Congress fails to pass Net neutrality bill in 2006

Advocates will try again; broadband bill may face uphill battle

The U.S. Congress adjourned last week without passing a much-debated broadband bill or strengthening Net neutrality rules.

The wide-ranging broadband bill would have streamlined the franchising process that telecom companies such as AT&T Inc. and Verizon Communications Inc. need to go through to offer IP-based television service in competition with cable TV. But advocates of Net neutrality rules pressed Congress to hold on to the broadband bill unless it included a provision prohibiting broadband providers from blocking or slowing competing Internet content.

Congress' failure to pass the broadband bill "shows the power of the issue with Net neutrality," said Jim McGann, a spokesman for the It's Our Net Coalition, a group calling for a Net neutrality law. "Some lawmakers ignored Net neutrality at their peril."

Democrats take control of the Senate and the House of Representatives when Congress reconvenes in January, and the prospects for a wide-ranging broadband bill may be diminished. Republicans have generally pushed for the bill, while many Democrats have raised objections based on concerns about the lack of Net neutrality rules and about provisions that they said would allow the telecom providers to skip poor areas when offering new television services.

The House version of the broadband bill would have required VoIP providers to offer customers the Enhanced 911 emergency dialing service. It also would have allowed municipal governments to offer broadband data and video services. The Senate version would have permanently extended a tax moratorium on Internet-only taxes, such as access taxes.

Net neutrality advocates will continue to press Congress to pass a law protecting open access on the Internet, McGann said, although he declined to speculate on its chances in the new Congress. "We're going to, as much as we can, educate members about the issue," he said.

The broadband bill will also lose a major champion in Congress next year. Verizon, one of the large broadband providers pushing for streamlined video-franchising rules, will refocus its efforts on state legislation next year, a company spokesman said. Verizon is also watching the Federal Communications Commission, which may act on broadband regulations, said David Fish, a Verizon spokesman.

"The federal campaign raised the issue to a higher visibility," Fish said. "We've made big strides toward video choice this year and expect continued progress in 2007."

Beyond the broadband bill, some tech groups said Congress' postelection, lame-duck session produced mixed results. In its final days, Congress approved an extension of a research-and-development tax credit that allows U.S. companies to get a tax break of up to 10%  of R&D spending. The credit expired in 2005, and many tech groups called on Congress to reinstate it so that the U.S. can stay competitive with other countries offering R&D tax breaks. Congress approved an extension through the end of 2007, although some tech groups want the tax credit made permanent.

Congress also approved an expansion that could add $1 billion to $2 billion to the program, which has cost about $7 billion annually.

Tech groups applauded the extension of the R&D tax credit, as well as Congress' decision to extend permanent normal trade relations to Vietnam. The R&D tax credit action was "long overdue," said William Archey, president and CEO of AeA, a technology trade group.

But groups representing large technology vendors complained that Congress failed to increase the 65,000-person limit for H-1B visas, the program used to hire highly skilled foreign workers. Congress also failed to make changes to the U.S. patent system, although many large technology companies want improvements in the quality of patents and a weaker patent-enforcement system.

By failing to act on H-1Bs, patents and a fiscal 2007 budget, Congress "ultimately failed to make the grade,” Phil Bond, president and CEO of the Information Technology Association of America, said in a statement.

Tech worker groups have opposed expansion of the H-1B cap, saying that many U.S. IT workers remain out of work. Small inventors have opposed many changes to the patent system, including a proposal to make it tougher for investors to get court injunctions against accused patent infringers.

Copyright © 2006 IDG Communications, Inc.

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