Statement on Draft House Bill on Telecom Reform

Published September 20, 2005

(September 20, 2005 — Chicago, IL) On September 15, U.S. Reps. Joe Barton (R-TX) and John Dingell (D-MI), chairman and ranking Democrat, respectively, of the House Energy & Commerce Committee, began circulating a “discussion draft” of a telecommunications reform measure that addresses broadband Internet, voice over Internet Protocol (VoIP), and video services, among other things.

The following statement in response to the measure can be attributed to Steven Titch, senior fellow – IT and telecom policy for The Heartland Institute, a 21-year-old nonprofit research organization based in Chicago. Titch can be contacted for further information by telephone at 281/571-4322 (office) or 312/925-0464 (cell), or by email at [email protected].

The full text of the 77-page discussion draft bill can be downloaded in Adobe Acrobat’s PDF format from

The House Energy and Commerce Committee’s working draft bill for telecom reform, released last week, attempts to take regulatory reform forward, but it raises as many issues as it resolves.

In its favor, the draft recognizes that a competitive industry has taken hold in the telecom arena, with price points pushing downward. The bill would foster more investment by ending a counterproductive policy that forces facilities-based providers to share broadband capacity with competitors at less than cost–an approach that has led to years of unneeded delays in deployment amid uncertainty about return on new investments in broadband. In its place, the bill would sustain a market-based system for purchasing wholesale access to broadband facilities.

The draft bill also seeks to create statewide systems for franchising competitive broadband video services, ensuring consumer choice reaches individual local markets much faster than if permission must be secured from every city, town, and hamlet.

The bill falls short, however, in the way it approaches badly needed reform of universal service. The measure places the responsibility for a workable solution primarily in the hands of the Federal Communications Commission, where it already sits. This is hardly a bold initiative. Worse, rather than call for new thinking on universal service, the bill seeks to extend monopoly-era subsidy schemes to VoIP. In addition, the bill contains provisions that may be unworkable, such as the mandatory FCC registration of VoIP service providers–some of whom are not U.S.-based and do not have facilities here.

The bill embraces the idea of municipal broadband systems but does little to differentiate between limited systems designed to meet local government needs and large-scale projects that attempt to compete with the private sector. The latter are proving to be a costly problem for many communities.

These issues help frame the debate. We welcome the bill, which takes its place alongside other legislation introduced this summer by Sen. John Ensign (R-NV) and Rep. Pete Sessions (R-TX). All three measures focus attention on the way broadband is rapidly changing concepts of “telephone” service and how inadequate the current regulatory structure is for dealing with them. We hope the upcoming debate is vigorous and insightful, because it is badly needed.

Steven Titch ([email protected]) is senior fellow – IT and telecom policy for The Heartland Institute, a national nonprofit organization based in Chicago.