Policy

Red Rules

11/07/2004 7:00 PM Eastern

Washington— One thing is clear from Tuesday’s election results: Capitol Hill Republicans will control the destiny of any changes in telecommunications law over the next two years.

In addition to President Bush’s victory over Sen. John Kerry (D-Mass.), Republicans padded their red-state majorities in both the House and Senate on Nov. 2, retaining control of key committees from which any changes in cable and telecommunications law would originate.

Cable industry leaders like to say that the fate of the industry is not tied to the outcome of any one election.

“I think the cable industry was in good position, no matter who won the election,” said Steve Burke, the Comcast Corp. chief operating officer and an active fundraiser for the Bush-Cheney ticket.

Comcast chairman and CEO Brian Roberts has urged Congress to refrain from making drastic changes in telecom policy, saying broad legislation would rattle investors who don’t want to see regulatory uncertainty hanging over cable stocks.

Comcast’s vision clashes with that of the Baby Bell phone companies, which believe that cable operators enjoy regulatory advantages — especially in broadband — that a new law should eliminate.

Insight Communications Co. Inc. vice chairman and CEO Michael Willner said because the cable industry has friends in both political parties, election results should not be seen in anticipation of policy victories or defeats.

“We talk to individual members and there are people who understand and support our issues on both sides of the aisle,” Willner said. “I don’t think either party has a strong philosophical belief about what to do about cable.”

Senate Republicans will hold 55 seats. That’s up from 51, but still five votes short of the 60 needed to prevent a Democratic filibuster, which typically means the death of nominees and legislation.

HOUSE MARGIN: 30

In the House, Republicans will control 231 seats and the Democrats 201, with two races in Louisiana still undecided until run-off elections are held in a few weeks. The House has one Independent.

Leaders in Congress have already signaled interest in writing a new telecom law, egged on by Federal Communications Commission chairman Michael Powell, who thinks the Telecommunications Act of 1996 failed to provide the agency with the tools to deal with the convergence of voice, video and data over a single distribution platform.

The election results should be good news for cable operators and programmers, which have counted on Capitol Hill Republicans to oppose rate reregulation, to go easy on cable mergers and to permit MSOs to exclude competing Internet-service providers from their high-speed data networks.

HOUSE STABILITY

The lineup in the House should remain stable.

Rep. Joe Barton (R-Texas) is expected to retain his chairmanship of the Energy and Commerce Committee. Rep. Fred Upton (R-Mich.) is likely to retain the helm of the Telecommunications and the Internet Subcommittee.

Barton — an opponent of mandatory cable carriage of local TV stations — has called for ending the digital-TV transition Dec. 31, 2006, two years earlier than an FCC plan nearing a vote. Broadcasters are trying to scuttle the agency’s plan.

Barton has also called for revamping the 1996 law, sharing Powell’s assessment that current law failed to anticipate that various industries, with their unique sets of rules and regulations, would start offering nearly all the same services.

Barton is also concerned about strains on the subsidy program to keep local phone service affordable in rural America, especially if voice-over-Internet protocol (VoIP) providers are not required to pay into the system called universal service.

Cable needs to monitor Barton in at least one area: program indecency.

Barton has repeatedly declared that fairness dictates that cable networks should comply with the same federal indecency laws that govern radio and TV stations.

Those rules ban indecent programming between 6 a.m. and 10 p.m.

The cable industry has said programming bans on subscription video services violate the First Amendment, especially if parents possess channel-blocking technology to shield children from sex and violence.

SENATE CHANGES

In the Senate, a key leadership change is in the offing.

Sen. Ted Stevens (R-Alaska) is likely to take command of the Senate Commerce Committee from Sen. John McCain (R-Ariz.), who won re-election last Tuesday. McCain had to yield the gavel due to GOP Senate rules that impose term limits on committee chairmen.

McCain’s loss of power is a political gain for the cable industry. He has hectored MSOs about rising consumer rates and their resistance to offering channels to consumers on an a la carte basis.

Months ago, Stevens said writing a new telecommunications law was a priority and something he would pursue in close consultation with veteran Sen. Daniel Inouye (D-Hawaii.), another winner last Tuesday.

Affordable rural phone rates have been a Stevens cause for decades. He is also troubled that if voice traffic migrates to the Internet, and private Internet-protocol networks and providers do not have to contribute to universal service, phone rates will spike in his state — a fear shared by many Senate lawmakers from states with large rural profiles.

Even though key lawmakers say they want to pass a new law, such a task has never been easy.

It took more than one decade for warring industry factions to work with Congress to produce the compromise telecommunications bill President Clinton signed in early 1996.

Mindful of that history, one cable lobbyist said that it was highly unlikely that the Senate would pass legislation before next August.

But Tom Tauke, Verizon Communications Inc.’s chief Washington lobbyist, plans to press Congress for a new law that lays out a national blueprint.

“We do expect the Congress will act in 2005 in establishing a new policy for telecommunications,” he said.

HOLLINGS OUT

Even Tauke, a former House Republican from Iowa, confirmed that hopes for swift action on Capitol Hill often don’t materialize.

“Heaven only knows when you are dealing with Congress,” he said.

In another plus for cable, the Senate won’t include Sen. Fritz Hollings (D-S.C.), who is retiring after 38 years in office. Earlier in the year, Hollings won Senate approval of a bill designed to require cable operators to ban the transmission of most violent programming until after 10 p.m.

The bill is not expected to pass when Congress returns for a lame-duck session next week.

Hollings was the ranking Democrat on the Commerce Committee. Others leaving the panel are Sen. Peter Fitzgerald (R-Ill.), who declined to seek re-election, and Sen. John Breaux (D-La.), who also retired.

Kerry, absent from the Commerce Committee while pursuing the presidency, is expected to return to the panel in January, where he has championed various tax incentives to promote broadband deployment in poor urban markets and expensive-to-serve rural areas.

Changes Ahead
How the new Congress shapes up:
• In the U.S. Senate, Republicans will hold 55 seats, up from 51 but are five votes short of the 60 needed to prevent Democratic filibusters.
• In the House of Representatives, Republicans will control 231 seats and the Democrats 201, with two races in Louisiana still undecided until run-off elections are held in a few weeks, and one Independent member.

October