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Net neutrality missing from sweeping telecom bill

Draft represents the most significant rewrite of laws dealing with video, satellite and broadband communications in 10 years.

The U.S. Senate took the first serious step on Monday toward rewriting the nation's telecommunications laws, a move that raises politically sensitive questions about digital copyright and Net neutrality and that could take years to complete.

Ted Stevens, chairman of the Senate Commerce Committee, released a 135-page draft bill (click here for PDF) that represents the most sweeping rewrite in a decade of laws dealing with video, satellite and broadband communications.

Stevens said in a statement that the legislation grew out of more than a dozen hearings and drew on proposals from other senators as well. "It attempts to strike a balance between competing industries, consumer groups and local government," the Alaska Republican said.

Absent from the legislation are any regulations related to "Net neutrality," also known as network neutrality, that companies such as Amazon.com, Google, Yahoo, Intel and Microsoft have been lobbying for during the past few months. Instead of handing the Federal Communications Commission extensive powers to police violations--an idea defeated in a House of Representatives committee vote last week--the FCC would merely be required to prepare annual reports on any problems.

Included in the massive proposal is, however, one requirement sure to please the recording industry: authorization for the FCC to start the process of outlawing digital over-the-air radio and digital satellite receivers sold today that permit users to record broadcasts. Those would be supplanted with receivers that will treat as copy-protected anything with an "audio broadcast flag" in the future.

Jonathan Lamy, a spokesman for the Recording Industry Association of America, called it "a necessary and appropriate focus on an issue critical to record labels, songwriters, publishers, artists and many others in the music community." The RIAA is worried about newer receivers, such as the Sirius S50, that it says let Americans assemble a personal music library without paying for it.

Telecom reform or not?

Here are some parts of Sen. Ted Stevens' proposal to rewrite U.S. telecommunications laws:

Audio broadcast flag
Devices would be banned based on "consensus" of FCC-created review board, which has a year to do this.

Broadband taxes
Taxes would be imposed on VoIP and broadband providers.

Child pornography
FCC would be asked to come up with rules banning child porn on local video services.

Municipal broadband
Cities and states could set up their own networks, with some restrictions.

Net neutrality
No new powers for FCC; it would publish a report instead.

Video broadcast flag
Some over-the-air receivers likely would be banned within six months, but regulations allow some fair use.

VoIP providers
Companies offering Internet phone services would increasingly be regulated and taxed as traditional phone companies.

Stevens did seem, however, to bow to pressure from technology groups and the consumer electronics industry when devising related regulations to copy-protect digital video. His legislation would order the FCC to ban digital TV tuners, such as ElGato's EyeTV 500, that let users record over-the-air broadcasts and save them without copy protection.

But the bill does say that Americans should enjoy the right to share recorded broadcast TV over their home networks, make "short excerpts" available over the Internet, and that news programming generally should not be flagged. Those sections are likely to draw opposition from the Motion Picture Association of America and its allies; one source close to Hollywood told CNET News.com on Monday that "the movie industry has real problems with the broadcast flag language as it appears in the bill."

A bill's long journey
If history is any indication, it's unlikely that Stevens' proposal will be enacted until next year at the earliest.

Because 2006 is an election year, work on Capitol Hill is likely to drop off as November approaches, and the House leadership may not see eye-to-eye with Stevens. For instance, at a House hearing in November, some politicians suggested that it was premature to enshrine a broadcast flag requirement in federal law.

Enacting the 1996 Telecommunications Act--the last major law in this area--was anything but a rapid process. Then-Sen. James Exon, a Nebraska Democrat, first introduced an amendment that would become the Communications Decency Act in July 1994.

"These measures will help assure that the information superhighway does not turn into a red light district," Exon said at the time. "It will help protect children from being exposed to obscene, lewd, or indecent messages."

Exon later glued his proposal onto the Telecommunications Act, which was introduced in the Senate in March 1995 and sponsored by Stevens' predecessor, Democratic Sen. Larry Pressler. But negotiations between the House and Senate dragged on for months, and President Clinton didn't sign the measure until February 1996. The dozens of contentious topics that Stevens chose to address are likely to complicate negotiations this time around as well.

Net neutrality, for instance, has become a rallying cry recently for Internet and software firms and liberal advocacy groups (and even one or two conservative ones) that say strict FCC regulations are necessary to protect the Internet. Net neutrality refers to the idea of the federal government preventing broadband providers from favoring some Web sites or video streams' connection speeds over others.

Large telephone and cable companies have argued against the need to put such principles into law, saying they're not interested in blocking sites or services but deserve the right to charge extra for such a "fast lane" to make their investments in bandwidth-hogging services and new technologies economically viable. Broadband providers have spent billions of dollars to run fiber or faster links to American homes and businesses.

Another contentious topic is whether municipal governments should be competing with private companies by running their own broadband networks. This bill would authorize it--and zap state laws, including one in Pennsylvania that have restricted such activity. (A bill introduced in the House last year takes the opposite approach and bans all such municipal networks.)

Ted Stevens Ted Stevens

Under Stevens' proposal, called the Communications, Consumer's Choice, and Broadband Deployment Act, municipalities would face some restrictions designed to prevent discrimination by public-sector enterprises against private-sector ones. Governments would be forced, for instance, to post public notice of any projects they planned to undertake and to have an open bidding process if they planned to bring on any private corporations as partners. That provision borrows from a broadly pro-business broadband bill introduced last summer by Sen. John Ensign, a Nevada Republican.

Raising broadband taxes
Also, if Stevens' legislation passes, a broader swath of Americans would be taxed for the Universal Service Fund, a controversy-plagued, multibillion-dollar pool of money that's currently used to subsidize telecommunications services in rural and other high-cost areas, schools and libraries.

Critics--including Stevens, a self-avowed USF proponent--have charged that the fund has steadily been dwindling because traditional services, such as long-distance, are taking in less money, while unanticipated voice technologies, such as voice over Internet protocol, or VoIP, are not expressly required to pay up. (A number of the larger VoIP providers, including Vonage, have said they already pay into the fund.)

The Stevens-Inouye proposal would require all companies providing a "communications service" to pay into the fund, which most likely would translate into another line item on customer bills. The bill defines "communications service" as a telecommunications service, a broadband service offering transmission speeds of at least 200 kilobits per second in one direction, and an IP-enabled voice service that connects to the public-switch telephone network. That means services like the voice-chat feature on AOL Instant Messenger would not be subject to the tax.

It would be up to the FCC to decide how to levy the fees. It could choose, for instance, to charge an USF fee to each phone number or IP address or to continue the current model, in which companies contribute a fixed portion of their revenues to the fund.

Like a proposal introduced last week by Sen. Gordon Smith of Oregon, a Republican on Steven's committee, the new bill would also create a separate "broadband service for unserved areas" account within the USF that would allow up to $500 million of support each year for such ventures.

"The overarching theme of the bill we introduce today is deployment of broadband nationwide," Stevens said in a statement upon introducing the bill.

The approach, however, does not enjoy unanimous support. Free-market thinkers and their sympathizers, including Sen. Jim DeMint of South Carolina, tend to argue that because of evidence that broadband prices are on the decline, the fund should be capped or even phased out entirely.

The bill also revisits freeing up bands on the broadcast television spectrum for various purposes, including more affordable broadband deployments. It sets forth requirements for a consumer education campaign related to the digital television transition, which Congress approved late last year. That measure requires broadcasters to vacate the analog spectrum by Feb. 17, 2009, so that it can be turned over to public safety workers and auctioned off for new wireless services.

Like a number of its predecessors, the bill also proposes allowing unused channels, or "white spaces," on the broadcast television bands to be snapped up for unlicensed wireless ventures.

Consumer advocates say the properties of that chunk of the radio spectrum would enable cheaper and easier setup of broadband networks. The broadcasting lobby has railed against the idea, fearing interference with their stations' reception. The new bill would require the FCC to vet such concerns and to set rules aimed at staving off such conflicts.