“Debate: Is TV via Internet a ‘video service’?”

A very good thing has happened; major media is beginning to pick up on the real implications of BellSouth’s attempt to kill local cable franchising and transfer it to the state. That’s a necessary part of rousing the public to the dangers of the bill.

Michelle Millhollon at the Advocate has picked up on the central question in the ongoing debate over HB 699, the state-wide cable franchise bill being considered by the Louisiana legislature. It is an issue we’ve been pounding (2, 3, 4) here at LPF: Does the proposed law contain a loophole that will allow AT&T, when it completes its purchase of BellSouth, to refuse to pay a penny to cities and parishes in return for using their rights-of-way.

The straightforward answer is: it does.

The article cites Dan Garrett of the police jury association on the loophole:

Garrett is concerned that the “information services” language creates a loophole that could exempt telephone companies from paying franchise fees to local governments for providing television to consumers.

Garrett said he thinks the conflict in the bill’s language is a deliberate attempt to hoodwink legislators into thinking local governments would get paid for television services provided by telephone companies.

AT&T Inc. has contended in legal action in several states that it does not have to enter into franchises to provide Internet Protocol Television because it is a “information service” and not a “cable service,” Garrett said.

A lot turns on whether or not you trust BellSouth/AT&T. BellSouth claims that it will pay fees and that language in the law obligates it to do so. But BellSouth representatives consistently avoid dealing with the implications of clear language of the law. In the story, Boggs, a BellSouth representative evades dealing with “information services:”

But he would not say whether BellSouth — or its successor — will seek to have IPTV deemed to be an “information service.”

Boggs pointed to language in the bill that defines video services as including IPTV.

Garrett agrees with Boggs.

But Garrett pointed out that in the formula for calculating what is owed to a local government, “information services” is exempt from the definition of gross receipts.

He said BellSouth refused to have the exemption for “information services” removed from the bill.

“They could clear this up right away,” Garrett said.

Boggs said “information services” means e-mail.

Garrett is right. And Boggs is being evasive; deliberately evasive.

Garrett is right that as long as “information services” is excluded from the definition of “gross receipts,” and its legal meaning at the federal level not dealt with explicitly, the loophole remains regardless of other smoke-screen language. If BellSouth/AT&T would openly admit what it means on the federal level the only logical next step would be to explicitly waive that classification for their product in Louisianar. (Or to openly admit they plan to stiff everyone’s local government.) Not surprisingly, they just refuse to acknowledge the implications of their using that term in the law. That they won’t openly deal with this obvious issue is the best evidence that don’t want to provide real assurances that they won’t exploit the loophole.

Bogg’s evasion is simply not credible. The phrase “information services” is absolutely central to his company’s current business plan. BellSouth’s entire DSL/Internet business is built on the back of the FCC’s definition of this term. Without the FCC defining it out bounds for state and local regulation BellSouth would face the same rate regulation on DSL and the internet that it faces on phone services. NO competent BellSouth executive could possibly not be aware of how important the phrase is. Nor is it “old” history: cable modems were only recently definitively decided to be “information services” and that definition put the cable companies and the phone companies in direct competition. BellSouth DOES know what this means, contrary to any silly evasion that tries to limit its meaning to “email.”

LPF’s own Mike Stagg makes the point (and his testimony before the Senate Commerce Committee was no doubt a prime factor in prompting the story–way to go Mike!):

Mike Stagg, a Lafayette information technology consultant, said BellSouth will not be the one that determines what “information services” is because AT&T is in the process of acquiring the company.

Stagg said AT&T has been filing lawsuits or being sued in other states over whether franchise fees apply to its television service.

“I definitely do think there’s deception involved,” Stagg said. “BellSouth is giving assurances when they’re not going to have any say in it.”

This end run doesn’t only concern Louisiana. Much the same game is being played in Congress where a nation-wide cable franchise bill is in the works. The Advocate story reports:

Earlier this year, U.S. Rep. John Dingell of Michigan asked AT&T to clarify what IPTV is.

Dingell wrote AT&T and asked whether proposed federal legislation to create a national cable franchise would exempt the company from paying a fee to local governments.

Timothy McKone, AT&T’s executive vice president, responded with a five-page letter.

McKone’s reply said: “If AT&T’s service were conclusively determined to be a ‘cable service,’ then clearly the service would fall within the ambit of the national franchise. If not, then AT&T would not be subject to franchise regulations under the Cable Act, including as modified by this draft bill.”

That makes it sound as if AT&T doesn’t have a hard and fast position on the question–it sounds like they are waiting to “find out.” But actually reading the letter makes it clear that it does have a hard position on it–and that, when forced, it is telling Dingell directly that its arguments DO amount to the claim that the federal bill (and hence our similar Lousiana bill) are exempted from regulation by the draft law. Here’s what AT&T says when pinned down by a US Senator:

As AT&T has explained in comments filed with the Federal Communications
Commission and elsewhere, its IP-enabled video service is delivered over a two-
way, switched broadband network that is designed to deliver a suite of integrated
advanced services, not just video. The video service itself is an inherently
interactive, two-way service that allows subscribers to communicate on an
ongoing basis with the network, tailor their video service to create a personalized
viewing experience, and integrate the video service with other services and
devices enabled by the broadband network. For these reasons, AT&T’s Project
Lightspeed, IP-enabled video service is not a “cable service” under section 602 of
the Communications Act, 47 D.S.C. § 522(6), which defines “cable service”, in
pertinent part, as a “one-way” transmission of video programming services.

AT&T’s video service is NOT a cable service and is NOT subject to regulation under the law Congress is considering because the Communications Act excludes it. And it won’t be covered under Louisiana’s law either. We need a legislator who’ll “do a dingell” on AT&T (NOT BellSouth) and ask whether AT&T thinks it is exempted from the franchise fee portions of the law its agents are promoting.

It all comes down to whether or not you trust AT&T/BellSouth to treat local communities fairly. Here in Louisiana we have the examples of the way BellSouth has treated New Orleans and Lafayette that teach us not to believe a word they say. The nation should learn from our experience.