By Dave Flessner and Jason Reynolds
AT&T Corp. is hoping for a fresh start in the Tennessee Legislature next year when it mounts its second attempt to be able to add video services across Tennessee under a single franchise agreement, the company's new Tennessee president said Wednesday.
Gregg Morton, who was transferred last month from South Carolina to the top Tennessee job at AT&T, said consumers here want competition but that the cable TV industry "is trying to delay, delay, delay" new entrants in the market.
AT&T rivals and critics, however, contend the phone giant simply is trying to gain an unfair advantage in entering a market it has ignored in the past.
AT&T wants the Tennessee Legislature to allow it to provide video services in Tennessee without having to obtain franchises in each city or county where it wants to operate. Franchise agreements specify how cable and video businesses may operate and what local taxes and fees they must pay. Existing cable companies traditionally have negotiated individually with local governments.
Legislators in nearby Georgia, North Carolina, South Carolina and Florida agreed to a single franchise requirement over the past two years, effectively replacing municipal franchises with statewide operating permits.
Mr. Morton said he is talking with state and local officials this fall and expects new legislation to be introduced next year, although AT&T does not yet have a bill sponsor.
Without legislation for a statewide franchise, Tennessee "is like a hole in the doughnut" of the Southeast and is being left behind by other states that are doing more to encourage competition to monopoly cable TV systems, Mr. Morton said.
"The only thing that AT&T is asking here is the opportunity to compete," he said. "We may not be able to succeed in the market, but we'd like to have a streamlined approach for us to get in and compete with cable."
In Tennessee, more than 300 cities and counties issue franchises for cable TV or other video providers. Mr. Morton said that in the past, AT&T has spent an average of 13 months to gain new franchises in each new city it enters.
But new rules from the Federal Communications Commission require local governments that now issue video or cable TV franchises to act within 90 days on an application for cable TV or video services, officials said.
"This is not about competition because the FCC addressed that issue and set the rules for how cities must respond," said Ted Jenkins, deputy director of the Tennessee Municipal League that opposed AT&T's initial bill last year. "Now it's about AT&T wanting to have competition on their terms."
Mr. Jenkins said his association, which represents Tennessee's cities, agreed to a compromise measure last spring to allow a statewide franchise for AT&T provided it met all the rules in each municipality and was regulated by a panel comprised of city and county officials. But at the last minute, AT&T withdrew its support, he said.
Rep. Charles Curtiss, D-Sparta, who brokered the compromise in the last legislative session, said Wednesday he will not be sponsoring legislation in the next session but hopes some measure will be approved.
"Being chairman of the House Commerce Committee, I think I need to be as unbiased as I can be with this process," he said. "But I think the citizens of this state will benefit from a statewide franchising law. If there is truly competition out here in the marketplace as emerging technologies come forth, they are going to be deployed a whole lot quicker if we have more than one provider."
But Stacey Burks Briggs, president of the Tennessee Cable Telecommunications Association, said AT&T is reluctant to offer video services in many rural areas of the state.
"I believe this is about ... not wanting to serve all the neighborhoods," she said.
Ms. Briggs noted Verizon Corp. plans to spend more than $20 billion on new competitive video services nationwide, and EPB is preparing to spend more than $200 million on a fiber-optic cable TV system throughout Chattanooga through existing local franchise requirements. AT&T has had the right to add cable TV or other video services under local franchises for the past 11 years, but the phone giant has chosen not to do so, Ms. Briggs said.
AT&T said it will spend more than $1.7 billion on investments for video services in four other Southern states where statewide franchising was approved and could spend more than $300 million in Tennessee if it gains such a simplified franchise here.
But Mr. Jenkins said AT&T has yet to make such investments elsewhere and the company's video service, known at U-verse, now is in operation in 12 cities in eight states -- none in the Southeast.
"It sounds like they are selling a pig in a poke," he said. "Where's the investment they promised?"
Mr. Morton said such additions take time, and AT&T is making plans for major new services in the Southeast over the next three years.
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AT&T VIDEO INVESTMENTS
With statewide franchising authority, AT&T says it is preparing major investments to add its U-verse video service in the Southeast:
* Florida -- $750 million
* Georgia -- $500 million
* North Carolina -- $350 million
* South Carolina -- $250 million
Source: AT&T Corp