House Was Close to Voting on Neutrality

“It’s safe to say that the Sensenbrenner-Markey forces have pretty much gotten black eyes every time they bring up their ideas,” House Commerce Committee Chmn. Barton (R-Tex.) said at the Rules Committee hearing. “So I'm not an advocate,” he said, arguing against the amendment. But House Speaker Hastert (R-Ill.) said earlier Wed. the net neutrality amendment would go to the floor.

The committee adopted a rule providing an hour of debate for each side, waiving points of order and barring amendments other than those already agreed to. The committee rejected controversial amendments on redlining and buildout, angering several key Democrats during debate on the rule Thurs.

“This is a bad bill. It could have been a good bill, had the special interests not gotten on it,” Commerce Committee Ranking Member Dingell (D-Mich.) Said: “The Democrats offered real solutions. At one point we had a handshake deal but the telephone companies have the leadership here. I say to this body, ‘Shame.’ This bill will do more harm than good.”

Defending the bill, Rep. Rush (D-Ill.) admitted he faced a “highly difficult situation.” Rush’s sponsorship made the bill bipartisan after talks involving Barton, Dingell and Markey collapsed. “I'm a minority. I'm a Democrat. I've lived next door to public housing and I'm a supporter of this rule,” Rush said: “Why? Because my constituents want to get much needed relief from the escalating and high cost of cable TV.” His constituents “don’t need buildout, we need buildup” by allowing this bill, he said.

House Minority Leader Pelosi (D-Cal.) backed Markey’s amendment, calling it key to preserving the Internet’s open nature. She voiced regret at the exclusion of amendments to require phone firms to build out to all residences in their service areas and bar redlining. Markey objected to the 20- min. limit on debate over his amendment. It’s “disrespectful” to confine such a complex issue to so brief a period, he said: “It almost defies description.”

An amendment by Rep. Smith (R-Tex.) also addresses net neutrality, moving to preserve such cases’ antitrust status. Specifically, it says the bill’s provision giving the FCC exclusive authority to adjudicate net neutrality complaints doesn’t affect antitrust laws’ applicability to cases that involve network neutrality or courts’ jurisdiction over such cases.

If Congress doesn’t pass a strict net neutrality measure, “extraordinary damage” will be done to “the inherent beauty of the Internet,” Sen. Wyden (D-Ore.) said on the Senate floor Thurs. The Web has thrived because “it’s been all about a fair shake for every American, for every consumer,” he said. Wyden sponsored S-2360, which treats content providers equally while barring network operators from charging more for faster delivery of services. Lobbyists for telcos and cable are blurring the real issues with a PR blitz, he said. By Wyden’s count, net neutrality opponents have spent “hundreds of millions of dollars” on ads to persuade the American people that the extra charges they would face on the Web “are actually good for them… If discrimination was so good, wouldn’t consumers have been interested in paying higher prices a long time ago?” He attacked the Hands Off the Internet coalition, a group backed by AT&T, Alcatel and the American Conservative Union as producing a smear campaign against his bill. An ad paints a picture of S-2360 amounting to “hundreds if not thousands of pages” of regulation, he said, which is “dead wrong.” Wyden said his bill is 15 pages and aims to “leave the Internet alone.”

Unfunded Mandates

Rep. Baldwin (D-Wis.) objected to the bill in debate on the rule Thurs., claiming the provisions would impose unfunded mandates on cities. She cited a recent Congressional Budget Office estimate that implementing the bill would impose costs of up to $350 million on state and local govts. by 2011, since it preempts state and local laws on rights of way fees.

Under federal law, cable collects such fees, set at 1%- 3% of provider gross revenue; the House video bill would exempt Bells from the fees, the report said. The CBO said the House bill would erase taxpayer benefits to which local govts. are accustomed, such as institutional broadband networks, wireless networks in schools and libraries and other services.

Democrats accused Republicans of abandoning a Reagan-era commitment to shunning unfunded mandates. “Not one Republican supported the principle of unfunded mandates,” Pelosi said.

That argument is “hogwash,” Barton said: “This is an Alice in Wonderland definition.” Fees cities get are “found money” and new entrants will be required to pay, he said: “If there’s one thing I'm sure of it’s that there’s no unfunded mandates in this bill. If there were unfunded mandates, I would oppose it.”

Amendments Allowed

Inclusion of the net neutrality amendment marked a win for Democrats, though they lost out on amendments dealing with buildout and redlining. “This is a weak bill and will prove to be ineffective,” Rep. Solis (D-Cal.) whose 2 amendments on redlining and buildout were rejected, said. “Some consumers could lose cable service altogether” under the House bill as written, Solis said.

In addition to Markey’s amendment, a manager’s amendment offered by Barton would clarify: (1) what a franchise area is; (2) that a person or group seeking authority to provide service under a national franchise must meet FCC consumer protection requirements; (3) that anyone with a national franchise comes under all cable operator provisions of the Communications Act’s Title VI save for those excepted in the bill; (4) that nothing in the legislation affects existing pole attachment law.

VoIP providers would have to contribute to the Universal Service Fund (USF) when interconnecting with local exchange carrier networks under an amendment by Rep. Gutknecht (R- N.M.). VoIP providers also would have to compensate network owners for using networks, as incumbent and competitive carriers must under current rules.

An amendment by Rep. Jackson-Lee (D-Ill.) would halve to 0.5% the fee paid local franchise authorities for public education changes by women-owned, small businesses and economically disadvantaged firms. An amendment by Rep. Wynn (D-Md.) would let a franchising authority issue an order requiring compliance with FCC consumer protection rules.

Rep. Johnson (D-Tex.) put forth an amendment to increase penalties on cable operators from $500,000 to $750,000 if they deny access to residents based on income. Rep. Rush (D- Ill.) offered an amendment outlining a complaint process to resolve fee disputes between local franchise authorities and a cable operator.

Pushing to bar redlining, Jesse Jackson wrote to Hastert and Pelosi saying the bill is weak on consumer safeguards. “Any meaningful provision must ensure that minority, rural and low-income communities will receive the benefits of video competition as rapidly as do more privileged communities,” he said.

Web Lobbyists Battle at Lunch

As members of the House pondered rules for the net neutrality debate, Web watchers weighed in Thurs. on the issue at a Capitol Hill lunch. Representatives of both sides of the battle told an Congressional Internet Caucus event what they would tell lawmakers. Public Knowledge Pres. Gigi Sohn would urge them to “vote yes on Markey” for its nondiscrimination provision. She would ask them if they wanted their Internet service to wind up looking like their cable lineup, in which “you can’t pick and choose what channels you want.” Rejecting net neutrality is advocating “discrimination… plain and simple,” she said.

Skype Dir.-Govt. Affairs Chris Libertelli offered an e- commerce rationale for a neutrality mandate. If members think countless eBay entrepreneurs should stay in business, they should vote for the legislation. A vote against the Markey amendment is a vote against preserving the Web as we know it, he said.

But Verizon’s Gregg Rothschild argued “we're in a regulatory sweet spot": Major Internet players are pouring money into developing the next-generation broadband network and dedicating considerable resources to innovative content. “Until there’s a problem, don’t risk what is essentially a good thing that’s working,” he said he would advise policymakers. Net neutrality backers started the war with nothing more than a Nov. BusinessWeek article as ammunition, Rothschild said. The article quoted AT&T Chmn. Ed Whitacre as saying he wanted to charge companies like Google a fee for delivering their content to consumers PCs.

Lawmakers “must be vigilant” in resisting pressure to legislate preemptively, said National Cable & Telecom Assn. (NCTA) Deputy Gen. Counsel Michael Schooler. Congress should “wait & see if all these anticompetitive things happen” and “be careful that you don’t thwart the development that consumers would want,” he said. As long as the market is evolving and consumers are responding favorably to its advances, there’s “no identifiable problem,” Schooler said. He said that if a problem arises, legislators could reexamine net neutrality and “see if there’s a tailored way to fix it.”

But waiting until discrimination is rampant is unwise, Sohn said. There’s “utter lack of competition in the broadband field” and it’s time to “regulate the on and offramps” -- not the services, applications or content, she said. Libertelli agreed: “There’s a duopoly in place. As much as we'd like to pretend that there’s this competitive landscape, its just not here yet.”