Technology and telecommunications issues will be on Capitol Hill’s radar in the months ahead as lawmakers attempt to influence regulators at the Federal Communications Commission and frame the debate for next year’s Congress. Among the issues at the top of the agenda: subsidies for telephone service in underserved areas, "net neutrality," and online privacy.

With a lame-duck Congress and the Senate Commerce Committee still regrouping following the July indictment of its top Republican, Alaska’s Ted Stevens, it’s unlikely lawmakers will produce much legislation upon returning from summer recess. But Congress doesn’t need to pass bills to influence tech and telecom policy, said Stanford Washington Research Group analyst Paul Gallant.

A prime example is the battle over proposed "net neutrality" rules, which would prohibit broadband providers from discriminating against or favoring internet traffic flowing over their networks.

Internet giants such as Microsoft Corp. and Google Inc. have argued that net neutrality rules are needed to preserve the open, egalitarian nature of the internet and prevent broadband providers from becoming online gatekeepers. But network operators such as Verizon Communications Inc. and Comcast Corp. contend they need flexibility to manage web traffic and provide extra capacity for services that consume a lot of bandwidth.

Although Congress has not passed a net neutrality bill, nearly three years of debate helped pave the way for last month’s FCC ruling that Comcast had violated federal policy when it delayed internet traffic from a popular file-sharing site. (See "FCC: Comcast violated ‘net neutrality’ principles.") Comcast challenged the FCC’s decision last week in the U.S. District Court of Appeals in Washington, D.C.

Gallant expects to see a similar pattern on other issues in the months ahead. With little chance of legislation passing, lawmakers are likely to hold hearings and fire off letters to the FCC, he said.

Another area of focus could be the Universal Service Fund, the federal program that subsidizes telephone service in rural and low-income communities through a surcharge on long-distance bills. The fund also is the source of telecommunications discounts for schools and libraries through the federal e-Rate program.

Henry Waxman, D-Calif., chairman of the House Oversight and Government Reform Committee, in July sent letters to two dozen telecom companies, including Verizon and AT&T Inc., asking them to account for billions of dollars they receive in Universal Service money.

That inquiry comes as the FCC studies how to stabilize and reform the program, which continues to grow even as its funding base shrinks with eMail, cell phones, and internet calling plans replacing traditional landlines. Critics also insist the fund is plagued with waste, fraud, and abuse.

But Jessica Zufolo, an analyst with Medley Global Advisors, said rural carriers that depend heavily on Universal Service funding are pushing hard to educate Waxman’s committee–which typically does not wade into telecommunications issues–on the value of the program.

Meanwhile, the House Energy and Commerce Committee is probing the online advertising practices of internet service providers and web content companies, including the possible use of technology to track where users go online and mine that information to deliver personalized advertising.

The panel last month sent letters to more than 30 telecom and internet companies demanding to know whether they target online advertising based on consumers’ search queries and web surfing habits. The Senate Commerce Committee also has looked into the issue.

Although Congress is unlikely to pass online privacy legislation this year, Gallant said, it has publicized concerns surrounding online advertising practices and could ultimately move a bill next year.

Several other areas that Congress is expected to explore include:

– The possible approval of additional funding to educate consumers about the fast-approaching transition to digital broadcasting, which will take place in February and could leave consumers who still rely on free, over-the-air broadcasting with dark television screens.

– Wireless consumer protection measures to address growing complaints about early termination fees and other plan restrictions, as well as possible hearings on Verizon Wireless’s planned $5.9 billion acquisition of Alltel Corp.

– Potential antitrust concerns raised by an advertising partnership between Google and Yahoo that will allow Google to sell some of the ads displayed alongside search results on Yahoo’s web site.

In addition, the Senate Commerce Committee has scheduled a hearing next week on deceptive and fraudulent practices surrounding prepaid calling cards that are popular with immigrants, seniors, military families, and students.

Still, much of the real action in Congress on telecom and technology issues won’t come until next year.

"Like so much of what is happening in Washington in the fall of 2008, it’s all about the spring of 2009," said Stifel Nicolaus analyst Blair Levin.

Links:

Federal Communications Commission

House Oversight and Government Reform Committee

House Energy and Commerce Committee

Senate Commerce Committee

Note to readers:

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