1.  Deregulates telephone companiesï provision of high speed Internet access service so they can compete with cable companies offering same service.

• Provides an incentive for all companies to develop and deliver new, advanced telecommunications services to American consumers.

Under current rules, telephone wire is regulated; cable wire is not. The Federal Communications Commission (FCC) says Bell telephone companies must "unbundle" network elements and sell them to competitors at cost meaning that return on new facilities investment will be limited. This vestige of the previous monopoly in voice services creates a disincentive for the Bell companies to invest in new equipment that will bring consumers high speed Internet access and other services.

	The central thesis of the Telecommunications Act of 1996 was to regulate - or not regulate - like services in a like manner. The historical "mission" of a particular company should not be relevant - i.e., telephone and cable companies should be treated the same if both are offering high speed Internet access.
	The Bell companies are providing high speed internet access (DSL) service; cable companies are providing cable modem service. Similar speed, application, price, and market.

The bill does not roll back network unbundling requirements included in the Telecommunications Act that are designed to open the local telephone market to competition. Loops, switches, and other essential facilities are still required to be sold to competitors at cost.

• Allows consumers the freedom to choose which ISP they want to connect to when they purchase DSL service from a telephone company.

Under current rules, cable companies may force their customers to subscribe to a proprietary ISP (e.g., AT&Tïs "At Home" service).

	Cable industry claims there are technological constraints that hinder providing "open access" to unaffiliated ISPs. The bill accepts that contention and requires open access only of telephone companies.
	Policy is that as long as one platform (cable) is closed, consumers must have an option available to them that can provide effective competition.

• Ensures that Internet backbone networks remain competitive. Increasing concentration could result in higher prices to consumers for Internet access.

Every bit that travels over the Internet must pass over one or more Internet backbone networks which could become next bottleneck. Only five national networks exist, and traffic is becoming concentrated on just a few.

Backbone networks exchange traffic free of charge today ("peering agreements"). Disequilibrium in traffic could lead to disintegration of peering, and higher charges to consumers.

Today, telephone companies are prohibited from hauling data over so-called LATA lines, so they canït operate backbone networks. Bill allows them to enter this market to enhance competition.

• Allowing telephone companies to backhaul data traffic over LATA lines shouldnït permit them to offer voice long distance service until they have met the Section 271 checklist and receive FCC approval.

Opponents argue that in a digital world, it is impossible to tell the difference between a voice bit and a data bit, so Bell companies may use high speed data lines to transmit voice calls. They argue that the Bell companies would escape the Telecom Act restrictions on providing voice long distance service.

But voice long distance over packet switched networks is not a viable service, and wonït be for 3-5 years. Moreover, the bill also prohibits the Bell companies from marketing.

Prepared by the Democratic staff of the Committee on Energy and Commerce
2322 Rayburn House Office Building, Washington, DC 20515
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