06-16-2001

TELECOMMUNICATIONS: Broadband Battle Over Small-Town U.S.A.

Listening to the advertising cross fire in the debate over the
controversial Tauzin-Dingell high-speed Internet access bill, you would
think that the survival of rural America was hanging in the
balance.


Consider one widely televised commercial that aims to quash the
controversial bill: "The [Baby] Bell phone monopolies say if Congress
would just give in to their demands, they'll bring high-speed Internet to
rural America-someday," an announcer intones. The commercial, one of
a series sponsored by a coalition called Voices for Choices, argues that
high-speed Internet access has bypassed most rural communities, even
though the nation's four massive Baby Bell phone companies have had the
technology for 10 years.


Or consider this ad: "Why is AT&T attacking local phone
companies?" Produced by Connect USA, the ad insinuates that Voices
for Choices is just a front group for AT&T, because Voices for Choices
receives most of its funding from that telecommunications giant. Connect
USA says the bill guarantees high-speed Internet access to small towns as
well as inner cities, "making sure no one is left behind," if
Tauzin-Dingell passes.


Connect USA, a business and consumer coalition founded and primarily
financed by SBC Communications Inc.-one of the four Baby Bell
companies-says Tauzin-Dingell will bring the wonders of high-speed
Internet access, also known as "broadband," to rural America. On
the other side, AT&T-subsidized Voices for Choices says Tauzin-Dingell
would make it even harder for small-town America to cash in on the
broadband revolution.


Whichever group is right, one thing is clear: The Internet Freedom and
Broadband Deployment Act sponsored by Reps. W.J. "Billy" Tauzin,
R-La., who chairs the Energy and Commerce Committee, and John D. Dingell,
D-Mich., the committee's ranking Democrat, has provoked one of Capitol
Hill's hottest lobbying battles.


"The advertising wars are rampant," observes David Bolger,
spokesman for the United States Telecom Association, which supports
Tauzin-Dingell and counts the four Baby Bell companies (SBC, BellSouth
Corp., Qwest Communications International Inc., and Verizon Communications
Inc.) among its roughly 1,200 members. The commercials, he says,
"seem to be going back and forth, creating a lot of noise as opposed
to creating a lot of buzz."


Rural access has emerged as a key rallying cry in the debate over
Tauzin-Dingell, although most of the combatants have never set foot in
Mayberry. "I think rural access is a button [the coalitions] use that
gains a lot of interest on Capitol Hill, because that has always been a
very hot issue in communications," Bolger adds.


Yet rural interest groups and small-town telecommunications enterprises
haven't been visible players in the legislative fray, except as part of
the larger coalitions. "We haven't heard from any rural groups
specifically," explains Tauzin spokesman Ken Johnson.


That's because "the people most affected by this bill are the ones
who can't afford to fight it," says Maura Colleton, executive
director of the United States Internet Service Providers Alliance, a
member of Voices for Choices. Colleton's group represents several state
and national associations of Internet service providers, or ISPs, and more
than 800 small independent ISPs, many of which serve rural communities and
small towns.


"It's been really important to my guys to have [the coalition]
available to them. They could never afford to do it themselves,"
Colleton says. "We participate in other groups, but we have not been
able to wage our own lobbying campaign."


If Tauzin-Dingell passes-and right now it appears to have more than enough
support for House approval-it will lift restrictions in the 1996
Telecommunications Act and allow the Baby Bell companies to offer
long-distance data services without fully opening their local telephone
networks to competitors.


Tauzin-Dingell proponents contend that lifting those barriers would level
the playing field by enabling the Baby Bells to offer broadband services
under the same rules as cable companies, which currently control more than
70 percent of the broadband market. "The fact is, AT&T is now the
nation's largest cable monopoly," Connect USA says in one
commercial.


But opponents say Tauzin-Dingell would hand over to the Baby Bells a
virtually unregulated monopoly by allowing them to cut off their
competitors' access to the "local loop"-that is, the lines that
connect telecommunications facilities right into American's homes.


The main opponents of the bill are the telecommunications companies that
offer Internet services in competition with the Baby Bells. Those
competitors include independent Internet service providers serving as few
as 100 customers, "competitive local exchange carriers" that
serve small and midsized communities, and telecommunications giants such
as AT&T and Worldcom.


"The Holy Grail of telecommunications is broadband," Johnson
says. "In the very near future, broadband will be a $15 billion to
$20 billion market, and that's what this battle is all
about."


With such huge stakes, the corporate combatants have wrapped themselves in
the flags of small-town America, and both sides agree rural areas have
been largely left behind in the race to the Internet.


A joint report released last year by the Commerce Department's National
Telecommunications and Information Administration and by the Agriculture
Department's Rural Utilities Service concluded that less than 5 percent of
towns with populations under 10,000 have access to broadband services of
any kind. A key reason, the agencies found, is the higher cost of serving
sparsely populated regions.


In contrast, the study found that cable companies had deployed broadband
services to 65 percent of U.S. cities with populations of more than
250,000. Telephone companies had deployed broadband services to 56 percent
of cities with populations exceeding 100,000.


Thus all the talk about rural Internet access. In one commercial, Connect
USA calls itself "a group of local telephone companies and people
across America who want real competition for high-speed access to the
Internet." Those local telephone companies include giant SBC.


Voices for Choices' membership includes more than 30 associations,
interest groups, and competitive telecommunications companies. AT&T,
one of its most prominent members, is a long-distance company that is
trying to break into the local phone market and also happens to be the
nation's largest cable company. "It's a front group for AT&T,
period. Pure and simple," Tauzin spokesman Johnson said of Voices for
Choices.


Colleton insists, however, that without Voices for Choices, the small
independent ISPs that serve from 100 to 2,500 customers would not have a
voice on Capitol Hill. "Our members take real exception to the
perception that this is just a fight between the [Baby] Bell companies and
AT&T," she argues. She says that by lifting a requirement that
the Baby Bells open their local telephone lines to competitors before
offering long-distance services, the bill would destroy independent ISP's
ability to compete.


If Tauzin-Dingell passes, she concludes, "AT&T will be harmed,
but my guys will be out of business."


But Bolger, of the United States Telecom Association, said the legislation
would "make a considerable difference for rural access.


"That's why the entire [1,200-member] USTA is behind this bill, not
just the [Baby] Bell companies," Bolger says, adding that releasing
the Bells from certain regulations would have a "spill-over"
effect in remote areas.


"If the big guys get this regulatory relief," Bolger argues,
"they'll reach out further into communities in rural parts of the
country, and that will enable smaller companies to be part of broadband
pipelines and fiber optics out there in the hinterlands, and more
customers will be able to take advantage of those services."


Although the Tauzin-Dingell bill is likely to win House approval, it faces
formidable Senate opposition. Sen. Ernest F. Hollings, D-S.C., who now
chairs the Senate Commerce, Science, and Transportation Committee, is a
vocal opponent of freeing the Baby Bells from the 1996 act's requirements.
He could block committee action on the bill.


Colleton contends that independent ISPs and other competitive telecom
firms would be hurt even if the bill never passes. She says the bill has
created "uncertainty in the markets," and that "regulatory
and legislative uncertainty has dried up the capital markets for
competitors."


But it is not Congress's job, Johnson says, to "pick the winners and
losers" among the entities battling over the bill.


So the endless commercials continue.


"Despite all the money that's been spent on the advertising effort, I
don't think the average person in America understands the issue,"
Johnson says. "Most people aren't sure if Tauzin-Dingell is a bill or
a person."


Molly M. Peterson

National Journal