HOLLINGS BROADBAND BILL WOULD PRESERVE CLEC ACCESS TO TERMINALS

Hollings should be praised for “focusing attention on the only real issue in broadband deployment -- the expense of putting remote terminals in rural areas,” ALTS Pres. John Windhausen said. “By providing federal funding of remote terminals, and by guaranteeing that competitors can gain access to them, the bill will make sure that rural Americans can receive high-speed services and have a choice of competitive carriers.” He said bill was right approach to broadband “whether or not CLECs receive any funding under this bill.” AT&T Gen. Counsel Jim Cicconi added that bill “won’t weaken upstart broadband competitors who are challenging the Bell providers of DSL.”

Currently, excise tax produces several billion dollars annually that’s added to U.S. Treasury without earmarks. Tax dates back to Spanish-American War, and in 106th Congress House passed bill revoking it, only to have measure die in Senate. If Hollings’ bill were to pass, earmarking excise tax funds would have impact on overall budget numbers, so bill probably would be subject to pay-as-you-go (pay-go) provisions requiring budget offsets elsewhere. Along with Hollings’ position as chmn. of Commerce, he also is chmn. of Senate Appropriations Commerce, Justice, State Subcommittee.

Largest funding provision of bill would be $2 billion in loans over 5 years for carriers in rural and underserved areas. Hollings made it clear in speech introducing S-2448 that rural carriers, including cooperatives, would be among recipients of those loans. “Small telephone companies have been diligently rolling out broadband service in rural areas,” he said, but “to achieve the goal of broadband deployment in all rural and underserved areas, the government will need to provide some assistance.” Hollings praised bill by Sen. Rockefeller (D-W.Va.) that would offer loans, grants and tax incentives for rural broadband deployment, calling it “constructive approach.” That bill, S-88, includes Hollings among its 64 co-sponsors. Hollings said his bill took “similar approach,” but included focus on next-generation broadband, 50-100 Mbps network promoted by TechNet and Telecom Industry Assn.

Study Would Examine Cost of 100 Mbps Network

“The bill begins to help us understand what is necessary to accomplish broadband with speeds of 50 to 100 megabits per second by providing grants to NTIA’s lab, NIST [National Institute of Standards & Technology] labs, National Science Board [NSB] and to universities for research,” Hollings said. His bill would offer $60 million to NTIA labs, $50 million to NIST labs, $50 million to NSB. NSB funding would go for National Science Foundation grants to study both next- generation technology issues and financial cost of deploying wireline and wireless networks. Other funding items: (1) $14 million pilot project for wireless, wireline and fiber to home in rural and underserved areas. (2) $100 million in grants to libraries and another $100 million to museums to digitize their collections. (3) $50 million to universities to develop consumer-friendly broadband applications. Hollings said most consumers with access to broadband weren’t signing up, “leading many to believe that low demand is a problem, not slow deployment.” Without specifically mentioning his bill (S-2048) that seeks to propel private industry to find digital rights management solution for digital content, he said “we must eliminate the impediments that block consumers from obtaining the content, services and applications necessary to make broadband service a useful and productive tool.”

Hollings also wants to help keep alive Technology Opportunity Program (TOP) created in Clinton Administration that has been targeted by President Bush’s FY 2003 budget. The bill calls for $250 million in grants through TOP to connect underrepresented colleges and another $250 million in TOP grants to connect communities. S-2448 also calls for $1 billion in block grants for state and local govts. to develop e-govt. Along with NIST study, bill would have Federal-State Joint Board examine impact of reclassifying telecom service on universal service, rates and unbundled network elements, as well as General Accounting Office study identifying factors in other countries that facilitate broadband deployment and spur broadband demand.

One impediment to broadband acceptance is concern over privacy, Hollings said. Full acceptance “will not be possible… unless consumers are confident that their privacy and personal information are protected and secured,” he said. He recently introduced Online Personal Privacy Act (S-2201) that takes opt-in approach to privacy, which along with the DRM bill S-2048 and his latest bill, making 3 separate pieces of legislation Hollings has introduced recently related to broadband.

Comparisons to Breaux-Nickles

The introduction of S-2448 drew tremendous interest among telecom and high-tech companies, much of it positive. CompTel Pres. Russell Frisby said “Hollings’ legislation simply makes wise use of existing tax dollars. Instead of sending money into the U.S. Treasury, Hollings proposes to use the money to stimulate the telecom industry.” However, SBC Vp-Congressional Relations Timothy McKone said: “Instead of relying on taxpayer dollars to promote broadband deployment in the U.S., we would urge the sponsors of S-2448 to consider alternatives that focus on fair and equitable regulation of all providers of broadband services.” USTA Pres. Walter McCormick concurred, saying bill “leaves unchanged the fundamental disincentive to investment” -- interconnection burdens unique to ILECs. That is target of bill by Sen. Breaux (D-La.) and Senate Minority Whip Nickles (R-Okla.), which would give FCC 120 days to create regulatory parity across all broadband providers. However, Frisby said that measure would give “the Bell companies a monopoly over broadband which would undermine competition.” Progress & Freedom Foundation Dir.-Telecom Policy Studies Randolph May said Breaux-Nickles could jump-start IT economy. In new study, Broadband Gets a Breaux-Nickles Boost, he said bill would resolve onerous requirement on ILECs to share “piece- parts” of telephone company networks with new entrants at below-market prices.

NARUC said in letter to Hollings that his bill included many of key broadband concerns adopted by NARUC Telecom Committee, including low-interest, carrier-neutral loans for rural and underserved areas. NARUC Telecom Committee Chmn. Joan Smith and Vice Chmn. Robert Nelson said S-2448 was “consistent with our view that while the 1996 Act is working… additional incentives to serve rural and underserved communities are appropriate.” Voices for Choices, coalition including ALTS, CompTel, WorldCom, AT&T and Sprint that was born out of opposition to Tauzin-Dingell, issued statement saying S-2448 focused on “the real issues in the broadband debate: How do we get services deployed, and how do we foster demand for these services?” Coalition Co- Chmn. Steve Ricchetti called bill “forward-looking.” Consumers’ Voice Exec. Dir. Robert Johnson said “finally, someone gets it, and thankfully, it’s the chairman of the Senate Finance Committee.” He said S-2448 offered “concrete, real and tangible resources to spur deployment of broadband” in rural and underserved areas, “unlike the Tauzin-Dingell or the Breaux-Nickles bills.” Covad CEO Charles Hoffman praised Hollings for focusing on “the real issue of driving demand, not the artificial one of supply.” NTCA Vp-Govt. Affairs Shirley Bloomfield wrote Hollings Thurs. that while its members had made extraordinary efforts to serve rural areas with broadband, “the provisions of your bill go to the heart of the circumstance the industry currently faces -- addressing deployment situations that are not economically feasible, and investigating incentives to spur consumer demand.”