Stevens Floats Major Franchising Overhaul

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Washington— Sen. Ted Stevens (R-Alaska) last week introduced a massive telecommunications bill that would not only overhaul cable-franchising rules but also restrict cable control of sports programming, impose digital-TV carriage requirements on cable operators and require federal regulators to monitor discriminatory conduct by broadband access providers.

But the bill received only lukewarm support by the ranking Democrat on the Senate Commerce Committee, which Stevens heads. Declining to wholly embrace the 135-page-long bill was Sen. Daniel Inouye (D-Hawaii), an old friend who had worked hand-in-glove with Stevens since last January without noticeable signs of policy fissures.

In a surprise, Inouye said that although he agreed to sign on as a co-sponsor in the “spirit of bipartisanship,” he could not support the document as a whole, faulting the bill’s network-neutrality provisions in particular.

Under the bill, the Federal Communications Commission would oversee cable, phone and other broadband access providers that attempted to demand fees from Web-based search, information, and applications providers in exchange for faster or more reliable delivery of their services to consumers.

'GOING NOWHERE’

But the oversight would be limited. The FCC, under the Stevens bill, would be relegated to filing annual reports on network neutrality and make recommendations to Congress for action if the agency identified problems.

“We cannot ignore concerns about the potential for discrimination by network operators, but the [bill] appears to do just that by failing to create enforceable protections that will ensure network neutrality,” Inouye said.

The Stevens bill was a setback for Amazon.com Inc., eBay Inc., Google Inc., InterActiveCorp, Microsoft Corp. and Yahoo! Inc., huge Internet players aiming for a legal ban on pay-to-play demands.

Scott Cleland, president of Precursor LLC, an industry research and consulting firm, said Inouye’s concerns right out of the gate suggested that passage of a Senate bill was highly unlikely this year.

“In the Senate, it is always hard to legislate,” he said. “We are very early in the process, and we don’t have consensus. There’s precious little floor time before the election.”

Congress is expected to adjourn in early October, leaving about 46 legislative days ahead. A lame duck session is possible, but that period is typically used to finish up spending legislation, as lawmakers are eager to return home. Stevens unveiled his bill hoping to pair it with companion House legislation later in the year for eventual presentation to the White House. Sponsored by Energy and Commerce Committee chairman Joe Barton (R-Texas), the House bill (H.R. 5252) could reach the House floor May 10 or May 11, but Judiciary Committee chairman James Sensenbrenner (R-Wis.) has demanded a referral to his committee.

“Clearly, if [Sensenbrenner] gets it, it will delay it. It won’t be on the floor [this] week,” Upton said before offering a bullish outlook for a new law. “At the end of the day, we’re going to have a lot of [House] votes for’’ the Barton legislation.

The Senate Commerce Committee has announced hearings on the Stevens bill (S. 2686) on May 18 and May 25, with June 8 as the tentative date for a full committee vote. The Stevens bill could come under the scrutiny of the Senate Judiciary Committee, either directly or within the context of AT&T Inc.’s proposed $67 billion merger with BellSouth Corp.

A Stevens aide said she had “zero doubt” that a new law would pass this year if key House and Senate lawmakers can pass bills in their respective chambers and get into a conference to marry the two versions.

“They are just posturing,” said a former Republican staff member of the Senate Commerce Committee, who asked for confidentiality. “This bill is going nowhere this year.”

ISSUES ABOUND

While the House bill is largely devoted to cable franchising issues, the Stevens bill is broad, requiring the FCC to complete 24 separate rulemakings, reports or proceedings.

On cable franchising, the Stevens bill would retain local control but allow new entrants to enter cable markets within 30 days under normal circumstances. The House bill would allow new cable companies to bypass local regulators in connection with securing a franchise.

Local governments, however, would lose authority to review the sale or transfer of a cable franchise under both bills, and they could not regulate basic cable rates of a cable incumbent under attack from a new provider facing competition under the Stevens bill.

The bill would also ban a pay TV distributor from locking up local live sports events, a provision that could cost Comcast Corp.’s control over Comcast SportsNet Philadelphia and DirecTV Inc. over “NFL Sunday Ticket,” although Stevens aides insisted the bill exempts the out-of-market National Football League game package.

In a provision certain to anger TV stations, the bill would allow cable operators to downconvert “must carry” digital television signals to any digital or analog format from the headend generally from Feb. 17, 2009 until Feb. 17, 2014. During the same transition period, small cable operators must offer DTV signals in analog, with digital carriage optional.

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