Two Views From the Hill

CABLE WORLD STAFF

During their time in the House of Representatives, Telecommunications Subcommittee Chairman Billy Tauzin, R-La., and ranking member Rick Boucher, D-Va., have been involved in some of the toughest decisions Congress has made regarding the cable industry. Both lawmakers teamed up to draft the program access rules and had major roles in drafting the 1996 Telecommunications Act that included those rules.

During the most recent session of Congress, Tauzin and Boucher wrestled with the Satellite Home Viewer Improvement Act and debated over testimony from America Online and Time Warner.

In these interviews with `Cable World's' David Connell the two lawmakers discuss what cable issues they expect the 107th Congress to tackle, their thoughts on the AOL Time Warner deal and the very real possibility of overhauling the Federal Communications Commission.

U.S. Rep. Billy Tauzin CW: What will be the most important issue facing the cable industry on Capitol Hill next session?

Tauzin: It's really the fallout from the AOL Time Warner merger. Of course, we really don't know yet what agreements are going to be made pursuant to the approval. Whether or not the FTC will file suit against the merger, what impact that might have on other cable systems. Whether or not, for example, there are agreements on open access, agreements on technology and non-discriminatory treatment for other programs on cable. Whether or not there are any rules or agreements on aggregation of assets. In effect, whether or not all the old regulations that exist on a regulated industry will be imposed upon cable as a result of this merger, either voluntarily or through creeping regulation. So obviously that's a big issue.

A couple of the issues for cable include protection of video content in the digital age. That's, of course, a problem for broadcasters as well as for cable. As things move into the digital era, how do you put something out on a broadband cable distribution system that, if you can copy it once, you can copy it a million times perfectly, a billion times perfectly? There are serious problems of protection for content providers that have to be addressed either through technology or some policy somewhere. Equally important in the transition to digital is gong to be the question of must carry. What will be cable's obligation as concerns the transmission of the new digital high-definition signals, for example, of broadcast networks? Will the commission decide that, or will Congress have to jump into that fray?

And finally, the whole question of competition. You know, AOL Time Warner poses that big question. Is there going to be a single provider like that, dominant in the marketplace, capable of providing all the services: IP telephony, data, Internet, broadband and television? Or are there going to be multiple providers capable of doing comparable types of services for the consumer?

Down the line, I see some other issues that might come out of that, by the way. Those have to do with the questions of packaging and exclusivities. Here's how that's framed: If you end up with a single dominant carrier of these services, then you're likely to have some sort of regulated status, some kind of common carriage provision. Because you're not going to have a dominant, monopoly provider, that's not going to be subject to some sort of government-imposed requirements. On the other hand, if we do end up with multiple systems, we could still end up with some problems that consumers would find very daunting. I think those problems are going to be primarily in the sports area. Because if one system gets exclusive rights to some sports programming and another system gets exclusive rights to some other sports programming, both of which are essential in my life, as a consumer I'm going to have to get both systems. Will I be forced to buy two packages that duplicate each other in order to get those sports? Or will there be some arrangement for me to buy a package here and buy the specific programming I want.

All those are questions we can't even begin to think about until we find out the state of competition and whether or not we're going to have a lot of different delivery systems or whether we're going to end up with only one. So, as we think about cable issues in the future, we sort of have to think in multiples. Which direction is this going to develop in? If it develops into fully capable alternative competitive platforms, then we've got this set of issues to deal with. If it develops in the AOL Time Warner model as a dominant carrier, are there going to be restrictions on it and somehow invite government more and more into regulating content, which is, frankly, something I hope we can avoid.

CW: Should open access be national policy? If so, is it up to Congress to vote on that, or should the FCC make those rules?

Tauzin: I think it's certainly a congressional decision, because it has huge policy implications. It essentially means, if you decide to go that route, you're making cable a common carrier- you're re-regulating cable as a common carrier of product. Open access implies that anyone who wants to get on it, can get on it under terms and conditions regulated by the government. So it's really a decision that's monumental in impact because it's the first major decision about whether or not the new Internet broadband distribution systems are going to be common carriage systems regulated heavily by government. If we choose not to require open access, then the decision obviously is to let these new systems escape governmental content terms, price conditions and regulation. Therefore, we have an entirely different world of Internet services.

It's a monumental question, not one, I think, to be decided by the FCC, but one to be decided by Congress. And how do we decide it? We decide it on the basis of whether or not competition exists. If competition exists in delivery systems, then we ought not regulate these systems as common carriers. In fact, we ought to think seriously about deregulating the telephone Internet systems when they are finally fully competitive. When there's no longer a fight between long-distance and local and when they're fully capable of competing against one another, and they move to high-speed broadband delivery systems, just like cable. We ought to think about a date when we can deregulate those systems from common carriage regulations. So that competition becomes the marketplace governor of the systems, and if I don't like a system, because I don't like what's in it, I choose the other one.

To answer, precisely, your question: This is a monumental decision that ought to be made by Congress, and we ought to make it on the basis of whether or not competition truly exists out there for consumers. If it does exist, well, let it work. If it doesn't exist, then we will have no choice but to come in and provide rules for carriage.

CW: Will there or should there be any action or reexamination of the program access rules during the next session? Should the "satellite-delivered" loopholes be closed? Comcast has switched some of their programming to fiber to take advantage of this.

Tauzin: Well, again, you've touched the hot button of television carriage, and that's sports. The Comcast issue has become a hot-button issue because it involves local sports and, by delivering that programming terrestrially instead of over a satellite, Comcast escapes the provisions of the 1992 act. Obviously, that has caused a lot of controversy and is probably going to be an issue Congress looks at.

We spent a lot of time in this Congress trying to make satellite systems more competitive; by that I mean more capable. We've all seen the very effective cable ads, with the parent running around with tin foil on an antenna trying to get a local signal to complement the satellite signal. We spent a lot of time trying to overcome that handicap. It was the Achilles' heel of the satellite TV industry. We not only passed local programming laws, but we're trying to finalize a bill that would even help finance it for the rural parts of America. The whole idea was to make satellite as fully capable as a cable system in at least television programming. Having done that, obviously, it would defeat the purpose of all the work we've done if systems can simply avoid the law and not sell programming to the satellite TV company by finding a new terrestrial distribution system - which, by the way, broadband is going to give you in buckets. It's an issue that's right in front of us as broadband is fully deployed.

Again, here's the situation for cable: You can't have it both ways; you can only have it one way or the other. If cable wants to avoid the 1992 act, therefore wants to be the dominant monopoly player on the planet, you're going to face regulation again - as sure as I'm sitting here, whether I like it or not, and I don't like it. If cable, on the other hand, works with us to ensure there are fully capable competitors, all of whom have access to enough programming to be real choices for consumers, not phony choices. If they work with us for that kind of a world, then I'm going to do everything I can to keep the regulators away from them. I mean, it's one or the other. Congress is not going to allow an unregulated monopoly to serve American consumers. We're either going to regulate it or continue fighting to make sure there's a competitor on the block. That's how it should be.

CW: As you said, Congress did a lot of work to get the satellite TV industry on track with local signals. Now they're suing over must carry. Did they go back on a deal they made with Congress?

Tauzin: You know, there's a lot of people talking about going back on deals. The broadcasters are playing around with going back on their deal on the spectrum we gave them, leasing it off and selling it off. The same is true with the satellite TV industry. I fought hard for them to have a chance of being a competitive industry to cable. But, the quid pro quo is that they've got to keep their word to us on carriage. They made a very definite commitment to being capable of meeting must carry requirements by date certain, and I expect them to live by that. It's not a question of a lot of wiggle room here. There were very clear commitments made.

On the other hand, when it comes to cable, we have, I hope, a clear understanding that if we're going to move everybody over to the language of computers, that cable won't become a bottleneck where digital programming and HDTV programming won't be able to get through to reach the ultimate consumer. Congress literally has made a huge investment of America's spectrum in this effort to get digital programming out there. We have to come to some agreements on how cable is going to make sure programming does, in fact, reach Americans.

We've got three different sets of commitments that everybody has to find a way to live with before this thing finally evolves. The bottom line on all this is that Congress is going to be very careful to insist people make this transition one that works, and that means keeping your commitments.

CW. Let's talk about the broadcasters' commitment for a minute. FCC Chairman William Kennard recently proposed that Congress make 2006 a "hard deadline" for the end of the digital transition, a 2003 deadline for making all television sets DTV-ready and impose a "spectrum squatter's fee" on broadcasters if they don't meet the 2006 deadline. What do you think of these suggestions? What will get the DTV transition back on track?

Tauzin: I don't know. I do know that early next year we've got to put all the players in the same room and let them all point fingers at each other until we find the real culprit. I mean, who's holding this up? We've got a cart and a horse argument here. Who has to go first? What decisions have to be made by whom to get the consumer electronics manufacturers to produce the right equipment for the broadcasters to be able to get their signals to homes in America? What's going to be the standard set-top box configuration, and who's going to have access to it? We've got questions about whether even the standards developed by the FCC are going to adequately provide a signal to Americans, particularly with translators in parts of this country. We had a demonstration of that in our committee room only to find out they had to stick an antenna out of the window to get it to work right. That wasn't very encouraging. I've heard very encouraging things since then, but I think maybe we have to get everybody in the same room.

CW: Will FCC reform be high on the agenda next year? What kind of reforms should we expect (limits on merger review power, etc.)?

Tauzin: Yes. In fact, before we leave here, Paul Gilmore, who was the chair of the task force for me, and I are probably going to file a marker bill to get the process going. He's got a draft of it in his office today, and they're working on some final changes in it. Obviously, we're not going to act on it this year, but we're filed the bill before we left so people can start thinking about what will be in a good FCC reform bill.

It ought to think about doing several things. It should reorganize the FCC so it makes sense in a modern converged and merged Internet world. All these bureaus are pretty anachronistic; they just don't make sense today.

Secondly, it ought to have a redefined mission. We ought to redefine what the FCC's role is in the competitive telecom marketplace as opposed to the old 1930s mission we gave it to regulate all these monopolies.

Third, we really ought to design it so that it always favors deregulation as opposed to minute re-regulation and "creepy-crawly regulation," like I call it.

We also have another bill we might want to merge with it, and that's the Burr-Pickering bill. That bill would give the FCC deadlines on action and prohibit it from requiring consent agreements. It would also provide reasons for denials so that people have a chance to go to court and battle with them when they think the commission is wrong.

I think we need to include that in it or have it as a separate package. I mean, AOL and Time Warner are going through it right now. The agencies are over there saying, "You're in the room, and you're not getting out of the room until you agree to what we want you to agree to." What's awful about it is they may have to agree to some things competitors may not have to abide by. That's what's so wrong about this process. It's not only anti-competitive and unfair, but it's legally unfair because it takes the right of those parties to go to court and argue that those conditions should never have been imposed. As I said, these are monumental decisions.

Suppose the FTC forces AOL Time Warner to agree to open access. Imagine if that were decided, what a huge, monumental decision that is. That says, in effect, we're going to regulate the Internet the way we regulate the phone companies. I don't know if people have thought that through yet and whether they understand that. It's total re-regulation of cable. Are people really ready for that? I'm not sure.

CW: How would you rate the FCC's progress in reviewing the AOL Time Warner merger? Do you agree with their decision to basically halt the examination?

Tauzin: I've been giving them failing grades all year. I think they're one of the agencies in this town that's totally run amok. They literally have decided on their own agenda, and they're carrying it out. I've often told my friend Mr. Kennard, "If you really want to be a legislator, why don't you go find a district and run?" They're substituting the power of the legislature.

They raise taxes now with the e-rate fund. They have a construction program going in schools, libraries and hospitals all over this country. They've become the taxing authority and the spending authority and now the new legislators in terms of regulating companies that come before them on a subjective basis. I mean, they're really, totally out of control. If there's an agency that really needs to get stripped down to its undies and examined, this is one. And we're going to do that next year.

CW: You've heard a lot of testimony on that merger recently. What do you think of the company's plans? Will it be good for competition and good for consumers?

Tauzin: Basically, I think there's an awful lot of good in the merger. I mean, it represents the 1996 act. It says what we wanted; it says that all these systems ought to eventually merge and consumers ought to have one-stop shopping opportunities like AOL Time Warner represents. It represents the final mission of the 1996 act, which was to bring these technologies and services all together, hopefully in competitive packages. AOL Time Warner represents the first, and I applaud them for that. I think it's an incredible signal of things to come.