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Coming Soon: Telecom Reform Road Show

Things just don't last like they used to. Take the 1996 Telecommunications Act. At the ripe old age of eight, it's in the Congressional crosshairs.

Lawmakers "have made it clear they are going to rewrite the Telecom Act," said Eddie Fritts, president and CEO of the National Association of Broadcasters. Fritts appeared at a panel discussion on telecommunications reform held by the National Journal group at the Watergate Hotel in Washington, D.C. on Thursday. He said that Reps. Charles W. "Chip" Pickering (R-Miss) and Joe Barton (R-Texas), and Sens. Daniel K. Inouye (D-Hawaii) and Ted Stevens (R-Alaska) have all indicated they're ready to take up Telecom reform "relatively soon."

Barton, head of the House Commerce Committee, has already made it abundantly clear that he wants a 2006 analog shut-off hard date. He has also threatened broadcasters with an inquiry into news oversight, based on Dan Rather's blunder at CBS involving a report critical of President Bush's National Guard service. How far that will go now that Rather is stepping down as anchor of "CBS Evening News" remains to be seen.

Stevens, who will likely take over the Senate Commerce Committee from Sen. John McCain (R-Ariz.), has been a hard-liner on broadcast indecency fines and media ownership regulation. He and Inouye, the ranking Democrat on the committee, have said they'll initiate a nationwide "listening tour" to get the skinny on just what a new-and-improved telecom act ought to include.

One major issue will be how to keep the telephone Universal Service Fund from drying up, since major contributors like AT&T are no longer the behemoths they once were.

The Brand X case represents an entirely new facet for the revision of the '96 Act, which includes nothing about the nature of high-speed Internet service. In Brand X, the 9th Circuit Court of Appeals in San Francisco vacated the FCC's ruling that cable modem service would not be regulated like telephone service. The U.S. Supreme Court is expected to decide by Monday if it will hear Brand X.

To purveyors of high-speed Internet service, the Brand X decision will determine whether the president's policy goal of broadband ubiquity by 2007 will become a reality. Several panelists at the National Journal gathering said (relative) regulatory freedom and competition would clear the way for ubiquitous broadband, instead of municipally funded networks like the start-up in Philadelphia. ILECs there managed to get the governor of Pennsylvania to sign legislation this week limiting other municipalities in the state from building similar broadband networks.

"Competitive private sector-government models are not successful," said Peter Davidson, senior vice president of federal government relations for Verizon. Besides Davidson and Fritts, other panelists included Joe Waz, vice president of external affairs for Comcast; Peter Pitsch, communications policy director at Intel; Rick Whitt, senior director of global policy and planning for MCI; and Jeff Citron, CEO of Vonage.

Davidson went on to say that government and private-sector broadband providers have different agendas, and that government-funded providers are more likely to deploy "outdated technology."

However, it was pointed out that broadband is nearly universal in Japan and Korea, where the governments initiated build-outs of networks that put U.S. broadband offerings to shame. In Japan, for example, a 25-Mbps (download-speed) connection runs at around $40 a month. Comcast cable modem service offers 3-Mbps download speed at $56 per month for non-subscribers; $43 for subscribers.

Davidson said Verizon is sinking around $40 billion into fiber in order to get download speeds into the 30 Mpbs range.

Nationwide availability by 2007 is another matter. In addition to competition and a regulation-free environment, freeing up taboo-channel broadcast spectrum for wireless devices will be necessary to get broadband to every American home within two years, Citron said.

Fritts said that broadcasters, who have "taken an enormous risk to move their audience to a different TV set," simply want assurances that wireless devices won't interfere with those new sets.

"And there's a demand question," he said. "There's a presumption here that everyone wants broadband and can't live without it. Broadband is available, but take-rates are low."

Comcast, for example, had 6.5 million broadband subscribers out of a footprint of 38 million households for a take-rate of 17 percent at the end of Q3 '04.

"It won't just be broadcast spectrum that will drive take-rates," Fritts said. "In Korea, they offer pornography and gambling with no restrictions."

FCC Commissioner Michael Powell has been a vociferous proponent of freeing up the taboo TV channels for unlicensed wireless devices, a position he reaffirmed in remarks to reporters Thursday morning. Powell, who had the audacity to stay on as chairman even after widespread reports of his impending departure, said he also intends to deal with the regulatory issues involving Internet Protocol, such as delivery of voice and video, and to determine a hard date for the end of the DTV transition.

Powell has a plate full of pending issues as well, including media ownership and multicast must-carry.

Earlier this week the Supreme Court gave the FCC & NAB 30 days to file a cert petition to overturn the Third Circuit ruling on media ownership rules. Last June, the U.S. Court of Appeals for the Third Circuit in Philadelphia told the agency to do a better job of justifying its methodology. The D.C. Court of Appeals likewise remanded the agency's previous ownership rules in 2001, prompting the crafting of the erstwhile new rules.

As for must-carry, Powell has long contended that it applies to primary video only, and therefore the multicast must-carry is moot. The D.C. Circuit Court disagreed, and gave the FCC until the end of this month to explain why it hasn't definitively ruled on the matter. Since the court didn't demand a ruling, and nothing has been circulating at the commission, multicast must-carry won't show up on the December agenda.

Meanwhile, even as Powell reiterated his intention to hang around, Fritts was telling the Watergate crowd that "there will be significant changes soon at the FCC. The FCC you're dealing with today is not the one that's going to be there."