Long-distance dispute

Congressmen, Kennard at odds over best way to achieve open access to broadband markets

Washington policymakers generally agree that there should be free and vigorous competition in the provision of data services over high-speed networks. They just can't agree on how to do it.

Last week, the House Judiciary Committee held a hearing on one approach, which would allow the regional phone companies to offer long-distance data services before they open their local voice markets to competition.

Reps. Bob Goodlatte (R-Va.) and Rick Boucher (D-Va.) have co-sponsored a pair of bills to give regionals that flexibility as a way to accelerate the build-out of high-speed Internet services to rural and underserved areas. Reps. Billy Tauzin (R-La.) and John Dingell (D-Mich.) have introduced a similar bill, HR 2420, that has 222 co-sponsors and some momentum behind it. Tauzin plans to hold a hearing on that bill this Thursday.

The bills would amend the 1996 Telecommunications Act, which required regionals to open their local markets before competing in long distance.

Proponents of the legislation say that the net effect would be to spur the rural rollout and bring competition to broadband cable. Opponents-including the chairman of the FCC-say the marketplace is already competitive, or getting there, and that allowing the regionals into data early would actually be counterproductive

FCC Chairman William Kennard told a standing-room-only crowd at last week's hearing that he opposes both bills. He said that to allow the change to the Telecommunications Act of 1996 would stifle competition and, rather than speed rural rollouts, delay even further the delivery of high-speed services to rural communities.

"The Telecommunications Act is working, and it's working well," Kennard said. "It would be unfortunate at this time if we were to reverse course just as we were beginning to show progress."

Kennard says that, if Congress allows regional phone companies to offer long-distance digital, they likely will convert all their services-including voice-to digital. Once they had the Internet telephony, there would be no need to open their markets to competition. And unless they are facing competition, phone companies are not expected to roll out expensive high-speed networks to sparsely populated, low-return rural areas.

The FCC plans to examine the issue, Kennard said, but has not come to any conclusions on how the agency ultimately will handle the problem. The issue fell into the FCC's hands after the Ninth Circuit Court of Appeals in San Francisco last month ruled that it is up to the commission to decide how broadband service should be regulated.

But Goodlatte and Boucher, and Tauzin and Dingell-who don't necessarily agree with each other on how open access should be accomplished-got support from members of Congress who want to see high-speed digital services offered in their rural districts as soon as possible.

The Walt Disney Co., represented by Executive Vice President Preston Padden, said getting some competition into the broadband marketplace is necessary.

"For us and for consumers, the enemy is a marketplace where consumer choice is artificially limited or skewed by the conflicted business interests of companies that own both content and services of their own and a bottleneck pipeline to the consumer's home," Padden said in prepared testimony.

Padden used the hearing as an opportunity to continue raising Disney's concerns about the planned merger of Time Warner and AOL. He has been pressing Congress and regulators to impose some conditions on the merger since it was first announced last January.

"Unfortunately, AOL's planned merger with Time Warner and EMI has produced a dramatic turnaround in AOL's call for government action to protect consumer choice," Padden said. "Instead of 'immediate and unequivocal congressional action,' AOL now favors forbearance in deference to the promise of voluntary openness-a 'trust us' appeal. Consumers cannot rely on 'trust us,' because both AOL and Time Warner have demonstrated their propensity to restrict rather than enhance consumer choice."

Meanwhile, AT & T and the National Cable Television Association asked Congress to let the market work before passing any legislation.