Primer on Broadband Consumer Choice Act of 2005

Posted by Bernie - August 11, 2005 (entry 347)

S 1504

Broadband Investment and Consumer Choice Act of 2005

Sponsor: Sen. John Ensign (R-Nev.)

Purpose
The bill lists several public interest objectives:

a. restoring U.S. leadership in global communications technology by making it easier for companies to compete for markets in the U.S.,

b. broadening the range of consumer options in broadband, satellite, and mobile service, and extending service to rural areas,

c. protecting consumers from dangers that a market-driven communications industry risks by, for example, protecting access to basic telephone service and providing for enforcement of quality standards.

Measures
The bill proposes to reach these goals by:

a. eliminating “the requirement that video service providers obtain a cable franchise agreement in order to provide video service," and

b. setting “federal consumer protection standards to ensure timely and quality carrier service” and providing for “consumer access to Internet-based phone service.”

Fairness
The bill is also concerned to address a perceived unfairness to commercial providers that results from government regulation of telecommunications. A lack of “regulatory certainty” is held to be “chilling investment and stalling deployment of broadband networks.” According to the bill, the U.S. must “eliminate barriers for domestic communications providers to compete in the global marketplace.” It maintains that varying state and local regulations “will only stifle growth and impose undue costs and burdens on consumers.”

In the Absence of Service
Where “market failure” leads to local government service initiatives, the bill requires that such governments not compete “unnecessarily” with private industry. Priority must be given to commercial providers “under similar terms” as the government gets. This is intended to empower consumers to choose “the best services at the best prices.”

Section 3
This section of the bill is designed to limit the power of local governments over communications technology. It says no federal, state, or local government has the authority to:

a. regulate the rates, terms, price, or quality of any communication service,

b. require any facilities-based communications service provider to give third parties access to its facilities, or

c. regulate the terms, rates, or conditions of access provided such third parties.

It prohibits any government regulation “through franchise agreements or otherwise” of direct-to-home satellite service. And it prohibits the application of existing regulations to a mobile service, with the exception of measures to increase competition or protect public health and safety.

Section 4
This section proposes that Commissions establish quality standards and details how they are to enforce them. Penalties for violations of standards, for example, are to be paid to affected consumers.

Section 7
Section 7 tries to protect consumers against providers who restrict access to content, prohibiting such restrictions except where it is authorized by state law, the content is illegal, or the content is inconsistent with the terms of service.

Section 8
Here the bill says that fees can be imposed on a provider “for the purpose of compensating such local government for the cost that it incurs in managing the public rights-of-way used by such provider.” The bill says such a fee, passed on to consumers, can be listed as a separate item in the providers billing.

Section 8 also says “a cable operator operating under the authority of any franchise described in [previous law] prior to the date of enactment of this Act shall be treated as a video service provider, thereby releasing existing commercial providers from any obligation to provide third-parties with facilities.

Finally, Section 8 says that video service providers and local authorities will designate “not more than 4 public, educational, or governmental use channels” within a local franchise area. Although the channels are thus protected, the bill eviscerates provisions for using them.

Section 15
This is the most remarkable section. It has several parts. “Any State or local government seeking to provide communication services” must give conspicuous notice of the:

a. costs,

b. services,

c. area served,

d. terms,

e. architecture, and

f. accommodations reserved, such as below-cost rights-of-way, preferential tax treatment, funding sources unavailable to nongovernmental entities.

Having done that, all the same terms, etc., must be offered to any nongovernmental bidder. And any such bidder assumes for the purpose of bidding all the same advantages and resources the government would have.

A “neutral” third party would then consider the government and commercial bids. In the event of “identical” bids, the commercial provider must be given priority. Moreover, if the government wins, “a nongovernmental entity shall have the ability to place facilities in the same conduit, trenches, and locations as the Sate or local government for concurrent or future use under the same conditions secured by the State or local government.”

Conclusions
The bill treats government provision of telecommunication services as “functionally equivalent” to commercial provision of such services. In doing so it fails to recognize any role for elected representatives other than that of policing. The different needs of local communities, reflected in regulations designed to enhance public discussion and local production, are held to be only obstructions to U.S. “leadership in global communications technology.” In place of the various bodies of democratically elected authorities, the bill proposes a “neutral” body to compare bids, implement penalties, and receive petitions from disgruntled competitors. This would indeed achieve the objective of enhancing “regulatory certainty” for purposes of investment. But it ignores the impact that markets have on the quality of video programming. The bill’s stated objective of increasing “diversity” and choice is seriously undermined by its elimination of the role played by local government through franchise agreements.

Just as we would not leave our public roads or transportation services to private enterprise, we should not leave telecommunications to commercial providers. There is some recognition of the problem with this bill in its provisions to protect basic telephone services. Much of what we want to say or hear we will not or cannot pay for. But telephone access is not the only access that calls for protection from a market based telecommunications policy. If the quality of video programming has suffered in the hands of communications conglomerates, and if the public sphere serves a critical role in public decision-making, a role that should not be sacrificed for low rates or the latest in conveniences, then this bill must be rejected.

Cable television providers have been required by law to make facilities and channels available for public access in exchange for use of the public airwaves. Section 15 of this bill reverses this trend. Instead of securing public access before permitting commercial interests to operate, this bill would secure commercial access wherever elected officials manage to underbid them. This reversal of priorities is neither necessary nor adequately compensated for by increased investment.

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