WASHINGTON, DC – The House Commerce Committee passed a bill late yesterday that would make it easier for phone carriers to offer services like pay-per-view television and high-speed internet services, but the committee largely avoided the highly contested issue of “Net neutrality,” saying there’s little agreement on how to define the term, much less enforce the proposed bad on “online discrimination.”The committee voted 42-12 to grant national franchising rights to major phone companies like Verizon and AT&T, in order to make it easier for the telecoms to provide internet-based television service. Such companies are laying out billions of dollars in order to build high-capacity fiber networks, via which they intend to offer enhanced broadband web connections and TV services to rival cable television.

Under the current structure, the telecoms would have to obtain franchising licenses individually for literally thousands of cities and towns in which they wish to offer their services. In order to avoid that speed-bump, the companies have sought legislation that would grant them national franchising rights, simplifying and reducing cost of the process significantly.

While the committee approved the national franchising concept, it declined to include provisions to preserve what has come to be called “Internet neutrality;” the right of any company to offer its service and deliver its content, over the Web free of “discrimination” in the form of added fees and charges for delivering data over the networks of the major telecoms, and possibly blocking users from certain sites.

Not surprisingly, phone companies are by and large opposed to any codification of Net neutrality. Executives of several phone companies have stated that they should be allowed to charge added fees to companies that generate large volumes of internet traffic, Google and eBay being the two most-commonly mentioned examples.

Consumer groups and internet firms have both pushed Congress for Net neutrality laws, arguing that without the protection of law, phone and cable companies will be free to discriminate at whim, and impose a heavy burden of fees on internet companies that operate on low margins, and will not be able to afford the fees. The real price of Net discrimination, they caution, could be the endangerment of the internet itself.

Opponents of the Net neutrality provisions note that, to this point at least, instances of network operators blocking surfers from bandwidth-intensive sites are essentially nonexistent and thus there is no need for Congress to intervene. Phone company executives have also assured legislators that they would not take the step of blocking users from receiving “legitimate” sites at speeds that are guaranteed by the consumer’s ISP.

The assurances delivered to lawmakers by the telecoms haven’t addressed the possibility of telecoms charging content providers and website operators, however, which some pundits have said is the real problem, as opposed to site blocking.

Should the Commerce Committee’s bill be passed into law, the Federal Communications Commission (FCC) could still punish network operators if they block access to certain sites – in fact, the House bill would raise such fines to a maximum of $500,000.

At the same time, the committee also included a caveat preventing the FCC from employing an expansive definition of “neutrality.” Under the House bill, the FCC would be able to investigate allegations of access-blocking on an individual basis, but would otherwise have very limited authority.

Legislators on both sides of the Net neutrality issue note that Congress can revisit the issue should network operators use their position to effect undue influence and control over use of the Net.

While less controversial than Net neutrality, the national franchising provision is not without its opponents, either.

Cable companies oppose the national franchising, for the obvious reason that the grant of national franchising will reduce the barrier of entry into the TV and broadband markets for telecoms, thus making them much more immediate competition for the cable providers.

Some lawmakers are concerned that “discrimination” is a possibility with regards to the franchising, as well. Congressional critics have voiced concern that the new House bill could pave the way for the telecoms to selectively develop their infrastructure and, in effect, shut out low-income areas and customers.

“It would allow them to serve rich communities and ignore the rest,” fretted Lois Capps, a California Democrat.

Capps and others in Congress have proposed “build-out requirements” which would force the telecoms to roll out fiber in a way they feel is more equitable. Thus far, though, attempts to tack such build-out requirements on to Congressional telecom bills have failed.

Phone company supporters, on the other hand, argue that the telecoms need flexibility, especially during the build-out phase, due to the high expense of building their fiber networks and the fact that they will be competing with the well-established cable industry.

The telecom backers assert that as time goes on, the phone companies will naturally expand their service into more areas in order to increase their customer base. This will boost competition in the market and possibly even drive prices down for cable customers.

“Let the market work,” said Joe Barton, Commerce Committee chairman. “Competition will drive investment.”

The bill passed by the Commerce Committee now heads to the full House for a vote, but there’s no certainty the bill will become law this year; a separate House panel could propose an alternative bill and the Senate is just as deeply split over the issue of Net neutrality as its peers in the House.