Telecom Awaits New Congress

Posted June 18, 2008 at 3:01pm

Just because telecom policy might not make for scintillating presidential campaign politicking doesn’t mean it’s slated for a back seat next Congress.

After a year of trying to get piecemeal telecommunications legislation passed, industry lobbyists say they expect several long-standing issues — including reworking the universal service fund, furthering broadband deployment and overseeing the digital television transition — to get attention next year.

A new Congress and administration, as well as expected changes at the Federal Communications Commission, are also expected to create changes on the regulatory front, lobbyists say.

“Every time there is a change in administration it always sparks a lot of activity, regardless who wins,” said Greg Rohde, former assistant Commerce secretary during the Clinton administration who now heads the telecom lobby shop e-Copernicus.

Whether Sen. Barack Obama (D-Ill.) or Sen. John McCain (R-Ariz.) is elected president, “I think both of them are going to come in with a flurry of activity,” Rohde said. “They have very different records and viewpoints on some issues, but it’s safe to say there will be a lot of initiative and energy from a new administration.”

It is still unclear how central telecom reform will be in either presidential candidate’s agenda, but the industry says it is hoping to be a beacon of economic hope during hard times.

“The next administration’s challenge is going to be to continue the innovation agenda,” said Tim McKone, executive vice president of federal relations at AT&T. “You have seen, especially in this economy, that telecom is thriving. We’re investing in our networks, creating new jobs and bringing lower prices.”

The U.S. Telecom Association’s Alan Roth concurs. Roth said that greater access to broadband could help spur economic improvement, but he warns that more regulation would stymie growth.

“I think broadband deployment and adoption can certainly be a major contributor to the economy, both improvement of our economic situation and improvement of individuals’ situations,” Roth said.

McCain, who served as chairman of the Senate Commerce Committee from 1997 to 2001 and again from 2003 to 2005, has long had an eye toward deregulation of the industry. For instance, McCain voted against the 1996 Telecommunications Act, arguing that it didn’t ensure competition.

Obama’s telecom policy record is less clear. But several lobbyists point to his reliance on online fundraising as an example of how Obama will push for more deployment of computers and Internet access to rural and underprivileged areas.

“He said he watched Sen. Clinton’s [concession] speech by means of the Internet, that was a really different thing,” said Kevin Curtin, a telecom lobbyist who represents Verizon Communications, referring to Sen. Hillary Rodham Clinton (D-N.Y.).

One key area that would dramatically change industry regulation is the appointment of FCC commissioners. Besides the current regulatory issues, the FCC likely will face Congressional scrutiny as it attempts to auction, for the second time, part of the D-Block spectrum, which will be used for a national public safety network.

This Congress hasn’t taken on massive reforms in telecom; instead, lawmakers have approached legislation in both the Senate and House committees by focusing on specific issues.

“Obviously, after the big push on the telecom rewrite in 2005 and 2006, this year was much more piecemeal,” said Kyle McSlarrow, head of the National Cable & Telecommunications Association.

Still, McSlarrow points to broadband mapping and enhanced 911 legislation as two issues that are likely to pass quickly in the next Congress if they aren’t finished by the end of the year.

The mapping legislation, which at one time was attached to the farm bill, would create a format to locate where broadband has been deployed across the country and where it needs to be expanded.

The program is modeled after a state-based approach in Kentucky that identified underserved areas and later encouraged public-private partnerships to enhance the state’s broadband capacity.

Enhanced 911, which allows an operator to know the location of a wireless caller, is also expected to pass quickly. The legislation would codify an FCC rule that allows Voice-over Internet protocol callers to use the 911 service as well.

“Frankly, I’m surprised it has taken so long,” said Jot Carpenter, vice president of government relations at CTIA, of the legislation.

Another issue Carpenter is following deals with a specific tax provision that would clarify the status of employer-provided wireless devices.

Currently, businesses can only deduct devices such as BlackBerrys if the business can document that employees used them only for business purposes, not personal use. If the company can’t document that, or an employee uses the device for any personal use, they could be subject to an IRS audit.

CTIA is lobbying to get the provision added to the tax extenders package later this year, which would change the definition.

“The IRS has had this definition since the late1980s, back when a wireless device was an executive perk,” Carpenter said.

An Industry Overhaul in 2009

As telecom companies prepare for 2009, many are pondering whether an Obama or McCain presidency will push for an industry overhaul.

“The pregnant question is whether they will pursue an ambitious major telecom rewrite that deals with the Internet, new innovations, or whether they will take a piecemeal approach,” said Tom Wacker of the National Telecommunications Cooperative Association, which represents small and rural telephone companies.

Many telecom lobbyists said they don’t expect another major rewrite, but for Congress to take on some of the bigger issues on an individual basis.

One area of focus will be the continued oversight of the DTV transition, which requires all televisions to switch from analogue to digital service by Feb. 17, 2009.

Congress has already held several hearings to try to guarantee a smoother transition. There have been worries about consumers not getting the information they need about converter boxes and whether enough money was allocated for the transition.

“Congress is not going to pass any legislation unless there is calamity on the horizon,” said Brian Peters, a former staffer to Rep. Jay Inslee (D-Wash.) who is now at the Information Technology Industry Council. “I think the oversight tools are the most effective right now. There could be additional funding to enhance consumer education efforts or potentially to help the coupon-for-converters program.”

While the transition is well under way, lawmakers are expected to home in on making sure the public understands where to purchase the converter boxes and that viewers who don’t have cable know how to use them.

There is also the evolving debate over net neutrality, and whether cable and phone companies can legitimately charge some kinds of Internet traffic more money for faster access speeds. Internet access providers such as cable and telecom companies oppose a net neutrality bill that would regulate their ability to determine how they use their networks.

“It has been a bad idea. It will continue to be a bad idea,” said CTIA’s Carpenter, of a net neutrality bill. “There’s been a good evolution in that debate and I’m glad they aren’t hurtling toward a markup.”

NTCA’s Wacker agrees.

“The best I can say is its future as a legislative opportunity is still quite murky,” Wacker said.

One of the biggest issues that Congress is expected to target will be the universal service fund. Revisions have been attempted in the past, but to no avail because different factions in Congress, including Senators from rural states, have balked at reducing the amount of money available to rural areas.

“Universal service is sort of like Social Security,” one telecom lobbyist said. “Everybody knows it needs to be reformed, but there is not the willpower, so it just keeps getting punted and punted.”

Yet several telecom lobbyists think the next Congress could finally be the one to enact meaningful reform.

“People are understandably concerned,” Curtin said. “There are issues of the applicability of the universal service fund to emerging technology and it’s going to continue to be a huge issue because the original concept of the fund has changed so much.”