The Baby Bells won a victory in the House last week, when the chamber passed a bill that would remove many regulatory constraints on their high-speed-data offerings.
The measure (HR 1542), sponsored by Reps. Billy Tauzin (R-La.) and John Dingell (D-Mich.), passed on a 273-157 vote after a six-hour debate that blurred partisan lines.
It was the culmination of a nearly three-year effort by Tauzin and Dingell to pass what is the first major overhaul of the Telecommunications Act of 1996.
The two lawmakers want to provide an economic incentive for the four regional Bell operating companies to deploy enough fiber to make high-speed Internet access affordable and universal, and to provide a competitive check to cable-modem service.
"This bill is about jobs," Tauzin said during floor debate. "This bill is about keeping cable honest."
Added Dingell, "We are going to get competition in and regulation out."
Although the bill would preserve some network-access rules for data competitors, House opponents complained that the Baby Bells' rivals would be forced out.
"They will be out of existence, which is the dream of the Bells," said Rep. Edward Markey (D-Mass.), who voted against the bill.
The bill would allow the RBOCs to transmit data over long-distance lines before demonstrating that their local phone networks are open to competition. They would still be required to open their networks before transmitting long-distance voice calls.
Tauzin-Dingell would originally have allowed the Bells to exclude competitors from leasing their high-speed-data facilities, but that provision was softened to ensure the bill's passage.
"We tried to be fair" to Bell competitors, House Majority Leader Rep. Richard Armey (R-Texas) said.
Tauzin-Dingell was amended to give the Federal Communications Commission the authority to increase the amount of fines levied against the Bells for violating agency rules. The cap on fines was raised to $10 million from $1.2 million for the first offense and to $20 million from $2 million for repeat offenders.
The bill's future in the Senate in uncertain because Sen. Ernest (Fritz) Hollings (D-S.C.) — chairman of the Senate Commerce Committee — remains a vocal opponent. Hollings and enough like-minded colleagues would have little trouble killing the bill.
"Clearly, a number of senators have indicated that this bill is dead on arrival in the Senate," said Russell Frisby, president of CompTel, a trade group opposed to Tauzin-Dingell.
On the Senate floor last Tuesday, Hollings called the Tauzin-Dingell bill "blasphemy" because it would undercut pro-competitive provisions of the 1996 Telecommunications Act.
"Touted as a way to enhance broadband communications, [the bill] merely allows the Bell companies to extend their local monopoly into broadband," Hollings said.
In speech on Thursday night, Dingell warned that Hollings's opposition was an obstacle that would be difficult to overcome.
"I have worked with him and I've worked against him," Dingell told members of the United States Telecom Association. "And to be perfectly truthful, knowing my good friend Fritz Hollings, I can't tell you which one is worse."
The USTA presented Dingell — the most senior member of the House, now in his 24th term in office — with a lifetime achievement award.
The House vote came after a massive TV ad campaign which stressed that the Bells faced excessive broadband regulation while cable operators are not required to share facilities with high-speed data competitors or permit subscribers to pick their Internet service providers.
AT&T Corp., which is both a cable operator and a local phone and data competitor that relies on access to local phone-network facilities, was a fierce opponent of the bill.
The National Cable & Telecommunications Association stayed neutral.
"NCTA strongly believes that marketplace competition is the best way to foster the availability of broadband services to all Americans. Thus, we have not opposed the Tauzin-Dingell bill nor advocated that regulatory conditions be placed on broadband competitors," the trade group said in a statement.
Last month, the FCC released data which showed that as of June 30, 2001, cable operators served 5.2 million high-speed-data customers, compared to 2.7 million served by phone companies.
'LIKE THOSE NUMBERS'
During House debate, supporters of Tauzin-Dingell asserted that liberating the Bells would add $500 billion to the U.S. economy and create 1 million new jobs.
"I like those numbers," said Rep. David Bonior (D-Mich.).
Other supporters claimed that the regulatory disparity between broadband services offered by phone companies and cable operators likely accounted for cable's 54 percent market share, and that deregulation of the Bells was necessary to level the playing field.
"Perhaps we need competition for cable," said Rep. Cliff Stearns (R-Fla.). "This would do it."
Opponents argued that the Bells have been fined billions of dollars for failing to comply with the telecom law and such intransigence should not be rewarded with broadband deregulation. Rather than create jobs, the Tauzin-Dingell bill could eliminate them by putting competitive data carriers out of business, they said.
"This is going to shut down [the competitors], the children born out of the Telecommunications Act," said Rep. Anna Eshoo (D-Calif.).
The FCC has launched several rulemakings that could achieve many of Tauzin-Dingell's goals administratively. But Bell rivals believe the FCC is far from taking such bold steps.
"If there is any signal here that [the FCC] ought to take from this, there is deep division in Congress on this subject and a feel of reluctance on the part of the Congress … to alter the terms of the telecom act," said AT&T general counsel and executive vice president of law and government affairs James Cicconi.