House Telecom Bill Passes 27-4, Following Lively Debate

The House Telecom Subcommittee approved the House video franchise bill 27-4 after a nearly 6-hour markup Wed. The committee unanimously passed a manager’s amendment for Titles I and II of the Communications Act. Offered by Chmn. Upton (R-Mich.), the Title I amendment clarifies rules for national franchises, while the Title II measure strengthens net neutrality provisions. Debate was lively, with Telecom Subcommittee Ranking Member Markey (D-Mass.) and Commerce Ranking Member Dingell (D-Mich.) pushing for net neutrality, buildout and other provisions rejected in private negotiations with the committee leadership.

The last amendment the committee approved would make permanent the “naked DSL” provision that would require broadband service providers not to tie purchase of DSL service to other services the provider offers. The FCC put in place a 2-year naked DSL provision when it approved the SBC-AT&T and Verizon-MCI mergers, said Rep. Boucher (D-Va.), who offered the amendment.

“I'm making a strong effort to be cooperative,” Dingell said in a strained exchange early in the session. He said he wanted assurance he'd have an “adequate opportunity to ask questions.” While Upton extended him extra time for questions later in the session, House Commerce Committee Chmn. Barton (R-Tex.) cut Dingell off during an extended discussion about the definition of franchise areas. “These are issues we've discussed almost ad infinitum in our private discussions,” Barton said: “It’s fun to ask questions of counsel, but we have 28 other amendments to get through.” Dingell complained that the bill doesn’t make it clear what a franchise area is or who will define it. Barton said the committee sidestepped the issue because the FCC has dealt with it.

The Title I manager’s amendment clarifies rules for revoking national franchises, sets eligibility requirements for national franchises, lets the FCC decide the number of PEG channels national franchise holders must carry and redefines auditing requirements. The amendment adds strong enforcement language, including a shot clock for FCC action on antibias complaints and adds a penalty mechanism with fines up to $500,000 a day.

Net neutrality provisions gain strength under the Title II manager’s amendment. The amendment would require the FCC to resolve within 90 days any complaint about violations of FCC broadband principles. Violators would face fines up to $500,000 for each transgression, and the FCC would have full power under Title IV and V to enforce the provisions.

The committee passed by voice vote an amendment offered by Rep. Cubin (R-Wyo.) to let video operators use a shared headend. NTCA said it was pleased with the vote because its members pool their resources through joint purchases or leases of headends. The committee approved an amendment proposed by Rep. Stupak (D-Mich.) that would require FCC to adopt rules requiring cable operators with national franchises to prevent distribution of child porn over their networks.

Buildout, Net Neutrality Defeated

The committee defeated 22-11 a Dingell buildout amendment that wouldn’t have taken effect for 5 years after the bill was enacted. The amendment said in areas where 15% of households subscribe, the franchising authority could require the cable operator to boost by 20% the number of households served in the franchise area over 3 years, until the full franchise area was served.

“The amendment is well-thought out,” Barton said: “If we were going to do it, this isn’t a bad way to do it.” But he said buildout was among the chief areas of dispute in closed-door negotiations, and the differences couldn’t be overcome. If there’s enough competition -- which Barton said he believes the bill will encourage -- a buildout requirement isn’t needed, he said.

But many Democrats disagreed. “There will be discrimination on an economic basis,” Dingell said: “There will be picking and choosing and it will have a terrible effect on people of least means.”

A key net neutrality amendment failed 23-8 after heated debate during which Markey declared “the future of the Internet is at stake.” Markey offered the amendment with Reps. Boucher, Eshoo (D-Cal.) and Inslee (D-Wash.). The amendment made it explicit that network operators couldn’t block content.

“This is an historic moment,” Markey said. The committee bill would bar the FCC from conducting rulemaking, he said. “It’s a fundamental choice,” Markey said. On one hand there are a few firms’ “bottleneck designs,” and on the other are thousands of entrepreneurs’ “dreams.” Barton acknowledged the bill “is not perfect,” but said it gives the FCC the authority to enforce “whatever net neutrality is.” Few people can agree on a definition, he said, adding that Boucher has probably come up with the best-articulated definition so far.

The draft “fails to preserve the longstanding openness of the Internet,” chiefs of Amazon.com, eBay, Google, Microsoft, IAC/InterActiveCorp and Yahoo told Barton in a letter Wed. As written, the bill imperils consumer choice and American innovation and competitiveness, they said. Until 2005’s FCC ruling, consumer choice of content and services over broadband was assured by regulation, with innovators able to develop new online offerings unfettered, they said. “Innovation without permission” has fueled productivity and U.S. high-tech firms’ global leadership, they said. The group urged the committee to include language on network operators’ ability to manipulate what consumers see and do on the Web.

Cisco reiterated its net neutrality stance. Saying it has long backed an open, innovative Internet, the firm traced many Web benefits to its freedom and the chance for anyone to develop innovative devices and services. Cisco endorsed High Tech Broadband Coalition connectivity principles (CD Aug 3 p9) and FCC policy, which “protect consumers with information and the ability to use the Internet in an open fashion.”

Innovation inside a network is as important as innovation in services and devices connected to the Web, Cisco said. The firm endorses ISP use of network management tools to improve the Internet experience if there’s no harm to competition. Cisco believes in regulating when problems occur, not before, it said. Imposing specific net neutrality rules to address hypothetical problems would only compound the problem, Cisco said. The company backs FCC action case by case.

Barton Scolds AT&T

The subcommittee rejected 17-13 an amendment clarifying that AT&T’s IP-enabled video service would be covered under the bill. The amendment, proposed by Rep. Eshoo (D-Cal.), prompted vigorous debate among Democrats who feared that Bells could claim exemption from franchise fees because they aren’t cable companies. “AT&T has a very real possibility of going to court” over this, Dingell said, warning the committee that it needed to clarify the point.

“This is stupido,” Barton said, scolding AT&T for sending a letter to Dingell -- in response to questions he posed -- that said its IP-enabled service isn’t a cable service. “Our friends at AT&T have sent this silly letter saying they're not a cable service, which they shouldn’t have done,” Barton said. “We explicitly say they're a cable service,” he said, dismissing the need for the amendment.

In a lighter moment, Markey offered, then withdrew, an amendment to codify nondiscrimination principles. “I'm kind of into the spirit of Verizon and AT&T. It’s taken me a while to finally swallow the Kool-Aid,” Markey said. Poking fun at the bill’s reliance on FCC principles, the amendment said, “in lieu of the legally-enforceable, pro-consumer and pro-competitive provisions… the Commission is directed to adopt a broadly-worded, imprecise policy statement of principles about the benefits of video programming access by competitors.”