Telecom reform bill meets opposition

Republican draft legislation that would largely deregulate Internet Protocol-based services such as broadband video favors giant incumbent telecommunications carriers over other competitors, complained some witnesses and lawmakers during a hearing in the U.S. House of Representatives Wednesday.

“The telephone companies, to us, appear to get everything they ask for … while avoiding most social obligations,” said Marilyn Praisner, a member of the Montgomery County Council in Maryland, during a hearing before the House Energy and Commerce Committee’s telecom and Internet subcommittee.

The staff draft, revised from a bipartisan draft released in September, streamlines video franchising requirements, allowing large telecom carriers such as Verizon Communications Inc. and SBC Communications Inc. to compete with cable television providers without securing franchise agreements from multiple local governments.

The draft, a first step toward a rewrite of the wide-ranging Telecommunications Act of 1996, would require VOIP (voice over IP) providers to provide enhanced 911 emergency dialing services, and it requires VOIP and telecom service providers to exchange voice traffic, but it leaves negotiations over fees entirely to the carriers.

The draft, which creates a new regulatory category called broadband Internet transmission services, is needed because U.S. industry needs a clear legal framework for offering broadband services, said Representative Joe Barton, a Texas Republican and chairman of the House Energy and Commerce Committee. “The advance of technology has left the law behind,” he said.

SBC this month called the new draft a “strong, positive step for consumers and the country,” and most subcommittee Republicans praised the new draft. While SBC and Verizon applauded the draft, Praisner criticized it for seemingly limiting the franchising fees local governments can collect as telecom companies begin to offer broadband video services.

Internet service provider EarthLink Inc. complained that the draft includes no enforcement of network interconnection requirements, and some consumer groups and Internet-based companies such as Google Inc., Yahoo Inc. and Amazon.com Inc. said the bill doesn’t have strong enough protections for Internet users to access the legal content of their choice. With a handful of telecom carriers and cable companies controlling most broadband access, Internet users need a legal guarantee that they can access the content of their choice, say supporters of stronger language in the bill.

A set of so-called network neutrality rules are in the draft bill, but broadband providers could cut off some content or services “under the guise of network management,” said Gene Kimmelman, senior director of public policy and advocacy at Consumers Union. The draft bill says broadband providers “may not unreasonably” restrict legal services or applications over their networks, but the bill doesn’t define “unreasonable,” he said.

The draft bill would also allow broadband providers to “segment” their IP offerings and reserve “huge chunks” of bandwidth for their own uses, added Vinton Cerf, chief Internet evangelist at Google Inc., in a letter to the committee. The bill allows providers to create network capacity limitations, offer their own enhanced services over the network and protect the security and reliability of the network.

“My fear is that, as written, this bill would do great damage to the Internet as we know it,” wrote Cerf, one of the creators of TCP/IP (Transmission Control Protocol/IP). “Enshrining a rule that broadly permits network operators to discriminate in favor of certain kinds of services and to potentially interfere with others would place broadband operators in control of online activity.”

SBC is committed to allowing its customers to access the legal content of their choice, said James Ellis, the company’s senior executive vice president and general counsel. But when Representative Rick Boucher, a Virginia Democrat, tried to get Ellis to commit to legal language to guarantee broadband capacity for customers, Ellis wouldn’t bite.

“Our position on this is, like so many other things, that heavy-handed regulation shouldn’t be there,” Ellis said. “[Customers] will have ample capacity.”

In addition to the network neutrality debate, the other big issue during the hearing was about streamlined franchise agreements for telecom carriers offering services that compete with cable television. The bill appears to narrow the number of profit centers from which local governments can collect a 5 percent franchise fee, and it appears to limit local government ability to require new broadband video carriers to provide public access channels, she said.

Subcommittee chairman Fred Upton, a Michigan Republican, disagreed, saying the bill largely preserves those local government rights.

Representatives of the cable industry and the National Association of Broadcasters also objected to parts of the bill. The bill doesn’t appear to require new broadband video providers to carry local TV stations, as Congress has required cable TV carriers to do, said K. James Yager, chief executive officer of Barrington Broadcasting Co. LLC, an owner of local TV stations in Illinois.

Committee Democrats also complained that Republican leaders abandoned eight months of bipartisan negotiations that resulted in the bill’s first draft. The new draft is a “detour that’s a likely legislative dead end,” said Representative Edward Markey, a Massachusetts Democrat.

When Barton, the committee chairman, asked one panel of nine witnesses which draft version they preferred, three said the first draft, two said the second draft, and the rest didn’t raise their hands for either one. Barton said the new draft was necessary because “no one” liked the first draft and even with the new draft, the full committee is unlikely to move a bill to the full House floor this year.

“You can’t legislate if you don’t put it out to the public,” he said. “The Energy and Commerce Committee, as long as I’m chairman, is about action, it’s not about inaction.”