• by Erik Sass , April 2, 2007

The competition between telecoms and cable companies is heating up--especially with Friday's announcement from AT&T. The communications giant received approval from California's Public Utilities Commission to roll out video service. The approval brings it into head-to-head competition with established cable provider Time Warner, which serves approximately 425,000 households in the greater San Diego area and 250,000 households in Los Angeles, as well as players like Cox and Comcast.

"The CPUC's approval of our application brings Californians one step closer to finally having a real choice to cable TV," said Ken McNeely, president of AT&T California. "After more than 40 years of the status quo, Californians are now beginning to see the benefits of a competitive marketplace for both TV/video and other broadband services." McNeely was referring to the new "Digital Infrastructure and Video Competition Act of 2006," which went into effect Jan. 1.

McNeely cited AT&T's ongoing program of improvements to its fiber-optic network in California, which allows it to deliver video, Internet and wireless in addition to phone service in the vaunted "quadruple play." The news follows AT&T's announcement at the beginning of March that it is delivering its new IPTV video service, called AT&T U-verse, to new markets in Wisconsin and Kansas City in both Kansas and Missouri.

AT&T U-verse's footprint, which began last year in San Antonio, Texas, and then moved to Houston, now covers two parts of the Bay Area in Northern California, the Hartford/New Haven/Stamford areas in Connecticut, a portion of Indiana and now Wisconsin's Milwaukee and Racine areas. AT&T has pledged to offer its bundled services to 19 million homes by 2009; a higher adoption rate could increase its competitive position. Similarly, competitor Verizon has promised 18 million homes with potential access by 2010.