GOP Gains Boost for Bells?

Though unlikely to cause major upheaval in telecommunications policy, the GOP's gains in Congress could indirectly boost the Bells' degregulatory efforts.

The GOPs gains in Congress this election are likely insufficient to cause major upheavals in telecommunications policy, but the slight Republican majority in the Senate could indirectly boost the deregulatory efforts of the Regional Bell Operating Companies. Because the Bells still control the vast majority of the local telephone market six years after the passage of the landmark Telecommunications Act, opponents of deregulation say the result would reduce competition.

The most evident change in the dynamic on Capital Hill will be seen in Senate committee chairmanships, which will revert to the Republicans after a year of Democratic control resulting from Sen. Jim Jeffords party defection. For the most part, to pass any new laws the Senate will continue to have to work in a bipartisan fashion because the majority remains exceedingly thin, but Republican-driven measures now have a greater chance of at least coming to a vote.

In the realm of telecommunications, the 107th Congress (which returns for a brief lame-duck session) devoted much of its agenda to the so-called broadband deployment initiatives brought by the Bells. Although the House in February passed a bill (dubbed the "Tauzin/Dingell bill" for its sponsors from both parties) that would release the incumbent carriers from some obligations to lease portions of the local network to rivals at regulated rates, the measure was stymied in the Senate by the chairman of the commerce committee, Sen. Ernest Hollings, D-S.C.

In the 108th Congress, Sen. John McCain, R-Ariz., will re-assume the chairmanship of the committee. While McCain has not voiced a strict position either for or against the deregulatory initiative, he is also not a vociferous critic of the Bells. But even with potentially more support—or at least less antagonism—from the Senate telecom panel, the Bells are likely to face a difficult battle rallying the votes for a controversial initiative that gained notoriety for the pricey lobbying (including extensive advertising inside the Beltway) that it engendered for more than two years already.

"It never gets easier in the next Congress. It always gets harder. You develop a Sisyphus complex," said Julian Epstein, former minority chief counsel and staff director for the House Judiciary Committee. Speaking at a roundtable hosted by the Competitive Telecommunications Association in Washington on Wednesday, Epstein said many House members who voted for the Tauzin/Dingell bill did so reluctantly, and that they will be even more reluctant to vote for a similar measure in the next Congress.

"The last thing I think the White House wants to get bogged down with are a bunch of distractions," Epstein said "This [telecommunications initiative] does not fit into their agenda in any way. It divides their party, and it divides our party."

The Republican majority gives President Bush greater power to drive his agenda, but controversial telecom legislation is unlikely to emerge near the top. The White House is likely to try to keep its message simple and focus on priority issues that are achievable, said Steve Perry, CEO of The Dutko Group Inc., a lobbying firm in Washington.

Advocates of the Bell rivals (known as CLECs or competitive local exchange carriers) say they are not very worried even though they have lost a powerful ally at the helm of the Senate commerce committee. Russel Frisby, president of CompTel, said that the election outcome has not significantly changed the landscape in Congress. "You will see the same old battles and a similar dynamic as in the last session," he said, adding that the arena to watch is the FCC, which is deliberating over several proceedings that could affect CLECs ability to compete.

Unlike Hollings, McCain is not a vociferous critic of the Federal Communications Commissions own deregulatory proposals, which analysts at Legg Mason Inc.s telecom group in Washington see as providing greater leeway to FCC Chairman Michael Powell on a deregulatory agenda.