It’s BS

BellSouth is trotting out an attractive story about HB 699, the bill that would transfer cable franchising power from local governments to the state. But since BellSouth’s purchase by AT&T is currently being finalized, company representatives are making promises they are in no position to keep.

BS representatives are telling local officials and the Legislature happy stories about lower prices, providing services to rural and poorer urban areas, allowing local governments to control their own rights of way and paying franchise fees to local governments..

Contrary to what BellSouth is claiming in Baton Rouge, AT&T is singing an entirely different tune in every other corner of the country.

BellSouth in Baton Rouge

AT&T in California, Illinois…

Tells everyone prices will fall.

Says don’t expect prices to fall. (1)

Tells committee will use current broadband, which runs past 85% of all phone users.

Tells investors they will need to do massive upgrades and “plan” to serve 52.5% of all users. (2)

Tells the Legislature that they’ll serve rural and poor urban communities.

Tells investors they’ll serve 5% of “low-value” customers. (3)

Says nothing about how AT&T will fund the purchase of BellSouth and who will be served after AT&T closes the deal.

Sold off 650,000 rural lines in Texas and Michigan to fund the purchase of AT&T wireless. (4)

Tells local communities that they’ll pay franchise fees.

Tells the federal government they are not bound by franchise provisions. (5)

Claims that local governments will still be able to control their rights of way.

Tells towns that “because we have a state franchise already” they can put 5 foot tall, 2 x 4 foot boxes anywhere they want. (6)

Can’t recollect what the phrase “information services” in SB 699 means. Doesn’t mention “telecommunications services.”

Tells local governments that they are only offering “telecommunication services” and don’t have to abide by any local or state rules. (7)


AT&T Chairman Edward Whitacre tried to assure Wall Street types at a Sanford C. Bernstein & Co. media conference in New York this week that the entry of telcos into the video space would not lead to price cuts in video service.

When asked whether a price war between telco video, like AT&T’s Lightspeed service, and cable wasn’t inevitable, Whitacre said: “If I were the cable companies I guess I wouldn’t be offering discounts.”


[Slides show that SBC, now AT&T, showed to its investors made clear that, even in their most ambitious plans, the company is not planning to serve more than half its customer base with new, video-capable technologies in the foreseeable future.]

If you figure out the “promise” SBC/ATT is making, it works out to about 52. 5 percent of the total population, a little over half of the people in the communities they serve. The wealthiest half.


During a slide show for analysts, SBC said it planned to focus almost exclusively on affluent neighborhoods. SBC broke out its deployment plans by customer spending levels: it boasted that Lightspeed would be available to 90% of its “high-value” customers — those who spend $160 to $200 a month on telecom and entertainment services — and 70% of its “medium-value” customers, who spend $110 to $160 a month.

SBC noted that less than 5% of Lightspeed’s deployment would be in “low-value” neighborhoods — places where people spend less than $110 a month. SBC’s message: it would focus on high-income neighborhoods, at least initially, to turn a profit faster.


SBC also has announced a rural line sale in Michigan and Texas, offering approximately 650,000 lines that are expected to fetch $1.5 billion. These funds will contribute to the company’s wireless purchase (AT&T Wireless by Cingular — as SBC owns half of Cingular, it will owe in excess of $20 billion for the deal). Since this rural line sale will put a small dent in its share of the wireless deal, we can expect additional repositioning activities.

BellSouth is expected to borrow $10.5 billion for the AT&T Wireless purchase. We further expect that they will put some of the steady income-producing local lines on the block to invest in areas of higher revenue growth.


[Senator Dingell’s question about the bill, supported by AT&T currently before Congress:]

Would AT&T’s planned IP video service be eligible for national franchising under the Committee Print of the Communications Opportunity, Promotion, and Enhancement Act of 2006?

[AT&T’s response:]

While AT&T is confident in its interpretation of the law as applied to its IP-enabled video service, many franchising authorities and incumbent cable operators disagree, and have taken concrete steps to hinder AT&T’s deployment of its next-generation broadband capabilities and IP-based video services.

[AT&T is referring to its answer to question 1, where it asserted that it was not a cable service and hence not able to be regulated under cable franchses. There it said about its services:]

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 . . . . In short, because AT&T will not be providing a “cable service” over a “cable system,” it cannot, by definition, be a “cable operator” under the Act. . . .

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.


Julie and Sean Whiteley have a nickname for the hulking gray box in the front yard of their Grand Fir Drive home. But it’s not an affectionate one.

“We call it ‘the refrigerator,’ ” Julie Whiteley said. “We were just talking about if we were going to hide it with landscaping…”

AT&T has already approached [the Illinois town of] Lodi about installing 10 boxes near apartment buildings, the start of its Project Lightspeed work in Lodi. The boxes AT&T proposes would be 5 feet 3 inches tall, 43-1/2 inches deep, nearly 21 inches wide and be placed in the public utility easement, typically 10 feet in from the sidewalk…

“Under state law, because we have a statewide franchise already, we can upgrade our infrastructure in the public right of way,” said Diamond, who added he did not know how many of the large cabinets are planned for Lodi . “What it all comes down to is educating the cities on what we plan to do and how we plan to do it.”

When a handful of Illinois cities balked at letting AT&T install similar boxes, the phone company sued.


The telephone company sued Walnut Creek, Calif., late last year, contending the city violated state and federal law by awarding siting permits for the telco’s hardware — but with the caveat that the company would have to seek a cable franchise at a later date.

In discussions with officials across the country, AT&T has argued that its planned pay TV service, dubbed U-verse, is not a cable service because it will employ an Internet Protocol distribution method that transmits video channels as packets of data, at the request of an end user.

Rather than accept the conditioned permits, AT&T stopped work on its telephone-plant upgrade in Walnut Creek and filed the federal suit. AT&T wanted the court to issue a declaratory judgment that the city’s franchising authority was pre-empted by the section of the federal act that explicitly bars franchises on “telecommunications services.”

AT&T also argued that it has authority to use rights of way in Walnut Creek and other cities by virtue of its grant to operate as a telephone-service provider.