AT&T Enters Bay Area Cable TV Market

Thursday, December 21, 2006

Bay Area cable TV companies are getting some new competition from the region's dominant telephone company. AT&T announced a new home TV service that will provide hundreds of channels.

The Bay Area will be one of the first in California to get the new AT&T service, called U-Verse. It will deliver TV, movies and other entertainment over fiber optic cables. And it will put AT&T in direct competition with cable TV companies such as Comcast. AT&T will be spending one billion dollars in California to upgrade its network. It's not just your telephone company anymore.

Melba Muscarolas, AT&T Area Vice President: "We want to be the company that consumers want and we can meet all their communications and entertainment needs."

U-Verse's goal is to have 19 million homes connected over the next two years. Initially, the service will be available in portions of Danville and San Ramon in the East Bay and areas of Cupertino and Saratoga in the South Bay.

AT&T promises it will make the service available to five and a half million low-income homes in two years. U-Verse launches at a time when consumers are starting to convert to high definition, or HDTV. Its service will have 25 HD channels, along with hundreds of channels of standard TV, music, sports and movies.

AT&T and Verizon spent almost $20 million this year to lobby the state legislature to pass a law to allow them to get into TV services on a state-wide basis. Local franchise agreements were eliminated. That change has some cities worried that customers will lose an important advocate when service is faulty.

Paul Valle-Riestra, Walnut Creek City Attorney: "If you're having a snowy picture at home or your cable signal is always going out, typically with cable companies, we would intervene and they would typically fix those problems very quickly."

New services, such as U-Verse, will still have to pay a fee to cities the same way cable companies do. For a city like Walnut Creek, the revenue currently generates between $600,000 and $700,000 a year -- an important contribution to the city's budget.

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