GOVERNOR RACES LIKELY TO AFFECT TELECOM INDUSTRY

Control of the Senate Commerce Committee is important this year because Chmn. Sen. Hollings (D-S.C.) was instrumental in stalling Breaux-Nickles bill (S-2430). Commerce Committee member Sen. Breaux (D-La.) has told us that Hollings’s opposition was one of chief reasons it never cleared committee. But Levin said bills such as S-2430 or Tauzin-Dingell bill (HR-1542), which passed House, weren’t likely to be pushed in next Congress since many of issues had been nearly resolved. FCC is moving on its own to deregulate broadband, Levin said, and 3 of 4 Bell companies (BellSouth, Qwest and Verizon) have nearly completed their rollout of long distance service under conditions required by 1996 Telecom Act.

Bell companies had 3 goals following Telecom Act, Levin said, and 2 are nearly complete. “From a political perspective, the things the Bells have been complaining about since the ‘96 Act have been largely achieved,” he said. With long distance rollout and broadband deregulation close, Bells are likely to focus on reduction of unbundled network elements (UNEs), he said. That’s where governors races come in. State regulators control many issues relating to regulation of telecom competition, including pricing, and most PUC members are appointed by governors. “The governors have significant impact on the membership and nature of a public utility commission,” NARUC Legislative Dir. Jessica Zufolo said. Levin said he was closely watching gubernatorial races in Pa. and Midwest, including Mich., Ill. and Wis., where he said Democrats were poised to win governorships. In 9 states there are 17 PUC seats that will be filled through elections (CD Oct 21 p1).

But broadband still is likely to be issue of concern for Congress, said Scott Cleland of Precursor Group. “There’s a lot more consensus on broadband on the Hill than the process would suggest,” he said: “They believe broadband is a good thing and that more of it would be good, but there isn’t consensus on how to achieve that goal.” For instance, Hollings introduced broadband bill that would have used subsidies to encourage deployment to underserved areas, rather than deregulating Bell companies.

Many say it would be hard to judge exactly what direction Commerce Committee would take under leadership of ranking minority member Sen. McCain (R-Ariz.). “He has an idiosyncratic personality,” Levin said. While he has roiled some broadcasters with proposals for free air time for political campaigns, he’s seen as friendly to broadcasters on ownership issues. Should McCain become chmn., it would be “win” for FCC Chmn. Powell, since McCain has been supporter of his deregulatory agenda, said Jeffrey Chester, exec. dir., Center for Digital Democracy. Cleland said Congress was likely to address media ownership, which could be one of “most politically divisive issues since the fairness doctrine.” Chester said McCain was likely to support Powell’s attempt to loosen ownership rules: “McCain’s not leading the charge against media ownership rules.”

Digital rights management (DRM) is likely to be “hot- button” issue for Congress in 2003, Cleland said. Congress is “just on the cusp” of addressing DRM through legislation, Rep. Smith (R-Tex.) said. Hill sources have suggested that Smith is front-runner to succeed Rep. Coble (R-N.C.) as chairman of House Judiciary Courts, Internet & Intellectual Property Subcommittee, beating out House Internet Caucus Co- Chmn. Goodlatte (R-Va.) on basis of seniority. Smith’s contention that Congress is losing patience with issue and will intervene is supported by numerous members who have introduced bills involving DRM, including Hollings, whose bill could lead to govt.-mandated technology solutions; Courts Subcommittee ranking Democrat Berman (Cal.), whose bill would empower content owners to employ self-help on peer-to-peer networks; and House Commerce Committee Chmn. Tauzin (R-La.), who introduced legislation on digital TV broadcast flag.

Lobbyists for content, IT and CE communities have told us they were gearing up for tough fight in 2003. That’s perhaps best exemplified by as-yet-unnamed coalition being formed by major IT and PC companies and trade associations to lobby against technology mandates and what they regard as other disruptive policy solutions. Dozen or so organizations are expected to announce themselves formally early next year, we're told, which would have them launching just as 108th Congress commenced. DRM hasn’t become partisan issue, but most aggressive bills (Hollings, Berman and one by Sen. Biden [D-Del.]), all have been by Democrats. Biden’s bill actually was amended to include online protection issues by Senate Judiciary Committee ranking Republican Hatch (R-Utah), but prominence of Democrats in calling for govt. solutions on online copyright protection has led Stanford U. Prof. Lawrence Lessig, Democrat, to warn his party not to become viewed as hostile to technology.

Also, Minn. Gov. Jesse Ventura appointed fellow independent Dean Barkley to fill seat of recently deceased Sen. Paul Wellstone (D). Appointment creates questions about leadership of Senate when it returns Nov. 12 for “lame-duck” session. Each party now has 49 members, with 2 independents and Vice President casting the tie-breaking vote. Former FCC Comr. Gloria Tristani isn’t expected to unseat incumbent Sen. Domenici (R-N.M.).