The reassertion of Democratic control in Congress will impact key telecom issues currently under debate in Washington, including Net neutrality, universal service reform and the consolidation of power through mergers and acquisitions.

It is more likely, however, that the new Congress, once installed in January, will focus on more pressing issues and choose to exert its influence through hearings and oversight rather than new legislation, say Washington insiders.

“This is a seismic shift, but it isn't on the order of tectonic plates moving,” said Erik Huey, analyst with the Washington-based law firm Venable LLP.

The Democrats who will take over leadership of key House and Senate committees are familiar faces and veterans when it comes to telecom issues. In the House, Rep. Ed Markey (D-Mass.) and Rep. John Dingell (D-Mich.) were both a big part of the Telecom Act of 1996. They are expected to exert their influence through hearings on issues such as the mega-mergers, consolidation of media ownership and other matters before the FCC.

The result, said Blair Levin, former FCC staff member and now an analyst with Stifel Nicolaus, may be changes in processes such as forbearance petitions, which the Bell companies have used to gain freedom from regulation. Last March, the FCC allowed a Verizon petition for forbearance from resale of business services to pass into law by not acting on it within the required time frame.

“The Bells have a very smart strategy about forbearance petitions, and they are using those to get the freedom they want,” Levin said. “The Democrats taking over makes that strategy much trickier. If there is a controversial decision about to be made — such as a consolidation in media ownership — there will be a hearing in advance of the FCC decision so people can weigh in. At the end of the day, the votes that count are those of the commissioners. But you very rarely get a decision where a commissioner just says, ‘I don't care at all what the rest of the world thinks.’ A hearing does have influence — more than any other single event can influence commissioners.”

Just days after the election, Dingell said publicly he thought the FCC should postpone approving the AT&T/BellSouth merger until the new Congress could weigh in, although he later backed off that statement. Sen. Daniel Inouye (D-Hawaii), the likely incoming Senate Commerce Committee chairman, made similar statements to the press, but with little clarification.

Their comments have been followed by increased speculation that Republican FCC Commissioner Robert McDowell might be convinced to break the current 2-2 tie on the merger that has pitted Democrats Jonathan Adelstein and Michael Copps against FCC Chairman Kevin Martin and Commissioner Deborah Tate, the two Republicans. McDowell has recused himself from the vote because of his prior work for CompTel, which represents competitive service providers.

“We still believe Mr. McDowell could be enlisted, if necessary, but we acknowledge there could be significant political and legal controversy surrounding such a move, giving Chairman Martin much incentive to seek a bipartisan solution and not rush into a partisan outcome,” Levin wrote recently.

“I think the merger is still likely to go through, but it might have a different set of conditions,” Huey said. “If they are not able to get Commissioner McDowell to un-recuse himself and get a vote, and it has to go to the next Congress, there is a substantial likelihood that there will be pressure to take a much harder stand.”

The prospect of a major telecom reform measure or a national video franchise law, which had seemed possible last summer, is now fading, Levin said. “If they couldn't get it under the Republicans, they aren't going to get it under the Democrats,” he said.

Huey believes the Bell companies may even back off any push for video legislation since it could come packaged with rules to enforce Net neutrality.

“I don't think they are going to look at a telecom bill, period,” he said. “The appetite of the Bells for a national video franchise law is waning — they have been successful at the state level and at local franchise level. The carrot they are getting isn't worth the stick, when that stick is onerous Net neutrality requirements.”

There could be a separate Net neutrality push, however, as the high-tech community finds a more sympathetic ear among Democrats such as Markey, whose Net neutrality amendment to last year's House telecom reform measure was voted down in committee.

“Silicon Valley interests are very concerned, and they will make a significant push for a bill, irrespective of whether it is attached to a larger measure,” Huey said.

Because Inouye and fellow Democrat Sen. Jay Rockefeller (D-W.Va.) share the concerns about the Universal Service Fund expressed by Sen. Ted Stevens (R-Alaska) during his leadership of the Senate Commerce Committee, USF reform may also be on the agenda, he added.

Levin calls the chances “slim to none” that the lame duck Congress now in session will take action on pending legislation, including Rep. Joe Barton's (R-Texas) telecom reform measure, which passed the House, and Steven's bill, which was pending in the Senate.

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