USF, DTV Top Congressional Agenda, But Timetable Unclear

Most talk is about Telecom Act reform, but sources said action likely would be limited to reform of the universal service fund regime and intercarrier compensation. Efforts are likely on codifying the FCC’s Vonage decision, which preempted state VoIP regulation, and the FCC’s triennial review order ruling that prohibits unbundling requirements for new fiber and next generation broadband deployments. There’s some momentum for Congress and the FCC to address “parity” issues by putting DSL and cable broadband providers in the same regulatory framework. But sources said they didn’t expect Congress to address any of the unbundling issues associated with legacy voice systems. One source said: “I doubt we'll see another Tauzin-Dingell.”

The Senate Commerce Committee has the most ambitious plan to develop a public record on telecom reform, sources said. The committee, now led by Sens. Stevens (R-Alaska) and Inouye (D-Hawaii), will take to the road Feb. and March for a series of hearings on telecom issues. Sources have said the hearings are intended to be “grass roots” and obtain more consumer perspectives on how to reform telecom laws. The Senate Commerce Committee hasn’t released information on the hearings, but has said they're in the works. One industry source said the list of cities isn’t complete, but there almost certainly will be one each in Alaska and Hawaii.

There’s less consensus about how the House Commerce Committee will proceed. While one source expects the House to hold an initial hearing on telecom issues, another source said House Commerce Committee staffers felt comfortable with the record established last year and are ready to proceed with legislation. One House source couldn’t specify when work would begin on telecom issues but said it would likely be a few months before the House got into the meat of its efforts.

Congress could also tackle the DTV transition, but it will likely wait to see if the FCC acts on the transition plan formulated by the FCC Media Bureau, commonly known as the “Ferree plan” for Bureau Chief Kenneth Ferree. House Commerce Committee Chmn. Barton (R-Tex.) has been one of the most vocal proponents of establishing a hard-date deadline for DTV transition. Last year, he suggested broadcasters should be subject to the original deadline of 2006 and let Congress fund subsidies for analog TV users to buy DTV converters. There probably will continue to be pressure on Congress and the FCC to act on DTV transition, since the 9/11 Commission report cited reclamation of the analog TV spectrum as vital for public safety. Portions of the broadcast analog spectrum are reserved for public safety users to improve emergency response communications and interoperability. Members of Congress have also said they're anxious to redeploy the spectrum to foster more wireless technology.

VoIP rapidly gained attention from Congress last year and IP-enabled services will likely remain a hot topic on the Hill this year, sources said. But the issue could expand to IP-enabled video services, as both SBC and Verizon prepare to offer them. As with telephony and broadband, parity may become the issue here, as sources speculated that cable interests would want these services subject to the same local franchise fees cable must play - - or argue cable should also be exempt from them. Reps. Stearns (R-Fla.) and Boucher (D-Va.) quickly reintroduced legislation (HR-214) from last session that would exempt VoIP from local and state regulation but presumably would also exempt IP-based video service from local regulations.

Indecency and media ownership could also be issues that Congress addresses, industry sources said. House Telecom Subcommittee Chmn. Upton (R-Mich.) has said he will reintroduce legislation to raise FCC fines on indecent broadcast. And an industry source said Congress could look to expand indecency regulations to satellite and cable. However, another source said indecency legislation might need another national incident -- like last year’s Janet Jackson Super Bowl exposure -- to propel it.

Many members of Congress, including some influential Republicans, have expressed concern about the FCC’s loosening of media ownership restrictions and legislative efforts to control media consolidation could resurface, industry sources said. However, congressional action will likely hinge on whether the U.S. Supreme Court reviews the 3rd U.S. Appeals Court, Philadelphia, ruling that sent the FCC’s media ownership rules back to the Commission. The U.S. Solicitor Gen. is expected to make the decision on whether to appeal the case by Jan. 31, sources said. One industry source said the Solicitor Gen. is expected to appeal the case. Lastly, an industry source said there would likely be efforts to introduce legislation that would prevent satellite radio from offering local services.