As the year ends, the heated debate over the "Tauzin-Dingellbill" continues to rage as the House of Representatives considers acompromise version of this controversial legislation. H.R. 1542,The Internet Freedom and Broadband Deployment Act of 2001, is namedafter its two key sponsors, House Energy and Commerce ChairmanBilly Tauzin (R-La.) and ranking member John Dingell (D-Mich.). Asdiscussed in previous editions of thisnewsletter, the Tauzin-Dingell bill would help level thebroadband playing field by allowing Baby Bell companies to offercustomers broadband services the same way cable and satelliterivals currently can. This would, in turn, catalyze additionalbroadband deployment by the Bells, who are somewhat reluctant toroll out new services as aggressively as they might if not for theregulatory uncertainty surrounding the treatment of their broadbandofferings.
In a nutshell, the Bells fear they might be forced to surrenderoperational control of their new services if infrastructure sharing("forced access" or "mandatory unbundling") requirements are placedon them that demand they share those new services with rivals.After all, would you want to build an expensive new network if thegovernment told you that you would have to share it with all yourclosest competitors? The Tauzin-Dingell bill would limit suchrequirements. The bill also makes it clear that Bells can offerbroadband services across long-distance boundaries, which they havenot been allowed to cross with traditional voice traffic since theAT&T breakup in the early 1980s.
Therefore, despite the apocalyptic rhetoric of its opponents, all the Tauzin-Dingellbill does is grant the Bells the freedom to offer consumers thehigh-speed Internet services they want. Opponents of theTauzin-Dingell bill still cannot answer the fundamental questionthat lies at the heart of this debate: Why should it ever beconsidered a crime to offer consumers an important, life-enrichingservice that they demand? The real motivation that lies behind theefforts of some rivals to derail the Tauzin-Dingell bill is thatthey would prefer to hitch a perpetual free ride on the Bells' oldand new networks instead of constructing competing facilities oftheir own. This is a shameful corporate philosophy and an even moredisturbing and destructive economic principle when imposed on anindustry through regulation.
As this bitter legislative debate unfolds, along comes asignificant new report from a research arm of the National Academyof Sciences that provides an extensive set of excellentrecommendations for policymakers to follow if they hope to bringbroadband to the masses. The report, Broadband: BringingHome the Bits is an impressive 228-page survey of thecurrent state of the broadband marketplace that was the result ofthe collaborative efforts of a notable collection of academic andcorporate technology experts. The report was organized by theComputer Science and Telecommunications Board, an operating unitwithin the National Research Council, which is the principalworking arm of the NAS. Among the report's many important findingsand recommendations are the following:
- The Telecom Act is more of a problem than asolution: "The present policy framework for broadband,which revolves around the Telecommunications Act of 1996, isproblematic and is unsuited in several respects to the new era ofbroadband services," the NAS report notes. Moreover, the reportargues that changes may be necessary to the act since it was,"framed before the Internet was fully commercial," and since it,"devotes too much of its attention to the voice telephony marketand maintains distinct rules for various communications networks(telephone, cable, cellular, broadcasting, and so on)."
- Level the regulatory playing field: Buildingon this last point, the report advocates that lawmakers "movetoward a more coherent, consistent policy framework for broadband,"to avoid "policy-induced distortions in technology deployment."Moreover, "If regulation of a broadband-delivered service iscontemplated, it should be done in a service- rather than atechnology-centric fashion," so that cable, telco, and wirelessproviders are not subjected to different regulatory regimes.
- Avoid broadband crystal ball gazing: Thereport cautions legislators to "avoid present-day policy makingthat is based upon presumptions about the final form of broadbandmarkets." The report stresses that the market needs time tonaturally mature into a mass market so that demand and willingnessto pay for broadband services can be better gauged.
- Favor facilities-based competition over forced accessand unbundling mandates: In a ringing indictment of theinfrastructure socialism mentality that pervades modern telecompolicy, the report boldly states that "in the long term and in thecase of investment in new facilities, policies should favorfacilities-based competition over mandatory unbundling," since theformer: (1) reduces the need for persistent regulatoryintervention, (2) permits the natural character of the broadbandservice and industry structure to be discerned, (3) promotesdiversity in technology bases and cost structures, (4) avoidsdeterring competitors from investing in their own infrastructure,(5) removes the disincentive to new investment by incumbents, (6)avoids costs and organizational complications associated withcoordination between incumbents and competitors, and (7)facilitates technical optimization of total bandwidth.
- Expand spectrum options: The report recommendsthat policymakers "ensure appropriate radio spectrum for broadbandand associated capabilities" since "both licensed and unlicensedspectrum plays a role in enabling various wireless broadbandalternatives as well as local area and mobile capabilities thatcompliment and supplement wireline broadband access."
- Reduce federal, state, and local rules to ease marketentry or to stimulate investment: The report calls on allgovernments to remove barriers to greater broadband deployment. Atthe local level, this includes providing greater access torights-of-way, relaxing franchise fees or obligations, and changingpermitting or zoning rules to accommodate more investment.
To be sure, the NAS report is not an across-the-board freemarket manifesto. It recommends a handful of targeted forms ofgovernment intervention to foster broadband deployment such as taxcredits, increased research and development efforts, and municipalgovernment direct investment in broadband backbone facilities.Nonetheless, on the issues that truly matter to future broadbanddeployment, the report hits the nail right on the head. Increasedbroadband investment and deployment will only occur in a legalenvironment uncluttered by the illogical distinctions of the pastand free of burdensome, innovation-deterring infrastructure-sharingmandates. Congress should take the lessons of the NAS report toheart as it continues to debate the rather limited reforms setforth in the compromise Tauzin-Dingell bill.