Last Mile?

First introduced back in 1999, the Internet Freedom bill has gained renewed momentum this year due to the elevation of Louisiana representative Billy Tauzin as chairman of the House Energy and Commerce Committee. A small-town Democrat turned Republican, Tauzin, the bill’s sponsor, is well-informed and well-connected to the Bells — he received $55,200 in campaign contributions from RBOCs in the last election cycle, and his oldest son is a state lobbyist for BellSouth in Louisiana.

These connections have sparked concern among opponents who fear good ol’ boy politics at its worst. "Representative Tauzin should be recused from regulating telecommunications because of his obvious conflicts of interest," says Bruce Kushnick, executive director of New Networks Institute, a small non-profit organization fighting against the mighty RBOCs. "He is a textbook definition of why campaign finance reform is necessary."

But it’s not just small, non-profit activists who oppose the Tauzin bill. The Competitive Broadband Coalition — a formidable group whose members include AT&T, Sprint, and WorldCom — has been vocal in accusing the bill of stifling consumer choice and "allowing the Bells to extend their monopoly to the broadband Internet access market."

In May, after a heated battle, Tauzin’s bill did pass the House Energy and Commerce committee, sending it to the full House for a vote later this summer. While most of the bill remained intact, opponents were successful in adding a few compromise amendments, including requiring the Bells to provide DSL services in 20 percent of their central offices within a year, and 100 percent in five years. All parties expect the fight surrounding the Internet Freedom and Broadband Deployment Act to get fiercer if the bill heads to the Senate.

The Cable Guys

In the meantime, while the legislational drama unfolds in Congress, the battle for broadband remains firmly between cable and DSL. (See sidebar, page 23.) Today, cable has three times as many broadband subscribers as DSL providers, RBOCs included.

Cable’s competitive advantage, as seen in context with the instability of DSL, would appear to be a rosy outlook for coaxial, but there are signs of trouble on the horizon. According to the most recent survey compiled by research firm Telecommunications Reports International, "[Cable] industry sources indicate that manufacturers are cutting back their deliveries of equipment because cable operators have sufficient supplies on their shelves for current demand." The report goes on to suggest the weak advertising market has hit cable operators like Excite@Home (on its portal side) particularly hard. AT&T, which controls @Home, has been forced to supply further financing, to the tune of $75 million.

Uncertainty seems to be the only certain factor in the future of broadband and DSL. At a recent conference, Gary Kim, president of NxGen Data Research and noted industry luminary, painted a gloomy picture for DSL. In his keynote speech, Kim predicted that two-thirds of CLECs will be gone in the next 18 months. Ironically, the saving grace for CLECs, says Kim, could be the need for higher pricing — upward to $100 per month for DSL service. Such price hikes have been resoundingly condemned by DSL consumer groups. But even with all the nightmare customer service stories and delayed installations, users will pay if there’s compelling or niche broadband content, says Kim.

But even with compelling content and widespread deployment, another important variable still affecting the mass adoption of DSL is quality of service, says Dave Burstein, editor of online news magazine DSL Prime. He notes, "I have not had a DSL provider guarantee the bit rates and quality of service that they have marketed. I’m still waiting for one to show me."

It seems as if "waiting" is what it’s all about for DSL. And for those who are feeling left out of the broadband party, Steve Ballmer included, waiting is the hardest part.