McCain Bill Skirts Cable-Access Issue

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A few months ago, the cable industry was bracing for Sen. John McCain's broadband legislation and for provisions that might force cable systems to carry multiple Internet-service providers.

McCain, an Arizona Republican, introduced the bill on Aug. 1, just hours before the Senate headed home for its traditional August hiatus.

Fortunately for cable, McCain decided to postpone a battle on the ISP access issue for now. Instead, McCain's Consumer Broadband Deregulation Act (S. 2863) relies on the market as an initial matter, but it does so without stripping authority from the Federal Communications Commission to step in to correct market failures on both a short-term and long-term basis.

Competition in the access market is expected to safeguard consumer access to all manner of Internet content and services. If that effort fails, the Senate "may need to consider a different approach," McCain said in a statement that accompanied the 17-page bill.

Broadband legislation has proliferated on Capitol Hill, though nothing is expected to reach President Bush's desk this year, including McCain's iteration.

McCain's bill likely merits more attention than the others, because Republicans might regain control of the Senate next year, thus restoring McCain as chairman of the Commerce Committee.

Depending on how the political winds are blowing at that time, chairman McCain might decide "a different approach" to broadband policy is needed.

CABLE: 'NOT BAD'

For now, the McCain bill is good news for cable. It contains no forced ISP-access mandate, and it blocks local governments from using control of the public rights-of-way to squeeze revenue from cable operators that deploy high-speed Internet service.

"For cable, there's a lot here that is not bad," said a cable-industry lawyer who would not speak for attribution.

Further, McCain's measure protects cable by legislating that his bill would trump any existing provision in federal cable law that might raise a conflict.

"From a cable standpoint, that is one of the things that commends the bill," the cable attorney said.

At one point, the National Cable & Telecommunications Association was concerned that McCain might attempt to regulate cable-modem service.

"NCTA believes that market-based competition is the best way to ensure that broadband services are made available to all Americans," said trade group spokesman Mark Osgoode Smith. "We appreciate Senator McCain's deregulatory approach to broadband deployment, which already has experienced impressive growth based upon free-market principles."

ROLE FOR FCC

McCain was one of the few senators to vote against the Telecommunications Act of 1996, claiming the law was excessively regulatory and ceded too much power to the FCC.

Oddly, McCain's bill requires the FCC to perform key tasks. For example, it calls on the FCC to define "high-speed Internet access" in terms of megabits per second.

An FCC majority hostile to the intent of McCain's bill could use its power to define high-speed Internet access to ensure that no provider met the standard and enjoyed the law's deregulatory benefits.

A McCain aide downplayed the reliance on the FCC, claiming "some of those things are studies just to inform the Congress."

McCain relies on the FCC in other ways. His bill would bar the agency and the states from regulating "rates, charges, terms or conditions for retail offering of broadband service." But in two years, the FCC could adopt service quality-rules that would apply nationally and would be enforced by the states.

Although the bill precludes automatic ISP access, it empowers the FCC to impose access mandates on "any entity" that had to comply with access rules on the day McCain's bill became law.

"Any entity" in this case means a local phone company. The FCC's authority would sunset in five years unless the agency determined that it needed to retain its access authority "to protect and promote competition."

CONVERGENCE FREE

McCain's bill also appears weak on the key issue of convergence. The bill would not interfere with the regulation of non-broadband services (such as local phone service or cable television) provided over the same facilities as high-speed Internet access.

The bill does not address what would happen if regulated voice and video services were to migrate to the unregulated broadband side, also called convergence.

"Certainly, going forward that may become a more and more difficult question to answer," a McCain aide said. "If a telco goes packet-switching for voice to provide dial tone, that doesn't necessarily mean states can't regulate that rate."

McCain's bill does not apply to the business market. That takes some of the sting out of consumer-market provisions that would deny competitive carriers the legal right to lease fiber loops and subloops at regulated rates from phone incumbents or to interconnect at remote terminals.

Over the years, McCain has forged close ties with consumer advocates over a mutual concern about rising cable rates.

In April, McCain asked the General Accounting Office to investigate cable-rate increases and to assess the reliability of industry-supplied financial data reported by the FCC.

CONSUMERS WINCE

But Consumers Union and the Consumer Federation of America both described McCain's bill as bad legislation.

"We don't support it, because it does not adequately regulate monopoly high-speed services," said CU Washington office co-director Gene Kimmelman. "However, we are pleased that Senator McCain acknowledged in his floor statement that discriminatory practices by cable monopolies could undermine the open nature of the Internet, and therefore he is still open to the idea of regulating cable if this problem grows."

CFA research director Mark Cooper said McCain's bill should have require multiple ISP carriage on both cable and phone companies.

"It exempts cable and it abolishes common carriage," Cooper said. "He should have done something on cable. From my point of view, that is the problem."

Another issue is whether the McCain bill is necessary, given that FCC chairman Michael Powell is looking to shield broadband service providers from access and pricing regulations.

Two weeks ago, Powell said his rulemakings should be completed by the end of the year.

A McCain aide said it was important to codify Powell's changes in law because in court, it's easier to overturn a rule than a law.

"What this bill tries to do is bring some certainty," the McCain aide said.

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