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Debates on BITS Bill Challenge Congress to Ensure Net Neutrality, Cable-Telco Parity

By Bob Aldrich


Sometime this year, the Energy and Commerce Committee of the U.S. House of Representatives is likely to report a bill that could reshape the marketplace for Internet Protocol (IP)-based products and services. Although not yet formally introduced when this article went to press, a draft bill circulated last Fall has already sparked debate on the ultimate shape of federal regulation (or non-regulation) of the IP market. By holding hearings on a draft bill, the Commerce Committee leadership retained flexibility to test the waters and make revisions before formally submitting a bill for mark-up by the committee. While chances are good for moving the bill through the committee, getting a bill passed by both House and Senate this year is a much tougher challenge.

Committee Chairman Joe Barton (D-TX) wants Congress to set a comprehensive framework for regulation (or non-regulation) of broadband and Internet services. As released last Fall, the draft bill had four parts, known as titles. The first, Title I, establishes the framework for broadband Internet transmission services (BITS), which are essentially any packet-switched services and related facilities used to transmit the services. BITS includes but is not limited to broadband services used to access the Internet. Title II addresses voice-over-Internet-protocol (VoIP) services and related facilities. Title III addresses broadband video services (BVS), which are essentially cable TV-like services that integrate the provision of video programming with Internet access. The final part of the draft, Title IV, contains general provisions affecting all services.

The draft bill seeks to minimize regulation of broadband services and to equalize, more or less, the regulatory requirements affecting various providers of Internet access, BVS, and VoIP. The bill reflects major battles between the cable TV industry, the telephone companies, and other providers of these services to gain the advantages available to their competitors. For example, the Supreme Court recently upheld an FCC decision stating that Internet access facilities provided by cable TV operators are an information service. As a result, cable TV companies are not subject to FCC regulation as carriers when their cable facilities are used to access the Internet. As a practical matter, this meant that cable TV operators offering Internet service do not have to open their access services or last mile facilities for use by other Internet service providers.

Currently, those same Internet service providers are able to use telephone company facilities to compete with the telephone companys digital subscriber line (DSL) service. Under the FCCs September 2005 Broadband Access decision, however, the FCC reclassified and deregulated DSL service as an information service, subject to a one-year transition period. As drafted last Fall, the bill would largely institutionalize the Broadband Access decision, freeing the DSL Internet access vehicle, like cable modem service, from regulation as a common carrier service. Both would be classified as BITS and, except as provided in the new legislation, neither the FCC nor any state could regulate rates, terms, or conditions of service or entry into the BITS market.

Essentially the legislation is designed to ensure that telephone companies have the same freedom to market DSL as the cable companies already have to market Internet access through cable modem.

Similarly, in BVS, the bill attempts to equalize regulatory treatment of broadband video services that are integrated with Internet access. The idea here is to regulate other providers of BVS in a manner similar to cable TV. For example, in order to provide a BVS, a telephone company could not rely on its existing franchise to provide telephone services and simply upgrade the facilities to offer the BVS, as the telephone companies contend they are currently able to do. The draft legislation provided that a telephone company would have to go get a BVS franchise from the authorities in the same manner as a cable operator (although both cable and telephone companies would be subject to a much more streamlined franchising process than they are today).

The draft legislation also tries to provide regulatory parity between providers of VoIP services and providers of traditional telephony. All VoIP service providers would be subject to the same regulatory regime. VoIP services could be subjected to universal service funding obligations. Subscribers to VoIP services would have many of the same rights as subscribers to conventional telephone service, such as number portability. But the provision of VoIP service would be free of traditional common carrier regulation.

VoIP (define - news -alerts) service providers also would have to be able to provide 911 and E911 services and to access the E911 infrastructure in accordance with FCC requirements. In general, the E911 provisions of the draft bill track current FCC requirements. Another bill, specific to E911, however, has been introduced in the Senate and could move forward on a separate track.

Under the draft legislation, the role and authority of state and local governments to regulate broadband services would be substantially reduced. Virtually all IP-based services are declared to be in the interstate jurisdiction, where the authority of the FCC to regulate the services would be quite limited. The requirements for entry as a provider of any of the services would be made much simpler. In general, all that is required for entry to provide the services is the filing of a registration statement with the FCC and a few formalities.

The draft would have a significant impact on the enterprise market. While reducing the regulatory burden for new entrants to the market, the bill also would lighten the load for established dominant firms like the Bell companies. As a result, the draft legislation would institutionalize and perhaps extend the impact of recent FCC decisions that threaten to make it more difficult for competitive broadband service providers and manufacturers to enter or grow in the market.

A key area of concern is network neutrality. The most recent draft of the bill does mandate open access to broadband facilities. Under an exception, however, Bell companies and other providers of broadband facilities could give routing priority and other forms of enhanced quality of service to their own services, including video services. Competitors are alarmed that these exceptions could pave the way for a two-tiered Internet in which the dominant firms are able to offer premium services with built-in advantages.

In contrast to the ways whereby regulation would be reduced, requirements for broadband products and services to be accessible to people with disabilities would seemingly be made stronger than the existing requirements for circuit-switched telecommunications. Rather than requiring equipment and services to be accessible if doing so is readily achievable, they would have to be accessible unless the manufacturer or service provider demonstrates that taking such steps would result in an undue burden. Although the exact legal impact of the language is unclear, it appears to shift to the manufacturer or provider the burden of justifying why it is not cost effective to provide access.

The legislative process is still only a few steps beyond the starting point. There are different approaches under discussion in the Senate and even some more narrowly targeted bills circulating in the House. A lot will happen before legislation is adopted, and it will be a difficult challenge for Congress to actually enact legislation in this election year. All participants in the IP market, however, should remember to keep an eye on the speed and direction of the federal legislative process. IT

Bob Aldrich is a telecommunications law practitioner at Dickstein Shapiro Morin & Oshinsky, Washington, D.C. Aldrich represents the Enterprise Communications Association (ECA) and other competitive telecommunications firms and organizations. For more information, please visit the organization online at (news - alerts).

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