Senate Panel Boots Net Neutrality, Passes Telecom Bill 15-7

The Senate Commerce Committee Wed. passed 15-7 an 11- title telecom bill the excludes Democrats’ strict net neutrality provisions. The panel concluded work after 3 days spent marking up the sweeping measure, dealing with about 215 amendments. Wed. the committee adopted amendments that would institutionalize a moratorium on Internet taxation, turning away amendments on net neutrality, a la carte programming and buildout requirements in franchise areas for video providers.

Telecom companies voiced pleasure at the vote. “We look forward to seeing this bill scheduled for action on the Senate floor shortly after the Independence Day recess to provide the House and Senate time to resolve the considerable differences that exist between” their 2 bills, BellSouth Vp Govt. Affairs Herschel Abbott said. Verizon called the bipartisan vote a positive step. It brings Congress close to “producing a tangible victory for consumers,” said Peter Davidson, senior vp-federal govt. relations.

Several Democrats praised Sen. Stevens’ (R-Alaska) performance during the markup, thanking him for allowing thorough exchanges of views. This prompted Stevens to liken himself to Jack Daniels: “The longer I'm in the bottle, the mellower I get.” Markup ended a marathon of 28 hearings, 6 listening sessions and 3 days’ debate, Stevens said. None of the amendments undermines the base bill, and of 48 amendments in the manager’s package, 42 came from the minority side, he said.

The vote on net neutrality may not be as close on the floor, Stevens told reporters afterwards. The amendment failed 11-11, with the chairman exercising his privilege to defeat the measure.

“The question is whether a compromise can survive in the Senate,” Stevens said. For instance, “we still have massive disagreement over net neutrality,” he said. The issue stirred emotional debate Wed. afternoon. “For the first time, content on the network will be selected by network owners,” said Sen. Snowe (R-Me.).

“We are going to transform the Internet in a way in which people will not recognize,” Snowe said. “We don’t have a competitive system. We have at best 2 companies,” she said: “This is the essence of what we're dealing with today.” But Stevens said the amendment would thwart the possibility of conference on the bill with the House, which rejected a similar amendment when passing its bill (HR-5252).

“I don’t care what the House of Representatives says,” Sen. Kerry (D-Mass.) said: “You have talked about a conference, but you have to talk about getting it off the floor.” Kerry, along with Snowe, Dorgan (D-N.D.), Cantwell (D-Wash.) and Boxer (D-Cal.), cosponsored the failed “consumer bill of rights” net neutrality amendment. The amendment stated that consumers are entitled to service that doesn’t discriminate in carriage of Internet traffic, and violators would be subject to a $500,000 fine.

“We're creating gatekeepers here,” Kerry said: “It’s the open architecture of the Internet” that has made entrepreneurs like Google the successes they are today.

A frustrated Sen. Wyden (D-Ore.) took to the Senate floor Wed. evening to say he had put a “hold” on the sweeping telecom bill until it includes clear language barring online bias. In March, Wyden introduced the first standalone net neutrality bill (S-2360); he cosponsored the Snowe-Dorgan measure when it debuted as a separate bill before the Commerce Committee began its markup. “Without a clear policy preserving the neutrality of the Internet and without tough sanctions against those who would discriminate, the Internet will be forever changed for the worse,” he said.

A telecom bill lacking antidiscrimination language threatens to divide the Web into access “haves” and “have- nots,” Wyden said. It also would pour more power into “the hands of the special interests that own the pipelines to the Internet,” he said. Wyden said he would object to any unanimous consent request for the Senate to move to consider the bill.

Net Neutrality Foes Cheer

Net neutrality foes were gratified by the committee vote. The lawmakers’ decision is “an important step forward,” said Hands off the Internet Coalition Co-Chmn. Mike McCurry. The broader telecom bill balances “competing needs that have made the Internet a global success” and reinforces consumers’ online rights without strangling innovation, he said. His group is backed by Alcatel, AT&T, the National Assn. of Mfrs., the American Conservative Union and others. The Snowe-Dorgan amendment sought light regulation but its wording would have required the FCC to spend months preparing regulation, McCurry said: “All of this would have just driven up costs that ultimately would be passed along to consumers.”

NetCompetition.org Chmn. Scott Cleland lauded the vote. Net neutrality proponents “whose true agenda is to protect free speech on the Internet, and not price-regulate the Internet,” should back Stevens’ strong Internet First Amendment language on the Senate floor, he said. Blocking final passage of the telecom bill would only ensure that net neutrality proponents “achieve nothing in their quest for additional Internet safeguards,” he said.

The amendment’s backers were dispirited. The committee “handed control of Internet content to the telephone and cable companies, and control over the design of consumer electronics to the movie and recording industries,” Public Knowledge Pres. Gigi Sohn said. “Big companies win and consumers lose,” she said. Network operators will be free to discriminate in favor of content in which they have financial stakes or in favor of content providers able to afford new fees the companies charge, Sohn said. Telcos and cable firms would have “no incentive to make any improvements to today’s Internet, on which consumers, innovators and small businesses depend,” she said.

The intense debate during markup underscores committee unease with “abandoning rules that until now have ensured an open, innovative and competitive Internet marketplace,” the It’s Our Net Coalition said. That group, backed by Amazon.com, Intel, eBay and others, said net neutrality won’t go away. The groundswell of grassroots concern emerging in recent months “will only grow louder as more Americans learn what is at stake,” officials said. The Coalition urged the full Senate not take up the broader telecom bill unless and until strong net neutrality provisions are included.

Free Press Policy Dir. Ben Scott said the committee’s vote shows bipartisan momentum for antidiscrimination. The principle “moved from obscurity to the center stage in the debate over our nation’s telecommunications policy” in mere months, he said, and will gain steam as the full Senate takes up the telecom bill. “The voices of millions of average citizens are just starting to break through the misinformation and lies being peddled by the big phone and cable companies who want to erect tollbooths on the Internet,” Scott said.

Consumer advocates weren’t pleased with the committee’s decision either. Rejecting net neutrality endangers “the most important engine for economic growth and democratic communication in modern society,” Consumers Union Senior Policy Analyst Jeannine Kenney said: “Nondiscrimination made possible the grand successes of the Internet. Its removal can take them away.” Unless the Senate “stands up for the public interest, consumers can kiss goodbye the wide array of low-cost, competitive choices and stunning innovation that the Internet has brought them,” Consumer Federation of America Research Dir. Mark Cooper said.

The Senate Commerce Committee preserved federal preemption of state laws for the wireless industry in most areas, but adopted an amendment establishing some consumer protection standards. The amendment, offered by Sens. Rockefeller (D-W.Va.) and Pryor (D-Ark.) would require the FCC to adopt a final rule establishing customer service standards for wireless providers a year after the telecom bill is passed.

The amendment requires the FCC to adopt a “truth-in- billing” rule that would require carriers to disclose all fees line by line charged to customers. The amendment is aimed at eliminating a practice in the wireless industry of charging consumers for “regulatory compliance” charges that are generally not included in the advertised price of communications services, according to the amendment. These line-item fees “often fail to adequately inform consumers of the specific costs being recovered through such charges and as to whether such charges are required by govt. law or rule,” the amendment said.

The amendment generated considerable debate among the committee as members wrestled over different versions offered by Rockefeller. There was confusion at one point over which text was being considered. Sen. Ensign (R-Nev.) spoke against the amendment for fear it would inhibit growth of the wireless industry: “They've flourished without a huge burden of regulation.”

“Sometimes I listen and don’t believe what I hear,” said Sen. Boxer (D-Cal.). “These industries have flourished while they've been regulated by the states,” she said.

CTIA Pres. Steve Largent was pleased with the vote on the preemption amendment, saying it would establish a “national framework for the wireless industry” with a “light regulatory touch.” However, NARUC Telecom Committee Chmn. Tony Clark objected that the committee, “without a public hearing on this specific issue, or a recorded vote, has chosen to effectively erase most consumer protections for cell phone customers.”

The committee also passed 19-3 an amendment making permanent the moratorium on Internet taxation. The amendment was the result of a agreement worked out by Sens. Allen (R- Va.), Ensign (R-Nev.), Burns (R-Mont.), Sununu (R-N.H.), Smith (R-Ore.), McCain (R-Ariz.), DeMint (R-S.C.) and Snowe. But Dorgan warned that the issue would come to a fight on the Senate floor because some oppose the moratorium.

A separate amendment would prohibit the FCC from making any changes in its media ownership rules until it has published a notice of proposed rulemaking detailing its changes. Offered by Dorgan, the amendment passed by voice vote. The committee also adopted by voice vote amendments that would authorize grant funds for IP-enabled E-911 systems and a measure to curtail “spoofing,” or the manipulation of caller ID.

Buildout Amendment Fails

The cable industry was pleased with the resounding defeat of an a la carte amendment offered by McCain that would have required the FCC to provide regulatory relief for video service providers who offer a la carte programming. “We will continue to oppose unnecessary government regulation of the pricing and packaging of video services, which most studies show will diminish diversity in programming and result in higher prices for fewer channels,” said NCTA Pres. Kyle McSlarrow. The amendment was defeated 20-2, with only Snowe joining with McCain.

“If we don’t have a buildout amendment, we're picking new losers” in the game of picking winners and losers, Kerry said. Like other Democrats, he maintained the lack of a buildout requirement would harm rural communities where providers would be less likely to invest. Stevens opposed the amendment along with most Republicans -- Sen. Hutchison (R-Tex.) left no voting instructions -- because they've said they prefer a market approach to industry growth.

The buildout amendment wouldn’t have taken effect until 3 years after a video service provider entered a market. At that point, providers would be required to offer service when at least 15% of households subscribe to a video service. Providers would be required to increase by 20% the households served over the next 2 years until the company is capable of providing service to all households in the franchisee area, according to the amendment.

“I believe in some form of a la carte, but this bill would deny benefits of the bill to providers,” Stevens said: “I think a la carte will come, but it should be done on a volunteer basis.” Co-Chmn. Inouye (D-Hawaii) said he “reluctantly” opposed the amendment because it could threaten cable programs like the Discovery and History channels. McCain said the amendment was needed to prevent consumers from paying for channels they don’t watch.

McCain was successful with 2 other amendments -- one that would put a 3-year moratorium on imposition of new cell phone taxes and a 2nd that would implement the FCC’s recommendations on low-power FM (LPFM) service. The LPFM amendment mimics earlier attempts to let 100 w stations broadcast on 3rd adjacent channels in urban markets (CD Feb 9/05 p5). LPFM advocates cheered the amendment, saying it’s a step toward putting more non-commercial and independent voices on the air in urban areas.