The local phone company is about to compete with cable and satellite to offer TV services to Napa residents, but first the pesky issue of where to place refrigerator-sized transmission boxes in neighborhoods must be resolved.

AT&T will use its fiberoptic network and a new Internet technology to begin offering interactive, high-definition video services to local homes, possibly by late spring.

The new service could be a financial boon for Napa TV, the local public access channels and, to a lesser extent, city coffers, with AT&T paying a 5 percent franchise fee. This is the same percentage as Comcast, the cable company that now dominates the video market.

AT&T officials briefed the Napa City Council on the service last week as a prelude to asking for encroachment permits to install cabinets in the city’s curbside right of way.

The biggest cabinets are six feet tall — the size of refrigerators, said Councilman Mark van Gorder, who worried that residents might soon gaze out on unsightly metal boxes from their living room windows.

If the service is extended to every neighborhood, 50 to 100 of these boxes could pop up over the next couple of years.

Rhuenette Alums, an AT&T spokeswoman, said her company would negotiate with residents to put the cabinets in the least obtrusive locations. One cabinet serves 300 to 600 houses, she said.

Asked by Councilwoman Juliana Inman if residents could veto a cabinet installation, Alums said yes. In some cases, AT&T has won agreements to put the boxes on private property and paid for landscaping, an official said.

The cabinets can only go above ground, Alums said, but Councilman Peter Mott said his research indicated otherwise. If properly vented — potentially an expensive proposition — these installations can go underground, he said.

AT&T is offering a new technology that adds television to the broadband DSL and traditional phone services that now enter homes through phone lines.

Subscribers will be able to choose from among hundreds of TV and movie offerings, including niche entertainment now unavailable on satellite and cable services, said Gordon Diamond, director of AT&T media relations in San Francisco.

In the Bay Area, AT&T is planning to offer more than 300 channels for movies, sports and digital music. Interactive applications are planned, including the ability to select a camera angle at sports events.

Viewers can record up to four programs at once and channel surf without leaving the program they are watching, Diamond said.

AT&T has already begun offering the service in San Ramon, Danville, Cupertino and Saratoga, with Napa among the next wave of cities in the company’s plans.

Nationally, AT&T plans to make the service available to 19 million homes in 13 states by the end of 2008. With the recent acquisition of BellSouth, AT&T will be expanding into nine more states, Diamond said.

It’s unknown how much revenue Napa will receive from the new service, said Jed Christensen, city finance director. If AT&T mostly takes customers away from Comcast, which currently pays $600,000 annually to the city, the financial gain would be slight, he said.

If AT&T is successful in enticing new customers, revenues would be greater for both the city and Napa TV, he said.

The Legislature recently took the power away from cities for franchising this new technology — called Internet Protocol Television, or IPTV — and gave it to the California Public Utilities Commission. The PUC is expected to award AT&T a statewide franchise this spring, Alums said.

Napa is left with control of its right-of-way, the area between the sidewalk and the city street, where AT&T wants to install cabinets.

The city’s Public Works Department is asking AT&T for a map of every location where it intends to place cabinets, Christensen said.

AT&T has begun talking to property owners about placing cabinets in front of their homes, Alums said.

Statewide, AT&T will be investing $1.5 billion to roll out its U-verse service, Diamond said. The state is requiring that both high- and low-income neighborhoods be offered the service, she said.

With U-verse, AT&T will extend fiberoptic lines into more neighborhoods, with traditional copper phone lines carrying images from curbside “nodes” to houses, Diamond said.

Napa is continuing to talk to AT&T about another offering, wireless Internet. Last fall the company proposed making Napa a Wi-Fi community, with the fastest service provided for a fee. A slower wireless service would be provided for free.

A report on negotiations between the city and AT&T over Wi-Fi is expected in February, Christensen said.