Cable Licensing Decision Against AT&T An Industry First

HARTFORD — Attorney General Richard Blumenthal October 15 said the state Department of Public Utility Control (DPUC) — in a landmark victory — has agreed that AT&T’s U-Verse must be regulated as a cable service, which will ensure real cable competition throughout Connecticut. The action was immediately met with an attempt to block the regulatory directive.

Mr Blumenthal and Consumer Counsel Mary J. Healey today jointly issued statements after AT&T filed a court motion to fight a requirement that it obtain a full cable franchise – ensuring competition and consumer protections – for its U-Verse Internet Protocol Television service.

“AT&T shareholders and consumers should be outraged by the company’s colossal waste of resources on litigation simply to avoid vital consumer protections. We are ready wholeheartedly to assist AT&T in obtaining a full cable franchise, but they are flagrantly breaking the law – seeking to avoid the franchise – and all of the consumer protections that go with it,” Mr Blumenthal said.

“I want that service offered to all citizens in the state, not just the most wealthy or most accessible. Discrimination among customers should be barred based on income or geography. The only way to ensure this statewide competition is through a full cable franchise, as the federal courts and now the DPUC have demanded.

Mr Blumenthal suggested AT&T should, “stop its scare tactics in threats to cut jobs and injure workers and our economy.”

In the US District Court ruling Mr Blumenthal’s office sought to uphold, the DPUC directed AT&T to apply for a full cable franchise license before year’s end in order to provide its “U-Verse” Internet Protocol Television (IPTV) service. DPUC commissioners said a recent ruling by a federal judge made it clear that AT&T’s “U-verse” constitutes a cable television service, and the company is operating it without proper authorization.

Commissioners unanimously rejected the company’s application for a “video franchise” certificate, which Mr Blumenthal said would have allowed AT&T to run “U-verse” under regulations that are less strict than those for cable television.

The DPUC ordered AT&T to apply for a cable TV license no later than December 31.

The agency, however, is allowing AT&T to continue offering “U-verse” to existing customers until a decision is made on the cable television license. The company will be prohibited from signing up new customers and installing new equipment related to the Internet protocol service while the cable TV application is pending.

AT&T vowed to appeal the ruling in state Superior Court on Tuesday. The company said that if the ruling stands, it will be forced to eliminate more than 300 jobs in the state related to “U-verse,” not hire or eliminate about 1,000 other jobs in Connecticut, and disconnect the more than 7,000 households in the state that currently subscribe to the service.

The company also said the Connecticut ruling would be the first in the country to force it to obtain a cable franchise for “U-verse,” and would harm consumers by reducing competition.

“Plainly and simply AT&T is illegally operating a cable service without a franchise, required to provide real competition and a level playing field,” the attorney general said.

Mr Blumenthal said that if AT&T was granted a video franchise, it would have been allowed to provide cable TV service to a select number of customers in certain parts of Connecticut without requirements for consumer protection or service quality.

He said the cable television license rules require basic service packages including local, governmental, and educational programming.

AT&T officials strongly disagreed with the DPUC and Mr Blumenthal.

The company said agency commissioners contradicted a law approved by Governor M. Jodi Rell and state lawmakers earlier this year that was intended to make it easier for video providers like AT&T to enter the market and compete against cable companies.

“In making this ruling, the DPUC ignored both the spirit and the letter of a brand-new consumer-friendly law and is protecting the cable monopoly,” said Ramona Carlow, who oversees regulatory and external affairs as AT&T’s state president.

AT&T says “U-verse” is available to more than 150,000 households in more than 40 cities and towns across the state. The service is provided over the company’s telephone wires and is set up like traditional cable TV service.

John Emra, an AT&T regional vice president, said the DPUC’s decision “is bad for consumers who are finally getting a choice.”

He said the company is going to immediately stop its $336 million investment in video service in Connecticut.

State Sen John Fonfara, D-Hartford, and Rep Stephen Fontana, D-North Haven, who wrote the new video providers law, urged the DPUC to approve AT&T’s video franchise.

“AT&T is the type of applicant that we foresaw applying when we passed [the law] so overwhelmingly, the type of applicant the governor likely sought to encourage to apply by signing the legislation into law,” the lawmakers wrote in a letter to the DPUC.

In a release from Mr Blumenthal he explained that the DPUC has rejected AT&T’s attempt to obtain lighter regulation — instead forcing the company to be fully regulated, which ensures that AT&T will “build out” its service statewide. Such measures provided under traditional cable regulation, will ensure that all Connecticut communities have access to this competitive service and prevent AT&T from “cherry picking” the wealthiest or most accessible regions to provide the service.

“This decision is a huge total victory for Connecticut consumers — holding the promise to change the landscape of cable service and provide real competition with lower prices and better service for all consumers throughout the state,” Mr Blumenthal said. “It is the right decision at the right time. I urge AT&T to accept it — and follow the law — rather than continue to litigate and defy reality and the law. I pledge to work with AT&T to secure a statewide cable franchise.

“I commend and thank the DPUC for standing steadfast on the side of consumers in this hard-fought battle,” Mr Blumenthal added. “I will continue this fight relentlessly — defending the DPUC decision if AT&T unwisely and unfortunately challenges it.”

The Associated Press contributed to this story.