BELL DEREGULATION BILL SEEN CLEARING TELECOM PANEL TODAY

We're told Bell companies have agreed to modification that would keep in place FCC’s current line-sharing rules. CLECs had complained that bill appeared to overrule rules, which weren’t in effect when measure was introduced in 1999. Continued inclusion of line-sharing changes was “inadvertent to begin with” and was just product of bill’s being unchanged from last introduction, Bell company source told us. Source said Bells didn’t want to let complaints about line-sharing detract from main focus of bill, which was data services.

Meanwhile, House Telecom Subcommittee leaders floated amendment that also would strengthen FCC’s ability to levy fines on incumbent phone companies that didn’t follow market-opening rules. Subcommittee Chmn. Upton (R-Mich.) cited FCC Chmn. Powell’s testimony that agency’s maximum available fines -- $100,000 per violation, capped at $1 million -- were just “cost of business” for billion-dollar companies. He said he was drafting amendment to significantly increase those limits, although he didn’t say by how much, and he was supported in his efforts by Subcommittee Vice Chmn. Stearns (R-Fla.).

Bill’s sponsors and main beneficiaries expressed tentative interest in seeing Upton’s proposal. Full Committee Chmn. Tauzin (R-La.), who along with ranking Committee Democrat Dingell (Mich.) is bill’s lead sponsor, said he would work with Upton. Spokesman for USTA told us his group “really need[s] to see the details.” He said “if fines are on the table,” it’s important to also increase commensurately fines for long distance companies and others who flout FCC rules. On other side, CLEC source said enforcement provisions were “fig leaf that doesn’t do anything” since FCC would now have “nothing to enforce.” Source said Upton action probably would be touted as proof of Tauzin’s readiness to compromise, but in fact it “speaks volumes to how Upton has no role at all… It will be very interesting to see if Tauzin runs the markup or Upton does.”

Other amendments were being discussed at our deadline, including one that would force Bells to deploy their data services in rural and/or inner city areas. “Admittedly it may be tweaked a bit” at this morning’s markup, Tauzin spokesman Ken Johnson said, but he said likely changes weren’t troubling. “We're convinced we have the votes to pass our bill out of the Subcommittee,” he said. “I don’t think there’s anyone who’s truly undecided at this point,” Johnson said. To accommodate what’s likely to be host of amendments, and desire of some House members to adjourn early, Tauzin moved markup up to 9 a.m. “There are going to be a lot of people burning the midnight oil” drafting and reading through amendments before then, Johnson said.

Lobbyists on other side also were fairly resigned to bill’s passage. “We're expecting that it’s going to pass,” ALTS Pres. John Windhausen said, although he added “it’s really going to be up in the air.” Tauzin “can ram it through the House,” one opponent told us, but “that’s the end of it.” Opponent said Tauzin “overplayed his cards” by scheduling markup and hearing so quickly, and hearing demonstrated that his bill was indeed controversial for Senate, which still is expected to stall measure. By our count, 9 of Subcommittee’s 33 members clearly opposed bill in its current form, and most of those in strong enough terms that they would be unlikely to change their mind due to enforcement provisions. Bill is “fundamentally flawed” and “not reparable,” said Rep. Pickering (R-Miss.).

By contrast, only 6 Subcommittee members, including Tauzin and Dingell, expressed unequivocal support. Bill was introduced Tues. night with 75 original co-sponsors, but only 9 of them, including Dingell, vote on Subcommittee and even some of them sounded less than convinced. For example, although she’s original co-sponsor, Rep. McCarthy (D-Mo.) sounded like opponent at hearing: “I understand my colleagues’ desire to increase deployment, but I do not think this legislation will do so.”

Opponents continued to harp on speed of proceedings. Members were required to submit amendments by Wed. afternoon, after hearing, which supposedly was to educate them, that ran past that deadline. Rep. Cox (R-Cal.) said members were being “deprived of the opportunity to think.” Rep. Markey (D-Mass.) said going to markup day after hearing was “disrespectful of the issues at stake,” and promised to offer multiple amendments. (Tauzin said he “looks forward” to those amendments.) More significantly, some apparently undecided lawmakers expressed discomfort with the pace. “Many of us have more to learn,” said Rep. Gordon (D-Tenn.).