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from: The Tennessean

AT&T, cable rivals agree on rules for TV
Phone giant will have quota for offering statewide access
By NAOMI SNYDER • Staff Writer • April 7, 2008

After months of secret negotiations between AT&T and the cable industry, both sides have agreed on many of the ground rules for AT&T's entry into the television service business in Tennessee — including how many customers must get access and how many households must be in low-income neighborhoods.

Legislators set a deadline for today for both sides to come up with draft legislation so they could present it to the media this afternoon.
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Under draft legislation that was still being negotiated over the weekend, AT&T would have to offer TV service to a minimum of 30 percent of its telephone territory within 3½ years after it begins offering television, according to people involved in negotiations.

AT&T has not said when it would begin offering its TV service, dubbed U-verse, if the law passes in Tennessee this year.

U-verse, which is available in other states, costs $69 per month for up to 100 channels and a 1.5-megabit broadband Internet connection, according to the company's Web site.

Other pricing packages and higher Internet speeds also are available.

The bill will give AT&T and other telecommunications pro viders, including the cable companies, a chance to get a state franchise to sell TV service anywhere in Tennessee, bypassing the local government control that has been the standard in the industry for decades.

Under the draft legislation that was being negotiated, the company would get extra credit toward its statewide build-out requirement by offering broadband Internet service with speeds of at least 1.5 megabits per second to homes that don't now have access to broadband Internet.

"In my opinion, we're trying to push out broadband into the rural areas,'' said Democratic Caucus Chairman Rep. Randy Rinks, D-Savannah. Rinks did not go into details of the legislation or explain how the extra credits would work.
Build-out levels required

Rep. Steve McDaniel, R-Parkers Crossroads, said last week that he hoped the proposed legislation would come up in the House Commerce Committee this week. But he also declined to talk about its details.

"It'sbetter not to talk about anything unless you have specific things all parties agreed you can go out and talk about," he said.

AT&T has been lobbying states for such legislation for years. Nineteen states have passed laws within the last three years to allow state franchising, according to the National Cable and Telecommunications Association.

The draft legislation is similar to laws in several other states that require new TV providers with a state franchise to build out to a minimum number of households within a set number of years and provide service to low-income neighborhoods, often those with average household incomes of $35,000 or less.

Wisconsin, for example, requires at least 30 percent of a franchise holder's TV customers to be low-income within three years of deployment.

AT&T's push for such a law in Tennessee died during the last legislative session after opposition from the cable industry, which said AT&T would "cherry pick" customers in wealthy neighborhoods, and because it was opposed by local governments that now issue cable TV franchises.

"We felt like local franchising was sufficient and there was no need for state franchising,'' Chad Jenkins, deputy director for the Tennessee Municipal League, said last week. "That argument has been lost."

He said the league believed a state franchise law would get passed this year and that it needed to get involved in the negotiations to represent the interests of local governments. He declined to provide details of the draft legislation.

Others said local governments would get 5 percent of AT&T's gross TV revenues in tax payments, a higher rate than some local governments now get from the cable companies.

TRA would be regulator

The Tennessee Regulatory Authority would handle state franchise applications and customer complaints, according to the draft legislation. TRA is a state agency that regulates utilities, including telephone and some natural gas services.

"We're focused on passing legislation that promotes competition and promotes a level playing field,'' said AT&T spokesman Bob Corney last week. "We're very appreciative of the amount of time various parties have put into it."

Stacey Briggs, executive director of the Tennessee Cable Telecommunications Association, which represents the cable industry, said in an e-mailed statement that "it's been a good process, not easy but good."

"Importantly for the public is that the cable industry has urged maximum build-out standards,'' she said. "This is an important public policy because build-out means access to services.

"These services should be available to as many Tennesseans as possible, not just to neighborhoods determined to have the highest profit potential."

She credited House Speaker Jimmy Naifeh, D-Covington, with getting a compromise bill worked out.

Contact Staff Writer Naomi Snyder at 259-8284 or nsnyder@tennessean.com.