All Sides Gear Up For Re-Write Fight

Telecom Policy Report, Nov 24, 2004

Though Telecom Act Action Is Months Away, Players Are Talking

Congress doesn't reconvene until late January 2005, but with lawmakers contemplating the biggest overhaul of the nation's telecommunications laws in nearly a decade, lobbyists, advocacy groups and politicians are gearing up now for the legislative frenzy. The reason for the jockeying is simple: The future of the multi-billion-dollar telecommunications industry is on the line, and stakeholders want to be well-positioned for the political horse trading. The battle lines are expected to cut many ways, including Republican versus Democrat, urban versus rural, Bell versus long-distance and watchdog versus corporate.

At this early stage, the only consensus among industry observers is that the new Congress will explore overhauling the watershed Telecommunications Act of 1996 through hearings and draft bills. But the scope of a rewrite, its chances of success and its timeframe are unclear. Some sources speculated the process would take two years while others said it would extend beyond the 109th Congress.

"There's a plethora of diversity of interests involved with such a rewrite," says Robert McDowell, senior vice president at telecom association CompTel/Ascent, predicting a lengthy timeframe. He notes that the 1996 law took 12 years to create. CompTel's members include AT&T, MCI and Vonage.

Technology In Internet Time

Driving the push for reform, observers say, is the reality that the Act hasn't kept pace with the fast-moving telecom landscape, which is being revolutionized by such new technologies as voice-over-Internet Protocol (VoIP). "The law is not broad enough to contemplate where technology is today," says Ed Merlis, senior vice president of law and policy at the U.S. Telecom Association, whose members include the Bells, adding, "The word 'Internet' appears in the Act only in two sections."

But CompTel's McDowell disagrees, arguing that the 1996 law could have accommodated industry changes. "Unfortunately, the Act has not been enforced. It has been litigated and undermined at every step," he says. An appeals court this year ruled that the FCC, in implementing the law, gave states too much authority to require the Bells to unbundle their networks, and judges sent the FCC back to the drawing board.

A key issue for lawmakers is the extent to which providers of such new services as VoIP should contribute to universal service or pay access charges. Several industry lobbyists say new technologies should be "walled off" from regulation so they can grow into full-fledged competitors. The approach would provide companies with the certainty they need to make investments, they add.

Susanna Montezemolo, legislative representative at Consumers Union, agrees that VoIP should prosper -- but she doesn't want providers to shirk their public-interest obligations.

"We feel really strongly that [VoIP] should be contributing to the universal service fund," she said.

Lawmakers also will examine a la carte pricing for cable television, the regulation of wireless voice and data services, and access of competitors to monopoly networks and their bottlenecks, among other issues.

FCC Or Congressional Oversight?

While a draft bill is months away, the industry already is divided over the scope of legislation. The ILECs generally prefer broad reforms that would free them of common-carriage requirements, sources say, but their competitors want narrow reforms that would loosen restrictions on them while preserving regulations on the Bells.

"We don't think just tweaking the existing act or rewriting sections of it is the way to go," says Link Hoewing, vice president of Internet and technology policy at Verizon. Instead, he says Congress should create an entirely new telecom bill that's flexible enough to evolve with rapidly changing technology. However, Peter Jacoby, vice president of congressional affairs at AT&T, says many issues in play do not require congressional attention. "A lot of these issues we feel can move more quickly and get resolved more quickly by [the FCC]," he told us.

Some critics, however, think the FCC weakened the 1996 law even while implementing it. "The FCC has kind of lost its way in reinterpreting the intent of Congress," says Jason Oxman, general counsel at the Association for Local Telecommunications Services (ALTS). While the agency has moved aggressively this year to shape policy on VoIP and other issues, congressional action could trump the FCC's moves.

Who To Watch

The GOP's control of both chambers of Congress, not to mention the White House, might suggest lawmakers would take a deregulatory approach. But Sen. Ted Stevens, R-Alaska, the incoming chairman of the Senate Commerce Committee and a likely author of a draft bill on the Senate side, is determined to strengthen the universal service program, which phone companies fund to subsidize communications service in rural and low-income areas. Other rural panel members sharing his concerns are Sen. Conrad Burns (R-Mont.), Sen. Sam Brownback (R-Kan.), and ranking Democrat Daniel Inouye of Hawaii.