Almaden Resident

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AT&T deal with San Jose awaits decision on state vs. city control

By Monica Heger

AT&T wants to become a phone company turned Internet and cable provider. That's the vision AT&T's Project Lightspeed wants to bring to San Jose customers.

Looking to put a dent in Comcast's hold on the cable market, AT&T is in discussion with city staff to allow the company to install a network of fiber optics, which would expand its service into the cable and Internet arena. It would also provide customers another cable provider option and increase the availability and speed of DSL.

But the discussions are stalled until the question of whether AT&T should be regulated by local or state government is resolved.

The city would like to enter into a deal where AT&T is required to pay the city a franchise fee, since cable is regulated at the city level. AT&T does not want to pay this fee, because phone service is regulated by the state.

State legislation is currently pending that, if passed, would create a statewide franchise for cable and Internet providers. San Jose, at its May 2 city council meeting, voted to oppose this bill, supporting the position of the League of California Cities, which is to keep the regulations at the local level.

Ed Shikada, deputy city manager, said the city opposes the state bill because it would "supersede any ability to place requirements on AT&T's implementation."

The state bill would decrease city revenue, because municipalities would not be allowed to impose franchise fees. Also, the funding of public, educational and government programming would be controlled by the state, instead of the city.

"Under our current cable system, we have channels dedicated to public access," Shikada said. "The state legislation would set how many channels and fix the level of funding."

Shikada said another one of the city's priorities in striking a deal with AT&T is to assure they build their system out to every neighborhood.

Shikada said the city would lose its authority to specify how and where AT&T could build its network if state legislation is approved.

Finally, there is the issue of the cabinets that will have to be constructed. This is another facet that the city does not want to relinquish to state control.