Contentious broadband bill dies in Senate

Legislation aimed at easing state regulation on high-speed Internet services in Missouri has failed to get out of a Senate committee.

"Broadband is dead for the year," said a disappointed Missouri Rep. Mark Wright (R-Springfield).

House Bill 142, which Wright co-sponsored, would have removed Missouri Public Service Commission powers over Internet broadband deployment throughout the state, instead placing greater significance on Federal Communications Commission orders.

After receiving overwhelming approval in the House, a joint bill never made it out of the Senate Commerce and Environment Committee, twice deadlocking 5-5. The bill was defeated April 29.

SBC Communications officials, who have been lobbying for the bill since day one in session, consider the defeat a setback in Internet service expansion throughout the state. SBC lobbyists have claimed passage of the bill would make broadband available to more of Missouri's rural areas.

"The goal of the bill was to provide certainty in the state as to what the regulatory climate was like so we could go out and make additional investment," said SBC Missouri President Cynthia Brinkley.

However, rival companies called the bill anticompetitive and feared it would deregulate SBC's network facilities, which it is obligated by the state to share with competitors per the Telecommunications Act of 1996. SBC leases space on its networks based on state-regulated rates.

Show Me Competition, a Jefferson City-based watchdog group for Missouri's telecommunications industry, formed a coalition of 43 rivals including AT&T, MCI Worldcom and NuVox Communications that opposed the broadband bill. Group members consider the bill's defeat a victory.

"The bill would have changed the rules of the game, such that SBC could have squeezed smaller competitors out if the broadband market," said Ed Cadieux, NuVox Communications vice president of regulatory affairs.

By stripping the PSC's authority, he said, competitors' lease rates would have been unregulated. "I think all the competitors fully expected if that had occurred, SBC would have both the incentive and the ability to raise those rates substantially to basically price us out of business," Cadieux said.

According to Wright, SBC officials "bent over backwards" so as not to kick rivals off the SBC telephone network but access would have been pricier.

"They would have had to pay slightly higher rates to access the service," Wright said.

Wright sees broadband expansion as an economic development tool that's why he supported the bill. SBC also is a large employer in Springfield's 137th District.

"I think the bill would have expanded high-speed Internet in a lot of these rural areas that can't get it because nobody is willing to make that big investment," Wright said.

"SBC is really the only high-speed Internet provider who is willing to spend a lot of money and implement this system in rural areas statewide."

SBC has the ability to provide DSL service to more than 50 percent of Missouri residents, Brinkley said, and intends to eventually double the number of communities with access. SBC has invested $6 billion nationwide for broadband network deployment, largely in metropolitan areas, Brinkley said.

The legislators' decision delays broadband build-out in rural areas, Brinkley said.

She said SBC needed set criteria before going forward with future network investments in Missouri.

"We don't know what the future holds (in Missouri), and when you make that kind of commitment with the kind of dollars that we would invest, you kind of need to know what your environment is like," she said.

Recent legislation in Oklahoma determined the state could not impose additional restrictions beyond those at the federal level.

Following passage of the bill, the company announced plans to bring DSL to 37 smaller Oklahoma communities and extend the reach of DSL in 25 communities.

"That gave us the certainty we need that the state wouldn't in fact step in and try to force us to share that competitive network with our rivals," Brinkley said. "That's all we were seeking in Missouri. We're disappointed, certainly."

Other states, including Kansas and Indiana, have turned down similar SBC requests.

The industry now awaits an FCC order addressing broadband regulation. The FCC ruled Feb. 20 that phone companies should not be required to share new high-speed data lines with competitors, but that state governing bodies have the final authority. The order, which will specify the guidelines, is expected later this year.