Broadband bill hews to laissez-faire line

Sen. Jim DeMint, a South Carolina Republican, introduced a 50-page bill (click here for PDF) late last week, adding to a medley of proposals Congress will likely take up next year as it attempts to update the 1996 Telecommunications Act. Politicians and industry representatives have criticized the law for failing to account for booming Internet, wireless and broadband technologies.

Sen. Jim DeMint

"Today, cable, phone, and wireless offer consumers similar services, but each one is bound by a different set of confusing and burdensome regulations," DeMint said in a statement. "At a time when communication technologies are exploding, and mediums are merging, we must create a system that protects consumers while allowing businesses to thrive."

Like a telecommunications reform bill introduced by Sen. John Ensign in July, DeMint's bill takes a deregulatory tack. It adopts a consistent free-market premise: The clearest path to a thriving communications marketplace is competition, and the government should regulate only when evidence of market threats are present.

Beginning with its title, the Digital Age Communications Act, the proposal borrows heavily--and sometimes verbatim--from "model legislation" drafted during the last several months by the Progress & Freedom Foundation, a free-market think tank, and several of its working groups. (Esther Dyson, an editor-at large at CNET Networks, publisher of News.com, was a member of one such group.)

"Sen. DeMint's bill wisely replaces an existing regime that ties regulation to outdated and ever-evolving technofunctional constructs with a forward-looking one that grounds the need for any regulatory intervention in an assessment of marketplace realities," PFF President Raymond Gifford said.

Under the bill, the Federal Communications Commission would act as a watchdog body akin to the Federal Trade Commission, charged with fielding and investigating complaints of "unfair methods of competition" by any "electronic communications service"--a blanket term that covers anything from satellite to radio and wireless to wireline signals.

But the agency would be barred from issuing any rules in the process unless it can first present "clear and convincing evidence" that the marketplace couldn't protect consumers on its own or that consumers were likely to face "substantial injury" without government interference.

The bill also curbs the FCC's power in other areas, such as its ability to award permits, licenses and certificates to communications companies and to set conditions for mergers. It would replace the existing patchwork of telecommunications rules developed at the state, local and federal levels with a "single, unified, minimally pervasive regulatory regime."

The FCC would have to overhaul the controversy-plagued Universal Service Fund, a pool of money collected from telecommunications subscribers to fund services in rural, high-cost and low-income areas, as well as schools and libraries. The bill proposes creating a single Universal Service Fund at the federal level, getting rid of the state-level funds and placing a cap on the amount of money the fund can distribute each year.

That section could prove a sticking point within the telecommunications industry. The nation's major telecommunications companies--AT&T, BellSouth and Verizon Communications--were quick to applaud the bill in general.

But the U.S. Telecom Association was not. "We are gravely concerned by its universal-service provisions that would reduce and cap the fund, and abdicate responsibility for this important program to the states," said Ed Merlis, the association's senior vice president of government and regulatory affairs.

That's because the association represents more than 1,000 companies--Verizon and BellSouth, for instance, but also many small, rural providers that stand to benefit most from the USF payments. "They occasionally will have diverging viewpoints on things," said Brian Blevins, a Verizon spokesman, of the trade association, adding that Verizon generally supports a cap on the fund's disbursements.

The DeMint bill contrasts with draft broadband legislation currently pending in the U.S. House of Representatives. That measure, which has drawn opposition from Internet companies like Google, outlines obligations such as E911 service and network neutrality for broadband Internet, video and Net phone providers, giving the FCC more regulatory power.