Broadband Bill Battle Begins

The broadband wars are heating up again as Internet providers choose sides
between two bills making their way through the House of Representatives.

On one side, you have the incumbent local exchange carriers (ILECs), or
telephone companies. They are arrayed behind their generals, Rep. Billy
Tauzin (R-LA), chairman of the committee on energy and commerce, and fellow
committee member Rep. John Dingell (D-MI).

The Tauzin-Dingell Bill, named “The Internet Freedom and Broadband
Deployment Act of 2001,” is essentially the second coming of the bill
originally proposed to the House of Representatives in 1999, which
languished in the subcommittee and died, despite the 204 co-sponsors named
on the bill.

Now that Tauzin is chairman, he is free to champion the cause of H.R. 1542,
pushing for legislation that clearly favors the incumbent telephone companies.

The energy and commerce committee sat down Wednesday to consider amendments
to the Tauzin-Dingell bill, which industry experts predict will be enough
to send it up the legislative ladder.

Both Dingell and Tauzin are known, infamously, in the Internet community to
be rather chummy with the telephone companies.

According to the Center for
Responsive Politics
, that’s no accident. In 1999-2000, both
politicians collected more than $60,000 in campaign contributions from the
telephone companies. Politicians in both houses received more than $2.5
million in that time span.

On the other side of the high-speed brawl you have the Internet service
providers (ISPs), competitive local exchange carriers (CLECs), and cable and
long-distance telephone companies.

ISPs and CLECs, which don’t have the big-money clout of the incumbents, were
fortunate to find themselves on the same side of the fence as long-distance
providers Worldcom, Sprint Corp. and AT&T Corp.

The long-distance companies were brought into the fray, in large part
because of the actions of the Federal Communications Commission. The
commission, led by Chairman Michael Powell, gave the regional telephone
companies the go-ahead to provide long-distance service in states
throughout the U.S., cutting into the profits formerly the domain of
long-distance providers.

Recent reciprocal compensation changes also eroded at the profits held
tightly by struggling long-distance companies. The FCC ruled to virtually
eliminate the money paid between call carriers in the next several years,
both inside the regional telephone calling areas and between regions.

Cable companies, like AT&T, AOL Time Warner and Cox Communications, also
joined the melee, since all have a vested interest in seeing the breakup of
the Internet dominance telephone companies hold in the market.

As such, all are standing behind their leaders, Reps. Christopher Cannon
(R-UT) and John Conyers (D-MI), who introduced their own bill May 5. The
two representatives saw their own share of contributions from the cable and
long-distance companies in 1999-2000, to the tune of roughly $41,000

The broadband bills are two sides of the same coin of bringing high-speed
Internet to the masses.

The Tauzin-Dingell bill sides with the powerful incumbents — SBC
Communications, Verizon Communications, Qwest Communications and Bell
South. The two representatives believe that the best bet for broadband
deployment, especially in rural areas, depends on the unencumbered efforts
of the telephone companies.

The Conyers-Cannon bill calls for strict adherence to the 1996
Telecommunications Act, which forced the telcos to open up their network to
competition in the first place.

In a statement last week, Conyers called the Tauzin-Dingell a transference
of power for the ILEC from the telephone to the Internet.

“Where we need competition more than ever, the Tauzin-Dingell bill would
unplug the requirements of the ’96 Act,” Conyers said. That would mean
that the Bell monopolies would be able to transfer their monopoly power
that they now have in local telephony into the Broadband market.

“That will mean fewer broadband providers and less competition, higher
prices for consumers, and less innovation,” he continued. “Such are the
empirical lessons of our experience in the new economy.”

The regulations of the Telco Act, incumbents say, is the primary reason
they are unable to afford bringing high-speed Internet access to the nation
at large. SBC recently used that excuse to cancel its high-speed
deployment in Illinois, saying the Illinois Commerce Commission’s decision
to open up remote terminals to the competition made broadband deployment
financially unfeasible.

In a recent statement, Tauzin said that restrictions like reselling
broadband service to the competition and not being able to offer
long-distance telephone services is undermining the ILECs ability to
operate effectively.

“These restrictions give the ILECs little incentive to deploy new services
and facilities,” Tauzin said. “Why spend the money to rollout broadband
when your competitors can use your own network to take your customers?”

Experts at the public policy research firm, the Cato Institute, tend to agree with the
summation of Tauzin-Dingell’s bill.

In his May 8 paper entitled, “A 10-Point Agenda for Comprehensive Telecom
Reform,” Adam Thierer, director of telecommunications studies, said that
people should avoid making “Chicken Little” pronouncements that predict the
end of the free market. In many cases, its just company’s trying to hide
behind a regulatory shield to keep their business open.

“A free market should not be rejected just because it poses risks,” Thierer
said. “In another sense, the industry’s ‘Chicken Little’ attitude can be
viewed as nothing more than the repackaging of its unremitting pleas for
special protection and regulatory favoritism.”

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