Local Governments Brace for Rough 2005

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Local governments are bracing for a rough Congress next year, with an eye on telecommunications legislation that could impact cities’ bottom lines.

“Local governments’ interests were and are under attack in Washington and in the state legislatures. Absent a unified and strong response by local government (and where possible with state government groups), matters will only get worse in 2005 and 2006,” according to a report prepared by the Local Government Telecommunications Alliance.

The seven-page report, obtained by Multichannel News, indicated that Congress will come under pressure from industry next year to limit state and local oversight of Internet-protocol services, whether voice, video or data.

The report explained that events in 2004 sent “a not-so-subtle message to local government” that Congress might pass a new law that shields IP-service providers from state and local regulation, except in the areas of consumer protection and emergency services.

The Senate is expected to take the lead in drafting new legislation designed to overhaul the Telecommunications Act of 1996. Federal Communications Commission chairman Michael Powell, for example, has recommended passage of a new law, saying that current statutes are broken because they are less than clear in stating whether IP services are information or telecommunications services.

In terms of 2004, the LGTA report said extension of the Internet-access-tax ban by Congress and two actions by the FCC to shield voice-over-IP providers from state regulation signaled further erosion in state and local oversight.

The report also noted that in early December, the Supreme Court refused to hear a local-government appeal tied to the FCC’s classification of cable-modem service. The court’s decision meant that the FCC’s ruling that cities could not collect 5% of cable-modem revenue as a franchise fee would remain in effect.

Cities claimed that the inability to assess modem fees is costing them almost $500 million annually.

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