Panic on the Hill

A Bell-generated Washington firefight cheers up telecom reporters in the time of anthrax.

In the current state of tension on Capitol Hill, it only takes one casual remark to start a panic.

No, Im not talking about anthrax, although I spent much of the morning in the newly (I hope) disinfected Rayburn House Office Building. Im talking about broadband deregulation.

The case in point is the now-famous (for a piece of telecom legislation, anyway) Tauzin-Dingell bill, the Bell-sponsored bill that would remove LATA restrictions from the RBOCs and deregulate the access ends of their new Digital Subscriber Line networks, among other Bell goodies.

Until recently, Tauzin-Dingell (named for its primary sponsors, Reps. Billy Tauzin (R-La.), the chairman of the powerful House Commerce Committee, and John Dingell (D-Mich.), the ranking member of the committee), was considered dead for the session — a victim of the new precept that no controversial bills should hit the floor to disrupt the post-Sept. 11 consensus. Now, suddenly ... ITS ALIVE.

Competitive local exchange carriers consider the bill a new threat because a recent comment by Tauzin spokesman Ken Johnson indicated that Tauzin had cut a deal to bring the bill to the House floor this session — especially if the projected adjournment date, which keeps slipping backward, doesnt occur until late in December. The CLECs, and their legislative supporters, whipped up a press conference on the Hill this morning to try to kill the resuscitated bill in its tracks, or at least to reassure the capital markets, which are iffy on CLECs right now anyway, that there is strong opposition to the bill.

The legislative full-court press was led by Reps. Chris Cannon (R-N.M.) and Anna Eshoo (D-Calif.), flanked by the heads of the major CLEC lobbying groups, H. Russell Frisby Jr. of CompTel and John Windhausen Jr. of ALTS. On hand to predict financial disaster if the bill passes were Roscoe Young, president and COO of KMC Telecom; Charlie Thomas, CEO of Net2000; and George Schmitt, chairman of eSpire.

Tauzin and Johnson, of course, being brutal inside political players, love causing just such panic in their opponents. I told Johnson the CLECs sounded genuinely scared.

"They should be," Johnson said cheerfully. "Its our expectation that Tauzin-Dingell will move to the floor in the next few weeks. We have the votes to pass it, and, frankly, by a wide margin."

True? False? Half-true? Who knows? It all depends on the strength of any commitments the House leadership has given Tauzin when it comes to moving his first pet project to the floor. Any way you look at it, however, Johnson has the best job on the Hill.

Look at it this way: The usual job of a legislative aide/spokesman is to tone down any politically risky statements made by a legislator boss. The boss says something that might rile someone, and the aide explains that, no, thats not really what he or she meant. Its a job of throwing sand onto political fires.

Tauzin and Johnson have a different relationship. Tauzin throws gasoline on the fire. Reporters run to Johnson for clarification, and Johnson throws on more gasoline. Then they sit back and toast marshmallows.

Ive analyzed this bill to death. Ive certainly written more columns on it in the last two years than any other columnist. Heres one that sums up the position Ive reluctantly reached on the subject. Id rather see DSL competition to the furthest reaches of the American backwoods, based on the 96 Telecom Act. But that act was so badly written and implemented, and the competition it created so weak, that thats not going to happen. Without major intervention by Congress in the direction of strengthening competition (such as structurally separating the Bells, which Ive supported, but aint gonna happen), the Bells are our best bet for rural DSL. We may have to give them some deregulation of their new networks to get it, although, knowing them for the tricky and often duplicitous bastards they are, we should demand universal DSL buildout in return.

Those legislators and execs at the press conference today, however, werent being alarmists about the potentially devastating effect of the bill, as now written, on the CLEC industry. Cannon told me the bill is "an abomination, which cant be made into anything but an abomination."

ALTS argues that the bill would cause 77,000 CLEC layoffs. Johnson scoffed at that argument.

"Give us a week, and we can come up with a study that shows Tauzin-Dingell will create 77,000 jobs and lower prices to consumers," he said. "Theyre picking numbers out of a hat."

I think Johnsons right in saying that the layoff numbers are unprovable. The real issue is the damage the bill would cause to CLECs trying to raise capital. So the exact language of any final bill is critical. In particular, language protecting the Bells from any oversight by state utility regulators should be stricken.

If Tauzin pulls off the not-inconsiderable trick of getting the bill to the House floor in the remaining days before adjournment, I think its unlikely to pass as written. Were more likely to see its language stricken and amendment in a much milder form put in its place, which could actually pass. In that case, the bill, packaged and advertised as a post-Sept. 11 economic-stimulus measure, might have a chance of passing the Senate in some (probably quite different) form.

I give it a 40-percent chance that some form of a Bell bill, probably more innocuous than the current Tauzin-Dingell, passes both houses. If that happens, the bills will go into a conference committee, that black box where most of the dirty work of legislating and lobbying is done. If any bills make it that far, given the Bells lobbying clout, the CLEC fears may not turn out to be imaginary.