Tech Bytes – Tid Bits in Tech News: Consumers in Captivity: San Jose City Government Prevents Broadband Deployment

Tensions between AT&T and the city of San Jose reached new heights on Monday as lawyers representing the company sent a letter that formally threatened to sue the city over broadband Internet deployment. The city of San Jose contends that AT&T does not posses a valid franchise necessary for the provision of cable service and has made broadband Internet deployment contingent upon a new franchise accord.

This protracted battle comes at a huge cost to consumers who are eager to receive high-speed Internet and improved cable content and service.

Over the past two years, AT&T has acquired both of San Jose’s cable systems: Pacific Bell, which covers one-forth of the city, and Tele-Communications, which provides service to the rest of San Jose. The former Pacific Bell system is far more modern and would require only $50 million in renovation to provide high-speed Internet access. However, this investment has been put on hold by the San Jose city government. Before construction begins, city officials demand that AT&T sign a franchise agreement that covers all of its operations in San Jose. The proposed franchise license would require the company to increase the number of public access channels from two to seven, and build a network connecting all city buildings.

Understandably, AT&T has balked at this $25 million mandate. In negotiations, AT&T requested the franchise issue be decided apart from the infrastructure upgrade. When the city would not relent, AT&T negotiators sent the letter, dated August 18th, to inform the city that if AT&T could not begin construction by August 28th, it would, “seek relief from the court.” The letter did not specify which court.

This protracted battle comes at a huge cost to consumers who are eager to receive high-speed Internet and improved cable content and service. Currently, San Jose residents have only one choice for high-speed Internet: Digital Subscriber Lines (DSL) from Pacific Bell or a rival telephone company. It is unfortunate that the city government has prevented consumers from having a choice in the matter.

AT&T’s recent victory against the city of Portland in the 9th circuit Court of Appeals bodes well for AT&T’s position in this matter. In that decision, the court prevented the city of Portland from making the franchise license contingent upon “open access” and implied that jurisdiction over high-speed Internet regulation belonged to the Federal Communications Commission (FCC). FCC jurisdiction would seem to preempt other mandates and regulations upon which a city government may try to base a franchising agreement.

City governments should not be able to hold their own citizens hostage to gain financial advantage. Every day that the city of San Jose prevents AT&T from upgrading the quality of its own infrastructure is another day San Jose consumers will be robbed of an option for affordable high speed Internet service.