A classic Washington power struggle is underway about access to broadband, high-speed Internet. The battle also spreads beyond the capitol to state legislatures, local authorities that grant rights of way, and state utility commissions, with competing providers lobbying at every power center. Adding to the uncertainty of outcome, some regulatory decisions have been taken into court.

"Everybody is going to court," says Liddy Beaty, executive director of the National Association of Telecommunications Officers and Advisors (NATOA). "This is just the beginning of a long saga." The Supreme Court, where some of the issues will probably need to be resolved, has already weighed in on one issue: backing the Federal Communication Commission's (FCC) right to regulate rates for attachments of cables to existing utility poles.

Stakes for the carriers (regional Bells, competitive local telephone companies, utilities, long-distance carriers, cable companies,) are in the billions. At present, the two means of high-speed Internet access are digital subscriber line (DSL), which is regulated by the FCC, and cable modem, which is regulated currently at the state and local level.

Stakes for e-business users over the years could also be high, depending on how various services—Internet access, cable modem, and local and long distance—are treated by regulators. Another major factor is the wave of bankruptcies hitting newer telecommunications companies. The result is that purchasers will have fewer choices.

The broadband issue is mixed with deregulation of the telecom industry, which most agree has not delivered the degree of competition in local telephone service that was envisioned. The current tussle focuses on such issues as charges and permits for public rights of way, local taxes on cable revenues, and access fees to incumbent telecommunications networks.

The telecom battle has little to do with traditional party lines, but rather with powerful lobbies representing the various current and potential broadband service providers. Unfortunately buyers of telecommunications services don't have a voice in the debate, except to the degree that government agencies and Congress represent the public interest. In this case, the public interest is defined mainly in terms of bringing high-speed Internet to households, to the more sparsely populated areas of the country, and to urban areas outside central business districts where most of the fiber-optic broadband cable has been installed.

Two major fronts in the current battle over broadband bear close watching: Congress and the FCC.

In Congress the House has passed H.R. 1542, the Internet Freedom and Broadband Deployment Act and the Senate Commerce, Science and Transportation Committee is considering it. The bill's sponsors, House Energy and Commerce Committee Chairman W.J Tauzin (R-La.) and ranking minority member John Dingell (D-Mich.), say it is designed to speed up broadband deployment.

Tom Tauke, senior vice president for public policy and external affairs at Verizon Communications (the Atlantic-coast regional Bell), told Tauzin's committee that the current regulatory regime is holding up more rapid deployment of high-speed Internet access. "Cable is unregulated, while telephone companies are burdened with a set of rules that were designed for the voice business and that make no sense at all in this marketplace," he said. This disparity, Tauke noted "handicaps" deployment of DSL and discourages the substantial investment required by local telephone companies to reach more customers located further from terminals.

An opposite reading of the bill comes from Senate Commerce Committee Chairman Ernest Hollings (D-Mo.). The Tauzin-Dingell bill "is about finishing off [Bell] competitors before they can win any more market share" and "attempting to leverage [Bell's] market power as it enters new markets," Hollings says.

Jil Lyon, vice president and general counsel of the Utilities Telecommunications Council, expresses a similar view. "There are a number of (electric) utilities that offer telecommunications services and this bill would stifle competition." Organizations representing local governments also oppose the bill, saying it interferes with municipal collection of charges from companies for public rights of way. State legislatures, seeing broadband deployment as a spur to new business, are passing laws to limit fees charged cable companies and to standardize permitting procedures among local jurisdictions.

At the FCC, which historically has regulated interstate telecommunications, the provision of high-speed Internet access raises questions of what regulatory regime controls cable modem services. Although Congress has barred the FCC from regulating traditional cable services (such as television), the Commission has claimed jurisdiction over the Internet access portion of it. It has not, however, decided which regulations to apply, such as whether it should require access to cable and other high-speed systems by Internet Service Providers (ISPs).

NATOAS Beatty, who represents local telecom regulators, says the FCC ruling poses "great concern" for local governments, which can collect up to 5% of cable companies' revenues as compensation for ceding public rights of way. Contrary to some industry claims, Beaty says, "cable modem broadband has not had a deployment problem."

The Commerce Department's National Telecommunications and Information Administration (NTIA) says it is developing a broadband policy. Such a policy is overdue, yet unlikely to have much influence on Congress, which seems bent on yet another try to fix the deregulation scheme it put into effect in 1986. While the threat of cyber terror is real, Congress and the Bush administration ought to treat more urgently the unresolved telecom issues that threaten the current U.S. competitive advantage in interconnectivity.