Calif. Court Rules Against AT&T


Cities are within their rights to demand a franchise of AT&T Inc. for its video service, according to a ruling from a judge in U.S. District Court for the Northern District of California.

The judge, however, did not rule specifically on whether Internet-protocol-delivered video is a cable service. But cities can pursue franchises because the action is not specifically precluded in the federal Cable Act, Judge Maxine Chesney wrote in a decision issued Friday.

The ruling is a blow to AT&T, which argued that its service -- which will deliver programming in data packets at the demand of consumers -- does not meet the definition of a cable service.

The company has challenged any attempts at franchising, filing this suit against Walnut Creek in California, as well as another city there, to go along with three suits in Illinois. AT&T argued that it has a right to deliver video under the authority given to it as a local-exchange carrier.

The dispute in this case arose when AT&T sought permits to place hardware in city-controlled rights of way. Walnut Creek issued the permits, but with the caveat that by accepting them, AT&T would be agreeing to enter later into a franchise agreement in advance of delivering video.

AT&T's suit alleged pre-emption of the city action by federal law, violations of the First Amendment and contracts policy, as well as state law violations. Chesney deferred the state arguments to state court. She dismissed the federal counts, but AT&T has 20 days to refile on those counts.