Tauzin-Dingell: Helping to Disable
The 1996 Telecommunications Act

By Judi Clark
NetAction Advisory Board Member

Introduction

Previous Section

Tauzin and Dingell Stroll In

Louisiana representative Billy Tauzin has a long history of support for corporate private property rights, in this case representing the interests of the Bells.[25] He should - he's long been the recipient of soft-money, lobbying, industry and personal contributions from the Bells.[26] Michigan representative John Dingell, also an advocate of corporate private property rights, is similarly situated in financial favor.[27] It was no surprise that these two men have championed bills over the last two congressional sessions that position FCC regulations as unjust governmental "takings," contrary to the 5th Amendment, and which are worded strongly in the Bell's favor.

In the 106th Congress (1999-2000), Tauzin and Dingell teamed up for the first Tauzin-Dingell bill, HR 4445: Reciprocal Compensation Adjustment Act of 2000: to exempt from reciprocal compensation requirements telecommunications traffic to the Internet.[28]

This bill would have exempted the ILECs from paying termination fees to CLECs, while the CLECs would still be required to pay fees to the ILECs.[29] "In other words, it changes the Act so that a business is required to provide a service for free to its competitors,"[30] reported Joan Smith, Commissioner of the Oregon Public Utility Commission and chairman of the National Association of Regulatory Utility Commissioners (NARUC) Committee on Telecommunications. In her testimony at the legislative hearing before the Subcommittee on Telecommunications Trade & Consumer Protection, she continued,

Without revenues to offset the costs of providing telecommunications service, a company terminating calls (often a competitive local exchange carrier rather than an incumbent Bell company) would have to increase prices to offset the loss in reciprocal compensation revenues. This may choke the flow of investment in broadband services and new technologies. The increase in rates would make the company less competitive, and it would, in turn, raise the ISP's costs, which, in turn, would raise the cost to consumers who access the Internet. Congress should not create a special exemption for the Bell companies who are seeking a legislative fix to system they fought hard to have in 1996.[31]

HR 4445 bill died in committee, but that was not to be the end of the Tauzin-Dingell efforts to legislatively skew the market in favor of the ILECs and their property interests.

Dismantling The 1996 Act: Tauzin Struts Back In

The 107th Congress saw renewed life in favoring ILECs when Tauzin and co-sponsor Dingell introduced HR 1542: The Internet Freedom and Broadband Deployment Act of 2001.[32] Among other things, this bill would have amended The 1996 Act to give ILECs a way around the federal regulations requiring them to share parts (called unbundled network elements, or UNE)[33] of their extensive telephone network with CLECs on cost-based rates (as required by the 1996 Act):

(E) SCOPE.-Notwithstanding any provision of law, neither the Commission nor any State shall-

(i) require an incumbent local exchange carrier to provide unbundled access in accordance with subsection (c)(3) to any packet switching network element;

(ii) require an incumbent local exchange carrier to provide, for the provision of high speed data service, access on an unbundled basis in accordance with sub-section (c)(3) to any fiber local loop or fiber feeder subloop; or

(iii) require an incumbent local exchange carrier to provide for collocation in accordance with subsection (c)(6) in a remote terminal, or to construct or make available space in a remote terminal.[34]

The United States Telecom Association, backed by the ILECs and others,[35] claim this bill is necessary because of the imbalance in rules and regulations governing broadband services, specifically resulting in cable companies having about 70 percent of the residential market.[36]

At the heart of the issue is competition between the four so-called "Baby Bells" ... and the cable companies. The Baby Bells have long complained that cable, satellite and wireless broadband providers do not face the same regulatory hurdles as sellers of digital subscriber line (DSL) and other telephone-based broadband delivery services.

In order to better compete against cable, the local phone companies say, they need a level regulatory playing field. Currently, cable television companies control about 68 percent of the broadband market. ... "There's a firestorm going on out there" ... "Everybody, regardless of the future potential for profits or meeting customer requirements, is hell-bent on hanging on to what they've got."[37]

The Heritage Foundation's James Gattuso goes further, concluding "Broadband technologies hold great promise for American consumers, as well as for the U.S. economy. Thus far, progress toward realizing that promise has been good, but unless policymakers reduce the regulatory barriers to investment, it will be limited."[38]

While de-regulation does support the property rights model of corporate ownership, it does not generally address monopoly-based power and market inequalities such as between ILECs and their competitors. Furthermore, it does not address problematic or fraudulent methods used to account for what one's property is.[39] More importantly, the private property rights of government-granted monopolies have always been subject to regulation and supervision. Common carriers have long been charged with the obligation to act in a reasonable and non-discriminatory manner. Here, the 1996 Act and FCC interpretations are designed to put constraints on the monopoly players in order to correct market failure (including that induced by monopoly). "No monopolist is entitled to be protected from the effects of technological change. The policy of the 1996 Act is to assist the forces relying on new technology to undermine the traditional monopoly."[40]

A very different House of Representatives from the one that helped design and approve the 1996 Act voted to pass HR 1542. The votes were split among financial lines: those that supported the bill had, for the most part, accepted greater campaign and PAC contributions from the ILECs than from their competitors.[41] The bill, however, did not fare as well in the Senate where Senator Fritz Hollings, the Ranking Democrat on the Commerce, Science and Transportation Committee and a principal author of The 1996 Act,[42] opposed it. Tauzin has vowed to continue his work.

Next: Dismantling The 1996 Act: The FCC "Deregulates"