BOB GARFIELD: For months, lawmakers in the Commerce Committee have been laboring over an update to the 1996 Telecommunications Act, but in recent weeks, the intended overhaul seems to have shriveled into a minor revision, as such issues as network neutrality and video franchising – which we'll get into in a minute – slide on and off the table. Now, committee members are weighing the power of the baby bells – not quite babies any more – against the power of public pressure. David Hatch, a reporter for Congress Daily, has been watching this play out on Capitol Hill.



DAVID HATCH: Well, there's a lot of interesting politicking and horse-trading going on. The House Commerce Committee, which is headed by Representative Joe Barton, a Republican of Texas, has been negotiating for several months on this legislation. Network neutrality is said to still be on the table and, in particular, in the wake of the announcement that AT&T plans to merge with Bell South, the ante has been upped here and there's a lot more attention on the issue. And there are other issues that are also at play, including the issue of video franchising. And that has to do with the Bell companies seeking regulatory relief so that they can enter the video programming marketplace.

BOB GARFIELD: Well, let's start with that one, because I can actually see both sides of the argument.

DAVID HATCH: Sure. Basically, the Bell companies are saying we have an opportunity to help lower prices but we need the help of the government. They want to be put under either a nationwide franchise that would be uniform throughout the country or perhaps statewide franchises. The phone companies would still pay the fees and the money would still go to localities, but the phone companies would not have to negotiate with potentially thousands of local governments in order to be able to bring their video programming to different communities. And the cable industry has been balking, basically saying, “look, there should be a level playing field. We had to secure local franchises throughout the country. The Bells should have to get them too.”

BOB GARFIELD: Now, the phone companies are not passive witnesses to what's going on. They have been a very active lobby in Congress and have paid big money over the years to the very principals – notably, Joe Barton and the Democrat John Dingell, who are the architects of this legislation. What effect has all that money had on the way this law is being drafted?

DAVID HATCH: Well, there's no question that the Bells bring tremendous lobbying muscle to the table here. It should be noted that John Dingell, the ranking Democrat on the Committee, historically has been known as somebody who has fairly close ties to the Bells. Both he and Mr. Barton have received a lot of money from the Bells over the years. And, as a matter of fact, it was a top lobbyist with Verizon, Tom Tauke, who started talking several weeks ago about a streamlined video franchising bill, and lo and behold, we started hearing that that was a direction that the committee was moving in. But again, I think in the wake of this merger there's a lot more emphasis on network neutrality. There's a lot more attention on it, and there's a feeling out there that the House Commerce Committee might be a little hesitant to be the ones who leave that completely out of legislation, that they don't want to be blamed for very substantive changes to the Internet that might result.

BROOKE GLADSTONE: Well, let's talk about that merger for a moment, because those of us of a certain age remember when, before the court-ordered 1984 breakup of AT&T, it was Ma Bell. You know, it was the quintessence of the gigantic institution over which the poor customer had no [LAUGHS] leverage. Will this merger, which appears to be headed for approval, will that put political pressure on the phone companies that could hurt them in the outcome of whatever legislation gets drafted?

DAVID HATCH: I think it could. I think now there's a lot more at stake. There would only be three Bell companies that would be left if this merger goes through. Of course, the Bells would paint a very different picture. They would argue that they're facing all sort of new competitors that did not exist years ago with the emergence of cell phones and Internet telephony and even free Internet-based telephone services, such as Skype, cutting into their market share. So they're really looking to broaden their businesses.

BOB GARFIELD: On the subject of competition, there is one potential competitor out there for all broadband providers, and that is actual municipal governments, notably Philadelphia, which has floated the idea, at least, of bringing broadband at very low cost to everyone within the city limits. There was talk at one point of that kind of issue being addressed in the Telecommunications Bill. Is it going to be?

DAVID HATCH: It's definitely an issue that's being addressed by Congress. There are several bills that have been introduced. There are some measures that would restrict the ability of municipalities to offer broadband service. There are other bills that would ensure that no restrictions are placed on municipalities. It doesn't look like that issue is going to be part of the House Commerce legislation that's being considered at the moment. The sense is that if there's going to be legislation this year on telecom and media issues, it's probably going to focus on video franchising. It may include network neutrality. I'm not sure if they're going to get to municipal broadband this year.

BOB GARFIELD: All right, David. Well, thank you very much.

DAVID HATCH: Thank you.

BOB GARFIELD: David Hatch is a reporter for several national journal publications, including Congress Daily.