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D.C. paving info-highway offramp

Get ready for one of the bloodiest street fights to hit Congress in years.

No, not health-care reform. An equally brutal battle is shaping up over the “information superhighway,” the most-hyped story to hit telecommunications since Alexander Graham Bell dialed up Dr. Watson.

From Vice President Al Gore to Commerce Secretary Ron Brown to key leaders in both the House and Senate, top dogs in D.C. have left the impression that passage of major infopike legislation is merely a formality. Privately, however, a growing number of contrarian Capitol Hill watchers predict Congress will fail in its bid to pass the three pieces of legislation needed to spur creation of the infopike.

“Even though the stars and moon may be aligned for this to happen, I would say chances are at best 50-50 for passage,” says a top entertainment industry representative. “It’s awfully easy to kill something in this town. The more sweeping the proposal, the easier it is to kill.” Passage of legislation will be made difficult simply by the sheer complexity of a proposal that constitutes the most ambitious revision to telecommunications law in 60 years.

D.C. insiders say the most daunting hurdle, however, may be Congress’ ability to placate some of the country’s wealthiest industries, most of which are clamoring for an amendment here or a proviso there that ensures continuation of cozy monopolies. “I can’t remember when Congress was considering legislation where virtually every part of the communications industry was fighting for something,” says one lobbyist.

Already, deep-pocketed long-distance phone companies are engaged in a nasty war of words with the equally well-oiled local phone providers over fine points in bills offered by Sen. Ernest Hollings (D-S.C.) and Reps. John Dingell (D-Mich.) and Jack Brooks (D-Texas) allowing regional Bell operating companies into the long-distance market.

Meanwhile, the cable TV industry, which is given the opportunity to enter the local phone business under a bill offered by Rep. Edward Markey (D-Mass.) and Jack Fields (R-Texas), is arguing against allowing telcos into cable for up to seven years.

The inter-industry warfare is endless: Hollywood and the baby bells are squabbling over Tinseltown’s demand that telco entry into the video “platform” be contingent on a guarantee that telcos own no more than 25% of programming. Cablers, meanwhile, are bad-mouthing a broadcast industry-backed provision offered by Hollings that would allow broadcasters to use precious spectrum for new lines of data delivery business.

One congressional staffer says some lawmakers are quietly beginning to question whether consumers may get socked with higher local phone rates if the bills pass.

“Everyone says they’re for competition,” says the Capitol Hill aide. “But this is a $ 400 billion industry and clearly there will be winners and losers. If residential customer rates are going to rise while business rates go down — and a lot of people think that may happen if these bills pass — then Congress is not going to want its fingerprints on that.”

For every skeptic, however, there are those who believe passage of historic infopike legislation is indeed a certainty. “There’s no question in my mind” the bills will pass, says Roy Neel, the former White House deputy chief of staff who was recently tapped as prexy of the U.S. Telephone Assn. “You’ve got the White House and every key leader in Congress pushing for this.”

If infopike legislation becomes law, it may come in the form of a watered-down version of the bills currently pending. D.C. insiders agree that the battle to protect industry special interests will be fought most furiously in a House-Senate conference committee established to reconcile differences in the bills.

Though it may be too early to handicap winners and losers, any legislation signed into law by President Clinton would likely prove beneficial to Hollywood. “The name of the game is programming,” says Neel.

Congress is expected to reject the cable industry’s call for a “staged entry” approach for telcos entering the cable biz. Nevertheless, lawmakers seem more receptive to cable’s request to allow telco buyouts of cable systems in rural areas. Congress will also probably carve out a broadcast industry wish list that includes a directive requiring the FCC to review TV ownership rules that currently allow broadcasters to own no more than 12 stations nationally.

As for the biggest fight — the terms of Baby Bell entry into markets now monopolized by AT&T and the other long distance providers — the outcome is anyone’s guess.

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