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AT&T, Comcast in TV Tussle: SAN JOSE CITY COUNCIL HEARS OPPOSING VIEWS ON `FRANCHISE' AGREEMENTS

Posted on: Friday, 12 May 2006, 12:03 CDT

By Jessie Seyfer, San Jose Mercury News, Calif.

May 12--Phone giant AT&T and cable giant Comcast -- the two rivals that want to deliver "advanced" TV service to San Jose residents -- each made their case Thursday before the San Jose City Council.

AT&T wants to sell its forthcoming TV package, known as Lightspeed, without having to strike the same kind of "franchise" agreements with the city that have governed cable companies for decades. AT&T's TV services would travel by underground fiber-optic networks and eventually reach homes over phone lines.

Franchise agreements are typically designed to ensure that local communities get a share of revenues from television providers. Often such agreements require cable companies to upgrade technology in poorer areas, where the companies make less money, as well as affluent ones, where households can afford premium services.

AT&T argues that having to strike franchise deals with cities will delay the installation of its TV services. Residents deserve these services as soon as possible, in part because the TV competition will lower cable rates, according to the company.

"We just want an opportunity to invest in San Jose," said Leon Beauchman, director of regional external affairs for AT&T. "Not only would it provide the kind of savings that your citizens want, but we are also going to provide jobs in the deployment of our network."

Comcast, however, holds that the franchise system has worked just fine for years and ensures investment into the community.

Any competitor in the video service industry "ought to play by the same rules," said Eddie Garcia, Comcast's director of South Bay governmental affairs. "They ought to have the same social and economic requirements that we do."

AT&T is a new face on the pay-TV landscape, which has been dominated for decades by cable. Under the Lightspeed service, AT&T hopes to invest $1 billion in California to upgrade phone lines and install fiber-optic wires to bring upgraded Internet access and TV service over the next three years.

The state Legislature and U.S. Congress are both discussing bills to change existing TV regulations, and many local communities are trying to figure out what to do in the meantime. In Sacramento, lawmakers are deciding whether statewide franchise agreements would work, and in Washington, Congress is mulling the idea of nationwide franchises.

For several months, AT&T has been in discussions with San Jose city staff members, trying to persuade them to come to a three-year agreement that would not be labeled a franchise and would bring Lightspeed and download service Homezone to city residents while legislators hash out the regulatory issues.

The council is expected to revisit the issue, and possibly vote on a three-year agreement, sometime over the next three weeks.

Contact Jessie Seyfer at jseyfer@mercurynews.com or (408) 920-5425.

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Copyright (c) 2006, San Jose Mercury News, Calif.

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Source: San Jose Mercury News

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