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Search Terms: telecommunications act of 1996, House or Senate or Joint

Document 43 of 383.

July 18, 2000, Tuesday

SECTION: PREPARED TESTIMONY

LENGTH: 3239 words

HEADLINE: PREPARED STATEMENT OF DAVE BAKER VICE PRESIDENT, LAW AND PUBLIC POLICY EARTHLINK, INC. ON BEHALF OF THE OPENNET COALITION

BEFORE THE HOUSE COMMITTEE ON THE JUDICIARY

SUBJECT - H.R. 1686, "THE INTERNET FREEDOM ACT" AND H.R. 1685, "THE INTERNET GROWTH AND DEVELOPMENT ACT OF 1999"

BODY:
SUMMARY

Chairman Hyde, Ranking Member Conyers, and Members of the Committee on the Judiciary, thank you for the opportunity to testify before you today regarding the open access provisions of H.R. 1686, the "Internet Freedom Act," introduced by Congressman Goodlatte, and H.R. 1685, the "Internet Growth and Development Act of 1999," introduced by Congressman Boucher.

I am Dave Baker, Vice President for Law and Public Policy with EarthLink, Inc., the nation's second largest Internet Service Provider (ISP) serving approximately 3.5 million customers throughout the country. I am pleased to appear today on behalf of the openNET Coalition, a national organization of more than 980 local, regional and national ISPs that have joined together to promote the rights of all consumers to obtain affordable, high speed access to the Internet from the ISP of their choice.

Incumbent cable companies currently offering broadband cable services do not provide open access to their systems by unaffiliated ISPs. A consumer of cable broadband transmission service must buy the ISP service bundled into the offering by the cable company (generally the ISP owned by or affiliated with the cable company). If a cable broadband consumer wants to use the services of any other ISP, he or she does not currently have the option of buying only the broadband transmission service from the cable company. In effect, such consumers have to pay for two ISPs to get the one they want. The openNET coalition believes that a national open access policy is required to ensure that consumers have multiple ISP choices in the new broadband environment. OpenNET endorses the open access provisions in H.R. 1686 and H.R. 1685 because they would firmly establish an enforceable national nondiscriminatory policy applicable to cable broadband providers. Significantly, this approach would not negate the ability of parties to negotiate specific terms and conditions for open access in the marketplace. Enactment of these open access provisions would quickly end the cable companies classic anticompetitive practice of tying their cable broadband transport services to "exclusive" ISP services provided by their affiliated ISP.

The openNET coalition maintains support for a federal legislative approach to open access notwithstanding several positive events that have recently occurred in the marketplace which have significantly advanced the progress of openNETs cause, including the acceptance of open access "in concept" by a number of the nations largest cable operators. OpenNET also believes that the Ninth Circuits recent ruling that cable broadband service is a "telecommunications service" fully confirms the need for a national open access policy which Congress is well-suited to establish.

OpenNET is encouraged by these recent developments, but none of them substitutes for the near-term establishment of a national open access policy which can be effectively enforced nationwide. OpenNET believes that this national open access policy should be established as soon as possible. Given the resistance of the cable industry to move quickly to implement open access, openNET submits that a catalyst is required to make the cable industrys implementation of open access a near-term reality. Enactment of federal open access legislation--such as the direct, nonregulatory antitrust provisions of H.R. 1686 and H.R. 1685--would provide that catalyst. These provisions would accelerate the national implementation of open access by cable providers; support marketplace negotiations while affording ISPs with an effective means of enforcement; sustain the open nature of the Internets architecture and provide incentives for new innovation; and, most importantly, ensure that cable broadband consumers gain the benefits of competition, choice and innovation which are hallmarks of our Nations telecommunications policy.

Chairman Hyde, Ranking Member Conyers, and Members of the Committee on the Judiciary, thank you for the opportunity to testify before you today regarding the open access provisions of H.R. 1686, the "Internet Freedom Act," introduced by Congressman Goodlatte, and H.R. 1685, the "Internet Growth and Development Act of 1999," introduced by Congressman Boucher.

I am Dave Baker, Vice President for Law and Public Policy with EarthLink, Inc. Headquartered in Atlanta, EarthLink is now the nation's second largest Internet Service Provider (ISP) serving approximately 3.5 million customers throughout the country.

I am pleased to appear today on behalf of the OpenNet Coalition, of which EarthLink is a charter member. OpenNet is a national organization of more than 980 local, regional and national ISPs and communications providers that have joined together to promote the rights of all consumers to obtain affordable, high speed access to the Internet from the ISP of their choice. Founded in early 1999, OpenNet has grown to become the largest ISP organization in the country. OpenNet supports "open access"-- the ability of consumers to use their ISP of choice over a broadband cable line the same way that they have always been able to do using a telephone line. OpenNet firmly believes that "open access" policies applied to the emerging broadband environment are critical for sustaining the Internets open, end-to- end architecture. This open design has been the source of the Internets explosive expansion, the catalyst for sustained information technology innovation, and the driver of extraordinary economic growth and efficiency.

When consumers today get Internet access over telephone company networks, either through narrowband dial-up access or through broadband digital subscriber lines (DSL), they already enjoy the benefits of an open access framework. Put simply, consumers are not forced to use or pay for their local phone companys affiliated ISP. Almost all consumers throughout the country can choose from among several Internet Service Providers; those in large cities can choose from among hundreds serving their area.

There are over 6,000 ISPs nationwide. Most are local "Mom and Pop" small businesses. Without the open access policies which apply to the phone companies provision of Internet transmission services, the vast majority of these ISPs would not exist. Open access policy provided the foundation for the investment, innovation, services and competition which these 6,000+ ISPs have brought to consumers over the past several years.

By contrast, incumbent cable companies providing broadband services do not provide open access to their systems. If a consumer today wants high speed Internet access through a cable modem, he or she has no choice but to buy and use the bundled offering of their cable companys own affiliated ISP. From the start, cable companies are establishing their broadband offerings in a classically anticompetitive way by tying their transmission and ISP offerings together and making their affiliated ISP exclusive. They have implemented this structure notwithstanding their dominance over essential transmission facilities in the broadband market.

Since its inception, OpenNet has led the national fight for open access and against closed cable monopolies.

We are glad to report that some progress has been made, but there is still a long way to go. Within the past year, the cable industrys opposing arguments--that open access is impossible, or is "technically infeasible," or would chill investment, or would slow deployment, or is "bad for business"-- have eroded. An increasing number of large cable operators have begun to at least pay lip service to open access.

OpenNet remains concerned, however, that the cable industry still seeks to delay open access for as long as possible. This would allow them to gain a "first mover" advantage and "rope off" from competition as many customers of their bundled high speed cable broadband services as possible. Given the continued resistance of the cable industry towards open access, a catalyst is required if there will be any meaningful widespread open access any time soon. In other words, a coherent national policy supporting open access is more important than ever.

The open access provisions of H.R. 1686 and H.R. 1685 provide this catalyst. They would ensure that consumers throughout the country could enjoy the benefits of open access, without having to wait on the artificial timeframes that cable companies have established before they will even begin to open their systems. The open access provisions of H.R. 1686 and H.R. 1685 would firmly establish an enforceable national framework for nondiscriminatory access to cable broadband facilities without restricting the ability of parties to negotiate specific terms and conditions for open access in the marketplace. Enactment of these open access provisions would quickly end the cable companies ongoing, classic anticompetitive practice of tying their cable broadband transport services to exclusive ISP services provided by their affiliated ISP. H.R. 1686 and H.R. 1685 would require broadband transport service providers, both cable companies and telephone companies alike, to abide by open access requirements so that consumers have a free and fair choice to select from a range of competitive ISPs regardless of the broadband platform they use for transport.

There have been some positive developments both in the marketplace and in the courts with regard to open access in recent months. However, they serve to emphasize, rather than diminish, the importance of the open access provisions of H.R. 1686 and H.R. 1685.

In December, 1999, AT&T, now the nations largest cable operator, signed a statement of principles with MindSpring Enterprises, as my company was then known, which we submitted to the FCC. I noted at that time that AT&Ts commitments toward eventual open access were a step in the right direction, but were nonetheless too limited and indefinite to stand in lieu of a comprehensive national policy for open access.

More recently, AT&T announced that it would conduct future open access trials in Massachusetts and Boulder, Colorado. My company, EarthLink, and several other OpenNet members hope to be able to participate in these trials.

In February, 2000, AOL and Time Warner signed their Memorandum of Understanding (MOU) which set forth more detailed open access principles which could serve as the foundation for a national open access standard implemented by the entire cable broadband industry.

And, in a landmark decision issued on June 22, 2000, in AT&T v. City of Portland, the U.S. Court of Appeals for the Ninth Circuit ruled that local governments could not require open access as a condition of transferring a local cable franchise because cable broadband service is a "telecommunications service." As such, it is subject to federal law requiring nondiscriminatory access and establishing interconnection rights for other telecommunications carriers.

While OpenNet is encouraged by these recent developments, none of them substitutes for a comprehensive, enforceable national open access policy. To date, none of the various voluntary open access commitments by some large cable companies is close to meaningful implementation and the enforcement of these commitments remains unclear at best. In most cases, they raise more questions than they answer. When will implementation happen specifically? Will these voluntary commitments support robust competition or only favor a few "preferred" ISPs? How will cable operators ensure that they do not discriminate against unaffiliated ISPs? How will ISPs enforce these commitments?

In light of the recent Ninth Circuit decision, the FCC announced on June 30 that it would finally initiate a long-requested proceeding to address cable Internet access. However, as the FCC itself has indicated many times in the past, such a proceeding could take years to complete. And any eventual FCC rule establishing open access would undoubtedly be challenged in court creating further delay, litigation expenses and business uncertainty.

Consumers of emerging high-speed broadband services should not have to wait for cable companies with market power to unilaterally decide whether or when they might offer access to unaffiliated ISPs so that their broadband customers have a choice of multiple ISPs. Similarly, consumers should not have to wait the years it would require for the FCC to complete an open access proceeding, already compounded by the lack of any FCC action to date. And while the Ninth Circuit decision has established clarity in the law in at least one portion of the country, the process by which that decision could be given national applicability would again take several years and would require the commitment of substantial litigation resources.

To retain the ability to reach their customers as the market continues its transition to high speed, broadband technologies, the 6,000+ ISPs operating today need a near-term opportunity for open access to broadband infrastructures. They require a certain and decisive way to enforce on a national basis the policy of open access which has now won at least grudging support from its critics in the cable industry.

The Goodlatte and Boucher open access provisions before the Committee provide ISPs and consumers with the immediate national enforcement capability needed to make a national open access policy effective. H.R. 1686 and H.R. 1685 set forth an efficient, nonregulatory approach to open access by establishing a presumption of an antitrust violation if a broadband transport provider with market power, such as an incumbent cable company, does not provide open, nondiscriminatory access to unaffiliated ISPs. For aggrieved ISPs denied access to a cable broadband system or discriminated against in the type of access provided to them by the cable provider, these measures provide an efficient, case-by-case enforcement tool. As the marketplace moves in the direction of high speed broadband technologies, this nonregulatory, direct antitrust approach to open access would ensure that cable broadband providers do not lock out unaffiliated ISPs from their broadband networks and would deter cable companies from discriminating against them when they provide access.

Enactment of the Goodlatte and Boucher open access approach would avoid the need for protracted regulatory analyses and proceedings by the FCC which, at this point, could serve to delay the establishment of an enforceable national open access policy in the broadband Internet environment. Had the FCC expeditiously exercised jurisdiction and initiated a rulemaking shortly after the national open access debate fully ignited in late 1998, it is conceivable that a national open access policy could have been established by the FCC by now. Given the FCCs past decision not to act, the rapid pace at which support for open access as a national policy has grown in less than two years, and the well-reasoned decision of the Ninth Circuit that cable broadband transport is a "telecommunications service," OpenNet believes that a federal legislative approach--such as the open access provisions of H.R. 1685 and H.R. 1686-- is a direct and timely way to resolve the open access debate in favor of consumers, competition and innovation.

OpenNet believes that in order to be effective, negotiated open access arrangements must include the following seven minimum standards:

Consumers of broadband cable services should have a choice among multiple ISPs, without being forced to pay for or go through their cable companys affiliated ISP.

Cable broadband providers must negotiate at arms-length nondiscriminatory commercial arrangements with both affiliated ISPs and non-affiliated ISP's (including "first screen" placement).

ISPs should have the choice of operating on a national, regional, or local basis.

Cable operators must provide nondiscriminatory network management of their systems.

ISPs should be allowed to purchase broadband backbone transport services of their choice.

Both the ISP and the cable operator should have the opportunity for a direct relationship with the customer.

ISPs should be allowed to provide video streaming and there should be no discriminatory restrictions on provision of content.

These elements should be used by policymakers as a minimum standard by which to measure whether private negotiations are working to implement open access and should inform the process by which open access obligations are enforced. To date, the AOL and Time Warner MOU comes closest to fulfilling these requirements and could form the basis for an effective national open access policy for cable broadband providers. AOL and Time Warner have committed to running an open system, but questions regarding the MOU s implementation timing and enforcement remain to be resolved. Enactment of federal legislation, such as the Goodlatte and Boucher open access provisions, would accelerate the rollout of these and other open access commitments, apply the obligation uniformly to broadband providers, and provide a means of effective enforcement.

Mr. Chairman, in closing, let me underscore that the proper resolution of the open access debate is critically important to the future of the Internet. Open access has a proven track record of producing consumer choice, competition and innovation. Because of open access policies applied to the narrowband marketplace, over 97% of Internet users throughout the country, even in the smallest towns, can choose from among several Internet Service Providers. Compare this to cable, where over 97% of customers throughout the country have NO choice in the selection of their cable company.

It has been consistent policy in this country for over 30 years to give consumers greater choice in their telecommunications services. The federal court decision that broke up AT&T in 1984 and created competition in long distance helped create a competitive market in which rates today are 2/3 lower than they were then. In the Telecommunications Act of 1996, Congress established the framework to bring these same benefits of competition to local phone service and to wireless. Recent legislation such as the Satellite Home Viewer Act seeks to end cable's longstanding monopoly over multi-channel video programming. And consumers have always had competitive choice in ISPs in large part because FCC decisions over the past thirty years allowed such information services to travel unfettered over phone lines.

At every turn, policymakers have sought to give consumers greater choice in their communications services. Mr. Chairman, this Committee has played a leading role in crafting many of the laws that have fostered that competition. Broadband Internet access over cable should be no exception.

The OpenNet coalition urges you and the Committee to ensure that open access is the law of the land as the Internet makes a transition to high speed, broadband applications. We commend Committee Members Congressman Goodlatte and Congressman Boucher for their early understanding of this critical policy debate and for demonstrating the leadership to author a nonregulatory, legislative approach that would quickly establish a national open access policy.

Thank you again for inviting me to share OpenNets views. I would be pleased to answer any questions you may have.

END

LOAD-DATE: July 19, 2000

Document 43 of 383.


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