House Commerce Committee Releases Draft of Bill to Regulate Internet Protocol Services
September 15, 2005. The House Commerce Committee (HCC) released a discussion draft [77 pages in PDF] on September 15, 2005, of a bill that is as yet unnumbered and untitled. It creates three new regulatory regimes -- for broadband internet transmission services (BITS), voice over internet protocol (VOIP) services, and broadband video services (BVS). The HCC also released a summary [7 pages in PDF] and a short release.
The FCC currently operates under a dichotomy of Title I based information services, with the associated assertion of ancillary jurisdiction, and Title II telecommunications. This draft would create three new regulatory categories, while maintaining Title II. It would provide some clarity as to which regulatory categories would apply to certain current services. It would put all broadband internet transmission services, whether provided by cable, DSL, wireless, or other platform, in the same regulatory category.
The regulatory scheme contains some elements that could be characterized as deregulatory, such as by precluding the exercise of certain powers by state and local governments. On the other hand, it also maintains, or expands, the regulatory reach of government in many other areas.
Broadband Internet Transmission Service. The draft bill defines "broadband Internet transmission service" as "a packet-switched service that is offered to the public, or to such classes of users as to be effectively available directly to the public, with or without a fee, and that, regardless of the facilities used (i) is transmitted in a packet-based protocol, including TCP/IP or a successor protocol; and (ii) provides to subscribers the capability to send and receive packetized information", and it includes "any features, functions, and capabilities, as well as any associated packetized facilities, network equipment, and electronics, used to transmit or route packetized information". However, it does not include the provision of any video programming service.
While the bill uses the term "broadband", its definition contains no reference to transmission speeds. The term "subscriber" is given a definition different from its plain meaning. It includes anyone who "consumes".
It is also notable that the definition of BITS, like the definition of VOIP services and broadband video services, includes free services. This is an expansion of regulatory power.
The bill then provides (at Section 101) two significant deregulatory provisions. First, it provides that "Except as expressly provided in this Act ... neither the Commission nor any State or political subdivision thereof may establish or enforce any law, rule, regulation, or other provision having the force of law that -- (1) regulates, or requires the approval by the Commission or such State or subdivision of, the rates, charges, terms, or conditions for, or entry into the provision of, any broadband Internet transmission service; or (2) imposes any such regulation or requirement on any BITS provider that is registered under section 102 of this Act."
The bill requires BITS providers, VOIP service providers, and broadband video service providers to register with the FCC. (See, Sections 102, 202, and 302.)
Second, it provides that "Broadband Internet transmission services are interstate services and are subject to exclusive Federal jurisdiction, except as otherwise expressly provided in this Act."
However, the bill also maintains, or creates, many regulatory powers, which would fall within the meaning of "except as otherwise expressly provided in this Act".
The bill maintains the FCC's full authority to license and regulate the use of spectrum.
The bill provides that while there is no regulation of "rates, charges, terms or conditions for, or entry into the provision of, any broadband Internet transmission service", there is a mandate to interconnect with both other BITS providers and telecommunications carriers (Section 103), and there is FCC adjudicatory authority with respect to interconnection (Section 411). FCC interconnection authority necessarily implies rate regulation. Telecommunications services are currently subject to an interconnection mandate. In contrast, the internet has grown and thrived without any interconnection mandate. This bill changes this.
The bill also extends authority to mandate disability access to BITS, VOIP, and BVS, and related equipment manufacturers (at Section 404).
The bill also contains detailed requirements and restrictions related to consumer privacy (at Section 403).
The bill provides that state and local governments can regulate public rights of way, and to demand "fair and reasonable compensation".
The bill provides that state and local government can provide BITS, VOIP services, or broadband video services, regardless of whether such services are already available.
Network Neutrality. Section 104 provides a network neutrality, or network freedom, guarantee.
It provides that "each BITS provider has the duty -- (1) to provide subscribers with access to lawful content, applications, and services provided over the Internet, and not to block, impair, or interfere with the offering of, access to, or the use of such content, applications, or services; (2) to permit subscribers to connect and use devices of their choosing in connection with BITS; and (3) not to install network features, functions, or capabilities that do not comply with the guidelines and standards established pursuant to section 106 of this Act." (Section 106 pertains to coordination for interconnectivity.)
The bill then enumerates certain practices by BITS providers that do not violate this section, such as blocking spam or providing parental controls.
There is no reference to the "needs of law enforcement", as there may be in the FCC's yet to be released Policy Statement of August 5, 2005.
VOIP Services. The bill defines VOIP services as "a packet-switched voice communications service that -- (i) is offered with or without a fee to the public, or to such classes of users as to be effectively available directly to the public, regardless of the facilities used; and (ii) enables a subscriber to send or receive voice communications in TCP/IP protocol or a successor protocol over a broadband Internet transmission service to or from any subscriber with a telephone number under the North American Numbering Plan or such other identification method as designated by the Commission".
The bill then defines "VOIP service provider" as "any person who provides or offers to provide a VOIP service, either directly or through an affiliate."
The bill contains two limitations on regulation (at Section 202). First, it provides that "Except as expressly provided in this Act ... neither the Commission nor any State or political subdivision thereof may establish or enforce any law, rule, regulation, or other provision having the force of law that -- (1) regulates, or requires the approval by the Commission or such State or subdivision of, the rates, charges, terms, or conditions for, or entry into the provision of, any VOIP service; or (2) imposes any such regulation or requirement on any VOIP service provider that is registered under section 202 of this Act."
Second, it provides that "VOIP services are interstate services and are subject to exclusive Federal jurisdiction, except as otherwise expressly provided in this Act."
But, then it provides exceptions, some of which are noted above in the summary of BITS.
In addition, exchange of traffic is required. The bill provides (at Section 203) that "Each VOIP service provider shall have the right and duty to exchange voice communications traffic with other VOIP service providers and telecommunications carriers."
In addition, "A VOIP service provider shall enter into a reciprocal compensation agreement with a telecommunications carrier with which the VOIP service provider exchanges traffic for compensation for the costs of transport and termination of voice communications traffic." Moreover, the FCC is given rule making authority, and the states and the FCC both possess dispute resolution authority.
That it, this bill puts the states and the FCC into the role of rates and terms regulators.
And in addition, the bill imposes detailed 911/E911 requirements upon VOIP providers (at Section 205). The bill also allows state and local governments to tax VOIP services in connection with imposing 911/E911 mandates.
And furthermore, the bill requires that the FCC "shall initiate an inquiry to determine if, as subscribers migrate from telecommunications services to VOIP services, the contribution base used to support universal service should be expanded to include VOIP service providers to ensure that contributions to the universal service support mechanisms are being made in an equitable and nondiscriminatory manner. The Commission shall complete such inquiry within 180 days after such date of enactment." Then, if the FCC "determines that the contribution base must be expanded", it should conclude a rule making proceeding within 180 days. (See, Section 206.)
And furthermore, the bill extends number portability requirements to VOIP services. (See, Section 207.)
Broadband Video Service. The bill defines "broadband video service" as "a two-way, interactive service that -- (A) is offered, with or without a fee, to the public or to such classes of users as to be effectively available to the public, regardless of the facilities used; (B) integrates, on a real-time and subscriber customizable basis, a video programming package with voice and data features, functions, and capabilities; and (C) integrates the capability to access Internet content of the subscriber’s choosing consistent with section 104 of this Act."
A BITS providers is then anyone that "provides or offers to provide, directly or through an affiliate, a broadband video service that is delivered directly to subscribers over facilities the service provider owns or controls."
The BVS title of the bill provides two broad limitations on regulatory authority, as with the BITS and VOIP titles. First, it provides that "Except as expressly provided in this Act ... neither the Commission nor any State or political subdivision thereof may establish or enforce any law, rule, regulation, or other provision having the force of law that -- (1) regulates, or requires the approval by the Commission or such State or subdivision of, the rates, charges, terms, or conditions for, or entry into the provision of, any broadband video service; or (2) imposes any such regulation or requirement on any broadband video service provider that is registered under section 302 of this Act."
Second, it provides that "Broadband video services are interstate services and are subject to exclusive Federal jurisdiction, except as otherwise expressly provided in this Act."
The bill creates a local franchise process for broadband video services, and allows the local franchising authorities (LFAs) to collect rents not to exceed 5 percent of a broadband video service provider's gross revenues (at Section 303).
The bill also permits the LFAs to impose capacity requirements on broadband video service providers.
More Provisions. The bill also prohibits a local exchange carrier (LEC) related BITS or BVS provider from acquiring more than 10% interest in "cable operator, BITS provider, or broadband video service provider who is owned by, operated by, controlled by, or under common control with an entity that was a cable operator". The bill also contains a similar prohibition on cable related BITS or BVS providers. (See, Section 405.)
The bill extends the CAN-SPAM Act to BITS providers and VOIP service providers
What is Not in the Bill. There are many topics not addressed by this bill.
There is nothing in the bill regarding the broadcast flag. There is nothing regarding defining intellectual property rights or remedies.
There is nothing regarding the CALEA, or mandating that BITS or VOIP providers make their facilities or services more susceptible to government surveillance.
There is nothing regarding spectrum management, or developing secondary markets for spectrum rights.
There is nothing in the bill about a DTV transition.
There is nothing regarding reforming the FCC.
Comments by Committee Leaders. Rep. Joe Barton (R-TX), the Chairman of the HCC, stated in a release that "The Telecommunications Act of 1996 spurred the development of telephone competition, but no one could have foreseen the magnitude of the challenges and opportunities that the Internet age has presented. New services shouldn't be hamstrung by old thinking and outdated regulations ... We need a fresh new approach that will encourage Internet providers to expand and improve broadband networks, spur growth in the technology sector and develop cutting-edge services for consumers."
Rep. John Dingell (D-MI), the ranking Democrat, stated in the same release that "This staff draft is a very useful starting point in the process ... I look forward to continued bipartisan efforts to resolve these tough issues, and to full and fair committee consideration."
Rep. Fred Upton (R-MI), the Chairman
of the Subcommittee on Telecommunications and the Internet, stated in a release
that "Today's release of the bipartisan staff draft of legislation to update the
country's telecom laws represents a big step forward as we seek to ensure that
our laws will allow for the growth of new Internet services. As I've said all
along -- as goes the tech sector, so goes the economy -- and I am confident
that, before year's end, the House will pass comprehensive legislation that
keeps pace with evolving technologies, spurs the economy and facilitates growth
in this critical infrastructure. Most importantly, this bill will create jobs
throughout the nation and bring consumers a variety of new services."