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from: NewsDay

Cable TV sues to overturn decision favoring AT&T
July 19, 2006, 8:46 PM EDT

NEW HAVEN, Conn. (AP) _ The battle between the cable television industry and AT&T over expanded video service went to federal court on Wednesday.

Cable television operators and the state's consumer advocate for utility ratepayers sued in U.S. District Court in New Haven in an attempt to overturn last month's decision by Connecticut regulators to allow AT&T to offer video over phone lines without requiring it to seek a cable franchise.

AT&T says the June 7 decision by the state Department of Public Utility Control will spur competition with greater choice for consumers. Cable TV operators, represented by the New England Cable and Telecommunications Association, say the ruling will give AT&T special privileges.

"If allowed to stand, the DPUC's decision will allow AT&T to become a telecomm freeloader, serving only the wealthy while avoiding taxes, privacy protections and rules protecting children," Paul Cianelli, president of the cable trade association, said in a statement that accompanied the lawsuit. "The DPUC allows AT&T to be a cable operator without any of the obligations, responsibility or accountability required of other cable providers."

The lawsuit says AT&T will be exempt from paying Connecticut's 5 percent gross earnings tax and will be free to choose wealthy areas to serve while ignoring others.

Seth Bloom, a spokesman for AT&T, countered that the company will pay local property and state sales taxes and $5 per subscriber to support public access operations.

AT&T also has said it will provide "nondiscriminatory access" to video services that will be available to more than 5.5 million low-income households in 41 markets where it is building its video-capable network.

The lawsuit, which was joined by the state Office of Consumer Counsel, names the DPUC and AT&T.

In a related matter, the DPUC on Wednesday denied a request by cable operators to delay its decision.

AT&T announced plans to start offering television service over Connecticut phone lines by the end of the year. The company said it plans to spend $336 million for the new service and other technology improvements in Connecticut.

State Attorney General Richard Blumenthal said Wednesday that he is participating in the challenge but has not decided whether he will join the lawsuit.

He criticized what he called DPUC's "persistent refusal" to regulate AT&T's Internet Protocol Television.

"The DPUC decision wastes an opportunity to ensure that IPTV is available to all consumers, not just the wealthy or more accessible."