Foes of ’96 Telecom Law Feel Encouraged

Consumer advocates and corporate lobbyists are pushing from opposite sides for Congress to overhaul the law that reshaped the communications industry, saying the Telecommunications Act of 1996 has failed to promote true competition among telephone and cable companies.

And for the first time in years, Congress appears to be listening.

Consumer groups complain that although phone bills have fallen for most customers, prices for cable programming and high-speed Internet access, or broadband, have risen steadily since 1996. They also point out that most communities are still served by just one cable company and one phone company.

For their part, SBC Communications Inc. and other local phone carriers say they need more freedom from government regulation to reduce prices and roll out broadband and other services across the country.

Buoyed by the views of the new congressional leaders overseeing the telecom industry, critics of the act say they have their best chance in years to revamp it. In fact, a series of court rulings have rejected key aspects of the law’s implementation -- including the requirement that local phone service providers share their networks with rivals.

The Telecom Act was aimed at lowering prices by freeing phone and cable companies to compete against one another in the delivery of phone, video and high-speed Internet service. But House and Senate leaders said they were impatient with the pace of the opening of traditional monopolies to new competitors.

Rep. Joe Barton (R-Texas), elected chairman of the House Energy and Commerce Committee this year, and Sen. Ted Stevens (R-Alaska), who is expected to become chairman of the Senate Commerce Committee in January, both have said they wanted to change the law. The two committees oversee the Federal Communications Commission, the agency charged with implementing the rules.

Also fueling the drive for change are new technologies such as Internet telephony and wireless networking that barely existed when the act was passed.

“Clearly, technology has advanced to a point in the last eight years that it merits revisiting the statutes and, possibly, revising them,” Barton said.

In a recent speech at the Quello Center for Telecommunication Management & Law in Washington, Stevens was more emphatic: “We will undertake, as soon as possible, a major revision of the Telecommunications Act.”

Sen. John E. Sununu (R-N.H.) and Rep. Charles W. “Chip” Pickering (R-Miss.) introduced a bill this week that would exempt Internet telephony from state taxes and regulation and treat the technology as an information service. The two said they would push the bill even though FCC Chairman Michael K. Powell has already called for Internet telephony to be exempt from state regulations.

Lawmakers’ sudden interest in the issues has been triggered in part by a migration of consumers and businesses to unregulated new, low-cost communications technologies like Internet telephony. That shift has put growing financial pressure on the existing public phone system, which is required by law to serve virtually every home and office in the country.

Meanwhile, local phone companies, which collect about $25 billion a year in payments from long-distance companies to deliver toll calls to homes and businesses, are agitating for change out of fear that Internet telephony -- which circumvents their systems -- will decimate revenue.

“We think the 1996 act is completely antiquated,” said Walter B. McCormick Jr., president of the United States Telecom Assn., a Washington trade group that represents local phone companies. “I think you are seeing a broad consensus that the telecom act needs to be dramatically reformed.”

Chris Murray, legislative director for Consumers Union in Washington, said reform was needed not “because the law didn’t contemplate new technology; it needs to be rewritten to provide consumers more choice in the cable and telecom services.”

Though there may be a groundswell for reform, executing it won’t be easy.

“There is strong consensus that telecommunications law is totally screwed up,” said Scott C. Cleland, a technology analyst at the Precursor Group, a research firm in Washington, “but there is little consensus on how to fix it.”