Tauzin Vows Telecom Aid to Rural USA

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Rep. Billy Tauzin (R-La.), father of the 1992
program-access laws that forced cable to sell its programming to competitors, scored
another big legislative victory Nov. 29 when President Clinton signed the law allowing
satellite carriers to beam local-TV signals throughout a market without full must-carry
until 2002. Looking ahead to next year, the chairman of the House Telecommunications
Subcommittee sees video streaming over the Internet as a "huge communications
issue," and he views support for Baby Bell deregulation to provide data long-distance
service as "the consumer issue of the year." Following is an edited transcript
of Tauzin's interview with
Multichannel News Washington bureau chief Ted

MCN: You must be pleased that the Satellite Home
Viewer Act bill is now law. What are your expectations for the law going forward?

BT: The expectations are that, of course, in the top
65 markets, consumers will very quickly have a choice of full-package programming, either
from the cable company or, now, from the satellite company, which will be able to offer
the local programming in a package. And that's the key to the whole issue -- creating
real competition for cable, in as many markets, as quickly as possible.

So for the top 65 markets, I think, the bill will have
accomplished that. For the rest of the country, our hope is that with the improvements we
have in the bill for consumers to be able to access long-distance signals if they
can't receive a good- and decent-quality picture from their local television
stations, we'll give some relief to satellite consumers around the country from being
shut off from the network programming.

And more important, I hope that it will introduce other
technologies -- perhaps such as Northpoint [Technology Ltd.'s] and other wireless
technologies -- where local programming can complement a satellite package to the

Finally, we have a commitment from both [Phil] Gramm
[R-Texas] on the Senate side and [Majority Leader] Dick Armey [R-Texas] on the House side
that before April, the House and Senate will report a bill that will hopefully help to
secure the launching of a satellite to provide local-into-local for the rural and smaller
markets of America. So that, in fact, competition can arrive not just for the larger
markets, but for everyone in our country.

MCN: But the point here is that the
Republican-controlled Congress has decided that cable-rate regulation doesn't work,
and that this is a way to use competition to check rising cable rates. Is that correct?

BT: It's actually a continuation of the efforts
we've made since 1992 to build a competitor for cable, in lieu of having to go in and
constantly regulate cable prices, terms and offerings.

Everyone knows regulations at both the state and federal
level have not worked well, and they are not the best approach to protect consumers. So
what we have been doing since 1992 with the creation of direct-broadcast [satellite]
television and now, with local-into-local, is creating the possibility of choice for
consumers, the theory being that consumers can better regulate the marketplace if they, in
fact, have real choice.

MCN: EchoStar Communications Corp. chairman and CEO
Charlie Ergen does not like the bill. He called it anti-consumer. He complained about the
must-carry and retransmission-consent provisions. What's your view of his criticisms?

BT: Well, he preferred the House-passed version. So
did I, obviously -- I helped write it. Charlie probably has a bigger complaint with his
own satellite competitors, and he thinks they got a better break in here than he has.

And that may be true to the extent that they have already
negotiated carriage with most of the networks, and he, I think, has negotiated agreement
with only one, Fox. So he has some problems in terms of his competitive position with
other satellite carriers, and I understand his concern there.

But on the whole, I have to disagree with Charlie. This is
a big step forward for DBS to become a viable competitor to cable, and I take nothing from
Charlie when I say this. He has been an incredible pioneer in this effort, and he has done
great work to bring DBS-television choice to America.

And I frankly wish we could have passed the provisions that
he's most concerned about, in the way the House wrote them. But the House
doesn't write law by itself, you know. We had, literally, to write a bill that took
into account the Senate version, and as a result, it doesn't quite do all of the
things that Charlie would have hoped it would have done.

It is still a much better law than the current law, and it
is going to advance dramatically the cause, the general cause, of creating real
competition for consumers.

MCN: Ergen issued a report card, and he wound up
giving Congress a D average, or a 1.0. Did you notice that he didn't issue grades for
things in the bill such as authorizing local into local and cutting copyright fees?

BT: Well that's my point. He's graded the
things he's not happy with, and he then failed to account for, as I said, the very
strong improvements in the law that will help satellite-broadcast television in general.

I think a fair, objective grade for the bill would be much
higher than a D. It's not an A, and it's certainly not an A-plus, but it's
a heck of a lot better than a D. And I think it merits strong support among the general
public, and certainly among those who are now choosing satellite television as an
alternative to the incumbent cable.

MCN: Were you glad to see that the cable industry
sat back and didn't try to block passage of this law?

BT: Well, it was part of our understanding. March
[cable deregulation] came by this year and went without event. When there was a lot of
thought about delaying the March deregulatory date, or extending it, or in some way
changing the law that allowed cable to become totally deregulated in March, the
understanding was that if we did not mess with that date, cable would not oppose -- in
fact, it would be quietly helpful toward -- our efforts to complete the competitive
package with DBS.

Frankly, I think, since 1992, when we first launched
program access over cable's objection, cable has come to understand that satellites
are a new way of selling their products. In many cases, cable has now invested in
satellites. So they're in a different economic position now, and probably a different
political position, than they were in 1992.

They now view satellite distribution the way I did in 1992:
as an additional way to get programming out to many people who could not otherwise [get]

MCN: The DBS must-carry provisions look vulnerable
in court, given the fact that cable must-carry was a very close call in the Supreme Court.
What's your view?

BT: Over time, as there is more competition in
carriage, as there is more than one pipe, as there's competition and choice for the
consumer, it's going to be harder and harder to make a legal case for government
regulation of content.

Must-carry is just one of those forms of content
regulation. The last time must-carry was tested, as you know, it passed muster, only
because the court correctly looked at cable as a monopoly provider of programming.

When cable is no longer the monopoly provider -- when there
is adequate and real competition and choice for consumers -- it is going to be harder and
harder to argue that must-carry is a sustainable, constitutional content-control

My guess is that -- and this is the irony of it -- as
competition really develops in the marketplaces of America, and as more and more people
choose to take advantage of the satellite systems, or other terrestrial distribution
systems, over the incumbent cable, must-carry is going to fall as a legal principle. It
has to fall, eventually.

MCN: If DBS must-carry does go down in court,
doesn't that upset an important compromise in this bill?

BT: No, because if DBS must-carry goes down, so will
cable must-carry, and the whole concept is lost. And it will be lost because there is
ample competition and choice for consumers.

In the end, that's the way it ought to be. Congress
ought not to be in the business of mandating content on any communications channel where
there is choice for consumers. Consumers ought to decide which of the pipes, or the
channels of communication, they want to use, depending upon what's in those pipes and
what content they enjoy.

For Congress -- government -- to be making a decision about
what kind of speech or content is going to be contained in a channel of communication is
generally not only discouraged, but also outlawed, under the Constitution.

We only have limited ability there, and the court in the
must-carry decision very clearly said our capacity there is limited only to the
circumstance where there is no competition, and there's only a single pipe. When that
changes, so should the law.

MCN: Where did you come down on this $1.25 billion
rural-loan-guarantee program? Did you support it?

BT: Yeah, I did, and I will again. We have an
agreement that Sen. Gramm is going to produce a bill out of his Senate Banking Committee
before April 1, and we now have the agreement of the Majority Leader, Dick Armey, that a
bill will be produced for the floor before that same date so that the House and Senate can
revisit this issue and make sure in effect that it gets voted on at some point.

The reason why I supported it was because obviously, there
is not sufficient transponder capacity on existing satellites to provide local into local
beyond the 65 major markets of America. It leaves out rural America. And the financial
incentive to go in and serve rural America is not very strong without some kind of
loan-guarantee program, like the idea that was floated during this conference.

So I've endorsed the idea. I think we need to explore
it, we need to examine carefully how it's developed to make sure that it's a
competitive offering of this loan guarantee, and that small cable companies that will face
this competition have their fairness issues addressed. Maybe doing it in a separate bill
is the right way to do it.

MCN: Sen. Gramm said he was puzzled that this
satellite bill was supposed to be competition to cable, but this rural program seemed to
include cable as a potential entity to get access to these loan guarantees. Was that
right? Was small cable eligible for some of these loan guarantees in the bill?

BT: Well, it depends on what version of the language
you're talking about. There were several versions floated. And obviously …

MCN: I meant the one that passed the House.

BT: There wasn't one that passed the House. The
loan guarantee was an idea offered up in the conference, so it never actually passed the

MCN: I meant it was put in the conference report,
and the House passed the conference report.

BT: Oh, that version. Yeah, and the idea was to make
sure, again, that the law was not picking and choosing who might utilize these loan
guarantees to provide service to rural customers. That's one of the problems you have
when the government is going to be financing a competitor. In fact, you have to make sure
that you, again, are not creating favorites under the law.

Mr. Gramm's concern, while a real one, runs into that
consideration: How do you write this loan guarantee so that you don't create favorite
competitors and you give everyone a fair chance to utilize the loan guarantees, the goal
being to get service out to customers who otherwise wouldn't get it?

MCN: It wasn't exactly clear to me what the
goal was here. Was it meant to launch a nonprofit competitor to EchoStar and DirecTV Inc.
that offers both local TV and cable networks, or just an entity that offers local TV
signals in all of those rural markets?

BT: It was to create a satellite competitor.

MCN: Satellite?

BT: A satellite competitor that could, in fact,
offer cable programming that included carriage of the local signals into rural and smaller
markets of America. But again, [depending on] how you write it and how you develop it, you
could produce different results with it.

That's why I think doing it in a separate bill, where
you get full discussion of all of the options and a full examination of the equities
involved, is probably the right way to do it. I was a little concerned about doing it in a
conference report, where it literally had not gone through the committee processes.

MCN: That's my last question on this point.
This provision was put in at the end of the process. Why wasn't this issue vetted
early in the year? Was that somebody's strategy?

BT: No, I think the idea only came up after the bill
had already been passed and was on its way to conference. Apparently, the timing of the
issue had to do with the fact that there was discussion with the government agency
involved as to whether or not it could, in fact, assist in a loan guarantee.

The discussions apparently indicated that congressional
authority to do it was needed. By the time that became clear, the bill, I think, had
already made it into conference. So it became an option to be discussed in conference, to
get past the 65-major-markets concern.

I don't see any sinister motives or Machiavellian
moves here. In the end, it may have worked out best, because what we now have is an
agreement that this is going to go through process. We're going to get a chance to
look at all of these equities, to examine thoroughly the purposes of the loan guarantees
and to make sure that it's done in as fair and as equitable a fashion as we can.

MCN: America Online Inc. wants a compulsory license
to carry broadcast signals, or, at least, it doesn't want to be denied one in law. It
looks like this is an issue that could take years to resolve. Do you agree with that, and
what's your view here on where this is going?

BT: AOL was concerned that Sen. [Orrin] Hatch's
[R-Utah] amendment might have created a technological discrimination -- that is, a
discrimination against the Internet as a potential carrier of video signals under
compulsory license.

And when you looked at the language of the Hatch amendment,
you could well draw that conclusion. That's why, if you recall, when we took the
conference-committee report up, I entered into a colloquy with [Rep. Howard] Coble
[R-N.C.] and [Rep. John] Dingell [D-Mich.] indicating that before the session was over, if
that language remained, we should try to resolve that with some technology-neutral changes

As it is, they've dropped the language now completely
from the bill, and that is probably the best thing to do at this point.

The question of video streaming, carriage of video
programming, in a digital age on the Internet is a pretty severe one. Obviously, digital
video presents a real problem for content providers, because digital video is copyable in
innumerable numbers without degrading the quality of the programming, unlike the old
analog programming, where the more copies you make, the worse the picture looks. With
digital, you can make innumerable copies, and they're all of perfect quality.

For a content provider to put digital video on the Internet
and make it available for anyone in the world to copy -- innumerable copies -- is a real
frightful thought for many in the content community.

So there obviously needs to be some technological solution.
What AOL and others are saying, in effect, is that if we can find a technological
solution, if we can qualify with technology that will protect content, we should not be
excluded from the possibility of being video streamers or Webcasters.

And they're correct in that view. The Internet poses
all kinds of new problems for us when it comes to protecting copyrighted material and
content in a digital age. But it also presents huge opportunities for distribution and for
video sales. Who knows what the technology is going to bring if companies like AOL and the
many other Internet companies who called upon Congress to take that language out are

Maybe some technology is going to be discovered or
available in the years to come and they simply wanted to preserve that opportunity and
that option, and I think they were correct.

MCN: Are you going to take the lead on this next
year? Are you considering holding hearings, or maybe legislation? Or are you going to have
to share this with the Judiciary Committee?

BT: We don't have a choice. It is a huge
communications issue. ABC [Inc.], for example, was visiting with me … with the same
concern. They obviously are concerned about whether or not content providers will make
certain programming available to them, unless there's some sort of solution here.

For example, [The Walt] Disney [Co.] was able to put The
Lion King
on television. It was produced in analog form, and it was copied. That only
went so far, because analog copies degrade as you make more and more copies.

ABC is bringing their concern now as to whether or not Lion
would ever be shown on television in the digital age because of that fear. And
when would it be shown? Would it be shown only when all of its value has been used up
somewhere? The question is: Has all of the value in Gone with the Wind been used up
yet? I don't know. When does that happen?

So it's an issue we can't avoid. It is directly
connected to the communications-policy decisions we've made in terms of pushing
television to go digital.

We have real responsibility here to carry through with the
right policy. So our Commerce Committee will be very active on that level, as I'm
sure the Judiciary Committee will be, as well, because of its
content-copyright-jurisdiction concern.

MCN: A couple of questions on broadband. The Federal
Communications Commission has repeatedly declined to require cable operators to open their
broadband facilities, while imposing line-sharing and open-access requirements on the Baby
Bells. Should the FCC impose open access on cable?

BT: The answer is no. What we ought to do is turn
the Bells loose to provide broadband to America, and then, when there is enough
competition available in different pipes, again, at some point, eliminate those content
regulations, even on the Bell companies.

The Bell companies have these content regulations imposed
upon them, these carriage regulations, interconnections, colocations, all of these rules
of how they price their services and how access charges are assessed.

All of those are part and parcel of regulations of a
monopoly, but once there is no monopoly -- once there is ample competition among a set of
different providers of broadband -- at some point, those content regulations should go

The last thing we ought to be thinking of doing right now
is extending them to cable. We ought to be letting cable, and the AT&T [Corp.]-cable
combination, go out there and provide broadband competition to the Bells.

Simultaneously, we ought to pass my bill [H.R. 2420], which
would allow the Bells to immediately begin deploying their own broadband systems across
the old [local-market] lines so that eventually, one day, all of those content regulations
can go away.

MCN: You and Rep. Dingell have this bill that would
data-deregulate the Bells. How far can this measure go? How are you doing on co-sponsors,
and do you think there could be some support mushrooming for this approach?

BT: Every day I've gone to the floor and filed
a list of new co-sponsors. We're at 141 as of this moment, and the numbers continue
to grow. I suspect that we're going to be approaching a majority of members of the
House in co-sponsorship sometime in the spring of next year.

By that time, I suspect that anything can happen. This is
going to be the hottest consumer issue of the end of this Congress and the beginning of
the next, just as program access to television programming was critical in 1992. And if
you recall, we won that issue over the objection of every one of the House leadership, and
minority leadership members, as well as over the president's veto.

Just as the power of the consumer argument for access to
more and more programming was so strong in 1992, consumer concerns about being left out of
broadband are being shorted by having only one monopoly provider, and they are going to
grow, I think. Next year, we are going to make this the consumer issue of the year. When
we do, anything can happen.

MCN: It sounds as if this might be a bill that House
Commerce Committee chairman Tauzin is going to have to pass because of current chairman
Bliley's opposition to deregulation of the Bells in this area.

BT: Let me remind you that in 1992, I was not
Commerce Committee chairman -- I was not even Telecom chairman. I was just a member. And
in 1992, the chairman of the committee, the chairman of the subcommittee, the ranking
minority member of the committee, the ranking minority leader in the House, the speaker of
the House and the president of the United States were all arrayed against me -- along, by
the way, with the chairman of the Rules Committee. They were all in a position to block me
from passing access to programming for satellite television as a competitor to cable.

In 1992, I took that issue directly to the floor, not to
the committee, and the result was that over the objections of all of those chairmen and
all of those leaders, and even the president of the United States, program access is now
the law of the land.

Don't underestimate me. Don't underestimate
consumers next year in their demand for access to broadband. Americans across this country
are not going to like it when they hear that for a full quarter of Americans, they're
not going to have access to the incredible services of broadband. And for a full quarter
of Americans, they're going to be stuck with a monopoly -- an unregulated monopoly

They're going to listen, I think, and when their
voices are heard in unison, I suspect that members of Congress are going to want to see us
move on this bill.

MCN: Are you going to introduce a bill on FCC
reform. And if you do, what will be in it?

BT: Beginning in January, we will make an effort to
introduce actually several bills. As you know, [Rep.] Paul Gillmor [R-Ohio] has headed up
a task force that I've appointed, and the work of that task force is going on now. By
sometime in January or February, we'll be filing a bill that will reflect the work of
that task force. It will call for a major overhaul of the structure of the FCC and a
redefining of the FCC's mission in a competitive communications age.

Second, we are going to be pursuing a separate strategy, in
a number of bills, designed to correct immediately some of the particularly egregious
problems with the FCC.

For example, bills to put some time limits on the
consideration of applications before the FCC.; to deal with the question of how much
authority the FCC has in a merger that is properly being reviewed by the DOJ [Department
of Justice]; and to codify some of the forbearance provision of the 1996
Telecommunications Act that the FCC has tended to ignore -- and that is to codify the
forbearance of regulations where marketplaces are fast becoming competitive.

So we're going to have some targeted reform bills, as
well as a major structural and remissioning-reform bill, that you'll hear a lot about
in the year 2000.