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from: Hollywood Reporter

June 29, 2006

Senate panel on side of telecoms Rejects net neutrality provision

By Brooks Boliek

WASHINGTON -- Legislation making it easier for the phone companies to get into the video business cleared a major hurdle Wednesday when the Senate Commerce Committee approved legislation setting nationwide cable franchise requirements.

The legislation was approved on a 15-7 vote at the conclusion of three days of votes on a series of amendments to the legislation that at one point numbered more than 100.

"The Net is not being modernized as it should be, and I think it will be under this," Sen. Ted Stevens, R-Alaska, said after the vote. "I think there is incentive to build it out so its capacity and speed will be something we never dreamed of."

Stevens is chairman of the committee and one of the most powerful members of the Senate.

The bill includes provisions that allow the phone companies to bypass local governments and get a franchise to deliver video services from the FCC. It also eases franchise regulations in individual markets for cable companies once a Bell company enters the fray.

In addition to franchise reform, Stevens' bill attempts to alter the so-called universal fund -- into which phone companies pay to ensure everyone gets telephone service -- to require every telecommunications service, broadband service or Internet phone service provider to pay into the fund.

It also includes language that ultimately would give the FCC authority to promulgate regulations designed to protect content delivered by digital broadcasts.

While three Democrats crossed the aisle and voted to approve the bill, a vote over a provision guaranteeing so-called "network neutrality" lost on an 11-11 vote as Sen. Olympia Snowe, R-Maine, voted with the Democrats.

In an impassioned appeal, Snowe called network neutrality "the founding principle of the Internet and the single greatest reason for its growth."

Failing to approve a network neutrality law would cause the Internet to look like cable television service, with customers being forced to view content that they don't want, she said.

"Consumers will have all the selection and choices of a former Soviet supermarket," she said. "They will have access to all those supermarkets but dismal choices on the shelves."

Proponents of the concept, mostly Democrats, contend that the government should prevent the network companies from favoring one person or companies' programming or data over another. They are backed by many of the nation's Internet and high-tech companies, including Google, Amazon and Microsoft.

"For the first time, content on the Internet will be elected by the network operator," Snowe said. "We're going to consolidate the power of the Internet in the hands of a few."

Opponents of the idea, mostly Republicans, contend that a network neutrality requirement is an unnecessary government intrusion. They are backed by such big network companies as AT&T, Verizon and Comcast.

Stevens and other opponents dismissed the arguments made by Snowe and such Democrats as Sens. Barbara Boxer, D-Calif., and Byron Dorgan, D-N.D. Network neutrality will stifle innovation and keep companies from investing in fiber-optic cable and other infrastructure, Stevens argued.

"They will be able to charge more for incentives," he said. "It will be a larger pipe, and in it you'll have some lanes that are reserved because people will pay to reserve them. Meanwhile, the pipe itself will be free to all the consumers who want to use it. I do think you'll see a build-out, and new concepts and types of organizations grow as that happens."

Stevens contends that network companies should be able to stratify the Internet in order to charge bandwidth hogs more or sell services to big users who want to pay more for security.

"The people streaming though 10 movies or an entire book, they aren't you or me, they're the distributors," he said.

A move to address the network neutrality issue in the House failed. It has more strength in the Senate, where it takes 60 votes to break a filibuster. The 11-11 vote in the committee is an indication of the tough time the bill could see on the floor. Sen. Ron Wyden, D-Ore., already has put a hold on the bill. Holds are an informal way senators keep legislation off the floor.

"If this amendment goes down, you can expect a massive fight, not just from us in the Senate but from people across America," Boxer said.

Including a network neutrality provision in the bill also could doom it.

"This is absolutely a poison pill the House will not accept," said Sen. John Ensign, R-Nev. "This will kill the bill."

Both the House and Senate must approve identical bills before they can be sent to the White House for approval. If the bill gets a vote in the full Senate, the differences between the two bills must be ironed out in a conference committee. The House's telecommunications bill is much narrower than the Senate's version as it deals mainly with video franchise reform.

While most of the attention directed at the bill has been on video franchise reform and the network neutrality fight, several other provisions of interest to the entertainment industry were added. Those include language setting up thousands of new low-power FM radio stations and a provision that allows cable operators to downgrade broadcasters' digital TV signal.

Both provisions are opposed by the broadcast industry. Broadcasters also had hoped to get lawmakers to include language that would force cable operators to carry all of a broadcaster's signal, whether it was several programming streams or one high-definition signal.

While that explicit language was left out, there was one change that could give them some relief. Language in the bill could be read as a direction to the FCC to set a multicast, must-carry requirement. FCC chairman Kevin Martin already has indicated that he wants to do that at the agency.

"I don't think it does directly, but indirectly it does," Stevens said.