Stevens: Make Payments 'Universal'
Chairman-in-Waiting Wants Internet Providers to Kick Funds Into Rural Telecom Subsidy
By Ted Hearn -- Multichannel News, 2/1/2004 7:00:00 PM
Washington — Sen. Ted Stevens (R-Alaska), a good bet to be the next chairman of the Senate Commerce Committee, hopes to use that gavel to rewrite the Telecommunications Act of 1996, a landmark law that passed just as the Internet was about to explode and call old regulatory axioms into question.
In a speech here last week, Stevens told local phone executives that if he becomes chairman, he wants to break the legislative truce in place for eight years and write a new law that addresses imbalances introduced by the migration of traditional telecommunications services from circuit-switched networks to the packet-based Internet.
Stevens, currently chairman of the Appropriations Committee, has to yield that post at the end of the year under Senate GOP rules. Those rules also mean current Senate Commerce Committee chairman John McCain (R-Ariz.) has to vacate the center seat.
"Yes, he would like to become Commerce Committee chairman," Stevens press secretary Courtney Schikora said last week. "I know that telecommunications is very important to Sen. Stevens, particularly the area of Alaska because of the level of remoteness in the state."
As a senator from a state with a small population spread over a vast wilderness, Stevens has for years been preoccupied with equipping his state with modern facilities at reasonable prices. The mechanism for doing that is the universal service program, a federal/state system that circulates billions of dollars among companies to keep the price of local phone service affordable for the poor and rural high-cost areas.
As Stevens views it, the use of the Internet to send e-mail messages and complete phone calls means less use of the old phone network — and less revenue available for universal service, upon which Alaska is dependent.
In his speech, Stevens said his legislation would ensure that broadband Internet-service providers contribute to universal service.
That proposal would overturn long-standing Federal Communications Commission policy. The FCC doesn't require Internet-service providers to contribute to universal service because they are information-service providers, not telecom providers.
"While I agree with [FCC] chairman [Michael] Powell that high-speed services should be encumbered as little as possible by government red tape, every segment of the industry should pay into universal service," Stevens told the United States Telecom Association.
Stevens added that he's also concerned that heavily regulated incumbent phone carriers require regulatory relief to compete against more nimble, unregulated Internet-based providers.
"We will seek regulatory parity so you can compete on a level playing field and not a tilted table," Stevens said.
Stevens' message resonated with USTA members, many of which are universal-service recipients. Large USTA members, such as BellSouth Corp., have complained for years that their high-speed digital subscriber line services are more heavily regulated than cable's high-speed data product.
"Sen. Stevens's comments certainly accelerate the momentum for reform," said USTA president Walter McCormick in a statement. "This is the latest powerful example that leaders who are concerned about the nation's economy and America's consumers are increasingly concerned about outdated telecom rules."
Hundreds of millions of dollars are at stake for cable.
When cable companies offer circuit-switched local phone service, they contribute to universal services and, in some cases, also receive support from the fund. But fast-growing cable modem revenue, expected to accelerate even more with the rollout of VoIP services, is not subject to universal service taxation or local franchise fees.
With Stevens as commerce chairman, the cable industry has to decide whether to fight.
"Our focus for this year is on issues like the digital [TV] transition, establishing a framework for voice over the Internet and extension of Internet Tax Freedom Act. We'll turn to 2005 issues later in the year," said National Cable & Telecommunications Association spokesman Brian Dietz.
Legislation may not be necessary. The FCC has numerous proceedings that could become vehicles for expanding the pool of universal-service contributors.
The NCTA wants the FCC to first audit universal-service programs for waste before deciding to corral new contributors.
"We believe that before another service is brought into the Universal Service Fund, the FCC should take a look at the size and scope of the fund [and] to reform and right-size it," Dietz said.
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