Clock Ticks on Telecom Reform

Congress set out to update the 1996 Telecommunications Act, the likelihood that a new law will emerge this Congressional session is in doubt.

Efforts at reform have been spearheaded on both the House and Senate, with the House first to pass a bill the Communications Opportunity, Promotion and Enhancement (COPE) Act, introduced by Reps. Joe Barton, R-Texas, and Bobby Rush, D-Ill. in early June. That proposal sailed through because, except for fair use issues, legislators viewed it as fairly innocuous. Barton kept everything controversial, except net neutrality, off the table, says Brad Ramsay, general counsel at the National Association of Regulatory Utility Commissioners (NARUC). He dropped VoIP provisions that were at the core of his original draft, and also wireless consumer protection preemption language that was and remains controversial. [Those were] possible poison pills dropped to get quick passage of the key elements of his bill. His strategy was successful.

I have serious reservations about how broad this bill has become. Sen. Bill Nelson, D-Fla., on the Communications, Consumers Choice and Broadband Deployment Act of 2006

Bartons bill mainly sought to establish a national video-franchising system, overriding the need for new market entrants read, telcos to obtain city-by-city permissions to roll out TV services. The bill was sent to the Senate where it awaited reconciliation with that bodys version of new telecom law, which was having a tough time just getting past the committee level. By the end of June, the Communications, Consumers Choice and Broadband Deployment Act of 2006, a pet project of Sen. Ted Stevens, R-Alaska, had gone through three revisions and been the recipient of more than 200 amendments, a record for this committee, Commerce Committee Chair Stevens noted during one markup hearing. The bill went through a final markup hearing the week of June 26, and, after getting out of committee, was renamed The Advanced Telecommunications and Opportunity Reform Act. At press time, it awaited debate on the Senate floor. While Republicans favored the draft, some Democrats expressed concern about its scope. This bill goes too far, said Sen. Bill Nelson, D-Fla. If the bill were just video franchising and a few other narrow policy issues like the Universal Service Fund, then I would be much happier. But I have serious reservations about how broad this bill has become. It looks much more like a sweeping telecom reform bill than what we started with.

One of the reasons the Stevens bill had such trouble was it contained, or didnt contain, some key provisions, which stuck in the craws of many a special interest group. The contested subject matter included states rights, the Universal Service Fund, money for first responders and, again, net neutrality. Near the end of June, a provision was popped into the bill that attracted more attention than net neutrality. The wireless association, CTIA, lobbied for and got, an amendment for wireless preemption; the provision would halt the power of state regulators to oversee consumer complaints about their wireless phone services, instead moving enforcement to an overburdened FCC. A number of groups including NARUC, the National Governors Association, the AARP and more begged the Commerce Committee to shoot down the clause.

Similarly, the National Association of State Utility Consumer Advocates (NASUCA) called on Congress to allow states to remain the the traditional protectors of their citizens from the unfair practices of persons and industries that bedevil their consumers, wrote John R. Perkins, president of NASUCAs Iowa division. This industry has put forth absolutely no evidence it deserves any less oversight in its dealings with those consumers than do a myriad other industries.

NARUC leaders, too, had a number of questions should enforcement be transferred to the federal level, including who would help wireless customers when the industry does not respond; what could happen to current agreements and service concessions.

Earlier in June, in testimony before the committee, CTIAs Steve Largent, president and CEO, said state preemptions were positive because they would lead to lower prices, more providers and rate plans from which to choose, and the innovative design of new devices.

The wireless preemption amendment was included in the final markup of the communications bill, which the Senate Commerce Committee renamed the Advanced Telecommunications and Opportunity Reform Act. The provision nearly got more air time from senators than net neutrality during the final committee hearings because, as Ramsay explains it, Consumers understand wireless issues even more than they understand the arguments over network neutrality. After all, 200 million of them own a cell phone and 47 percent according to a survey of 50,000 readers by Consumer Reports last January arent satisfied with their wireless service arrangements. That might make senators either on the floor or in committee think twice before voting to approve those sections in an election year.

The Senate act moved out of committee on June 28 with elements that guaranteed heated debate on the Senate floor. After watching her amendment on net neutrality get shot down in committee, Sen. Olympia Snowe, R-Maine, vowed to fight for a fair use requirement in the final bill. I am hopeful the mistake made here today can be undone before the full Senate, she said. Stevens disagreed, saying there was no reason to regulate net neutrality, calling it a nonexistent problem. He said the bills so-called Internet Consumer Bill of Rights was sufficient because it would ensure that ISPs allow subscribers to access and post any lawful content; access any Web page; access and run any voice, video or e-mail application; access and run any software or search engine service; and connect any legal device. Snowe, however, wanted to bolster those principles with requirements encouraging broadband deployment in ways that would preserve open and interconnected traffic, and add enforcement authority in case a provider were to discriminate against a users traffic.

The bill also addressed the Universal Service Fund. It would require all service providers to contribute and would establish a $500 million account to finance broadband deployment to unserved areas.

The Consumers Choice, and Broadband Deployment Act of 2006 originally was introduced to provide an overall framework for easing the entry of phone companies into the subscription television market. It would replace the city-by-city franchising system with a nationwide one, a change zealously lobbied for by the Bells.

Overall, after the Senate bill passed committee at the end of June, hopes for its passage were fading. The record number of amendments the last version attracted cannot do anything but reduce the chances for passage on the Senate floor, Ramsay says.

Craig Clausen, senior vice president and COO of research firm New Paradigm Resources Group Inc. (NPRG), agrees, foreseeing less than a 50-50 chance of new telecom legislation passing this year, in spite of Stevens efforts. Unlike 1995-1996, he explains, legislators have confronted next-generations concerns such as net neutrality that have stalled progress. Every day that we get closer to the next election, it reduces the likelihood that well have any telecom legislation pass this year, this session, he says.