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On Capitol Hill, The Internet Wars Are Just Beginning

Washington Outlook

On Capitol Hill, the Internet Wars Are Just Beginning

As the online world runs headlong into a wall of bricks and mortar, Congress is becoming a battleground. The latest skirmish: the Net vs. the nets. So far, the two sides--Internet service providers and TV networks--have fought to a draw, but the struggle is just beginning. At stake: who gets to deliver movies, sports, and other programs to the living rooms of the future.

The firefight this time began in mid-November as Congress was putting the final touches on a bill that would force TV networks to license programs to satellite broadcasters. Two influential lawmakers, Senator Orrin G. Hatch (R-Utah) and Representative Howard Coble (R-N.C.), sought to add a single sentence at the last minute to prevent Internet companies from benefiting. Aides insist the lawmakers were merely clarifying that new broadcast rights apply only to traditional cable and satellite providers, and not to Net companies. And the Internet providers claim they have no immediate plans to send TV over the Net. But the two sides sparred anyway. A full-court lobbying press by the techies got the ban removed late on Nov. 19, as Congress rushed toward adjournment. Score one for America Online, Yahoo!, Microsoft, and other Net giants.SHOW TIME? The seeds of this dispute go back to 1976, when Congress granted cable-TV the right to retransmit network programs under a compulsory licensing program, which requires some copyright owners, in return for royalties, to license their programs. This year, Congress sought to extend such rights to satellite companies to promote competition. But a funny thing happened on the way to enactment. A coalition of copyright owners persuaded Hatch, Coble, and other lawmakers to amend the satellite bill and exclude "online digital communications." The upshot: Internet companies would not get the same privileges as satellite outfits.

Internet providers weren't just battling the networks on this one. Also lined up against them were Major League Baseball, the National Basketball Assn., and other professional sports leagues, as well as associations of Hollywood producers, music companies, and composers. Scoffs AOL Senior Vice-President George Vradenburg III: "In a more competitive world, established players will try to get a legislative advantage over new, rowdy innovators."

The old-timers' biggest worry? That Internet powerhouses might rebroadcast the latest hot game show or pro hoops games over the Net. Once a program gets on the Internet, perfect copies can be sent around the globe--depriving studios or team owners of distribution rights. It also would make it nearly impossible for local network affiliates to sell ads., a new lobbying group for the Netniks, argued that the technology doesn't yet exist to broadcast TV programs over the Internet, anyway. And Internet companies with cable or satellite partnerships claim they just wanted to make sure they would be able to offer innocuous Internet links to viewers.

But the fears of content providers may not be so far-fetched. In May, America Online Inc. and Hughes Electronics Corp. teamed up to offer combined AOL-DirecTV service to home TVs via a set-top box. Microsoft Corp. and EchoStar Communications Corp., the No. 2 satellite provider, already offer a similar service. And Internet providers are positioning themselves for a world in which phones, TVs, and the Net merge. Any ban on online digital transmissions of TV looms as a threat.

"The battleground of the future," says EchoStar lobbyist Karen E. Watson, "will be between technology companies with global reach, and older companies looking to protect existing markets." Judging by this year's encounter, the hostilities are just getting started.By Paula DwyerReturn to top

Teamsters Money Chase

Teamsters President James P. Hoffa is expected to file a civil racketeering suit to recover $885,000 siphoned from the union to help finance the reelection campaign of his ousted predecessor, Ronald Carey. The suit will rely on testimony from the trial of an ex-political director convicted on Nov. 19 for his role in the Carey fund-raising scheme. Other Carey advisers and donors who pleaded guilty may be named. A possible surprise: Teamsters lawyers are reviewing whether to name the AFL-CIO or its secretary-treasurer, Richard L. Trumka. Witnesses at the trial said Trumka played a key role in the fund-raising effort. Trumka's lawyer says his client denies any wrongdoing.By Paula DwyerReturn to top

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