Battle lines are drawn on crafting Telecom Act II: legal, regulatory and legislative debates set stage for broad overhaul

America's Network,  June 15, 2004  by Al Senia

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A number of critical legislative, regulatory and legal skirmishes being waged in Washington and in several states are setting the framework for a major telecom law reform effort expected early next year after the upcoming national election is decided, according to telecom regulatory observers.

Both Senate and House committees are holding hearings on various telecom matters and a spirited debate unfolding over whether or how the existing 1996 Telecom Act should be reformed. At the same time, the FCC is mulling a potential far-reaching decision on whether IP telephony and VoIP technology should be regulated. It's also trying to figure out whether broadband should be regulated as an information service. The D.C. Circuit Court of Appeals, meanwhile, recently ruled that the FCC wrongly gave power to state regulators to determine which parts of regional phone companies' networks have to be offered to competitors at wholesale prices and set a mid-June deadline for the FCC and the RBOCs to amiably reach a compromise.

Much of the fussing and fighting merely underscores a point that must be reconciled one way or another by federal lawmakers next year: Telecom technology has rapidly leapfrogged the laws that govern it, causing the current regulatory system to crack under the strain.

INTERCONNECTIONS

Leading telecom trade associations are watching the escalating debates unfold with a mixture of hope and trepidation. On one hand, given the tone of current political debate in Congress and the FCC, the sentiment clearly seems to be moving in a non-regulatory direction. On the other hand, it is clear to all sides that something needs to be done to quickly reconcile the market forces and rapidly improving technology. However, when lawmakers decide to rewrite laws, anything can happen. And the upcoming federal election hangs like a massive uncertainty over the entire process.

Surveying the landscape, executives from telecom associations are largely conceding that the big telecom effort won't truly begin until next year. So they are focusing on the various political battles erupting across the telecom landscape right now.

"You have litigation, legislation and regulation all occurring at the same time, and that's unusual," says Rob McDowell, senior vice president and assistant general counsel for CompTel/ ASCENT, a 350-member trade group representing facilities-based carriers and vendors. "A lot of this is related."

"Everything is connected because part of the problem is the FCC has tried to impose the existing outdated regulations on new technologies," says Allison Remsen, a spokeswoman for USTA, a 1,200-member trade association of service providers and vendors." Some of these technologies weren't even around in 1996. That's why it is so important for Congress to step in and set up some kind of framework to encourage service providers to invest in the technologies."

NETWORK ACCESS

McDowell notes that his group's main concern right now hangs on resolving the Trinko issue, which ignited the battle over the FCC's ability to control access to the carriers' networks. "We want to make sure there is access to the monopoly choke points ...at a fair cost to the Bells," he adds.

McDowell strongly backs the Sensenbrenner bill, which he says is urgently needed because the circuit court decision, along with the FCC's "consistent failure to enforce the Telecom Act, has empowered the Bells to believe they are above the law." The bill is needed to ensure that the antitrust laws continue to promote competition in the telecom industry, he believes.

CompTel/ASCENT also has taken a stand on VoIP regulation, urging the FCC to take a "layered approach" assuring that the underlying network and transport facilities remain available to all providers, but that the applications and content running through the pipes be minimally regulated.

USTA, for its part, has also been active in several issues, with executives pushing for regulatory certainty, a stable environment and a level playing field.

"There is abundant evidence that heavy regulations cannot keep pace with rapid innovation," said USTA President and CEO Walter McCormick after the recent House Telecom Subcommittee hearings.

In the mood to reform

Legal and policy battles continue to signal a showdown on new regulations for the telecom industry. Among the recent highlights:

Legislative (House): House Subcommittee of Telecommunication and the Internet holds hearings in May on voice, video and data convergence. Chairman Upton says 1996 Act needs to be reformed "given the evolution of technology and the marketplace." Leading technical executives from Verizon, Sprint, Qualcomm, Alcatel and others appear as witnesses as latest technology is demonstrated.

Legislative (Senate): Senate Commerce Committee holds hearings in April on national telecom policy with former FCC Chairman Reed Hundtand a variety of industry pundits appearing. Chairman John McCain pledges to introduce new legislation by year's end.