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AT&T, city set 10-year cable pact that anticipates Internet, phone services
Tuesday, November 23, 1999 By Timothy McNulty, Post-Gazette Staff Writer
City officials yesterday struck a 10-year cable television contract with AT&T Corp. that will allow the company to start installing $40 million in fiber optic lines and other upgrades citywide.
The upgrades, which will take up to 2 1/2 years, could provide high-speed Internet links to community institutions and give AT&T customers cable television, Internet and local and long-distance phone service at home through existing cable lines.
The agreement, reached after months of negotiations, is subject to Pittsburgh City Council approval by Dec. 31, when a 15-year-old agreement with Tele-Communications Inc. expires.
AT&T -- which has invested $100 billion in buying cable systems nationwide -- bought TCI earlier this year for $54 billion.
The agreement gives AT&T the rights of way to build and maintain its system along city-owned streets and utility poles. In return the city receives 5 percent of the company's gross revenue from city consumers -- almost $3 million annually.
In the new contract, the city sought stricter rules for customer service and a commitment for high-speed fiber optic links to city-owned buildings, such as police and fire stations and computer labs at Citiparks senior and recreation centers.
The service change city cable users will notice first will be the disappearance of their old A/B switches, which have to be flipped back and forth to access all channels.
A generation after the introduction of remote control, the change will mean Pittsburgh couch potatoes with cable-ready TVs will no longer have to walk to the television to surf all of the system's channels.
Later, residents will be able to use existing lines to connect to phone services, the Internet and cable television.
If they want, they can access all three through AT&T and pay for all the services on one bill.
An intriguing part of the agreement raises a possibility that residents could use the cable to connect to other Internet service providers, such as America Online, Stargate Industries or Telerama.
The agreement says that should AT&T provide access to outside Internet companies, voluntarily or not, in any other of the 1,400 municipalities in which it provides cable service, it also has to negotiate with Pittsburgh to provide the access here.
Such access could be forced by courts -- the company is battling Portland, Ore., over the issue right now -- or by the Federal Communications Commission, which has warned municipalities that it and Congress should be regulating the issue, not local governments.
AT&T is spending billions of dollars to shoulder its way into local telephone and Internet services, and is building new cable systems in Pittsburgh and seven other cities to jump-start the effort.
It doesn't want other Internet providers to get "open access" to its new systems. Competitors -- such as GTE Corp. -- have said AT&T will have a monopoly if access isn't provided.
The compromise with the city on the issue -- which was brokered late Friday -- was a major factor in closing the deal, officials on both sides said. AT&T's regional vice president of cable services, Jim Mazur, called it a "unique negotiation point."
"It puts a whole arrangement in place to revisit [the issue], instead of ending up in court," he said.
The company plans to build high-speed fiber optics links from its headquarters in the West End to 220 outposts -- called "nodes" -- citywide, connecting all of the city's 88 neighborhoods to its new system.
The cable wiring linking the outposts to homes will remain as it is, using the coaxial cable currently strung there. AT&T said it will hire 300 people during the $40 million upgrade and eventually spend $300 million in southwestern Pennsylvania.
City officials who worked on the agreement said it will make Pittsburgh a "state of the art" city.
"This is not just about cable," said Pittsburgh City Councilman Dan Cohen, a telecommunications lawyer who helped negotiate the agreement. "Fifty years ago the primary means of exchanging commerce and information was over roads and rivers. Now it's over cable lines and phone lines."
Still, city officials noted, it's now up to AT&T to deliver the changes.
"It was a lot like doing a development deal on the moon," city Solicitor Jacqueline Morrow said of the agreement. "It's not all so clear what the technology will look like, who'll get it, or the cost."
The agreement requires:
Links will be built to utility poles nearest to large community group offices and perhaps to a centralized network headquarters probably at the former Alcoa headquarters, Downtown. Financing and management plans must be in place first, and the cost of the links could be passed on to AT&T ratepayers, just as ratepayers currently pay 25 cents monthly to fund the city's cable access station, PCTV.
That monthly charge will rise to 45 cents over the 10-year course of the deal. AT&T has agreed to fund $400,000 in upgrades to the station.
A high-speed network will be built among the City-County Building, the Public Safety Building, the John P. Robin Civic Building, the Public Works department and the Municipal Courts Building, which will then be linked to 23 other government buildings and public safety offices (such as police and fire stations) citywide.
The network will allow for quick computer links among departments during emergencies, video conferencing and possibly a centralized security camera network that watches over city facilities, said the city's Information Services Director, John Staudacher.
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AT&T to build high-speed links to schools, libraries and community groups, should the institutions fulfill certain funding and planning requirements. The company will build the links for free to the utility poles closest to schools and libraries.