WASHINGTON -- Sen. Ernest Hollings, the prime sponsor of a bill to rewrite the nation's laws governing telecommunications, has agreed to drop a controversial provision in an effort to remove the latest obstacle threatening its passage this year.
Responding to concerns raised last week by the nonpartisan Congressional Budget Office, the South Carolina Democrat said he would change language in his proposal to make sure nothing in it could be considered a tax.
Tax provisions probably would have been the death of the bill, because it would have required more detailed review before the Senate could vote on it, and there is little time left before Congress adjourns for the year in October.
The move by Mr. Hollings, chairman of the Senate Commerce Committee, still might not be enough to assure passage of the wide-ranging bill, which would remove barriers to competition in the local and long-distance telephone markets and in cable television.
The bill still faces tough opposition from the regional Bell operating companies, a powerful lobbying force in Washington. And a number of other groups -- including state utilities regulators and some computer firms -- have joined the Baby Bells in opposing the proposal.
"There's a lot of ways to kill this thing," said Blake Bath, a telecommunications analyst with Sanford C. Bernstein. "If it doesn't hit the Senate floor by the middle of next week, then you know it's dead."
Mr. Hollings' agreement to change the language of parts of his bill erased a preliminary determination by the CBO that a fund called for in the bill to make sure telecommunications services would be available to everyone was actually a tax on telecommunications companies. That tax could reach $30 billion year, the CBO said.
In a Sept. 13 letter to Mr. Hollings, CBO director Robert Reischauer said the promised changes would eliminate the tax issue.
If the bill contained a tax, it could have been sent to the Senate Finance Committee and the House Ways and Means Committee for further review.
All along, the biggest stumbling block facing Mr. Hollings' legislation has been disagreement about how quickly the regional Bells should be allowed to begin offering nationwide long-distance and cable service.
The extended negotiating means there is little time left to submit the bill for consideration by the full Senate, which is trying to squeeze in votes on such items as health care reform, campaign finance reform and the Uruguay Round global trade agreement before leaving town early next month. The House overwhelmingly passed its telecommunications deregulation bill in June.
Bell company officials say a host of changes must be made before Mr. Hollings' measure can gain their support.
Lately, they have complained the most about the terms under which they would be allowed to begin competing with cable companies. The phone companies would have to wait at least two years before offering video services, they say.