Providers complain telecom bill adds regulations

WASHINGTON – One of the major goals of a telecommunications reform bill in the U.S. Congress should be to ensure that all U.S. residents and businesses have access to at least three broadband Internet providers, the chairman of the House Energy and Commerce Committee said Wednesday.

Chairman Joe Barton, a Texas Republican, called for Congress to take a light regulatory approach on a bill aimed at broadening competition, but representatives of Internet providers suggested that a bill being promoted by Barton would add more regulations, not reduce them.

“Do you trust markets, or do you trust bureaucrats?” Barton said while calling for light regulations. “That’s a basic question.”

But officials with Verizon Communications Inc. and Comcast Corp., both large broadband providers, said the Energy and Commerce Committee’s current draft telecom reform bill would create new obligations for Internet providers to allow competing technologies on their networks where none existed before. Barton and the company officials were among the speakers at a telecom reform forum sponsored by Congressional Quarterly Inc. and Dittus Communications, a Washington, D.C., public relations firm.

The current bill would put into law some network-neutrality principals advanced by the U.S. Federal Communications Commission (FCC) in recent years. The net-neutrality provisions in the bill would require broadband providers to allow subscribers to access the lawful content and services of their choice, requiring that providers don’t “unreasonably” cut off access to Web sites or services such as VOIP (voice over Internet Protocol).

The latest committee draft, revised from one released in September, provides some new exceptions to the net-neutrality rules, such as allowing broadband providers to cut off services when they interfere with network management and to segment parts of the broadband network to be used for enhanced services offered by the provider. Some Internet companies including Google Inc. and consumer groups including Consumers Union have criticized the new exceptions to the net-neutrality rules, saying the current draft bill would allow broadband providers a wide latitude to block competing services in favor of their own.

But any net-neutrality rules written into law could create a massive new regulation regime for the Internet, which has been largely unregulated, said Kerry Knott, vice president of government affairs at Comcast. Comcast, Verizon and SBC Communications Inc. have argued that the net-neutrality rules aren’t needed because broadband providers would lose customers if they shut off access to some parts of the Internet.

Verizon supports the principle of net neutrality, said Peter Davidson, the company’s vice president of federal government relations. “The question becomes, when we start implementing those either as legislation or enforcement, we start getting into some real trouble,” he said. “We start walking down the path of regulating the Internet real quickly, if we do it in the wrong way.”

Knott suggested the FCC could deal with any cases of discrimination without the rules being written into law. “It is better to let the market work, and if there are instances that pop up, you deal with them,” he said. “It’s a solution in search of a problem, still.”

But moderator Mike Mills, of Congressional Quarterly, noted that SBC Chief Executive Officer Edward Whitacre, in a recent BusinessWeek interview, questioned why broadband providers should share their networks with potential competitors such as Google Inc. and Vonage Holdings Corp., a VOIP provider.

Asked by BusinessWeek if he is concerned about competition from Internet companies, Whitacre said: “How do you think they’re going to get to customers? Through a broadband pipe. Cable companies have them. We have them. Now what they would like to do is use my pipes free, but I ain’t going to let them do that because we have spent this capital and we have to have a return on it.”

Asked if a net-neutrality provision was needed, Representatives Charles “Chip” Pickering Jr., a Mississippi Republican, and Edward Markey, a Massachusetts Democrat, both called for a provision included in telecom law. The Internet has thrived so far because of its open nature, and Congress should make sure Internet users can continue to make their own choices, Pickering said.

“It’d be a mistake if we undo that success,” Pickering said.

While Pickering and Markey agreed on net neutrality, Markey criticized the most recent draft of the telecom bill as favoring large telecom carriers such as Verizon and SBC. The bill streamlines local video franchising processes, allowing the large telecom to compete with cable providers, and it would allow large telecom carriers to buy out competing broadband services such as cable companies, Markey said.

“That’s not a good idea to allow one company to own both wires into a home,” Markey said. “At a minimum, it should be a two-wire world. With this bill, it would be a one-wire world.”

Comcast’s Knott also criticized the proposal to create a national franchising process, saying huge companies such as Verizon and SBC don’t need government help.

The current bill doesn’t promote competition, and with limited broadband choices, regulation is still necessary to protect consumers, Markey added.

“I absolutely believe that the key to consumer benefits is a ruthless, Darwinian, paranoia-inducing competition,” he said. “When the consumer is king, then you don’t need any more bureaucrats. If the consumer is going to be protected, if competition is what is going to make America great … we have to make sure that it’s in more than just three companies.”

The House Energy and Commerce Committee is likely to send a telecom reform bill to the full House early in 2006, Barton said.