Salvation Now! Apocalypse Now!

Reaction to Wednesday’s successful passage of the Tauzin-Dingell legislation in the U.S. House of Representatives was swift and predictable. The regional Bell companies, who poured millions of dollars into the effort, said the bill was the magic economic bullet the country needed, while the long distance carriers, competitive local exchange carriers (CLECs), cable companies and consumer groups, who also spent millions trying to defeat it, predicted apocalypse now.

The Internet Freedom and Broadband Deployment Act (H.R. 1542), also widely called Tauzin-Dingell after its authors, Billy Tauzin (R.-La.) and John Dingell (D.-Mich.), passed on a 271-158 vote after a long afternoon of often rancorous debate and arcane parliamentary maneuvering.

The legislation would allow regional Bell companies to enter the broadband market, limit access of their DSL circuits to competitors and impose a ban on Federal Communications Commission (FCC) or state regulation of the rates, conditions for, or entry into high-speed Internet service.

What few mentioned, however, is that bill is a very long way from becoming law. In the world of Washington politics, this is known as an incremental victory. Essentially, the Bells won a battle in what will be a very long war because espite the support in the House, the chances of passage in the Senate appear remote.

Senate Commerce Committee Chairman Ernest “Fritz” Hollings (D.-S.C.), whose committee would control the legislation, vowed to block the bill after a press conference in which he called Tauzin-Dingell “blasphemy.” A number of other senators have indicated the bill has little chance of success.

“Qwest commends the House for passing this long-overdue deregulatory measure which could place our DSL service on an equal regulatory footing with cable modem services which today dominate the high speed Internet access market,” said Lauren J. Belvin, Qwest vice president, federal policy and law.

Tom Tauke, senior vice president for Public Policy and External Affairs at Verizon was less restrained in his praise, saying, “Today’s victory in the U.S. House of Representatives is a victory for every American consumer who wants choice of and access to high-speed Internet service. Verizon applauds the Members of the House of Representatives, especially Chairman Tauzin and Representative Dingell for their leadership on this important issue. “This is a vote that sends a strong message to the U.S. Senate and the Federal Communications Commission that the status quo is not good enough for the American consumer or the American economy.”

The House vote came after an almost two-year, multi-million dollar lobbying and advertising campaign that pitted the four regional Bell operating companies against cable and long distance companies, competitive local exchange carriers (CLECs) and consumer groups.

The Bells contend they need legislative relief from certain provisions of the 1996 Telecommunications Act that prohibit them from providing a competitive broadband product, i.e., DSL, to cable modems. Under current law, the Bells can not move into the lucrative high-speed market until first proving they have opened their local voice markets to competition.

The regional Bells also complain that CLECs, which Dingell called “non-investing parasites,” are a drain on their profits since the 1996 Telecommunications Act requires the Bells to make their lines available to CLECs at below market costs.

Opponents counter that Tauzin-Dingell is tantamount to creating new Bell monopolies.

“The passage of the Tauzin-Dingell bill marks a sad day in the short history of competition in telecommunications service. It also represents the culmination of over six years of efforts by the Bell Operating Companies and their allies to undo critical portions of the 1996 Telecommunications Act,” said Ernest B. Kelly, president of the Association of Communication Enterprises. “Having failed in the regulatory regimes and failed in the courts they turned to the one place where their powers of persuasion would have the most effect.”

Kelly added, “Finally, it is a shameful day for the House of Representatives whose members have dealt a harsh blow to an industry that is already under terrific duress, while shortchanging consumers everywhere. We hope for and expect better from the United States Senate.”

H. Russell Frisby, Jr. president of the Competitive Telecommunications Association, echoed Kelly’s hope for the Senate.

“The ruling wasn’t unexpected. Though it’s the conclusion of a sad chapter in our efforts to defeat the bill in the House it’s really the high water mark for the Bells, because the Senate won’t pass this if it ever goes up for a vote,” he said.

Tauzin, the primary author of the legislation and the chief architect of the political maneuvering for the bill, said H.R. 1542 would free broadband deployment from the “grip of bureaucratic regulation” and a “fight for consumers.”

“This bill unleashes the creativity of these companies (the Bells) to unleash the power broadband throughout this country,” said Tauzin in a podium-pounding opening statement. “It’s about the Internet, not the old telephone companies. Broadband is the engine that will drive the Internet into the future.”

Rep. Anna Eshoo (D.-Calif.) argued that the “Bells don’t need any legislation to offer broadband services. It stifles innovation because the Bells have never been known for innovation.”

Also raising objections in the first hour of debate was Rep. Louis Slaughter (D.-Ny.Y.), who said, “This bill says monopolies, not ratepayers know what it is best. This is an extraordinary handoff of power.”

One amendment added to the bill would increase penalties to $1 million a day from the current $120,000 a day the FCC can impose on telecoms not complying with the provisions of the 1996 Telecommunications Act. The amendment also increases the ceiling on the penalties to $10 million from the current $120,000 and gives the FCC the ability to issue cease and desist orders.

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