AT&T should set sights higher than repackaging DSL with Project Lightspeed

AT&T should set sights higher than repackaging DSL with Project Lightspeed

Are cable franchise agreements needed for AT&T to move forward on its deployment of Project Lightspeed?
If you’re going to go through all this redeployment, AT&T should be setting its sights higher on real broadband and long-term capabilities. Providing another flavor of DSL is shortsighted.
The marketing strategy of Project Lightspeed should be to get fiber to the premises in order to provide more services in a true broadband package. Instead, it is a way to further utilize a hybrid transmission medium of fiber and copper to offer DSL. In addition to “high-speed” data, video services will also be provided through what AT&T and Lucent (the manufacturer of the platform) calls its IP multimedia platform (IMS).
There are some people questioning the deployment of this technology in various municipalities as they argue that it should only be granted through a cable franchise agreement. Does Project Lightspeed fit the definition of a “cable service” or is it something different that should not be viewed as a cable service? This is a huge question that is creating some friction across the country in some municipalities.
Marketing to the subscriber base
“IMS-based services allow for enhanced, customized and personalized services that offer compelling value to consumers. IMS is truly a transformational step in network development with the potential to reshape and radically improve the customer experience,” said David Heeren, vice president of sales for Lucent Technologies, in an AT&T press release in 2005. “We are excited to work with SBC to help bring product and service integration from conception to reality.”
According to a press release from AT&T this year, Kiley Ranch in Nevada is one of the first new-home developments that will benefit from AT&T’s Project Lightspeed:

This will be a multibillion-dollar deployment of fiber that will reach approximately 18 million households as part of the initial rollout. As a result, AT&T is making plans to deliver AT&T U-verse products and services to homeowners as they become available, including:
1. High-quality video experience (featuring more than 200 channels) and set-top boxes (each with an internal DVR).
2. Video-on-demand (VOD) library featuring hundreds of hours of a variety of programming.
3. Picture-in-picture technology that allows subscribers to channel surf without leaving the program they’re watching.
4. Fast channel changing to eliminate the delay experienced with other digital broadcast services whether you are surfing channels or recalling the last channel viewed.
In addition, the network will deliver [a service to offer] subscribers a leading combination of broadband access, services and content that provides a unique high-speed Internet access experience.
AT&T’s initial offering will include three tiers of high-speed Internet access:
1. Elite: up to 6.0 Mbps downstream and up to 1 Mbps upstream
2. Pro: up to 3.0 Mbps downstream and up to 1 Mbps upstream
3. Express: up to 1.5 Mbps downstream and up to 1 Mbps upstream

After all the fuss, is 6 Mbps enough bandwidth? What is the maximum speed supported by these new boxes? With HDTV and other applications on the close horizon, how soon will you be able to increase speeds to 1 Gbps? California has a broadband initiative of 1 Gbps or bust by 2010.
I would think 100 Mbps would be a minimum roll-out service with 1 Gbps being the “elite” service option (rather than 6 Mbps). Maybe I’m the only one who thinks in a quantum leap, but if you are going to go through all this redeployment and installation of new building blocks, AT&T should be setting its sights higher on real broadband and long-term capabilities. Providing another flavor of DSL is shortsighted.
Cable franchise agreements
If this is truly a giant step forward for the average consumer, why did Geneva, Ill. (who wanted fiber in an earlier referendum) say no? This was found in a recent suburban Chicago news article:

AT&T officials have said because their project is Internet-based that the company is not required to have a franchise agreement.
“They’re wrong,” said Peter Collins, Geneva’s information technology manager. “They have a competitive video service.”
It is the city’s contention that AT&T must have a franchise agreement just like cable television provider Comcast, Collins said. The issue is not the fee itself. AT&T has agreed to pay the 5 percent that is in the current Comcast franchise agreement. It is service, he said.
“They won’t agree to serve the whole town,” Collins said. “Under the cable franchise, we require Comcast to serve the entire city. That’s just not fair.”
Collins said municipalities believe they have to defend that fairness under the Illinois Fair Playing Field Statute.

Some other Illinois suburbs (including Carpentersville, Roselle and Wheaton) have stopped installation and have been sued by AT&T. Not all municipalities share the idea that it should be covered by a cable franchise agreement. According to a legal newsletter from Cooper White Cooper:

The Anaheim City Council in Anaheim, Calif. authorized on March 7, 2006 a primitive agreement with AT&T California (formerly Pacific Bell/SBC) under which AT&T’s Project Lightspeed cable television may be delivered in Anaheim without a cable franchise.
The agreement approved by the city does not actually define or identify Project Lightspeed but appears to contemplate that AT&T’s local telephone lines will be upgraded for the transport of data such as video and broadband signals for marketing to Anaheim customers in competition to established cable service. Notable features of the agreement include:
1. Project Lightspeed service is referred to as “IP-enabled” (apparently the fig leaf for not treating it as cable service and not requiring a cable franchise).
2. The agreement carries no franchise fee nor any other fee or payment to the city.
3. The agreement has no term of years and AT&T can abandon or terminate its service or the agreement at will.
4. AT&T “will work with Anaheim to … provide access to City Channel 3 (apparently as an analog signal outside the IP-enabled service).
5. AT&T can cover its video service territory through the technology of its choosing including direct-to-the-home satellite services (thus enabling it to draw its own boundaries for areas that will actually receive plant upgrades and investments).

If you read the letter to Congressman Dingel from AT&T executive vice president of federal relations Tim McKone, there are some valid arguments and some definitions put forth that question whether or not this service should even be covered under the cable franchise agreement of different states. In reading this letter, the arguments are strong as to the application of the definitions.
What is the right stance?
It is difficult to choose a direction until all the facts are weighed. While it is true that municipalities should adhere to the Illinois Fair Playing Field Statute, they also have to make a judgment as to whether or not they are comparing apples to oranges.
A cable service is currently considered to be a one-way delivery system. The new Project Lightspeed platform, according to AT&T, is a two-way interactive system. AT&T’s argument is that you can’t put it in the same category and make the service adhere to that regulatory standard. That is a valid argument to me.
Should it be sorted out in court? That is what may happen if both sides don’t take some time to discuss and understand each other’s position. I hope everyone can convey and understand those nuances. In a recent Multichannel News article, there is one court decision on a case involving Walnut Creek, Calif., which also barred AT&T from putting in the new service:

Cities are within their rights to demand a franchise of AT&T for its video service, according to a ruling from a judge in U.S. District Court for the Northern District of California.
The judge, however, did not rule specifically on whether IP-delivered video is a cable service. Cities can pursue franchises because the action is not specifically precluded in the federal cable act, judge Maxine Chesney wrote in a recent decision.
The ruling is a blow to AT&T, which argued that its service (which will deliver programming in data packets at the demand of consumers) does not meet the definition of a cable service.
The company has challenged any attempts at franchising – filing this suit against Walnut Creek in California – as well as another city there to go along with three suits in Illinois. AT&T argued that it has a right to deliver video under the authority given to it as a local-exchange carrier.

Some people are already starting to point to this decision to bolster their position, but to me, the key question was not answered or ruled on: Is IP-delivered video considered a cable service? In the past, I have always pointed out that the creation and acceptance of technology outpaces the regulatory framework that usually lags behind it both in application and enforcement.
Carlinism: An antiquated regulatory framework can only harm progress as the creation and acceptance of new technologies accelerate beyond its scope.

James Carlini is an adjunct professor at Northwestern University. He is also president of Carlini & Associates. Carlini can be reached at or 773-370-1888. Copyright 2006 Jim Carlini.

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