Policy

AT&T Loses Calif. Challenge

4/21/2006 8:00 PM Eastern

AT&T Inc. has been rebuffed in its attempt to get a federal court to rule that its planned video service does not meet the legal definition of a cable-television service.

Judge Maxine Chesney of the U.S. District Court for the Northern District of California, in a ruling April 13, declined to rule whether video delivered via Internet Protocol meets the federal definition of a cable service. But she also dismissed claims by the telephone company that cities violate state and federal law by attempting to franchise AT&T’s video product.

Chesney wrote that cities might seek franchises because the Telecommunications Act of 1996 does not specifically exclude them.

The telephone company sued Walnut Creek, Calif., late last year, contending the city violated state and federal law by awarding siting permits for the telco’s hardware — but with the caveat that the company would have to seek a cable franchise at a later date.

AT&T’S IP ARGUMENT

In discussions with officials across the country, AT&T has argued that its planned pay TV service, dubbed U-verse, is not a cable service because it will employ an Internet Protocol distribution method that transmits video channels as packets of data, at the request of an end user.

Rather than accept the conditioned permits, AT&T stopped work on its telephone-plant upgrade in Walnut Creek and filed the federal suit. AT&T wanted the court to issue a declaratory judgement that the city’s franchising authority was pre-empted by the section of the federal act that explicitly bars franchises on “telecommunications services.”

AT&T also argued that it has authority to use rights of way in Walnut Creek and other cities by virtue of its grant to operate as a telephone-service provider.

Chesney wrote that the only specific exclusions in federal law are for video services provided via radio broadcast, common carrier or an open-video system. No exclusions exist for franchising other technologies, she said.

The state law issues raised by the telephone company, she added, are “novel and complex” and best addressed in a state court.

Chesney granted Walnut Creek’s motion and dismissed all the counts, advising AT&T it could redraft and refile the federal counts within 20 days of her ruling.

AT&T media-relations director H. Gordon Diamond said the company’s lawyers are reviewing the order and will “certainly consider all options available to us.”

“Whether we continue to pursue these claims in federal or state court, we remain confident the courts will ultimately rule in our favor,” he said.

AT&T officials are concerned the court action will delay video deployment, he added.

The ruling is notable because the telephone company is pursuing similar claims in California, against Lodi, and in Illinois, where it recently filed federal suits against the towns of Roselle, Carpentersville and Wheaton.

BLAST FROM NATOA

The National Association of Telecommunications Officers and Advisors expressed dismay over the recent spate of suits. The trade group has urged its members to offer AT&T expedited franchises in order to speed the arrival of video competition.

“It is frustrating that AT&T approached local governments to upgrade their networks via Project Lightspeed [the name given the plant improvement project], but refuse to abide by local rules. They continue to think that they deserve special treatment for their products and that the normal rules do not apply to them, and instead file lawsuits to get their way,” said Lori Panzino-Tillery, president of NATOA and division chief of the franchise division for San Bernardino County, Calif.

NATOA noted that Verizon Communications, which is offering video over fiber-to-the-home technology, has successfully worked to gain franchises in several states in which it operates

“We are eager to bring competition to our constituents and we remain open to working with AT&T to deploy services and bring competition to our neighborhoods. And so, we continue to wait until AT&T is ready to work with us, and not against us,” she stated.

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