OLR Research Report

March 12, 2008




By: Kevin E. McCarthy, Principal Analyst

You asked for a discussion of the rationale of the Department of Public Utility Control (DPUC) in initially denying an application by AT&T to enter the video services market in the state.

After AT&T announced plans to provide video service in the state, DPUC opened a proceeding (docket 05-06-12) to consider whether the proposed service fit the federal definition of “cable service,” and therefore should be subject to cable regulation in Connecticut. The DPUC accepted AT&T's argument that its service was not a “cable service” because of certain technological differences, and based on its interpretation of federal law, ruled in AT&T's favor on June 7, 2006. Three commissioners (Downes, George, and Fleming) voted in favor of the decision and two (Betkoski and Palermino) voted against it.

The Office of Consumer Counsel (OCC) and the New England Cable and Telecommunications Association (NECTA) then appealed the decision to the federal court. They argued, among other things, that the decision was invalid as being preempted by the federal Cable Act, that AT&T's proposed video service in fact constitutes a “cable service” being offered over a “cable system” by a “cable operator,” as these terms are defined in federal law, and that AT&T therefore had to obtain a cable franchise before providing its service in Connecticut.

While the appeal was pending, the legislature passed and the governor signed PA 07-253. The act allowed companies that met certain criteria to obtain a “certificate of video franchise authority.” To be eligible for this certificate, the company could not be a cable TV company certified to provide cable TV service on or before October 1, 2007, or an affiliate, successor, or assign of such a cable TV company. Companies granted such certificates would be subject to some, but not all, of the laws that apply to cable TV companies. For example, they would generally be subject to the public access requirements that apply to cable TV companies, but they would not be required to obtain a cable franchise and their rates would not be subject to DPUC regulation.

On October 1, 2007, AT&T applied to DPUC for a certificate pursuant to PA 07-253. On October 2, 2007, the federal court entered a judgment ruling in favor of OCC and NECTA in their appeal of the initial DPUC decision. Among other things, the federal court held that federal law preempted DPUC's decision.

On October 15, 2007, a panel of three DPUC commissioners (Palermino, Downes, and Betkoski) denied AT&T's application (docket 07-10-04). They noted that the district court decision made it clear that AT&T was operating a cable system without proper authorization. They also noted that, as a state administrative agency, DPUC must defer to the higher authority of the judiciary. The commissioners also noted that the court did not stay the effect of its decision, nor was an injunction issued. They stated that until the court's decision is overruled or stayed, DPUC had to follow the law. DPUC ordered AT&T to apply for a cable franchise by December 31, 2007. It permitted AT&T to continue serving its existing customers, provided it filed an application for a cable franchise.

AT&T then appealed DPUC's decision to state court. On October 31, 2007, the court ruled that AT&T did not act unlawfully by operating a video system in Connecticut without a franchise. It also ordered the DPUC to process AT&T's request for a video franchise certificate, and allowed AT&T to continue serving Connecticut subscribers it had already signed up. DPUC subsequently granted the certificate.