Broadband bickering hits Silicon Valley

By Cathleen Moore
InfoWorld, 08/23/00

AT&T officials confirmed Tuesday that the company is pondering legal action in an attempt to force the city of San Jose to release permits allowing AT&T to deliver cable modem service to city residents.

According to an AT&T spokesman, a company attorney sent a private letter last week to the city requesting the release of approximately 40 permits that have been pending for more than nine months. The permits would allow AT&T to launch its @Home cable modem service to approximately 55,000 households in the city. AT&T planned to build out an existing cable network in San Jose in order to launch its high-speed cable service by year-end, says Andrew Johnson, executive director of communications for AT&T Broadband, in San Ramon, Calif.

"The letter is the conclusion of a year-long process where we have being trying to work cooperatively with the bureaucracy on our plans to build a new digital network in the heart of Silicon Valley. While we have been patiently trying to work with the staff and outside consultants, it has failed to make any headway," Johnson says. "We had wanted to launch cable modem service in the city of San Jose this year, and our runway is fast disappearing on that."

Johnson says the company is seeking only the permits that would allow it to build capacity to an existing network. The permits for the cable network franchise, which would involve a broader negotiation process, do not expire for well over one year, according to AT&T.

"The city wants to leverage the permits for the bigger franchise negotiations, which don't expire for another year and a half. The consultants and bureaucracy are severely limiting us in competing against Pacific Bell and [its] DSL service, which continues to march right along at the same time," Johnson says.

San Jose has requested several items from AT&T as part of the negotiations, including system upgrades and enhanced public access capabilities that would link public facilities such as police, fire and ambulance facilities, says David Vossbrink, communications director for Mayor Ron Gonzales.

"There have been long and sometimes difficult discussions to resolve the differences between what AT&T and San Jose are after," Vossbrink says. "Our goal is to achieve a good cable system that meets the needs of all our cable customers and our community."

Unlike a squabble earlier this year in Portland, in which the city attempted to force AT&T to open its cable lines to competitors, the tiff between San Jose and AT&T is a local issue that does not carry nationwide implications, according to Andrew Cray, a senior analyst at The Aberdeen Group in Boston.

"There are always disputes between cable companies and [cities]," Cray says. "The local cities have authority over cable companies because they grant them franchises. So the city can hold the cable company over a barrel every few years because the cable company needs to renew its franchise to keep operating."

AT&T officials say if the company gets the necessary permits, cable modem service for San Jose residents could be up and running in three to four months.