As you read this, the final deals are being cut on radically new communications regulations. To find out what Rep. Ed Markey and other insiders are arguing about this summer, read on.
__In Washington's air-conditioned corridors and committee rooms, legislators and lobbyists are rewriting the rules for America's communications networks. For most of this century, America's wires – and the signals that travel over them, be they telephone, cable television, data, or fax – have been dominated by regulated monopolies. In September, assuming all goes according to political plan, that will begin to change. By then, just before representatives go back to their constituents to campaign for reelection, leaders of the US House and Senate, together with the Clinton administration, hope to sign legislation that will open networks to competition from top to bottom. The once omnipotent Bell logo will denote just another telephone company, and – legislators hope – a new era of network innovation will begin. In the interview that follows, Ed Markey – Democrat of Massachusetts, chair of the House Subcommittee on Telecommunications and Finance, and co-author with Jack Fields (R-Texas) of the key piece of telecoms-reform legislation known as the Markey-Fields bill – gives an overview of what he is trying to accomplish. But success in network regulation lies in the details – mind-bendingly obscure details that concern cost allocations for pieces of equipment that few people without a graduate degree in engineering have even heard of.
July promises to be the crunch month: the details will be hashed out, the final deals will be cut, and legislation will either be polished for signing or relegated to the world of might-have-been. For a quick guide to what Washington will be debating this summer, read on.
Throughout the spring, a consensus emerged about the general outlines of reform. Legislation in the House was divided into two bills: Markey-Fields and Brooks-Dingell. Markey-Fields sets broad outlines for competition in networks: It breaks open local telephone monopolies; it forces the ex-monopolists to provide competitors with access to their wires, switches, and the like, so that they can begin to compete; it allows cable-television companies to offer telephone services and lets telephone companies offer video programming; and it begins the long and sure-to-be-painful task of updating the vast regulatory structure of telecoms to reflect new competitive realities – to decide how regulators might influence networks when there aren't monopolies to order around anymore.
Brooks-Dingell, for its part, incorporates the aspects of reform that overturn parts of the "Modified Final Judgment," the court decision that, in 1982, broke AT&T's overall telecoms monopoly to create today's local monopolies and competitive markets in long-distance telephone services. Specifically, Brooks-Dingell – whose moniker refers to Jack Brooks (D-Texas) and John Dingell (D-Michigan) – allows the local telephone companies to compete in long-distance services and to manufacture telecoms equipment. It also tries to ensure that local telephone companies do not use their entrenched power to compete unfairly in markets for information services – like databases and electronic newspapers.
Congress's summer job is to consolidate the momentum behind these bills and to reconcile them with parallel legislation proposed in the Senate by South Carolina's Democratic Senator Fritz Hollings. While the Senate legislation has always agreed with that in the House on most key points, some differences have cropped up as the bill has wended its way through committees: in dispute are the roles to be played by state and federal regulators (the House bill gives the feds more power); the conditions to be placed on local telephone companies entering competitive markets; and what, if any, special provisions will be made for electric utilities seeking to use power lines to offer telephone services.
Just about every telecom and cable company can find something to like in the legislation, and something to hate. For Markey, Vice President Al Gore, and other supporters of reform, the key issue is simply time. Can they corral enough members to reach a consensus before the elections bring down the curtain on debate? Or will the Communications Act of 1994 turn out to be yet another case of Washington's all-talk, no-action approach to running the country? If you want to join the debate, try these net.sites: ftp to cpsr.org (Computer Professionals for Social Responsibility), eff.org (Electronic Frontier Foundation), or ba.com (Bell Atlantic). If you use Mosaic, check out wired.com.__
Wired: On a spectrum from "run it like the Post Office" to "get out of the way," where should government's role in telecommunications fall?
Ed Markey:
Networks are not the Post Office now and never have been. The question is: How can the modern telecommunications world maintain the best values of the old, while making room for new technological developments? The legislation I have proposed tries to maintain the three key parts of the Communications Act of 1934: diversity, localism, and universal service. At the same time we need to change America's telecommunications policy to factor in new technology and fierce global competition. The bill seeks to preserve and enhance universal service by creating a joint federal-state board to work out appropriate formulas to preserve universal-service subsidies in a newly competitive local telephone market. This does not mean preserving the income flows of local telephone companies at their current levels. But it does mean ensuring telecom service that is affordable for consumers. We also include provisions for the joint board to look at updating the base-line level of technology which customers should have.
What is the government's role in setting technological standards for universal service on these new networks?
Government sets goals and directions while private industry delivers the services. We clearly do not want to preclude rapid technological development, but neither do we want proprietary technologies to wall out new competitors. We in government have no mandate on specific technologies. But we should articulate goals on reliability, functionality, and so on.
What is the role of government in promoting competition in network markets?
Legislatively we are going to remove the obstacles that have made it impossible for real local competition to exist. We are going to require telephone companies to provide access to their networks. We are going to ensure that there is telephone number portability.
Should regulation force the separation of content providers from conduit providers in order to prevent conflicts of interest?
It's not possible to do that any longer – not since recent court decisions. In 1991, telephone companies were allowed to run information services; in 1993, similar rights were given to cable. The best protection, though, is to use common carrier requirements to ensure that telephone companies cannot discriminate against other providers of information. Then it's not such a deterrent that telephone companies are in the information market because they cannot discriminate against other voices and so force them to sell out. The reasoning is to empower the consumer and the information provider at either end of these multiple networks with the leverage to bargain for the lowest price, the best quality, and the best location.
Will networks ever become as competitive as other industries?
Yes. Think of publishing. In most communities there are a couple of newspapers that readers have access to that are in many ways equivalent to the network. A myriad of magazines and information services feed our society with information, and kiosks sell them. I think that is what is going to come to be the norm in electronic markets.
What would you hope the Communications Act of 1994 would have achieved in 60 years?
Many competitors, in a market-driven environment, providing low-priced, high-quality information services to every American, with the government playing only a minimal role in assuring that the marketplace works. And I would like to see networks open to any kid with a bright idea. Any kid with a bright idea should have an opportunity to get on the information highway and sell his or her idea without having to sell out to a monopoly.
