- The Washington Times - Thursday, April 26, 2001

Critics of a bill intended to speed up the rollout of high-speed Internet service to consumers said the legislation would let the Baby Bells establish a monopoly similar to the one Congress broke up in 1984.

The House Energy and Commerce Committee yesterday debated a bill that would ease restrictions on the regional Bell operating companies by letting them sell Internet access before opening networks to competitors that want to market local-calling service.

But a raft of lawmakers criticized the bill introduced Tuesday by Rep. Billy Tauzin, Louisiana Republican and chairman of the energy and commerce panel.

"It's a Bell protection program, plain and simple," said Rep. Edward J. Markey, Massachusetts Democrat.

Rep. Charles W. "Chip" Pickering Jr., Mississippi Republican, called the bill a "sham."

The Baby Bells BellSouth, Verizon Communications Inc., Qwest Communications International Inc. and SBC Communications Inc. support the measure.

Mr. Tauzin argued the Baby Bells suffer from a regulatory burden that other companies marketing high-speed Internet service, or broadband, do not.

"Broadband is a nascent market that does not need regulation," Mr. Tauzin said.

Mr. Tauzin and co-sponsor John D. Dingell, Michigan Democrat, said the bill would lower prices to consumers and increase broadband choices by encouraging phone companies to offer more high-speed Internet access over their digital subscriber lines. Phone companies can offer the service now, but not without fulfilling an obligation mandated in the 1996 Telecommunications Act to open local service to competition first.

Cable companies, which market broadband services over cable modems, currently have more than half the market for broadband service. About 5.1 million U.S. consumers subscribe to broadband service, according to Cahner's In-Stat Group, a technology research firm in Scottsdale, Ariz.

While 3.1 million of those have signed up for broadband service from cable companies, the remaining 2 million have signed up through phone companies marketing the service via digital subscriber lines. About 48 million households or 47 percent of all households subscribe to slower dial-up service.

Cable and phone companies are fighting over access to a growing market for broadband service. Consumers worldwide spent $59.7 billion for high-speed access in 1999, according to Cahner's. That is expected to grow to $464.5 billion by 2004.

Mr. Tauzin said fears that the proposed legislation will let the phone companies dominate the market for high-speed service are unfounded because statistics show cable companies have more broadband subscribers than the Bells.

But critics said the bill would annihilate the struggling competitive local exchange carriers like E.Spire Communications Inc., of Herndon.

The competitive local exchange carriers had just 12.7 million of the approximately 192 million U.S. consumers subscribing to local telephone service at the end of 2000, according to the Federal Communications Commission. That was up from the 8.3 million local calling customers the CLECs had in 1999.

"By permitting Bell companies to enter the high-speed-data market without first opening their local [calling] markets, this bill would substantially reduce the likelihood that this dominance will end," James W. Cicconi, AT&T; Corp. general counsel, testified.

In addition to losing subscribers as they are frozen out of the market for local-calling services, the competitive local-exchange carriers would be ignored by investors, James H. Henry, managing general partner at venture capital firm Greenfield Hill Capital, told lawmakers.

"The proposed bill is illustrative of the kind of legislative uncertainty that will cause investors to move to the sidelines and withhold capital from the emerging local competitors," he said.

The bill introduced this week by Mr. Tauzin and Mr. Dingell failed to reach the House floor last year.

Mr. Tauzin said he has scheduled a markup of the legislation to be held today.

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