[Congressional Record (Bound Edition), Volume 150 (2004), Part 19]
[Senate]
[Pages 25195-25198]
[From the U.S. Government Publishing Office, www.gpo.gov]




                BROADBAND AND TELECOMMUNICATIONS REFORM

  Mr. ALLEN. Mr. President, I would now like to discuss the exciting 
changes that have taken place over the last 8 years in the 
telecommunications industry, in particular with regard to broadband 
Internet technologies.
  As many of us know, the 1996 Telecommunications Act was the first 
major overhaul of the communications policy in over 60 years. Since the 
passage of that law, remarkable changes have occurred in the 
technologies used to deliver telecommunications services. Some of these 
changes may be products of the 1996 act. However, many are due to the 
tremendous explosion of new and advanced broadband technologies.
  Specifically, the Internet or digital technologies are replacing the 
slower legacy communications networks with multiple high-speed 
broadband platforms. For example, DSL, cable modems, 3G wireless, WiFi, 
ultrawide band, satellites, broadband over power lines, are all 
advanced communications networks delivering the same services and many 
more services, not just data, not just voice, but also video.
  Broadband is widely considered the future of communications because 
it enhances the consumers' experience on the Internet and will have a 
tremendous impact on our country's economy.
  By 2006, economists at the Brookings Institution estimate that 
widespread high-speed broadband Internet access would increase our 
national gross domestic product by $500 billion annually.
  The Internet and the broadband revolution are opening up a whole new 
world of opportunity that did not exist prior to the Telecommunications 
Act of 1996. By almost any measure, consumers are better off and have 
more choices now than ever before. These advancements have actually 
outpaced the laws and especially outpaced the economic regulations 
governing the communications industry because new Internet-enabled 
services do not easily fit into the stovepipe regulatory model of the 
1996 act.
  Unfortunately, the regulatory treatment of a given broadband provider 
depends on the particular platform that provider uses to offer their 
service. DSL providers are regulated entirely different from wireless 
broadband providers or cable modem service providers. All of these 
platforms deliver the same service--broadband Internet access. Yet all 
are regulated completely different from the other.
  This type of regulatory regime picks technology winners and losers, 
creating, in my view, a competitive advantage for certain technology 
platforms over others. A number of my colleagues have called to revisit 
and potentially rewrite the telecommunications law, and I commend them 
for their leadership on these issues.
  I believe any rewrite of the telecommunications law must take into 
account the transformative and positive impact broadband technologies 
have on the future of communications.
  In considering what the next Telecommunications Act should look like, 
I am guided by a few foundational principles.
  First, we should favor innovation and freedom over regulation. I call 
myself a commonsense Jeffersonian conservative. I trust free people, 
free enterprise, and free markets to allow them to innovate and create 
opportunities for all Americans to advance, compete, and succeed. 
Nowhere is this more true than with the Internet.
  Restraining from regulating the economics of Internet applications 
has served consumers well with the advances in the Internet 
technologies, such as voice-over-IP or voice-over-Internet protocols. 
Entrepreneurs are a Web site away from offering phone services better 
than those offered by traditional telephone providers.
  Virtually every consumer with broadband Internet access can now 
choose among potentially hundreds of telephone service providers. 
Internet applications are bringing new competition to old markets which 
means more innovation, lower prices, and higher quality of service for 
consumers who also can easily move to any other vendor if they get 
dissatisfied with any of those providers.
  As elected leaders, we should ensure that our policies embrace and 
encourage this type of innovation and continued advancement.
  Second principle: Support a competitive level playing field over 
fragmentation and ditches. As a former Governor of Virginia, I am an 
ardent supporter and believer in the principles of federalism. Our 
Founders, though, wisely realized, when constructing our Constitution, 
the importance of a coherent national policy regarding matters 
affecting interstate commerce.
  Certainly, one of the great attributes of the Internet is that it is 
not limited by the boundaries of States or local governments. It is 
actually not even limited by the boundaries of countries. By its 
structure and unique architecture, it is clearly, though, interstate 
commerce and, indeed, international commerce.
  I am reluctant to support policies that encourage the fragmentation 
of telecommunications regulation to State and local authorities, 
especially as communications transition to a digital format.
  Third, and last, let's make sure we keep it clear and keep it 
certain. One of my biggest concerns with the 1996 Telecommunications 
Act is that it has brought forward a tremendous amount of litigation 
and legal uncertainty. This ongoing litigation and regulatory 
uncertainty has slowed the deployment and potentially stifled the 
advancement of future high-speed broadband networks. Any revision to 
the 1996 Telecommunications Act should contain clear, simple, coherent 
legislative principles that provide legal certainty and regulatory 
clarity for business models and also for the capital investment 
decisionmakers.
  It has been the policy of the United States to promote the continued 
development and deployment of the Internet. The broadband revolution is 
bringing tomorrow's communications and

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commerce tools to more and more Americans every day. These new 
opportunities for consumers are also providing new opportunities for 
our Nation's economy in terms of job creation, productivity gains, and 
innovation.
  It is my great hope that as the Senate considers these important 
issues and potential telecommunications reform next year, we do so 
mindful that consumers are enjoying more choices, better value, and 
more personalized products in the Internet age than ever before, 
primarily due to the advances of broadband technologies.
  I ask my colleagues to stand strong for freedom, for clarity of 
purpose, and we will see more investment and more jobs. I look forward 
to working with my colleagues for these exciting advancements in the 
future. We must keep adapting, keep innovating, and keep improving for 
the competitive benefit of the American people.
  I thank the Chair, and I yield the floor.
  The PRESIDING OFFICER. The distinguished Senator from Tennessee is 
recognized.
  Mr. ALEXANDER. Mr. President, I salute the Senator from Virginia for 
his leadership on telecommunications policy. Over the last 2 years, I 
do not know any Senator in the Chamber, other than the Senator from 
Virginia, who has been more active, who has been better informed, and 
who has been more vigorous on the principles in which he believes. He 
was the leading Senator in advancing a compromise. It was his 
legislation, S. 150, which a number of us cosponsored, which the House 
has accepted, which has taken the next step in how we deal with the so-
called Internet tax moratorium.
  I was glad to have a chance to hear his remarks today as he talked 
about that and as he looks to the future, and I would like to add my 
own thoughts because during this past 2 years we have had pretty 
vigorous debate as we have made our way toward a compromise. It has 
been a debate in the best traditions of the Senate. We have had it on 
the floor. On one occasion the Senator from Virginia and I took our 
points of view to a forum off campus, so to speak, went over to the 
Heritage Foundation and had a debate. In that debate, we actually 
learned some things from each other, which shows that when Senators 
debate and speak, we find some points of common agreement. I think that 
debate itself helped lead toward the compromise we have made.
  I believe the compromise, S. 150, of which Senator Allen is the 
principle sponsor, is important. No. 1, it is temporary, not permanent. 
This is a fast-moving technology and field. As Senator Allen pointed 
out in his remarks, the 1996 Telecommunications Act in some ways is 
obsolete today because high-speed Internet access, or broadband as we 
call it, was barely even known in 1996. It is no insult to the Members 
of the Senate to say I doubt if many Senators ever heard of it in 1996, 
because most Americans had not heard of high-speed Internet access. 
Very few people were using it.
  So the legislation did not contemplate this rapidly growing new 
technology we have. That is one reason why I felt in the debate that it 
was good to have a temporary, rather than a permanent, moratorium on 
what States may do about applying their taxes to Internet access so 
that the Commerce Committee of the Congress could consider a long-range 
permanent policy.
  S. 150, which has passed this year, this compromise, as the Senator 
from Virginia said, allows States to continue collecting taxes on the 
Internet and to continue to do so for 2 to 4 years, depending on the 
type of access.
  One other important thing it does is it makes clear that State and 
local governments can continue to collect taxes on telephone services 
even if telephone calls are made over the Internet.
  Now, that is a very important development. Most observers believe 
that certainly most businesses--and maybe most all of us--will soon be 
making our telephone calls over the Internet. That is a wonderful 
opportunity and a great advance. I believe there is general consensus 
among all of us who debated this issue over the last 2 years that in 
order to make sure that happens, the Government needs as much as 
possible to get out of the way. That means a different kind of 
regulation than we now have for what we call traditional telephone 
services, the plain old telephone.
  Where I was concerned about the legislation that was going through 
the Congress was not about whether we should lighten up on regulation--
I believe we should--the question was whether from Washington, DC, we 
should tell State and local governments that they may not apply the 
same sales taxes and other use taxes to telephone calls made over the 
Internet that they apply to other telephone services. We did not change 
that with the temporary legislation we passed this year, but it is 
bound to be a big subject of discussion in the new Congress.
  Now here is why it is so important: I believe gradually we are making 
it more difficult for State and local governments to do the things we 
want them to do. The Senator from Virginia and I are both former 
Governors. We know many of the things Americans want most from their 
government, they want from their State and local government. They do 
not want decisions made up here. So one of my goals is to make sure we 
do no harm to State and local governments while at the same time we are 
trying to make sure we do no harm to this exciting new technology, 
broadband, high-speed Internet access.
  My fear was we might unwittingly in this legislation stop Texas, 
Tennessee, or Florida, for example, States that have no State income 
tax, from using their sales tax on telecommunications services. Last 
year, Texas collected $1 billion on sales tax on telecommunications 
services. Florida collected about $1 billion. Tennessee, according to 
the Department of Revenue, collected $361 million on sales taxes on 
telecommunications services.
  Now, not all of that is threatened by telephone calls over the 
Internet that might not be subject to the same taxation, but gradually, 
and it may come very rapidly--actually, we hope it comes rapidly--and 
if people move to this new technology, make their telephone calls over 
the Internet, and suddenly the Texas State budget has a $1 billion hole 
in it or a $750 million hole or a $500 million hole, what do they do 
about it? Well, they raise tuitions at the University of Texas or 
University of Tennessee, they reduce services, or they raise other 
taxes.
  So my primary reason for becoming involved in the Internet tax 
debate, so-called, was to try to make sure we did not do here what I 
never did like when I was a Governor, which was to look up to 
Washington and see Members of Congress coming up with a good idea, 
passing it, taking credit for it, and sending the bill to me when I was 
Governor. I did not like that.
  My whole point was if we are going to stop States from collecting a 
source of revenue they are now collecting, then we should pay the bill 
from Washington. In other words, that is an unfunded Federal mandate, 
in my opinion. We did not get to that problem because we reached a 
compromise for now, but that is the debate coming up in the future.
  Will we take some action in the name of making it easier for high-
speed Internet access that does real, serious harm to State and local 
governments by depriving them of billions of dollars of revenue, which 
in turn could cause the sales tax in Blunt County, TN, to go up, or the 
property tax to go up or, heaven forbid, Florida, Texas, or Tennessee 
to have to put in a new State income tax because Washington has told us 
we cannot have a sales tax on telecommunications services and we still 
like to have universities, parks, roads, and the other services States 
are supposed to provide.
  So now how do we go from where we are today, which Senator Allen has 
helped to craft a compromise we have all supported, and which is a very 
excellent piece of legislative work by him and by others, and what is 
the next step? He has offered a few suggestions

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about telecommunications in general. Let me reiterate a single 
suggestion I have about this specific issue about whether State and 
local governments will be permitted to tax telephone calls made over 
the Internet.
  I would like once more to encourage the Governors, the mayors, and 
the county executives to meet with the telecommunications industry and 
suggest to us in the Congress a way to do this. This is a highly 
technical subject. It has many moving parts. This is not the best place 
to come up with a complex reaction to a complex problem. We would like 
to see some options, or at least I would.
  The option I would like to see would have basically two parts. One 
would be lighten up the regulation on high-speed Internet access. There 
is a broad consensus about that. But do it in a way that does no harm 
to State and local governments, that does not have Senator Feinstein 
from California standing up in the back with letters from 130 cities 
and counties saying this could take away 5 to 15 percent of their local 
tax base. I do not think we need to go through that again. I think we 
need to find a way to do no harm to high-speed Internet access. Let it 
flourish. Let it grow. Let it move. And do no harm to State and local 
governments. Those are the principles.
  I understand there may be some discussions already beginning to go on 
and I want to encourage those, and I pledge I will work with Senator 
Allen and others in this Chamber and State and local governments and 
the telecommunications industry to try to get a commonsense exclusion 
so the technology can grow and so States can continue to have an 
adequate tax base to support universities, schools, and the other 
things we expect from State and local governments.
  The guidelines that I suggest for this discussion that I hope is 
being held outside the Halls of the Senate are, No. 1, separate the 
issue of taxation and regulation. Let's go ahead and figure out a way 
to lighten up regulation of high-speed Internet access. I think there 
is a broad consensus for that. Separate the issue of what do we do 
about the fact that States and local governments are depending on these 
revenues. What do we do about that? Second, I agree with the Senator 
from Virginia that our goal should be simplicity, simplicity both in 
regulation and in any rules about taxation.
  Finally, I believe that a goal should be, in addition to simplicity--
certainty. If you are in business, you want some certainty. If you are 
a State treasurer, you want some certainty. You have budgets to make 
up. So we need some certainty. We do not need a situation where 
thousands and thousands of local jurisdictions tax new 
telecommunications technology in such a confusing way that it creates 
uncertainty, litigation, and lots of paperwork and slows down the 
economy. We fail if we have that. In searching for simplicity, there is 
no need for us to create an unfunded Federal mandate that tells State 
and local governments they have to give up part of their tax base 
without reimbursing them for it.
  While we can debate it at another day, I do not believe that high-
speed Internet access needs a Federal subsidy or State subsidy. It is 
the fastest growing new technology we have seen. It is growing faster 
than the cell phone did at this stage of its development.
  We are talking about an exciting new technology. We are talking about 
real dollars. We are talking about a bipartisan disagreement and a 
bipartisan consensus that we have been able to come to this year about 
what to do, at least temporarily. For those who say the Senate is not 
capable of working in a bipartisan way, I think they are wrong because 
we have had bipartisan agreement and we have disagreement, and we have 
had some bipartisan agreement.
  I see the Senator from New Hampshire is also in the Chamber, and the 
Senator from Delaware. I have some other remarks I would like to make, 
but I imagine they both would like to say something about this same 
subject.
  My further remarks have to do with other legislation. What I would 
like to do at this stage is to yield the floor in just a minute and 
listen to what they have to say, in the hopes that we may be advancing 
toward some consensus. Now that we have a consensus about what to do 
for the next 2 to 4 years, maybe we can take some steps about advancing 
toward a consensus about the future.
  I yield the floor.
  The PRESIDING OFFICER. The distinguished Senator from New Hampshire 
is recognized.
  Mr. SUNUNU. Mr. President, I want to begin by thanking Senator 
Alexander, as well as Senators Wyden and Allen, who have worked on the 
consensus legislation that was touched on in earlier remarks, a final 
piece of the legislation necessary to ensure that we do not tax 
Internet access.
  The reason we do this, the reason we think this legislation is so 
important is, first and foremost, because these are national and global 
broadband networks. They are interstate and global in nature. I believe 
the responsibility for both determining the tax status and the 
regulatory status of these networks falls on the Federal Government. I 
do believe taxation is merely an extension of regulatory power, in that 
it has the ability to shape the playing field, to weight the 
competition among ideas or technology in one direction or another. As 
was said many years ago, when you tax something, you get less of it. If 
that is not a form of regulation, I don't know what is.
  The issue of broadband voice, of Internet protocol voice services was 
also mentioned. I do want to be clear, at least in expressing an 
opinion if not declaring it absolute fact: The Internet tax legislation 
that we passed was silent on this issue. It doesn't allow or disallow, 
per se, the taxation on Internet protocol, IP voice service, or 
broadband voice service. But what it does is protect Internet access, 
access to that broadband pipe from taxation.
  We will discuss and debate in greater detail in the coming year the 
nature of these broadband voice services--broadband access, spectrum 
regulations--as we develop telecom legislation in 2005, beginning with 
hearings and work in the Commerce Committee. I think in many ways the 
FCC has already set the direction for this process in a recent ruling 
that they made, which was to say that broadband voice services using 
the Internet protocol are interstate in nature and that they should be 
regulated on a national level for many of the reasons that Senator 
Alexander has outlined. We want clarity; we want consistency; we don't 
want it weighted toward one technology or another.
  There are lots of ways to get access to these national and global 
broadband networks. You can get them through wireless systems, DSL, 
cable. You can get them even through satellite. And there are probably 
more technologies that will come to give customers and consumers 
access. We want to be careful that we do not distort the marketplace of 
ideas, either through subsidies for one form of technology relative to 
another--which was mentioned by Senator Alexander--or regulatory 
regimes on one form of broadband network relative to another.
  It will be a challenging debate. I think Senator Alexander has been 
very helpful in this debate in bringing the perspective of a Governor. 
I think we do need to be very sensitive to the rights and the powers of 
the States. But where we have something that is interstate, national, 
or global in nature, then I think it does make sense to try to find a 
light regulatory touch, as Senator Alexander has described, but one 
that is clearly defined and that will keep the competitive playing 
field as open and vigorous as possible. If we have a strong economy, 
then I think the governments at the local level, the State level, and 
the Federal level will do fine so far as revenue collection is 
concerned.
  I look forward to participating in this debate with other members on 
the Commerce Committee and all of the Members in the Senate in order to 
make sure that we have a regulatory system that is designed for, so to 
speak, the 21st century, these new technologies, and not just take a 
regulatory system that was designed for a copper circuit switch phone 
system, invented by Alexander Graham Bell--

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don't take that regulatory system and try to force it on emerging 
technologies for the future.
  I yield the floor.
  The PRESIDING OFFICER. The distinguished Senator from Delaware is 
recognized.
  Mr. CARPER. Mr. President, while my colleagues, Senator Alexander and 
Senator Allen, are still in the Chamber, I want to express to each of 
them my own gratitude for their hard work to try to forge a compromise 
on an issue upon which some folks said we were not going to find common 
ground. But ultimately we did. They are to be commended for that.
  I see we have been joined by Senator Burns from Montana. I would say 
to him, thank you as well.
  Several people who are not here have been very much involved in this 
issue, including Senator Wyden of Oregon and a handful of other former 
Governors who serve now in the Senate--among them, Senator Voinovich of 
Ohio and Senator Bob Graham. A couple of former mayors who serve here 
as well worked on this issue, and this includes the former mayor from 
California, Senator Feinstein, and a former mayor from a little town 
called Gillette, WY, a fellow named Enzi, who have all been involved in 
this, along with Senator Byron Dorgan of North Dakota.
  We shared goals and we shared a number of the same objectives. None 
of us were interested in taxing access to the Internet. None of us 
wanted to inhibit its growth. But at the same time, none of us were 
interested in undercutting the ability of State and local governments 
to raise revenues to fund their own programs.
  As a former Governor, as a former chairman of the National Governors 
Association, as are Senators Alexander and Voinovich, I never liked it 
very much when the Federal Government would tell my State or any other 
State what to do but not to provide the revenue, the wherewithal to do 
that thing that was being ordered.
  I never liked it when the Federal Government undercut my State or any 
State's ability to raise revenues to pay for programs that we deemed 
necessary and not provide the revenues to offset that loss.
  I think in the end we have come out with a compromise that is not 
everything that those of us who are former Governors and mayors who 
worked with Senator Alexander and myself wanted, and certainly all that 
was sought by Senators Allen and Wyden. Having said that, I believe we 
have ended up in a very good place. Senator McCain is not here today, 
at least in the Chamber at this moment, and I thank him for bringing us 
to common ground on this issue.
  We have passed a compromise that I think sends a good message, that 
may have applicability to other issues. And there are a whole lot of 
issues that we have considered this year, certainly that we will be 
considering next year, where we generally share the same goals, but for 
some reason we do not--and maybe it is the lack of trust, the lack of 
interpersonal relationships to be able to work through our differences 
to get fairly close to, at the end, the goals that we share, to 
legislation that reflects the goals that we share. In this case we did 
it. And for all who have had a hand in fashioning what I think is a 
most acceptable compromise and a good ending, I just want to say well 
done.
  The Commerce Committee will now move to new leadership beginning in 
January. I presume the leader, the chairman, will be Senator Stevens, 
and the ranking Democrat will be Senator Inouye. They have as close a 
personal bond as I think any two Senators across the aisle who serve in 
the Senate. I think that bodes well as they and their committee look 
down the road to what further changes we need to make, again, to deny 
the ability to have access to the Internet, make sure we don't inhibit 
the growth of the Internet and all it can do for our economy, and 
finally making sure we are fair to State and local governments. It is 
not an easy thing to do, but in this instance I think we have done 
quite well for State and local governments, and industry hasn't fared 
too badly either.
  With that having been said, I yield the floor.
  The PRESIDING OFFICER. The Senator from Illinois is recognized.
  Mr. DURBIN. I ask unanimous consent to speak as if in morning 
business.
  The PRESIDING OFFICER. The Senator should advise that we are in 
morning business.
  Mr. DURBIN. I thank the Chair.

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