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US House debates bill to allow nationally franchised ISPs, VoIP providers

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US House debates bill to allow nationally franchised ISPs, VoIP providers

Washington (DC) – Hearings began on Capitol Hill this morning for members of the House Subcommittee on Telecommunications and the Internet, to debate the language of a bill introduced last Friday to create a national franchising system for cable TV and Internet service providers. If passed, the bill would radically redefine the regulatory infrastructure for all classes of broadband service in the US, enabling regional telecom companies such as Verizon and the new AT&T, Inc., as well as cable TV providers such as Comcast and Time Warner Cable, to provide customers with the “triple threat:” television, Internet, and voice communications service, all on a national scale.

The bill’s author is House Committee on Energy and Commerce Chairman Joe Barton (R – Texas); the Subcommittee is a division of Barton’s own committee. As the Barton bill – thus far unnumbered – currently reads, national franchisees would be permitted to operate cable services in areas where local, municipal, and some statewide authorities (such as Texas) have already granted limited monopolies or duopolies to cable TV (CATV) providers in designated regions. These new franchisees would still pay local fees in the regions they serve, but those fees would be limited by federal law to 5% of gross revenue, plus 1% additional revenue from pay-per-view or premium services.

Here is the extent of the change the Barton bill could catalyze: Presently, AT&T (formerly SBC) provides DSL coverage to many municipal areas, under its partnership with Yahoo. It must negotiate fees with local, and some statewide, authorities in order to provide DSL to those areas. Suppose AT&T could become a national cable broadband service provider, under a new national franchise license negotiated with the FCC. With cable broadband typically faster than DSL, the question is raised, why would AT&T want to continue to provide slower service on local levels?

There’s a possible answer to this question, which could be more dangerous than the question itself: DSL service could continue to be provided to rural areas where cable service doesn’t presently reach. Determining which geographical areas deserve higher-speed cable service, and which could suffice with slower-speed DSL or else be served by satellite, is a very sticky issue, especially for congresspeople who represent lower-income areas. Conceivably, under the current bill’s language, a national licensee could pick and choose which areas it wishes to serve throughout the nation – it would not have to service every square inch of US territory. But opponents argue, what’s to stop national franchisees from selectively serving higher population, higher income areas first? For at least one congressman on the Subcommittee, the issue could actually become racial in nature.

As the Barton bill is currently written, federal licenses and municipal (local) licenses for providing CATV service – and, thus, cable broadband service – would have to co-exist. As a result, companies such as Comcast that provide CATV service on multiple local levels, could find themselves competing with AT&T and Verizon – two of the three remaining regional Bell operating companies (RBOCs) – in perhaps thousands of municipal areas. The RBOCs would have had to negotiate one license, which the municipalities must agree to observe under new federal law; meanwhile, the CATV providers may have to wait until its municipal license expires for a given service area before its national license could apply to that area. So at least for a time, the CATVs and the RBOCs could be regulated according to different sets of rules.

Subcommittee Chairman Fred Upton (R – Michigan) rose in support of the Barton bill, praising it for containing language that maintains local control over the “right of way” of cable lines in municipal areas. Whether all municipalities would necessarily appreciate this effort to preserve their rights isn’t clear, especially because they may find themselves negotiating lease agreements where one provider might have to open its lines to a national provider, for an agreed upon fee, for a fixed period of time…in tens of thousands of municipalities across the nation. Upton also believes the Barton bill creates a level playing field for telecom providers, by replacing language in the bill it replaces that would have determined the viability of a technology for service rollout, such as some forms of digital cable, based on the estimated percentage of the nation in which the technology has already been rolled out.

But leading the uprising against the Barton bill was Subcommittee Ranking Member Edward J. Markey (D – Mass.), who foresees the possibility that a national franchisee system would become prohibitive to small companies that might not be able to compete unless they are capable of rolling out on a national scale. He said it’s sensible to be asking the question, “But why shouldn’t Google pay?” In other words, what’s wrong with drawing 5% or 6% of gross revenues, from the major Internet service providers (although, technically, Rep. Markey could have been informed that Google is not an ISP)? In response, one should ask whether it would have been fair to have taxed the founders of Google six years ago, when they were operating their service as a lab project at Carnegie-Mellon?

The Barton bill would “condone online discrimination,” Rep. Markey argued, by enabling the FCC to create and enforce rules governing the conduct of national franchisees, only if enough complaints are lodged against them to warrant a hearing. The FCC, he said, should be enabled to pass rules and regulations that govern conduct on the Internet as a whole, without waiting for complaints to amass. Should the principal regulatory agency for telecommunications become reactionary, he asked? “This is efficient government?…I don’t think it is,” he answered himself. As it stands, the bill plays into the hands, he remarked, of “the world-wide whims of broadband barons.”

In support of the bill, its co-author, Rep. Bobby Rush (D – Illinois), stated that federal regulators could be the best arbiters to ensure equitable competition among what he called “video service providers.” Rep. Rush argued that the bill’s terminology should be expanded, replacing “cable providers” with the more modern “video service providers,” arguing that video is the principal service under discussion here, and that broadband Internet service derives from it. African-Americans, he stated, watch more television than any other ethnic group in the country; and therefore, anti-discrimination provisions written into the bill, he said, will protect those groups. Other provisions that would mandate that all nationally licensed voice service feature emergency 9-1-1 calling capability, he said, could possibly increase emergency service coverage to rural and lower-class neighborhoods.

The Subcommittee hearings were ongoing at the time of this writing, and TG Daily will have an expanded report on the hearings, as well as testimony heard this afternoon, in the hours to come.