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Telecom Issues Remain a Congressional Priority

Telecommunications issues are among the top priorities for action as the first session of the 110th Congress winds down, with lawmakers pushing for an extension of an Internet tax moratorium as well as sweeping legislation to overhaul the U.S. patent system.

Telecommunications policy likely will remain a priority in the second session as well, as lawmakers eye the impact of a deadline for a transition to digital television and voice concerns over a lack of broadband access in rural communities. They also may have additional work to do on the patent bill.

Uppermost in many minds is a Feb. 17, 2009, deadline for broadcasters to transition their analog signals to digital signals. Lawmakers have expressed concern that the transition could leave consumers who use analog televisions “cut off” from broadcasts unless they know they need to buy the digital converter box. However, they also view the switch as an opportunity to open up broadband services to rural communities.

The switch to digital broadcasts, mandated under the Deficit Reduction Act (PL 109-171), will clear several channels worth of spectrum that will be auctioned off next year. A block of 60 megahertz is up for bidding in the 700 MHz spectrum auction, which is due to start in late January. Of the spectrum being auctioned, 22 MHz will be covered by the “open access” rule, adopted by the Federal Communications Commission, which forces the winner of the auction to allow access by any wireless device.

Telecommunications companies are eyeing the new spectrum for a variety of wireless broadband services. Verizon and AT&T are among the dominant players in the wireless sector that could bid for the additional spectrum.

FCC Chairman Kevin Martin has defended the rules against rural interests who have criticized aspects of the plan, arguing that the auction rules will provide opportunities for small businesses to participate and will promote broadband deployment to rural communities.

The auction’s rules require licensees in some blocks to serve at least 70 percent of the geographic area covered by their licenses, of which 35 percent must have service within the first four years. In the largest block of spectrum, licensees must serve 75 percent of the population covered by their licenses, at least 40 percent within the first four years.

“The commission has tried to ensure that these areas have the same access to broadband enjoyed elsewhere in the country,” Martin said at a hearing on the subject.

Earlier this month, a House Energy and Commerce subcommittee approved a draft bill, called the Broadband Census of America Act, that calls for the National Telecommunications and Information Administration to develop a map depicting the geographic areas that have broadband service. Under the legislation, $8 million would be granted to states and local governments annually to assist in the data collection — a move designed to determine how easily rural communications can access broadband.

Rep. Ed Markey (D-Mass.), chairman of the Subcommittee on Telecommunications and the Internet and sponsor of the draft, said the FCC’s current data collection methods — which count a single broadband subscriber in a five-digit ZIP code as indicating the entire ZIP code has broadband availability — are “inadequate and highly flawed.” Instead, his draft would require that the information be based on a nine-digit ZIP code.

Meanwhile, increased broadband availability would make even more urgent an extension of the moratorium on Internet taxes, backers of the tax ban say.

The Internet Tax Freedom Act, originally passed in 1998, is set to expire in less than a month. It established a temporary moratorium on state and local governments’ abilities to tax Internet access. It was extended through Nov. 1, 2003, and then again through Nov. 1, 2007.

Industry sources suggest that politics — not havoc from a sudden rush by states to impose new taxes — is driving the effort to renew the ban by Nov. 1. The House passed legislation that would temporarily extend the soon-to-expire Internet tax moratorium for another four years, and the Senate is expected to follow suit.

A Democratic committee aide close to negotiations in the Senate last week said “a permanent ban is not going to happen.” But while the upcoming deadline does put some heat on lawmakers to act, the reality, experts say, is that if Nov. 1 comes and goes without action, states will not be rushing to impose a new Internet tax.

Movement toward revising U.S. patent law also has occurred this Congress — the result of more than eight years of negotiations and lobbying.

In April, the House and Senate introduced identical measures that would make the broadest changes to the U.S. patent system in decades. The Patent Reform Act (H.R. 1908, S. 1145) would set up a system like those in Europe and Asia by moving to a “first-inventor-to-file” from the “first-to-invent” system under current law. It also would create a new post-grant review process and make changes to the way damages for patent infringement is calculated.

A wide variety of stakeholders, including labor and university groups, have weighed in on a debate that typically had pitted technology firms against the pharmaceutical industry. Their biggest gripes have been on the post-grant review and damage provisions, which they say could encourage infringement.

The House passed its version of the measure, making tweaks to both provisions. Still, many stakeholders are not satisfied and have been pressing the Senate to make further modifications to the language. The Senate Judiciary Committee approved the bill in July.

Majority Leader Harry Reid (D-Nev.) has stated his intention to bring the bill to the floor, and many observers expect that to happen in the coming weeks.

Jennifer Bendery contributed to this report.

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