Hurdles Multiply for Telecom Reform

Can the House bill and the more expansive Senate draft be meshed into law?
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The Senate rolled out its version of a telecommunications-reform bill last week amid confident talk of passage that echoed similar boasts on the House side. But whether either has the momentum to make it to the president’s desk is still up in the air. The omnibus legislation promises to dramatically alter the regulatory landscape for media companies, spurring cable competition and giving clearer guidelines for the digital-TV transition.

A much narrower House bill passed the Commerce Committee last week. Before telecom reform can become law, both House and Senate versions must be passed in committee and by their respective houses; then differences must be hashed out in conference committee.

So far, the House version has cleared the subcommittee and full committee, but a floor vote planned for last week was delayed by work on the ethics bill and could be delayed even further. The House Judiciary Committee, which oversees antitrust issues, wants to share jurisdiction, which would mean even more hearings.

The Senate version is only a draft and must still go through two hearings in late May and a markup in early June.

Moreover, any senator could put a hold on the bill and stop it dead in its tracks. Senate Commerce staffers were outwardly confident of passage. Top staffer Lisa Sutherland says that, if the bill makes it to conference, she has “zero doubt” it will pass.

One staffer, though, says Commerce Committee Chairman Ted Stevens (R-Alaska) is concerned about a hold.

Still, the plan, said a confident House Telecommunications Subcommittee Chairman Fred Upton (R-Mich.) last week, was for the Senate to have a bill to the president by the end of July.

Some Wall Street analysts see the bill’s prospects dimming, and one former high-ranking telecommunications regulator says he doesn’t see how the bills could be reconciled in the time remaining.

The Senate bill is far more expansive than the House. Like the House version, the Senate draft streamlines video franchising to allow telephone companies and other potential cable competitors into the market in 30 days if they can’t strike local deals. But it preserves more local control of the franchise process than the House national-franchise bill would.

Although the Senate version is tougher on telco entry than the House, it is softer on the key issue of preventing networks from discriminating in the provision of Internet access, so-called network neutrality. The Senate version merely directs the FCC to study the issue, while the House version outlines the FCC’s power to judge and punish violators. Neither is strong enough to suit a growing movement in favor of network neutrality.

But the Senate bill goes far beyond franchising, folding in a number of issues that were yanked from the DTV-transition bill last fall because of Senate procedural rules.

It would give the FCC the authority to institute the broadcast-flag digital-content–protection technology. That would be a victory for broadcasters, although carve-outs for public use of content—news, public affairs, libraries—do concern the networks.

The Senate version also gives cable a big victory by allowing downconversion. Specifically, larger cable systems can convert a broadcaster’s must-carry digital signal to analog or its HDTV signal to standard DTV, and smaller cable operators can deliver only analog. Also, the Senate bill does not grant multicast must-carry to broadcasters.

The bill also would allow unlicensed devices to operate in the broadcast band and require providers of Internet services to pay into a $500 million fund to extend those services to rural and other underserved areas.

E-mail comments to jeggerton@reedbusiness.com

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