Regulatory Landscape Needs Re-evaluation

Posted June 1, 2005 at 12:53pm

Nine years ago, Congress enacted the Telecommunications Act of 1996, a law fashioned for the analogue era of voice-based telephone service. Since that time, we have witnessed a communications revolution that has rivaled the Industrial Revolution for how it has transformed the way we do business. In 1996, electronic communication was mostly about analogue circuit-switched telephone

service. Today, it is all about the Internet. It is now time to re-evaluate a regulatory landscape, which is based on a nearly decade-old law which mentions the Internet only in passing.

A re-examination of our communications laws should focus on encouraging entry by new service providers, which will enhance the options available to consumers at more competitive prices. Two of the more significant recent developments in the communications arena are the announcement by several Bell companies, including BellSouth, SBC and Verizon, of their intent to enter the multichannel video programming market using broadband platforms, and in some cases, the Internet protocol architecture, and the decision by many municipalities, particularly smaller communities, to build out their own networks capable of delivering broadband, video programming and other services. Each of these advances promises to bring the benefits of competition and more choice to consumers, and each should be closely examined as Congress modernizes our communications laws.

The decision by traditional telephone service providers to offer hundreds of channels of TV programming, whether over fiber optic cable or using Internet protocol, will in many areas provide a third service provider to vie with cable and satellite, thereby greatly enhancing the competitiveness of the market. The speed of these services and their virtually unlimited capacity promise to make them attractive options for consumers.

However, new video market entrants face a significant barrier to entry: the need to obtain a local franchising agreement for each community in which they want to offer service. A Bell company that wants to provide multichannel video programming throughout its service area might have to gain approval from as many as 10,000 local franchise authorities. If the company were to obtain one local franchise agreement per business day, it would take 40 years to be able to offer TV services throughout its footprint. Meanwhile, consumers will be denied the benefit of competition and more varied service offerings.

At the same time, communities in many areas, primarily in small towns and rural areas, are seeking to respond to the need for affordable broadband by investing in their own municipal networks. In many localities the population is too small for private sector providers to offer DSL or cable modem service. There are counties in my mountainous district with populations of 5,000 people or fewer, where the largest town has just 200 residents. These areas are not likely to receive broadband service from telephone and cable companies for years to come. In other communities, a single broadband provider may charge rates for the service that place it beyond the reach of small businesses.

With the United States recently dropping from 13th in the world to 16th for broadband penetration, we should be doing everything we can to encourage the deployment of advanced communications networks, and local governments have a role to play, particularly where the private sector either has not provided the service or provides it at such a high price that it is effectively unavailable to residents and much of the business community. Just as in the last century, municipal electric utilities filled the gap in bringing electricity to communities that did not have it, localities now should be free to offer broadband where they can provide the only widely available and affordable service. Yet in many states, localities are barred from this market or required to offer the service under unrealistic restrictions.

I, therefore, advance a proposition for consideration as we rewrite the telecom laws, one which addresses both the needs of telephone companies, which plan to offer video channels, and the needs of localities to offer broadband networks. The proposal has these components:

1. Congress should create a national franchise for multichannel video offerings and eliminate the need for program providers to seek approval from each local franchise authority. In exchange for not having to obtain local franchises, new video market entrants would agree to pay local franchise fees and to provide public, educational and governmental — or PEG — channels. This approach would bring to local governments an additional revenue stream and would assure them that the community is served through the availability of PEG channels, an offering which would not impose a significant burden on new multichannel video programming providers, which have indicated that their systems will not face capacity constraints.

2. Localities would, in return, receive a clear set of rules under which they can offer broadband services to their residents. Communities opting to do so would need to factor into the price they charge their customers the cost of their natural advantages, such as tax exempt status and unlimited free access to rights of way.

3. It is also essential that new regulations treat all service providers equally, without regard to the means by which they deliver their services. Disparate treatment of cable and telephone companies offering identical services, which is a feature of current law, must end. And the law should welcome and accommodate all new technologies, such as the WiFi and WiMAX wireless systems that are beginning to make broadband an affordable offering in hard-to-wire rural areas.

The result would be a win for all parties involved, especially consumers. New multichannel video programming providers would be able to roll out service quickly, and communities that desire to do so could build out community networks. The ultimate beneficiaries would be the American public, because the increased competition would result in more choices and lower prices.

While these goals are easy to state, achieving passage of a law that accomplishes them will no doubt prove challenging and require both time and patience. I look forward to engaging in a dialogue with those in the industry and other interested parties and with my colleagues to develop an approach that will ensure that our communications market is fully competitive and equal to the demands of this new century.

Rep. Rick Boucher (D-Va.) is a member of the Energy and Commerce subcommittee on telecommunications and the Internet.