Policy

Stevens: Senate Will Pass Telecom Bill

5/19/2006 8:05 PM Eastern

Washington — Senate Commerce Committee chairman Ted Stevens (R-Alaska) predicted last Thursday that his broad telecommunications bill would pass the Senate this year, despite sharp differences of opinion on the 22-member panel.

“I'll tell you, this senator is going to see that this bill gets to the floor and it passes the Senate. It will do so this year,” Stevens said at a hearing on the bill (S. 2686).

His panel has scheduled a June 20 vote on the measure.

The 135-page bill, introduced May 1, would allow phone companies to sweep into cable markets within 30 days, largely bypassing the local approval process Congress erected in 1984.

New cable entrants would not be subject to a franchise-buildout requirement, though denial of service to a group based on income, race or religion could result in civil fines.

In a move proving controversial, Stevens kept the bill clean of so-called network-neutrality regulations favored by Internet-content giants Amazon.com Inc. (www.amazon.com), eBay Inc. (www.ebay.com), Google Inc. (www.google.com), InterActiveCorp, Microsoft Corp. and Yahoo! Inc. (www.yahoo.com).

The Web players are looking for a number of restrictions on broadband-access providers that they say are needed to maintain an open Internet.

They want to ban network providers from degrading voice, video and data services that they don't own and from demanding fees from Web service providers to guarantee high-quality connections to customers.

“If we don't do this net neutrality [regulation], we are going to have a lot of people shut out of that [Internet] highway,” said Sen. Barbara Boxer (D-Calif.), who called for changes to the bill that would restrict the behavior of phone and cable giants like AT&T Inc. and Comcast Corp.

Cable and phone companies oppose a net-neutrality law, claiming it would hurt network investment and would require consumers to foot the entire bill for the billions spent to install high-speed data links in millions of homes.

Network providers have also stressed that the Internet has enjoyed phenomenal growth because government regulation has been kept to a minimum.

“In my mind, given where the draft bill is right now, this is the number one issue,” National Cable & Telecommunications Association president Kyle McSlarrow testified. “Our recommendation to you is to be very cautious. The best way to promote investment and competition in broadband is to stay away from net neutrality as it is commonly understood.”

Sen. Byron Dorgan (D-N.D.) shared Boxer's concern that commercial deals on the Internet could end up harming consumers and competition.

“The open architecture of the Internet, I think, is very important, and we'll have some amendments, I assume, and some discussion about that issue,” said Dorgan, who last Friday introduced a mandated net-neutrality bill.

At first, Stevens was receptive to arguments that net-neutrality regulations should be enacted by Congress.

But he changed his mind after Wall Street analysts, including Craig Moffett of Sanford C. Bernstein & Co., told his panel that network owners should not be expected to fund hugely expensive upgrades from a single revenue source: subscriber fees for Internet access.

In his bill, Stevens would order the Federal Communications Commission to study Internet commerce and file annual reports for five years. The FCC would be required to identify problematic activities, but it would not be allowed to draft regulations.

“We haven't seen [Internet discrimination] yet. It's still a fear,” Stevens told reporters. “If [FCC regulators] see it at all, they'll raise the flag and we're supposed to act, and I think we would act immediately if that happened.”

House legislation, by contrast, would allow the FCC to enforce broadband principles it enunciated last August, field complaints, and fine violators $500,000 per offense.

But network-neutrality proponents consider those provisions weak, because the FCC is barred from drafting regulations that it could enforce independently without relying on a complaint-driven process.

Stevens is also getting pressure over his bill's treatment of cable-franchising issues. Lawmakers fear that allowing the FCC to oversee a quasi-national system is the wrong approach, because it would largely render mayors and city councils across the country powerless, relegated to administering terms of the national franchise.

“We need to be careful about usurping local rights, including the right to negotiate franchise agreements with television providers,” said Sen. Frank Lautenberg (D-N.J.).

Lautenberg also said he was troubled that the bill might allow phone companies to target affluent consumers — a matter of serious concern to cable operators that have had to comply with buildout requirements in current law.

The absence of a cable buildout requirement “could give [phone companies] an unfair advantage over their competitors, especially if they are allowed to cherry-pick the most lucrative part of the market,” Lautenberg said.

Dearborn, Mich., Mayor Michael Guido called the 30-day deadline to act on new cable operator applications “unreasonable and unworkable.” He complained that cities would lose 15% to 20% of their franchise fee revenue, because the Stevens bill would exclude advertising revenue and home-shopping commissions from the definition of gross revenue.

Sen. Bill Nelson (D-Fla.) said he supported streamling cable franchising but not at the financial expense of local governments.

“This bill does not protect the cities. That concerns me,” Nelson said.

To pass a bill that enjoys broad support, Stevens needs to strike deals. He said his staff would revise the bill and release a new draft prior to a June 13 hearing. The panel, he said, will hold a second hearing May 25 exclusively on network neutrality.

Stevens expects negotiations with the panel's ranking Democrat, Sen. Daniel Inouye of Hawaii, to produce a bipartisan consensus. In a statement, Inouye said the bill would require “substantial revision” with regard to local franchising and network neutrality.

“We'll wait and see what changes we have to make in order to have bipartisan support of the bill. We want to have bipartisan support of the bill,” Stevens said.

Roll Call
Where the telcom bills stand
House
H.R. 5252: Communications Opportunity, Promotion and Enhancement Act of 2006
Status: Energy and Commerce Committee passed H.R. 5252 on April 26, but a turf battle with Judiciary Committee over the issue of network neutrality ensued. That has delayed consideration of the bill on the House floor.
Outlook: Possible House floor vote week of June 5th
H.R. 5417: Internet Freedom and Nondiscrimination Act of 2006
Status: Judiciary Committee chairman James Sensenbrenner (R-Wisc.) introduced on May 18 a bill that would apply antitrust penalties on broadband access providers that violate network neutrality.
Outlook: Committee to vote on the bill May 24 or May 25.
Senate
S. 2686: Communications, Consumer's Choice and Broadband Deployment Act of 2006
Status: Senate Commerce Committee is holding hearings on a sweeping bill (S. 2686) introduced by chairman Ted Stevens (R-Alaska). It would streamline cable franchising and require the FCC to study net neutrality but not regulate broadband access providers. Panel is split on both issues. Sens. Olympia Snowe (R-Maine), Byron Dorgan (D-N.D.) and Daniel Inouye (D-Hawaii) introduced on May 19 a bill (S. 2817) that would mandate network neutrality.
Outlook: Stevens is revising the bill in anticipation of a committee vote on June 20.
Source: Multichannel News research

September