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Chamber pushes upgrade to telecom law

By DONNA BORAK   |   April 22, 2005 at 11:13 AM   |   Comments

WASHINGTON, April 14 (UPI) -- The U.S. Chamber of Commerce said it plans to launch a campaign this week to modernize the nation's telecommunications legislation to increase jobs, minimize government interference and expand consumer choices.

A recent study commissioned by the chamber found market capitalization in the telecom industry dropped from $1,135 billion in March 2000 to $375 billion in July 2004 -- a 67 percent decline. The industry also lost 380,500 jobs between March 2001 and May 2004, and has continued to lose jobs in the first quarter of 2005.

Analysts argue the leading cause of the industry's depressed economic condition has been what some in the industry view as out-of-date laws such as the Telecom Act of 1996, which aimed but failed to make the telecom industry more free-market oriented.

"Congress wanted market competition, but did not trust the free market enough to tell regulators to step aside and allow markets to function on their own," said Adam Thierer, a senior fellow at The Progress & Freedom Foundation in Washington who is involved in developing telecom-reform legislative proposals.

Thierer said the reluctance to remove regulations on the industry was due to fear the sky would fall on telecom companies and consumers.

"Legislators and regulators often conjure up an endless parade of horribles that they fear would befall this market if all operating restrictions, price controls, and other regulatory 'safeguards' were removed completely," Thierer said. "Policymakers appear fixated (on) fears of potential price hikes, possible job losses, temporary service outages, or other imagined calamities."

Opponents to the current telecommunications legislation also have argued that the law, passed nearly a decade ago, has become obsolete because of technological advances such as Internet telephony and video over broadband.

"The Telecom Act is almost 10 years old, which is an eternity in the high-tech world," said Thomas Donohue, the chamber's president and chief executive. "The out-of-date laws are stifling innovation and holding back forces that could revive the industry and create a boon for our economy."

Donohue added his organization wants "minimal government interference. We don't want the government to stand in the way of innovation and investment. We want to spur competition and we want to start creating growing jobs in this sector, which have been depleting tremendously in this sector over the last several years."

The chamber has recommended several reforms to the current legislation:

--phasing out mandatory network-sharing rules,

--an end to regulated wholesale rates,

--allowing wireless providers access to the 438 megaHertz prime radio spectrum to enhance broadband-wireless services, and

--imposing the same regulations on high-speed cable modems and digital-subscriber lines.

Another suggested change would reform the universal service funds -- which help pay for telecom services in rural areas -- to pay for a larger range of services such as broadband.

Jason Goldman, director of technology policy at the chamber, explained that such reforms would return power to the companies by recognizing changes in the technology market, while also providing consumer protection.

One of the suggested reforms -- phasing out mandatory network-sharing rules -- would allow companies interested in offering a service in a local market to do so through contracts and negotiations, rather than through government-imposed pricing.

Under the current law, the three major competitors -- Verizon, SBC Communications and BellSouth -- are mandated to open up their networks to competitors, which ends up discouraging other telecom companies from either upgrading their own networks or investing in their own facilities, Goldman said.

Yet another proposed reform would impose the same regulations on the DSLs provided by phone companies that govern high-speed cable modems. Until now, the federal government has made a distinction between the two services, both of which now offer high-speed Internet.

"These rules were developed at a time when cable companies weren't competing with phone companies, and now that they are competing they should be subjected to the same rules," Goldman said.

The sponsor of the current legislation, Rep. Joe Barton, R-Texas, who is chairman of the House Energy, Commerce & Transportation Committee, attended a news briefing Tuesday in a show of support for the proposed reforms.

"There have been a number of dramatic changes in the market place," Barton's spokesman, Kevin Schweers, told United Press International. "We need to adopt new rules for this emerging technology."

Schweers said Barton aims to propose the legislation by late spring or early summer, with the goal of passing it in the House before the August recess.

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E-mail: sciencemail@upi.com

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