Wave Issue 0208 3/8/02 Article 2-01

***U.S. Commerce Secretary Makes Broadband Announcement, as
TechNet Visits Washington
(March 8)
By James Sneeringer

Donald Evans, Secretary of the U.S. Department of Commerce,
announced on Wednesday that the Bush administration is committed
to promoting the development of broadband services to Americans,
calling it "the next big move" in high tech. The announcement
came at the Commerce Department's "Broadband Expo," an event held
to highlight companies that use broadband technology. At the
same time, the technology advocacy group TechNet was meeting with
members of Congress to promote their "100 by 100 by 10"
initiative. Announced on January 15 of this year, the initiative
calls on the federal government to set the goal of bringing
broadband data service of at least 100 Mb per second to 100
million homes and small businesses by the end of the decade.
Among the members voicing support for TechNet's initiative were
Senators Joseph Lieberman (D-Conn.) and Christopher Dodd (D-
Conn.).

TechNet is composed of the senior executives of about 300
technology firms. One of those is the global law firm of Manatt,
Phelps and Phillips, LLP. The WAVE spoke to Robert Rini, a
partner at Manatt and Manager of their Telecom and Technology
Practice Group, about the announcements. He attended the TechNet
event, representing Manatt as a member of TechNet.

Rini saw the Secretary's announcement as an intermediate step to
a larger, Presidential announcement of a national broadband
policy. One set of factors yet to be in place for such an
announcement is the recommendations of the Presidents' Council of
Advisors on Science and Technology, on such broadband issues as
application development, pricing, security, and copyright issues.
Rini stated that both such a demand-oriented approach, and the
deployment-oriented approach of the Congress and FCC, are
important. He expects that the administration will announce a
national broadband initiative soon, focusing on the demand side.

In the meantime, the focus is on both the Congress, particularly
the Senate now that Tauzin-Dingell moves there, and the FCC. We
mentioned that most sources do not expect Tauzin-Dingell to make
it out of the Senate. Rini replied that yes, that is the
conventional wisdom but it's not over yet. He pointed out that
with the bill out of the House, the intense lobbying pressure
surrounding it will fall on the Senate. He believes there is
growing support for stimulating broadband deployment as a means
to spur economic recovery, and that many see Tauzin-Dingell as a
way to accomplish that. He thinks there is a real chance it
could pass, in some form. We will add that this view is probably
contrary to what we would hear from a CLEC representative, as
Manatt represents local phone companies supporting Tauzin-
Dingell.

Meanwhile the FCC is preparing its own actions on broadband
regulation. Rini pointed out the scheduled March 14 hearing
concerning the nature of broadband services over cable. He
stated the FCC is considering a similar item with respect to
broadband services over telecom lines. He stated that the
importance of these hearings lies in how Internet service is
classified. If classified as a cable service, it may be subject
to cable regulation such as franchise fees. If classified as a
telecom service, it may be subject to telecom regulations such as
universal service fees and requirements. However, the result of
such hearings may be the classification of Internet service as an
information service, one of the most lightly regulated services.
This may be the vehicle the FCC uses to "deregulate" broadband.
Rini emphasized that currently, there is no clear ruling on how
Internet service is classified.

For both the FCC and Congress, according the Rini, the goal is
regulatory certainty, which will in turn drive investment. When
we repeated the remark from COMNET that the ILECs love regulatory
uncertainty, he stated: that must have come from a CLEC rep. It
had. He strongly disagreed, saying that broadband deployment is
expensive, why would anyone want uncertainty? Markets crave
regulatory certainty, he said, to predict ROI--this is true of
all companies. Again, this seems in direct contradiction to the
CLEC party line.

With Tauzin-Dingell now in the Senate, will the FCC wait for
Congress, or vice versa? Rini stated that usually in Washington,
the expert agency moves and Congress waits and sees. He expects
the FCC to charge ahead with its initiatives, and that Congress
will keep one eye on it as the Senate debates. For both, the
driving issue seems to be providing a solid regulatory
environment, to stimulate investment. Meanwhile the Bush
administration seems focused on the demand side, and on how
exactly they should promote utilization of broadband services.