Video competition: Phone vs. Cable

The phone giant AT&T officially can compete with cable companies on a statewide level to offer high-tech video services to customers. But that doesn’t guarantee the company will build out those services in all areas of the state any time soon. See Crain’s Chicago Business story here.

This comes after the Illinois General Assembly approved changes to state law in May. The new state law allows such phone companies as AT&T and Verizon to offer video services anywhere in the state without having to go through each individual municipality as cable companies previously had to do.

Three of four members on the Illinois Commerce Commission, a state panel, voted Wednesday to approve AT&T’s application to provide the video services (the fourth commissioner was absent). But the law stops short of giving the commission the ability to regulate what happens after the application is approved, says Beth Bosch, commission spokeswoman.

The measure originally sparked controversy but was rewritten with consumer protections that allowed the bill to win near-unanimous support in the Illinois House and Senate. Among the biggest changes is the requirement for video service providers to extend a certain percentage of their services to low-income neighborhoods within three years of earning the so-called statewide video franchise.

The new law expires in six years, meaning the General Assembly will have five years to evaluate whether it actually creates competition as touted. The law does bring Illinois in line with Indiana, which approved a statewide video franchise in March 2006.

For more background, check out my previous telecom blogs, and for a lot more context and potential outlook, see my May 2006 article, “A playbook for competition.”