Rep. Billy Tauzin (R-La.) could be spending his final months as chairman of the House Telecommunications Subcommittee. His potential next stop: the chairmanship of the House Commerce Committee, with its sweeping authority over the cable, broadcasting, satellite and telephone industries. While reluctant to talk about his possible promotion, Tauzin is less reticent when spelling out his concerns about America Online Inc.'s merger with Time Warner Inc., the Federal Communications Commission's reluctance to mandate cable carriage of digital-TV signals and some broadcasters' interest in datacasting to the potential exclusion of high-definition television. Following is an edited interview with Multichannel News Washington bureau chief Ted Hearn:
MCN: Renewal of the program-access rules is going to heat up at the FCC in about a year. The cable industry says it does not support extension. The satellite industry supports a five-year extension. Where do you stand?
BT: I'd like to see them extend it. I'd like to see them extend it for a while. I don't think we yet have enough competition in delivery systems to warrant a loss of those rules right now.
MCN: Would you like to see them tightened?
BT: They may, in fact, have to be tightened. This is a moving target. The issue is, and should always be, are they necessary to ensure that there is in fact choice in the marketplace among providers?
When the answer is no, they're not necessary anymore, then they ought to go. But as long as the answer comes back yes, that they're necessary to ensure competitive choice in the marketplace, then you ought to extend them and adjust them accordingly.
MCN: One proposal is to extend them to terrestrial-delivered signals and to have non-vertically integrated programmers included. What are your thoughts on those extensions?
BT: Again, I'd like to see the evidence in the marketplace. Both of those ought to be reviewed. If there's an obvious loss of effectiveness of the provisions because of the changes in the integration system of the ownership, and they need to be tightened in that regard, then so be it.
I remember Comcast [Corp.] delivered some of their programs differently than using the satellite. They went to terrestrial distribution. And the question then was: Was this a valid business plan, or was this connected to an avoidance of the program-access rules?
All of that should be examined in the question of whether or not the rules ought to get both extended and tightened in the process.
I would very much favor an examination of both of those issues very closely, and if the FCC fails to do that, you can count on us doing it at the Commerce Committee level.
MCN: Do you think there would be widespread support on Capitol Hill to extend or broaden the program-access rules?
BT: I can only remind you that they got passed over a presidential veto. That tells me that there was then, and I think still, widespread support for ensuring that there's a viable satellite competitor to cable.
MCN: Turning to AOL-Time Warner, some consumer groups and public-interest groups are advocating that the FCC reject this merger, asserting that the combination would be too large and too dominant. Do you share that view?
BT: No, and neither do I reject it. I don't know. I'm not in a position to know. We're going to have a hearing later on-we're going to schedule it in either May or June-at my subcommittee level, where we're going to get a look at that merger primarily to see what it means to the consumer in terms of how services are going to be provided, and how it's going to affect content providers that have previously used that system and that want to use it in the future.
So we'll get a look at of all that through that hearing, although we won't be focusing on the merger itself. That's really a judiciary question. The communications questions that we're going to focus on are what are the kinds of impacts this new merged entity will have on consumer services.
I'm particularly concerned also about what this new merged entity means regarding the FCC structure-I mean, as merged entities like this come into play, what box do you put them in?
The FCC is built with these old boxes that define players according to the character of their service. When they merge from one box to the other, what box do you put them in? I think it's going to help us to focus on the question of FCC reorganization, as well.
MCN: The cable industry's position on open access has evolved within the past year. Cable started out by saying.
BT: Wait. You've got to say what cable. AOL started out saying they wanted open access, right?
BT: And AOL is proposing a merger with Time Warner, and now all of sudden, it changed its position.
MCN: Why do you think that's happening, and do you think the promises that have been made by AT & T Corp. and AOL-Time Warner are satisfactory?
BT: I think it started because AOL obviously was unable to get a good deal, a good contract with AT & T [Broadband] cable. And I think AOL correctly figured out that it needed some leverage. There may have been other reasons for this merger, but that was certainly one of them.
When AOL eventually became a cable company itself, through this merger, it got the leverage it needed to deal effectively with AT & T cable.
I think the two entities now are probably going to end up having to deal with each other. There are going to be some new contractual arrangements if they each want to be carried on each other's system, or they're each going to be relegated to carrying their own service only.
I think the realities of the marketplace are changing as these two mergers go forward. The question for me has always been: Should Congress get involved with content regulation of Internet services?
And the answer I come back to is no. And the answer I always come back to is that we ought not replicate the same systems of regulations and universal-service subsidies in this new world of communications that has so hampered the development and the success of the old industries.
MCN: You have legislation that would lift some regulations off the Baby Bells in their provision of broadband.
MCN: And there are other bills to provide tax credits, expand universal service and some other forms of deregulation. What should happen first? Should they all go together? What's your assessment of these efforts at government stimulus, rather than deregulation, to promote broadband deployment, in rural areas especially?
BT: The Satellite Home Viewer Improvement Act is the best model to work with. The first thing we did, with local-into-local, was to remove the regulatory barriers and to allow the marketplace to serve as much of the market as it could economically or would economically wish to serve.
That ought to be the first thing we do when it comes to broadband, not the last thing. The first thing we ought not do is rush to a new form of government subsidy and universal service sort of provisions.
We ought first to pull away all of the regulatory barriers that prevent full deployment in the marketplace to as many areas as possible. Then we ought to look at what areas are still underserved, or not served at all, and to consider what remedies we want to bring to bear in order to reach those areas.
But we haven't done the first thing yet. We ought to do the first thing. And the first step ought to be to free the Bells from these old telephone restrictions that now inhibit their capacity to offer advanced Internet services to people across these old, irrelevant [local calling area] lines that unfortunately are still out there and hamper full deployment.
MCN: What's the outlook for the Tauzin-Rep. John Dingell (D-Mich.) bill (H.R. 2420), which would deregulate the Bells for broadband, for the rest of the year?
BT: It's improving every day. We ended the session before the Easter break with 193 co-sponsors, and every week, we've added co-sponsors. I suspect that we're going to reach a majority of the House at some point, and when we hit that level, I intend to take the issue to the leadership and ask that we be given a chance to bring it to the floor at some point.
I think our chances improve every day. It occurred to me today that there's an argument we have yet to make and that we're going to make a lot stronger in the weeks ahead.
And that is that the American public paid for all of those telephone fibers. We paid for them with our telephone bills. We put them in the ground, we paid for them to be laid across America, and the government ought not stand in the way of us utilizing those lines in order to have access to broadband services and competitive access.
I think that in this election year, with consumers watching Congress and what Congress can do for them before we go to the polls in November, I've got an issue that could be just as hot as program access was in 1992.
MCN: Have you been in touch with the George W. Bush campaign as far as feeding this to it as a potential campaign issue?
BT: I've offered to the Bush campaign the services of my subcommittee and our members-Republican members, obviously-to be of any resource that they might think useful. But that's in their hands. I've made the offer to them at this point.
MCN: You're familiar with Northpoint Technology Ltd.'s service. It wants to share direct-broadcast satellite spectrum to offer a terrestrial wireless service providing video programming and data. The DBS industry is concerned that Northpoint is going to present harmful interference or perhaps interrupt service to millions of DBS customers. Do you share those concerns, or do you think Northpoint has made a case that it won't interfere?
BT: I think Northpoint has made a case that it probably will not interfere. I think that still needs some final resolution.
And that's why I think it's important for Northpoint to submit its data and its testing to third-party independent review. But everything I've seen so far tells me that they probably have a technology that works, and they probably have a technology that could be very useful and would, again, probably not interfere with terrestrial reception of DBS signals.
But that's something that ought to be resolved by third-party review. During the markup of the rural [loan-guarantee] bill, I think I made that very clear that I thought they needed to do that in order to satisfy both the critics and, frankly, whatever customer concerns exist out there.
MCN: The DBS industry said Northpoint has bypassed the normal process and used its political connections to advance its application at the FCC. Are those allegations accurate? And if they are, do they fit in with some of the critical things you've said about the FCC and the way it goes about its business?
BT: I don't know if that's accurate. I've heard those criticisms. Remember, Northpoint initially proposed its technology as an adjunct, as a supplement to the DBS signal. They were going to be the local-into-local provider for DBS signals. Then it became a little clearer that Northpoint, potentially, could even be a full competitor to the DBS signal.
I think when that became clear, obviously, the DBS providers had a different view of Northpoint. And that may be one of the reasons why there's such animosity among them right now.
I don't know how much of that is concern about competition, how much of it is real, whether those allegations are true. All I know is what I've told you-that I've been impressed with the technology, that I think it's real, that I think it works and that I think in all probability, it does not pose an interference problem for DBS consumers. But I'd like to know that with some more certainty.
MCN: I wanted to talk to you about Commerce Committee politics. You're in a tough race to succeed Rep. Tom Bliley (R-Va.) as chairman of the Commerce Committee.
BT: No, no. Where did you hear that?
MCN: Just what I've read.
BT: You don't believe everything you've read?
MCN: Let me recast the question. You and Rep. Michael Oxley (R-Ohio) are vying to become the next chairman of the Commerce Committee.
BT: Not true, not true. I'm not vying with anybody. Let me disabuse you of that notion. I'm focused on one thing, and that's winning the majority for our party and making sure that we have majority control of the House after the November elections. When we do accomplish that, I feel very confident about what happens when that happens, I'm not worried about it until then. That's the company line.
MCN: Is that in response to House Speaker J. Dennis Hastert's (R-Ill.) request not to campaign for chairman?
BT: No, no, I've said that from the beginning. I've never said anything but that. Everything you've read is speculation or something coming from somebody else who's trying to make an issue of it. I've literally focused on very little else other than helping my party keep its majority so that we can in fact chair the committees and control the agenda. My No. 1 concern is making sure that my good friend, Mr. Dingell [the ranking Democrat], is not chairman of the Commerce Committee.
MCN: On digital must-carry, FCC chairman William Kennard said at the National Association of Broadcasters convention in Las Vegas in April that he's in no rush to judgment. Meanwhile, broadcasters said the transition can't go forward unless the FCC mandates digital must-carry. Are you concerned that the transition is at risk?
BT: I think it's very much at risk. What was the purpose of us giving the broadcasters new digital spectrum? And what was the purpose of us moving this whole industry to the digital broadcast if in the end, cable can block the delivery of those signals to its customers by refusing to carry it?
The whole purpose of moving the industry to digital would have been wasted, would have been negated, if cable doesn't deliver those signals to the ultimate customers.
I've got real problems with it. I don't know how it's going to be resolved yet, but you can bet that if it is not resolved in a way that leads to consumers having access to those signals, then we're going at some point to have to spring into action in Congress on the issue.
MCN: Why is it necessary for the government to come in with $1.25 billion in loan guarantees for the satellite industry?
BT: It [might not] be necessary, but it could be. What we were trying to do is to make sure that the markets in America that would not be served by the satellite industry-that is, all of the markets other than the top 70, which is an awful lot of markets-be served in some form or fashion. And that if in fact there was no way to serve them other than to do so by private loan that would be guaranteed by the government, we want to make sure that possibility existed. To say it again, I frankly hope it isn't necessary.
The bill even provides additional ways to serve those communities. For example, with opening a window at the FCC for new translator licenses to provide free over-the-air distribution of local broadcast signals to complement the satellite signals in many parts of the West.
In the end, if it becomes necessary to use these loan guarantees, we wanted to make sure that they were available to make sure that 30 percent of Americans who are not going to benefit yet from local-into-local SHIVA marketplace distribution of local signals are going to nevertheless have a chance to receive those signals.
MCN: If Congress had decided to relax the must-carry rules on DBS, the DBS industry said it would be able to serve more local markets and, thus, the need for a guarantee program would be reduced. Why didn't that happen?
BT: Well, it did happen, to some extent. Congress relaxed the must-carry requirements for two years to give satellites a chance to become operational and to give the technology a chance to improve so that the satellites could deliver more channels and services to their consumers.
Secondly, we've got some relaxation language in the rural satellite bill that provides that the new entrants only have to supply the same must-carry requirements as the biggest cable company is required to provide in a given area.
That's a relaxation that establishes parity with the cable companies. And that's sort of the aim of the bills. We're literally talking about creating a more competent competitor to cable.
In doing so, I think we have an obligation to provide that they operate under nearly the same rules on must-carry in order to have fair competition.
MCN: Is this bill going to go to conference, or is there an effort to get either the House or the Senate to pass the other's bill and just shoot it to the White House?
BT: There was an effort right at the end of the session before Easter break in the Senate to just take the House bill, as there was originally an effort in the House to take the Senate bill. My information is that we're going to have a small conference on it.
MCN: I believe you've raised concerns that datacasting might preclude broadcasters from doing HDTV. Is that your view, or is there room to do both?
BT: I think there's room to do both. My concern is only that if any broadcaster chooses to do data broadcasting to the exclusion of doing any HDTV, then we've got a problem there.
The 1996 [Telecommunications] Act and the acts that followed giving the broadcasters digital spectrum clearly intended for the broadcasters to do some HDTV. Otherwise, why give them 6 megahertz of incredibly valuable spectrum? The 6 MHz was designed to accommodate some HDTV production and broadcasting. If none occurs, that's a real problem.
The act also clearly intended that they could have some flexibility in using that spectrum for other purposes. It even said that if you use it for data purposes, in competition with other data suppliers in America, the broadcaster would have to pay for that spectrum.
So it clearly intended both, but if data is done to the exclusion of any HDTV production and broadcasting, then I think the broadcasters may find that there's an awful lot of problems in Congress with that kind of a decision. In fact, there may be efforts in Congress to either require the broadcasters to pay for that spectrum or to return some of it to other uses.