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Court rules U.S. cable laws apply to AT&T's U-verse

NEW YORK, July 26 (Reuters) - A U.S. federal court has overturned a decision by Connecticut authorities that would have allowed AT&T Inc. T.N to expand its new U-verse Internet video service in the state more quickly.

Telecom companies have complained of the lengthy process involved in gaining local video franchise approvals, which they say slows their expansion of new video and Internet services, to the benefit of incumbent cable television operators.

A U.S. District Court in Connecticut ruled on Wednesday that AT&T’s U-verse would be subject to the country’s Cable Act that requires “cable operators” to apply for local franchising and other state regulatory requirements.

The ruling overturns a June 2006 decision by Connecticut’s Department of Public Utility Control, which said AT&T’s Internet protocol-based television service did not fall within the federal definition of cable service.

Several lawsuits had been filed against the decision, including suits by the New England Cable and Telecommunications Association and Cablevision Systems Corp. CVC.N, which has cable systems in the area competing with AT&T for customers.

Telecom companies see television services as crucial to future growth amid increasing competition from cable operators and a decline in traditional phone service subscriptions.

Cablevision declined to comment on the ruling.

The top U.S. phone company said in May that it plans to spend $6 billion to $6.5 billion and make the service available to 18 million homes in its traditional 13-state territory by the end of 2008.

Its Internet-based video service had 51,000 subscribers at the end of the second-quarter. Rival Verizon Communications VZ.N has also a new, high-speed Internet and video service called FiOS.

Both companies have sought a simpler process to gain video franchises, although they failed in an attempt last year to get a national license. In most states, new entrants must apply for licenses with individual counties or towns.

At the same time, cable operators have won customers from phone companies by rolling out competitively priced packages of video, high speed Internet and digital phone.

Some cable operators, including Cablevision, say they are beginning to see some competition for subscribers from phone companies’ advanced TV and Internet services.

AT&T and Cablevision have clashed in Connecticut in the past. Last month, AT&T filed a U.S. regulatory complaint that Cablevision and its Rainbow Media unit was improperly withholding regional sports programming that AT&T must have to roll out video service in Connecticut.

Rainbow Media owns the Fox Sports Network New York, Madison Square Garden Network and Fox Sports Network New England.

((Editing by Leslie Gevirtz; email:yinka.adegoke@reuters.com Reuters Messaging: Yinka.adegoke.reuters.com@reuters.net; +1 646 223 6081)) Keywords: AT&T CABLEVISION/

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