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[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3609 Introduced in House (IH)]

103d CONGRESS
  1st Session
                                H. R. 3609

To improve the competitiveness of American industry in the markets for 
 telecommunications equipment and customer premises equipment, and for 
                            other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                           November 21, 1993

Mr. Slattery introduced the following bill; which was referred jointly 
       to the Committees on Energy and Commerce and the Judiciary

_______________________________________________________________________

                                 A BILL

 
To improve the competitiveness of American industry in the markets for 
 telecommunications equipment and customer premises equipment, and for 
                            other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Telecommunications Equipment 
Research and Manufacturing Competition Act of 1993''.

SEC. 2. FINDINGS.

    The Congress finds that--
            (1) universal access to advanced telecommunications 
        services through the public switched telephone network by all 
        persons, including persons with disabilities and public 
        educational institutions, would be advanced, and
            (2) the continued economic growth and the international 
        competitiveness of American industry, would be assisted,
by permitting the Bell Telephone Companies, through their affiliates, 
to manufacture (including design, development, and fabrication) 
telecommunications equipment and customer premises equipment, and to 
provide telecommunications equipment, and to engage in research with 
respect to such equipment.

SEC. 3. AMENDMENTS TO THE COMMUNICATIONS ACT OF 1934.

    Title II of the Communications Act of 1934 (47 U.S.C. 201 et seq.) 
is amended by adding at the end the following new section:

``SEC. 228. REGULATION OF MANUFACTURING BY BELL TELEPHONE COMPANIES.

    ``(a) General Authority.--Subject to the requirements of this 
section and the regulations prescribed thereunder, but notwithstanding 
any restriction or obligation imposed before the date of enactment of 
this section pursuant to the Modification of Final Judgment on the 
lines of business in which a Bell Telephone Company may engage, a Bell 
Telephone Company, through an affiliate of that company, may 
manufacture and provide telecommunications equipment and manufacture 
customer premises equipment, except that neither a Bell Telephone 
Company nor any of its affiliates may engage in such manufacturing in 
conjunction with a Bell Telephone Company not so affiliated or any of 
its affiliates.
    ``(b) Separate Manufacturing Affiliate.--Any manufacturing or 
provision authorized under subsection (a) shall be conducted only 
through an affiliate that is separate from any Bell Telephone Company.
    ``(c) Commission Regulation of Manufacturing Affiliate.--
            ``(1) Regulations required.--The Commission shall prescribe 
        regulations to ensure that Bell Telephone Companies and their 
        affiliates comply with the requirements of this subsection.
            ``(2) Books, records, accounts.--A manufacturing affiliate 
        required by subsection (b) shall maintain books, records, and 
        accounts separate from its affiliated Bell Telephone Company 
        which identify all financial transactions between the 
        manufacturing affiliate and its affiliated Bell Telephone 
        Company and, even if such manufacturing affiliate is not a 
        publicly held corporation, prepare financial statements which 
        are in compliance with Federal financial reporting requirements 
        for publicly held corporations, file such statements with the 
        Commission, and make such statements available for public 
        inspection.
            ``(3) In-kind benefits to affiliate.--Consistent with the 
        provisions of this section, neither a Bell Telephone Company 
        nor any of its nonmanufacturing affiliates shall perform sales, 
        advertising, installation, production, or maintenance 
        operations for a manufacturing affiliate, except that--
                    ``(A) a Bell Telephone Company and its 
                nonmanufacturing affiliates may sell, advertise, 
                install, and maintain telecommunications equipment and 
                customer premises equipment after acquiring such 
                equipment from their manufacturing affiliate; and
                    ``(B) institutional advertising, of a type not 
                related to specific telecommunications equipment, 
                carried out by the Bell Telephone Company or its 
                affiliates, shall be permitted if each part pays its 
                pro rata share.
            ``(4) Domestic manufacturing required.--
                    ``(A) General rule.--A manufacturing affiliate 
                required by subsection (b) shall conduct all of its 
                manufacturing within the United States and, except as 
                otherwise provided in this paragraph, all component 
                parts of customer premises equipment manufactured by 
                such affiliate, and all component parts of 
                telecommunications equipment manufactured by such 
                affiliate, shall have been manufactured within the 
                United States.
                    ``(B) Exception.--Such affiliate may use component 
                parts manufactured outside the United States if--
                            ``(i) such affiliate first makes a good 
                        faith effort to obtain equivalent component 
                        parts manufactured within the United States at 
                        reasonable prices, terms, and conditions; and
                            ``(ii) for the aggregate of 
                        telecommunications equipment and customer 
                        premises equipment manufactured and sold in the 
                        United States by such affiliate in any calendar 
                        year, the cost of the components manufactured 
                        outside the United States contained in the 
                        equipment does not exceed 40 percent of the 
                        sales revenue derived from such equipment.
                    ``(C) Certification required.--Any such affiliate 
                that uses component parts manufactured outside the 
                United States in the manufacture of telecommunications 
                equipment and customer premises equipment within the 
                United States shall--
                            ``(i) certify to the Commission that a good 
                        faith effort was made to obtain equivalent 
                        parts manufactured within the United States at 
                        reasonable prices, terms, and conditions, which 
                        certification shall be filed on a quarterly 
                        basis with the Commission and list component 
                        parts, by type, manufactured outside the United 
                        States; and
                            ``(ii) certify to the Commission on an 
                        annual basis that for the aggregate of 
                        telecommunications equipment and customer 
                        premises equipment manufactured and sold in the 
                        United States by such affiliate in the previous 
                        calendar year, the cost of the components 
                        manufactured outside the United States 
                        contained in such equipment did not exceed the 
                        percentage specified in subparagraph (B)(ii) as 
                        adjusted in accordance with subparagraph (G).
                    ``(D) Remedies for failures.--(i) If the Commission 
                determines, after reviewing the certification required 
                in subparagraph (C)(i), that such affiliate failed to 
                make the good faith effort required in subparagraph 
                (B)(i) or, after reviewing the certification required 
                in subparagraph (C)(ii), that such affiliate has 
                exceeded the percentage specified in subparagraph 
                (B)(ii), the Commission may impose penalties or 
                forfeitures as provided for in title V of this Act.
                    ``(ii) Any supplier claiming to be damaged because 
                a manufacturing affiliate failed to make the good faith 
                effort required in subparagraph (B)(i) may make 
                complaint to the Commission as provided for in section 
                208 of this Act, or may bring suit for the recovery of 
                actual damages for which such supplier claims such 
                affiliate may be liable under the provisions of this 
                Act in any district court of the United States of 
                competent jurisdiction.
                    ``(E) Annual report.--The Commission, in 
                consultation with the Secretary of Commerce, shall, on 
                an annual basis, determine the cost of component parts 
                manufactured outside the United States contained in all 
                telecommunications equipment and customer premises 
                equipment sold in the United States as a percentage of 
                the revenues from sales of such equipment in the 
                previous calendar year.
                    ``(F) Use of intellectual property in 
                manufacture.--A manufacturing affiliate may use 
                intellectual property created outside the United States 
                in the manufacture of telecommunications equipment and 
                customer premises equipment in the United States. A 
                component manufactured using such intellectual property 
                shall not be treated for purposes of subparagraph 
                (B)(ii) as a component manufactured outside the United 
                States solely on the basis of the use of such 
                intellectual property.
                    ``(G) Restrictions on commission authority.--The 
                Commission may not waive or alter the requirements of 
                this paragraph, except that the Commission, on an 
                annual basis, shall adjust the percentage specified in 
                subparagraph (B)(ii) to the percentage determined by 
                the Commission, in consultation with the Secretary of 
                Commerce, as directed in subparagraph (E).
            ``(5) Insulation of rate payers from manufacturing 
        affiliate debt.--Any debt incurred by any such manufacturing 
        affiliate may not be issued by its affiliated Bell Telephone 
        Company, and such manufacturing affiliate shall be prohibited 
        from incurring debt in a manner that would permit a creditor, 
        on default, to have recourse to the assets of its affiliated 
        Bell Telephone Company's telecommunications services business.
            ``(6) Relation to other affiliates.--A manufacturing 
        affiliate required by subsection (b) shall not be required to 
        operate separately from the other affiliates of its affiliated 
        Bell Telephone Company, but if an affiliate of a Bell Telephone 
        Company becomes affiliated with a manufacturing entity, such 
        affiliate shall be treated as a manufacturing affiliate of that 
        Bell Telephone Company and shall comply with the requirements 
        of this section.
            ``(7) Availability of equipment to other carriers.--A 
        manufacturing affiliate required by subsection (b) shall make 
        available, without discrimination or self-preference as to 
        price, delivery, terms, or conditions, to all regulated local 
        telephone exchange carriers for use with the public 
        telecommunications network, any telecommunications equipment, 
        including software integral to the functioning of 
        telecommunications equipment (including upgrades), manufactured 
        by such affiliate so long as each such purchasing carrier--
                    ``(A) does not either manufacture 
                telecommunications equipment, or have an affiliated 
                telecommunications equipment manufacturing entity, or
                    ``(B) agrees to make available, to the Bell 
                Telephone Company affiliated with such manufacturing 
                affiliate or any of the regulated local exchange 
                telephone company carrier affiliates of such company, 
                any telecommunications equipment, including software 
                integral to the functioning of telecommunications 
                equipment (including upgrades), manufactured for use 
                with the public telecommunications network by such 
                purchasing carrier or by any entity or organization 
                with which such purchasing carrier is affiliated.
            ``(8) Sales practices of manufacturing affiliates.--
                    ``(A) Prohibition of discontinuation of equipment 
                for which there is reasonable demand.--A manufacturing 
                affiliate required by subsection (b) shall not 
                discontinue or restrict sales to other regulated local 
                telephone exchange carriers of any telecommunications 
                equipment, including software integral to such 
                telecommunications equipment, including upgrades, that 
                such affiliate manufactures for sale as long as there 
                is reasonable demand for the equipment by such 
                carriers; except that such sales may be discontinued or 
                restricted if such manufacturing affiliate demonstrates 
                to the Commission that it is not making a profit, under 
                a marginal cost standard implemented by the Commission 
                by regulation, on the sale of such equipment.
                    ``(B) Determinations of reasonable demand.--Within 
                60 days, the Commission shall reach a determination as 
                to the existence of reasonable demand as referred to in 
                subparagraph (A), and in doing so, the Commission shall 
                consider--
                            ``(i) whether the continued manufacture of 
                        the equipment will be profitable;
                            ``(ii) whether the equipment is 
                        functionally or technologically obsolete;
                            ``(iii) whether the components necessary to 
                        manufacture the equipment continue to be 
                        available;
                            ``(iv) whether alternatives to the 
                        equipment are available in the market; and
                            ``(v) such other factors as the Commission 
                        deems necessary and proper.
            ``(9) Joint planning obligations.--Each Bell Telephone 
        Company shall, consistent with the antitrust laws, engage in 
        joint network planning and design with other regulated local 
        telephone exchange carriers operating in the same area of 
        interest; except that no participant in such planning shall 
        delay the introduction of new technology or the deployment of 
        facilities to provide telecommunications services, and 
        agreement with such other carriers shall not be required as a 
        prerequisite for such introduction or deployment.
    ``(d) Information Requirements.--
            ``(1) Filing of information on protocols and technical 
        requirements.--Each Bell Telephone Company shall, in accordance 
        with regulations prescribed by the Commission, maintain and 
        file with the Commission full and complete information with 
        respect to the protocols and technical requirements for 
        connection with and use of its telephone exchange service 
        facilities. Each such company shall report promptly to the 
        Commission any material changes or planned changes to such 
        protocols and requirements, and the schedule for implementation 
        of such changes or planned changes.
            ``(2) Filing as prerequisite to disclosure to affiliate.--A 
        Bell Telephone Company shall not disclose to any of its 
        affiliates any information required to be filed under paragraph 
        (1) unless that information is immediately so filed.
            ``(3) Access by competitors to information.--The Commission 
        may prescribe such additional regulations under this subsection 
        as may be necessary to ensure that manufacturers in competition 
        with a Bell Telephone Company's manufacturing affiliate have 
        access to the information with respect to the protocols and 
        technical requirements for connection with and use of its 
        telephone exchange service facilities required for such 
        competition that such company makes available to its 
        manufacturing affiliate.
            ``(4) Planning information.--Bell Telephone Companies shall 
        provide, to other regulated local telephone exchange carriers 
        operating in the same area of interest, timely information on 
        the planned deployment of telecommunications equipment, 
        including software integral to such telecommunications 
        equipment, including upgrades.
    ``(e) Additional Competition Requirements.--The Commission shall 
prescribe regulations requiring that any Bell Telephone Company which 
has an affiliate that engages in any manufacturing authorized by 
subsection (a) shall--
            ``(1) provide, to other manufacturers of telecommunications 
        equipment and customer premises equipment that is functionally 
        equivalent to equipment manufactured by the Bell Telephone 
        Company manufacturing affiliate, opportunities to sell such 
        equipment to such Bell Telephone Company which are comparable 
        to the opportunities which such Company provides to its 
        affiliates;
            ``(2) not subsidize its manufacturing affiliate with 
        revenues from its regulated telecommunications services; and
            ``(3) only acquire equipment from its manufacturing 
        affiliate at the open market price.
    ``(f) Collaboration Permitted.--A Bell Telephone Company and its 
affiliates may engage in close collaboration with any manufacturer of 
customer premises equipment or telecommunications equipment during the 
design and development of hardware, software, or combinations thereof 
related to such equipment.
    ``(g) Accessibility Requirements.--
            ``(1) Manufacturing.--The Commission shall, within 1 year 
        after enactment of this section, prescribe such regulations as 
        are necessary to ensure that telecommunications equipment and 
        customer premises equipment designed, developed, and fabricated 
        pursuant to the authority granted in this section shall be 
        accessible and usable by individuals with disabilities, 
        including individuals with functional limitations of hearing, 
        vision, movement, manipulation, speech, and interpretation of 
        information, unless the costs of making the equipment 
        accessible and usable would result in an undue burden or an 
        adverse competitive impact.
            ``(2) Network services.--The Commission shall, within 1 
        year after enactment of this section, prescribe such 
        regulations as are necessary to ensure that advances in network 
        services deployed by a Bell Telephone Company shall be 
        accessible and usable by individuals whose access might 
        otherwise be impeded by a disability or functional limitation, 
        unless the costs of making the services accessible and usable 
        would result in an undue burden or adverse competitive impact. 
        Such regulations shall seek to permit the use of both standard 
        and special equipment and seek to minimize the need of 
        individuals to acquire additional devices beyond those used by 
        the general public to obtain such access.
            ``(3) Compatibility.--The regulations prescribed under 
        paragraphs (1) and (2) shall require that whenever an undue 
        burden or adverse competitive impact would result from the 
        manufacturing or network services requirements in such 
        paragraphs, the manufacturing affiliate that designs, develops, 
        or fabricates the equipment or the Bell Telephone Company that 
        deploys the network service shall ensure that the equipment or 
        network service in question is compatible with existing 
        peripheral devices or specialized customer premises equipment 
        commonly used by persons with disabilities to achieve access, 
        unless doing so would result in an undue burden or adverse 
        competitive impact.
            ``(4) Definitions.--As used in this subsection:
                    ``(A) Undue burden.--The term `undue burden' means 
                significant difficulty or expense. In determining 
                whether an activity would result in an undue burden, 
                factors to be considered include--
                            ``(i) the nature and cost of the activity;
                            ``(ii) the impact on the operation of the 
                        facility involved in the manufacturing of the 
                        equipment or deployment of the network service;
                            ``(iii) the financial resources of the 
                        manufacturing affiliate in the case of 
                        manufacturing of equipment, for as long as 
                        applicable regulatory rules prohibit cross-
                        subsidization of equipment manufacturing with 
                        revenues from regulated telecommunications 
                        service or when the manufacturing activities 
                        are conducted in a separate subsidiary;
                            ``(iv) the financial resources of the Bell 
                        Telephone Company in the case of network 
                        services, or in the case of manufacturing of 
                        equipment if applicable regulatory rules permit 
                        cross-subsidization of equipment manufacturing 
                        with revenues from regulated telecommunications 
                        services and the manufacturing activities are 
                        not conducted in a separate subsidiary; and
                            ``(v) the type of operation or operations 
                        of the manufacturing affiliate or Bell 
                        Telephone Company, as applicable.
                    ``(B) Adverse competitive impact.--In determining 
                whether the activity would result in an adverse 
                competitive impact, the following factors will be 
                considered--
                            ``(i) whether such activity would raise the 
                        cost of the equipment or network service in 
                        question beyond the level at which there would 
                        be sufficient consumer demand by the general 
                        population to make the equipment or network 
                        service profitable; and
                            ``(ii) whether such activity would, with 
                        respect to the equipment or network service in 
                        question, put the manufacturing affiliate or 
                        Bell Telephone Company, as applicable, at a 
                        competitive disadvantage in comparison with one 
                        or more providers of one or more competing 
                        products and services. This factor may only be 
                        considered so long as competing manufacturers 
                        and network service providers are not held to 
                        the same obligation with respect to access by 
                        persons with disabilities.
                    ``(C) Activity.--
                            ``(i) the research, design, development, 
                        deployment, and fabrication activities 
                        necessary to comply with the requirements of 
                        this section; and
                            ``(ii) the acquisition of the related 
                        materials and equipment components.
            ``(5) Effective date.--The regulations required by this 
        subsection shall become effective 18 months after the date of 
        enactment of this section.
            ``(6) Impact of ada.--Nothing in this section will be 
        interpreted to limit or otherwise affect the application of the 
        Americans with Disabilities Act or its implementing 
        regulations.
    ``(h) Public Network Enhancement.--A Bell Telephone Company 
manufacturing affiliate shall, as a part of its overall research and 
development effort, establish a permanent program for the manufacturing 
research and development of products and applications for the 
enhancement of the public switched telephone network and to promote 
public access to advanced telecommunications services. Such program 
shall focus its work substantially on developing technological 
advancements in public telephone network applications, 
telecommunication equipment and products, and access solutions to new 
services and technology, including access by (1) public institutions, 
including educational and health care institutions; and (2) people with 
disabilities and functional limitations. Notwithstanding the 
limitations in subsection (a), a Bell Telephone Company and its 
affiliates may engage in such a program in conjunction with a Bell 
Telephone Company not so affiliated or any of its affiliates. The 
existence or establishment of such a program that is jointly provided 
by manufacturing affiliates of Bell Telephone Companies shall satisfy 
the requirements of this section as it pertains to all such affiliates 
of a Bell Telephone Company. Notwithstanding any other provision of 
this Act, the manufacturing affiliate may engage in close collaboration 
with its Bell Telephone Company Operating Company affiliate for the 
purpose of identifying public switched network requirements and 
solutions under this subsection.
    ``(i) Access Needs of Individuals with Disabilities.--A Bell 
Telephone Company and its affiliates that engage in any manufacturing 
authorized by subsection (a) shall accommodate the alternate access 
needs of individuals with disabilities, including individuals with 
functional limitations of hearing, vision, movement, manipulation, 
speech, and interpretation of information, unless such Company or 
affiliate can demonstrate that the accommodation would impose an undue 
hardship on such Company or affiliate. For purposes of this subsection, 
the term `undue hardship' has the meaning provided in section 101(10) 
of the Americans With Disabilities Act (42 U.S.C. 12112).-
    ``(j) Additional Rules Authorized.--The Commission may prescribe 
such additional rules and regulations as the Commission determines 
necessary to carry out the provisions of this section.
    ``(k) Administration and Enforcement Authority.--
            ``(1) Commission regulatory authority.--For the purposes of 
        administering and enforcing the provisions of this section and 
        the regulations prescribed thereunder, the Commission shall 
        have the same authority, power, and functions with respect to 
        any Bell Telephone Company as the Commission has in 
        administering and enforcing the provisions of this title with 
        respect to any common carrier subject to this Act.
            ``(2) Private actions.--Any regulated local telephone 
        exchange carrier injured by an act or omission of a Bell 
        Telephone Company or its manufacturing affiliate which violates 
        the requirements of paragraph (7) or (8) of subsection (c), or 
        the Commission's regulations implementing such paragraphs, may 
        initiate an action in a district court of the United States to 
        recover the full amount of damages sustained in consequence of 
        any such violation and obtain such orders from the court as are 
        necessary to terminate existing violations and to prevent 
        future violations; or such regulated local telephone exchange 
        carrier may seek relief from the Commission pursuant to 
        sections 206 through 209.
    ``(l) Effective Date; Rulemaking Schedule.--The authority of the 
Commission to prescribe regulations to carry out this section is 
effective on the date of enactment of this section. The Commission 
shall prescribe such regulations within 180 days after such date of 
enactment, and the authority to engage in the manufacturing authorized 
in subsection (a) shall not take effect until regulations prescribed by 
the Commission under subsections (c), (d), and (e) are in effect.
    ``(m) Existing Manufacturing Authority.--Nothing in this section 
shall prohibit any Bell Telephone Company from engaging, directly or 
through any affiliate, in any manufacturing activity in which any Bell 
Telephone Company or affiliate was authorized to engage on the date of 
enactment of this section.
    ``(n) Definitions.--As used in this section:
            ``(1) The term `affiliate' means any organization or entity 
        that, directly or indirectly, owns or controls, is owned or 
        controlled by, or is under common ownership with a Bell 
        Telephone Company. The terms `owns', `owned', and `ownership' 
        mean an equity interest of more than 10 percent.
            ``(2) The term `Bell Telephone Company' means those 
        companies listed in appendix A of the Modification of Final 
        Judgment, and includes any successor or assign of any such 
        company, but does not include any affiliate of any such 
        company.
            ``(3) The term `customer premises equipment' means 
        equipment employed on the premises of a person (other than a 
        carrier) to originate, route, or terminate telecommunications.
            ``(4) The term `manufacturing' has the same meaning as such 
        term has in the Modification of Final Judgment as interpreted 
        in United States v. Western Electric Civil Action No. 82-0192 
        (United States District Court, District of Columbia) (filed 
        December 3, 1987).
            ``(5) The term `manufacturing affiliate' means an affiliate 
        of a Bell Telephone Company established in accordance with 
        subsection (b) of this section.
            ``(6) The term `Modification of Final Judgment' means the 
        decree entered August 24, 1982, in United States v. Western 
        Electric Civil Action No. 82-0192 (United States District 
        Court, District of Columbia).
            ``(7) The term `telecommunications' means the transmission, 
        between or among points specified by the user, of information 
        of the user's choosing, without change in the form or content 
        of the information as sent and received, by means of an 
        electromagnetic transmission medium, including all 
        instrumentalities, facilities, apparatus, and services 
        (including the collection, storage, forwarding, switching, and 
        delivery of such information) essential to such transmission.
            ``(8) The term `telecommunications equipment' means 
        equipment, other than customer premises equipment, used by a 
        carrier to provide telecommunications services.
            ``(9) The term `telecommunications service' means the 
        offering for hire of telecommunications facilities, or of 
        telecommunications by means of such facilities.''.

SEC. 4. ACCESSIBILITY STANDARDS.

    Section 710 of the Communications Act of 1934 (47 U.S.C. 610) is 
amended by adding at the end the following new subsection:
    ``(i) Network capabilities to be deployed by common carriers shall 
be designed to accommodate the needs of individuals whose access might 
otherwise be impeded by a disability or functional limitation, unless 
such carrier can demonstrate that the accommodation would impose an 
undue hardship on such carriers. Such capabilities shall seek to permit 
the use of both standard and special equipment, and seek to minimize 
the need for individuals to acquire expensive devices to obtain such 
access. For purposes of this subsection, the term `undue hardship' has 
the meaning provided in section 101(10) of the Americans With 
Disabilities Act (42 U.S.C. 12112).''.

SEC. 5. EFFECTIVE DATE.

    (a) In General.--Section 228 of the Communications Act of 1934 (as 
added by this Act) shall be effective 30 days after the Federal 
Communications Commission prescribes final regulations pursuant to such 
section.
    (b) Rulemaking Authority Effective on Enactment.--Notwithstanding 
subsection (a) of this section, the authority of the Federal 
Communications Commission to prescribe regulations pursuant to such 
section 228 is effective upon enactment of this Act.

                                 <all>

HR 3609 IH----2
HR 3609 IH----3
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