Major Reform of Telecom Act Proposed

WASHINGTON — Sweeping legislation to deregulate the U.S. telecommunications
market finally hit Congress today. Long awaited and much anticipated, the bill
calls for stripping away many of the current federal and state rules for the
delivery of voice, video and data services.

Introduced by Sen. John Ensign (R-Nev.) and co-sponsored by Sen. John McCain
(R-Ariz.), the Broadband Investment and Consumer Choice Act aims to level the
playing field between telephone, cable and satellite companies while opening
the door for the delivery of emerging broadband services.

Ensign’s bill specifically calls for eliminating state and local franchise
requirements for all video providers, including telephone companies moving into
the field. Existing cable franchises would cease to exist upon enactment of
the bill.

Ensign said state and local authorities would be protected from financial
losses under his bill by requiring video providers that use existing rights of
way to pay local authorities a fee of up to five percent of gross video

Broadband services, regardless of technology platform, are largely freed from
federal and state regulation at both the wholesale and retail levels. The bill
further states that consumers may not be denied access to any legal content
provided over the facilities used for broadband communications, including
Voice over IP port blocking.

“Americans’ ingenuity and creativity can provide more choices for consumers if
government bureaucrats will get out of the way and allow our companies to
compete,” Ensign said at a Capitol Hill press conference. “Technology is moving forward but current laws are not.”

As for interconnection fees between broadband providers and facilities-based
providers, the legislation says the parties are required to establish
“commercial arrangements.” The Federal Communications Commission (FCC) would
only intervene if they fail to reach an agreement.

The legislation also targets state and local governments considering
establishing their own broadband networks. Under the bill, local
municipalities must give the private sector notice before going into business
for themselves and allow non-government providers to bid on the project.

“We need to modernize our communications laws. Instead of stifling,
government-managed competition, we need to move to market-controlled forces,”
Ensign said. “We need to get the investment dollars flowing.”

Ensign cited the cell phone industry as a model of innovation with minimum
government regulation. “This is the type of competition we want between cable
and telephone companies,” he said.

Incumbent telephone companies will be required to continue to provide
unbundled access to their copper lines until 2011 and to make narrowband
communications available for resale at rates established by the FCC.

The FCC also retains the authority granted in the 1996 Telecommunications Act
to require service providers to comply with wiretapping requests. In addition,
Ensign’s bill retains prohibitions on obscene Internet materials.

The bill does not, however, deal with reforming the Universal Service Fund
(USF), an issue Ensign said he was leaving to Senate Commerce Committee Chairman
Ted Stevens (R-Alaska).

Ensign’s legislation drew a flurry of statements in support of telecom

“Senator Ensign has produced the most deregulatory communications bill ever
introduced in Congress, and, commendably so, in light of the vast marketplace
changes that have occurred since passage of the 1996 act,” said Randy May, a
senior fellow at the Progress and Freedom Foundation.

Roger Cochetti, group director for U.S. public policy at the Computing
Technology Industry Association, added, “Since the Telecommunications Act of
1996, the convergence of markets, the rapid advance of information and
communications technology, and the ubiquity of the Internet have pushed the
96 Act to its limits.

Cochetti said while the Telecom Act did much to update the nation’s
regulatory structure, “It is timely and appropriate that we revisit that
landmark legislation.”

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