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Analyst: Downturn Could Work Against Net Neutrality Legislation

Paul Glenchur, a telecom analyst for the Stanford Group Co., says the economic meltdown could wind up working against passing network neutrality legislation in the next Congress.

If the government focuses on economic stimulus, he told an interviewer for C-SPAN's Communicator series, telecommunications networks. "I could see investment in cable networks as being one of the potential drivers of economic growth. I think they [cable, telephone networks] will play that card in making the case against heavy net neutrality legislation."

If so, that would simply be an exclamation point on an economic argument cable has made all along--that network neutrality legislation, or even the threat of it, can discourage the kind of investment in infrastructure necessary to roll out broadband to underserved communities and expand the pipes for all those band-width heavy applications, like video, that are becoming the currency of online entertainment and community (YouTube, Hulu).

But Glenchur also said he saw a chance for "the stars to begin to align" for legislation if network neutrality legislation supporter Barack Obama wins.

The FCC's finding that Comcast violated its network nondiscrimination principles established the precedent of the FCC determining what it reasonable network management. Comcast has taken that decision to court, arguing, among other things, that the FCC overstepped its authority. If a court concurs, the FCC might have to look to Congress to clarify. A Democrat-led Congress combined with a president willing to sign a network neutrality bill could mean action in the next Congress, he suggested.

Adam Thierer, senior fellow at the Progress and Freedom Foundation, said who is in the White House could well be determinative, calling it a "clash of industry titans" between cable and telcos on one side and companies like Google and microsoft and Yahoo! He said he thought the battle would be in Congress, predicting the court would strike down the FCC decision against Comcast. "If it is an Obama administration," he says, "I think there is a good chance it would tip in favor of some kind of legislation," saying it was unclear in the case of Senator John McCain.

Both Thierer and Glenchur predicted FCC Chairman Kevin Martin would not stick around long after the election. "He has made so many enemies on both sides of the political fence during his tenure that I think chances are he is going to want to leave."

The House government oversight committee recently wrapped up an investigation of FCC process, though it has not released the findings. Glenchur said he thought Martin had been sensitive and responsive to criticisms that the process was not sufficiently transparent. "He is trying to have more openness and make clear what is circulating at the commission. I think they are improving," he said.

Thierer said he thought there would still be calls for institutional reforms of the FCC in a new Congress.