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from: ConnPost

AT&T building U-verse
By PAM DAWKINS
Article Last Updated: 08/23/2007 10:35:33 PM EDT

While a federal district court and state regulators contemplate rulings about the nature of AT&T's U-verse television service, the company continues building up the infrastructure and customer base.

AT&T plans to spend about $336 million on infrastructure improvements in the state as part of its three-year plan to roll out U-verse nationally.

It started the service in Connecticut in parts of nine towns in December; today it is available in parts of 35 cities and towns, including Bridgeport, Danbury, Derby, Fairfield, Milford, New Haven, Stratford, Trumbull, Westport and West Haven. The company won't disclose specific numbers, but says it has thousands of subscribers here already. Its marketing efforts include a doublewide trailer with two living rooms, where customers can check out the service. That trailer is at the Best Buy parking lot in Danbury for another month.

"The main driver behind U-verse is the empowerment of the Web U-verse is about bringing that Web empowerment to your TV," Chris Traggio, AT&T's vice president for consumer operations, said Thursday during a media tour of the video hub office.

For security and competitive reasons, AT&T has asked the hub's location be identified only as being in New Haven County, around the center of the state. The hub has no identifying signage.

This is where AT&T acquires Connecticut and New York City channels — sent digitally through fiber optics — and merges them with national content, said Rob Frey,
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the facility manager.

Inside, gray and black bookcase-like shapes line rows, holding black boxes sporting a variety of wires and lights; bundles of yellow fiber-optic cable are everywhere. Everything has a redundancy, Frey said, so service isn't interrupted. This includes the power supply; huge batteries fill in for a secondary backup generation if the primary generator, which is on site, fails.

The local signal moves down an aisle of machinery, which processes it into an Internet Protocol stream. Technicians can also change the color or volume in a program. The process is mirrored on the other side of the room for national programming.

Both sets move via fiber optics to neighborhood nodes but once there, the content moves to individual sites via the copper wire that also carries phone service, said Chad Townes, AT&T's vice president and general manager for Connecticut. That need to move through sites with fiber optics is why it's not available in the whole state at once, he said. "Every day, we're adding more fiber."

Part of the installation — the company has 100 technicians now with more going through six-week training courses continuously — includes rewiring the house if the wires are too old.

U-verse is billed as competition to cable television, but Attorney General Richard Blumenthal maintains the service is cable television, and so AT&T should be regulated like a cable company, which includes requesting a franchise from the state Department of Public Utility Control.

One worry, Blumenthal has said, is that AT&T will "cherry pick" its demographic, bringing U-verse to wealthier communities and leaving poorer areas behind. Also, unless held to franchise rules, the company won't offer public access television; AT&T, however, has promised to do this.

In June 2006, the DPUC ruled AT&T's Internet Protocol Television is not subject to cable franchising requirements; Blumenthal sued in U.S. District Court for a ruling that it is. In July 2007, the court overturned the DPUC's decision. Now, AT&T has moved for a reconsideration while Blumenthal has filed an emergency request with the DPUC to force AT&T to apply for a franchise.

Blumenthal puts AT&T's chances of a reconsideration at "virtually zero," calling it a "futile attempt" at delaying the inevitable.

"Whatever the rules for cable franchises they should apply to IPTV," he said Thursday. "It's the law," and what the federal courts have decided.

"We're waiting until court action is finalized," because it would be imprudent to take action until then, DPUC spokeswoman Beryl Lyons said Thursday. The DPUC's cable regulating authority is minimal and includes ensuring cable companies meet public, education and government access requirements.

"Cable competition has been permitted since 1984," Lyons said, but "the investment is enormous. The risk was very great," so no one wanted to start up service. AT&T, however, already has a fiber-optic infrastructure.

In its most recent session, the state Legislature passed, and Gov. M. Jodi Rell signed, a bill to prompt competition wherever possible. In part, Lyons said, as of Oct. 1, the bill narrows the DPUC's jurisdiction once competition — when there's at least one non-cable company customer in an existing franchise — is established. The DPUC, however, remains the franchising authority and continues to oversee access channels and customer service.

Townes declined to comment Thursday about the court case, but said, "There's a huge difference between the two technologies." Cable, he said, is a one-way broadcast of content; U-verse is two-way communication.

The cable box, he said, brings in a signal with all the offerings. The U-verse set-top box tells the hub what programming to send. This frees up bandwidth for more channels and other offerings.

The company has four packages, which include high definition television channels. Prices for bundled U-verse and Internet service — customers can buy the television service alone but the highspeed Internet service is embedded in the signal — range from $59 to $129 a month, depending on Internet speed.

The basic package has more than 100 channels and comes with one receiver. Other packages come with three receivers, including one with a digital video recorder, which can record up to four channels at once. "We don't ever expect to replace the computer," Townes said, but U-verse will soon be capable of showing photos from the Web, stock quotes and movie times and even send messages to appear on the screen from an off-site computer. Today, users can program their DVR from an off-site computer or cell phone.Wallingford resident Leslie Spiars, an AT&T employee, has a projection television hooked up to U-verse, as well as a 1988-era model in the basement. "We're kind of into technology," said Spiars; the company used her home setup as a demonstration for reporters Thursday. While AT&T is looking at U-verse as a way to bring new services to existing customers, it is also planning to take people away from the cable companies. According to Townes and other executives, their service is about 20 to 30 percent cheaper than comparable cable television prices.

But the cable companies, which are going after telephone customers through their new offerings, won't be giving up on television.Cablevision, for example, has about 1.4 million residential phone service customers; it also offers customers a chance to bundle telecommunications services.

"Cablevision is successful in a competitive market because customers love and value our television, Internet and phone products. Our digital cable service features real interactivity, local news and information through News 12 Connecticut, and 40 high-definition programming services at no additional charge," the company said in a prepared statement. Blumenthal, meanwhile, said even if the court and DPUC rule against AT&T, he doesn't expect the company will pull its U-verse out of Connecticut, because there's "too much money and opportunity [here]."

Pam Dawkins, YourMoney editor, can be reached at 330-6351.