Thursday, November 16, 2006

What the Democrats' Win Means for Lafayette Tech

c|net publishes a timely story on the effect of the Democrats' capture of the House and Senate on tech-related policies. The National Journal has a similar article focusing solely on telecom matters. (See also: Buisness 2.0) As you might expect the effect is mixed--favorable for many, unfavorable for others, and dependent on which part of the tech sector you occupy for yet another set. On most telecom topics of interest to the Lafayette community this change will likely prove a good thing both in the short and long term.

Short Term: Stevens' Telecom Bill
In the short term Senator Stevens' comprehensive Telecom bill is almost certainly dead. Stevens (he of "the internet is a series of tubes") had been unable to push a bill that catered extensively to corporate interests through the Senate after it hung up on the then-majority's refusal to include net neutrality provisions. He blamed the politics of the midterm election for its demise (normally party-line Republican votes apparently didn't want to stir up net activists against them right before an election).

Stevens had defiantly promised to take it up during the lame duck session when the will of the people wasn't such a troublesome factor. With the apparent death of that bill dies the threat that a major overhaul of telecom law will be possible without some measure of net neutrality. Gone as well is the threat of a national video franchise clause that would "federalize" local state and municipal rights of way by setting extensive conditions the freedom of local governments to write contracts controling their own property. The most onerous of those conditions would have been a ban on cities requiring corporations that want to use the people's property to serve all the people--not just the most profitable faction.

Both the net neutrality issue and the video franchise power grab would have had real effects on Lafayette's fiber build.

Net neutrality is, at its root, about allowing the few large corporate owners of the current networks to use their size and control of current networks to favor their own products and those that "partner" with them over those of their competitors. Data from Cox's propietary search engine would be given "packet priority" over Google's for instance and hence would work faster. That bad for users and the outcry has been enormous on that ground alone. But by the same token it would be bad for any small local provider of network services (like LUS or EATel) whose size and lack of vertical integration makes playing similar games with its customers impossible.

The video franchise power grab would have allowed both Cox and BellSouth to only compete for the most profitable local consumers, leaving the lower margins on all those "low value" consumers to LUS. Since LUS will offer service all of its citzen-owners that would leave the small local corporation at an unfair disadvantage. (Citizens should take note: expect another go at this issue in the next state legislature. Only Blanco's veto of a state franchise bill with the same onerous build out provisions as the proposed federal law saved us last year.)

Intemediate Term: Regulatory Atmosphere and the AT&T-BellSouth merger
The regulatory bodies of the federal government wield an inordinate amount of practical power. In many areas Congress and the Courts have all but ceded practical law-making and interpretation of the law to regulatory bodies. The Federal Communications Commission (FCC) is one place where this has been especially noticeable. This is intensely political and in the absence of any countervailing Congressional oversight the pro-corporate, anti-regulatory assumptions of the Bush administration has controlled. The same laws that lead earlier regulatory bodies to successfully pursue breaking up AT&T are now interpreted to allow AT&T to gradually reconstitute itself. The bid to take over BellSouth is part of the shift.

Here's what c|net calls the "Bottom line:"

Some fear a supersize AT&T could jack up wholesale line-leasing rates it charges to smaller carriers--a cost that would ultimately be passed on to consumers.
The new AT&T will be most dangerous in the way that it reduces competition in the backbone, long haul business. Lafayette is lucky enough to lie at the intersection of an unusually rich set of fiber optic networks--extensive fiber from mulitiple providers runs down I-49, I-10, and the railroad tracking southeast to New Orleans providing multiple ways to reach the vastness of the internet. That's lucky because it will allow LUS to bargain aggressively for lower costs in a way that is not available to many communities. But even in our enviable position consolidation has meant fewer choices. The AT&T network will not be a practical choice for LUS when it buys BellSouth. Similarly but less dramatically the deal that Sprint-Nextel has entered into with the cable companies to provide cell phone services to a consortium that includes Cox likely removes it from the group of companies that are willing to bargin aggressively to win LUS's business. In the long run consolidation of the long lines means smaller companies and local communities will see less competition for their business...and, inevitably, their customers will pay higher prices for their connections than they would otherwise. Allowing the telephone companies to recombine into a few huge networks clearly has detrimental effects on competition--and frankly in any other regulatory regime before the one fostered by the current administration and its recent Congressional leadership it is doubtful that such consolidation would be allowed.

A prime complaint against the Republican Congress has been that it has not meant its constitutional obligations to provide oversight. While most who level that charge are thinking of no-bid contracts in Iraq and the gulf coast or the conduct of the Iraq occupation the concern is actually much larger. Regulatory bodies have also been allowed to go their own way without any Congressional oversight. Congressional hearings on so major a consolidation as the upcoming AT&T-BellSouth merger would have once been considered obligatory. An FCC board of commissioners that strayed very far from the law or the will of Congress found itself in very hot water. The incoming Democratic committee chairs are promising to renew Congressional oversight of the federal apparatus.

In the new atmosphere the FCC may find it wise and AT&T may find it politic to agree to net neutrality conditions on its merger that the Democratic minority on the FCC has demanded and AT&T has resisted. Too much resistance might well earn it a round of hearings that would be very uncomfortable for all concerned.

Long Term: Committee Chairmanships

Most of the longer term (2 year?) effects of the changing of the guard will be a result Democratic control of key committees. Committee chairmanships will be taken over by the former "ranking minority" members of both the House and the Senate. In addition, a number of those who lost their seats were among the strongest supporters of the corporate position on various telecom issues. (For instance the two close races whose loss gave the Democrats the senate were Sens. Conrad Burns of Montana and George Allen of Virginia. Both these men sat on Stevens' Commerce Committee and were ardent supporters of Stevens' bill.)

The new chairs have, by and large, a well-defined position and voting history on major telecom issues. They tend to be much more pro-consumer than the men they replace, a situation which aligns them more nearly with Lafayette on the issues important here.

In short, at least for the telecom and tech issues that most directly effect Lafayette, the shift in Washington doesn't look bad.

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