AT&T’s deployment of U-Verse services in Tennessee, commenced this week, could provide an unusual showcase of three-way competition in the country’s most active hotbed for municipal fiber-to-the-premises (FTTP).

This week AT&T pledged to spend $400 million rolling out U-Verse services to 56 Tennessee towns over the next two years. The announcement came with the enactment of a state law passed earlier this year granting statewide franchises for video services.

Tennessee has more municipal fiber projects than any other state, according to Michael Render, president of research firm RVA. (Only Washington state has as many public fiber projects, but many of its deployments are from public utility districts as opposed to municipalities, he said.) The state already has five active municipal broadband projects and more on the way. And at last count, municipalities there already had 33,000 video customers among them.

AT&T claims to have more than 1 million customers in the state. And Comcast is the dominant cable provider.

Consumers in some markets are already anticipating a competitive three-way market for residential telecom services.

“Tennessee will continue to be an excellent test bed to watch,” Render said.

The state’s largest muni fiber project is in Jackson, where the local utility company has been turning up FTTH customers since 2004, passing the 10,000 customer mark three years ago.

The municipal electric utility in Clarksville, CDE Lightband, has been rolling out fiber this year with the goal of offering voice, video and 10-Mb/s symmetrical broadband service to about 50,000 residences. So far, despite delays, hundreds of customers have been turned up, the company says.