GAO study Raises Nagging Questions

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Washington-Over the last four years, many in Congress and key industries have resisted alterations to the Telecommunications Act of 1996, believing the law needed time to mature and provide stability to the market.

But in a recent study, the General Accounting Office indicated the formula for competition crafted by Congress is already under stress. It pointed to the advent of the Internet and the onset of the open-access debate as compelling reasons to think about drafting a new plan.

The GAO, the investigative arm of Congress, looked at Internet access-in particular, the disparate regulatory treatment of cable operators and phone companies-and concluded that lawmakers should consider ensuring that "both existing and emerging services provided over different networks are regulated in a comparable manner."

Unlike phone companies, cable operators do not have to provide nondiscriminatory, or open, access to competing Internet-service providers, although AT & T Corp. and Time Warner are moving toward voluntary carriage agreements with competitors.

The GAO, which usually uses neutral language and presents positions in a balanced manner, said Congress must recognize that companies providing the same service are facing different forms of regulation and that marketplace convergence is clashing with "stovepipe" or "compartmentalized" laws and regulations.

"Other manifestations of this problem within the communications marketplace are likely to arise in the coming years," the GAO said. The next big battle, it suggested, might come over the regulation of voice services-Internet-protocol telephony-over the Internet.

Were cable operators to offer IP telephony, would they then become common carriers required to provide interconnection and contribute to the programs that keep phone service affordable for low-income and rural users?

"What rules will apply to such a service?" the GAO asked.

In forwarding its recommendation two weeks ago, the GAO notably omitted an opinion on imposing access mandates on cable. This means its views on the need for new laws could be interpreted to mean that open access should not apply to either cable or telephone companies.

Based on interviews with numerous telecom experts, industry players and trade groups, the GAO indicated that if cable operators, phone companies, wireless companies and satellite carriers were each to provide Internet access only through one affiliated provider, there would be sufficient competition at the facilities level to persuade regulators that access to any and all ISPs was something they did not have to impose.

The GAO said some experts interviewed argued that the abundance of ISPs was not the result of some specific government action, but the outcome of telephone regulations that required nondiscriminatory access long before the Internet became commercialized.

The experts told the agency that government action to protect ISPs was not necessarily desirable.

"Many of these experts stated that a reduction of consumer choice at the ISP layer is not a concern as long as there is adequate competition among companies providing physical transport to the Internet," the GAO noted.

Washington cable attorney Barbara Esbin, an Internet access expert at Dow, Lohnes & Albertson, agreed with the GAO's discussion about the competitive benefits of multiple transport providers.

"I think there is a lot of validity to that point of view," Esbin said. "If there are multiple platforms, you don't need to worry whether non-facilities-based service providers are going to get access."

But the GAO did not ignore the other side of the debate.

Today, 7,000 ISPs compete for subscribers, and the vast majority of Internet users have access to seven providers in a market, the GAO found.

Open-access proponents insist ISP competition has been vital to the Internet's nearly vertical growth curve and a fundamental component of its end-to-end architecture.

Apparently relying on the open-access views of the OpenNet Coalition and the Media Access Project, the GAO said many ISPs are now offering more than pure Internet access by integrating content and applications.

As a result, consumer exposure to multiple content aggregators was crucial, in that it allows subscribers to "vote with their feet" if their enthusiasm for a particular ISP started to wane.

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