USTA PRESSING HARD FOR REGULATORY CHANGE; LEGISLATION POSSIBLE

However, keynoter William Daley, pres. of SBC, told reporters: “It’s about time to take a look at legislation and see what works… There’s a growing sense in the industry that there needs to be a new paradigm about how we are regulated.” Outgoing USTA Chmn. Margaret Greene of BellSouth said “fundamental reform” in regulation of telecommunications was needed: “Regulators refuse to acknowledge that the world is a different place [and refuse to] cede authority to consumers.”

Legislation won’t happen this year or next because or preoccupation with the Presidential race, said House Commerce Committee member Barton (R-Tex.), who some are touting as an eventual Commerce Committee chmn. But Barton said “this is the year to begin laying the groundwork” for an overhaul of the 1996 Telecom Act in order to “maximize markets and minimize regulation.”

Some progress can be made by regulators, Barton said in the convention’s opening session, but universal service, for example, will “probably take a legislative solution.” Requiring telcos to provide UNE at below cost also is “wrong and may need a legislative solution,” he said. Barton also said facilities-based competition was “not really happening… It seems obvious that at some point there will have to be a legislative solution.”

One key question is what the telecom industry will do to get the legislation it wants, and leaders were vague on that question. McCormick talked of a “new intensity” and “focus” on issues that could lead to legislation, but provided few details. Daley said there may need to be some effort to build up USTA, but it’s more important that telcos make “a commitment” to “be part of the awareness campaign… We have to convince the consumers that competition is here and all this [regulatory] minutia hurts the industry and the economy.”

McCormick said he believed legislation would get Hill support because “both parties are focused on one thing -- economic growth. This is one of the most dynamic sectors of the economy” and anything that unleashes it the govt. “is going to be interested in.”

One of the key arguments to the public and to lawmakers is that regulation hasn’t kept up with technological change, experts said. McCormick said some telco regulations were established in the 19th century, based on common carrier railroad regulation. The goal, he told reporters, was to protect consumers who didn’t have a choice of carriers, but “where the consumer has a choice, the very purpose of regulation falls away.”

The proliferation of telecommunications media means no consumer is limited to using traditional telephone lines, since telephony is available via wireless, cable and the Internet, McCormick said: “Rapidly and irrevocably the nation is moving toward a truly seamless, boundary-less, limitless communications environment.” He said the various regulatory categories for telecom, such as local and long distance, were becoming obsolete.

Despite that, McCormick said in his opening speech, “the requirements that are placed on us today are greater than when local exchange consumers were actually without choice. Perversely, as competition has grown, the regulatory requirements on our industry have increased.” McCormick actually compared the situation to the Soviet Union’s system of central planning.

Any legislation that emerges should retain a “positive” govt. role, McCormick said, including: (1) Nondiscriminatory policy across platforms. (2) Encouragement of investment in infrastructure. (3) Assurance of universal access. McCormick said the universal service fund was “trapped in a time warp” and it was time to “require all those whose enterprises depend upon the public to support universal service.” He also said the fund should “get back to its original purpose” of assuring that rural areas have access to service.

Consultant Jeff Pulver counseled caution in revamping universal service. On a panel session, he said “everyone understands the need for universal service,” but suggested that voice-over-IP (he’s credited as being a co-founder of VoIP operator Vonage) may be a more efficient way to provide it. Pulver said that “before implementing [universal service] policies that you will regret in the future, you should take time to understand” VoIP and other new technologies.

Telecom regulation has been made “exceedingly difficult” by the “high level of emotion” that has divided the industry into “warring camps,” former NTIA Dir. Nancy Victory said at USTA Tues. She said regulators couldn’t view the issues in isolation and it was “important” that Congress either step in or the industries come to a consensus on the issues: “Everyone is at high risk if you continue to rely on an ill- defined and highly litigated regulatory regime.”

Victory acknowledged later that it would be difficult for Congress to legislate on issues such as the “stovepipe” regulator separations of telecom and video services: “It would be a very helpful thing for Congress to do, but realistically it would be very difficult.” FCC Comr. Martin agreed it would be “helpful” if Congress intervened, but said even if it didn’t, the FCC had the “tools” to resolve many of the issues.

Daley in his convention keynote here Mon. said he had been “struck by how harsh the debate often is in this industry.” He said there was a “very legitimate policy debate under way as to whether we should be regulated by your father’s telecom rules,” particularly in “a time of unheard- of choices in communications… Regulators don’t need to continue refereeing competition issues when the market is teeming with competitors.”

“Nationwide litigation and open season on consumer privacy cannot be what Congress envisioned” in the Digital Millennium Copyright Act, Daley said. He used more than 1/4 of the keynote to criticize RIAA lawsuits targeting consumers. Asked later why he made the issue so prominent at a telephone convention, Daley said only that “our company feels very strongly about protecting the privacy of our customers.”

SBC, which has opposed RIAA file-sharing subpoenas in court, believes “the recording industry has every right to protect its interests,” Daley said, and the telco expects its customers to abide by the terms of their service agreement, including protecting copyrights. But he said the recording industry “cannot trample consumer privacy in order to protect its bottom line.”