With the advent of Internet Protocol TV (IPTV) in which TV is delivered through phone lines the rules of the game are changing, and the cause of contention for many companies and municipal governments caught in the middle.

A case in point: Last Jan. 20, the Alabama-based Huntsville Times reported that telecom giant AT&T is fighting against local franchise laws for its new IPTV video service, U-verse. (U-verse boasts more than 40 high-definition TV channels, the ability to customize weather, sports, stock and traffic news on the TV screen, and has a Yellow Pages channel for searching out phone numbers.)

AT&T said they will be reluctant to break into Huntsville, Alabama market if the municipal government seeks to require them to enter a franchise agreement for video services, similar to deals the Huntsville has with Comcast and Knology. The company is willing to pay the city the same rate (up to 5% of its annual gross revenues for video services) but it does not want to be subject to “build-out” requirements that are common in franchise agreements.

Other companies and their state lobbying association contend that if AT&T is providing video services via a line into a home, it is acting as a cable company and should be subject to the same rules they operate under. In other words, AT&T falls under the category of cable operator a thin line and gray area, if there was any

Under the 1901 Alabama Constitution and federal laws governing cable companies, municipal governments control their rights of way, the article in the Huntsville Times stated. That means cable TV providers and other right-of-way users, such as telecom companies, have to secure a franchise agreement to gain access.

AT&T argued that they have already been granted use of Alabama rights of way access to the state’s roads and highways as far back as 1867. AT&T’s position is that its franchise obligations are to Alabama’s Public Service Commission and the Federal Communications Commission, not local governments.

AT&T’s argument is it should be not be subject to local franchise agreements. In some states, it has worked out a franchise agreement with state government. In Alabama, the company has secured video services agreements with six smaller Alabama cities. Those towns require the company to pay a 5 percent fee on revenue it collects, but it is not subject to other franchise agreement terms.

City of Huntsville has been working on a new law that seeks to provide a uniform agreement for cable, telecommunication and other similar companies, rather than separate agreements with each company.

The proposal has met much resistance by AT&T and other such companies providing a totally new service, one that was not around in the century when the law was passed. But companies like Knology, which says it would face new franchise fees for its phone service unlike Comcast and AT&T also have their own stiff objections.

The City of Council of Huntsville claims that their only goal is to treat all providers with fairness. The ordinance is designed to ensure continued competition, they said in a statement, that the public right of way is protected and that each provider is treated fairly and equitably.”