High-speed Net bill clears House panel
By Jeffry Bartash & Will Pollock
Last Update: 10:30 PM ET May 9, 2001
WASHINGTON (CBS.MW) -- A House panel backed a controversial proposal
Wednesday night that would free the Baby Bell phone carriers from restrictions on
offering on high-speed Internet service.
Under the bill sponsored by House Commerce Committee Chairman Billy Tauzin and
Michigan's John Dingell, the panel's top Democrat, the Bells would be allowed to
immediately offer high-speed Internet service in all territories they serve.
At present, Bells that want to transmit Internet traffic
across long distances first have to prove to regulators
that their local phone markets are open to rivals. That
requirement was included in the 1996 landmark law
enacting telecom industry reform.
Yet those very same rules deter faster rollout by the
Bells because they raise the costs and dampen the
profits of providing high-speed service, Tauzin and his
allies argued.
The proposal, which the Commerce Committee passed
on a close 32-23 vote, pits the Baby Bells against a
group of opponents including long-distance leaders
like AT&T (T: news, msgs, alerts) and smaller local
phone operators like McLeodUSA (MCLD: news,
msgs, alerts) . Both sides have swamped the air waves
in the Washington area with dueling ads in recent
weeks.
Despite the bill's passage, it still faces tough hurdles in the full House. Foes almost
managed to sink the Tauzin bill with a broad "line-sharing" amendment that would
have forced the Bells to lease competing rivals access to all parts of their high-speed
network, not just the copper wire running to homes. That effectively would have
gutted the bill.
In addition, some observers say it has little chance of passing in the Senate, which is
split 50-50 and where opposition is stronger.
Opening bottleneck
At issue is a debate over the best way to accelerate delivery of cheap, high-speed
access to millions of Americans, especially those in remote areas. Right now, only a
few million consumers use fast Internet service, mostly in dense or wealthy
metropolitan areas.
"This bill provides the right amount of deregulation for broadband services," said
Tauzin, R-La. "It rejects the application of antiquated telephone rules to a new
market like broadband. And it seeks to maximize investment and innovation in new
facilities."
Opponents, however, noted that the Bells already possess the right to offer
high-speed service on a local basis. All they have to do is comply with rules
designed to open local markets to competition.
Henry Waxman, D-Calif., argued that the Tauzin bill "tips the scales" in favor of the
Bells over their smaller rivals, often referred to as competitive local exchange
providers.
The so-called Clecs are already reeling from high debts, lack of access to new
finance and slower growth amid a downturn in the U.S. economy. Some lawmakers
are concerned that the Tauzin bill would deliver the final blow.
"This would be the death knell of the industry," asserted Diana DeGette, D-Colo. "It
would upset a delicate balance in the industry."
If that happened, the Bells would solidify their grip on the local market. Five years
after the landmark 1996 telecom act, the Bells still control more than 90 percent of all
local phone lines.
Some argue that keeping current rules in place will maintain pressure on the Bells to
hasten deployment of high-speed access. Without competitors and regulators
breathing down their neck, the Bells will delay rollout or target only the most
lucrative customers in big markets, they say.
On the other hand, long distance carriers and smaller local phone operators haven't
exactly beaten a path to the door of consumers. By and large, those companies find
business customers more lucrative to serve.
Jeffry Bartash is a reporter for CBS.MarketWatch.com in Washington. Will Pollock is a reporter for the Medill
News Service. |
