Baby Bells Take Step Toward High-Speed Internet

Legislation that would allow the Baby Bells to offer high-speed Internet access has passed a key test in the House, but it faces a long road ahead, including stiff opposition from competing legislation in the House and Senate.The Internet Freedom and Broadband Deployment Act of 2001 (H.R. 1542) amends the Telecommunications Act of 1996 and lifts Federal Communications Commission regulations that prohibit the Baby Bells from offering long distance, including high-speed Internet services, until they meet provisions designed to increase competition among local telephone service providers.The telecommunications act prohibits the Baby Bells from offering high-speed Internet services until they allow competition in the local telephone markets. But the House Commerce Committee recently approved legislation that removes this provision.The bill, offered by House Energy and Commerce Committee Chairman Rep. Billy Tauzin, R-La., and Ranking Member Rep. John Dingell, D-Mich., passed the Commerce Committee May 9 in a 32-23 vote.The Baby Bells, or regional Bell operating companies, are the local telephone companies formed from the breakup of AT&T Corp. in 1984.Defending his bill, Tauzin said that with the rapid consolidation of ownership in both the cable and Internet backbone industries, millions of consumers nationwide are faced with the bleak prospect of being denied their Internet service provider of choice. Essentially, he said, these consumers will have no access to the high-speed on-ramps to the Internet because the backbone hubs are concentrated in the big cities and high-income urban areas of the country. A small business, library, medical center or university in a rural state likely will not be able to get convenient, economical access to high-speed Internet service and soon could be consigned to the backwaters of 21st century economic development, Tauzin said.At present, 60 percent of the states have only two or three backbone hubs. Several states don't have any at all, he said.The goal of the bill is to provide American consumers with choices in Internet service and high-speed backbone access, according to Tauzin. The bill frees the regional Bell operating companies to "build out" and offer high-speed Internet data and backbone hub services on a level playing field in competition with cable companies and backbone providers, he said. "Do the cable and backbone companies want that to happen?" Tauzin said. "Of course not. It's competition. But do America's small businesses and rural communities want that to happen? You bet."The IT industry has opposed the Tauzin-Dingell bill as a "step away from competition," Mark Uncapher, Information Technology Association of America vice president for Internet commerce and communications, told Washington Technology.Despite the bill's passage by the House Commerce Committee, it still must pass the full House, and faces an even tougher fight in the Senate, Uncapher said. The bill voids the provisions in the telecom act that promote competition, and ITAA is concerned implementing the bill would lead to some high-speed Internet customers getting cut off, he said.The bill's opponents could introduce changes when it is reviewed by the House Judiciary Committee, Uncapher said. Because antitrust issues are contained in the bill, Judiciary has requested a referral, he said. Judiciary Committee Chairman James Sensenbrenner, R-Wis., is an opponent of the Tauzin-Dingell bill.In a move to counter the Tauzin-Dingell bill, Reps. Chris Cannon, R-Utah, and John Conyers, D-Mich., introduced alternative legislation May 3.Cannon said he and Conyers are deeply concerned about "anti-competitive practices" in the telecommunications field and the legislation offered by Tauzin and Dingell, which they think would make the situation much worse.Similar legislation is expected to surface in the Senate, with senators, including Senate Appropriations Committee Chairman Ted Stevens, R-Alaska, promising to oppose the Tauzin-Dingell version if it makes its way to that chamber for approval.Meanwhile, the Cannon-Conyers legislation creates a market entry test prohibiting the provision of long-distance service if a local telephone company continues to monopolize the local market. And it leaves intact the Telecommunications Act of 1996.Cannon said his legislation will help establish a more level playing field for faster deployment of broadband across the country. The bill also would overturn a 7th Circuit Court of Appeals case that found antitrust law doesn't apply to the telecommunications field. The bill also establishes a regionwide alternative dispute resolution process to allow for speedy resolution of interconnection disputes. Proposals to modify the 1996 telecom act do little more than unsettle the capital markets, Cannon said. "The uncertainty caused by the mere introduction of the Tauzin-Dingell bill is enough to dry up capital, making it more difficult for competitors to survive and threatening nearly $700 billion in private investment," he said.ITAA officials said the legislation introduced by Cannon and Conyers is a significant contribution both to competition in the telecommunications sector and to broadband deployment."These bills make sure that the local Bell telephone companies eat their vegetables before they enjoy their dessert," ITAA President Harris Miller said in a statement. "Allowing the Bells to enter long distance before demonstrating competitive local markets will otherwise mean indigestion for the American public."