Juneau Something New ‘Bout Net Neutrality?

NEW YORK — Proponents of legislation codifying net neutrality rules may be
able to hang their hats on an unlikely peg.

Senate Commerce Committee Chairman Ted Stevens (R-Alaska) is so keen to
reform funding to the Universal Service Fund (USF) that he may be willing to
insert language protecting net neutrality in order to get that done this
year.

According to Thad Strom, an industry lobbyist, language codifying the basic
principles of net neutrality could be presented to Congress by Stevens as
early as next week.

“No one has shared the specific language with me, but I have reason to
believe something of that sort could be coming along,” he said.

Strom, vice president of congressional relations for Parry, Romani,
Deconcini & Symms, which represents Verizon on Capitol Hill, argued that
oversight of network neutrality should rest with the FCC, as proposed by an
earlier draft of the Stevens bill.

“Is network neutrality an issue to be watched? Sure. But we shouldn’t be
regulating it at this point,” he told internetnews.com.

Strom, who was in New York to address investors at a conference organized by
Cowen and Company, said that three disparate issues — USF reform, net
neutrality and exemptions from video franchising — are so intertwined
politically as to make them almost inextricable.

“You’ll get action on all three together or none at all,” he said.

This is a far cry from the situation in April, when the Communications Opportunity, Promotion and Efficiency Act
of 2006 (COPE), the lynchpin of the broadband carrier industry’s
IPTV strategy, seemed a shoe-in for enactment.

Now, proponents of net neutrality, which would prohibit carriers from
discriminating against content providers through different pricing levels,
have successfully linked their issue to COPE and USF reform.

And Strom was adamant that Senator Stevens will use his chairmanship to
block any telecom reform legislation that doesn’t include provisions for the
USF.

“Nothing is going to get passed unless USF is radically reformed,” he said.

The USF was created in 1983, at the time of the break-up of AT&T, to help
extend telecommunications services to remote, rural and low-income areas by
taxing interstate long-distance telephone carriers.

But contributions to
that fund have fallen along with the revenues of traditional long-distance
carriers.

Voice-over-IP (VoIP) providers are currently exempted, but,
one way or another, will have to start contributing to this fund. The
question is how much.

If no legislation is passed, the FCC will step in, perhaps as soon as June
15, and require companies like Vonage to pony up as much as 6 percent of
their total revenues.

That “would have a tremendous material
impact on VoIP providers,” said Chris McKee, vice president and assistant general counsel at broadband provider Covad Communications.

Net neutrality has complicated matters, as Congressmen from both sides of the aisle have proposed
language that is unacceptable to the broadband carrier industry.

Ordinarily, Verizon, AT&T and others in the industry would be expected to
fight such legislation with everything they’ve got.

But the importance of
the calendar, political and otherwise, cannot be overstated in their
calculations, and explains why the carrier lobby may be more willing than
usual to compromise.

Indeed, there are fewer than 30 business days left for
Congress to act this year, and one or both houses of Congress may be
changing hands after the November elections.

If the carriers have any hopes of developing their IPTV strategy this year,
they need COPE to get enacted, and the only way that can happen is if they
compromise on network neutrality.

McKee told internetnews.com that language which protects the
principles of network neutrality without getting too specific about details
should be acceptable to the industry.

Compromise is likely, he said, because “network neutrality doesn’t seem to
be taking money out of anyone’s pocket.”

Even Strom conceded that, “as the sand runs out [on the legislative
Session], compromises could be reached if they’re not too detrimental.”

Thomas Watts, managing director at Cowen and Company, argued that compromise
is in the interests of the broadband carrier industry.

“If I were Verizon, I would be in a deal-making mood,” he said.

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