TCS Daily

Tauzin-Dingell a Remonopolization 'Scam,' Rep. Tom Davis Says In Wide-Ranging Interview

By James K. Glassman - July 30, 2001 12:00 AM

Just as Congress was bracing for the busy final week of business before its traditional month-long August recess, Rep. Tom Davis (R-Va.) talked with Tech Central Station Host James K. Glassman about prospects for the remaining House agenda. The two talked tech extensively, with Davis reserving his toughest comments for the tech world's most talked about legislation this year, the Tauzin-Dingell bill.

"Part of me thinks this whole bill is a scam in one sense," said Davis, "and they're just trying to remonopolize this thing and squash the competition."

The moderate Virginia Republican also made the tech case for Trade Promotion Authority, urging that the U.S. use it to penetrate more markets. "You have to believe in your own products. And that's the problem," Davis said. "You have people who don't believe in our products and our ability to complete, and they want protectionist policies. But the technology sector does believe in their products, and they're ready to go to the mat."

Glassman and Davis' conversation starts with a discussion about Fairfax County, Virginia, the high-tech haven that Davis represents in the House.

James K. Glassman: Let`s talk a little bit about Fairfax County.

Rep. Tom Davis: Sure.

Glassman: What are the traits that Fairfax County has that has caused it to be one of the nation`s high-tech havens.

Davis: The best thing we have is a critical mass of very educated, technology proficient employees. It was built up over a number of years, basically starting with the Pentagon deployments in the `50s and `60s and the IT companies` contractors that grew out of that, and then the new telecom hub. With the FCC so close and things, it just kind of grew. And one thing has led to another, and it just continues to grow. But the key is the critical mass of great technologically proficient employees.

That`s what makes it different from Biloxi, Mississippi, or other places that have nice physical attributes, but they just don`t have the educated workforce.

Glassman: What are some of the hangover effects of the recent slowdown, and how are you dealing with them?

Davis: Well, we`re seeing some substantial layoffs in some companies, but we`re also seeing a lot of new startups. The office space is down a little bit in terms of the large box, but a lot of small box are coming back. I think it is still sorting itself out. But a lot of the large companies all of a sudden they`re starting layoffs and some have gone under or pretty close to it, particularly in the telecom sector.

Glassman: You have a bill on keeping too much of a tax burden on high-tech workers who exercise stock options ...

Davis: Right, absolutely. They`re getting killed right now in the marketplace right now, with the way that they`re being scored, and we`d like to soften that blow a little bit.

Glassman: Just switching gears, and talking about telecommunications, what are the prospects for the Tauzin-Dingle Bill, which is H.R. 152, reaching the floor this year? Is the vote on it worth it, considering all the controversy?

Davis: Well, here`s the dilemma. For Billy Tauzin, it`s the most important bill, he`s the chairman of one of those important committees in Congress, and he`s putting all the chips on the table for this one bill. And he is changing the bill by the minute, to try to make this not such a Hobbesian choice for members, where they have to choose CLECs [Competitive Local Exchange Carriers], some long-distance companies versus the Bells. So he`s negotiating trying to bring this to the floor, or to the point where he can not only get a strong majority, but it will not be such a tough vote for members who have to choose between groups and constituencies that have traditionally been friends.

The answer is, he may well get a vote out of this. He`s been working very hard at it. -- He`s pulling in all the chits on this one.

Glassman: But as the Chairman of the National Republican Congressional Committee, you have to make sure that people keep their seats and elect new Republicans. You`ve got maybe a dozen Republicans in very tight districts where a vote on this, either way, would not be particularly helpful . . .

Davis: Yeah, absolutely. Well, we have a lot of votes like that. I can go through that list of no-win votes for some of our members this year. This vote is not a party vote by any means, but it cuts across all kinds of lines. All I can say is Tauzin is working very hard. I think the leadership has been kind of lukewarm toward it because of the political ramifications and the fact that it does not show much prospect of going anywhere in the Senate. You hate to put your members on record for something that does not become law. But Billy feels very, very strongly about this, and we`ll have to see what`s going to happen.

I don`t know what`s going to happen at this point. I don`t think we`ll see a vote before the recess. But in September, he`s going to work very hard to try to get it. Or it is one of those undetermined factors, whether we end up dealing with it or not.

Glassman: What is the recently re-introduced cyber security act designed to do?

Davis: Everyday, we`re getting different hits and penetrations by unfriendly groups in the government and even the private sector as well. One of the things we try to do is to make sure that the private sector can share its knowledge on this with government. The difficulty right now is if they do that, it`s FOIA-ble for the most part -- that is, subject to the Freedom of Information Act. And you end up not only giving away trade secrets and other things you don`t want your competitors to know, but also things you don`t want out there in public that could hurt your stock price. There`s just a lot of problems. And when the trial lawyers get hold of it and say, "Why did you disclose it?" - it`s just a lot of problems.

If you want to have cooperation from the private sector, you`ve got to give some privacy provision. You`ve got to protect the information that they`re sharing with the government. If they don`t, they`re going to be very reticent to enter into a dialogue, because everything they say can and will be used against them.

Glassman: Will the House vote up or down on granting trade promotion authority to the President? And when will that happen?

Davis: Yes, as soon as I think we have the votes. I think we`d prefer to do it next week, just because it does not give labor a month to beat up on them during August when they go back. Labor just started running ads in about 19 districts, and labor is going to throw down the gauntlet on this.

Glassman: But you think you have the votes on this?

Davis: I don`t know. It`s going to come down really to language. I call it "fig leaf" language, but no doubt it may feel more substantial. We have not agreed on what the language is yet in terms of environmental and labor being a part of a trade promotion. If this is just general language, then we`re going to pay attention to it. And we`ll have problems with it if you start restricting what can actually come up. Obviously that creates a different problem in trade promotion before it becomes unworkable as passed. So, we`re trying to find some language that will bring a bloc of the Democrats alongside. They need some kind of cover with their constituencies, basically labor.

Glassman: What is the stake that the technology...

Davis: Let me just say one other thing.

Glassman: Sure.

Davis: In the Republican Congress, three-fourths of the Republicans were willing to give Bill Clinton trade promotion authority.

Glassman: Right.

Davis: But only about 30 some Democrats were. So, we only have some 30 Democrats willing to give trade promotion authority to Bill Clinton; that number is likely to be less for Bush, given the political climate. And that is a problem. So we think we`ll get more Republicans. The president himself will make the case.

Glassman: And part of that case is how important trade promotion authority would be for the high-tech sector of the economy, correct?

Davis: Absolutely. I`m a great believer that the 21st century can be America`s century, not in military might but through our products and our technology. But we`ve got to be able to penetrate some more markets. Less than five percent of the world`s consumers are in the United States. You`re just not going to dominate the globe unless you can get trade promotion. You have to believe in your own products. And that`s the problem. You have people who don`t believe in our products and our ability to complete, and they want protectionist policies. But the technology sector does believe in their products, and they`re ready to go to the mat.

Glassman: We know about the computer debacles at the IRS and FAA, but where else is the U.S. government missing big opportunities to take advantage of information technology?

Davis: Well, we`re way behind the curve in the public sector because we don`t face a competitive environment.

Glassman: Right.

Davis: A competitive environment forces you to constantly reinvent and re-engineer what you`re doing. But in government you`re not faced with that, so you can do the same-old same-old, tried and true. You`re not forced to take risks and be out front in new technologies. I think that`s too bad in many cases and lags way behind the private sector. But a lot of it is just the way that government is constituted -- the fact that you don`t reward people by getting rid of employees. Here you`re promoted by how many people you have under you, not how many people you eliminate underneath you. It`s just that the incentives are perverse in that sense. So government does lag behind in a number of areas.

Now, government, the administration is talking about putting some e-government initiatives, while we`re trying to do the same thing. But we`re woefully behind.

The biggest problem is not government communicating with its citizens: the biggest problem is government-to-government, agency-to-agency, federal-to-state, federal-to-local. We just don`t have platforms that are conversant with each other in a very efficient way. And nobody has paid a great attention to that. As a result of that, we lag behind where we ought to be as a government.

Glassman: But aren`t the feds also behind the states in a lot of areas?

Davis: In some areas, because they`re laboratories of democracy out there. The federal level is the worst place for innovation -- so many checks and balances and interest groups up here that making change is very, very difficult. Your real changes are coming out of the state and local governments. That`s what the federal system is, within the laboratory of democracy out there, and some of them are doing some very innovative things.

Glassman: Just one last question, I want to get back to telecom, one thing I forgot to ask you about, or maybe I`m not quite clear on this. Did you and Congressman Tauzin offered amendments in committee on broadband, deregulating broadband at different levels? Yours was 1½ megabyte and his was 384K. What was the difference between these two approaches?

Davis: Our approach was basically, "See, if they`re called a broadband, they`ll make it a broadband bill." This megabyte level is not broadband at all, it`s a monopoly level but it`s not broadband. Their argument is that we`re trying to have them put out wires that are just not cost efficient and telling them what to do, and it`s going to discourage deployment in the rural areas. Our feeling is, "Look, if you`re going to take away the ability, if you`re going to allow the Bells into long distance, get something for it." Make sure they`re going to have to up the technology and meet a given level as they start spreading into those areas. That was the only thing: get something for it. And, obviously, there was a great resistance to that.

Part of me thinks this whole bill is a scam in one sense, and they`re just trying to remonopolize this thing and squash the competition. You already have a number of CLECs that are in trouble. That`s one of the problems out in my district. There`s companies like Teligent, and Tauzin-Dingell dries up financing of some of these groups.

Glassman: Oh, yeah, absolutely. We did a paper on this, and it`s actually the bill itself, just hanging over the heads of these CLECs, that has clobbered their stock prices. And they`re not able to raise any capital.

Davis: And even if it didn`t have that effect, they`re having enough trouble anyway...

Glassman: Right...

Davis: For a lot of reasons, it gives them an excuse.

Glassman: So, just in summary, do you think that the passage of the Tauzin-Dingell bill, as it stands now -- and there`s probably not much chance it will pass, but if it did pass -- would that just basically kill the CLECs entirely?

Davis: Yeah, oh absolutely. Now, they understand that. The nice thing is that Billy understands that. His latest amendment is, he`s talking about making sure that nobody is deprived of access, that kind of thing. But it still allows the Bells to get into long distance, at least in the long-distance data, which is what most of it is, without having to pay much of a price. And that`s what this really is all about; these guys are very powerful, and there are some philosophical reasons, you might say, that the Bells are the natural folks -- that the Bells and cable companies should compete on it. But the price is, you`re not going to be able to get local access competition. You`re basically destroying that.

Glassman: And also the problem, and let me get your response to this, if the CLECs are killed off and you just have basically a duopoly-- you have the giant Bells competing with the giant cable companies. It`s kind of doubtful you`re going to get this sort of innovation that you would have...

Davis: Right. At least the Bells would go somewhere else, they`d find some lucrative markets. I think the interesting thing in all of this is, it`s hard to predict the future. But the technological innovations can change all this. All of sudden you can move to a wireless component where you can do this stuff -- when the Bells and cables are not around. So, there`s a lot of risk in all of this.

Glassman: Well, I really appreciate your taking the time.

Davis: My pleasure.

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