SBC Hits a Pothole in California

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At least in the short term, SBC Communications Inc.’s Project Lightspeed infrastructure improvements have been stalled in the city of Walnut Creek, Calif.

City officials there have refused permits needed by the telephone company to place infrastructure — such as 80 five-foot-tall cable vaults — in the public rights-of-way. Community officials maintain the main purpose of the plant upgrade is to deliver video services, and insist SBC needs a cable franchise before the city will approve the permits.

THIRD PLAYER IN

Comcast Corp., in the midst of an upgrade, and Astound Broadband, a bundled services provider that has just been acquired by Wave Broadband, already serve the city.

SBC has consistently maintained that its planned Internet-delivered video service does not meet the legal definition of a cable system, so the company appealed the city’s decision on the permits.

Senior assistant city attorney Paul Valle-Riestra disagreed with SBC’s definition of its service.

“SBC is looking for an unlevel playing field,” Valle-Riestra told the city council during an Oct. 18 meeting on SBC’s permit appeal.

City officials and cable executives in New York raised the same issues against cable-related system improvements by Verizon Communications Inc. earlier this year. Local officials failed to convince state utility regulators that the telephone company needed franchises in advance of its ability to deliver video service.

SBC officials at the California meeting said the company is willing to pay its fair share, including a fee of up to 5% of gross revenue on Internet protocol-based services. Barbara Leslie, area manager, added SBC supports community programming access and governmental emergency alert objectives. But an actual franchise is a “barrier to entry,” SBC representatives said. SBC has shut down the fiber-to-the-home build in the city, noted Richard Parr, assistant general counsel for SBC California.

“Our entire network is being held hostage,” he said, adding a cable franchise is “simply something we cannot work with.”

City officials offered to drop the term “franchise” and limit the agreement to a two-page document, but Parr also objected to that, stating the abbreviated agreement adopted community franchising terms by reference.

Parr stressed that conditions sought by the city are illegal, adding the telephone company refuses to negotiate “with a gun to our head.”

'BYPASS’ THREATENED

“We’ll simply bypass Walnut Creek,” Parr said.

Despite SBC’s protests, the council unanimously rejected the permit appeal, but urged the company to continue negotiations to resume Project Lightspeed.

SBC spokesman Dave Pacholczyk said his company believes the city is wrong on its franchising efforts, but added the company would take 30 days to determine its next step.

Valle-Riestra said he still hopes SBC will sit down and talk, but noted a community bypass, or a lawsuit, are two possibilities for the telco.

Walnut Creek sent a new contract proposal to SBC following the city council meeting but SBC only acknowledged it received it, Valle-Riestra said.

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