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Broadband Bills Languish As Courts, FCC Act
Everyone with an interest in high-speed Internet access complains about the sluggish deployment of "broadband" connections — but even with eight bills to choose from on Capitol Hill, it seems unlikely lawmakers will pass any one of them this year.
As a federal court and the Federal Communications Commission grapple over who has the authority to regulate high-speed Internet services, bills that would dramatically alter the debate's landscape continue to languish. Industry analysts speculate that none of the eight bills introduced this year stand to move, as sponsors — realizing the political pitfalls associated with reopening part of the 1996 Telecommunications Act — use the time to get their colleagues up to speed on high-speed Internet service, or broadband.
"We're going through an education process where a lot of legislators have to think through this," said Paul Glenchur, director of the Schwab Washington Research Group. "There's a general sense that none of those bills will be enacted into law."
Weighing The Arguments
While AT&T and its growing cable empire argue that proposals to require cable networks to open up to competing Internet service providers would stifle investment in their high-speed data services, the Baby Bells argue similarly that investment would dry up if they don't get relief from the 1996 act that would allow them to offer data services outside their local regions.
The U.S. Ninth Circuit Court of Appeals is in the midst of determining whether localities have the right to force open cable networks, and the FCC has taken a hands-off approach in favor of letting the market sort out broadband deployment.
House and Senate lawmakers have stepped in to offer relief for both sides in eight bills that address the concerns of the cable and telephone industries, but there is little interest by congressional leaders to re-ignite the battles of the 1996 act.
"No controversial legislation related telecommunications or the Internet will get through" this year, said Scott Cleland, manager of the Legg Mason Precursor Group.
Gaining Momentum
So far, a bill introduced by Rep. Billy Tauzin, R-LA, has the most momentum, with 61 bipartisan co-sponsors. Tauzin, who heads the House Commerce Committee's telecommunications subcommittee has the support of his panel, but faces a roadblock in Rep. Thomas Bliley, R-VA, the House Commerce Committee's powerful chairman. Bliley has long said he is not interested in reopening the 1996 act.
Tauzin's bill, H.R. 2420, would allow the Bells to offer broadband services outside of local boundaries, or local access transit areas (LATAs), and would not require the Bells to share access to upgraded high-speed networks with competitors.
The Bells are currently prohibited from offering telephone service outside their local regions until they sufficiently open their markets to competitors. Tauzin, and others pushing similar approaches, say an exception should be made for data services. The FCC has said that upgraded telephone loops for high-speed digital subscriber lines (DSL) must be shared at a reasonable cost with competitors. The Bells argue that they have no incentive to upgrade their service if they have to share it with competitors.
Offering Alternatives
Reps. Bob Goodlatte, R-VA, and Rick Boucher, D-VA, sensing resistance from Tauzin and Bliley, introduced two similar broadband bills —H.R. 1686 and H.R. 1685, respectively — and referred them to the House Judiciary and Commerce committees.
In addition to playing off competing House committees, the bills also play off both sides of the broadband debate by requiring cable networks to open competing Internet service providers (ISPs) through federal antitrust laws and giving the Bells regulatory relief in exchange for promising to roll out DSL service within a set timeframe.
Cleland said the Goodlatte-Boucher proposals adopt a reasonable approach to ensuring both industries are in a position to compete in the broadband market.
"The bills employ a wise anti-regulatory, antitrust enforcement approach," he said at a June hearing on the bills.
Boucher has picked up 16 co-sponsors, while Goodlatte has captured 21, but it's unlikely the bills will see any action this year beyond the one hearing called by Judiciary Committee Chairman Henry Hyde, R-IL. And as Congress moves deeper into the 2000 election cycle, most lawmakers would be unwilling to cross AT&T and the Baby Bells in this fight.
Considering Options
Other House efforts, H.R. 2637 by Rep. Earl Blumenauer, D-OR and H.Con.Res. 173 by Rep. Edward Markey, D-MA, also are non-starters. Blumenauer's bill would enforce a locality's right to place conditions on cable franchises requiring open broadband networks. Markey's plan, a non-binding resolution, would require the FCC to take formal regulatory action to force open cable networks to competing ISPs.
Markey's resolution says that the FCC's failure to create a formal policy opening cable networks is forcing localities to develop their own policies, which is "undermining the goal of the Congress to create a national framework for the competitive delivery of telecommunications services, and inconsistent with the largely interstate nature of the Internet."
The Senate's offerings in the debate also are not likely to move very far.
Promising Efforts
The most promising effort is by Sen. Sam Brownback, R-KS. His bill, S. 877, has five co-sponsors and help from computer industry association, the Information Technology Industry Council (ITI). While ITI has not taken a formal position on any of the broadband bills, spokeswoman Connie Correll said the group has been working with Brownback's office on his legislation.
"We'll probably get more active when congress gets back," Correll said. "It's difficult to say if anything's going to happen this year."
Brownback's bill would encourage deployment of broadband services by eliminating restrictions on telephone companies to sell high-speed Internet access through a separate subsidiary if 70 percent of local loops are capable of supporting DSL services. It also would remove federal pricing regulations on advanced services and would free the Bells from having to share upgraded network elements and services with their competitors.
But Bell companies have protested an FCC proposal the included the separate subsidiary idea. They insist it would saddle them with expensive and redundant corporate structures not faced by competitors, thus making their services less competitive.
Freeing Or Fining The Bells
Senate Commerce Committee Chairman John McCain, R-AZ, has offered a bill, S. 1043 and held one hearing on the issue, and has no current plans to further directly address the issue. His efforts have been focused on restructuring the FCC.
S. 1043 would, like Brownback's, free the Bells from regulations requiring them to share upgraded network elements with competitors. It also would allow the Bells to offer data services on a national basis without meeting the competitive requirements in the 1996 act by making a distinction between interstate Internet services and intrastate voice services.
Sen.Fritz Hollings, D-SC, is taking the opposite approach. An ardent supporter of the 1996 act, Hollings wants to fine the Baby Bells $100,000 a day after 2001 for not meeting the local competition requirements in the telecom law. He says that since the Bells helped to draft the requirements, they should be willing to fulfill them. So far, none of the Bells have met the requirements.
While industry officials say that the mere introduction of broadband bills has the potential of dampening investment in their broadband upgrades, investment analysts say otherwise.
While Cleland has said the legislation would have a "marginal" impact on investment, he said regulatory uncertainty could dampen interest in the market.
"It's a problem," he said. "It's a overhang of regulatory uncertainty of whether your business plan is going to be accepted."
Glenchur said investors are pragmatic.
"Investors know that it's one thing to introduce a bill and it's another to work through the process and turn it into law," he said. "The general thinking is these aren't likely to go the distance and become law."