TAUZIN AIDE SAYS NEW HR-2420 WILL EMERGE SOON

“We will get it out of the House and there is a fair to middling chance of getting it through the Senate,” he predicted. Johnson took issue with those who suggested Communications Subcommittee Chmn. Upton (R-Mich.) would take back seat to Tauzin. “Fred Upton is going to be in the driver’s seat,” he said: “Anyone who suggests he will be a caretaker and Billy Tauzin will be the driver is wrong.” Johnson said Tauzin was working with Upton to develop new version of HR-2420.

In separate panel on prospects for broadband legislation, industry lobbyists had varying degrees of optimism on this year’s bill clearing Senate. Allegiance Telecom Vp-Govt. Affairs Kevin Joseph said he wasn’t as optimistic about legislation making it through Senate as compared to House. “The House will pass legislation this year, you can take it to the bank,” he said. “At this point, I don’t see there being that much sentiment coming out of the Senate to complement the Tauzin effort.” But Washington attorney Bernard Wunder said situation in this Congress might be closer to that of 1993, when House had more interest in writing telecom legislation than Senate did but Senate became “seriously interested” when House overwhelmingly passed bills on RBOC restructuring and opening local loop. Given number of sponsors signing on to HR-2420 last year, similar sentiment might rule in this Congress, he said. “Is it possible?” he asked. “Sure it’s possible. Is it probable -- maybe.”

As for other legislation this year, Johnson said House would wait to introduce FCC reform legislation until FCC Chmn. Powell presented his reform plan. He said Tauzin “will allow [Powell] to take a swing at the ball first and present his own reorganization plan to Congress before we take action.” It’s still necessary for Congress to act because, without legislative change, “more activist” chairman could succeed Powell and change everything back again, Johnson said. Among ideas for FCC reform, according to Johnson: (1) Privatizing some of FCC’s responsibilities such as recordkeeping and information gathering. (2) Determining whether there’s duplication between FCC and other federal and state functions. (3) Looking at whether current forbearance authority was adequate. (4) General streamlining.

ALTS Pres. John Windhausen said viability of CLEC industry continued to sink and one of main reasons was “what’s happening in Washington.” He told audience “it’s close to the point where the last 5 years may go down the drain and all the promises for consumers may disappear.” Investors are losing confidence in CLECs as they start to see “a shift in Washington to deregulate the Bells,” he said. What’s really necessary is legislation to enforce Telecom Act’s requirements for competitive entry, he said.

AT&T Gen. Counsel James Cicconi said giving Bells lessened regulation for provision of DSL and other data offered “opportunity to further strangle competitors.” He said “DSL companies are going under” because of Bells’ refusal to open their markets. “Don’t help them further extend their markets.”

“This is bizarre,” Verizon Senior Vp Edward Young responded. “The largest cable company in the world is complaining about not having enough market share when we come to this [broadband market] without any market share.” Young said Act needed to be amended to take into consideration growth of “convergent services,” those that can be provided using more than one technology. Telecom Act now is too technology-specific, with different regulations for different technologies, even though they do same thing, he said. Answer is new Title 7 that would put everyone on par, Young said, raising one of Verizon’s key legislative campaigns.

One driver for legislation this Congress is “increasing frustration” with pace at which Telecom Act is facilitating competition in marketplace, said Howard Waltzman, Tauzin staffer for House Commerce Committee. Frustration centers on “what members contemplated when they passed the Act 5 years ago and what they saw as the goal of the Act. And that’s not happening at the sort of pace that most members expected,” he said. Wunder said telecom industry was only sector to have been deregulated in recent past that hadn’t had follow-up legislation within 5 years of passage of original bill to make refinements. Legislation to deregulate airline, railroad and trucking industries all had follow-up bills within that time, he said.

In lunch speech, BellSouth Chmn. Duane Ackerman said “it’s time for a modest course correction” on Telecom Act of 1996. He called on FCC to make changes, saying: (1) Although universal service fund was deliberately designed to be limited, neither federal fund nor those in states were large enough to provide rate of return on rural subsidies. Telecom Act called for those subsidies to be made explicit and it was time for policymakers to move on that. (2) Universal service funds hadn’t done enough to create attractive rural residential marketplace. Cost of providing rural residential service should be allowed to flow through and wireline and wireless competition should be allowed to take hold. “Obviously CALLS has not gone far enough to solve this problem.” (3) Long distance relief should be provided to Bell companies because “the value of RBOC entry into long distance can’t be overestimated” in terms of jump-starting competition.

In advanced services market, Commission should follow the regulatory model used for wireless carriers, which was to forbear from regulations where it made sense and to provide “lots of spectrum to ensure no barriers to supply existed,” Ackerman said. Advanced services market is “still in its infancy” and FCC and Congress need to send “strong” signal of deregulation, he said. “It’s just forbearance,” Ackerman said in Q&A session. “We are not advocating doing away with unbundled network elements.” Bell companies have been pushing proposal that would give them forbearance from requirement that they make their advanced network facilities available to competitors. Plan would apply only to advanced services such as DSL.

FCC Common Carrier Bureau Chief Dorothy Attwood said agency would hold public forums soon to gain information on 2 increasingly important issues: (1) “Appropriate regulatory paradigm” for competitive access to “next-generation networks” such as those that use remote terminals. (2) “Best practices for UNE [unbundled network element] pricing.” First one will be held this month, or April at latest, spokesman said later, and 2nd after that. Attwood said at conference that such forums had become important “tool” in helping agency “narrow issues.”

IP telephony will have an impact on telephony, and it already is starting to happen, Jeff Pulver, CEO of Pulver.com, said on “Impact of IP Telecom” panel. Five panel members, including Comr. Ness, said delivery of voice service over IP (Internet protocol) was growing and inevitably would have impact on public switched telephone network (PSTN). Not only will method of service change, “new set of economics” is emerging as well, said Mike McCue, CEO of TellMe, voice-activated service that links phone calls to Internet. Only impediment to industry growth is lack of capital investment, Pulver said, fear echoed by other panelists. On regulatory front, Ness said, in that arena “business governs, not the reverse,” saying several times that it would be wise not to regulate yet, even on issues such as universal service. Some worry that universal service will be harmed by proliferation of IP telephony, Ness aid, but regulators should adopt “wait-and-see” approach. Only drawback to that approach might be creation of uncertain atmosphere for investors, she said. Pulver, one of biggest proponents of IP telephony, said voice telephone of CD quality was technically feasible despite concerns that quality of service was inferior. AOL Wireless CEO Lisa Hook said her company wasn’t looking to partner with incumbent local and long distance carriers in VoIP since such companies couldn’t move quickly. They also may lack incentive to join market since POTS (plain old telephone service) quality is deemed good enough, especially for mass market, she said. However, AOL Wireless is working on product similar to TellMe for Internet access via telephone, Hook said. When asked why incumbent telcos would stand for market incursion by IP telephony, Pulver said WorldCom and AT&T had announced new services using VoIP. Hook said long distance was under pressure from IP telephony and that legacy technology was in tough spot. However, VoIP is at least “18 months from rollout to mass market,” she said.