Senate Panel Boots Net Neutrality, Passes Telecom Bill 15-7

Telecom companies voiced pleasure at the vote. “We look forward to seeing this bill scheduled for action on the Senate floor shortly after the Independence Day recess to provide the House and Senate time to resolve the considerable differences that exist between” their 2 bills, BellSouth Vp Govt. Affairs Herschel Abbott said. Verizon called the bipartisan vote a positive step. It brings Congress close to “producing a tangible victory for consumers,” said Peter Davidson, senior vp-federal govt. relations.

Several Democrats praised Chmn. Stevens’ (R-Alaska) performance during the markup, thanking him for allowing thorough exchanges of views. This prompted Stevens to liken himself to Jack Daniels: “The longer I'm in the bottle, the mellower I get.” The markup ended a marathon of 28 hearings, 6 listening sessions and 3 days’ debate, Stevens said. None of the amendments undermines the base bill, and of 48 amendments in the manager’s package, 42 came from the minority side, he said.

The vote on net neutrality may not be as close on the floor, Stevens told reporters afterwards. The amendment failed 11-11, with the chairman exercising his privilege to defeat the measure.

“The question is whether a compromise can survive in the Senate,” Stevens said. For instance, “we still have massive disagreement over net neutrality,” he said. The issue stirred emotional debate Wed. afternoon. “For the first time, content on the network will be selected by network owners,” said Sen. Snowe (R-Me.).

“We are going to transform the Internet in a way in which people will not recognize,” Snowe said. “We don’t have a competitive system. We have at best 2 companies,” she said: “This is the essence of what we're dealing with today.” But Stevens said the amendment would thwart the possibility of conference on the bill with the House, which rejected a similar amendment when passing its bill (HR-5252).

“I don’t care what the House of Representatives says,” Sen. Kerry (D-Mass.) said: “You have talked about a conference, but you have to talk about getting it off the floor.” Kerry, along with Snowe, Dorgan (D-N.D.), Cantwell (D-Wash.) and Boxer (D-Cal.), cosponsored the failed “consumer bill of rights” net neutrality amendment. The amendment stated that consumers are entitled to service that doesn’t discriminate in carriage of Internet traffic, and violators would be subject to a $500,000 fine.

“We're creating gatekeepers here,” Kerry said: “It’s the open architecture of the Internet” that has made entrepreneurs like Google the successes they are today.

A frustrated Sen. Wyden (D-Ore.) took to the Senate floor Wed. evening to say he had put a “hold” on the sweeping telecom bill until it includes clear language barring online bias. In March, Wyden introduced the first standalone net neutrality bill (S-2360); he cosponsored the Snowe-Dorgan measure when it debuted as a separate bill before the Commerce Committee began its markup. “Without a clear policy preserving the neutrality of the Internet and without tough sanctions against those who would discriminate, the Internet will be forever changed for the worse,” he said.

A telecom bill lacking antidiscrimination language threatens to divide the Web into access “haves” and “have- nots,” Wyden said. It also would pour more power into “the hands of the special interests that own the pipelines to the Internet,” he said. Wyden said he would object to any unanimous consent request for the Senate to move to consider the bill.

Net neutrality foes were gratified by the committee vote. The lawmakers’ decision is “an important step forward,” said Hands off the Internet Coalition Co-Chmn. Mike McCurry. The broader telecom bill balances “competing needs that have made the Internet a global success” and reinforces consumers’ online rights without strangling innovation, he said. His group is backed by Alcatel, AT&T, the National Assn. of Mfrs., the American Conservative Union and others. The Snowe-Dorgan amendment sought light regulation but its wording would have required the FCC to spend months preparing regulation, McCurry said: “All of this would have just driven up costs that ultimately would be passed along to consumers.”

NetCompetition.org Chmn. Scott Cleland lauded the vote. Net neutrality proponents “whose true agenda is to protect free speech on the Internet, and not price-regulate the Internet,” should back Stevens’ strong Internet First Amendment language on the Senate floor, he said. Blocking final passage of the telecom bill would only ensure that net neutrality proponents “achieve nothing in their quest for additional Internet safeguards,” he said.

The amendment’s backers were dispirited. The committee “handed control of Internet content to the telephone and cable companies, and control over the design of consumer electronics to the movie and recording industries,” Public Knowledge Pres. Gigi Sohn said. “Big companies win and consumers lose,” she said. Network operators will be free to discriminate in favor of content in which they have financial stakes or in favor of content providers able to afford new fees the companies charge, Sohn said. Telcos and cable firms would have “no incentive to make any improvements to today’s Internet, on which consumers, innovators and small businesses depend,” she said.

The intense debate during markup underscores committee unease with “abandoning rules that until now have ensured an open, innovative and competitive Internet marketplace,” the It’sOurNet Coalition said. That group, backed by Amazon.com, Intel, eBay and others, said net neutrality won’t go away. The groundswell of grassroots concern emerging in recent months “will only grow louder as more Americans learn what is at stake,” officials said. The Coalition urged the full Senate not take up the broader telecom bill unless and until strong net neutrality provisions are included.

Free Press Policy Dir. Ben Scott said the committee’s vote shows bipartisan momentum for antidiscrimination. The principle “moved from obscurity to the center stage in the debate over our nation’s telecommunications policy” in mere months, he said, and will gain steam as the full Senate takes up the telecom bill. “The voices of millions of average citizens are just starting to break through the misinformation and lies being peddled by the big phone and cable companies who want to erect tollbooths on the Internet,” Scott said.

Consumer advocates weren’t pleased with the committee’s decision either. Rejecting net neutrality endangers “the most important engine for economic growth and democratic communication in modern society,” Consumers Union Senior Policy Analyst Jeannine Kenney said: “Nondiscrimination made possible the grand successes of the Internet. Its removal can take them away.” Unless the Senate “stands up for the public interest, consumers can kiss goodbye the wide array of low-cost, competitive choices and stunning innovation that the Internet has brought them,” Consumer Federation of America Research Dir. Mark Cooper said. -- Anne Veigle, Andrew Noyes

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The Senate Commerce Committee Wed. okayed an amendment making permanent a moratorium on Internet taxation. The amendment, passed 19-3, resulted from negotiations among Sens. Allen (R-Va.), Ensign (R-Nev.), Burns (R-Mont.), Sununu (R-N.H.) and others. The language will be worked into the committee’s massive telecom reform bill. “It is hard to imagine a more destructive or counterproductive policy for the American economy than having an average of an 18% tax imposed on Internet access,” Allen said. Were state and local govts. allowed to impose such taxes, it would “clearly destroy and limit the opportunity for millions of our citizens.” But Dorgan warned that the issue will face a fight on the Senate floor because some oppose the moratorium. A recent Govt. Accountability Office (GAO) report on Internet taxation (WID Jan 24 p5) examined the moratorium’s effect on state and local revenue. Allen said the study made flawed conclusions on the impact of suspending taxation of wholesale Web trade. The GAO report was the 3rd in a series required by the 2004 Internet Tax Nondiscrimination Act, which extended the moratorium to 2007. “Making the Internet tax moratorium permanent will keep entrepreneurs and other consumers free from burdensome and unnecessary taxes,” Ensign said. The issue was a priority for him personally and for the Republican High Tech Task Force, which he chairs, he said. Americans for Tax Reform Pres. Grover Norquist told us the amendment’s passage is “extremely good news.” The same amendment, offered by Wyden in a federal excise tax reform markup in the Finance Committee, also was approved, he said. The conservative activist said this news, paired with Rep. Cannon (R-Utah) winning the Republican primary, is “more good news than should be allowed on any given day.”