- The Washington Times - Friday, June 1, 2001

Rep. Steve Chabot returned to his district in Cincinnati during the current congressional recess, but he couldn't escape the television ads that have become common in the fierce debate over a bill to reshape telecommunications policy.

"I know some very powerful groups care a lot about this issue, so I'm not surprised at the number of ads, and there certainly are a lot," said Mr. Chabot, Ohio Republican.

That's because the four regional Bell phone companies on one side and cable television giant AT&T; Corp. and its allies on the other are spending huge amounts on television, radio and print ads either to promote or attack the bill.

The measure would let the Bells market Internet access before they open their local-calling markets to competition, as required by the Telecommunications Act of 1996.

"Everyone thinks broadband is the future of the telecom industry, and that underscores the significance of this bill," said Matthew Miller, spokesman for Connect USA, an arm of the Baby Bells.

Most of the key industry groups buying the ads won't disclose how much they have spent. But based on media tracking reports, groups on each side of the debate have paid more than $1 million on television ads alone, industry sources said.

"It's been an advertising battle," said Charlie Black, co-chairman of Voices For Choices, a Washington group opposing the bill sponsored by Rep. Billy Tauzin, Louisiana Republican and chairman of the House Energy and Commerce Committee, and John D. Dingell, Michigan Democrat.

Voices For Choices, a group formed last year that includes AT&T; and WorldCom, the Competitive Broadband Coalition and Consumers' Voice are responsible for the hailstorm of television, radio and print ads opposing the Tauzin-Dingell bill.

Connect USA, founded by SBC Communications Inc. in January, and Keep America Connected are behind the wave of bill-backing ads.

The ad spending hasn't approached the amount spent during the two-year battle over the Telecommunications Act of 1996, industry groups say, but the current debate is the most important legal battle for the industry since that time and would represent the most significant change in telecommunications law since then.

"It's an important investment," said John Emra, spokesman for SBC Communications Inc., a Houston-based Baby Bell.

The U.S. Telephone Association, an industry group representing the Baby Bells, has spent about $100,000 on print ads, the group said.

Keep America Connected has spent $800,000 on television and radio ads, according to the USTA, which helps fund that group.

Ads by both sides portray their opponents as trying to block efforts to introduce high-speed Internet services, commonly referred to as broadband.

The Tauzin-Dingell bill proposes to relax rules outlined in the Telecommunications Act of 1996 and let the Bells begin marketing broadband Internet access sooner than the 1996 law allows.

The stakes for both sides are high. Revenue from broadband will grow to $14.8 billion by 2005, according to Forrester Research Inc.

The Baby Bells support the bill because of their minority share of the broadband market. Of the 6.5 million households subscribing to broadband Internet service, 73 percent buy it from cable companies, according to the Precursor Group, an independent research firm in the District.

The remaining 26 percent, or 1.7 million homes, subscribe to broadband service through the high-speed digital subscriber lines that the Baby Bells market.

Competitive local exchange carriers like Herndon-based E.Spire Communications Inc. and Covad Communications Co. also market broadband over digital subscriber lines, but they oppose Tauzin-Dingell because the Bells SBC, BellSouth Corp., Verizon Communications Inc. and Qwest Communications International Inc. dominate the market for local calling service and already are in millions of homes.

Competitive local exchange carriers had 12.7 million of the estimated 192 million U.S. consumers subscribing to local telephone service at the end of 2000, according to Federal Communications Commission statistics.

The 1996 telecommunications law requires the Bells to reduce their share of the local-phone market to no more than 85 percent before they can market broadband service. They still have more than 90 percent of local-calling customers nationwide.

If the law is changed, the Bells would squash their competitors, said David Rubashkin, managing director of the Competitive Broadband Coalition, based in Chevy Chase.

Whether the ads have been effective remains to be seen. Mr. Tauzin's House Energy and Commerce Committee approved the bill, but it was heavily criticized as a "Bell protection program" during a hearing and it passed by a narrower than expected 32-23 margin May 9.

"We're trying to get a message out in as direct and unfiltered a way as possible," Connect USA spokesman Matthew Miller said.

Many of the ads have appeared inside the Beltway. But as key lawmakers return to their districts, the ads have followed them.

Connect USA is paying for television ads to appear this week in districts of members of the House Judiciary Committee, which has held a hearing on the bill and will schedule a session by June 18 to mark up the legislation. Connect USA's pro-bill ads are running in the districts of Judiciary Committee members, including Mr. Chabot, Rep. Mark Green, Wisconsin Republican, Rep. Asa Hutchinson, Arkansas Republican, and Rep. Melvin Watt, North Carolina Democrat.

The Judiciary Committee has scheduled a hearing next week to debate a competing broadband bill sponsored by Rep. John Conyers Jr., Michigan Democrat, and Rep. Christopher B. Cannon, Utah Republican.

Voices For Choices is targeting undecided members of Congress.

A similar bill introduced by Mr. Tauzin and Mr. Dingell failed to get out of the Commerce Committee last year.


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