Bringing IPTV to Market: The Legal Front

Local cable franchises, eager to maintain their control over delivery of content to local markets, have been fighting IPTV entrants everywhere.

In response, Verizon has chosen the strategy of pursuing state-wide franchises for a couple of years now. In New Jersey:

 Twenty-six communities, business organizations and a county freeholder board are calling on Gov. Richard Codey and state legislators to end the cable industry’s stranglehold on the video marketplace.

The resolutions were issued over the past month, with Howell Township this week becoming the most recent community to support updating New Jersey’s 30-year-old laws to permit state-issued franchises. Under current law, a competitor to the monopoly cable-TV provider must obtain franchises community-by-community, a time-consuming process that inhibits competition.

As a sign of how contentious the introduction of IPTV has become, AT&T recently announced it was going to court in Connecticut to open up the statewide marketplace: 

AT&T will file a lawsuit challenging the Connecticut Department of Public Utility Control’s decision not to grant the company a statewide video franchise for its U-verse service, a company spokeswoman confirmed today.

The company admitted surprise Monday when the CDPUC ruling was announced, since the state has a video franchise law, and AT&T expected to be able to continue providing its U-verse IPTV service, which it launched in three Connecticut markets earlier this year, under a statewide franchise. Instead, the DPUC said AT&T’s offering is a cable TV service and therefore requires cable TV franchise agreements with individual municipalities.

AT&T also is threatening to immediately eliminate 300 jobs in the state, cancel plans to fill 1000 other positions, redirect its investment to other states and disconnect its more than 7000 current U-verse customers in the state.

The CDPU, surprisingly, justified its decision by explaining it had classified IPTV as a cable service

A new FCC rule could change the rules governing the market, however, allowing for easier entrance of IPTV offerings: 

The Federal Communications Commission reportedly will end thousands of contracts giving cable companies exclusive service rights in U.S. apartment buildings.

The rule under consideration could stem the rising costs of cable and open markets across the United States to more competition, The New York Times reported.

At the same time, it would be seen as a victory for telecom giants Verizon Communications and AT&T, which have lobbied for the change — with support from consumer groups, satellite TV providers and smaller rivals to large cable companies, the newspaper said.

FCC officials and consumer groups said the new rule — which is set to be approved Wednesday — could result in lower cable fees for millions of subscribers who live in apartment buildings.

Studies have indicated prices can drop by as much as 30 percent when a second cable company enters a market, the Times reported.

We’ll keep you updated.