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New Threat to Broadcasters

Overhaul of Telecom Act will legislate station fare 5/02/2004 08:00:00 PM Eastern

The TV industry has four words for the feds: Don't touch that dial. The Senate Commerce Committee just launched a drive to overhaul the 1996 Telecommunications Act, the law that ushered in a wave of consolidation in the broadcast and cable industries and kicked off the broad rollout of super-fast Internet services.

Although telcos—not television—are the obvious target, the industry expects to endure secondary fallout.

Why is Washington reopening legislation that originally took 20 years to pass?

Congress is under immense pressure to make it easier for local phone companies to dial into the long-distance business. That was the main goal of the 1996 law. But an unappetizing quid pro quo required Baby Bells to lease their switching networks to competitors for local service. And they balked.

Senate Commerce Committee Chairman John McCain, opening last week's hearings, called the law "a fatally flawed piece of legislation written by lobbyists that freezes telecommunications policy in a bygone era."

Even though TV isn't a driving factor in the new round of legislative wrangling, industry lobbyists say Congress will investigate television and related media issues. The broadband rollout remains a priority for most legislators, but many want to curb consolidation fever. Expect the bill to set tighter limits on the number of broadcast stations one company can own, as well as new public-interest obligations regarding local-election coverage and kids programs. "When the Telecommunications Act is reopened," says National Association of Broadcasters lobbyist John Orlando, "there's potential for our issues to be thrown into the mix."

Executives for telecom companies coveting broadcasters' channel capacity and cable's relatively light regulatory burden for Internet service made it clear that they want to drag media companies into the debate. Qwest Communications Chairman Richard Notebaert called for a broadband rule that treats phone-delivered DSL service the same as cable—either by eliminating the restrictions that force phone companies to share portions of their high-speed network with rivals or by imposing similar burdens on cable. "Customers view telecommunications as a commodity," he told the Commerce Committee. "Regulators should do the same by eliminating regulation of a single provider when others offer the same capability regulation-free."

Also, former FCC Chairman Reed Hunt, now a board member of several wireless companies, wants Congress to endorse an FCC plan to accelerate the day when they give back their analog channels. Hunt says selling the channels to wireless companies would fuel economic growth."

No one is expecting the overhaul to take two decades. Demand for new telecom services is so acute, a bill is expected in two years tops.

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