Commercials for the Tauzin-Dingell "Internet Freedom" bill are increasing in frequency and venom. The issue pits AT&T against the Baby Bells, and both claim the consumer will be the loser if the other side prevails. What's certain is that some provisions of the Telecom Act of 1996 are outdated, and the bill calls for some needed change.

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By Rex Moore (TMF Orangeblood)
June 27, 2001

Day One: Heard the first commercial on the radio. Basic message: The Tauzin-Dingell bill is evil -- it would allow the Baby Bells such as Qwest (NYSE: Q), Verizon (NYSE: VZ), BellSouth (Nasdaq: BLS) and SBC (NYSE: SBC) to corner the DSL market. The bill must be defeated "before the phone conglomerates do to our phones what the energy conglomerates did to electricity." I giggle at the name "Dingell."

Day Two: Heard the second commercial. Basic message: The Tauzin-Dingell bill is awesome -- it would free up restrictions currently hampering the rollout of DSL to millions of homes, especially in rural areas. (Oddly, the ad is voiced by the same guy who does the Miller High Life commercials on TV.) The announcer chides the big long-distance companies that were behind the first commercial, such as AT&T (NYSE: T), which has a hand in most cable ISPs in the U.S.: "Do we want high-speed access controlled by cable monopolies?"

Day Three: Realizing there is no way to form an opinion on this issue from those horrible (but entertaining) commercials, I decide to look at the details of this bill -- H.R 1542 (.pdf), the Internet Freedom and Broadband Deployment Act of 2001. I tell my news editor about the story. He giggles at the name "Dingell."

Day Four: After reading literature from both sides, I see the issue boils down to these elements (pay close attention if you own any of these companies or want to impress your in-laws at the July 4th picnic):

• Reps. Billy Tauzin (R-LA) and John Dingell (D-MI) believe certain restrictions imposed by the Telecommunications Act of 1996 are inhibiting the deployment of high-speed Internet access to much of the country, especially rural areas. The bill would lift these restrictions, which require the Bells to open their phone lines to competitors before providing DSL service. This would put potential DSL providers on more even footing with high-speed cable providers, which are largely unregulated.
• Opponents feel the Bells have enough of an advantage as it is. Harris Miller of the Information Technology Association of America says it's unwise to give these phone companies "access to new markets when they have not yet complied with the market opening requirements" of the Telecom Act... in effect limiting competition.

Fools on our message boards have some strong opinions. lordhep agrees with Rep. Dingell: "Who wants to invest in infrastructure when you are going to be forced to open it to your competition? Most people with a grade school education would know that, but I guess the authors of the (original Telecommunications Act) didn't."

Ted023, on the other hand, says he recently told a lobbyist for the bill that the Bells have enough of an advantage already. "'What else do you want?' He said, 'Well, we just think that we face more regulations than the cable broadband industry, and we want a level regulatory playing field.' So I asked him, 'Do cable companies require the assistance of their competitors to operate their business.' He didn't answer. So I asked him, 'Well...who are your competitors then?' He said, 'Well, there's Covad.' I almost choked on my drink." (Covad is a DSL provider trading at below $1 per share that recently faced the possibility of being delisted from the Nasdaq.)

Day Five: Choked on my Mountain Dew, but I think it was unrelated to DSL and lobbyists. At any rate, the bill has run into some stiff opposition (predictable, with such strong lobbies on both sides) and hasn't yet made it to the House floor. Supporters say they are still confident the measure will pass, but it's now up to its authors to decide how to proceed.

I agree with Rep. Dingell's basic premise:

"We want to remove outdated remnants of regulation written when we needed to safeguard and promote a different world of telecommunications. Today, those rules do little more than slow down progress."

It's a different world now than when the Telecom Act was drawn up, and high-speed data services need to be deregulated so that potential DSL providers aren't hampered by restrictions meant to enhance competition for phone services. The bill may need some changes in order to pass, but the average consumer will be better served if it does.

Rex Moore owns none of the companies mentioned in this column, and rides the information superhighway via high-speed cable. His holdings and the Fool's disclosure policy are available online, 24 hours a day, via dialup, DSL, wireless, or cable connections.

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