HOUSE RULES COMMITTEE WEIGHS MERITS OF TAUZIN-DINGELL AMENDMENTS

Amendments to Tauzin-Dingell data deregulation bill (HR- 1542) that House Rules Committee was considering last night included measures that either would deregulate Bells or preserve CLEC access to Bells’ facilities in event that bill is passed. Rules Chmn. Dreier (R-Cal.) had scheduled hearing after our deadline that was expected to choose 4-5 amendments out of 25 submitted by Mon. Amendments figuring prominently included compromise measure that would increase role of Dept. of Justice in reviewing antitrust implications of communications industry disputes. Some congressional CLEC supporters had quietly given nod to proposal by House Commerce Committee Chmn. Tauzin (R-La.) and House Judiciary Committee Chmn. Sensenbrenner (R-Wis.) that would bolster Justice involvement in such disputes, House sources said. Although House proponents have dropped their push for even more stringent DoJ oversight than called for in Tauzin- Sensenbrenner measure, another amendment was submitted that would preserve regulatory protections for competitive access to Bells networks, sources said.

Tauzin-Sensenbrenner amendment “clarifies that the antitrust laws are not repealed by, not precluded by, not diminished by and not compatible” with Communications Act or Telecom Act. It also would require Bells to notify Justice 30 days before offering interLATA high-speed data or Internet backbone service if “the company has not received the authority from the FCC to provide interLATA services,” Rules Committee summary said.

As expected, Reps. Towns (D-N.Y.) and Buyer (R-Ind.) submitted line-sharing amendment that they said would preserve CLEC access to ILEC central offices and fiber loops. Although presented as beneficial to potential competitors, CLEC sources have said Towns-Buyer proposal was ILEC-friendly amendment designed to subvert other attempts to amend bill sponsored by Tauzin and ranking minority member Dingell (D- Mich.). Tauzin said Towns-Buyer found middle ground that he saw as necessary to ensure bill’s approval: “It’s not what I prefer… It’s what I have to do in order to win.”

Allegiance Telecom CEO Royce Holland told us in interview that Towns-Buyer could be equated with “giving aspirin to a cancer patient… It’s nothing but a fraud.” He said sponsors of proposal had labeled it as boon for CLEC industry, but it actually was procedural move to keep other amendments out of contention. Rather than supporting Towns- Buyer, “all the CLECs are lining up behind” amendment by Reps. Cannon (R-Utah), Conyers (D-Mich.), Markey (D-Mass.), Pitts (R-Pa.), Luther (D-Minn.), Flake (R-Ariz.), Nadler (D- N.Y.).

Rules Committee summary of Cannon-Conyers said amendment would require “line-by-line change” in Tauzin-Dingell in order to: (1) Preserve existing rules that protected CLEC services. (2) “Preserve state authority and consumer safeguards from the broad preemption of such authority granted under HR-1542.” Cannon-Conyers amendment is “next- generation version” of one unsuccessfully submitted last year during Judiciary Committee markup of HR-1542. Although new Cannon-Conyers also seeks to protect CLEC regulatory interests, it drops language that specifically would attempt to increase Justice oversight of telecom industry. Rules summary also made no reference to any provision that would overturn Goldwasser v. Ameritech, 7th U.S. Appeals Court, Chicago, decision that gave Telecom Act priority over antitrust law in resolution of telecom-related disputes. CLEC industry considered overturning Goldwasser decision as high point of that measure, while Bells saw it as controversial and unnecessary.

Tauzin spokesman Ken Johnson said criticism of Towns- Buyer and other amendments that had been negotiated revealed that “the CLECs have never been interested in improving the bill, only in killing it.” He said bill was difficult for some to understand, “but easy to demagogue… Clearly both sides are putting on a full-court press” before House floor debate today (Wed.) on bill.

Upton Offers Enforcement Measure

As expected, House Telecom Subcommittee Chmn. Fred Upton (R-Mich.) submitted amendment that would increase FCC’s enforcement authority. It also would: (1) Raise cap on fines for violations of telecom law to $10 million from $1.2 million. (2) Raise cap on daily fines for continuing violations to $1 million from $120,000. (3) Double daily forfeiture penalties imposed on repeat violators to $2 million, capped at $20 million. (4) Double statute of limitations to 2 years from one. (5) Require report to Congress on impact of increased penalties within year of enactment.

Amendment by Rep. Chris Cox (R-Cal.) would require Bells to open up their markets to competition within one year of HR-1542’s enactment “in return for receiving the bill’s deregulatory benefits,” Rules said. Holland said CLEC industry wasn’t opposed to Cox proposal but called bulk of remaining amendments anti-CLEC: “The Bells have piled on everything under the sun. Throw slime against the wall and see if it will stick.”

Meanwhile, opponents and supporters of Tauzin-Dingell continued their efforts to make their positions known, ranging from HR-1542’s staunchest opponent, Senate Commerce Committee Chmn. Hollings (D-S.C.), to free-market advocates at libertarian Cato Institute. Hollings said on Senate floor Tues. that bill was “blasphemy… Hailed as a way to enhance competition, it eliminates it. Touted as a way to enhance broadband communications, it merely allows the Bell companies to extend their monopoly into broadband.” CLEC industry source said Hollings’s statement confirmed that bill, even if passed in House, would be dead on arrival in Senate. Cato’s Telecom Policy Studies Dir. Adam Thierer said Tauzin-Dingell “would help rejuvenate the ailing high-tech economy” and suggested it also would revive overall economy. Attempts to alter bill are ill-advised, he said: “Last-minute efforts to water down or even gut deregulation would be counterproductive and represent a blatant attempt by some companies to use the law to their own advantage.”

Other items under consideration include amendments by: (1) Rep. Bachus (R-Ala.), to uphold Goldwasser decision. (2) Rep. Bass (R-N.H.), to eliminate operations support systems (OSS) from competitive checklist of Telecom Act’s Sec. 271, and to remove OSS from items that must be sold to CLECs under price controls. (3) Rep. Gonzalez (D-Tex.), 3 that would: (a) Sunset Sec. 271 by Jan. 1, 2003. (b) Give FCC 90-day window to review Sec. 271 applications, require that FCC or state PUCs provide “point-by-point explanation” if such applications were rejected, prevent PUCs from imposing additional conditions beyond those required under Sec. 271. (c) Eliminate mandatory CLEC “unbundled access to the high- frequency portion of the loop” or collocation at remote terminals.