Senate Commerce Committee Holds Hearing on Broadband Internet Access

(April 14, 1999) The Senate Commerce Committee held a hearing on how to facilitate the widespread deployment of broadband access to the Internet on Tuesday, April 13. AOL's Steve Case argued that cable companies should be forced to open their networks, and be subject to non-discriminatory access obligations. Several Senators rejected this regulatory approach.

Sen. John McCain (R-AZ), the Chairman of the Senate Commerce Committee, presided at the hearing. He stated that the purpose of the hearing "is to examine how to facilitate the deployment of faster, higher-speed Internet access services -- and how to ensure that these benefits are extended to all American consumers." The benefits of broadband access, McCain said in his opening statement, include "e-commerce, advanced interactive instructional capabilities, telemedicine, telecommuting, and video on demand."

Several problems were raised at the hearing. One problem is that only about 2% of American homes have broadband access to the Internet. Another is the concern that as broadband access is deployed, rural and low income areas will lag behind the rest of the country. The committee examined what might be done to accelerate widespread deployment of fast Internet access.

Several technologies exist for providing broadband access, including cable modems, telephone DSL modems, and satellite. The cable industry was represented at the hearing by James Robbins, President of Cox Communications, Inc. The Committee also heard from Sol Trujillo, President and CEO of local exchange carrier U S West, which is providing DSL Internet access.

The local exchange carriers which provide high speed digital subscriber line (DSL) service allow subscribers open access to any of the many Internet Service Providers (ISPs). In contrast, the cable companies bundle their high-speed cable modem services with their own Internet portal services. Access to other ISPs costs subscribers more.

This has ISPs, such as America Online upset. Steve Case, President of AOL, testified that Congress should mandate "open cable."

James Robbins, of cable company Cox Communications, testified that "many industries -- telephone, cable, wireless, electric utility and satellite -- are investing billions of dollars in private risk capital to deploy broadband infrastructure. Injecting the government into the way competitive high bandwidth Internet access services are provided would have an entirely predictable result -- to slow their investment and deployment."

Several Senators, including Conrad Burns (R-MT), opposed any new regulation at this time. Sen. Burns said in his opening statement that "If we impose a regulatory regime on cable operators at this early stage, it could jeopardize their access to venture capital and threaten to derail the very efforts we are trying to promote. Regulatory restraint and forbearance -- not new regulations, are the keys to fostering investment in broadband infrastructure."

Sen. Burns concluded: "Burdensome regulation is simply wrong in a marketplace characterized by aggressive competition and investment. The market not the government, should be able to take care of this issue. I want to encourage deployment of broadband and will oppose any new regulations."

Similarly, Sen. Ted Stevens (R-AK) stated that "new regulation at this time is unwarranted."

AOL previously requested that the Federal Communications Commission compel AT&T and TCI to open TCI's cable network as a condition for the approval of the AT&T - TCI merger. However, the FCC refused.

FCC Chairman William Kennard stated at a press conference on February 4, 1999 that the FCC did not want to create a disincentive for investment in broadband facilities. "We are going to continue to study it and monitor it. But at this point, because the Internet is still in its infancy, we decided it was not appropriate for us to today write rules that are going to govern how this network should be developed," he said. 

Kennard elaborated that "we certainly want investment in broadband access. That is a good thing for the country. We need these networks deployed quickly. If the government is not going to do it, somebody has got to pay for it. The FCC should not -- nobody in government should be depressing investment in broadband facilities, because consumers want this. It is good for them. It is good for the economy."

Sol Trujillo, President of U S West, stated that the current regulatory framework for the incumbent local exchange carriers is hindering the deployment of broadband Internet access. "Regulation and unequal treatment of industry players is widening the Digital Divide, redlining millions of small and medium sized businesses, rural areas, inner cities and government and educational institutions. Large businesses have reaped the benefits of hyper-competition among telecommunications providers, but the benefits of those services have stopped there."

Trujillo stated that "Congress should act to lift the regulatory restrictions that have created disincentives for telecommunications providers to deploy high-speed services more widely. These regulations have their roots in the early 80s and were designed to regulate long-distance voice calls. Now, they are applied -- inappropriately and harmfully -- to data."

He concluded that "Congress must act to deregulate data services, including the transmission of data services across LATA boundaries to achieve the goals of the Telecom Act. That will ensure that high-speed services are being widely deployed to more Americans in a timely fashion."

McCain stated that "The Commerce Committee will meet again on April 21 to develop more insight on these issues. After that hearing, I will introduce legislation that will require NTIA, in collaboration with the FCC, to analyze the facts and the issues involved in the ongoing deployment of advanced broadband data networks, especially in rural and low-income areas, and jointly report their findings to us."