Yesterday, ALL day, the House Energy and Commerce Committee marked up the Barton Rush telecom reform bill, which allows telcos to enter video markets by going through a national, rather than today's local, franchise process. The markup is where the committee (or subcommittee) considers member-sponsored amendments to the legislation at issue, that have not previously been included in a bill, and if the term connotates a certain messy quality, well, it sometimes feels that way. Things ran along pretty smoothly yesterday, however, given that some members on Energy and Commerce have long backgrounds in telecom legislation, and a strong Chairman in Rep. Joe Barton (R-TX).
The most contentious areas for amendment yesterday surrounded buildout requirements, and Net Neutrality, both of which triggered fairly intense debate about the future intentions and business plans announced by the telcos. On the latter issue, the discussion revolved around consumer principles versus hard and fast rules, versus something completely different altogether, with my (unrecorded) vote being that the subtext of this debate is what the debate is really all about. The bill itself passed by a wide margin, with 42-12 voting for a national franchise, with buildout rejected on a vote count of 22 ayes 33 nayes, and Net Neutrality at 22 ayes 34 nayes, which was the widest amendment margin of the day.
The bill is expected to pass the full House sometime in mid-May, which means that the action turns to the Senate. With the number of remaining legislative days left tick tick ticking away, the Senate has a number of options, including a goal line fumble of a strong House telecom bill, or, taking a slightly different view, passing a conferenceable national franchise bill coupled with Universal Service Fund (USF) reform. With a growing number of states passing their own statewide franchise reform measures, hitching the national franchise horse to the USF wagon makes a good deal of sense, and possibly increases the chances of telecom reform legislation happening this year.
But don't hold your breath. Former FCC Chairman Michael Powell once remarked that intellectually grappling with the unbundling and broadband classification rules was like playing "three dimensional chess," but I would like to observe that things have gotten a good deal more complicated in the sense that we have gotten to the point where the business models of heretofore completely separate and independent little gardens have overgrown together into one big garden. If anyone really needs an example of what might constitute a genetically modified organism, freighted with great unknowns, and hidden danger, it would have to be video games, only now this fantasy car chase is brought to you by... Cingular!
Another interesting theme for carriers to chew on is: how much money per month will the average person be willing to pay for their communications needs? Is this figure going up, likely to stay level, or going down? Every time I want to feel completely and utterly confused, I go to an electronics store, and try to divine the difference between [insert Technology A here] and [insert Technology B here], all performed against a backdrop of subwoofered or subwoofed (I think the latter sounds better) soundtracks crashing about the aisles, I get the funny feeling that this industry is a pretty big part of peoples' lives, and also constantly in transition.
Which kind of makes it hard to handicap, as it were, but easy to hinder, and with all good intentions.
"...Mr. Stearns, Mr. Stearns votes 'no;' Mr. Shimkus, Mr. Shimkus votes 'no'..."
Verizon features a pair of press releases today on its developing network management capabilities in widely disparate customer segments, or perhaps not.
The first announcement, best read in breathless tones against a quiet backdrop that carries an expectant air, yet mysteriously vague about whether it’s night or day, is that Verizon…Verizon… here, I’ll just reprint it: “Verizon Online Offers Premiere Access to SOAPNETIC, Feeding the Craving of Passionate Soap Fans” (emphasis really added). Now that’s what I call a news release.
Reading on, the service basically allows committed soap fans the ability to tailor their programming access to “themed video collections or sort(ing) the video programming based on star, show or genre” over Verizon’s DSL or FIOS services so that “soap fans are in control.” Well, of course you are, honey.
My takeaway from this, other than taking the opportunity to screw around, is that Verizon’s broadband customers will be offered niche content that may be then further customized by the user. This new content joins other repertoire offered over Verizon’s broadband network, including a sports channel, other Disney fare, news and movies. (Announcement of the deal appeared previously on Disney’s site… since it is a Disney venture, one dedicated to soap fans.)
As these deals move from simple time shifting, through devices like TiVo, the capabilities of which are now mimicked by other vendors, we see a move towards “time choosing” and customer tailoring of exclusive content, much like a web portal might allow customization of content aggregated and channeled according to user tastes and desires.
Of course, for many people, a web portal simply pushes at you those marketing arrangements they’ve inked with their business partners – perhaps featured very prominently. Perhaps even featured so very prominently that you cannot get your cursor anywhere near the icon without launching the particular application or being redirected, immediately and irretrievably, to some other site. But they’ve got only so much screen to show, and people have a tendency to fight over valuable real estate.
The second press release concerns a regional solid waste and environmental company that chose Verizon business to improve its operations, moving from frame relay to a secure IP environment, “including monitoring, management, security and remedying of any issues and will also resolve hardware and software problems.” The press release continues: “(a)s part of its fully managed Private IP solution, Casella Waste Systems benefits from Verizon Business' technical expertise in fault remediation, configuration management and industry-leading service level agreements.”
These are old news by now, having come out this morning, but my question is this: would either of these deals be prevented by adopting net neutrality rules that competitors, now and in the future, claim violate net neutrality? Whether they be defined or undefined, the rules no doubt will be well intended, but also technically obsolete before the ink is dry.
~ Senate staffer, during a break in yesterday's Barton-Rush markup hearing, reflecting on the day's debates.
During the markup of the Barton-Rush bill yesterday, the Telecom Subcommittee of the House Energy and Commerce Committee debated the pros and cons of a Network Neutrality amendment in eloquent fashion that is the custom of the subcommittee.
The amendment, sponsored by Reps. Rick Boucher (D-VA), John Dingell (D-MI), Anna Eshoo (D-CA), Jay Inslee (D-WA) and Ed Markey (D-MA), was defeated by a vote of 23-8, while the bill (creating a national franchise) itself passed by a resounding vote of 27-4, with Rep. Boucher voting for the bill even though his Net Neutrality amendment was defeated.
Since virtually everyone I spoke with following the hearing agreed that Net Neutrality is an extraordinarily interesting issue, one worthy of discussing long after the room emptied, I'd like to spend some time reviewing the back and forth debate that more or less ended with the wry comment by Rep. John Shimkus (R-Il), that while the Net Neutrality discussion indeed was important, whatever the result, the Internet was not doomed, and that members weren't debating about "changing the earth's axis..."
One thing is clear, however, that holding the markup hard on the heels of last Thursday's hearing (introducing the bill) allowed members to ground their debating points on questions asked, and responses given, or other issues illuminated in the earlier hearing.
While the level of debate on telecom issues before the subcommittee is always sharp, and watching these debates is really one of the joys of working in the regulatory arena, the atmosphere yesterday was especially fun to behold, and produced no little measure of envy from the senate staffer (loosely) quoted above: I wasn't taking notes, I overheard it in a restaurant...
My basic recitation of the discussion will no doubt serve to illustrate the valuable principle that "you had to be there," but here goes: I hope that what follows will help illustrate the rather impressive complexities behind the phrase "Network Neutrality."
Rep. Markey introduced the amendment as having parts: one, allowing prioritization of traffic for services delivered over the Internet, for one and all, free of charge; two, containing some general exceptions to the rules; and three, providing an expedited process for dealing with complaints and violations. Rep. Markey stated that allowing the bill go forward, without amendment, would radically change the free nature of the Internet, which has greatly contributed to the innovation in communications over the past decade, and that this openness must not now be left to the market, given the business plans announced by the telcos.
Rep. Markey's dire predictions were immediately countered by Rep. Charles Bass (R-NH), with his observation that what's in the content is the key, and if it is popular it will prevail, not the way it is delivered or at what speeds, essentially trusting the market to determine what wins and how. This "water seeks its own level" argument seemed directed at contentions that "garage inventors" seeking to create the next Google might somehow be unable to survive in the future where content owners have to pay for prioritization and service quality guarantees from the carriers.
Rep. Boucher noted that the amendment simply added a 5th condition to the FCC's four existing principles on Net Neutrality, whereby all Internet content is protected, and fast lane content delivery must be available to others without charge. Rep. Boucher noted that the telcos' plans for deep fiber builds preceded their public concerns over Net Neutrality, and announcements to charge content providers for priority delivery services, and he voiced his opinion that the telcos are simply pushing the envelope (while also admitting that he'd probably do the same thing under the circumstances).
In measured tones, Committee Chair Joe Barton (R-TX) acknowledged that he wasn't much of a Biblical scholar, but that the debate over Net Neutrality reminded him over debates on the meaning behind the Book of Revelations, with many different meanings, with all meanings well meant. Chairman Barton reminded the subcommittee that he'd asked for a concise definition of Net Neutrality from the first panel of seven in last Thursday's hearing, and received seven different answers. He acknowledged that the most passable definition thus far was provided his friend and ally Rep. Rick Boucher -- in the amendment -- while the most lucid definition provided at the previous hearing was provided by Amazon representative Paul Misner.
Therefore, he continued, the debate over Net Neutrality is different from the debate earlier in the markup over buildout provisions – whereas everyone kind of knew what that term meant, with Net Neutrality no one really knows what it means. Chairman Barton acknowledged that the language in his bill wasn't perfect, but that (with a managers’ amendment strengthening enforcement) it added teeth to the FCC's four principles. The FCC originally had three principles, he noted, but added the fourth principle (to competition among network providers) in order to get the vote; Rep. Boucher’s amendment would add a fifth principle on top of that.
Rep. Mike Ferguson (R-NJ) echoed this theme, calling Net Neutrality a solution in search of a problem, and specifically referred to his questioning of Amazon's Paul Misner in hearing the Thursday prior, asking for specific examples of blocking, evidence upon which the subcommittee might justify acting. Rep. Ferguson recalled Mr. Misner answering that there wasn't yet a problem, but that there might be one in the future. Rep. Ferguson noted that the one instance of blocking, where a small telco blocked a VoIP provider, was handled swiftly by the FCC and the matter was resolved.
Rep. Boucher responded to Rep. Ferguson's comments, where instead of examples where Net Neutrality has been violated, what the subcommittee has instead are announced business plans by telcos to create fast lanes and slow lanes on the Internet, and that now is the time to act, to get it right, to preserve the open structure of Internet and the platform for innovation that the Internet has become.
Continuing this theme, Rep. Markey noted that, up until August 5, 2005, the open quality of the Internet was baked into its DNA. When the FCC, however, recast DSL (wireline Internet broadband access) as an "information" service regulated under Title I of the Telecommunications Act, while declining to provide meaningful anti-discrimination principles, he said, everything changed.
Rep. Chip Pickering (R-MS) noted the bill's bi-partisan past in the first draft. With the second and third drafts, he observed, the bill went away from trying to define Network Neutrality, to instead establish clear authority for FCC to enforce Net Neutrality. The focus in turn shifted to how the FCC should do this, in a rulemaking proceeding, or by other means, such as an adjudicatory process, which Rep. Pickering endorsed for its flexibility, particularly when dealing with rapidly changing technologies and shifting markets.
He continued that this draft give the FCC clear authority to act to enforce Net Neutrality, which authority was in some doubt following the Brand X case, and that this effort should be recognized for what it is, a great first step in ensuring Net Neutrality. Rep. Pickering wondered whether this is the best time to define Net Neutrality in law, further freezing today’s technology in regulations; particularly when it's already preserved in merger agreements (AT&T and Verizon) for two years.
Twenty-two members of the subcommittee agreed with him in defeating the amendment.
If you are reading this on Friday, April 7, you may be interested in the following:
In last Thursday’s hearing on the Barton-Rush bill, Rep. Ed Markey (D-Mass) sought clarity on a certain point from Walter McCormick, head of USTelecom, the association to which the large telcos belong – with the exception of Qwest – along with many of the smaller rural ILECs.
Specifically, Rep. Markey asked Mr. McCormick whether, in view of the telcos’ push for enforceable, Net Neutrality “principles” in lieu of rules created by the FCC, in a rulemaking process, whether it was a fair turn for dilution of the FCC’s Program Access rules – which allow multi-channel video providers to file complaints with the FCC that vertically integrated cable providers are restricting access to programming by non-affiliated entities – which could include the telcos.
Below is the text of Rep. Markey’s fifth amendment to the Barton-Rush bill, reprinted in its entirety (line numbering omitted):
AMENDMENT TO H.R. ___
OFFERED BY MR. MARKEY OF
Program Access Principles
Page 19, after line 18, insert the following new subsection
(and redesignate the succeeding subsections and
references thereto accordingly):
‘‘(j) PROGRAM ACCESS PRINCIPLES.—The provisions
of section 628, reflecting nondiscrimination in the access
to video programming, and the promotion of competition
and diversity in video programming distribution, shall not
apply to a cable operator franchised under this section.
In lieu of the legally-enforceable, pro-consumer and pro-
competitive provisions of section 628, the Commission is
directed to adopt a broadly-worded, imprecise policy state-
ment of principles about the benefits of video program-
ming access by competitors. The Commission shall have
the ability to enforce such vague statement of policy prin-
ciples, but shall not be permitted to implement such prin-
ciples into more effective rules.
____________
~ FCC Chairman Kevin Martin, commenting upon today’s release of the FCC’s US broadband development report, featuring a 32.3 percent increase in the year ended June 2005, to 49.9 million total subscribers (FCC News Release).
In an editorial published in today’s Financial Times, FCC Chairman Kevin Martin summed up his regulatory philosophy on broadband: looks like a breath of fresh air to me. For those that have had a ringside seat on the tortuous telecom regulatory fights over the past several (ten) years, though, Chairman Martin’s revelation comes as no surprise, because his efforts along the way, waged at some considerable cost, have no doubt contributed to the increase, but it’s also a welcome reminder from the strained arguments of those opposing deregulation, that somehow consumers will be harmed if X doesn’t happen, or if Y does, and they’ve got just the right solution in search of whatever those problems, whatever they might be.
(For the record, the votes in favor of broadband deregulation in February 2003 in what is called the Triennial Review Order or TRO were then Chairman Michael Powell, then Commissioner Kathleen Abernathy, and then Commissioner Kevin Martin, now Chairman).
While most telecom regulatory arguments are inflexibly centered upon market power – and the “net neutrality” argument is no different, that somehow “garage entrepreneurs” which might be tomorrow’s Google or e-Bay could be harmed by their lack of financial clout to pay for carriage on the carriers' "fast lane" managed services – they seem to forget that networks want to evolve, and create new opportunities for access, which is why the application service providers claim equal rights to service customers across networks they didn't build in the first place.
There is some suspicion that application service providers are trying to secure a land grab in order to develop this new business model before somebody comes along to challenge their supremacy, having access to fast lanes or not. If anyone asks what's the point of arguing about it, I might just refer to the numbers referenced above, courtesy of the FCC, and that while things appear to be chugging along, the next generation broadband networks aren't built yet.
Guess it’s time to fire up Ask.com and see if their new search engine works better than, well, the leading brand. Jeeves, I hardly knew ye, but early reviews of your successor’s new and improved mechanics have come back extremely positive, particularly if you’ve come to view the web, like many consumers now do, as an indispensable research tool that puts you “in the know” for handling big transactions, such as purchases of cars or flat screens TVs, or any other transaction for that matter, like after-the-fact gauging the value of that knick-knack you picked up at a rural flea market last weekend.
Chances are the “aw shucks” seller already ball-parked its value pretty darn well: they speak e-Bay in the country, don’t you know? Get any more knick knacks and you may need an étagère (a “whatnot”) to display them. Guess what? These are expensive: you can find lots online, but they often feature a “sold” slapped over where the price might be expected to appear. It's all in the details.
Tonight at 5 pm, the Barton-Rush markup begins with member statements before the Subcommittee on Telecommunications and the Internet of the House Energy and Commerce Committee, with substantive amendments offered tomorrow. In other words, for those who are planning on going, get ready to do some standing, and then some more standing, followed by some standing when you’re not otherwise standing.
If you’re lucky enough to get a seat, I’m not sure you need to analyze matters any further. If you don’t make it into the room, there’s always the coffee shop and webcast over Wi-Fi and headphones on your laptop, but it just won’t feel the same: it will be a whole lot more comfortable, though.
The general consensus seems to be watch tonight online and show up tomorrow, early. Or get a line sitter.
