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House Passes Internet Access Legislation
Senate Opponents Pledge to Block Measure That Helps 'Baby Bell' Companies

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Broadband Deregulation

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By Juliet Eilperin and Yuki Noguchi
Washington Post Staff Writers
Thursday, February 28, 2002; Page A10

The House approved legislation yesterday that would transform the way Americans access the Internet by making it easier for regional Bell telephone companies to enter the high-speed "broadband" market.

The 273 to 157 vote follows nearly three years of debate over how best to provide high-speed Internet access to consumers. The fight had sparked an intense advertising and lobbying campaign, with both the regional Bell companies and AT&T spending tens of millions of dollars to sway lawmakers.

Supporters predicted the bill, sponsored by Reps. W.J. "Billy" Tauzin (R-La.) and John D. Dingell (D-Mich.), would help modernize the nation's communications system and spur economic growth. Tauzin said it would ensure that "no corner of our country, no business, no child doesn't have access to this new technology. That's the future of where our economy lies."

But the measure's opponents said it would simply allow regional Bell companies to crush their rivals, by loosening regulations imposed as part of the 1996 Telecommunications Act. "If this bill becomes law, the Baby Bells would have total control over their competition," said Rep. Chris Cannon (R-Utah).

The legislation is not likely to become law soon, at least not in the House-passed form. Senate Commerce Committee Chairman Ernest F. Hollings (D-S.C.), an ally of AT&T, reiterated his opposition to the bill yesterday.

Yesterday's day-long debate highlighted how lawmakers are struggling with the question of expanding broadband access to small businesses and ordinary citizens. Most lawmakers rarely delve into telecommunications issues, and unlike most House fights this one did not divide neatly along party lines.

"This is not a fight between Democrats and Republicans," said Rep. Edward J. Markey (D-Mass.), a bill opponent. "It's between competition and monopoly."

But the legislation's backers said they were the ones giving consumers a choice. "If you care about the American people, if you want competition, if you want service, that's the way you go about it," Dingell said.

Only 10 percent of Americans have broadband access. About 68 percent of them get it through cable television modems, some of which are owned by AT&T, while 28 percent use digital subscriber lines, known as DSL, provided by regional telephone companies.

The bill, which would make it more difficult for competitors to access the Bell companies' data transmission networks, is the boldest and most successful attempt yet by the Bells to redefine the terms of competition in telecommunications since the local phone industry was deregulated six years ago. That law opened the local markets and spurred billions of dollars of investment in upstart phone companies hoping to take market share from the Bells, which were ordered to share pieces of networks with their new competitors.

Now, with most of those start-ups gone or under bankruptcy court protection, the Bells have been arguing -- before Congress and the Federal Communications Commission, which administers the law -- for rolling back some of those regulations. The rules, the Bells argue, should reflect competition defined broadly as that between different broadband technologies: phone, cable, wireless and satellite companies.

Industry watchers say the wide margin of the House vote will help the Bells' effort to sway the FCC, which has already undertaken three proposals to lighten regulation.

"The [Bells] are trying to send a message to the FCC," said John Windhausen Jr., president of the Association of Local Telecommunications Services in Washington, which represents the interests of the start-up phone companies. "The FCC is a creature of Congress, so of course there's interplay between what Congress does and what the FCC does."

FCC Chairman Michael Powell denied any legislative action would affect the commission's leanings. "The FCC does not feel the pressure as a consequence of the Bells," he said. "We do it because consumers are screaming for a lot more cohesiveness in broadband policy."

Yesterday's vote sends a "huge wake-up call that the House [believes] the Telecom Act needs fixing," said Scott Cleland, chief executive of the Precursor Group, a market research firm. Above all, legislators want to create new incentives for companies to invest, he said, and the Bells are the largest and richest candidates to do that.

The House adopted two amendments to the bill, including one that would increase the fines telephone companies pay for violating the 1996 act. But it rejected a proposal to uphold the existing authority of the FEC and state regulatory agencies to regulate the Bell companies.


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