Hard Path to New Terrain for Telecom

A push by the nation’s leading phone companies for major telecommunications legislation could end up being the biggest dropped call of the year.

Once on a fast track, congressional measures that would make it easier for Verizon Communications, AT&T; and other companies to offer TV services -- and possibly lower consumers’ bills -- have become bogged down by controversial side issues and Capitol Hill turf wars.

Because of a shortened election-year session and a legislative calendar overstuffed with immigration reform, domestic spying and other controversial issues, the telecom legislation’s prospects have dimmed.

“There was once a movie entitled “8 Million Ways to Die,” said Blair Levin, an analyst at investment bank Stifel, Nicolaus & Co., referring to the 1986 Hal Ashby movie about Los Angeles. “What you’re seeing is a movie ‘8 Million Ways to Die’ in D.C., but it’s not about a person, it’s about a bill.”

Actually, the telecom drama playing in Congress may yet end up being about a person: Senate Commerce Committee Chairman Ted Stevens (R-Alaska), a crafty veteran lawmaker who has vowed to pass a bill this year.

Although getting the legislation through the often fractious Senate may be Stevens’ toughest hurdle, phone company lobbyists say they are optimistic.

“If anybody can do it, Stevens can,” predicted Gregg Morton, BellSouth Corp.’s vice president of legislative affairs.

Phone companies have plenty at stake. As cable operators encroach on their turf, the phone giants are eager to add television programming so they can offer consumers the same bundle of voice, video and high-speed Internet services their rivals now sell.

Lawmakers hope that encouraging phone companies to build out their networks for television would have the additional benefit of allowing them to make high-speed Internet access available to more of their customers.

That could prevent the U.S. from falling even further behind other countries in broadband penetration.

To speed phone companies’ entry into TV, lawmakers propose allowing them to obtain national franchises rather than having to get permission from every community they want to serve, as cable providers now are required to do.

There appears to be bipartisan support for these measures, despite opposition from cable TV companies and local governments concerned that they won’t have enough say over the wiring of their communities. But the consensus ends there.

A series of events last week highlighted the pitfalls ahead.

At a long-awaited hearing Thursday, Stevens announced that his recently introduced telecom bill would have to be revised over the Memorial Day recess, delaying votes on it next month.

Stevens had hoped to lure support for the bill by loading it up with related issues backed by a variety of senators, including the expansion of a government fund to provide telecommunications services to low-income and rural areas. But those provisions appear to have raised hurdles rather then eased the path, because several senators announced they had problems with various aspects of the legislation.

Complicating matters, Sen. John McCain (R-Ariz.) is trying to add so-called a la carte cable TV pricing to the bill, which would enable consumers to select and pay for individual channels.

In the House of Representatives, hopes have faded for a quick vote on a telecom bill that passed out of committee last month, with two powerful committee chairmen sparring over its fate. At the heart of that dispute is a growing battle over “Net neutrality” -- a push for federal rules to prevent phone and cable companies from giving priority to some high-bandwidth services over others.

Bipartisan bills were introduced in the House and Senate last week mandating strong neutrality rules. Both the phone and cable industries oppose the rules, keen on charging extra to guarantee fast, reliable delivery of such bandwidth hogs as movies and video.

Supporters of Net neutrality, however, including leading Internet content companies Google, Microsoft and Yahoo, argue that such practices would ruin the egalitarian spirit of the Web and stifle innovation.

Grammy-nominated musician Moby was on Capitol Hill on Thursday announcing a group of artists and musicians who back the cause.

Sen. Gordon H. Smith (R-Ore.) told his Commerce Committee colleagues that “there’s a very real likelihood” telecom legislation will die because of Net neutrality. “The Senate may be the strainer that this just can’t pass through,” he said.

But Stevens was defiant last week.

“This senator is going to see that this bill gets to the floor and it passes the Senate,” Stevens said.

He pushed back the date the committee will vote on his telecom bill, which includes a watered-down Net neutrality provision, from June 8 to June 20. Supporters of the bill are pleased he is trying to resolve problems and has set a date for a vote.

The Senate, however, isn’t the only battleground.

The House Energy and Commerce Committee last month passed a telecom bill focused mainly on streamlined TV franchising rules. Supporters hoped for a quick vote by the full House in the first week of May.

But House Judiciary Chairman F. James Sensenbrenner Jr. (R-Wis.) tried to get hold of the bill. No fan of the phone companies, Sensenbrenner fired off a 24-page letter to House Speaker J. Dennis Hastert (R-Ill.) asking that his panel be allowed to take up the bill and strengthen its neutrality provisions.

The move delayed a House vote on the telecom bill. Last week, House leaders denied Sensenbrenner’s request, opening the door for a vote in June.

But Sensenbrenner was unbowed. He teamed up with a handful of Democrats to introduce his own Net neutrality bill, prohibiting high-speed Internet providers from giving priority to data from certain companies over others. Sensenbrenner will try to move it out of his committee this week.

“Right now, we are facing the greatest threat to the Internet in its history,” Rep. Edward J. Markey (D-Mass.), a leading Net neutrality supporter, said at a rally with Moby last week. They urged people to sign an online petition that already has 700,000 signatures, the result largely of a Net neutrality campaign by grass-roots Internet advocacy groups.

All the delays could cost consumers, said Walter McCormick, chief executive of the USTelecom trade group.

He cited a study by the Phoenix Center, a Washington think tank, showing that a one-year delay in passing the legislation would cost consumers $8 billion.

“Time is money,” McCormick said.

And with time running out this year, a series of showdowns next month could determine the fate of telecom legislation.

“This is a bill that needs to clear a lot of hurdles in a relatively short period of time,” said Levin, the analyst. “And the hurdles look a lot higher.”