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Cable market grows in N.C.

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Competition is coming to the North Carolina cable television market—though not to the Triangle, yet.

Download AT&T notice of cable franchise (PDF, 453 KB)

AT&T this week entered the TV marketplace in Charlotte, launching its U-verse service, which also includes high-speed Internet and telephone service delivered over DSL lines, for the first time in North Carolina.

On Nov. 14, AT&T officially notified the state of its intention to provide U-verse service in all areas where it currently provides landline phone service, including Raleigh, Morrisville and Cary in Wake County and Chapel Hill and Carrboro in Orange County.

But that doesn't mean Triangle customers will necessarily see U-verse any time soon. The company is keeping mum on when the service will come to other parts of the state.

"Unfortunately, for competitive reasons we can't provide that information," said AT&T spokesperson Della Bowling. "As far as where we're going, our competitors would love to know that, so that's why we haven't been providing any information up until the launch of the service."

AT&T is staking its claim in North Carolina two years after the company's previous incarnation, BellSouth, used its lobbying power to persuade state legislators to change the state's cable television law. The change removed local governments' authority over the terms of cable TV franchises.

Telecom companies are eager to enter a lucrative marketplace just as landline telephone business is drying up. AT&T, which purchased BellSouth in 2006, says it currently offers U-verse to 781,000 customers in 22 states.

Time Warner Cable is the state's dominant cable TV provider. Until this week, its biggest competitors have been satellite providers DirecTV and Dish Network. "We've always said, we embrace competition," said Time Warner spokesperson Melissa Buscher. "We're confident we'll maintain positive relationships with our customers."

AT&T's prices and speeds appear to be competitive with Time Warner's, which have risen steadily in recent years. U-verse TV starts at a base price of $44 per month for up to 120 channels. Add Internet, and the cost is between $77 and $109. Comparable Time Warner packages available here start at about $68 for digital TV and $101 for bundled services. The rival companies advertise various options for digital recording and other features.

In a press release, AT&T executives praised the General Assembly for passing the Video Service Competition Act, which "encouraged investment and competition by streamlining the process for entering the video marketplace."

But consumer advocates who criticized that law say they are waiting to see whether competition will be limited to consumers in the most affluent, densely populated areas, and whether public access television will suffer.

"The state law was passed with the notion that there would be competition, but measuring the impact is going to be tough, because the state law doesn't have build-out requirements," said Catharine Rice of the Southeast Association of Local Government Telecommunications Officers and Advisors. Rice said that means rural areas like Chatham County could be left behind when it comes to high-speed Internet service as well as TV.

Under the old system, cable providers had to negotiate franchise agreements with local governments, which could require the company provide service to certain areas. But AT&T, Time Warner and any other would-be provider are now free to offer service only in the areas they choose. In Charlotte, not all of AT&T's phone customers have access to U-verse.

Current law gives the company a March 10, 2009, deadline to offer its new service to at least one household in the service area, broadly defined to include the entire state. "With today's launch of service, we are meeting that requirement," Bowling said Monday.

But even in areas like the Triangle where AT&T isn't yet competing, its state filing has nullified existing agreements between Time Warner and local governments. "That's not competition," Rice said.

Companies aren't rushing to offer new service because building the infrastructure to do so is costly. Bowling said AT&T plans to invest $350 million in fiber-optic network upgrades and Internet-based technologies throughout the state. U-verse delivers video using the Internet Protocol, the same system consumers use to view Web pages, transmitted over DSL lines.

Large metal cabinets, about 4 feet by 4 feet by 2 feet, installed on street curbs connect fiber to twisted copper phone lines already in most homes.

One of those boxes popped up a few months ago near the offices of The People's Channel, a nonprofit that operates Chapel Hill's public access station.

North Carolina's 2006 cable law was written in a way that was intended to protect public access, educational and government channels like this one. But People's Channel director Chad Johnston is concerned that U-verse will marginalize PEG channels, because it places all of them on channel 99, which Johnston believes does not comply with state law. Viewers click through sub-menus to select which one they want to view. When the program does come up, it's streamed rather than broadcast, resulting in a low-resolution format that can take several minutes to appear.

"It's about YouTube quality," Johnston said. "They think about these channels differently than they think about network channels. Many of us look at that as discriminatory."

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