A bevy of bills: RBOCs heavily influence proposals

You can't always get what you want from the FCC, so regional Bell operating companies are turning to Capitol Hill to get high-speed data networks off the ground.

The RBOCs have found champions in legislators whose bills would give them the regulatory relief the FCC has refused to grant. Competitive local exchange carriers and long-distance carriers oppose the measures, saying that long-distance relief would give the RBOCs - who still dominate local service - an unfair advantage in the booming market for advanced data services.

Though many in Congress hesitate to reopen the Telecommunications Act of 1996, a few want to revise it to promote broadband services competition. Either way, they seek to get around Section 271, which bars RBOCs from selling in-region, long-distance service before they've opened their local markets to facilities-based competitors.

"Legislation tends to be the last refuge of people who can't win in the market," said Tom Nolle, president of CIMI Corp. "This whole process is driven by lobbyists. The more money you have, the more lobbyists you have."

But politicians say they just want to let the Internet grow free of government-imposed burdens. Sen. John McCain's, R-Ariz., bill states, "The purpose of this [Internet Regulatory Freedom] Act is to eliminate unnecessary regulation that impedes making advanced Internet service available to all Americans at affordable prices."

Rep. Billy Tauzin, R-La., chairman of the House telecom subcommittee, introduced a bill last week that would exempt RBOCs from Section 271 for the provision of data services only, his spokesman said. Voice services remain subject to the law.

Currently, RBOCs that sell Internet access can handle only local calls in their territories because of Section 271's long-distance ban. Calls between LATAs are passed off to other providers - traffic that the RBOCs want to capture through their own national networks.

McCain's bill, introduced May 13, would revoke the FCC's authority over packet-switched data services. The bill would exempt RBOCs from reselling or unbundling network elements for high-speed data services to other providers at a discount.

The Internet Freedom Act, introduced May 5 by Rep. Bob Goodlatte, R-Va., would grant the RBOCs long-distance relief by amending the definition of interLATA service to exclude data services provided over Internet protocol or packet-switched networks.

Incumbents also would be relieved of all price, rate and profit regulation after state commissions OK their plans for broadband deployment. The Goodlatte bill defines broadband as transmission capability in excess of 200 kb/s in at least one direction.

Carriers wouldn't have to follow their own plans once broadband competition emerges in their local exchanges. They would also be exempt from the Telecom Act's resale and unbundling requirements if they met certain conditions for providing local loops.

CLECs oppose all the legislation because it gives RBOCs relief they don't deserve until local markets are more competitive, said Cronan O'Connell, vice president of industry affairs for the Association for Local Telecommunications Services.

"The overall thrust on Capitol Hill is to push broadband deployment, especially in rural areas," she said. The [incumbents] are promising to be the ones to do that if they get total relief from the act." But promises made - and potentially broken - aren't a sound basis for changing the law, she added.

CLECs also worry that an exemption for data services amounts to one-for-voice services too, because voice eventually will migrate to data networks. "It's not so easy to be able to discriminate different services when it's all data in the end," said Rebecca Wetzel, a telecom consultant in Upton, Mass.

The fight is really about who will rule the high-speed Internet access market. While RBOCs and CLECs bet on digital subscriber line (DSL) service, cable operators favor cable modems and other technologies. Although DSL is expected to grow the fastest, dial-up will remain the most common way to reach the Internet, according to projections by The Yankee Group (see figure).