BOUCHER DRAFTING REVISED OPEN ACCESS BILL
House Internet Caucus Co-Chmn. Boucher (D-Va.) Thurs. vowed to introduce updated version of broadband open access bill that languished last year in House Judiciary Committee. Open access legislation “is still necessary, perhaps more necessary than ever,” Boucher said in wake of 4th U.S. Appeals Court, Richmond, Va., ruling that affirmed states had no authority to impose open access (see separate story, this issue). Boucher spoke at 3rd Congressional Internet Caucus lunch this year on broadband, and his approach was endorsed by Simon Strategies Pres. Greg Simon and Consumers Union Washington Office Co-Dir. Gene Kimmelman. But lunch also had opponents of open access, as well as some divided opinions on merits of tax credits to spur broadband deployment. Meanwhile, 3 American Enterprise Institute (AEI) scholars took 3 different approaches to broadband policy, specifically Bell- friendly HR-1542, at an AEI forum Thurs. Diversity of opinions reflected stubborn broadband policy divide that has prevented passage of legislation.
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Cable’s efforts to control interactive TV and its fear of streaming video in wake of Charter’s dropping of ESPNews because of Internet feeds (CD July 5 p2) left Boucher with “grave reservations” about allowing cable to escape further regulation, he said. Following some refinement, he said, his new bill to be introduced soon “does not lead to onerous burdens” on cable, but instead promotes competition and leads to regulatory parity with Bells. Simon agreed, arguing that cable had created “an artificial scarcity of broadband” by dedicating only 6 MHz of its pipe to broadband service. “That’s one of the most ludicrous arguments I've ever heard,” responded NCTA Senior Dir.-State Telecom Policy Rick Cimerman. Cable modem service passes 60 million homes, he said, and has driven Bells to dust off dormant DSL technology. Referring to comment by Kimmelman that deploying advanced services was difficult for cable operators, Cimerman said: “Adding new layers of government regulation… would only complicate things further.”
AT&T Federal & Regulatory Affairs Dir. Joan Marsh -- when not sitting quietly during quips about Comcast’s bid for AT&T Broadband -- said she agreed with Boucher that cable modem networks should be open, but didn’t see need for regulation. She praised recently concluded trial in Boulder, Colo., that had 4 ISPs on AT&T system, and said 4th quarter rollout was planned in 6 communities around Boston for multiple ISP service. (AOL Time Warner also is moving in that direction as part of merger approval by federal regulators.) Julia Johnson, former Fla. Public Service Commissioner and now chmn. of Internet Task Force for Fla. Gov. Jeb Bush (R), said “open access is a good idea, but the question is how you get there.” Her opinion was that “the market is in fact working.” Kimmelman responded: “Free market? Government- issued [cable] franchises… That’s about as opposite as you can get from a free market.”
Of more immediate interest in Congress is issue of broadband tax credits, with most popular bill (S-88) coming from Sen. Rockefeller (D-W.Va.). Bill, which has 58 co-sponsors, would give tax credits of 10-20% to broadband providers offering service in remote areas. AEI resident scholar Kevin Hassett told caucus luncheon that while he normally opposed tax credits because they artificially skewed markets, they could be effective in certain instances. Example he gave was R&D tax credit, where benefit to U.S. economy and innovation far exceeds cost of credit. “Arguably, broadband is an area where you could get something like that,” he said, particularly if it allowed solid base of broadband subscribers to provide market for development of “killer apps.” He acknowledged, however, that one deterrent to greater broadband use -- its high cost -- would not necessarily be eased with tax credits. Cato Institute scholar Adam Thierer said “it looks like everyone’s lining up in favor” of tax credits, but he feared legislation could favor one industry over another while still not addressing issues such as open access and interLATA data transmissions.
No broadband debate would be complete without HR-1542, Bell deregulation bill by House Commerce Committee Chmn. Tauzin (R-La.) and ranking Democrat Dingell (Mich.). That was theme at AEI forum, which had full-to-capacity room that could have been FCBA meeting. AEI’s James Glassman renewed his contention that fear of Tauzin-Dingell drove down market valuation of competitive LECs (CLECs). He cited CLEC valuation of $242 billion in March 2000 plunge to $38 billion in May 2001, compared with Nasdaq drop of half that rate. “The obvious solution is structural separation” of Bell local loops, he said, urging revision of Telecom Act. “What has Jim Glassman been smoking?” his colleague Thomas Hazlett responded. He pointed out incumbent LECs (ILECs) also lost money over that period and showed that Glassman’s study had same predictive power as basing CLEC market valuation on weather reports. As for Glassman’s strong words about Bell monopolies, Hazlett said: “Jim’s aiming for the No Bell prize.” Naturally, Glassman opposed HR-1542, Hazlett backed it.
The Glassman-Hazlett war of ILEC vs. CLEC was put in perspective by newest AEI scholar, former FCC Comr. Harold Furchtgott-Roth. His focus was on “ordinary people” making decisions about what they wanted in broadband market, with govt. there merely to enforce certain rights. “Broadband is a conscious choice available today” from satellite, DSL, cable, MMDS and soon wireless phones, he said, but “consumers choose to spend their hard-earned money on something else.” As for HR-1542 and its proposed lifting of certain telephony regulations, he said: “I'm hard-pressed to find a law that stands in the way of broadband deployment alone.”