In a setback for the Baby Bell phone companies, a congressional panel on Wednesday advised against lifting a federal law that bars the local phone giants from offering high-speed Internet service without first opening their local markets to competition.
The House Judiciary Committee forwarded the Internet Freedom and Deployment Act with an unfavorable recommendation. And the committee added an amendment to require Justice Department approval before SBC Communications Inc., Pacific Bell's owner, and other Baby Bells could offer broadband services outside their home markets.
For months, the regional Bell telephone giants, including SBC and Verizon Communications Inc., have been pushing to amend the 1996 Telecommunications Act so they can offer high-speed Internet service without first allowing competition in their local telephone markets.
The Baby Bells claim such a reform would help speed the roll-out of high-speed Internet service, now used by only about 6% of U.S. households.
But long-distance telephone companies such as AT&T; Corp. and Sprint Corp. have lobbied against the measure, fearing local networks will not be opened to competitors. And critics, pointing to the recent demise of several broadband competitors, including Emeryville-based Northpoint, say the Bells should not be rewarded for their failure to open up their home markets to greater competition.
The broadband measure is headed to the House rules committee without strong support. "I am not ready to give up the Justice Department's role in reviewing the antitrust implications of Bell entry into long-distance," said Judiciary Chairman James F. Sensenbrenner Jr. (R-Wis.).
The rules committee will have to weigh competing versions of the broadband measure and decide whether the full House will be allowed to vote on them this summer.
The broadband bill also faces heavy opposition in the Senate, where Sen. Ernest F. Hollings (D-S.C.) and chairman of the powerful Senate Commerce Committee, has vowed to impose even more oversight over the regional Bell phone companies.
Nevertheless, Rep. John D. Dingell (D-Mich.), who sponsored the broadband bill along with Rep. W. J. "Billy" Tauzin (R-La.), viewed Wednesday's Judiciary Committee vote in a positive light. "[The bill is] on the fast track to the House floor, and delivered a solid body blow to the world's biggest cable monopoly, AT&T;," Dingell said.
Some analysts, believe that concern over the slow deployment of broadband could spark Congress to make some reforms, possibly by giving tax credits to encourage the build out of high speed networks. Sen. John D. "Jay" Rockefeller IV (D-W.Va.) currently has such a bill pending in the Senate.