New Broadband Legislation Revives Old Debate

New legislation aimed at improving competition in the broadband industry has revived an old debate between U.S. lawmakers and telecommunications officials.

The “Broadband Regulatory Parity Act of 2002,” introduced Tuesday by Sens. John Breaux (D-Louisiana) and Don Nickles (R-Oklahoma), was designed to spur deployment of high-speed Internet services by subjecting all broadband providers to the same regulatory treatment.

The bill would require the Federal Communications Commission (FCC) to reduce restrictions imposed on digital subscriber line (DSL) access offered by telephone titans like Verizon Communications and BellSouth.

U.S. Falling Behind

“To ensure and encourage the widespread deployment of broadband networks in this country, Congress must level the regulatory playing field in the broadband market,” Breaux said.

Broadband Internet service is available to about 80 percent of 104 million American households through their local telephone, cable or satellite television companies, according to a study from the Yankee Group, but a mere 12 percent subscribe.

Meanwhile, Canadian households are taking advantage of high-speed access, according to a report released by the Ipsos-Reid marketing research firm. About 50 percent of Canada’s 18 million adults with Internet access subscribe to broadband services.

Existing Hurdles

A group of Cornell University economists said government regulations are stunting the growth of broadband Internet access and should be eliminated. The Telecommunications Act of 1996 puts obstacles between phone companies and broadband, they argued in a Tuesday filing with the FCC.

Local exchange carriers are heavily regulated under the 1996 law, which imposes a long list of federal and state requirements that must be fulfilled before they can offer broadband long-distance services.

Cable, satellite and wireless high-speed Internet access providers, on the other hand, are under no such restrictions.

Differing Opinions

Competitive telecom providers stand on the other side of the broadband fence, asserting that the new bill warps government policy to favor entrenched monopolies.

Jim Cicconi, AT&T general counsel, said passage of Breaux’s bill would be “a sledgehammer blow to a telecom industry that is already reeling.”

“If we accept the Bells’ argument, it would allow them to totally destroy their DSL competitors,” he said. “At best, this would leave consumers with a duopoly; at worst, it means a deregulated monopoly free to raise prices and ignore regulators.”

Reexamining the Issue

The reality is that the strong have gotten stronger, Aberdeen Group chief research officer Peter Kastner told the E-Commerce Times.

“It looks like we’re heading towards putting Humpty Dumpty back together again, but instead of one big AT&T, we’ll end up with four or five regional companies that will end up going national,” said Kastner. “And those companies need to be regulated very carefully.”

Kastner said Congress should consider the original intentions of the 1996 Telecommunications Act, which was supposed to make DSL “quite unregulated.” Instead, he said, the RBOCs (regional Bell operating companies) tromped all over DSL companies and effectively raised barriers to their economic success.

“The 1996 Telecommunications Act set the rules for the catastrophe we have now,” Kastner said. “Legislation is the only answer. It lets the political cooks into the kitchen, but I believe it is going to take a political approach to even out the competitive situation.”