The Internet Freedom Act of 1999 (H.R. 1686)
General Summary

The Internet Freedom Act of 1999, sponsored by Congressmen Bob Goodlatte and Rick Boucher of Virginia, ensures that the qualities that have provided the explosive growth of the Internet in recent years will continue into the new millennium. This legislation addresses the challenges that face the Internet by building on the strengths that have made it the major engine of growth and development in the new Information Age. The Act addresses the crucial challenges currently facing the Internet and its future: providing freedom from burdensome government regulation, ensuring consumer choice through open competition, and protecting consumer-friendly open access to the Internet.

Congress must act now to ensure that the qualities that made the Internet a revolutionary tool for both business and family remain fundamental components of the Internet for future generations. The Internet Freedom Act accomplishes this by achieving three goals.

The first goal of the Internet Freedom Act is freedom from burdensome government regulation: the bill gets the FCC out of the business of regulating the Internet. It eliminates existing FCC regulations that are inhibiting the development and rollout of broadband Internet service in non-urban and rural areas.

Broadband technology is up to twenty times faster than the old modems used for Internet access, and can be compared to the old "T-1" telephone lines offered for $1,000 a month, but at a fraction of the cost. In some areas, it is now possible to obtain broadband Internet service for as low as $40 a month. The development of broadband technology has the potential to not only make fast Internet access available, but to make it affordable as well.

The FCC is currently ignoring its responsibility under the Telecommunications Act of 1996 to provide regulatory relief to incumbent phone companies by removing existing regulations on data traffic. The FCC regulations currently prohibit the incumbent phone companies from competing in the Internet backbone market. The "backbone" is the very high speed, high capacity lines that crisscross the country linking major cities. Existing suppliers of Internet backbone are simply unable to keep up with the demand for high speed, high capacity backbone bandwidth. They also have little incentive to invest in many parts of the country that are far away from the main backbone routes. This legislation allows local phone companies into the backbone market, increasing competition and lowering prices for businesses and consumers.

In addition, many areas of the country are located far from these backbone pipes, often in rural areas. Traffic from these areas must be hauled to the closest backbone connection point (often miles away) and the connections used for this are of much smaller capacity than those on the backbone. More backbone investment will mean that more facilities will eventually become available in more places than ever before. Local phone companies and others will build major connection points to the Internet in more locations, allowing traffic to be aggregated by ISPs and encouraging the build-out of more connections closer to customers. This will make it possible for more customers to be able to access the Internet without being required to make a long distance call.

The second goal that the Internet Freedom Act accomplishes is to ensure consumer choice through open competition. One of the main goals of the Telecommunications Act was to open the local phone markets to competition to ensure non-discriminatory access and safeguard against anti-competitive behavior. However, certain networks unaffected by the Act remain closed to competitors and other closed networks could be just around the corner. Under this scenario, a consumer who wants high-speed broadband service would be forced to buy it from their access provider's ISP. If they wanted service from another ISP, they would either not be able to receive it or would essentially have to pay twice.

A closed network also provides undue leverage over Internet content, since one company would possess the ability to give content providers preferential access to their "hostage" customers. This ability to leverage its monopoly vertically can curtail competition and innovation in the content market and raise prices for such information or programs. It could also limit the variety and availability of content that has made the Internet so successful.

This legislation preserves competition among broadband Internet service providers without involving the heavy-handed bureaucracy of the FCC. The bill gives a right of action to ISPs who have been restricted by broadband transport providers in their ability to compete fairly against other ISPs. For example, if a company limits the ability of an ISP to offer its services over their facilities on the same terms and conditions that the company offers to another ISP, the first ISP would be able to seek relief in the courts.

Competition is preserved among ISPs by using existing antitrust law. Under this section, evidence in a civil action that a broadband access transport provider with market power has limited the ability of an Internet service provider to compete in the ISP marketplace would be presumed to have violated the Sherman Act. The second section also ensures that the same rules apply to the incumbent phone companies by presuming a Sherman Act violation if the phone company failed to make its "local loop" available to other carriers who wanted to provide broadband services.

Finally, the Internet Freedom Act encourages open consumer access for consumers by making the Internet a more user-friendly environment. In addition to ensuring consumer choice and lower costs through competition, the Act addresses the problem of illegal mass e-mail, also known as "spamming." This section makes it a federal crime for a person to knowingly use another person's Internet e-mail address, or "domain name," to send unsolicited mass e-mails. The penalty for violating the section would be the actual monetary loss and damages of $15,000 per violation or up to $10 per message, whichever is greater.

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