AT&T's failed attempt to be classified as a Video Service Provider has been in the news recently. In the state of Connecticut a new law was passed on October 1, 2007 that allows for two types of video services in the state. One of these is the traditional cable company while the other is a far less restricted video service provider. If you are classified as a cable company there is a vast amount of regulations in place to govern how you operate. If you are classified as a video service provider you are able to operate in a far less restrictive manner.

AT&T had earlier managed to convince the Connecticut DPUC (Department of Public Utility Control) that their U-Verse system was not a cable enterprise as defined by the Cable Communications Policy Act of 1984. Federal Judge Arterton disagreed with AT&T's interpretation. U-verse "constitutes a 'cable service' being offered over a 'cable system' by a 'cable operator,' as those terms are defined in the federal Cable Act," she wrote in her opinion. "Accordingly, the Court holds that the DPUC’s conclusions to the contrary, and its concomitant determination that AT&T need not comply with the franchising requirement in 47 U.S.C. § 541 and the regulations promulgated thereunder, are preempted by federal law."

Naturally AT&T was very displeased with this turn of events and has recently threatened to remove their U-Verse offering from the state of Connecticut. The funny part about all of this is the history involved.

Prior to SBC renaming itself AT&T they merged with a telephone company named SNET that used to be the primary phone company in Connecticut. This company was very forward thinking before the merger and was very smart in adapting to the rules of the Telecommunications act of 1996.

One of the first things SNET did was to split themselves into a wholesale and a retail company. Because the incumbents were being forced into subsidizing new entries into the telecom market SNET figured out that to split into two companies that cover opposite sides of the business it would be able to avoid much of the problems inherent in subsidizing their competitors. Prior to the split if SNET wanted to offer a special discounted rate plan they had to offer the same plan to their competitors to resell. By splitting everyone who wanted to resell access to the SNET network (including SNET Retail) would be paying the same price.

This was not the only forward thinking project started by SNET. In August 1983, SNET announced a partnership with CSX, a railroad holding company, to build a network of fiber optic cables, called Lightnet, which was planned to link 43 cities in 24 states along the railroad right-of-ways. In 1989 they sold off Lightnet to Williams Communications for $365 million dollars.

In 1993 SNET began to develop a truly ground breaking service that they called I-SNET. This was meant to be a statewide, interactive information super highway, not just for data but also for TV. This service used a new and specialized fiber/coax network to service the end user. The specialized cable contained the data fibers and power for the remote units in the neighborhood.

In the process of getting this system up and running SNET applied and was granted an 11 year state-wide cable TV license. The cable TV service was launched in 1997 under the SNET Americast brand name. This service ran until 2001 under the Personal Vision brand. It was terminated in that year after SNET petitioned the state for relief of its cable service agreement. If SNET had not petitioned the state for relief then their license would still be in effect today.

The I-SNET rollout was not without its share of problems. The big problem SNET encountered with their system had to do with the powering. Because they ran the power in the same cable as their data and Telco cables hang on the lowest tier of a telephone pole their were certain safety issues brought up. In the end SNET lost in their attempt to gain an exception from the National Electrical Safety Code.

The cable companies point was that having power in the lowest tier of cabling was dangerous to their technicians. If a technician with spikes on their boots was to step on the cable their spikes could penetrate the cable and they would be electrocuted. One response from SNET to this claim was one of, "why are your technicians walking on our cables with spikes on their boots?" In the end I-SNET went down.

Now we have a case of AT&T wanting to offer cable TV-like service but they do not want to call it that. They feel that because it travels over the Internet it is somehow a different animal. To be honest, I see it as being the same thing as cable TV, or should I say that I see it closer to satellite TV than cable TV.

In AT&T's defense the system is two-way and allows for more than just TV viewing but so does digital cable. The only difference between U-Verse and Cable is that one runs over twisted pair while the other runs over coax.

Right now the ball is in AT&T's court. If they can convince a Federal Judge that their new service is not a cable TV service they will be able to avoid the rules that govern cable TV. If not... well, you can still pick satellite TV!