Albion Monitor /News
[Editor's note: For more on governmental attempts to regulate the Internet, see "Congressional Deal to Muzzle the Internet" in an earlier issue.]

New Congressional Move Against Internet

by Craig A. Johnson

Would permit telecom companies to set prices on Net services

(AR) WASHINGTON -- Chief House and Senate telecom conference negotiators are set to squeeze the Internet into yet another a regulatory rathole.

Conference leaders are attempting to attach further "de-regulatory" restrictions to the conference committee's draft telecom bill that will remove guarantees for access and interconnection, and permit telecom companies to price Net services in ways which seem defensible only to the special interests which crafted the provisions.

Fresh from the "indecency" defeat, Net lobbyists and public interest groups barely caught their breath before a new "red tide" of restraints appeared in the draft conference bill language.

Though Netheads in Washington, such as D.C. Internet Society Chair Ross Stapleton-Gray, reassure us that the Internet will remain "pretty much the way it is now," and that neighborhood Internet service providers (ISPs) will generally be able to offer access at continuing competitive rates, insiders who have studied the language of the bill have grave concerns about how the Internet of the future will look.

A senior counsel on the Senate Justice Committee said last week that new draft changes will put back into the bill the original Cox-Wyden language that would have prohibited the FCC from "economically regulating" the Internet. "Nobody really knows what this means," the source said.

Under pressure from Baby Bells, no guaranteed access for Internet service providers

In a style now familiar to reporters covering the telecom bill, House Commerce Committee Chairman Tom Bliley (R-VA) prefers critical conference decisions to be made in the dark corners of Capitol offices and meeting rooms as far away from open committee meetings as possible.

A "signature sheet" is presently being substituted for open discussion and debate. This assures that so-called "technical" changes and at least one "substantive" change to the draft telecom bill, according to Senate Commerce Committee staffers, can proceed without conferees understanding too much about what the changes really mean.

The proposed language prohibiting the FCC from regulating the Internet is doubly ironic in that it was not part of the Cox-Wyden measure, which overwhelmingly passed the House on a vote of 420-4, and an FCC role for "describing" measures to regulate Internet "content" is positively sanctioned in the draft language.

Title V of the bill, "Broadcast Obscenity and Violence," classifies the Internet as equivalent to a broadcast facility and regurgitates the now familiar criminalization of speech measure inserted into the bill by the Christian Coalition's poster boy, House Judiciary Chairman Henry Hyde (R-IL).

Hyde, always eager to please fundamentalists, rammed his amendment through the House conference caucus on a razor-thin vote of 17 to 16, with members saying later that they did not understand the implications of what they voted for. This change in the House language brought it into line with the Exon "indecency" clause in the Senate bill.

Part of this regulatory cowpie is thrown into the FCC's lap (whose budget, of course, is chopped by the Congressional-deficit crowd). The bill states: "The Commission may describe measures which are reasonable, effective, and appropriate to restrict access to prohibited communications..."

But, while permitting the FCC to "describe" such measures, the bill expressly states that the agency has "no enforcement authority over the failure [on the part of providers or users] to utilize such measures."

This part of the bill is a honey-trap for litigators. Placing the FCC solely in an advisory role literally ensures that all of the interpretation, implementation, and enforcement will be undertaken by the courts and the Department of Justice. Of course, numerous individual and organizational users and providers will get caught in the cross-fire.

Other measures tucked away in the telecom bill's turgid prose seem to have escaped the scrutiny of many self-styled Internet defenders, protectors, and aficionados. Interconnection and equal access have barely passed the lips of Net mavens in connection with the telecom bills, yet these provisions in the draft bill could leave Net providers out in the cold without protection from gusts of corporate capriciousness.

The draft bill states that "each telecommunications carrier has the duty to interconnect directly or indirectly with the facilities and equipment of other telecommunications carriers" as well as the the duty to provide "to any other telecom carrier" interconnection and "nondiscriminatory access to network elements on an unbundled basis..."

What are "network elements," and why is "interconnection" important? The House telecom bill, H.R. 1555, clearly spelled these out, prior to its rewrite by the conference committee.

In the language of H.R. 1555, "a local exchange carrier" had to offer to those providing "a telecommunications service or an information service, reasonable and nondiscriminatory access on an unbundled basis ... to databases, signalling systems, poles, ducts, conduits, and rights-of-way ... or other facilities, functions, or information ... integral to the efficient transmission, routing, or other provision... that is sufficient to ensure the full interoperability of the equipment and facilities..." of those seeking such access.

But, the conferees, under pressure from the Regional Bell Operating Companies removed guarantees of access and interconnection to providers of "information services," which include Internet service providers.

In plain English, these changes in the bill mean that ISPs, online service providers, and any other interactive "information service" providers dependent upon telecom networks must worship at the altar of the Bell companies in order to attain "interconnection" and "equal access," two vital functions of communications which this bill was supposed to guarantee and enshrine for the information-centered future.

In even plainer English, they mean that carriers can play with Net providers like tigers playing with their prey. As providers of the critical conduits to Internet backbones, local exchange carriers under the provisions of the bill can essentially charge information services what ever the market will bear, thus potentially maiming or killing off small- to medium-sized ISPs.

Net pricing for schools, hospitals, and libraries may be up for grabs in a free-for-all commercial environment

The carriers can also promote sweetheart deals with corporate monoliths such as Microsoft, TCI, AT&T, MCI, and Time Warner for access at discounted rates, as determined by volume or a similar measure. They can underprice, overprice, or offer no prices, since information service providers are stripped of all guarantees as the draft law is currently written.

These are rather extreme visions. The reality is that discretionary pricing may well take place, but the Internet backbone's national service providers are working with the Commercial Internet Exchange, the Internet Society and others to ensure that draconian results do not obtain.

Corporate strategy is rapidly developing which will allow traditional providers control over Internet access and provision. Diversity will hang on a while longer but the wind is clearly blowing in the direction of conglomeration and concentration -- in no small part because telcos in the U.S. are rapidly grasping the fact that long-term marginal costs for local calls are moving toward zero.

Pricing is increasingly geared toward toward the content that is accessed, rather than transport costs. Carriers are restructuring in order to dominate the markets for content provision.

The threat to small- to medium-sized ISPs as well as other small businesses providing information services is real. The conference committee draft already anticipates the problem. The title of its Kafkaesque Section 257, "Market Entry Barriers Proceeding," calls for remedial action by the FCC for anti-competitive conditions which the bill may actively foster.

It stipulates that "within 15 months after the date of enactment," "the FCC shall complete a proceeding for the purpose of identifying and eliminating ... market entry barriers for entrepreneurs and other small businesses in the provision and ownership of telecommunications services and information services, or in the provision of parts or services to providers of telecommunications services and information services."

The FCC is supposed to complete this proceeding using criteria which will favor "diversity of media voices, vigorous economic competition, technological advancement, and promotion of the public interest, convenience, and necessity." The next FCC review would not come for three years, thus placing an enormous burden on the agency to get it right in its first rulemaking proceeding. In the fast-moving communications world, a three-year lag time can be equivalent to setting policy in stone.

Apparently, for the conference leadership, having the beleaguered FCC take on additional burdens is more palatable than taking the Congressional responsibility of rectifying the problem in law, and thus risk flying in the face of powerful interests filling campaign coffers.

However, in the most unkind cut of all, the bill managers in this Kafka-like castle on the Hill intend to strip the FCC of economic regulatory authority over the Internet, thus rendering the above provision moot. The FCC will have no power to redress market entry barriers such as distorted conditions for interconnection and access, or skewed pricing, if the rider on the "signature sheet" currently circulating makes its way into the bill.

This outcome, depending on its specific language, could well impact Internet access to schools, hospitals, and libraries. The bill requires telecommunications carriers to provide "any of its services that are within the definition of universal service" to schools and libraries at reduced rates.

But, if the above qualification goes into effect, the definition of "universal service" could not include the Internet because it could not be "economically" regulated by the FCC as a "universal service." Net pricing for schools, hospitals, and libraries may therefore be up for grabs in a free-for-all commercial environment.

In a bill which is a patchwork of compromises between industry giants, this Congress insists on behaving recklessly and destructively with regard to the Internet and its constituency. And, many of the conferees, as the old saw goes, appear to not "have the sense to pound sand in a rathole."

Albion Monitor January 31, 1996 (

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