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Tauzin-Dingell, Good Legislation
or a Threat to the US Economy? The Bill On April 24, 2001, Representatives W.J. Tauzin (R.-La.) and John Dingell (D.-Mich.) introduced the "Internet Freedom and Broadband Deployment Act" (H.R. 1542) in the House of Representatives. The bill proposes an amendment to the Communications Act of 1934 that would prohibit the FCC (Federal Communications Commission) and individual states from regulating an ILEC's (Incumbent Local Exchange Carrier's - Verizon, SBC, Qwest and BellSouth) entry into the long distance data services market. Current regulation requires that the ILECs prove that they have provided UNEs (Unbundled access to Network Elements) and high-speed data services at wholesale rates to competitors, before entering the long distance market. In the bill, both requirements would be lifted. Since its introduction, the bill has been referred to the House Committee on Energy and Commerce, which voted their approval 32 to 23. On May 24th, it was passed to the House Committee on the Judiciary, which gave the bill an unfavorable recommendation, and asked that anti-trust approval be required before allowing ILECs to offer long-distance data services (June 18th). The bill has been cosponsored by 112 other representatives. Among the bill's other supporters is the US Industry Internet Association. Tauzin-Dingell A statement on Representative Dingell's Web site claims that H.R. 2420 (now 1542) would give consumers the opportunity to choose their broadband provider, a freedom which has been denied due to, "The rapid consolidation of ownership in both the cable (AT&T) and Internet backbone (MCI WorldCom/Sprint) industries…" Representative Tauzin agrees, claiming that the Bell companies need a friendlier regulatory environment in order to compete with cable operators. An estimated 70% of broadband consumers use cable modems for access. Proponents of the bill hope that dropping restrictions for the Bell companies (ILECs) will result in an increased investment in broadband technologies. This, in turn, could facilitate the expansion of backbone hubs into all areas, a critical step given the fact that 60% of States have only 2 or 3 backbone hubs, and several lack any backbone structure at all. Opposition Competitive Local Exchange Carriers (CLECs) are opposed to Tauzin-Dingell, claiming that their future depends on the shared infrastructure of the ILECs - an arrangement that would be eroded if FCC regulation is terminated. But since CLECs are new to the market, most do not have the financial resources that help ILECs apply lobbyist pressure in Washington. To their benefit, though, CLECs have found support with long distance providers such as Worldcom and AT&T and cable companies like AOL Time Warner. These allies have partnered in opposition to the bill's passage. Representatives Chris Cannon (R-Utah) and John Conyers Jr. (D- Mich.) also oppose Tauzin-Dingell and have introduced a bill entitled the American Broadband Competition Act of 2001 (H.R. 1698), which would support CLEC efforts in two ways. First, it would overturn a 7th Circuit Court of Appeals case, which found that anti-trust laws do not apply to the telecommunications industry due to the enforcement measures inherent in the Telecom Act itself. Second, it would prohibit the co-marketing of advanced services with traditional telecommunications services by the providers. Other groups have gotten involved as well. One such group, Tech Central Station, has published several reports evaluating the impact of the Tauzin-Dingell bill on the US economy. Their latest report, "Competition in Telecommunications and Economic Growth," claims that by decreasing competition in the data services market, the bill could cause, "A reduction of gross U.S. economic output of between $57 billion and $88 billion by 2006." The report points out that the bill's introduction and consideration has already damaged efforts by existing CLECs to find adequate funding and to provide affordable services to consumers. In fact, according to the report, the market value of CLECs declined 84% between March 2000 to May 2001. In addition, a Telecommunications International report claims that increasing ISP failures have resulted in a smaller Internet population Q1 2001. According to the report's authors, this trend is not only of concern to the telecommunications industry, but would also affect the entire IT industry by decreasing investment and eliminating competition, which could increase prices and slow broadband development. In addition, if competition is stalled long-term, the reverberations would be seen in the US GDP (Gross Domestic Product). As mentioned earlier, the author's estimate that this reduction in IT capital might result in a decrease in the total GDP of between $57-88 billion. http://www.techcentralstation.com
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