Tuesday, May 09, 2006

AT&T's Contempt for Louisiana is Showing

BellSouth is working a scam in the Louisiana Legislature on behalf of its once and future owner, AT&T.

It centers on bills (HB 699 and SB 386) that purport to bring cable competition into Louisiana via a statewide video franchise. There are huge problems with the bills, not the least of which deal with the state giving away local rights of way and relieving the largest telecommunications company in America (AT&T) of any obligation to buildout its network to entire communities (not just, say, gated neighborhoods).

These are real and legitimate problems that local government leaders from across the state recognize and which AT&T (through its surrogate BellSouth) has refused to 'compromise' on.

But, AT&T's contempt for our state comes screaming through in that portion of HB 699 (the first try to get this franchise thing done) that deals with the definition of gross revenues. The bill ostensibly would create a mechanism for collecting and distributing proceeds from a five percent state video franchise fee. The gross revenues section (page 3, line 21) defines the term by enumerating exceptions.

The key section is actually starts on page 4, line 4:
4 (g) Any revenues from services provided over the cable system that are not
5 classified as cable services including without limitation revenue received from
6 telecommunications services, information services, Internet access services,
7 advertising services, and home shopping services. (emphasis added).
There are the critical words: information services.

Anyone who has followed telecommunications since the passage of the Telecommunications Act of 1996 knows that information services are a separate and distinct class of service which have been the source of intense litigation and rule making by cable and telephone companies during that time. Essentially, the Federal Communications Commission has ruled that providers of information services are exempt from some of the network regulations that apply to telecommunications service providers.

It was the classification of cable modem services as an information service which gave cable companies the right to shut independent Internet service providers (ISPs) from their networks. Last year, the FCC classified telephone companies digital subscriber lines (DSL) to be an information service, thus giving phone companies the right to shut out competitors from their DSL-ready networks.

The information services category is particularly relevant to these Louisiana bills because of the type of service AT&T/BellSouth propose to roll out in this and the other 21 states in their soon-to-be combined market. AT&T is rolling out something called Internet Protocol Television (IPTV) which, the company argues, is a two-way communications system and is, in fact, an information service.

How do we know this? We know this through the lawsuits that AT&T has filed against communities in Illinois, California and Michigan that have tried to collect a cable franchise fee from the company when it tried to introduce its new IPTV service.

AT&T, in court filings, claims that IPTV is not subject to franchise fees because it is an information service.

BellSouth, in meetings with Legislators and with local government leaders, has offered to scrap the entire state regulatory regime and it has offered what it claims to be a compromise on the issue of whether IPTV is a cable or "video" service. BellSouth has offered to allow both cable and "video" services to be covered by the new franchise law.

This is no compromise at all, but a deliberate attempt to deceive Legislators, local leaders and the public about the true nature of this legislation.

I can find no more suitable word for it than contempt.

Why do I believe it exhibits contempt? Because BellSouth was an active participant in the FCC rule making process that resulted in DSL being classified as an information service. Video service has nothing to do with information service.

By insisting that revenues from information services be exempted from the new video franchise regime, BellSouth is setting the stage for two things: 1) for local governments to lose local franchise fee revenue on every customer AT&T (which will actually be the company to deploy the service) IPTV wins; and 2) AT&T will have the legal standing to refuse to pay ANY franchise fees anywhere in Louisiana based on the language in this bill which exempts revenue from information services from the statewide video franchise regime.

BellSouth's legal staff and lobbyists are insisting on this information service exemption from gross revenues knowing full well the implications it will have on local governments, yet still they push the phony compromise of including video services under the franchise piece.

It is contemptuous because BellSouth's lobbyists and lawyers know full well AT&T's intentions and that it will be AT&T (not BellSouth) that moves to take advantage of the new act should it become law.

How do we know this? We know this because BellSouth insisted that Lafayette and LUS not oppose the AT&T/BellSouth merger as a condition for BellSouth dropping its most recent lawsuit against the LUS fiber project. Getting this merger approved quickly is a top priority of both AT&T and BellSouth. The sooner that merger is approved, the sooner AT&T will be officially calling the telecom shots in this state. It will be AT&T that moves to deploy IPTV in Louisiana, not BellSouth. And, AT&T insists this is an information service that is not subject to franchise agreements.

BellSouth knows this but continues to try to deceive the Legislature and the public.

Their contempt for Louisiana does not end there.

Another layer of contempt grows out of the fact that BellSouth's lobbying team is putting on their best "good ole boy" front on this cynical transfer of wealth from communities to AT&T. That is, by having BellSouth's well known fleet of lobbyists argue for these bills, it has the effect of masking the magnitude of the changes that would result from passage of this legislation. Hey, would ole George, or Tommy or Danny try to screw us? Well, they might well be watering hole buddies of a number of legislators, but they are also trying to either save their jobs by producing for their new masters, or they're trying to go out on the high note of victory -- regardless of the impact of this legislation on the state or its communities.

Profoundly cynical. But, their contempt does not end there.

The company has members appointed by the Governor to the Broadband Council, the body whose task it is to bridge the digital divide in this state. Yet here are representatives of that same company (in fact, the same people!) arguing that the Legislature should authorize AT&T and other companies to make the digital divide permanent by relieving them of the responsibility of bringing their new networks and services to every resident of every community they want to serve.

That's right! Members of the Broadband Council arguing for the right to make the digital divide in Louisiana permanent! They want legislative approval to leave rural communities on the far side of the digital divide. They want legislative approval to leave poor and middle class neighborhoods in any community on the far side of the digital divide.

AT&T's contempt for Louisiana is matched only by the cynicism behind the efforts of BellSouth's lobbyists and attorney's to somehow convince legislators, the public and the Governor that these bills (which serve only the interests of AT&T) are good for Louisiana.

These bills are anti-Louisiana bills. They are anti-rural Louisiana. They are anti-urban Louisiana. They are anti-local government.

Representative Montgomery and Senator Ellington should be ashamed of themselves for doing the bidding of AT&T with these bills.

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