ILEC LOBBYISTS ON HILL TO FOCUS ON TELECOM ECONOMICS

FCC has open proceedings on broadband and unbundled network elements (UNEs) that could provide some regulatory relief to ILECs. “What the FCC does or doesn’t do will shape legislative proposals and their perceived urgency,” said USTA Senior Vp-Law & Policy Daniel Phythyon.

ILEC lobbyists plan to emphasize to Congress effect telecom sector recession has had on entire economy. “Our legislative priority will be to help Congress and the Administration find an avenue to bring this sector of the economy back to where it was,” said SBC Vp-Federal Relations Timothy McKone. “The leading sector of the economy that’s losing is telecommunications. The regulatory structure today under which we operate is flawed and is hindering our ability to make investments and create jobs.” Telecom slump has forced Bell companies to take $14.1 billion out of marketplace and cut 20,000 jobs, he said. First priority is reform of UNE-platform (UNE-P), McKone said, which is getting support from Congress, particularly because members’ constituents are feeling effects of telecom slump. He said he was encouraged that more than 106 members of House wrote letter to FCC last session urging changes in administration of UNE-P.

Broadband deregulation is other main emphasis for ILECs. McKone said SBC wasn’t “necessarily waiting for the FCC” to act on issue, but couldn’t say yet what, if any, type of legislation would be needed to create parity between ILECs and cable, satellite and wireless providers. “We all want that fixed,” he said. “Is Tauzin-Dingell needed again? I don’t know yet. Is Breaux-Nickles needed? I don’t know yet.” Rise of Sen. McCain (R-Ariz.) to Commerce Committee chmn. is “exciting” and McKone said he believed committee would be more “active” on telecom issues. Committee has invited FCC Comrs. to testify at Jan. 14 hearing on state of competition in telecom industry. McCain’s support of deregulation of residential broadband is encouraging, he said, but SBC also will be pushing for deregulation of business broadband, which was excluded from broadband bill McCain introduced last session.

While USTA will echo SBC and other Bell concerns about UNE-P and broadband parity, universal service fund (USF) reform will be another priority lobbying issue for ILECs in new session, Phythyon said. NTCA has put USF at top of its lobbying agenda, highlighting importance of contribution methods that don’t give competitive carriers funding to detriment of ILECs (CD Nov 14 p7). NTCA CEO Michael Brunner said FCC was likely to “torque” USF to aid competition in rural areas, particularly from wireless companies. Commission is reviewing USF in rulemaking. If such approval of changes loomed, he said, NTCA would lobby Senate Commerce Committee members to block them.

Tax issues and Internet content concerns also will be watched closely by ILECs. “Not all of the important work will be done within the jurisdiction of the Commerce committees,” Phythyon said. USTA will work for changes in depreciation that can be claimed on investments, he said, and for repeal of estate tax, often known as death tax. OPASTCO said it also supported repeal of “death tax” because it often harmed family-owned ILECs after owner died. Tax can be as high as 55% and can force companies to sell and move from area, OPASTCO said. NTCA also will push for changes in bankruptcy laws to protect ILECs in WorldCom and Global Crossing bankruptcies.

One issue that will become increasingly important to ILECs is digital rights management, Phythyon said. “USTA members will play a growing role in some of the intellectual property debates,” he said. Main concern for carriers is potential of liability for copyright infractions, he said. “As content is distributed on broadband and the Internet, will some of the liability fall upon the carriers?” Phythyon asked. As ILECs seek to bundle services, content liability will become increasingly important issue, he said: “It’s the copyright equivalent to CALEA.”