Analyst: AT&T’s local lawsuits a bad tactic

AT&T’s decision to file lawsuits against Illinois communities which are delaying construction of its Project Lightspeed upgrade could backfire on the telecom giant, a leading analyst said today.

Brian Washburn of Current Analysis, who tracks the competitive telecom industry, said in a report today that the lawsuits are a bad public relations move that could negatively impact AT&T’s efforts to see video franchise reform.

“AT&T may see strategic lawsuits as another arrow in its quiver of intense local, state, and national pressure to break down the existing franchise licensing regime,” Washburn said. “However, dragging the case through the courts will end up an expensive, time-consuming battle that presents AT&T as a $43.8-billion schoolyard bully that beats up little townships because they do not hand their lunch money over fast enough.?

AT&T has filed suit against the Illinois suburban communities of Roselle, Wheaton and Carpentersville because those three have not granted rights of way for Project Lightspeed, AT&T’s multi-billion dollar fiber-to-the-node upgrade that will enable the company to offer video service. Two of the communities – Roselle and Wheaton – had enacted 180 waiting periods before permits could be filed and the third, Carpentersville, is requiring AT&T to get a local video franchise before building its network. AT&T had previously filed suit against the town of Walnut Creek, Calif., for also requiring a video franchise.

By contrast, Verizon – which like AT&T, is also backing both national and statewide video franchising agreements – is working in the meantime to secure local franchise agreements in areas where it has built its FiOS fiber-to-the-home network.

AT&T’s legally contentious approach could hurt its other efforts, Washburn pointed out.

“AT&T is putting townships in a Catch-22, but unless it can get the townships to capitulate, it is AT&T that is entering a no-win situation if it decides to forge ahead,” he said. “Moving through the courts is likely to be more time-consuming and expensive for AT&T than negotiating franchise agreements would be. AT&T can do much more damage to its name and image nationwide than it will ever recoup from serving these small Chicago suburbs. On top of that, AT&T stands to poison its brand in the very communities that would buy its services.”

AT&T has said that it blames local cable companies, not the cities themselves, for the resistance it is meeting.