Vote Set on New Telecom Bill

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The Senate Commerce Committee, despite sharp division on whether to regulate broadband-access providers, is planning to vote June 22 on a telecommunications bill that would streamline cable franchising to allow new entrants, such as AT&T Inc. and Verizon Communications Inc., to begin facilities construction after 90 days.

The 151-page bill (S. 2886) is broad, covering numerous subjects in addition to cable franchising and net neutrality. It would also overhaul cable program-access law and address cable carriage of digital-TV signals after TV stations turn off their analog signals no later than Feb. 17, 2009.

“I think we are ready to start working on the final draft,” Senate Commerce Committee chairman Ted Stevens (R-Alaska) said at the last hearing on the bill Tuesday. Later, he announced that the date of the vote had been changed to June 22 from June 20.

Stevens released the second draft of his bill Monday that included numerous changes, except that he did not budge from his opposition to invasive net-neutrality regulation in the absence of clear discriminatory conduct by the dominant providers of broadband access -- cable and phone companies.

But failure to close the gap on net neutrality with senators opposed to Stevens' approach could doom the bill, Sen. Gordon Smith (R-Ore.) said at the hearing's conclusion.

“There is just so much enormous good in this broader bill that it would be a tragedy for our nation if net neutrality is the basis upon which it is entirely taken down, and that’s a very real possibility, the way I see things shaping up,” Smith said.

At the hearing, National Cable & Telecommunications Association president Kyle McSlarrow called the new draft “a little bit of a mixed bag” for cable and urged restraint on net neutrality and elimination of the program-access language because it would tilt competition in favor of direct-broadcast satellite providers.

On net neutrality, McSlarrow warned that Congress could be headed down a slippery slope, with nondiscrimination regulation someday capturing not just access providers but also “Microsoft’s operating system or any Web-based software.”

“Now I’m not suggesting that you do,” McSlarrow continued, “but I am suggesting that people should think twice before going down this road.”

Stevens is trying to negotiate a compromise on net neutrality. At the hearing, he made clear his opposition to heavy-handed regulation that anticipates anticompetitive conduct rather than reacts to it.

Stevens articulated his approach after hearing Ben Scott, policy director of Free Press, demand broadband-access-provider regulations akin to common-carrier rules that applied to monopoly phone networks to ensure equal access to long-distance providers and dial-up Internet-access providers.

“I think you use the word 'net neutrality' really to mean put common-carrier provisions applying to all communications. We’re not going to do that. I don’t think anyone here would agree to put common-carrier on all of it,” Stevens said.

McSlarrow said head-to-head competition between cable-modem service and digital-subscriber-line service was the competition policymakers wanted, but Scott said the basis for net neutrality was that cable and phone companies control 98% of the broadband-access market -- a duopoly structure that gave network owners the ability and incentive to discriminate.

“The market share of all the other technologies combined is less than 2%. That’s not a competitive marketplace” Scott said.

In his bill, Stevens would require the Federal Communications Commission to monitor the Internet-access market and file annual reports for five years. Sens. Daniel Inouye (D-Hawaii), Byron Dorgan (D-N.D.) and Olympia Snowe (R-Maine) support legislation (S. 2917) that would impose stringent nondiscrimination rules on broadband-access providers -- an approach that rejects FCC monitoring and reporting.

“It will ... be good for the consumer if we have an Internet in a couple of years from now or 10 years from now that has an open architecture for the ordinary folks around this country who want to get on it and move on it without impediment,” Dorgan said.

Dorgan also dismissed arguments that antitrust laws were sufficient to ensure fair competition.

“My view of antitrust law is that they make glaciers look like they are speeding,” Dorgan said. “Antitrust law in this town is almost completely, thoroughly nonexistent.”

Without being specific, Stevens said he was looking at a compromise in which net-neutrality regulation was crafted from the perspective of the consumer to eliminate the need for the government to referee disputes between, say, Comcast Corp. and Google Inc.

“The protection for consumers, I think, we could handle in net neutrality. When it comes to interfering with the marketplace in terms of the major expenditures of capital, I think we should stay away,” Stevens said.

On program access, the Stevens bill would immediately close the so-called terrestrial loophole, which allows cable operators to withhold terrestrially delivered affiliated program from competing pay TV distributors. That provision is aimed at forcing Comcast to sell Comcast SportsNet to competitors.

Stevens would also allow satellite carriers to file FCC complaints to gain access to regional sports programming not owned by cable operators but distributed exclusively by undefined “dominant” cable operators. But in a change made to the first Stevens bill, cable operators could not demand access to NFL Sunday Ticket, the National Football League’s out-of-market package, to which DirecTV Inc. has exclusive rights.

McSlarrow called for elimination of the program-access provisions.

“What this does is that it starts discriminating between satellite and cable operators in terms of whether or not you can offer exclusive programming,” he said. “The program-access requirements are a search for a problem that doesn’t exist, and I would urge you to delete the entire provision.”

On carriage of digital-TV stations, the Stevens bill would require high-capacity cable operators, until Feb. 17, 2014, to ensure that the digital-TV signals of stations electing must-carry can be viewed on analog- and digital-TV sets. Signal downcoversion from digital to analog and from HD to standard-definition is permitted at the cable headend.

The National Association of Broadcasters is opposed to allowing cable operators to downconvert HD signals to standard-definition at the headend.

Stevens added similar downconversion authority for satellite carriers DirecTV and EchoStar Communications Corp.

The downconversion provisions were not discussed at Tuesday's hearing.

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