WASHINGTON – Consumers could be using phone companies for more than just voice and Internet services if a new telecom bill makes its way through the House and Senate by year's end.
The House Subcommittee on Telecommunications and Internet approved a bill April 5 that would allow phone companies to seek national franchises for permission to transmit video. That would allow phone companies to compete with cable and satellite companies.
“This bill will produce an explosion of opportunity for American workers,” House Committee on Energy and Commerce Chairman Joe Barton,R-Texas,said. “American consumers will get an array of video services that were unimagined just a few years ago.”
But there are significant differences between the House and Senate proposals,and it's far from certain that both houses will be able to agree on the complex issues this year.
Sen. Ted Stevens,chairman of the Senate Committee on Commerce,Science and Transportation,said after numerous hearings that he “has no priorities” and only “wants a bill” to be drafted soon. And he warned,“If we don't get something finished this year,we'll have to start all over again in '07.”
Under current law,cable TV operators must secure permission from local governments in exchange for fees,public access channels – which provide educational programming – and the guarantee that providers will “build out” their services to all neighborhoods,not just wealthy ones.
Consumers Union reported that as of Jan. 1 cable rates have increased 45 percent in the last 10 years,about double inflation,and Congress is hoping to create more competition by speeding the entry of phone companies into the video industry.
With a national franchise,phone companies would need permission only from the Federal Communications Commission,allowing them to sidestep thousands of local governments. That is one provision that the cable industry has publicly opposed.
Walter McCormick,president of the United States Telecom Association,a trade group representing the phone companies,applauded Congress,saying that if phone companies don't enter soon,cable providers will continue to monopolize video services.
As cable rates rise,Consumers Union agreed that more competition is needed.
But at a March hearing,Jeannine Kennedy,a policy analyst for Consumers Union,told the House committee that phone companies would focus video services “to only wealthy neighborhoods,leaving behind middle- and low-income consumers who most need cable rate relief.”
The Senate committee has yet to advance a telecom bill,and the provisions pertaining to franchising are uncertain. But as is the case with the House bill,easing the way for phone companies is a top priority.
Sens. Gordon Smith,R-Ore.,and John D. Rockefeller,D-W.Va.,have both introduced bills calling for a national franchise. During a February hearing,Smith said a national franchise would eliminate “unnecessary” agreements while protecting local concerns.
“There is only head-to-head competition in less then 2 percent of America,” Smith said. “Allowing new technology to compete with cable television will drive down prices and improve the quality of programming.”
The committee's senior Democrat,Sen. Daniel Inouye of Hawaii,and others don't want to move forward without ensuring “that new operators deal fairly with the communities they serve.”
NOW OR LATER?
Capitol Hill began to rumble over telecom issues last year,and when the House and Senate committees reconvened after the mid-term recess in January,the buzz seemed to indicate a new bill was imminent.
On the docket were issues such as Internet pornography and TV program indecency,but throughout 14 Senate hearings and a slew of others in the House,the focus was directed primarily toward the industry.
Both the House and Senate committees are on a two-week Easter recess. Once they return,they'll have only a short time before recessing for the fall elections to deal with several other issues affecting consumers.
A full committee vote on the House bill is not expected until late April or May,likely pushing a full House vote to June. And Stevens isn't planning to unveil language for the Senate bill until the week of April 24,which means a full committee vote could bypass June.
Some representatives on the House subcommittee wanted to require what they called network neutrality,which would prevent Internet providers from favoring certain Internet content based on what Web companies were willing to pay.
But the House committee did not mandate neutrality,leaving the task of policing providers to the FCC. Some argue that FCC rules,which promote open access,are adequate. The bill would allow the agency to fine those who violate neutrality $500,000.
Consumers and online retailers are still worried that Internet providers will act as gatekeepers by negotiating exclusive deals with companies like Google or Yahoo!
“This bill needs significant improvement before it will preserve the open Internet that consumers and service providers expect and deserve,” said Gigi Sohn,president of Public Knowledge,a Washington-based advocacy group.
Phone and cable companies argue,however,that the cost of speedier Internet access should not be footed solely by consumers' monthly fees,and charging Web companies for quality service would help shoulder the cost of upgrades.
On the Senate side,Stevens and the committee have been torn on how much regulatory control the government should have. Stevens has said that network neutrality “is one of the most difficult issues our committee faces in this process.”
Kyle Dixon,senior fellow of the Progress and Freedom Foundation,a market-oriented think tank focused on telecom,argued a neutrality mandate could send consumers and the industry down a “slippery slope” toward onerous regulation.
The Senate committee has addressed another major topic termed universal service,which is not in the House bill.
The universal service program,which subsidizes telecom rates in rural and underprivileged areas,is funded by an 11 percent fee on phone companies for interstate and international calls.
The FCC has proposed a flat,monthly fee of $1 to $2 per phone line,including cell phones and fax lines. Some disagree with the proposal,however,saying the new rules would discriminate against the people the fund is designed to help.
Stevens has loudly voiced his approval of expanding the program. And with an increase in Internet-based phone service,Stevens not only wants long-distance,wireless,pay-phone and wireline services to pay into the fund,but also Internet voice providers.
In March,Stevens told a communications industry association conference in San Diego,Calif.,that universal service contributions are vital to the villages he represents in Alaska.
“We have formidable challenges for communications,” Stevens said. “We still have about 140 of our villages that do not have access to high-speed Internet. … Without affordable communications and unfettered access to the Web,rural Americans will be relegated to the backburner of a red-hot global economy.”
But fellow Republican Sens. John Sununu of New Hampshire and Jim DeMint of South Carolina want to downsize the fund to cut what they see as a tax on consumers.
The House bill failed to include language about TV indecency,and it is doubtful the Senate will address the issue directly,but amendments could come during full committee votes.
At a hearing in January,Jack Valenti,former president of the Motion Picture Association of America,proposed an ad campaign to increase knowledge of the V-chip,which is embedded in all new TV sets and can block specific programs based on their television ratings.
Stevens agreed,asking that the government allow the “campaign to run for a while to determine whether this education of the public really will result in a better understanding of how to protect children without legislation.”