IP Video Is Cable TV, Judge Rules

Published September 1, 2007

A federal judge ruled in late July that AT&T’s U-verse, which delivers video programming to homes using the Internet protocol, is a cable TV service, not an information service.

In her decision, Judge Janet Bond Arterton overturned a year-old ruling by the Connecticut Department of Public Utility Control (DPUC) that defined U-Verse as an Internet-based information service, thereby exempting it from local franchise rules.

That July 2006 decision prompted the federal lawsuit against AT&T and the DPUC by the Connecticut Office of Consumer Counsel and the New England Cable and Telecommunications Association.

May Be Moot

The ruling, however, may be moot as the Connecticut state legislature in June approved a cable franchising bill that permits new entrants such as AT&T to apply directly to the state. The bill is similar to more than a dozen others that passed state legislatures in 2006 and 2007.

The national ramifications of Arterton’s decision are currently unclear. Oklahoma is the only other state where AT&T won a similar ruling for its IP video service.

The original DPUC decision drew fire from the cable industry and local consumer advocates because it relieved the phone company from having to go through the lengthy cable franchise renewal process, provide service to all homes in a franchise area, or support public, educational, and government (PEG) channels as cable systems had to do.

The statewide franchise law eased most of those restrictions for all video providers in the state.

Illinois, Nevada Pass Reforms

In other franchise reform developments, Illinois Gov. Rod Blagojovich (D) in June signed a statewide franchise law after the bill won unanimous votes in both chambers of the Illinois General Assembly.

Build-out requirements were the product of a compromise with legislative leaders. Essentially, within five years at least 30 percent of households where service is available–40 percent in Chicago–must qualify as low-income.

Among the measure’s provisions is a requirement that all providers of video service give customers a four-hour window for service calls. If a technician doesn’t show up within that time, the customer would get an automatic $25 credit. Customers would also be allowed a 60-day trial period for new services, and the contract period for video services would be limited to one year.

In Nevada, Gov. Jim Gibbons (R) signed AB 526, a bill creating a statewide franchising process, in early June.

Silver State Moved Quickly

Compared to similar legislation in other states, where reform has taken a year or two to happen, Nevada moved rapidly. The bill was introduced on March 23.

The bill holds franchise fees to the federal cap of 5 percent of gross video revenues. New entrants must match the number of PEG channels provided by the incumbent. If no PEG channels are offered, communities with populations less than 50,000 may require up to two PEG channels. Communities of 50,000 or more may require up to three. Communities themselves must provide up to 12 hours of programming a day, 80 percent of which is non-repeat.

The Nevada measure includes no build-out requirements, although there are anti-“redlining” provisions.

Steven Titch ([email protected]) is senior fellow for IT and telecom policy at The Heartland Institute and managing editor of IT&T News.