Policy

Barton: Bush Will OK National Franchising

3/31/2006 7:06 PM Eastern

Washington —President Bush will likely sign a bill before the year is out that's designed to allow phone companies to bypass local franchising and sweep into cable-television markets nationwide, House Energy and Commerce Committee chairman Joe Barton (R-Texas) said last Wednesday.

“I am a pretty good poker player and I'd say the odds are 2-1 the president is going to sign a bill this year,” Barton told reporters. “Obviously, it's going to be modified and amended, but I think it has real power and I believe the president will sign a version very close to this bill sometime this calendar year.”

Barton's bill, unveiled last Monday, would award a national franchise to a telephone company or other new entrant into the video services business within 30 days after applying to the Federal Communications Commission.

Telephone companies such as AT&T Inc. and Verizon Communications Inc., which have demanded elimination of local franchising, also would not face any mandate to serve all homes in any city or town they chose to serve. There is no deadline or requirement in the bill for new entrants to provide service to all residents in a community. That means the nation's two largest phone companies — or any other competitor — could pick to choose wealthy neighborhoods, instead of low-income areas.

The lack of a so-called buildout requirement is controversial.

The committee's leading Democrats, Reps. John Dingell of Michigan and Edward Markey of Massachusetts, fear that the lack of buildout requirements will deny minority and poor Americans access to video and Internet services, a viewed shared by the cable industry.

“Not all families in the same community will share in the competitive showdown,” Dingell said at a House subcommittee hearing last Thursday.

Also raising concerns is a feature that puts the FCC in charge of policing whether cable companies, telephone companies or other providers of high-speed access to the Internet were discriminating against different outfits trying to provide video or other services on the World Wide Web, either by blocking them from their networks or requiring additional fees to ensure reliable, fast delivery.

The bill also would permit local governments to compete for broadband subscribers, regardless of local market conditions. Verizon, in the past, vigorously fought the development of a municipally created wireless access network in Philadelphia.

NO TEETH

At the same hearing, Markey was especially vocal about instituting so-called network-neutrality rules, which would mandate that there be no discrimination by network gatekeepers such as cable TV operators or telephone companies as to which Internet services are allowed on their distribution networks.

Markey argued Barton's approach was toothless because it withheld from the FCC specific authority to adopt regulations that would prospectively ban cable operators from setting up premium services that content providers would have to pay fees to be included in.

“In my view, rules ensuring network neutrality are indispensable,” Markey said, calling a fee-based structure “nothing more than the imposition of a broadband Internet tax on electronic commerce.”

Markey complained that the net neutrality provisions were too weak — while National Cable & Telecommunications Association president Kyle McSlarrow urged their removal altogether, because “having the government regulate the Internet for the first time is a mistake.”

AT&T and Verizon also oppose the net neutrality provisions. “Any provider who blocks access to the Internet would be inviting its customers to find another provider,'' AT&T chairman Ed Whitacre said earlier this month at the TelecomNext conference in Las Vegas. “AT&T will not block anyone's access to the public Internet, nor will we degrade anyone's quality of service, period. End of story.''

Barton, whose negotiations with Dingell and Markey broke down a few weeks ago, is moving ahead without them, hoping that support from a pair of Democratic backbenchers, Reps. Bob Rush (Ill.) and Eliot Engel (N.Y.), will be sufficient to give the bill a bipartisan hue.

The House Subcommittee on Telecommunications and the Internet, headed by Rep. Fred Upton (R-Mich.) is expected to approve the bill April 5, with full committee passage expected to come in late April or early May.

“The speaker and the majority leader are already clearing floor time for us. They have made it a high-priority item,” said Barton, predicting a House vote “sometime in May or June.”

UNFAIRNESS AND UNKNOWNS

The cable industry has not endorsed Barton's bill. The NCTA is concerned that phone companies can unfairly target the most affluent customers.

Barton's bill includes an “anti-redlining” provision, meaning that operators can't bypass low-income neighborhoods they don't want to serve.

But because the bill frees phone companies to define the markets they intended to serve, McSlarrow, testifying last Thursday before Upton's panel, called the redlining provisions “an illusion.”

There are also unknowns in the proposed legislation.

Under Barton's bill, a cable operator is entitled to a national franchise when a phone company enters the market. McSlarrow said the bill needs to address whether cable and phone companies that currently have franchises need to wait for them to expire before they are eligible for national franchises.

McSlarrow noted that a cable operator with a national franchise might even need to apply for a local franchise if the phone company with draws from the market.

Upton told reporters that the cable and phone companies will endorse the bill.

“I want to say that we are very close to getting their sign-off,” he said.