Verizon: IP Video Key to Telco Reform

WASHINGTON — Verizon moved to Capitol Hill today in its
campaign to reduce entry barriers for incumbent telephone companies pushing new video services.

Verizon’s march on Congress comes after the Texas Legislature adjourned without taking action on a
bill supported by Verizon and SBC that they claim would have
streamlined the process for the incumbents to roll out their
video-over-fiber product.

On Wednesday, Verizon SVP Kathryn Brown told a broadband policy summit luncheon Congress should move forward with a rewrite of the 1996 Telecommunications Act that recognizes “true choice in the marketplace.”

“Today in the communications market, consumers, not government, not
technology, are in the driver’s seat,” she said. “So the first question we
must ask in any public policy discussion is, ‘What is best for consumers?'”

Brown said the Texas decision limits video choices for consumers. She said federal law allows cable operators to offer voice services in direct competition to the incumbent telephone companies without requiring a second franchise agreement to offer that service.

“Yet the very same law requires Verizon to go to the local community and ask for a second franchise to offer video over a network we already have authority to operate,” Brown said.

The Texas decision, she added, was example of regulatory policies curbing the national rollout of broadband.

“We should not lock the future of broadband in the regulatory shackles of the past,” Brown said. “We need to adopt not a fixed bureaucratic ‘Regulator’s Guide to the Universe,’ but an agile, problem-solving policy regime that is responsive to real, rather than imagined, problems in the multi-media space.”

Brown added that current regulatory policies at both the national and local
levels were drafted in a different technological age.

“People aren’t just downloading, they are streaming,” she said. “They aren’t
just calling on their phones, they are picture taking, text messaging and
watching video. They aren’t e-mailing, they are IM-ing. They aren’t playing
or recording, they are gaming or I-Podding.”

Although Congress has taken no action yet, it is widely believed it will
take up telecom reform before the end of the year.

“For consumers to receive the full benefits of broadband and to encourage
investment and deployment in broadband technology, it requires and
understanding that the world has changed and, so too must public policy,”
Brown said.

In a panel discussion following Brown’s address, former Federal
Communications Commission Chief Economist Thomas Hazlett said Congress needs
to act on telecom reform.

Without new legislation, he said, the cost of capital will rise because
investors become nervous about future liabilities such as taxes and
regulatory burdens.

“You’re going to have to pay a higher return or higher expected return to
get the same capital investment,” he said. “On the other hand, if you jump
in and impose bad rules, it can be much worse.”

Nevertheless, he noted, “Do you want to take the legacy regulations and move
them toward a more liberal regime or do you want to try to impose the
rigidity of the current system and all the cross subsidies and regulatory
burdens and move that into the Internet space? I think that would be a

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