown on the map."

U-verse has been available in selected areas of Wisconsin for about nine months. But it's unclear exactly where the service is offered, or when it's coming to a neighborhood, because AT&T refuses to provide detailed information.

The company says it wants to make U-verse available to as many customers as possible. But it takes several years to set up the necessary infrastructure and to complete a build-out that eventually will include wider coverage, according to company officials.

The service is available in some parts of every aldermanic district in Milwaukee, AT&T says.

"We have a history of offering our services to all segments of the population in our service area, and that's not changing," AT&T spokesman Jeff Bentoff said.

The U-verse build-out has conformed with "the spirit and letter" of a three-year agreement with the city and still is under way, Bentoff added.

Furthermore, AT&T disagreed with the Journal Sentinel's analysis and definition for low-income households.

Some census tracts used in the analysis appear to be almost entirely nonresidential, Bentoff said.

Nationwide, AT&T has introduced U-verse in more than 25 metropolitan areas, but subscriptions are only a fraction of those for cable service. U-verse has about 126,000 subscribers, up from 3,000 a year ago, according to the company.

U-verse packages vary in price from about $44 to $99 a month, plus taxes and fees, for the television service, depending on the number of channels received. Internet and phone service cost extra. One of the more expensive packages includes 320 channels. It has 49 premium movie channels, including HBO and Cinemax.
Advanced features

U-verse has the ability to record up to four programs at once using a digital video recorder. It also offers the ability to play AT&T Yahoo games on the television screen, including Sudoku, solitaire and chess.

AT&T is developing other advanced features, including the ability to stream live video from a cell phone to a television, and the ability to track a family member anywhere in the United States using satellite technology.

The company blitzes neighborhoods that can get U-verse with direct mail advertising and sales pitches that include door-to-door marketing and special introductory rates. In some cases, the service has been offered for free the first two months.

Critics and cable companies say AT&T has targeted more affluent, more densely populated areas. That's in contrast with cable companies that have been required to build their networks broadly, including low-income neighborhoods.

"The reality is that block by block, with no recourse or explanation, AT&T will decide who gets this wired video service," said Barry Orton, a telecommunications professor at University of Wisconsin-Madison and a paid cable-television consultant to municipalities.

Not offering the service to neighborhoods based on income or race would be illegal.

But consumer protection in the Assembly bill has "so many loopholes built into it, that it makes Swiss cheese look solid," Orton added.

State Sen. Kathleen Vinehout (D-Alma) said she's worried that the proposed cable bill gives AT&T a defense for redlining because the company would have to meet only minimum service requirements for low-income neighborhoods.

After that, she said, the company could ignore service areas it doesn't think are profitable.

Consumers can check the U-verse Internet site, https://uverse1.att.com/un/launchAMSS.do, to see by ZIP code if they are in a coverage area. But in some cases that coverage checker isn't up to date.
Competitive reasons for secrecy

AT&T says it has kept the U-verse rollout plan secret for competitive reasons. If cable companies knew where and when the service was coming, they could blitz those areas with special deals.

African-Americans constituted 73% of the 2000 population in the 40 Milwaukee census tracts that are below the poverty line. They represented 37% of the city's total population in 2000.

But racial discrimination isn't likely because studies have shown African-Americans are among the best customers for broadband and Internet services.

One study, by Horowitz Associates Marketing, showed that African-American cable subscribers pay, on average, $58.17 a month for service, compared with $54 for whites.

"There's nothing to suggest that we are trying to avoid neighborhoods" based on race, Bentoff said.

AT&T isn't trying to target neighborhoods based on income either, he added. For technical reasons, it just takes time to offer broad community coverage.

"There's no natural incentive" to limit U-verse, Bentoff said.

Although U-verse has technical limitations, the system could become a serious alternative to cable television, said Kurt Scherf, vice president and principal analyst with Parks Associates, a Dallas research firm that specializes in telecommunications.

But don't expect lasting relief from higher rates for either cable companies or their competitors.

"The strategy, on all sides, is to move the customer up from base packages to something with more features that's more expensive. Eventually, we are all going to be paying more," Scherf said.