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Note: This is an dangerous development in the telco push for State Video Franchises. AT&T and Verizon attempted to make this artificial distinction in the House Bill (HR 5252), but even Congressional Representatives wouldn't buy it (though COPE Bill sponsor Rep. Barton did entertain it). In any event, one can only wonder if the Connecticut Department of Public Utility Control is now a subsidiary of AT&T or just completely unaware of ongoing Federal legislation.

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from: National Journal - subscription

State Roundup: Thursday, June 8, 2006
Connecticut Deregulates AT&T Video Service
by Michael Martinez

Utility regulators in Connecticut on Wednesday moved to exempt AT&T's video service from franchising rules.

The state Department of Public Utility Control voted 3-2 to classify AT&T's video system as a data service, allowing the company to bypass rules that apply to the cable industry. Data services are not regulated in Connecticut.

According to department Vice Chairman Jack Goldberg, AT&T's video service differs from those offered by traditional cable providers because it offers two-way communication and more closely resembles Internet telephone service.

AT&T officials have said the rule change will make the marketplace in Connecticut more competitive. But one of the state's most powerful public officials is not buying into the idea. In a statement released Wednesday, Connecticut Attorney General Richard Blumenthal said the department is making a grave mistake by not regulating AT&T's Internet-based television service and by allowing the company to operate anywhere in the state that it sees fit.

"This new and exciting technology potentially provides real competition to increasingly expensive cable television, lowering prices and expanding service options, but only if service is available to all," Blumenthal said. He said video providers will only deploy their networks in wealthy neighborhoods if they are not regulated by the government.

He argued that "persuasive dissenting voices [in the ruling] coupled with deep reservations expressed by commissioners siding with the majority underscore the need for further scrutiny of this misguided decision."

State Consumer Counsel Mary Healy also criticized the department's decision. Regulators should reverse it "before damage is inflicted on the state's consumers, revenues and telecommunications market," she said.

Existing cable providers in Connecticut already have vowed to challenge the ruling. Paul Cianelli, the president of the New England Cable Telecommunications Association, said the state has earned the "dubious distinction of exempting telecommunications giant AT&T from cable television regulations deigned to protect the public."

"It is troubling and incomprehensible that a public consumer-protection agency would side with a giant, multinational corporation over Connecticut's consumers and taxpayers," Cianelli said. "It also shows bureaucratic arrogance for the agency to contradict the clear directives of Congress and the Connecticut legislature."