Bloomberg News

U.S. Communications Law Seen as Obsolete in Converged Age

April 25, 2012

A woman uses a laptop. Photographer: Photographer: by Justin Sullivan/Getty Images

A woman uses a laptop. Photographer: Photographer: by Justin Sullivan/Getty Images

Amazon.com Inc. (AMZN:US) volunteered to help U.S. legislators rewrite communications law to more fully account for Internet services that are disrupting markets for cable, broadcast and telephone providers.

If lawmakers take up the offer, made yesterday by Paul Misener, an Amazon vice president, during a Senate committee hearing, the online merchant would join a crowd. Broadcasters, cable operators and phone companies have an interest in whether Congress revises the law last updated in 1996.

“There are lots of voices calling for a reconsideration of the 1996 act,” Rick Boucher, who helped shape communications policy while a U.S. representative from Virginia from 1983 to last year, said in an interview. “It’s been 15 years and in that time the Internet has become the medium of choice for the delivery of information of all kinds -- voice, video and data -- and yet the law has not kept pace.”

Phone, cable and Internet interests have outlined different visions for changing communications law, with Web companies emphasizing open-Internet rules and telephone companies opposing regulation of how they provide Internet service. Cable companies have said they want to weaken broadcasters’ ability to extract payment for using TV channels.

Amazon, Microsoft Corp. (MSFT:US) and online television startup Aereo Inc., which counts IAC/Interactive Corp. (IACI:US) Chairman Barry Diller among its investors, were the focus of the Commerce Committee hearing that examined how Web-based technology is shifting TV viewing from traditional models to emerging platforms.

“You’ve got to rewrite the communications act” of 1996, Diller said. “It’s overdue given the Internet.”

Online Video Popularity

In October 2011, almost 166 million Americans watched video online, according to testimony submitted by Susan Whiting, vice chairwoman of the Nielsen (NLSN:US) media measurement company. More than 117 million Americans accessed the Internet through mobile devices, Whiting said.

“Consumers are finding and accessing their favorite content on more and more devices,” Whiting said. “Consumers are saying unequivocally, that online video will continue to play an increasingly larger role in their media choices.”

Amazon.com, which offers online movies and television programs, wants to ensure that Internet-service providers aren’t allowed to block it and other Web video platforms, Misener said. He called for “vigilance” about caps placed on data consumption by Internet service providers, saying such limits could hinder competition in the video market.

“Amazon would be happy to assist the committee in any way we can be helpful, including if the committee were to undertake a review of the 1996 act,” Misener said.

1996 Law

The 1996 law was written to encourage competition between traditional providers of services, such as having cable and phone companies offer voice service, said Boucher, who is now a Washington-based partner at Sidley Austin.

“It was silent as to the Internet,” Boucher said.

After yesterday’s hearing Senator Jay Rockefeller, the West Virginia Democrat who is chairman of the committee, told reporters that the rapidly evolving communications landscape “will require legislation.” No telecommunications update will pass this year, Rockefeller said.

“It’s not a simple business” in part because many devices and networks are involved, Rockefeller said. “It raises a lot of questions which we’re not able to legislatively answer at this point.”

‘Truly Obsolete’

Verizon Communications Inc. (VZ:US), the second-largest U.S. phone company, considers current laws outdated, Tom Tauke, an executive vice president, said in remarks delivered March 20 at a Washington conference.

“They were written before convergence, before competition and before consumers had a choice in the communications space,” Tauke said. “And so they are truly obsolete.”

Randolph May, president of the Rockville, Maryland-based Free State Foundation that promotes understanding of the free market and focuses on communications policy, has been calling for a rewrite of the telecommunications law since at least 2005.

“It takes a long time for anything to get done” in Congress, May said in an interview. “Sometimes you almost have to have a near-crisis.”

CTIA-The Wireless Association favors rewriting the statute, Steve Largent, president of the trade group, said in an interview yesterday.

“The tech industry has revolutionized telecommunications,” Largent said. “It just doesn’t take that long any more. We’ve totally eclipsed what the ‘96 act did.”

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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