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Senator McCain Introduces the "Consumer Broadband Deregulation Act of 2002"
Bill Hurts Local Governments by Limiting Rights-of-Way Fees; Cable Reregulation Possible Next Year According to Senator Hollings

By Ron Thaniel
September 9, 2002


Immediately before the congressional summer recess, Arizona Senator John McCain introduced a wide-ranging broadband deregulation bill that would be extremely detrimental to local governments. The legislation would prevent localities from doing anything to interfere with the provision of any consumer broadband service by limiting local governments- rights-of-way compensation to "direct and actual costs reasonably allocable to the administration of access to, or use of, public rights-of-way."

Unlike other measures that have been introduced, the McCain bill explicitly limits rights-of-way compensation. It is imperative for local governments to oppose such a measure that does not reflect the real costs associated with managing the public rights-of-way.

"The potential for government interference with market forces is not limited to federal regulation. State and local governments are also capable of obstructing the deployment of broadband," said McCain during the introduction of his measure. "The bill would address this threat by precluding any state or local regulation from prohibiting the ability of any entity to provide consumer broadband service. It would also prevent localities from transforming their legitimate interest in managing their rights of way into an imposition of additional, revenue-generating financial burdens on broadband deployment."

He added: "With such a tremendous opportunity comes no shortage of 'solutions.- Many want a national industrial policy to drive broadband deployment — they suggest multi-billion dollar central planning efforts aimed to deliver services to consumers regardless of whether those consumers want or need such services. Other legislative proposals have focused on limited sectors of the broadband services market. If I had my way, I would throw out the 1996 Act and start from scratch. I am mindful, however, that broadband is an issue that has polarized policymakers to the point of legislative paralysis. Now is the time for a measured approach that focuses on achieving what can be done to improve the deployment of services to all consumers. I believe that this legislation does just that."

Most residential broadband Internet users currently connect over cable systems, but the local phone companies dominate the business market. The bill would increase the power of the Baby Bells to offer their services to American homes. Federal regulations prevent this from happening until the Baby Bells open their own historical local calling areas to competitors. Commerce Committee members John Breaux (LA) and Sam Brownback (KA) have introduced bills that would eliminate these regulations. Committee Chairman Ernest "Fritz" Hollings (SC) introduced legislation to speed broadband rollout through hundreds of millions of dollars in grants to fund studies, tax credits, loans and other spending efforts.

In the House, the Tauzin-Dingell bill — named for House Commerce Committee Chairman Billy Tauzin (LA) and ranking Democrat John Dingell (MI) — would completely free the Baby Bells to offer long-distance service to residential and business customers, eliminating restrictions that were established in the Telecommunications Act of 1996. Tauzin-Dingell is the leading broadband bill so far, having been approved in the House of Representatives. But Hollings has frozen progress on the bill in his committee.

The McCain measure also calls on a study within two years to determine whether state regulation is necessary to protect consumers, as well as a study on the government's role in facilitating wireless broadband.

Cable Reregulation Possible Next Year

The chairman of the Senate Commerce Committee, Senator Ernest Hollings (SC) said an effort to reregulate the cable industry is a possibility starting next year. "The only reason why we didn't reregulate cable — and I would think the next Congress will, I don't mind saying that — but the only reason why we haven't done it is because that's been the only competition to the Bell companies on getting us the broadband," Hollings said at a July 30 hearing on the financially troubled telecommunications sector. Hollings helped to pass a cable-regulation law in 1992, then supported legislation in 1996 that relaxed terms of the 1992 law effective March 31, 1999.