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New franchise rules for cable may yield choices, lower costs

From the April 12, 2007 edition, The Atlanta Journal-Constitution, Page A1.

By Scott Leith and Sonji Jacobs

Georgia lawmakers have approved a plan meant to create a new wave of competition for the state's cable providers. If proponents are right, changes in franchising rules will lead to more choices in TV and cheaper bills for consumers.

But even with the overhaul looking all but certain after state Senate approval Wednesday, the biggest advocate isn't ready to say when — or where — it will mount a challenge to cable rivals in Georgia.

San Antonio-based AT&T, which bought Atlanta's BellSouth in December, has long talked of big ambitions in video, dating to three years ago. Changes in state laws, in Georgia and elsewhere, are an important part of the company's plans.

Both houses of the General Assembly voted overwhelmingly in favor of an AT&T-backed bill. While the company said its video services will arrive in the state later this year, AT&T isn't ready to announce a schedule.

"I think we're one big step closer," Sylvia Anderson, president of AT&T's Georgia operations, said Wednesday.

AT&T is starting to speed its rollout of what it calls U-verse — cable-like video services that, at the moment, have about 10,000 customers in 15 U.S. markets. AT&T thinks it can lure customers from cable by offering snazzy options such as a digital video recorder that can record four programs at the same time.

While the current number of people who can get U-verse is fairly small, AT&T expects the system to be available in about 8 million homes by the end of this year and 19 million by the close of 2008.

Getting video services up and running in hopes of taking on cable is a complex affair, with hurdles that include a thicket of regulations and expensive equipment upgrades.

AT&T first announced plans to develop its own video in 2004. It involves delivering television to homes via a technology known as Internet protocol television, or IPTV.

From a tech standpoint, it isn't easy. For one thing, many homes are served by copper phone lines that aren't stout enough to deliver video, given that it requires a lot of bandwidth.

AT&T's tactic is to enhance its network with fiber connections that get close to end-users, such as a facility near a neighborhood. This allows copper wires to handle the job the rest of the way to houses.

In addition to technical challenges, there have been bureaucratic obstacles. That's where the Legislature came in.

Cable companies such as Comcast spent decades assembling local franchise agreements that allow them to provide services. AT&T and other interested parties, notably Verizon Communications, didn't want to go through the difficult, time-consuming process of going to each community for approval, so the companies sought help in state legislatures. The plan would replace local franchises with statewide franchises.

In Florida, lawmakers pondered reforms last year but didn't act. A bill is under consideration this year. In Tennessee, the issue has proved contentious, with AT&T battling the cable industry. The fights involve local control and whether a new entrant should be required to provide services in poor areas.

Georgia, in contrast, has been smooth sailing for AT&T. In part, that's because AT&T — including staffers from the former BellSouth — sat down with representatives from cable companies and local municipalities to iron out differences before the introduction of a bill.

House Bill 227 breezed through the House March 20. It passed the Senate 52-2 Wednesday.

While the measure must go back to the House for procedural approval, that isn't expected to pose a problem. The bill then would go to Gov. Sonny Perdue for consideration.

Sen. David Shafer (R-Duluth), who carried the bill in the Senate, said the measure sticks to four important principles: it creates a level playing field among telephone and cable companies; it protects revenues already received by counties and cities; it allows local governments to manage right of ways; and it promotes competition.

Sen. Regina Thomas (D-Savannah) voted yes but had reservations. "We gave the people choice when we deregulated natural gas, and look at what happened," Thomas said, referring to rising prices.

AT&T lobbied heavily in favor of the bill, including via TV ads. Georgia's cable industry, meanwhile, aired anti-AT&T ads.

"We have not supported the bill because we do not feel that it is necessary," said Nancy Horne, president of the Cable Television Association of Georgia. "Having said that, we do feel that the state Legislature has made a very good effort at making sure that all providers of video services are treated in a similar, like fashion, from a regulatory standpoint."

Assuming the bill becomes law, a statewide franchise system will take effect in 2008. In the meantime, AT&T could roll out video services in several areas, given that the former BellSouth had some local franchises.

Whether customers flock to U-verse remains to be seen.

The company is offering multiple packages. One features 190 channels, plus a digital video recorder and Internet service, for $74.

Early on, the fledgling system had problems. Chad Brantly of San Antonio started using U-verse last summer and created a Web site, Uverseusers.com, to chronicle his experiences and those of others.

Brantly, 28, a software engineer, said U-verse costs less than cable and works well. He said the user menu is easy to navigate and AT&T's video-on-demand offerings are good.

"Everybody that sees it is really impressed," Brantly said. "They had some technical problems from the beginning, but their customer service has been better than what I've had with everybody else."

NEW COMPETITION FOR CABLE?

WHAT HAPPENED The Georgia Senate on Wednesday approved a bill to overhaul the state's video — or cable — franchising rules. AT&T was the key proponent because the company wants to compete with cable providers.

WHAT IT MEANS Assuming the bill becomes law, AT&T will be able to secure a single statewide franchise instead of seeking deals in each municipality it wants to operate in.

WHAT'S NEXT AT&T must invest tens of millions of dollars to launch services. Some services should be available this year, though the company hasn't provided details. More are expected in 2008.