S. 652

One Hundred Fourth Congress

of the

United States of America

AT THE SECOND SESSION

Begun and held at the City of Washington on Wednesday,

the third day of January, one thousand nine hundred and ninety-six

An Act

To promote competition and reduce regulation in order to secure lower prices and

higher quality services for American telecommunications consumers and encourage

the rapid deployment of new telecommunications technologies.

Be it enacted by the Senate and House of Representatives of

the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; REFERENCES.

(a) SHORT TITLE.—This Act may be cited as the ‘‘Telecommunications Act of 1996’’.

(b) REFERENCES.—Except as otherwise expressly provided,

whenever in this Act an amendment or repeal is expressed in

terms of an amendment to, or repeal of, a section or other provision,

the reference shall be considered to be made to a section or other

provision of the Communications Act of 1934 (47 U.S.C. 151 et

seq.).

SEC. 2. TABLE OF CONTENTS.

The table of contents for this Act is as follows:

Sec. 1. Short title; references.

Sec. 2. Table of contents.

Sec. 3. Definitions.

TITLE I—TELECOMMUNICATION SERVICES

Subtitle A—Telecommunications Services

Sec. 101. Establishment of part II of title II.

‘‘PART II—DEVELOPMENT OF COMPETITIVE MARKETS

‘‘Sec. 251. Interconnection.

‘‘Sec. 252. Procedures for negotiation, arbitration, and approval of agreements.

‘‘Sec. 253. Removal of barriers to entry.

‘‘Sec. 254. Universal service.

‘‘Sec. 255. Access by persons with disabilities.

‘‘Sec. 256. Coordination for interconnectivity.

‘‘Sec. 257. Market entry barriers proceeding.

‘‘Sec. 258. Illegal changes in subscriber carrier selections.

‘‘Sec. 259. Infrastructure sharing.

‘‘Sec. 260. Provision of telemessaging service.

‘‘Sec. 261. Effect on other requirements.’’ Sec. 102. Eligible telecommunications carriers.

Sec. 103. Exempt telecommunications companies.

Sec. 104. Nondiscrimination principle.

Subtitle B—Special Provisions Concerning Bell Operating Companies

Sec. 151. Bell operating company provisions.

‘‘PART III—SPECIAL PROVISIONS CONCERNING BELL OPERATING

COMPANIES

‘‘Sec. 271. Bell operating company entry into interLATA services.

‘‘Sec. 272. Separate affiliate; safeguards.
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‘‘Sec. 273. Manufacturing by Bell operating companies.

‘‘Sec. 274. Electronic publishing by Bell operating companies.

‘‘Sec. 275. Alarm monitoring services.

‘‘Sec. 276. Provision of payphone service.’’

TITLE II—BROADCAST SERVICES

Sec. 201. Broadcast spectrum flexibility. ‘‘Sec. 336. Broadcast spectrum flexibility.’’ Sec. 202. Broadcast ownership.

Sec. 203. Term of licenses.

Sec. 204. Broadcast license renewal procedures.

Sec. 205. Direct broadcast satellite service.

Sec. 206. Automated ship distress and safety systems. ‘‘Sec. 365. Automated ship distress and safety systems.’’ Sec. 207. Restrictions on over-the-air reception devices.

TITLE III—CABLE SERVICES

Sec. 301. Cable Act reform.

Sec. 302. Cable service provided by telephone companies.

‘‘PART V—VIDEO PROGRAMMING SERVICES PROVIDED BY TELEPHONE COMPANIES

‘‘Sec. 651. Regulatory treatment of video programming services.

‘‘Sec. 652. Prohibition on buy outs.

‘‘Sec. 653. Establishment of open video systems.’’ Sec. 303. Preemption of franchising authority regulation of telecommunications

services.

Sec. 304. Competitive availability of navigation devices. ‘‘Sec. 629. Competitive availability of navigation devices.’’ Sec. 305. Video programming accessibility. ‘‘Sec. 713. Video programming accessibility.’’

TITLE IV—REGULATORY REFORM

Sec. 401. Regulatory forbearance. ‘‘Sec. 10. Competition in provision of telecommunications service.’’ Sec. 402. Biennial review of regulations; regulatory relief. ‘‘Sec. 11. Regulatory reform.’’ Sec. 403. Elimination of unnecessary Commission regulations and functions.

TITLE V—OBSCENITY AND VIOLENCE

Subtitle A—Obscene, Harassing, and Wrongful Utilization of Telecommunications

Facilities

Sec. 501. Short title.

Sec. 502. Obscene or harassing use of telecommunications facilities under the Communications Act of 1934.

Sec. 503. Obscene programming on cable television.

Sec. 504. Scrambling of cable channels for nonsubscribers. ‘‘Sec. 640. Scrambling of cable channels for nonsubscribers.’’ Sec. 505. Scrambling of sexually explicit adult video service programming. ‘‘Sec. 641. Scrambling of sexually explicit adult video service programming.’’ Sec. 506. Cable operator refusal to carry certain programs.

Sec. 507. Clarification of current laws regarding communication of obscene materials through the use of computers. Sec. 508. Coercion and enticement of minors.

Sec. 509. Online family empowerment. ‘‘Sec. 230. Protection for private blocking and screening of offensive material.’’

Subtitle B—Violence

Sec. 551. Parental choice in television programming.

Sec. 552. Technology fund.

Subtitle C—Judicial Review

Sec. 561. Expedited review.

TITLE VI—EFFECT ON OTHER LAWS

Sec. 601. Applicability of consent decrees and other law.

Sec. 602. Preemption of local taxation with respect to direct-to-home services.

TITLE VII—MISCELLANEOUS PROVISIONS

Sec. 701. Prevention of unfair billing practices for information or services provided

over toll-free telephone calls.
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Sec. 702. Privacy of customer information.

‘‘Sec. 222. Privacy of customer information.’’

Sec. 703. Pole attachments.

Sec. 704. Facilities siting; radio frequency emission standards.

Sec. 705. Mobile services direct access to long distance carriers.

Sec. 706. Advanced telecommunications incentives.

Sec. 707. Telecommunications Development Fund.

‘‘Sec. 714. Telecommunications Development Fund.’’

Sec. 708. National Education Technology Funding Corporation.

Sec. 709. Report on the use of advanced telecommunications services for medical

purposes.

Sec. 710. Authorization of appropriations.

SEC. 3. DEFINITIONS.

(a) ADDITIONAL DEFINITIONS.—Section 3 (47 U.S.C. 153) is

amended—

(1) in subsection (r)—

(A) by inserting ‘‘(A)’’ after ‘‘means’’; and

(B) by inserting before the period at the end the following: ‘‘, or (B) comparable service provided through a system

of switches, transmission equipment, or other facilities (or

combination thereof) by which a subscriber can originate

and terminate a telecommunications service’’; and

(2) by adding at the end thereof the following:

‘‘(33) AFFILIATE.—The term ‘affiliate’ means a person that

(directly or indirectly) owns or controls, is owned or controlled

by, or is under common ownership or control with, another

person. For purposes of this paragraph, the term ‘own’ means

to own an equity interest (or the equivalent thereof) of more

than 10 percent.

‘‘(34) AT&T CONSENT DECREE.—The term ‘AT&T Consent

Decree’ means the order entered August 24, 1982, in the antitrust action styled United States v. Western Electric, Civil

Action No. 82–0192, in the United States District Court for

the District of Columbia, and includes any judgment or order

with respect to such action entered on or after August 24,

1982.

‘‘(35) BELL OPERATING COMPANY.—The term ‘Bell operating

company’—‘‘(A) means any of the following companies: Bell Telephone Company of Nevada, Illinois Bell Telephone Company, Indiana Bell Telephone Company, Incorporated,

Michigan Bell Telephone Company, New England Telephone and Telegraph Company, New Jersey Bell Telephone

Company, New York Telephone Company, U S West

Communications Company, South Central Bell Telephone

Company, Southern Bell Telephone and Telegraph Company, Southwestern Bell Telephone Company, The Bell

Telephone Company of Pennsylvania, The Chesapeake and

Potomac Telephone Company, The Chesapeake and Potomac Telephone Company of Maryland, The Chesapeake

and Potomac Telephone Company of Virginia, The Chesapeake and Potomac Telephone Company of West Virginia,

The Diamond State Telephone Company, The Ohio Bell

Telephone Company, The Pacific Telephone and Telegraph

Company, or Wisconsin Telephone Company; and

‘‘(B) includes any successor or assign of any such company that provides wireline telephone exchange service;

but
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‘‘(C) does not include an affiliate of any such company,

other than an affiliate described in subparagraph (A) or

(B).

‘‘(36) CABLE SERVICE.—The term ‘cable service’ has the

meaning given such term in section 602.

‘‘(37) CABLE SYSTEM.—The term ‘cable system’ has the

meaning given such term in section 602.

‘‘(38) CUSTOMER PREMISES EQUIPMENT.—The term ‘customer premises equipment’ means equipment employed on the

premises of a person (other than a carrier) to originate, route,

or terminate telecommunications.

‘‘(39) DIALING PARITY.—The term ‘dialing parity’ means

that a person that is not an affiliate of a local exchange carrier

is able to provide telecommunications services in such a manner

that customers have the ability to route automatically, without

the use of any access code, their telecommunications to the

telecommunications services provider of the customer’s designation from among 2 or more telecommunications services providers (including such local exchange carrier).

‘‘(40) EXCHANGE ACCESS.—The term ‘exchange access’

means the offering of access to telephone exchange services

or facilities for the purpose of the origination or termination

of telephone toll services.

‘‘(41) INFORMATION SERVICE.—The term ‘information service’ means the offering of a capability for generating, acquiring,

storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications, and includes

electronic publishing, but does not include any use of any

such capability for the management, control, or operation of

a telecommunications system or the management of a telecommunications service.

‘‘(42) INTERLATA SERVICE.—The term ‘interLATA service’

means telecommunications between a point located in a local

access and transport area and a point located outside such

area.

‘‘(43) LOCAL ACCESS AND TRANSPORT AREA.—The term ‘local

access and transport area’ or ‘LATA’ means a contiguous

geographic area— ‘‘(A) established before the date of enactment of the

Telecommunications Act of 1996 by a Bell operating company such that no exchange area includes points within

more than 1 metropolitan statistical area, consolidated

metropolitan statistical area, or State, except as expressly

permitted under the AT&T Consent Decree; or

‘‘(B) established or modified by a Bell operating company after such date of enactment and approved by the

Commission.

‘‘(44) LOCAL EXCHANGE CARRIER.—The term ‘local exchange

carrier’ means any person that is engaged in the provision

of telephone exchange service or exchange access. Such term

does not include a person insofar as such person is engaged

in the provision of a commercial mobile service under section

332(c), except to the extent that the Commission finds that

such service should be included in the definition of such term.

‘‘(45) NETWORK ELEMENT.—The term ‘network element’

means a facility or equipment used in the provision of a telecommunications service. Such term also includes features, func-
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tions, and capabilities that are provided by means of such

facility or equipment, including subscriber numbers, databases,

signaling systems, and information sufficient for billing and

collection or used in the transmission, routing, or other provision of a telecommunications service.

‘‘(46) NUMBER PORTABILITY.—The term ‘number portability’

means the ability of users of telecommunications services to

retain, at the same location, existing telecommunications numbers without impairment of quality, reliability, or convenience

when switching from one telecommunications carrier to

another.

‘‘(47) RURAL TELEPHONE COMPANY.—The term ‘rural telephone company’ means a local exchange carrier operating entity

to the extent that such entity—

‘‘(A) provides common carrier service to any local

exchange carrier study area that does not include either—

‘‘(i) any incorporated place of 10,000 inhabitants

or more, or any part thereof, based on the most recently

available population statistics of the Bureau of the

Census; or

‘‘(ii) any territory, incorporated or unincorporated,

included in an urbanized area, as defined by the

Bureau of the Census as of August 10, 1993;

‘‘(B) provides telephone exchange service, including

exchange access, to fewer than 50,000 access lines;

‘‘(C) provides telephone exchange service to any local

exchange carrier study area with fewer than 100,000 access

lines; or

‘‘(D) has less than 15 percent of its access lines in

communities of more than 50,000 on the date of enactment

of the Telecommunications Act of 1996.

‘‘(48) TELECOMMUNICATIONS.—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.

‘‘(49) TELECOMMUNICATIONS CARRIER.—The term ‘telecommunications carrier’ means any provider of telecommunications services, except that such term does not include

aggregators of telecommunications services (as defined in section 226). A telecommunications carrier shall be treated as

a common carrier under this Act only to the extent that it

is engaged in providing telecommunications services, except

that the Commission shall determine whether the provision

of fixed and mobile satellite service shall be treated as common

carriage.

‘‘(50) TELECOMMUNICATIONS EQUIPMENT.—The term ‘telecommunications equipment’ means equipment, other than customer premises equipment, used by a carrier to provide telecommunications services, and includes software integral to such

equipment (including upgrades).

‘‘(51) TELECOMMUNICATIONS SERVICE.—The term ‘telecommunications service’ means the offering of telecommunications for a fee directly to the public, or to such classes

of users as to be effectively available directly to the public,

regardless of the facilities used.’’.
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(b) COMMON TERMINOLOGY.—Except as otherwise provided in

this Act, the terms used in this Act have the meanings provided

in section 3 of the Communications Act of 1934 (47 U.S.C. 153),

as amended by this section. (c) STYLISTIC CONSISTENCY.—Section 3 (47 U.S.C. 153) is

amended—

(1) in subsections (e) and (n), by redesignating clauses (1), (2), and (3), as clauses (A), (B), and (C), respectively; (2) in subsection (w), by redesignating paragraphs (1) through (5) as subparagraphs (A) through (E), respectively; (3) in subsections (y) and (z), by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively; (4) by redesignating subsections (a) through (ff) as para- graphs (1) through (32); (5) by indenting such paragraphs 2 em spaces;

(6) by inserting after the designation of each such para- graph— (A) a heading, in a form consistent with the form of the heading of this subsection, consisting of the term

defined by such paragraph, or the first term so defined

if such paragraph defines more than one term; and (B) the words ‘‘The term’’;

(7) by changing the first letter of each defined term in such paragraphs from a capital to a lower case letter (except

for ‘‘United States’’, ‘‘State’’, ‘‘State commission’’, and ‘‘Great

Lakes Agreement’’); and (8) by reordering such paragraphs and the additional para- graphs added by subsection (a) in alphabetical order based

on the headings of such paragraphs and renumbering such

paragraphs as so reordered.

(d) CONFORMING AMENDMENTS.—The Act is amended—

(1) in section 225(a)(1), by striking ‘‘section 3(h)’’ and inserting ‘‘section 3’’;

(2) in section 332(d), by striking ‘‘section 3(n)’’ each place

it appears and inserting ‘‘section 3’’; and

(3) in sections 621(d)(3), 636(d), and 637(a)(2), by striking

‘‘section 3(v)’’ and inserting ‘‘section 3’’.

TITLE I—TELECOMMUNICATION

SERVICES

Subtitle A—Telecommunications Services

SEC. 101. ESTABLISHMENT OF PART II OF TITLE II.

(a) AMENDMENT.—Title II is amended by inserting after section

229 (47 U.S.C. 229) the following new part:

‘‘PART II—DEVELOPMENT OF COMPETITIVE

MARKETS

‘‘SEC. 251. INTERCONNECTION.

‘‘(a) GENERAL DUTY OF TELECOMMUNICATIONS CARRIERS.—Each

telecommunications carrier has the duty—

‘‘(1) to interconnect directly or indirectly with the facilities

and equipment of other telecommunications carriers; and
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‘‘(2) not to install network features, functions, or capabilities that do not comply with the guidelines and standards

established pursuant to section 255 or 256.

‘‘(b) OBLIGATIONS OF ALL LOCAL EXCHANGE CARRIERS.—Each

local exchange carrier has the following duties:

‘‘(1) RESALE.—The duty not to prohibit, and not to impose

unreasonable or discriminatory conditions or limitations on,

the resale of its telecommunications services.

‘‘(2) NUMBER PORTABILITY.—The duty to provide, to the

extent technically feasible, number portability in accordance

with requirements prescribed by the Commission.

‘‘(3) DIALING PARITY.—The duty to provide dialing parity

to competing providers of telephone exchange service and telephone toll service, and the duty to permit all such providers

to have nondiscriminatory access to telephone numbers, operator services, directory assistance, and directory listing, with

no unreasonable dialing delays.

‘‘(4) ACCESS TO RIGHTS-OF-WAY.—The duty to afford access

to the poles, ducts, conduits, and rights-of-way of such carrier

to competing providers of telecommunications services on rates,

terms, and conditions that are consistent with section 224.

‘‘(5) RECIPROCAL COMPENSATION.—The duty to establish

reciprocal compensation arrangements for the transport and

termination of telecommunications.

‘‘(c) ADDITIONAL OBLIGATIONS OF INCUMBENT LOCAL EXCHANGE

CARRIERS.—In addition to the duties contained in subsection (b),

each incumbent local exchange carrier has the following duties:

‘‘(1) DUTY TO NEGOTIATE.—The duty to negotiate in good

faith in accordance with section 252 the particular terms and

conditions of agreements to fulfill the duties described in paragraphs (1) through (5) of subsection (b) and this subsection.

The requesting telecommunications carrier also has the duty

to negotiate in good faith the terms and conditions of such

agreements. ‘‘(2) INTERCONNECTION.—The duty to provide, for the facilities and equipment of any requesting telecommunications carrier, interconnection with the local exchange carrier’s network— ‘‘(A) for the transmission and routing of telephone

exchange service and exchange access; ‘‘(B) at any technically feasible point within the carrier’s network;

‘‘(C) that is at least equal in quality to that provided

by the local exchange carrier to itself or to any subsidiary,

affiliate, or any other party to which the carrier provides

interconnection; and

‘‘(D) on rates, terms, and conditions that are just,

reasonable, and nondiscriminatory, in accordance with the

terms and conditions of the agreement and the requirements of this section and section 252.

‘‘(3) UNBUNDLED ACCESS.—The duty to provide, to any

requesting telecommunications carrier for the provision of a

telecommunications service, nondiscriminatory access to network elements on an unbundled basis at any technically feasible

point on rates, terms, and conditions that are just, reasonable,

and nondiscriminatory in accordance with the terms and conditions of the agreement and the requirements of this section

and section 252. An incumbent local exchange carrier shall
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provide such unbundled network elements in a manner that

allows requesting carriers to combine such elements in order

to provide such telecommunications service.

‘‘(4) RESALE.—The duty—

‘‘(A) to offer for resale at wholesale rates any telecommunications service that the carrier provides at retail

to subscribers who are not telecommunications carriers;

and

‘‘(B) not to prohibit, and not to impose unreasonable

or discriminatory conditions or limitations on, the resale

of such telecommunications service, except that a State

commission may, consistent with regulations prescribed by

the Commission under this section, prohibit a reseller that

obtains at wholesale rates a telecommunications service

that is available at retail only to a category of subscribers

from offering such service to a different category of

subscribers.

‘‘(5) NOTICE OF CHANGES.—The duty to provide reasonable

public notice of changes in the information necessary for the

transmission and routing of services using that local exchange

carrier’s facilities or networks, as well as of any other changes

that would affect the interoperability of those facilities and

networks.

‘‘(6) COLLOCATION.—The duty to provide, on rates, terms,

and conditions that are just, reasonable, and nondiscriminatory,

for physical collocation of equipment necessary for interconnection or access to unbundled network elements at the premises

of the local exchange carrier, except that the carrier may provide for virtual collocation if the local exchange carrier demonstrates to the State commission that physical collocation

is not practical for technical reasons or because of space limitations.

‘‘(d) IMPLEMENTATION.—

‘‘(1) IN GENERAL.—Within 6 months after the date of enactment of the Telecommunications Act of 1996, the Commission

shall complete all actions necessary to establish regulations

to implement the requirements of this section.

‘‘(2) ACCESS STANDARDS.—In determining what network elements should be made available for purposes of subsection

(c)(3), the Commission shall consider, at a minimum, whether—

‘‘(A) access to such network elements as are proprietary

in nature is necessary; and

‘‘(B) the failure to provide access to such network elements would impair the ability of the telecommunications

carrier seeking access to provide the services that it seeks

to offer.

‘‘(3) PRESERVATION OF STATE ACCESS REGULATIONS.—In

prescribing and enforcing regulations to implement the requirements of this section, the Commission shall not preclude the

enforcement of any regulation, order, or policy of a State

commission that—

‘‘(A) establishes access and interconnection obligations

of local exchange carriers;

‘‘(B) is consistent with the requirements of this section;

and
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‘‘(C) does not substantially prevent implementation of

the requirements of this section and the purposes of this

part.

‘‘(e) NUMBERING ADMINISTRATION.—

‘‘(1) COMMISSION AUTHORITY AND JURISDICTION.—The

Commission shall create or designate one or more impartial

entities to administer telecommunications numbering and to

make such numbers available on an equitable basis. The

Commission shall have exclusive jurisdiction over those portions

of the North American Numbering Plan that pertain to the

United States. Nothing in this paragraph shall preclude the

Commission from delegating to State commissions or other

entities all or any portion of such jurisdiction.

‘‘(2) COSTS.—The cost of establishing telecommunications

numbering administration arrangements and number portability shall be borne by all telecommunications carriers on

a competitively neutral basis as determined by the Commission.

‘‘(f) EXEMPTIONS, SUSPENSIONS, AND MODIFICATIONS.—

‘‘(1) EXEMPTION FOR CERTAIN RURAL TELEPHONE COMPANIES.—

‘‘(A) EXEMPTION.—Subsection (c) of this section shall

not apply to a rural telephone company until (i) such company has received a bona fide request for interconnection,

services, or network elements, and (ii) the State commission

determines (under subparagraph (B)) that such request

is not unduly economically burdensome, is technically feasible, and is consistent with section 254 (other than subsections (b)(7) and (c)(1)(D) thereof).

‘‘(B) STATE TERMINATION OF EXEMPTION AND

IMPLEMENTATION SCHEDULE.—The party making a bona

fide request of a rural telephone company for interconnection, services, or network elements shall submit a notice

of its request to the State commission. The State commission shall conduct an inquiry for the purpose of determining

whether to terminate the exemption under subparagraph

(A). Within 120 days after the State commission receives

notice of the request, the State commission shall terminate

the exemption if the request is not unduly economically

burdensome, is technically feasible, and is consistent with

section 254 (other than subsections (b)(7) and (c)(1)(D)

thereof). Upon termination of the exemption, a State

commission shall establish an implementation schedule for

compliance with the request that is consistent in time

and manner with Commission regulations. ‘‘(C) LIMITATION ON EXEMPTION.—The exemption provided by this paragraph shall not apply with respect to

a request under subsection (c) from a cable operator providing video programming, and seeking to provide any telecommunications service, in the area in which the rural

telephone company provides video programming. The

limitation contained in this subparagraph shall not apply

to a rural telephone company that is providing video

programming on the date of enactment of the Telecommunications Act of 1996.

‘‘(2) SUSPENSIONS AND MODIFICATIONS FOR RURAL CARRIERS.—A local exchange carrier with fewer than 2 percent

of the Nation’s subscriber lines installed in the aggregate
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nationwide may petition a State commission for a suspension

or modification of the application of a requirement or requirements of subsection (b) or (c) to telephone exchange service

facilities specified in such petition. The State commission shall

grant such petition to the extent that, and for such duration

as, the State commission determines that such suspension or

modification—

‘‘(A) is necessary—

‘‘(i) to avoid a significant adverse economic impact

on users of telecommunications services generally;

‘‘(ii) to avoid imposing a requirement that is unduly

economically burdensome; or

‘‘(iii) to avoid imposing a requirement that is technically infeasible; and

‘‘(B) is consistent with the public interest, convenience,

and necessity.

The State commission shall act upon any petition filed under

this paragraph within 180 days after receiving such petition.

Pending such action, the State commission may suspend

enforcement of the requirement or requirements to which the

petition applies with respect to the petitioning carrier or carriers.

‘‘(g) CONTINUED ENFORCEMENT OF EXCHANGE ACCESS AND

INTERCONNECTION REQUIREMENTS.—On and after the date of enactment of the Telecommunications Act of 1996, each local exchange

carrier, to the extent that it provides wireline services, shall provide

exchange access, information access, and exchange services for such

access to interexchange carriers and information service providers

in accordance with the same equal access and nondiscriminatory

interconnection restrictions and obligations (including receipt of

compensation) that apply to such carrier on the date immediately

preceding the date of enactment of the Telecommunications Act

of 1996 under any court order, consent decree, or regulation, order,

or policy of the Commission, until such restrictions and obligations

are explicitly superseded by regulations prescribed by the Commission after such date of enactment. During the period beginning

on such date of enactment and until such restrictions and obligations are so superseded, such restrictions and obligations shall

be enforceable in the same manner as regulations of the Commission.

‘‘(h) DEFINITION OF INCUMBENT LOCAL EXCHANGE CARRIER.— ‘‘(1) DEFINITION.—For purposes of this section, the term

‘incumbent local exchange carrier’ means, with respect to an

area, the local exchange carrier that— ‘‘(A) on the date of enactment of the Telecommunications Act of 1996, provided telephone exchange service

in such area; and

‘‘(B)(i) on such date of enactment, was deemed to be

a member of the exchange carrier association pursuant

to section 69.601(b) of the Commission’s regulations (47

C.F.R. 69.601(b)); or

‘‘(ii) is a person or entity that, on or after such date

of enactment, became a successor or assign of a member

described in clause (i).

‘‘(2) TREATMENT OF COMPARABLE CARRIERS AS INCUMBENTS.—The Commission may, by rule, provide for the treatment of a local exchange carrier (or class or category thereof)
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as an incumbent local exchange carrier for purposes of this

section if—

‘‘(A) such carrier occupies a position in the market

for telephone exchange service within an area that is comparable to the position occupied by a carrier described

in paragraph (1);

‘‘(B) such carrier has substantially replaced an incumbent local exchange carrier described in paragraph (1);

and

‘‘(C) such treatment is consistent with the public

interest, convenience, and necessity and the purposes of

this section.

‘‘(i) SAVINGS PROVISION.—Nothing in this section shall be construed to limit or otherwise affect the Commission’s authority under

section 201.

‘‘SEC. 252. PROCEDURES FOR NEGOTIATION, ARBITRATION, AND

APPROVAL OF AGREEMENTS.

‘‘(a) AGREEMENTS ARRIVED AT THROUGH NEGOTIATION.—

‘‘(1) VOLUNTARY NEGOTIATIONS.—Upon receiving a request

for interconnection, services, or network elements pursuant

to section 251, an incumbent local exchange carrier may negotiate and enter into a binding agreement with the requesting

telecommunications carrier or carriers without regard to the

standards set forth in subsections (b) and (c) of section 251.

The agreement shall include a detailed schedule of itemized

charges for interconnection and each service or network element

included in the agreement. The agreement, including any interconnection agreement negotiated before the date of enactment

of the Telecommunications Act of 1996, shall be submitted

to the State commission under subsection (e) of this section.

‘‘(2) MEDIATION.—Any party negotiating an agreement

under this section may, at any point in the negotiation, ask

a State commission to participate in the negotiation and to

mediate any differences arising in the course of the negotiation.

‘‘(b) AGREEMENTS ARRIVED AT THROUGH COMPULSORY ARBITRA- TION.— ‘‘(1) ARBITRATION.—During the period from the 135th to the 160th day (inclusive) after the date on which an incumbent

local exchange carrier receives a request for negotiation under

this section, the carrier or any other party to the negotiation

may petition a State commission to arbitrate any open issues. ‘‘(2) DUTY OF PETITIONER.— ‘‘(A) A party that petitions a State commission under paragraph (1) shall, at the same time as it submits the

petition, provide the State commission all relevant documentation concerning—

‘‘(i) the unresolved issues;

‘‘(ii) the position of each of the parties with respect

to those issues; and

‘‘(iii) any other issue discussed and resolved by

the parties.

‘‘(B) A party petitioning a State commission under

paragraph (1) shall provide a copy of the petition and

any documentation to the other party or parties not later

than the day on which the State commission receives the

petition.
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‘‘(3) OPPORTUNITY TO RESPOND.—A non-petitioning party

to a negotiation under this section may respond to the other

party’s petition and provide such additional information as

it wishes within 25 days after the State commission receives

the petition.

‘‘(4) ACTION BY STATE COMMISSION.—

‘‘(A) The State commission shall limit its consideration

of any petition under paragraph (1) (and any response

thereto) to the issues set forth in the petition and in the

response, if any, filed under paragraph (3).

‘‘(B) The State commission may require the petitioning

party and the responding party to provide such information

as may be necessary for the State commission to reach

a decision on the unresolved issues. If any party refuses

or fails unreasonably to respond on a timely basis to any

reasonable request from the State commission, then the

State commission may proceed on the basis of the best

information available to it from whatever source derived.

‘‘(C) The State commission shall resolve each issue

set forth in the petition and the response, if any, by imposing appropriate conditions as required to implement subsection (c) upon the parties to the agreement, and shall

conclude the resolution of any unresolved issues not later

than 9 months after the date on which the local exchange

carrier received the request under this section.

‘‘(5) REFUSAL TO NEGOTIATE.—The refusal of any other

party to the negotiation to participate further in the negotiations, to cooperate with the State commission in carrying out

its function as an arbitrator, or to continue to negotiate in

good faith in the presence, or with the assistance, of the State

commission shall be considered a failure to negotiate in good

faith.

‘‘(c) STANDARDS FOR ARBITRATION.—In resolving by arbitration

under subsection (b) any open issues and imposing conditions upon

the parties to the agreement, a State commission shall—

‘‘(1) ensure that such resolution and conditions meet the

requirements of section 251, including the regulations prescribed by the Commission pursuant to section 251;

‘‘(2) establish any rates for interconnection, services, or

network elements according to subsection (d); and

‘‘(3) provide a schedule for implementation of the terms

and conditions by the parties to the agreement.

‘‘(d) PRICING STANDARDS.—

‘‘(1) INTERCONNECTION AND NETWORK ELEMENT CHARGES.—

Determinations by a State commission of the just and reasonable rate for the interconnection of facilities and equipment

for purposes of subsection (c)(2) of section 251, and the just

and reasonable rate for network elements for purposes of subsection (c)(3) of such section—

‘‘(A) shall be—

‘‘(i) based on the cost (determined without reference to a rate-of-return or other rate-based proceeding) of providing the interconnection or network element (whichever is applicable), and

‘‘(ii) nondiscriminatory, and

‘‘(B) may include a reasonable profit.
S. 652—13

‘‘(2) CHARGES FOR TRANSPORT AND TERMINATION OF TRAFFIC.—

‘‘(A) IN GENERAL.—For the purposes of compliance by

an incumbent local exchange carrier with section 251(b)(5),

a State commission shall not consider the terms and conditions for reciprocal compensation to be just and reasonable

unless—

‘‘(i) such terms and conditions provide for the

mutual and reciprocal recovery by each carrier of costs

associated with the transport and termination on each

carrier’s network facilities of calls that originate on

the network facilities of the other carrier; and

‘‘(ii) such terms and conditions determine such

costs on the basis of a reasonable approximation of

the additional costs of terminating such calls.

‘‘(B) RULES OF CONSTRUCTION.—This paragraph shall

not be construed—

‘‘(i) to preclude arrangements that afford the

mutual recovery of costs through the offsetting of reciprocal obligations, including arrangements that waive

mutual recovery (such as bill-and-keep arrangements);

or

‘‘(ii) to authorize the Commission or any State

commission to engage in any rate regulation proceeding

to establish with particularity the additional costs of

transporting or terminating calls, or to require carriers

to maintain records with respect to the additional costs

of such calls.

‘‘(3) WHOLESALE PRICES FOR TELECOMMUNICATIONS SERV- ICES.—For the purposes of section 251(c)(4), a State commission

shall determine wholesale rates on the basis of retail rates

charged to subscribers for the telecommunications service

requested, excluding the portion thereof attributable to any

marketing, billing, collection, and other costs that will be

avoided by the local exchange carrier.

‘‘(e) APPROVAL BY STATE COMMISSION.— ‘‘(1) APPROVAL REQUIRED.—Any interconnection agreement

adopted by negotiation or arbitration shall be submitted for

approval to the State commission. A State commission to which

an agreement is submitted shall approve or reject the agreement, with written findings as to any deficiencies. ‘‘(2) GROUNDS FOR REJECTION.—The State commission may

only reject—‘‘(A) an agreement (or any portion thereof) adopted by negotiation under subsection (a) if it finds that—

‘‘(i) the agreement (or portion thereof) discriminates against a telecommunications carrier not a party

to the agreement; or

‘‘(ii) the implementation of such agreement or portion is not consistent with the public interest, convenience, and necessity; or

‘‘(B) an agreement (or any portion thereof) adopted

by arbitration under subsection (b) if it finds that the

agreement does not meet the requirements of section 251,

including the regulations prescribed by the Commission

pursuant to section 251, or the standards set forth in

subsection (d) of this section.
S. 652—14

‘‘(3) PRESERVATION OF AUTHORITY.—Notwithstanding paragraph (2), but subject to section 253, nothing in this section

shall prohibit a State commission from establishing or enforcing

other requirements of State law in its review of an agreement,

including requiring compliance with intrastate telecommunications service quality standards or requirements.

‘‘(4) SCHEDULE FOR DECISION.—If the State commission does

not act to approve or reject the agreement within 90 days

after submission by the parties of an agreement adopted by

negotiation under subsection (a), or within 30 days after

submission by the parties of an agreement adopted by arbitration under subsection (b), the agreement shall be deemed

approved. No State court shall have jurisdiction to review the

action of a State commission in approving or rejecting an agreement under this section.

‘‘(5) COMMISSION TO ACT IF STATE WILL NOT ACT.—If a

State commission fails to act to carry out its responsibility

under this section in any proceeding or other matter under

this section, then the Commission shall issue an order preempting the State commission’s jurisdiction of that proceeding or

matter within 90 days after being notified (or taking notice)

of such failure, and shall assume the responsibility of the

State commission under this section with respect to the proceeding or matter and act for the State commission.

‘‘(6) REVIEW OF STATE COMMISSION ACTIONS.—In a case

in which a State fails to act as described in paragraph (5),

the proceeding by the Commission under such paragraph and

any judicial review of the Commission’s actions shall be the

exclusive remedies for a State commission’s failure to act. In

any case in which a State commission makes a determination

under this section, any party aggrieved by such determination

may bring an action in an appropriate Federal district court

to determine whether the agreement or statement meets the

requirements of section 251 and this section.

‘‘(f) STATEMENTS OF GENERALLY AVAILABLE TERMS.— ‘‘(1) IN GENERAL.—A Bell operating company may prepare

and file with a State commission a statement of the terms

and conditions that such company generally offers within that

State to comply with the requirements of section 251 and

the regulations thereunder and the standards applicable under

this section.

‘‘(2) STATE COMMISSION REVIEW.—A State commission may

not approve such statement unless such statement complies

with subsection (d) of this section and section 251 and the

regulations thereunder. Except as provided in section 253, nothing in this section shall prohibit a State commission from

establishing or enforcing other requirements of State law in

its review of such statement, including requiring compliance

with intrastate telecommunications service quality standards

or requirements.

‘‘(3) SCHEDULE FOR REVIEW.—The State commission to

which a statement is submitted shall, not later than 60 days

after the date of such submission—

‘‘(A) complete the review of such statement under paragraph (2) (including any reconsideration thereof), unless

the submitting carrier agrees to an extension of the period

for such review; or
S. 652—15

‘‘(B) permit such statement to take effect.

‘‘(4) AUTHORITY TO CONTINUE REVIEW.—Paragraph (3) shall

not preclude the State commission from continuing to review

a statement that has been permitted to take effect under

subparagraph (B) of such paragraph or from approving or disapproving such statement under paragraph (2).

‘‘(5) DUTY TO NEGOTIATE NOT AFFECTED.—The submission

or approval of a statement under this subsection shall not

relieve a Bell operating company of its duty to negotiate the

terms and conditions of an agreement under section 251.

‘‘(g) CONSOLIDATION OF STATE PROCEEDINGS.—Where not

inconsistent with the requirements of this Act, a State commission

may, to the extent practical, consolidate proceedings under sections

214(e), 251(f), 253, and this section in order to reduce administrative

burdens on telecommunications carriers, other parties to the

proceedings, and the State commission in carrying out its responsibilities under this Act.

‘‘(h) FILING REQUIRED.—A State commission shall make a copy

of each agreement approved under subsection (e) and each statement approved under subsection (f) available for public inspection

and copying within 10 days after the agreement or statement is

approved. The State commission may charge a reasonable and

nondiscriminatory fee to the parties to the agreement or to the

party filing the statement to cover the costs of approving and

filing such agreement or statement.

‘‘(i) AVAILABILITY TO OTHER TELECOMMUNICATIONS CARRIERS.—

A local exchange carrier shall make available any interconnection,

service, or network element provided under an agreement approved

under this section to which it is a party to any other requesting

telecommunications carrier upon the same terms and conditions

as those provided in the agreement. ‘‘(j) DEFINITION OF INCUMBENT LOCAL EXCHANGE CARRIER.— For purposes of this section, the term ‘incumbent local exchange

carrier’ has the meaning provided in section 251(h).

‘‘SEC. 253. REMOVAL OF BARRIERS TO ENTRY.

‘‘(a) IN GENERAL.—No State or local statute or regulation, or

other State or local legal requirement, may prohibit or have the

effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service.

‘‘(b) STATE REGULATORY AUTHORITY.—Nothing in this section

shall affect the ability of a State to impose, on a competitively

neutral basis and consistent with section 254, requirements necessary to preserve and advance universal service, protect the public

safety and welfare, ensure the continued quality of telecommunications services, and safeguard the rights of consumers.

‘‘(c) STATE AND LOCAL GOVERNMENT AUTHORITY.—Nothing in

this section affects the authority of a State or local government

to manage the public rights-of-way or to require fair and reasonable

compensation from telecommunications providers, on a competitively neutral and nondiscriminatory basis, for use of public rightsof-way on a nondiscriminatory basis, if the compensation required

is publicly disclosed by such government.

‘‘(d) PREEMPTION.—If, after notice and an opportunity for public

comment, the Commission determines that a State or local government has permitted or imposed any statute, regulation, or legal

requirement that violates subsection (a) or (b), the Commission
S. 652—16

shall preempt the enforcement of such statute, regulation, or legal

requirement to the extent necessary to correct such violation or

inconsistency.

‘‘(e) COMMERCIAL MOBILE SERVICE PROVIDERS.—Nothing in this

section shall affect the application of section 332(c)(3) to commercial

mobile service providers.

‘‘(f) RURAL MARKETS.—It shall not be a violation of this section

for a State to require a telecommunications carrier that seeks

to provide telephone exchange service or exchange access in a

service area served by a rural telephone company to meet the

requirements in section 214(e)(1) for designation as an eligible

telecommunications carrier for that area before being permitted

to provide such service. This subsection shall not apply—

‘‘(1) to a service area served by a rural telephone company

that has obtained an exemption, suspension, or modification

of section 251(c)(4) that effectively prevents a competitor from

meeting the requirements of section 214(e)(1); and

‘‘(2) to a provider of commercial mobile services.

‘‘SEC. 254. UNIVERSAL SERVICE.

‘‘(a) PROCEDURES TO REVIEW UNIVERSAL SERVICE REQUIREMENTS.—

‘‘(1) FEDERAL-STATE JOINT BOARD ON UNIVERSAL SERVICE.—

Within one month after the date of enactment of the Telecommunications Act of 1996, the Commission shall institute

and refer to a Federal-State Joint Board under section 410(c)

a proceeding to recommend changes to any of its regulations

in order to implement sections 214(e) and this section, including

the definition of the services that are supported by Federal

universal service support mechanisms and a specific timetable

for completion of such recommendations. In addition to the

members of the Joint Board required under section 410(c),

one member of such Joint Board shall be a State-appointed

utility consumer advocate nominated by a national organization

of State utility consumer advocates. The Joint Board shall,

after notice and opportunity for public comment, make its recommendations to the Commission 9 months after the date

of enactment of the Telecommunications Act of 1996.

‘‘(2) COMMISSION ACTION.—The Commission shall initiate

a single proceeding to implement the recommendations from

the Joint Board required by paragraph (1) and shall complete

such proceeding within 15 months after the date of enactment

of the Telecommunications Act of 1996. The rules established

by such proceeding shall include a definition of the services

that are supported by Federal universal service support mechanisms and a specific timetable for implementation. Thereafter,

the Commission shall complete any proceeding to implement

subsequent recommendations from any Joint Board on universal service within one year after receiving such recommendations.

‘‘(b) UNIVERSAL SERVICE PRINCIPLES.—The Joint Board and

the Commission shall base policies for the preservation and

advancement of universal service on the following principles:

‘‘(1) QUALITY AND RATES.—Quality services should be available at just, reasonable, and affordable rates.
S. 652—17

‘‘(2) ACCESS TO ADVANCED SERVICES.—Access to advanced

telecommunications and information services should be provided in all regions of the Nation.

‘‘(3) ACCESS IN RURAL AND HIGH COST AREAS.—Consumers

in all regions of the Nation, including low-income consumers

and those in rural, insular, and high cost areas, should have

access to telecommunications and information services, including interexchange services and advanced telecommunications

and information services, that are reasonably comparable to

those services provided in urban areas and that are available

at rates that are reasonably comparable to rates charged for

similar services in urban areas.

‘‘(4) EQUITABLE AND NONDISCRIMINATORY CONTRIBUTIONS.—

All providers of telecommunications services should make an

equitable and nondiscriminatory contribution to the preservation and advancement of universal service.

‘‘(5) SPECIFIC AND PREDICTABLE SUPPORT MECHANISMS.—

There should be specific, predictable and sufficient Federal

and State mechanisms to preserve and advance universal service.

‘‘(6) ACCESS TO ADVANCED TELECOMMUNICATIONS SERVICES

FOR SCHOOLS, HEALTH CARE, AND LIBRARIES.—Elementary and

secondary schools and classrooms, health care providers, and

libraries should have access to advanced telecommunications

services as described in subsection (h).

‘‘(7) ADDITIONAL PRINCIPLES.—Such other principles as the

Joint Board and the Commission determine are necessary and

appropriate for the protection of the public interest, convenience, and necessity and are consistent with this Act.

‘‘(c) DEFINITION.— ‘‘(1) IN GENERAL.—Universal service is an evolving level

of telecommunications services that the Commission shall

establish periodically under this section, taking into account

advances in telecommunications and information technologies

and services. The Joint Board in recommending, and the

Commission in establishing, the definition of the services that

are supported by Federal universal service support mechanisms

shall consider the extent to which such telecommunications

services—

‘‘(A) are essential to education, public health, or public

safety; ‘‘(B) have, through the operation of market choices

by customers, been subscribed to by a substantial majority

of residential customers;

‘‘(C) are being deployed in public telecommunications

networks by telecommunications carriers; and

‘‘(D) are consistent with the public interest, convenience, and necessity.

‘‘(2) ALTERATIONS AND MODIFICATIONS.—The Joint Board

may, from time to time, recommend to the Commission modifications in the definition of the services that are supported

by Federal universal service support mechanisms.

‘‘(3) SPECIAL SERVICES.—In addition to the services included

in the definition of universal service under paragraph (1), the

Commission may designate additional services for such support

mechanisms for schools, libraries, and health care providers

for the purposes of subsection (h).
S. 652—18

‘‘(d) TELECOMMUNICATIONS CARRIER CONTRIBUTION.—Every

telecommunications carrier that provides interstate telecommunications services shall contribute, on an equitable and nondiscriminatory basis, to the specific, predictable, and sufficient mechanisms

established by the Commission to preserve and advance universal

service. The Commission may exempt a carrier or class of carriers

from this requirement if the carrier’s telecommunications activities

are limited to such an extent that the level of such carrier’s contribution to the preservation and advancement of universal service would

be de minimis. Any other provider of interstate telecommunications

may be required to contribute to the preservation and advancement

of universal service if the public interest so requires.

‘‘(e) UNIVERSAL SERVICE SUPPORT.—After the date on which

Commission regulations implementing this section take effect, only

an eligible telecommunications carrier designated under section

214(e) shall be eligible to receive specific Federal universal service

support. A carrier that receives such support shall use that support

only for the provision, maintenance, and upgrading of facilities

and services for which the support is intended. Any such support

should be explicit and sufficient to achieve the purposes of this

section.

‘‘(f) STATE AUTHORITY.—A State may adopt regulations not

inconsistent with the Commission’s rules to preserve and advance

universal service. Every telecommunications carrier that provides

intrastate telecommunications services shall contribute, on an equitable and nondiscriminatory basis, in a manner determined by

the State to the preservation and advancement of universal service

in that State. A State may adopt regulations to provide for additional definitions and standards to preserve and advance universal

service within that State only to the extent that such regulations

adopt additional specific, predictable, and sufficient mechanisms

to support such definitions or standards that do not rely on or

burden Federal universal service support mechanisms.

‘‘(g) INTEREXCHANGE AND INTERSTATE SERVICES.—Within 6

months after the date of enactment of the Telecommunications

Act of 1996, the Commission shall adopt rules to require that

the rates charged by providers of interexchange telecommunications

services to subscribers in rural and high cost areas shall be no

higher than the rates charged by each such provider to its subscribers in urban areas. Such rules shall also require that a provider

of interstate interexchange telecommunications services shall provide such services to its subscribers in each State at rates no

higher than the rates charged to its subscribers in any other State. ‘‘(h) TELECOMMUNICATIONS SERVICES FOR CERTAIN PROVID- ERS.—

‘‘(1) IN GENERAL.—

‘‘(A) HEALTH CARE PROVIDERS FOR RURAL AREAS.—A

telecommunications carrier shall, upon receiving a bona

fide request, provide telecommunications services which

are necessary for the provision of health care services in

a State, including instruction relating to such services,

to any public or nonprofit health care provider that serves

persons who reside in rural areas in that State at rates

that are reasonably comparable to rates charged for similar

services in urban areas in that State. A telecommunications

carrier providing service under this paragraph shall be

entitled to have an amount equal to the difference, if any,
S. 652—19

between the rates for services provided to health care

providers for rural areas in a State and the rates for

similar services provided to other customers in comparable

rural areas in that State treated as a service obligation

as a part of its obligation to participate in the mechanisms

to preserve and advance universal service.

‘‘(B) EDUCATIONAL PROVIDERS AND LIBRARIES.—All telecommunications carriers serving a geographic area shall,

upon a bona fide request for any of its services that are

within the definition of universal service under subsection

(c)(3), provide such services to elementary schools, secondary schools, and libraries for educational purposes at rates

less than the amounts charged for similar services to other

parties. The discount shall be an amount that the Commission, with respect to interstate services, and the States,

with respect to intrastate services, determine is appropriate

and necessary to ensure affordable access to and use of

such services by such entities. A telecommunications carrier

providing service under this paragraph shall—

‘‘(i) have an amount equal to the amount of the

discount treated as an offset to its obligation to contribute to the mechanisms to preserve and advance universal service, or

‘‘(ii) notwithstanding the provisions of subsection

(e) of this section, receive reimbursement utilizing the

support mechanisms to preserve and advance universal

service.

‘‘(2) ADVANCED SERVICES.—The Commission shall establish

competitively neutral rules—

‘‘(A) to enhance, to the extent technically feasible and

economically reasonable, access to advanced telecommunications and information services for all public and nonprofit

elementary and secondary school classrooms, health care

providers, and libraries; and

‘‘(B) to define the circumstances under which a telecommunications carrier may be required to connect its

network to such public institutional telecommunications

users.

‘‘(3) TERMS AND CONDITIONS.—Telecommunications services

and network capacity provided to a public institutional telecommunications user under this subsection may not be sold,

resold, or otherwise transferred by such user in consideration

for money or any other thing of value.

‘‘(4) ELIGIBILITY OF USERS.—No entity listed in this subsection shall be entitled to preferential rates or treatment as

required by this subsection, if such entity operates as a forprofit business, is a school described in paragraph (5)(A) with

an endowment of more than $50,000,000, or is a library not

eligible for participation in State-based plans for funds under

title III of the Library Services and Construction Act (20 U.S.C.

335c et seq.).

‘‘(5) DEFINITIONS.—For purposes of this subsection:

‘‘(A) ELEMENTARY AND SECONDARY SCHOOLS.—The term

‘elementary and secondary schools’ means elementary

schools and secondary schools, as defined in paragraphs

(14) and (25), respectively, of section 14101 of the
S. 652—20

Elementary and Secondary Education Act of 1965 (20

U.S.C. 8801).

‘‘(B) HEALTH CARE PROVIDER.—The term ‘health care

provider’ means—

‘‘(i) post-secondary educational institutions offering

health care instruction, teaching hospitals, and medical

schools;

‘‘(ii) community health centers or health centers

providing health care to migrants;

‘‘(iii) local health departments or agencies;

‘‘(iv) community mental health centers;

‘‘(v) not-for-profit hospitals;

‘‘(vi) rural health clinics; and

‘‘(vii) consortia of health care providers consisting

of one or more entities described in clauses (i) through

(vi).

‘‘(C) PUBLIC INSTITUTIONAL TELECOMMUNICATIONS

USER.—The term ‘public institutional telecommunications

user’ means an elementary or secondary school, a library,

or a health care provider as those terms are defined in

this paragraph.

‘‘(i) CONSUMER PROTECTION.—The Commission and the States

should ensure that universal service is available at rates that

are just, reasonable, and affordable.

‘‘(j) LIFELINE ASSISTANCE.—Nothing in this section shall affect

the collection, distribution, or administration of the Lifeline Assistance Program provided for by the Commission under regulations

set forth in section 69.117 of title 47, Code of Federal Regulations,

and other related sections of such title.

‘‘(k) SUBSIDY OF COMPETITIVE SERVICES PROHIBITED.—A telecommunications carrier may not use services that are not competitive to subsidize services that are subject to competition. The

Commission, with respect to interstate services, and the States,

with respect to intrastate services, shall establish any necessary

cost allocation rules, accounting safeguards, and guidelines to

ensure that services included in the definition of universal service

bear no more than a reasonable share of the joint and common

costs of facilities used to provide those services.

‘‘SEC. 255. ACCESS BY PERSONS WITH DISABILITIES.

‘‘(a) DEFINITIONS.—As used in this section—

‘‘(1) DISABILITY.—The term ‘disability’ has the meaning given to it by section 3(2)(A) of the Americans with Disabilities

Act of 1990 (42 U.S.C. 12102(2)(A)).

‘‘(2) READILY ACHIEVABLE.—The term ‘readily achievable’

has the meaning given to it by section 301(9) of that Act

(42 U.S.C. 12181(9)).

‘‘(b) MANUFACTURING.—A manufacturer of telecommunications

equipment or customer premises equipment shall ensure that the

equipment is designed, developed, and fabricated to be accessible

to and usable by individuals with disabilities, if readily achievable.

‘‘(c) TELECOMMUNICATIONS SERVICES.—A provider of telecommunications service shall ensure that the service is accessible

to and usable by individuals with disabilities, if readily achievable.

‘‘(d) COMPATIBILITY.—Whenever the requirements of subsections

(b) and (c) are not readily achievable, such a manufacturer or

provider shall ensure that the equipment or service is compatible
S. 652—21

with existing peripheral devices or specialized customer premises

equipment commonly used by individuals with disabilities to achieve

access, if readily achievable.

‘‘(e) GUIDELINES.—Within 18 months after the date of enactment of the Telecommunications Act of 1996, the Architectural

and Transportation Barriers Compliance Board shall develop guidelines for accessibility of telecommunications equipment and customer premises equipment in conjunction with the Commission.

The Board shall review and update the guidelines periodically.

‘‘(f) NO ADDITIONAL PRIVATE RIGHTS AUTHORIZED.—Nothing in

this section shall be construed to authorize any private right of

action to enforce any requirement of this section or any regulation

thereunder. The Commission shall have exclusive jurisdiction with

respect to any complaint under this section.

‘‘SEC. 256. COORDINATION FOR INTERCONNECTIVITY.

‘‘(a) PURPOSE.—It is the purpose of this section—

‘‘(1) to promote nondiscriminatory accessibility by the

broadest number of users and vendors of communications products and services to public telecommunications networks used

to provide telecommunications service through—

‘‘(A) coordinated public telecommunications network

planning and design by telecommunications carriers and

other providers of telecommunications service; and

‘‘(B) public telecommunications network

interconnectivity, and interconnectivity of devices with such

networks used to provide telecommunications service; and

‘‘(2) to ensure the ability of users and information providers

to seamlessly and transparently transmit and receive information between and across telecommunications networks.

‘‘(b) COMMISSION FUNCTIONS.—In carrying out the purposes

of this section, the Commission—

‘‘(1) shall establish procedures for Commission oversight

of coordinated network planning by telecommunications carriers

and other providers of telecommunications service for the effective and efficient interconnection of public telecommunications

networks used to provide telecommunications service; and

‘‘(2) may participate, in a manner consistent with its

authority and practice prior to the date of enactment of this

section, in the development by appropriate industry standardssetting organizations of public telecommunications network

interconnectivity standards that promote access to—

‘‘(A) public telecommunications networks used to provide telecommunications service;

‘‘(B) network capabilities and services by individuals

with disabilities; and

‘‘(C) information services by subscribers of rural telephone companies.

‘‘(c) COMMISSION’S AUTHORITY.—Nothing in this section shall

be construed as expanding or limiting any authority that the

Commission may have under law in effect before the date of enactment of the Telecommunications Act of 1996.

‘‘(d) DEFINITION.—As used in this section, the term ‘public

telecommunications network interconnectivity’ means the ability

of two or more public telecommunications networks used to provide

telecommunications service to communicate and exchange informa-
S. 652—22

tion without degeneration, and to interact in concert with one

another.

‘‘SEC. 257. MARKET ENTRY BARRIERS PROCEEDING.

‘‘(a) ELIMINATION OF BARRIERS.—Within 15 months after the

date of enactment of the Telecommunications Act of 1996, the

Commission shall complete a proceeding for the purpose of identifying and eliminating, by regulations pursuant to its authority under

this Act (other than this section), market entry barriers for entrepreneurs and other small businesses in the provision and ownership

of telecommunications services and information services, or in the

provision of parts or services to providers of telecommunications

services and information services.

‘‘(b) NATIONAL POLICY.—In carrying out subsection (a), the Commission shall seek to promote the policies and purposes of

this Act favoring diversity of media voices, vigorous economic competition, technological advancement, and promotion of the public

interest, convenience, and necessity. ‘‘(c) PERIODIC REVIEW.—Every 3 years following the completion

of the proceeding required by subsection (a), the Commission shall

review and report to Congress on—

‘‘(1) any regulations prescribed to eliminate barriers within

its jurisdiction that are identified under subsection (a) and

that can be prescribed consistent with the public interest, convenience, and necessity; and

‘‘(2) the statutory barriers identified under subsection (a)

that the Commission recommends be eliminated, consistent

with the public interest, convenience, and necessity.

‘‘SEC. 258. ILLEGAL CHANGES IN SUBSCRIBER CARRIER SELECTIONS.

‘‘(a) PROHIBITION.—No telecommunications carrier shall submit

or execute a change in a subscriber’s selection of a provider of

telephone exchange service or telephone toll service except in accordance with such verification procedures as the Commission shall

prescribe. Nothing in this section shall preclude any State commission from enforcing such procedures with respect to intrastate services.

‘‘(b) LIABILITY FOR CHARGES.—Any telecommunications carrier

that violates the verification procedures described in subsection

(a) and that collects charges for telephone exchange service or

telephone toll service from a subscriber shall be liable to the carrier

previously selected by the subscriber in an amount equal to all

charges paid by such subscriber after such violation, in accordance

with such procedures as the Commission may prescribe. The remedies provided by this subsection are in addition to any other

remedies available by law.

‘‘SEC. 259. INFRASTRUCTURE SHARING.

‘‘(a) REGULATIONS REQUIRED.—The Commission shall prescribe,

within one year after the date of enactment of the Telecommunications Act of 1996, regulations that require incumbent local

exchange carriers (as defined in section 251(h)) to make available

to any qualifying carrier such public switched network infrastructure, technology, information, and telecommunications facilities and

functions as may be requested by such qualifying carrier for the

purpose of enabling such qualifying carrier to provide telecommunications services, or to provide access to information services, in

the service area in which such qualifying carrier has requested
S. 652—23

and obtained designation as an eligible telecommunications carrier

under section 214(e).

‘‘(b) TERMS AND CONDITIONS OF REGULATIONS.—The regulations

prescribed by the Commission pursuant to this section shall—

‘‘(1) not require a local exchange carrier to which this

section applies to take any action that is economically unreasonable or that is contrary to the public interest;

‘‘(2) permit, but shall not require, the joint ownership or

operation of public switched network infrastructure and services

by or among such local exchange carrier and a qualifying carrier;

‘‘(3) ensure that such local exchange carrier will not be

treated by the Commission or any State as a common carrier

for hire or as offering common carrier services with respect

to any infrastructure, technology, information, facilities, or functions made available to a qualifying carrier in accordance with

regulations issued pursuant to this section;

‘‘(4) ensure that such local exchange carrier makes such

infrastructure, technology, information, facilities, or functions

available to a qualifying carrier on just and reasonable terms

and conditions that permit such qualifying carrier to fully benefit from the economies of scale and scope of such local exchange

carrier, as determined in accordance with guidelines prescribed

by the Commission in regulations issued pursuant to this section;

‘‘(5) establish conditions that promote cooperation between

local exchange carriers to which this section applies and qualifying carriers;

‘‘(6) not require a local exchange carrier to which this

section applies to engage in any infrastructure sharing agreement for any services or access which are to be provided or

offered to consumers by the qualifying carrier in such local

exchange carrier’s telephone exchange area; and

‘‘(7) require that such local exchange carrier file with the

Commission or State for public inspection, any tariffs, contracts,

or other arrangements showing the rates, terms, and conditions

under which such carrier is making available public switched

network infrastructure and functions under this section.

‘‘(c) INFORMATION CONCERNING DEPLOYMENT OF NEW SERVICES

AND EQUIPMENT.—A local exchange carrier to which this section

applies that has entered into an infrastructure sharing agreement

under this section shall provide to each party to such agreement

timely information on the planned deployment of telecommunications services and equipment, including any software or upgrades

of software integral to the use or operation of such telecommunications equipment.

‘‘(d) DEFINITION.—For purposes of this section, the term ‘qualifying carrier’ means a telecommunications carrier that—

‘‘(1) lacks economies of scale or scope, as determined in

accordance with regulations prescribed by the Commission

pursuant to this section; and

‘‘(2) offers telephone exchange service, exchange access,

and any other service that is included in universal service,

to all consumers without preference throughout the service

area for which such carrier has been designated as an eligible

telecommunications carrier under section 214(e).
S. 652—24

‘‘SEC. 260. PROVISION OF TELEMESSAGING SERVICE.

‘‘(a) NONDISCRIMINATION SAFEGUARDS.—Any local exchange car- rier subject to the requirements of section 251(c) that provides

telemessaging service— ‘‘(1) shall not subsidize its telemessaging service directly

or indirectly from its telephone exchange service or its exchange

access; and

‘‘(2) shall not prefer or discriminate in favor of its

telemessaging service operations in its provision of telecommunications services.

‘‘(b) EXPEDITED CONSIDERATION OF COMPLAINTS.—The Commission shall establish procedures for the receipt and review of complaints concerning violations of subsection (a) or the regulations

thereunder that result in material financial harm to a provider

of telemessaging service. Such procedures shall ensure that the

Commission will make a final determination with respect to any

such complaint within 120 days after receipt of the complaint.

If the complaint contains an appropriate showing that the alleged

violation occurred, the Commission shall, within 60 days after

receipt of the complaint, order the local exchange carrier and any

affiliates to cease engaging in such violation pending such final

determination.

‘‘(c) DEFINITION.—As used in this section, the term

‘telemessaging service’ means voice mail and voice storage and

retrieval services, any live operator services used to record, transcribe, or relay messages (other than telecommunications relay

services), and any ancillary services offered in combination with

these services.

‘‘SEC. 261. EFFECT ON OTHER REQUIREMENTS.

‘‘(a) COMMISSION REGULATIONS.—Nothing in this part shall be

construed to prohibit the Commission from enforcing regulations

prescribed prior to the date of enactment of the Telecommunications

Act of 1996 in fulfilling the requirements of this part, to the extent

that such regulations are not inconsistent with the provisions of

this part.

‘‘(b) EXISTING STATE REGULATIONS.—Nothing in this part shall

be construed to prohibit any State commission from enforcing regulations prescribed prior to the date of enactment of the Telecommunications Act of 1996, or from prescribing regulations after

such date of enactment, in fulfilling the requirements of this part,

if such regulations are not inconsistent with the provisions of this

part.

‘‘(c) ADDITIONAL STATE REQUIREMENTS.—Nothing in this part

precludes a State from imposing requirements on a telecommunications carrier for intrastate services that are necessary to further

competition in the provision of telephone exchange service or

exchange access, as long as the State’s requirements are not

inconsistent with this part or the Commission’s regulations to implement this part.’’.

(b) DESIGNATION OF PART I.—Title II of the Act is further

amended by inserting before the heading of section 201 the following

new heading:

‘‘PART I—COMMON CARRIER REGULATION’’.

(c) STYLISTIC CONSISTENCY.—The Act is amended so that—
S. 652—25

(1) the designation and heading of each title of the Act

shall be in the form and typeface of the designation and heading

of this title of this Act; and

(2) the designation and heading of each part of each title

of the Act shall be in the form and typeface of the designation

and heading of part I of title II of the Act, as amended by

subsection (a).

SEC. 102. ELIGIBLE TELECOMMUNICATIONS CARRIERS.

(a) IN GENERAL.—Section 214 (47 U.S.C. 214) is amended by

adding at the end thereof the following new subsection:

‘‘(e) PROVISION OF UNIVERSAL SERVICE.—

‘‘(1) ELIGIBLE TELECOMMUNICATIONS CARRIERS.—A common

carrier designated as an eligible telecommunications carrier

under paragraph (2) or (3) shall be eligible to receive universal

service support in accordance with section 254 and shall,

throughout the service area for which the designation is

received—

‘‘(A) offer the services that are supported by Federal

universal service support mechanisms under section 254(c),

either using its own facilities or a combination of its own

facilities and resale of another carrier’s services (including

the services offered by another eligible telecommunications

carrier); and

‘‘(B) advertise the availability of such services and

the charges therefor using media of general distribution.

‘‘(2) DESIGNATION OF ELIGIBLE TELECOMMUNICATIONS CARRIERS.—A State commission shall upon its own motion or upon

request designate a common carrier that meets the requirements of paragraph (1) as an eligible telecommunications carrier for a service area designated by the State commission.

Upon request and consistent with the public interest, convenience, and necessity, the State commission may, in the case

of an area served by a rural telephone company, and shall,

in the case of all other areas, designate more than one common

carrier as an eligible telecommunications carrier for a service

area designated by the State commission, so long as each additional requesting carrier meets the requirements of paragraph

(1). Before designating an additional eligible telecommunications carrier for an area served by a rural telephone company,

the State commission shall find that the designation is in

the public interest.

‘‘(3) DESIGNATION OF ELIGIBLE TELECOMMUNICATIONS CAR- RIERS FOR UNSERVED AREAS.—If no common carrier will provide

the services that are supported by Federal universal service

support mechanisms under section 254(c) to an unserved

community or any portion thereof that requests such service,

the Commission, with respect to interstate services, or a State

commission, with respect to intrastate services, shall determine

which common carrier or carriers are best able to provide

such service to the requesting unserved community or portion

thereof and shall order such carrier or carriers to provide

such service for that unserved community or portion thereof.

Any carrier or carriers ordered to provide such service under

this paragraph shall meet the requirements of paragraph (1)

and shall be designated as an eligible telecommunications carrier for that community or portion thereof.
S. 652—26

‘‘(4) RELINQUISHMENT OF UNIVERSAL SERVICE.—A State

commission shall permit an eligible telecommunications carrier

to relinquish its designation as such a carrier in any area

served by more than one eligible telecommunications carrier.

An eligible telecommunications carrier that seeks to relinquish

its eligible telecommunications carrier designation for an area

served by more than one eligible telecommunications carrier

shall give advance notice to the State commission of such

relinquishment. Prior to permitting a telecommunications carrier designated as an eligible telecommunications carrier to

cease providing universal service in an area served by more

than one eligible telecommunications carrier, the State commission shall require the remaining eligible telecommunications

carrier or carriers to ensure that all customers served by the

relinquishing carrier will continue to be served, and shall

require sufficient notice to permit the purchase or construction

of adequate facilities by any remaining eligible telecommunications carrier. The State commission shall establish a time,

not to exceed one year after the State commission approves

such relinquishment under this paragraph, within which such

purchase or construction shall be completed. ‘‘(5) SERVICE AREA DEFINED.—The term ‘service area’ means

a geographic area established by a State commission for the

purpose of determining universal service obligations and support mechanisms. In the case of an area served by a rural

telephone company, ‘service area’ means such company’s ‘study

area’ unless and until the Commission and the States, after

taking into account recommendations of a Federal-State Joint

Board instituted under section 410(c), establish a different definition of service area for such company.’’.

SEC. 103. EXEMPT TELECOMMUNICATIONS COMPANIES.

The Public Utility Holding Company Act of 1935 (15 U.S.C. 79 and following) is amended by redesignating sections 34 and

35 as sections 35 and 36, respectively, and by inserting the following

new section after section 33:

‘‘SEC. 34. EXEMPT TELECOMMUNICATIONS COMPANIES.

‘‘(a) DEFINITIONS.—For purposes of this section— ‘‘(1) EXEMPT TELECOMMUNICATIONS COMPANY.—The term

‘exempt telecommunications company’ means any person determined by the Federal Communications Commission to be

engaged directly or indirectly, wherever located, through one

or more affiliates (as defined in section 2(a)(11)(B)), and exclusively in the business of providing—– ‘‘(A) telecommunications services;

‘‘(B) information services;

‘‘(C) other services or products subject to the jurisdic- tion of the Federal Communications Commission; or

‘‘(D) products or services that are related or incidental

to the provision of a product or service described in

subparagraph (A), (B), or (C).

No person shall be deemed to be an exempt telecommunications

company under this section unless such person has applied

to the Federal Communications Commission for a determination

under this paragraph. A person applying in good faith for

such a determination shall be deemed an exempt telecommunications company under this section, with all of the exemptions
S. 652—27

provided by this section, until the Federal Communications

Commission makes such determination. The Federal Communications Commission shall make such determination within

60 days of its receipt of any such application filed after the

enactment of this section and shall notify the Commission

whenever a determination is made under this paragraph that

any person is an exempt telecommunications company. Not

later than 12 months after the date of enactment of this section,

the Federal Communications Commission shall promulgate

rules implementing the provisions of this paragraph which

shall be applicable to applications filed under this paragraph

after the effective date of such rules.

‘‘(2) OTHER TERMS.—For purposes of this section, the terms

‘telecommunications services’ and ‘information services’ shall

have the same meanings as provided in the Communications

Act of 1934.

‘‘(b) STATE CONSENT FOR SALE OF EXISTING RATE-BASED FACILITIES.—If a rate or charge for the sale of electric energy or natural

gas (other than any portion of a rate or charge which represents

recovery of the cost of a wholesale rate or charge) for, or in connection with, assets of a public utility company that is an associate

company or affiliate of a registered holding company was in effect

under the laws of any State as of December 19, 1995, the public

utility company owning such assets may not sell such assets to

an exempt telecommunications company that is an associate company or affiliate unless State commissions having jurisdiction over

such public utility company approve such sale. Nothing in this

subsection shall preempt the otherwise applicable authority of any

State to approve or disapprove the sale of such assets. The approval

of the Commission under this Act shall not be required for the

sale of assets as provided in this subsection.

‘‘(c) OWNERSHIP OF ETCS BY EXEMPT HOLDING COMPANIES.—

Notwithstanding any provision of this Act, a holding company that

is exempt under section 3 of this Act shall be permitted, without

condition or limitation under this Act, to acquire and maintain

an interest in the business of one or more exempt telecommunications companies.

‘‘(d) OWNERSHIP OF ETCS BY REGISTERED HOLDING COMPANIES.—Notwithstanding any provision of this Act, a registered holding company shall be permitted (without the need to apply for,

or receive, approval from the Commission, and otherwise without

condition under this Act) to acquire and hold the securities, or

an interest in the business, of one or more exempt telecommunications companies.

‘‘(e) FINANCING AND OTHER RELATIONSHIPS BETWEEN ETCS

AND REGISTERED HOLDING COMPANIES.—The relationship between

an exempt telecommunications company and a registered holding

company, its affiliates and associate companies, shall remain subject

to the jurisdiction of the Commission under this Act: Provided,

That—

‘‘(1) section 11 of this Act shall not prohibit the ownership

of an interest in the business of one or more exempt telecommunications companies by a registered holding company

(regardless of activities engaged in or where facilities owned

or operated by such exempt telecommunications companies are

located), and such ownership by a registered holding company
S. 652—28

shall be deemed consistent with the operation of an integrated

public utility system;

‘‘(2) the ownership of an interest in the business of one

or more exempt telecommunications companies by a registered

holding company (regardless of activities engaged in or where

facilities owned or operated by such exempt telecommunications

companies are located) shall be considered as reasonably

incidental, or economically necessary or appropriate, to the

operations of an integrated public utility system;

‘‘(3) the Commission shall have no jurisdiction under this

Act over, and there shall be no restriction or approval required

under this Act with respect to (A) the issue or sale of a security

by a registered holding company for purposes of financing the

acquisition of an exempt telecommunications company, or (B)

the guarantee of a security of an exempt telecommunications

company by a registered holding company; and

‘‘(4) except for costs that should be fairly and equitably

allocated among companies that are associate companies of

a registered holding company, the Commission shall have no

jurisdiction under this Act over the sales, service, and construction contracts between an exempt telecommunications company

and a registered holding company, its affiliates and associate

companies.

‘‘(f) REPORTING OBLIGATIONS CONCERNING INVESTMENTS AND

ACTIVITIES OF REGISTERED PUBLIC-UTILITY HOLDING COMPANY SYSTEMS.—

‘‘(1) OBLIGATIONS TO REPORT INFORMATION.—Any registered

holding company or subsidiary thereof that acquires or holds

the securities, or an interest in the business, of an exempt

telecommunications company shall file with the Commission

such information as the Commission, by rule, may prescribe

concerning—‘‘(A) investments and activities by the registered holding company, or any subsidiary thereof, with respect to

exempt telecommunications companies, and

‘‘(B) any activities of an exempt telecommunications

company within the holding company system,

that are reasonably likely to have a material impact on the

financial or operational condition of the holding company system.

‘‘(2) AUTHORITY TO REQUIRE ADDITIONAL INFORMATION.— If, based on reports provided to the Commission pursuant to

paragraph (1) of this subsection or other available information,

the Commission reasonably concludes that it has concerns

regarding the financial or operational condition of any registered holding company or any subsidiary thereof (including

an exempt telecommunications company), the Commission may

require such registered holding company to make additional

reports and provide additional information.

‘‘(3) AUTHORITY TO LIMIT DISCLOSURE OF INFORMATION.—

Notwithstanding any other provision of law, the Commission

shall not be compelled to disclose any information required

to be reported under this subsection. Nothing in this subsection

shall authorize the Commission to withhold the information

from Congress, or prevent the Commission from complying

with a request for information from any other Federal or State

department or agency requesting the information for purposes
S. 652—29

within the scope of its jurisdiction. For purposes of section

552 of title 5, United States Code, this subsection shall be

considered a statute described in subsection (b)(3)(B) of such

section 552.

‘‘(g) ASSUMPTION OF LIABILITIES.—Any public utility company

that is an associate company, or an affiliate, of a registered holding

company and that is subject to the jurisdiction of a State commission

with respect to its retail electric or gas rates shall not issue any

security for the purpose of financing the acquisition, ownership,

or operation of an exempt telecommunications company. Any public

utility company that is an associate company, or an affiliate, of

a registered holding company and that is subject to the jurisdiction

of a State commission with respect to its retail electric or gas

rates shall not assume any obligation or liability as guarantor,

endorser, surety, or otherwise by the public utility company in

respect of any security of an exempt telecommunications company.

‘‘(h) PLEDGING OR MORTGAGING OF ASSETS.—Any public utility

company that is an associate company, or affiliate, of a registered

holding company and that is subject to the jurisdiction of a State

commission with respect to its retail electric or gas rates shall

not pledge, mortgage, or otherwise use as collateral any assets

of the public utility company or assets of any subsidiary company

thereof for the benefit of an exempt telecommunications company.

‘‘(i) PROTECTION AGAINST ABUSIVE AFFILIATE TRANSACTIONS.—

A public utility company may enter into a contract to purchase

services or products described in subsection (a)(1) from an exempt

telecommunications company that is an affiliate or associate company of the public utility company only if— ‘‘(1) every State commission having jurisdiction over the

retail rates of such public utility company approves such contract; or

‘‘(2) such public utility company is not subject to State

commission retail rate regulation and the purchased services

or products—

‘‘(A) would not be resold to any affiliate or associate

company; or ‘‘(B) would be resold to an affiliate or associate company

and every State commission having jurisdiction over the

retail rates of such affiliate or associate company makes

the determination required by subparagraph (A).

The requirements of this subsection shall not apply in any case

in which the State or the State commission concerned publishes

a notice that the State or State commission waives its authority

under this subsection.

‘‘(j) NONPREEMPTION OF RATE AUTHORITY.—Nothing in this Act

shall preclude the Federal Energy Regulatory Commission or a

State commission from exercising its jurisdiction under otherwise

applicable law to determine whether a public utility company may

recover in rates the costs of products or services purchased from

or sold to an associate company or affiliate that is an exempt

telecommunications company, regardless of whether such costs are

incurred through the direct or indirect purchase or sale of products

or services from such associate company or affiliate.

‘‘(k) RECIPROCAL ARRANGEMENTS PROHIBITED.—Reciprocal

arrangements among companies that are not affiliates or associate

companies of each other that are entered into in order to avoid

the provisions of this section are prohibited.
S. 652—30

‘‘(l) BOOKS AND RECORDS.—(1) Upon written order of a State

commission, a State commission may examine the books, accounts,

memoranda, contracts, and records of—

‘‘(A) a public utility company subject to its regulatory

authority under State law;

‘‘(B) any exempt telecommunications company selling products or services to such public utility company or to an associate

company of such public utility company; and

‘‘(C) any associate company or affiliate of an exempt telecommunications company which sells products or services to

a public utility company referred to in subparagraph (A),

wherever located, if such examination is required for the effective

discharge of the State commission’s regulatory responsibilities

affecting the provision of electric or gas service in connection with

the activities of such exempt telecommunications company.

‘‘(2) Where a State commission issues an order pursuant to

paragraph (1), the State commission shall not publicly disclose

trade secrets or sensitive commercial information.

‘‘(3) Any United States district court located in the State in

which the State commission referred to in paragraph (1) is located

shall have jurisdiction to enforce compliance with this subsection.

‘‘(4) Nothing in this section shall—

‘‘(A) preempt applicable State law concerning the provision

of records and other information; or

‘‘(B) in any way limit rights to obtain records and other

information under Federal law, contracts, or otherwise.

‘‘(m) INDEPENDENT AUDIT AUTHORITY FOR STATE COMMISSIONS.—‘‘(1) STATE MAY ORDER AUDIT.—Any State commission with

jurisdiction over a public utility company that— ‘‘(A) is an associate company of a registered holding

company; and ‘‘(B) transacts business, directly or indirectly, with a

subsidiary company, an affiliate or an associate company

that is an exempt telecommunications company,

may order an independent audit to be performed, no more

frequently than on an annual basis, of all matters deemed

relevant by the selected auditor that reasonably relate to retail

rates: Provided, That such matters relate, directly or indirectly,

to transactions or transfers between the public utility company

subject to its jurisdiction and such exempt telecommunications

company. ‘‘(2) SELECTION OF FIRM TO CONDUCT AUDIT.—(A) If a State

commission orders an audit in accordance with paragraph (1),

the public utility company and the State commission shall

jointly select, within 60 days, a firm to perform the audit.

The firm selected to perform the audit shall possess demonstrated qualifications relating to—

‘‘(i) competency, including adequate technical training

and professional proficiency in each discipline necessary

to carry out the audit; and

‘‘(ii) independence and objectivity, including that the

firm be free from personal or external impairments to

independence, and should assume an independent position

with the State commission and auditee, making certain

that the audit is based upon an impartial consideration

of all pertinent facts and responsible opinions.
S. 652—31

‘‘(B) The public utility company and the exempt telecommunications company shall cooperate fully with all reasonable requests necessary to perform the audit and the public

utility company shall bear all costs of having the audit performed.

‘‘(3) AVAILABILITY OF AUDITOR’S REPORT.—The auditor’s

report shall be provided to the State commission not later

than 6 months after the selection of the auditor, and provided

to the public utility company not later than 60 days thereafter.

‘‘(n) APPLICABILITY OF TELECOMMUNICATIONS REGULATION.—

Nothing in this section shall affect the authority of the Federal

Communications Commission under the Communications Act of

1934, or the authority of State commissions under State laws

concerning the provision of telecommunications services, to regulate

the activities of an exempt telecommunications company.’’.

SEC. 104. NONDISCRIMINATION PRINCIPLE.

Section 1 (47 U.S.C. 151) is amended by inserting after ‘‘to

all the people of the United States’’ the following: ‘‘, without

discrimination on the basis of race, color, religion, national origin,

or sex,’’.

Subtitle B—Special Provisions Concerning

Bell Operating Companies

SEC. 151. BELL OPERATING COMPANY PROVISIONS.

(a) ESTABLISHMENT OF PART III OF TITLE II.—Title II is amended by adding at the end of part II (as added by section 101)

the following new part:

‘‘PART III—SPECIAL PROVISIONS

CONCERNING BELL OPERATING COMPANIES

‘‘SEC. 271. BELL OPERATING COMPANY ENTRY INTO INTERLATA SERVICES.

‘‘(a) GENERAL LIMITATION.—Neither a Bell operating company,

nor any affiliate of a Bell operating company, may provide

interLATA services except as provided in this section.

‘‘(b) INTERLATA SERVICES TO WHICH THIS SECTION APPLIES.— ‘‘(1) IN-REGION SERVICES.—A Bell operating company, or

any affiliate of that Bell operating company, may provide

interLATA services originating in any of its in-region States

(as defined in subsection (i)) if the Commission approves the

application of such company for such State under subsection

(d)(3).

‘‘(2) OUT-OF-REGION SERVICES.—A Bell operating company,

or any affiliate of that Bell operating company, may provide

interLATA services originating outside its in-region States after

the date of enactment of the Telecommunications Act of 1996,

subject to subsection (j).

‘‘(3) INCIDENTAL INTERLATA SERVICES.—A Bell operating

company, or any affiliate of a Bell operating company, may

provide incidental interLATA services (as defined in subsection

(g)) originating in any State after the date of enactment of

the Telecommunications Act of 1996.
S. 652—32

‘‘(4) TERMINATION.—Nothing in this section prohibits a Bell

operating company or any of its affiliates from providing termination for interLATA services, subject to subsection (j).

‘‘(c) REQUIREMENTS FOR PROVIDING CERTAIN IN-REGION

INTERLATA SERVICES.—

‘‘(1) AGREEMENT OR STATEMENT.—A Bell operating company

meets the requirements of this paragraph if it meets the

requirements of subparagraph (A) or subparagraph (B) of this

paragraph for each State for which the authorization is sought.

‘‘(A) PRESENCE OF A FACILITIES-BASED COMPETITOR.—

A Bell operating company meets the requirements of this

subparagraph if it has entered into one or more binding

agreements that have been approved under section 252

specifying the terms and conditions under which the Bell

operating company is providing access and interconnection

to its network facilities for the network facilities of one

or more unaffiliated competing providers of telephone

exchange service (as defined in section 3(47)(A), but excluding exchange access) to residential and business subscribers. For the purpose of this subparagraph, such telephone

exchange service may be offered by such competing providers either exclusively over their own telephone exchange

service facilities or predominantly over their own telephone

exchange service facilities in combination with the resale

of the telecommunications services of another carrier. For

the purpose of this subparagraph, services provided pursuant to subpart K of part 22 of the Commission’s regulations

(47 C.F.R. 22.901 et seq.) shall not be considered to be

telephone exchange services. ‘‘(B) FAILURE TO REQUEST ACCESS.—A Bell operating

company meets the requirements of this subparagraph if,

after 10 months after the date of enactment of the Telecommunications Act of 1996, no such provider has

requested the access and interconnection described in

subparagraph (A) before the date which is 3 months before

the date the company makes its application under subsection (d)(1), and a statement of the terms and conditions

that the company generally offers to provide such access

and interconnection has been approved or permitted to

take effect by the State commission under section 252(f).

For purposes of this subparagraph, a Bell operating company shall be considered not to have received any request

for access and interconnection if the State commission of

such State certifies that the only provider or providers

making such a request have (i) failed to negotiate in good

faith as required by section 252, or (ii) violated the terms

of an agreement approved under section 252 by the provider’s failure to comply, within a reasonable period of time,

with the implementation schedule contained in such agreement.

‘‘(2) SPECIFIC INTERCONNECTION REQUIREMENTS.—

‘‘(A) AGREEMENT REQUIRED.—A Bell operating company

meets the requirements of this paragraph if, within the

State for which the authorization is sought—

‘‘(i)(I) such company is providing access and interconnection pursuant to one or more agreements

described in paragraph (1)(A), or
S. 652—33

‘‘(II) such company is generally offering access and

interconnection pursuant to a statement described in

paragraph (1)(B), and

‘‘(ii) such access and interconnection meets the

requirements of subparagraph (B) of this paragraph.

‘‘(B) COMPETITIVE CHECKLIST.—Access or interconnection provided or generally offered by a Bell operating company to other telecommunications carriers meets the

requirements of this subparagraph if such access and interconnection includes each of the following:

‘‘(i) Interconnection in accordance with the requirements of sections 251(c)(2) and 252(d)(1).

‘‘(ii) Nondiscriminatory access to network elements

in accordance with the requirements of sections

251(c)(3) and 252(d)(1).

‘‘(iii) Nondiscriminatory access to the poles, ducts,

conduits, and rights-of-way owned or controlled by the

Bell operating company at just and reasonable rates

in accordance with the requirements of section 224.

‘‘(iv) Local loop transmission from the central office

to the customer’s premises, unbundled from local

switching or other services.

‘‘(v) Local transport from the trunk side of a

wireline local exchange carrier switch unbundled from

switching or other services.

‘‘(vi) Local switching unbundled from transport,

local loop transmission, or other services.

‘‘(vii) Nondiscriminatory access to—

‘‘(I) 911 and E911 services;

‘‘(II) directory assistance services to allow the

other carrier’s customers to obtain telephone numbers; and

‘‘(III) operator call completion services.

‘‘(viii) White pages directory listings for customers

of the other carrier’s telephone exchange service.

‘‘(ix) Until the date by which telecommunications

numbering administration guidelines, plan, or rules

are established, nondiscriminatory access to telephone

numbers for assignment to the other carrier’s telephone

exchange service customers. After that date, compliance with such guidelines, plan, or rules.

‘‘(x) Nondiscriminatory access to databases and

associated signaling necessary for call routing and

completion.

‘‘(xi) Until the date by which the Commission

issues regulations pursuant to section 251 to require

number portability, interim telecommunications number portability through remote call forwarding, direct

inward dialing trunks, or other comparable arrangements, with as little impairment of functioning, quality, reliability, and convenience as possible. After that

date, full compliance with such regulations.

‘‘(xii) Nondiscriminatory access to such services

or information as are necessary to allow the requesting

carrier to implement local dialing parity in accordance

with the requirements of section 251(b)(3).
S. 652—34

‘‘(xiii) Reciprocal compensation arrangements in

accordance with the requirements of section 252(d)(2).

‘‘(xiv) Telecommunications services are available

for resale in accordance with the requirements of sections 251(c)(4) and 252(d)(3).

‘‘(d) ADMINISTRATIVE PROVISIONS.—

‘‘(1) APPLICATION TO COMMISSION.—On and after the date

of enactment of the Telecommunications Act of 1996, a Bell

operating company or its affiliate may apply to the Commission

for authorization to provide interLATA services originating in

any in-region State. The application shall identify each State

for which the authorization is sought.

‘‘(2) CONSULTATION.—

‘‘(A) CONSULTATION WITH THE ATTORNEY GENERAL.—

The Commission shall notify the Attorney General

promptly of any application under paragraph (1). Before

making any determination under this subsection, the

Commission shall consult with the Attorney General, and

if the Attorney General submits any comments in writing,

such comments shall be included in the record of the

Commission’s decision. In consulting with and submitting

comments to the Commission under this paragraph, the

Attorney General shall provide to the Commission an

evaluation of the application using any standard the Attorney General considers appropriate. The Commission shall

give substantial weight to the Attorney General’s evaluation, but such evaluation shall not have any preclusive

effect on any Commission decision under paragraph (3). ‘‘(B) CONSULTATION WITH STATE COMMISSIONS.—Before

making any determination under this subsection, the

Commission shall consult with the State commission of

any State that is the subject of the application in order

to verify the compliance of the Bell operating company

with the requirements of subsection (c).

‘‘(3) DETERMINATION.—Not later than 90 days after receiv- ing an application under paragraph (1), the Commission shall

issue a written determination approving or denying the

authorization requested in the application for each State. The

Commission shall not approve the authorization requested in

an application submitted under paragraph (1) unless it finds

that—

‘‘(A) the petitioning Bell operating company has met the requirements of subsection (c)(1) and—

‘‘(i) with respect to access and interconnection provided pursuant to subsection (c)(1)(A), has fully implemented the competitive checklist in subsection

(c)(2)(B); or

‘‘(ii) with respect to access and interconnection generally offered pursuant to a statement under subsection

(c)(1)(B), such statement offers all of the items included

in the competitive checklist in subsection (c)(2)(B);

‘‘(B) the requested authorization will be carried out

in accordance with the requirements of section 272; and

‘‘(C) the requested authorization is consistent with the

public interest, convenience, and necessity.

The Commission shall state the basis for its approval or denial

of the application.
S. 652—35

‘‘(4) LIMITATION ON COMMISSION.—The Commission may

not, by rule or otherwise, limit or extend the terms used in

the competitive checklist set forth in subsection (c)(2)(B).

‘‘(5) PUBLICATION.—Not later than 10 days after issuing

a determination under paragraph (3), the Commission shall

publish in the Federal Register a brief description of the determination.

‘‘(6) ENFORCEMENT OF CONDITIONS.—

‘‘(A) COMMISSION AUTHORITY.—If at any time after the

approval of an application under paragraph (3), the

Commission determines that a Bell operating company has

ceased to meet any of the conditions required for such

approval, the Commission may, after notice and opportunity for a hearing—

‘‘(i) issue an order to such company to correct

the deficiency;

‘‘(ii) impose a penalty on such company pursuant

to title V; or

‘‘(iii) suspend or revoke such approval.

‘‘(B) RECEIPT AND REVIEW OF COMPLAINTS.—The

Commission shall establish procedures for the review of

complaints concerning failures by Bell operating companies

to meet conditions required for approval under paragraph

(3). Unless the parties otherwise agree, the Commission

shall act on such complaint within 90 days.

‘‘(e) LIMITATIONS.—

‘‘(1) JOINT MARKETING OF LOCAL AND LONG DISTANCE SERVICES.—Until a Bell operating company is authorized pursuant

to subsection (d) to provide interLATA services in an in-region

State, or until 36 months have passed since the date of enactment of the Telecommunications Act of 1996, whichever is

earlier, a telecommunications carrier that serves greater than

5 percent of the Nation’s presubscribed access lines may not

jointly market in such State telephone exchange service

obtained from such company pursuant to section 251(c)(4) with

interLATA services offered by that telecommunications carrier.

‘‘(2) INTRALATA TOLL DIALING PARITY.—

‘‘(A) PROVISION REQUIRED.—A Bell operating company

granted authority to provide interLATA services under subsection (d) shall provide intraLATA toll dialing parity

throughout that State coincident with its exercise of that

authority.

‘‘(B) LIMITATION.—Except for single-LATA States and

States that have issued an order by December 19, 1995,

requiring a Bell operating company to implement

intraLATA toll dialing parity, a State may not require

a Bell operating company to implement intraLATA toll

dialing parity in that State before a Bell operating company

has been granted authority under this section to provide

interLATA services originating in that State or before 3

years after the date of enactment of the Telecommunications Act of 1996, whichever is earlier. Nothing in this

subparagraph precludes a State from issuing an order

requiring intraLATA toll dialing parity in that State prior

to either such date so long as such order does not take

effect until after the earlier of either such dates.
S. 652—36

‘‘(f) EXCEPTION FOR PREVIOUSLY AUTHORIZED ACTIVITIES.—Neither subsection (a) nor section 273 shall prohibit a Bell operating

company or affiliate from engaging, at any time after the date

of enactment of the Telecommunications Act of 1996, in any activity

to the extent authorized by, and subject to the terms and conditions

contained in, an order entered by the United States District Court

for the District of Columbia pursuant to section VII or VIII(C)

of the AT&T Consent Decree if such order was entered on or

before such date of enactment, to the extent such order is not

reversed or vacated on appeal. Nothing in this subsection shall

be construed to limit, or to impose terms or conditions on, an

activity in which a Bell operating company is otherwise authorized

to engage under any other provision of this section.

‘‘(g) DEFINITION OF INCIDENTAL INTERLATA SERVICES.—For

purposes of this section, the term ‘incidental interLATA services’

means the interLATA provision by a Bell operating company or

its affiliate—

‘‘(1)(A) of audio programming, video programming, or other

programming services to subscribers to such services of such

company or affiliate;

‘‘(B) of the capability for interaction by such subscribers

to select or respond to such audio programming, video programming, or other programming services;

‘‘(C) to distributors of audio programming or video programming that such company or affiliate owns or controls, or is

licensed by the copyright owner of such programming (or by

an assignee of such owner) to distribute; or

‘‘(D) of alarm monitoring services;

‘‘(2) of two-way interactive video services or Internet services over dedicated facilities to or for elementary and secondary

schools as defined in section 254(h)(5);

‘‘(3) of commercial mobile services in accordance with section 332(c) of this Act and with the regulations prescribed

by the Commission pursuant to paragraph (8) of such section; ‘‘(4) of a service that permits a customer that is located

in one LATA to retrieve stored information from, or file information for storage in, information storage facilities of such company that are located in another LATA; ‘‘(5) of signaling information used in connection with the

provision of telephone exchange services or exchange access

by a local exchange carrier; or ‘‘(6) of network control signaling information to, and receipt

of such signaling information from, common carriers offering

interLATA services at any location within the area in which

such Bell operating company provides telephone exchange services or exchange access.

‘‘(h) LIMITATIONS.—The provisions of subsection (g) are intended

to be narrowly construed. The interLATA services provided under

subparagraph (A), (B), or (C) of subsection (g)(1) are limited to

those interLATA transmissions incidental to the provision by a

Bell operating company or its affiliate of video, audio, and other

programming services that the company or its affiliate is engaged

in providing to the public. The Commission shall ensure that the

provision of services authorized under subsection (g) by a Bell

operating company or its affiliate will not adversely affect telephone

exchange service ratepayers or competition in any telecommunications market.
S. 652—37

‘‘(i) ADDITIONAL DEFINITIONS.—As used in this section—

‘‘(1) IN-REGION STATE.—The term ‘in-region State’ means

a State in which a Bell operating company or any of its affiliates

was authorized to provide wireline telephone exchange service

pursuant to the reorganization plan approved under the AT&T

Consent Decree, as in effect on the day before the date of

enactment of the Telecommunications Act of 1996.

‘‘(2) AUDIO PROGRAMMING SERVICES.—The term ‘audio

programming services’ means programming provided by, or generally considered to be comparable to programming provided

by, a radio broadcast station.

‘‘(3) VIDEO PROGRAMMING SERVICES; OTHER PROGRAMMING

SERVICES.—The terms ‘video programming service’ and ‘other

programming services’ have the same meanings as such terms

have under section 602 of this Act.

‘‘(j) CERTAIN SERVICE APPLICATIONS TREATED AS IN-REGION

SERVICE APPLICATIONS.—For purposes of this section, a Bell operating company application to provide 800 service, private line service,

or their equivalents that—

‘‘(1) terminate in an in-region State of that Bell operating

company, and

‘‘(2) allow the called party to determine the interLATA

carrier,

shall be considered an in-region service subject to the requirements

of subsection (b)(1).

‘‘SEC. 272. SEPARATE AFFILIATE; SAFEGUARDS.

‘‘(a) SEPARATE AFFILIATE REQUIRED FOR COMPETITIVE ACTIVI- TIES.— ‘‘(1) IN GENERAL.—A Bell operating company (including any affiliate) which is a local exchange carrier that is subject

to the requirements of section 251(c) may not provide any

service described in paragraph (2) unless it provides that service

through one or more affiliates that— ‘‘(A) are separate from any operating company entity that is subject to the requirements of section 251(c); and ‘‘(B) meet the requirements of subsection (b).

‘‘(2) SERVICES FOR WHICH A SEPARATE AFFILIATE IS

REQUIRED.—The services for which a separate affiliate is

required by paragraph (1) are: ‘‘(A) Manufacturing activities (as defined in section 273(h)).

‘‘(B) Origination of interLATA telecommunications

services, other than—

‘‘(i) incidental interLATA services described in

paragraphs (1), (2), (3), (5), and (6) of section 271(g);

‘‘(ii) out-of-region services described in section

271(b)(2); or

‘‘(iii) previously authorized activities described in

section 271(f).

‘‘(C) InterLATA information services, other than electronic publishing (as defined in section 274(h)) and alarm

monitoring services (as defined in section 275(e)).

‘‘(b) STRUCTURAL AND TRANSACTIONAL REQUIREMENTS.—The

separate affiliate required by this section—

‘‘(1) shall operate independently from the Bell operating

company;
S. 652—38

‘‘(2) shall maintain books, records, and accounts in the

manner prescribed by the Commission which shall be separate

from the books, records, and accounts maintained by the Bell

operating company of which it is an affiliate;

‘‘(3) shall have separate officers, directors, and employees

from the Bell operating company of which it is an affiliate;

‘‘(4) may not obtain credit under any arrangement that

would permit a creditor, upon default, to have recourse to

the assets of the Bell operating company; and

‘‘(5) shall conduct all transactions with the Bell operating

company of which it is an affiliate on an arm’s length basis

with any such transactions reduced to writing and available

for public inspection.

‘‘(c) NONDISCRIMINATION SAFEGUARDS.—In its dealings with its

affiliate described in subsection (a), a Bell operating company—

‘‘(1) may not discriminate between that company or affiliate

and any other entity in the provision or procurement of goods,

services, facilities, and information, or in the establishment

of standards; and

‘‘(2) shall account for all transactions with an affiliate

described in subsection (a) in accordance with accounting principles designated or approved by the Commission.

‘‘(d) BIENNIAL AUDIT.—

‘‘(1) GENERAL REQUIREMENT.—A company required to operate a separate affiliate under this section shall obtain and

pay for a joint Federal/State audit every 2 years conducted

by an independent auditor to determine whether such company

has complied with this section and the regulations promulgated

under this section, and particularly whether such company

has complied with the separate accounting requirements under

subsection (b).

‘‘(2) RESULTS SUBMITTED TO COMMISSION; STATE COMMIS- SIONS.—The auditor described in paragraph (1) shall submit

the results of the audit to the Commission and to the State

commission of each State in which the company audited provides service, which shall make such results available for public

inspection. Any party may submit comments on the final audit

report.

‘‘(3) ACCESS TO DOCUMENTS.—For purposes of conducting

audits and reviews under this subsection—

‘‘(A) the independent auditor, the Commission, and

the State commission shall have access to the financial

accounts and records of each company and of its affiliates

necessary to verify transactions conducted with that company that are relevant to the specific activities permitted

under this section and that are necessary for the regulation

of rates;

‘‘(B) the Commission and the State commission shall

have access to the working papers and supporting materials

of any auditor who performs an audit under this section;

and

‘‘(C) the State commission shall implement appropriate

procedures to ensure the protection of any proprietary

information submitted to it under this section.

‘‘(e) FULFILLMENT OF CERTAIN REQUESTS.—A Bell operating

company and an affiliate that is subject to the requirements of

section 251(c)—
S. 652—39

‘‘(1) shall fulfill any requests from an unaffiliated entity

for telephone exchange service and exchange access within

a period no longer than the period in which it provides such

telephone exchange service and exchange access to itself or

to its affiliates;

‘‘(2) shall not provide any facilities, services, or information

concerning its provision of exchange access to the affiliate

described in subsection (a) unless such facilities, services, or

information are made available to other providers of interLATA

services in that market on the same terms and conditions;

‘‘(3) shall charge the affiliate described in subsection (a),

or impute to itself (if using the access for its provision of

its own services), an amount for access to its telephone exchange

service and exchange access that is no less than the amount

charged to any unaffiliated interexchange carriers for such

service; and

‘‘(4) may provide any interLATA or intraLATA facilities

or services to its interLATA affiliate if such services or facilities

are made available to all carriers at the same rates and on

the same terms and conditions, and so long as the costs are

appropriately allocated.

‘‘(f) SUNSET.—

‘‘(1) MANUFACTURING AND LONG DISTANCE.—The provisions

of this section (other than subsection (e)) shall cease to apply

with respect to the manufacturing activities or the interLATA

telecommunications services of a Bell operating company 3

years after the date such Bell operating company or any Bell

operating company affiliate is authorized to provide interLATA

telecommunications services under section 271(d), unless the

Commission extends such 3-year period by rule or order.

‘‘(2) INTERLATA INFORMATION SERVICES.—The provisions

of this section (other than subsection (e)) shall cease to apply

with respect to the interLATA information services of a Bell

operating company 4 years after the date of enactment of

the Telecommunications Act of 1996, unless the Commission

extends such 4-year period by rule or order.

‘‘(3) PRESERVATION OF EXISTING AUTHORITY.—Nothing in

this subsection shall be construed to limit the authority of

the Commission under any other section of this Act to prescribe

safeguards consistent with the public interest, convenience,

and necessity.

‘‘(g) JOINT MARKETING.—

‘‘(1) AFFILIATE SALES OF TELEPHONE EXCHANGE SERVICES.—

A Bell operating company affiliate required by this section

may not market or sell telephone exchange services provided

by the Bell operating company unless that company permits

other entities offering the same or similar service to market

and sell its telephone exchange services.

‘‘(2) BELL OPERATING COMPANY SALES OF AFFILIATE SERVICES.—A Bell operating company may not market or sell

interLATA service provided by an affiliate required by this

section within any of its in-region States until such company

is authorized to provide interLATA services in such State under

section 271(d).

‘‘(3) RULE OF CONSTRUCTION.—The joint marketing and

sale of services permitted under this subsection shall not be
S. 652—40

considered to violate the nondiscrimination provisions of subsection (c).

‘‘(h) TRANSITION.—With respect to any activity in which a Bell

operating company is engaged on the date of enactment of the

Telecommunications Act of 1996, such company shall have one

year from such date of enactment to comply with the requirements

of this section.

‘‘SEC. 273. MANUFACTURING BY BELL OPERATING COMPANIES.

‘‘(a) AUTHORIZATION.—A Bell operating company may manufacture and provide telecommunications equipment, and manufacture

customer premises equipment, if the Commission authorizes that

Bell operating company or any Bell operating company affiliate

to provide interLATA services under section 271(d), subject to the

requirements of this section and the regulations prescribed thereunder, except that neither a Bell operating company nor any of

its affiliates may engage in such manufacturing in conjunction

with a Bell operating company not so affiliated or any of its affiliates.

‘‘(b) COLLABORATION; RESEARCH AND ROYALTY AGREEMENTS.—

‘‘(1) COLLABORATION.—Subsection (a) shall not prohibit a

Bell operating company from engaging 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.

‘‘(2) CERTAIN RESEARCH ARRANGEMENTS; ROYALTY AGREEMENTS.—Subsection (a) shall not prohibit a Bell operating company from—

‘‘(A) engaging in research activities related to manufacturing, and

‘‘(B) entering into royalty agreements with manufacturers of telecommunications equipment.

‘‘(c) INFORMATION REQUIREMENTS.—

‘‘(1) INFORMATION ON PROTOCOLS AND TECHNICAL REQUIREMENTS.—Each Bell operating 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) DISCLOSURE OF INFORMATION.—A Bell operating company shall not disclose any information required to be filed

under paragraph (1) unless that information has been filed

promptly, as required by regulation by the Commission.

‘‘(3) ACCESS BY COMPETITORS TO INFORMATION.—The

Commission may prescribe such additional regulations under

this subsection as may be necessary to ensure that manufacturers have access to the information with respect to the protocols

and technical requirements for connection with and use of

telephone exchange service facilities that a Bell operating company makes available to any manufacturing affiliate or any

unaffiliated manufacturer.
S. 652—41

‘‘(4) PLANNING INFORMATION.—Each Bell operating company shall provide, to interconnecting carriers providing telephone exchange service, timely information on the planned

deployment of telecommunications equipment.

‘‘(d) MANUFACTURING LIMITATIONS FOR STANDARD-SETTING

ORGANIZATIONS.—

‘‘(1) APPLICATION TO BELL COMMUNICATIONS RESEARCH OR

MANUFACTURERS.—Bell Communications Research, Inc., or any

successor entity or affiliate—

‘‘(A) shall not be considered a Bell operating company

or a successor or assign of a Bell operating company at

such time as it is no longer an affiliate of any Bell operating

company; and

‘‘(B) notwithstanding paragraph (3), shall not engage

in manufacturing telecommunications equipment or customer premises equipment as long as it is an affiliate

of more than 1 otherwise unaffiliated Bell operating company or successor or assign of any such company.

Nothing in this subsection prohibits Bell Communications

Research, Inc., or any successor entity, from engaging in any

activity in which it is lawfully engaged on the date of enactment

of the Telecommunications Act of 1996. Nothing provided in

this subsection shall render Bell Communications Research,

Inc., or any successor entity, a common carrier under title

II of this Act. Nothing in this subsection restricts any manufacturer from engaging in any activity in which it is lawfully

engaged on the date of enactment of the Telecommunications

Act of 1996.

‘‘(2) PROPRIETARY INFORMATION.—Any entity which establishes standards for telecommunications equipment or customer

premises equipment, or generic network requirements for such

equipment, or certifies telecommunications equipment or customer premises equipment, shall be prohibited from releasing

or otherwise using any proprietary information, designated as

such by its owner, in its possession as a result of such activity,

for any purpose other than purposes authorized in writing

by the owner of such information, even after such entity ceases

to be so engaged.

‘‘(3) MANUFACTURING SAFEGUARDS.—(A) Except as prohibited in paragraph (1), and subject to paragraph (6), any entity

which certifies telecommunications equipment or customer

premises equipment manufactured by an unaffiliated entity

shall only manufacture a particular class of telecommunications

equipment or customer premises equipment for which it is

undertaking or has undertaken, during the previous 18 months,

certification activity for such class of equipment through a

separate affiliate.

‘‘(B) Such separate affiliate shall—

‘‘(i) maintain books, records, and accounts separate

from those of the entity that certifies such equipment,

consistent with generally acceptable accounting principles;

‘‘(ii) not engage in any joint manufacturing activities

with such entity; and

‘‘(iii) have segregated facilities and separate employees

with such entity.

‘‘(C) Such entity that certifies such equipment shall—
S. 652—42

‘‘(i) not discriminate in favor of its manufacturing affiliate in the establishment of standards, generic requirements, or product certification;

‘‘(ii) not disclose to the manufacturing affiliate any

proprietary information that has been received at any time

from an unaffiliated manufacturer, unless authorized in

writing by the owner of the information; and

‘‘(iii) not permit any employee engaged in product certification for telecommunications equipment or customer

premises equipment to engage jointly in sales or marketing

of any such equipment with the affiliated manufacturer.

‘‘(4) STANDARD-SETTING ENTITIES.—Any entity that is not

an accredited standards development organization and that

establishes industry-wide standards for telecommunications

equipment or customer premises equipment, or industry-wide

generic network requirements for such equipment, or that certifies telecommunications equipment or customer premises

equipment manufactured by an unaffiliated entity, shall—

‘‘(A) establish and publish any industry-wide standard

for, industry-wide generic requirement for, or any substantial modification of an existing industry-wide standard or

industry-wide generic requirement for, telecommunications

equipment or customer premises equipment only in compliance with the following procedure—

‘‘(i) such entity shall issue a public notice of its

consideration of a proposed industry-wide standard or

industry-wide generic requirement;

‘‘(ii) such entity shall issue a public invitation to

interested industry parties to fund and participate in

such efforts on a reasonable and nondiscriminatory

basis, administered in such a manner as not to

unreasonably exclude any interested industry party;

‘‘(iii) such entity shall publish a text for comment

by such parties as have agreed to participate in the

process pursuant to clause (ii), provide such parties

a full opportunity to submit comments, and respond

to comments from such parties;

‘‘(iv) such entity shall publish a final text of the

industry-wide standard or industry-wide generic

requirement, including the comments in their entirety,

of any funding party which requests to have its comments so published; and

‘‘(v) such entity shall attempt, prior to publishing

a text for comment, to agree with the funding parties

as a group on a mutually satisfactory dispute resolution

process which such parties shall utilize as their sole

recourse in the event of a dispute on technical issues

as to which there is disagreement between any funding

party and the entity conducting such activities, except

that if no dispute resolution process is agreed to by

all the parties, a funding party may utilize the dispute

resolution procedures established pursuant to paragraph (5) of this subsection;

‘‘(B) engage in product certification for telecommunications equipment or customer premises equipment manufactured by unaffiliated entities only if—
S. 652—43

‘‘(i) such activity is performed pursuant to published criteria;

‘‘(ii) such activity is performed pursuant to

auditable criteria; and

‘‘(iii) such activity is performed pursuant to available industry-accepted testing methods and standards,

where applicable, unless otherwise agreed upon by the

parties funding and performing such activity;

‘‘(C) not undertake any actions to monopolize or

attempt to monopolize the market for such services; and

‘‘(D) not preferentially treat its own telecommunications equipment or customer premises equipment, or that

of its affiliate, over that of any other entity in establishing

and publishing industry-wide standards or industry-wide

generic requirements for, and in certification of, telecommunications equipment and customer premises equipment.

‘‘(5) ALTERNATE DISPUTE RESOLUTION.—Within 90 days

after the date of enactment of the Telecommunications Act

of 1996, the Commission shall prescribe a dispute resolution

process to be utilized in the event that a dispute resolution

process is not agreed upon by all the parties when establishing

and publishing any industry-wide standard or industry-wide

generic requirement for telecommunications equipment or customer premises equipment, pursuant to paragraph (4)(A)(v).

The Commission shall not establish itself as a party to the

dispute resolution process. Such dispute resolution process shall

permit any funding party to resolve a dispute with the entity

conducting the activity that significantly affects such funding

party’s interests, in an open, nondiscriminatory, and unbiased

fashion, within 30 days after the filing of such dispute. Such

disputes may be filed within 15 days after the date the funding

party receives a response to its comments from the entity

conducting the activity. The Commission shall establish penalties to be assessed for delays caused by referral of frivolous

disputes to the dispute resolution process.

‘‘(6) SUNSET.—The requirements of paragraphs (3) and (4)

shall terminate for the particular relevant activity when the

Commission determines that there are alternative sources of

industry-wide standards, industry-wide generic requirements,

or product certification for a particular class of telecommunications equipment or customer premises equipment available

in the United States. Alternative sources shall be deemed to

exist when such sources provide commercially viable alternatives that are providing such services to customers. The

Commission shall act on any application for such a determination within 90 days after receipt of such application, and shall

receive public comment on such application.

‘‘(7) ADMINISTRATION AND ENFORCEMENT AUTHORITY.—For

the purposes of administering this subsection and the regulations prescribed thereunder, the Commission shall have the

same remedial authority as the Commission has in administering and enforcing the provisions of this title with respect to

any common carrier subject to this Act.

‘‘(8) DEFINITIONS.—For purposes of this subsection:
S. 652—44

‘‘(A) The term ‘affiliate’ shall have the same meaning

as in section 3 of this Act, except that, for purposes of

paragraph (1)(B)—

‘‘(i) an aggregate voting equity interest in Bell

Communications Research, Inc., of at least 5 percent

of its total voting equity, owned directly or indirectly

by more than 1 otherwise unaffiliated Bell operating

company, shall constitute an affiliate relationship; and

‘‘(ii) a voting equity interest in Bell Communications Research, Inc., by any otherwise unaffiliated Bell

operating company of less than 1 percent of Bell

Communications Research’s total voting equity shall

not be considered to be an equity interest under this

paragraph.

‘‘(B) The term ‘generic requirement’ means a description of acceptable product attributes for use by local

exchange carriers in establishing product specifications for

the purchase of telecommunications equipment, customer

premises equipment, and software integral thereto.

‘‘(C) The term ‘industry-wide’ means activities funded

by or performed on behalf of local exchange carriers for

use in providing wireline telephone exchange service whose

combined total of deployed access lines in the United States

constitutes at least 30 percent of all access lines deployed

by telecommunications carriers in the United States as

of the date of enactment of the Telecommunications Act

of 1996.

‘‘(D) The term ‘certification’ means any technical process whereby a party determines whether a product, for

use by more than one local exchange carrier, conforms

with the specified requirements pertaining to such product. ‘‘(E) The term ‘accredited standards development

organization’ means an entity composed of industry members which has been accredited by an institution vested

with the responsibility for standards accreditation by the

industry. ‘‘(e) BELL OPERATING COMPANY EQUIPMENT PROCUREMENT AND

SALES.—‘‘(1) NONDISCRIMINATION STANDARDS FOR MANUFACTUR- ING.—In the procurement or awarding of supply contracts for

telecommunications equipment, a Bell operating company, or

any entity acting on its behalf, for the duration of the requirement for a separate subsidiary including manufacturing under

this Act—

‘‘(A) shall consider such equipment, produced or supplied by unrelated persons; and

‘‘(B) may not discriminate in favor of equipment produced or supplied by an affiliate or related person.

‘‘(2) PROCUREMENT STANDARDS.—Each Bell operating company or any entity acting on its behalf shall make procurement

decisions and award all supply contracts for equipment, services, and software on the basis of an objective assessment

of price, quality, delivery, and other commercial factors.

‘‘(3) NETWORK PLANNING AND DESIGN.—A Bell operating

company shall, to the extent consistent with the antitrust laws,

engage in joint network planning and design with local

exchange carriers operating in the same area of interest. No
S. 652—45

participant in such planning shall be allowed to 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.

‘‘(4) SALES RESTRICTIONS.—Neither a Bell operating company engaged in manufacturing nor a manufacturing affiliate

of such a company shall restrict sales to any local exchange

carrier of telecommunications equipment, including software

integral to the operation of such equipment and related

upgrades.

‘‘(5) PROTECTION OF PROPRIETARY INFORMATION.—A Bell

operating company and any entity it owns or otherwise controls

shall protect the proprietary information submitted for procurement decisions from release not specifically authorized by the

owner of such information.

‘‘(f) ADMINISTRATION AND ENFORCEMENT 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 operating company or any affiliate thereof as the

Commission has in administering and enforcing the provisions of

this title with respect to any common carrier subject to this Act.

‘‘(g) ADDITIONAL RULES AND REGULATIONS.—The Commission

may prescribe such additional rules and regulations as the Commission determines are necessary to carry out the provisions of this

section, and otherwise to prevent discrimination and cross-subsidization in a Bell operating company’s dealings with its affiliate

and with third parties.

‘‘(h) DEFINITION.—As used in this section, the term ‘manufacturing’ has the same meaning as such term has under the AT&T

Consent Decree.

‘‘SEC. 274. ELECTRONIC PUBLISHING BY BELL OPERATING COMPANIES.

‘‘(a) LIMITATIONS.—No Bell operating company or any affiliate

may engage in the provision of electronic publishing that is disseminated by means of such Bell operating company’s or any of its

affiliates’ basic telephone service, except that nothing in this section

shall prohibit a separated affiliate or electronic publishing joint

venture operated in accordance with this section from engaging

in the provision of electronic publishing. ‘‘(b) SEPARATED AFFILIATE OR ELECTRONIC PUBLISHING JOINT

VENTURE REQUIREMENTS.—A separated affiliate or electronic

publishing joint venture shall be operated independently from the

Bell operating company. Such separated affiliate or joint venture

and the Bell operating company with which it is affiliated shall—

‘‘(1) maintain separate books, records, and accounts and

prepare separate financial statements;

‘‘(2) not incur debt in a manner that would permit a creditor

of the separated affiliate or joint venture upon default to have

recourse to the assets of the Bell operating company;

‘‘(3) carry out transactions (A) in a manner consistent with

such independence, (B) pursuant to written contracts or tariffs

that are filed with the Commission and made publicly available,

and (C) in a manner that is auditable in accordance with

generally accepted auditing standards;
S. 652—46

‘‘(4) value any assets that are transferred directly or

indirectly from the Bell operating company to a separated affiliate or joint venture, and record any transactions by which

such assets are transferred, in accordance with such regulations

as may be prescribed by the Commission or a State commission

to prevent improper cross subsidies;

‘‘(5) between a separated affiliate and a Bell operating

company—

‘‘(A) have no officers, directors, and employees in common after the effective date of this section; and

‘‘(B) own no property in common;

‘‘(6) not use for the marketing of any product or service

of the separated affiliate or joint venture, the name, trademarks, or service marks of an existing Bell operating company

except for names, trademarks, or service marks that are owned

by the entity that owns or controls the Bell operating company;

‘‘(7) not permit the Bell operating company—

‘‘(A) to perform hiring or training of personnel on behalf

of a separated affiliate;

‘‘(B) to perform the purchasing, installation, or maintenance of equipment on behalf of a separated affiliate, except

for telephone service that it provides under tariff or contract subject to the provisions of this section; or

‘‘(C) to perform research and development on behalf

of a separated affiliate;

‘‘(8) each have performed annually a compliance review—

‘‘(A) that is conducted by an independent entity for

the purpose of determining compliance during the preceding calendar year with any provision of this section; and ‘‘(B) the results of which are maintained by the separated affiliate or joint venture and the Bell operating company for a period of 5 years subject to review by any

lawful authority; and

‘‘(9) within 90 days of receiving a review described in para- graph (8), file a report of any exceptions and corrective action

with the Commission and allow any person to inspect and

copy such report subject to reasonable safeguards to protect

any proprietary information contained in such report from being

used for purposes other than to enforce or pursue remedies

under this section.

‘‘(c) JOINT MARKETING.— ‘‘(1) IN GENERAL.—Except as provided in paragraph (2)— ‘‘(A) a Bell operating company shall not carry out any

promotion, marketing, sales, or advertising for or in

conjunction with a separated affiliate; and

‘‘(B) a Bell operating company shall not carry out any

promotion, marketing, sales, or advertising for or in

conjunction with an affiliate that is related to the provision

of electronic publishing.

‘‘(2) PERMISSIBLE JOINT ACTIVITIES.—

‘‘(A) JOINT TELEMARKETING.—A Bell operating company

may provide inbound telemarketing or referral services

related to the provision of electronic publishing for a separated affiliate, electronic publishing joint venture, affiliate,

or unaffiliated electronic publisher: Provided, That if such

services are provided to a separated affiliate, electronic

publishing joint venture, or affiliate, such services shall
S. 652—47

be made available to all electronic publishers on request,

on nondiscriminatory terms.

‘‘(B) TEAMING ARRANGEMENTS.—A Bell operating company may engage in nondiscriminatory teaming or business

arrangements to engage in electronic publishing with any

separated affiliate or with any other electronic publisher

if (i) the Bell operating company only provides facilities,

services, and basic telephone service information as authorized by this section, and (ii) the Bell operating company

does not own such teaming or business arrangement.

‘‘(C) ELECTRONIC PUBLISHING JOINT VENTURES.—A Bell

operating company or affiliate may participate on a

nonexclusive basis in electronic publishing joint ventures

with entities that are not a Bell operating company, affiliate, or separated affiliate to provide electronic publishing

services, if the Bell operating company or affiliate has

not more than a 50 percent direct or indirect equity interest

(or the equivalent thereof) or the right to more than 50

percent of the gross revenues under a revenue sharing

or royalty agreement in any electronic publishing joint

venture. Officers and employees of a Bell operating company or affiliate participating in an electronic publishing

joint venture may not have more than 50 percent of the

voting control over the electronic publishing joint venture.

In the case of joint ventures with small, local electronic

publishers, the Commission for good cause shown may

authorize the Bell operating company or affiliate to have

a larger equity interest, revenue share, or voting control

but not to exceed 80 percent. A Bell operating company

participating in an electronic publishing joint venture may

provide promotion, marketing, sales, or advertising personnel and services to such joint venture. ‘‘(d) BELL OPERATING COMPANY REQUIREMENT.—A Bell operating company under common ownership or control with a separated

affiliate or electronic publishing joint venture shall provide network

access and interconnections for basic telephone service to electronic

publishers at just and reasonable rates that are tariffed (so long

as rates for such services are subject to regulation) and that are

not higher on a per-unit basis than those charged for such services

to any other electronic publisher or any separated affiliate engaged

in electronic publishing. ‘‘(e) PRIVATE RIGHT OF ACTION.— ‘‘(1) DAMAGES.—Any person claiming that any act or practice of any Bell operating company, affiliate, or separated affiliate constitutes a violation of this section may file a complaint

with the Commission or bring suit as provided in section 207

of this Act, and such Bell operating company, affiliate, or separated affiliate shall be liable as provided in section 206 of

this Act; except that damages may not be awarded for a violation that is discovered by a compliance review as required

by subsection (b)(7) of this section and corrected within 90

days.

‘‘(2) CEASE AND DESIST ORDERS.—In addition to the provisions of paragraph (1), any person claiming that any act or

practice of any Bell operating company, affiliate, or separated

affiliate constitutes a violation of this section may make application to the Commission for an order to cease and desist such
S. 652—48

violation or may make application in any district court of the

United States of competent jurisdiction for an order enjoining

such acts or practices or for an order compelling compliance

with such requirement.

‘‘(f) SEPARATED AFFILIATE REPORTING REQUIREMENT.—Any

separated affiliate under this section shall file with the Commission

annual reports in a form substantially equivalent to the Form

10–K required by regulations of the Securities and Exchange

Commission.

‘‘(g) EFFECTIVE DATES.—

‘‘(1) TRANSITION.—Any electronic publishing service being

offered to the public by a Bell operating company or affiliate

on the date of enactment of the Telecommunications Act of

1996 shall have one year from such date of enactment to

comply with the requirements of this section.

‘‘(2) SUNSET.—The provisions of this section shall not apply

to conduct occurring after 4 years after the date of enactment

of the Telecommunications Act of 1996.

‘‘(h) DEFINITION OF ELECTRONIC PUBLISHING.—

‘‘(1) IN GENERAL.—The term ‘electronic publishing’ means

the dissemination, provision, publication, or sale to an unaffiliated entity or person, of any one or more of the following:

news (including sports); entertainment (other than interactive

games); business, financial, legal, consumer, or credit materials;

editorials, columns, or features; advertising; photos or images;

archival or research material; legal notices or public records;

scientific, educational, instructional, technical, professional,

trade, or other literary materials; or other like or similar

information.

‘‘(2) EXCEPTIONS.—The term ‘electronic publishing’ shall

not include the following services:

‘‘(A) Information access, as that term is defined by

the AT&T Consent Decree.

‘‘(B) The transmission of information as a common

carrier.

‘‘(C) The transmission of information as part of a gateway to an information service that does not involve the

generation or alteration of the content of information,

including data transmission, address translation, protocol

conversion, billing management, introductory information

content, and navigational systems that enable users to

access electronic publishing services, which do not affect

the presentation of such electronic publishing services to

users.

‘‘(D) Voice storage and retrieval services, including

voice messaging and electronic mail services.

‘‘(E) Data processing or transaction processing services

that do not involve the generation or alteration of the

content of information.

‘‘(F) Electronic billing or advertising of a Bell operating

company’s regulated telecommunications services.

‘‘(G) Language translation or data format conversion.

‘‘(H) The provision of information necessary for the

management, control, or operation of a telephone company

telecommunications system.
S. 652—49

‘‘(I) The provision of directory assistance that provides

names, addresses, and telephone numbers and does not

include advertising.

‘‘(J) Caller identification services.

‘‘(K) Repair and provisioning databases and credit card

and billing validation for telephone company operations.

‘‘(L) 911–E and other emergency assistance databases.

‘‘(M) Any other network service of a type that is like

or similar to these network services and that does not

involve the generation or alteration of the content of

information.

‘‘(N) Any upgrades to these network services that do

not involve the generation or alteration of the content

of information.

‘‘(O) Video programming or full motion video entertainment on demand.

‘‘(i) ADDITIONAL DEFINITIONS.—As used in this section—

‘‘(1) The term ‘affiliate’ means any entity that, directly

or indirectly, owns or controls, is owned or controlled by, or

is under common ownership or control with, a Bell operating

company. Such term shall not include a separated affiliate.

‘‘(2) The term ‘basic telephone service’ means any wireline

telephone exchange service, or wireline telephone exchange

service facility, provided by a Bell operating company in a

telephone exchange area, except that such term does not

include—

‘‘(A) a competitive wireline telephone exchange service

provided in a telephone exchange area where another entity

provides a wireline telephone exchange service that was

provided on January 1, 1984, or ‘‘(B) a commercial mobile service.

‘‘(3) The term ‘basic telephone service information’ means

network and customer information of a Bell operating company

and other information acquired by a Bell operating company

as a result of its engaging in the provision of basic telephone

service.

‘‘(4) The term ‘control’ has the meaning that it has in

17 C.F.R. 240.12b–2, the regulations promulgated by the Securities and Exchange Commission pursuant to the Securities

Exchange Act of 1934 (15 U.S.C. 78a et seq.) or any successor

provision to such section.

‘‘(5) The term ‘electronic publishing joint venture’ means

a joint venture owned by a Bell operating company or affiliate

that engages in the provision of electronic publishing which

is disseminated by means of such Bell operating company’s

or any of its affiliates’ basic telephone service.

‘‘(6) The term ‘entity’ means any organization, and includes

corporations, partnerships, sole proprietorships, associations,

and joint ventures.

‘‘(7) The term ‘inbound telemarketing’ means the marketing

of property, goods, or services by telephone to a customer or

potential customer who initiated the call.

‘‘(8) The term ‘own’ with respect to an entity means to

have a direct or indirect equity interest (or the equivalent

thereof) of more than 10 percent of an entity, or the right

to more than 10 percent of the gross revenues of an entity

under a revenue sharing or royalty agreement.
S. 652—50

‘‘(9) The term ‘separated affiliate’ means a corporation

under common ownership or control with a Bell operating company that does not own or control a Bell operating company

and is not owned or controlled by a Bell operating company

and that engages in the provision of electronic publishing which

is disseminated by means of such Bell operating company’s

or any of its affiliates’ basic telephone service.

‘‘(10) The term ‘Bell operating company’ has the meaning

provided in section 3, except that such term includes any entity

or corporation that is owned or controlled by such a company

(as so defined) but does not include an electronic publishing

joint venture owned by such an entity or corporation.

‘‘SEC. 275. ALARM MONITORING SERVICES.

‘‘(a) DELAYED ENTRY INTO ALARM MONITORING.—

‘‘(1) PROHIBITION.—No Bell operating company or affiliate

thereof shall engage in the provision of alarm monitoring services before the date which is 5 years after the date of enactment

of the Telecommunications Act of 1996.

‘‘(2) EXISTING ACTIVITIES.—Paragraph (1) does not prohibit

or limit the provision, directly or through an affiliate, of alarm

monitoring services by a Bell operating company that was

engaged in providing alarm monitoring services as of November

30, 1995, directly or through an affiliate. Such Bell operating

company or affiliate may not acquire any equity interest in,

or obtain financial control of, any unaffiliated alarm monitoring

service entity after November 30, 1995, and until 5 years after

the date of enactment of the Telecommunications Act of 1996,

except that this sentence shall not prohibit an exchange of

customers for the customers of an unaffiliated alarm monitoring

service entity.

‘‘(b) NONDISCRIMINATION.—An incumbent local exchange carrier (as defined in section 251(h)) engaged in the provision of alarm

monitoring services shall— ‘‘(1) provide nonaffiliated entities, upon reasonable request,

with the network services it provides to its own alarm monitoring operations, on nondiscriminatory terms and conditions; and ‘‘(2) not subsidize its alarm monitoring services either

directly or indirectly from telephone exchange service operations.

‘‘(c) EXPEDITED CONSIDERATION OF COMPLAINTS.—The Commission shall establish procedures for the receipt and review of complaints concerning violations of subsection (b) or the regulations

thereunder that result in material financial harm to a provider

of alarm monitoring service. Such procedures shall ensure that

the Commission will make a final determination with respect to

any such complaint within 120 days after receipt of the complaint.

If the complaint contains an appropriate showing that the alleged

violation occurred, as determined by the Commission in accordance

with such regulations, the Commission shall, within 60 days after

receipt of the complaint, order the incumbent local exchange carrier

(as defined in section 251(h)) and its affiliates to cease engaging

in such violation pending such final determination.

‘‘(d) USE OF DATA.—A local exchange carrier may not record

or use in any fashion the occurrence or contents of calls received

by providers of alarm monitoring services for the purposes of

marketing such services on behalf of such local exchange carrier,
S. 652—51

or any other entity. Any regulations necessary to enforce this subsection shall be issued initially within 6 months after the date

of enactment of the Telecommunications Act of 1996.

‘‘(e) DEFINITION OF ALARM MONITORING SERVICE.—The term

‘alarm monitoring service’ means a service that uses a device located

at a residence, place of business, or other fixed premises—

‘‘(1) to receive signals from other devices located at or

about such premises regarding a possible threat at such premises to life, safety, or property, from burglary, fire, vandalism,

bodily injury, or other emergency, and

‘‘(2) to transmit a signal regarding such threat by means

of transmission facilities of a local exchange carrier or one

of its affiliates to a remote monitoring center to alert a person

at such center of the need to inform the customer or another

person or police, fire, rescue, security, or public safety personnel

of such threat,

but does not include a service that uses a medical monitoring

device attached to an individual for the automatic surveillance

of an ongoing medical condition.

‘‘SEC. 276. PROVISION OF PAYPHONE SERVICE.

‘‘(a) NONDISCRIMINATION SAFEGUARDS.—After the effective date

of the rules prescribed pursuant to subsection (b), any Bell operating

company that provides payphone service—

‘‘(1) shall not subsidize its payphone service directly or

indirectly from its telephone exchange service operations or

its exchange access operations; and

‘‘(2) shall not prefer or discriminate in favor of its payphone

service.

‘‘(b) REGULATIONS.— ‘‘(1) CONTENTS OF REGULATIONS.—In order to promote competition among payphone service providers and promote the

widespread deployment of payphone services to the benefit

of the general public, within 9 months after the date of enactment of the Telecommunications Act of 1996, the Commission

shall take all actions necessary (including any reconsideration)

to prescribe regulations that— ‘‘(A) establish a per call compensation plan to ensure

that all payphone service providers are fairly compensated

for each and every completed intrastate and interstate

call using their payphone, except that emergency calls and

telecommunications relay service calls for hearing disabled

individuals shall not be subject to such compensation; ‘‘(B) discontinue the intrastate and interstate carrier

access charge payphone service elements and payments

in effect on such date of enactment, and all intrastate

and interstate payphone subsidies from basic exchange and

exchange access revenues, in favor of a compensation plan

as specified in subparagraph (A);

‘‘(C) prescribe a set of nonstructural safeguards for

Bell operating company payphone service to implement

the provisions of paragraphs (1) and (2) of subsection (a),

which safeguards shall, at a minimum, include the nonstructural safeguards equal to those adopted in the Computer Inquiry-III (CC Docket No. 90–623) proceeding;

‘‘(D) provide for Bell operating company payphone service providers to have the same right that independent
S. 652—52

payphone providers have to negotiate with the location

provider on the location provider’s selecting and contracting

with, and, subject to the terms of any agreement with

the location provider, to select and contract with, the carriers that carry interLATA calls from their payphones,

unless the Commission determines in the rulemaking

pursuant to this section that it is not in the public interest;

and

‘‘(E) provide for all payphone service providers to have

the right to negotiate with the location provider on the

location provider’s selecting and contracting with, and, subject to the terms of any agreement with the location provider, to select and contract with, the carriers that carry

intraLATA calls from their payphones.

‘‘(2) PUBLIC INTEREST TELEPHONES.—In the rulemaking conducted pursuant to paragraph (1), the Commission shall determine whether public interest payphones, which are provided

in the interest of public health, safety, and welfare, in locations

where there would otherwise not be a payphone, should be

maintained, and if so, ensure that such public interest

payphones are supported fairly and equitably.

‘‘(3) EXISTING CONTRACTS.—Nothing in this section shall

affect any existing contracts between location providers and

payphone service providers or interLATA or intraLATA carriers

that are in force and effect as of the date of enactment of

the Telecommunications Act of 1996.

‘‘(c) STATE PREEMPTION.—To the extent that any State requirements are inconsistent with the Commission’s regulations, the

Commission’s regulations on such matters shall preempt such State

requirements.

‘‘(d) DEFINITION.—As used in this section, the term ‘payphone

service’ means the provision of public or semi-public pay telephones,

the provision of inmate telephone service in correctional institutions,

and any ancillary services.’’. (b) REVIEW OF ENTRY DECISIONS.—Section 402(b) (47 U.S.C.

402(b)) is amended—

(1) in paragraph (6), by striking ‘‘(3), and (4)’’ and inserting ‘‘(3), (4), and (9)’’; and

(2) by adding at the end the following new paragraph: ‘‘(9) By any applicant for authority to provide interLATA services under section 271 of this Act whose application is denied

by the Commission.’’.

TITLE II—BROADCAST SERVICES

SEC. 201. BROADCAST SPECTRUM FLEXIBILITY.

Title III is amended by inserting after section 335 (47 U.S.C.

335) the following new section:

‘‘SEC. 336. BROADCAST SPECTRUM FLEXIBILITY.

‘‘(a) COMMISSION ACTION.—If the Commission determines to

issue additional licenses for advanced television services, the

Commission—

‘‘(1) should limit the initial eligibility for such licenses

to persons that, as of the date of such issuance, are licensed
S. 652—53

to operate a television broadcast station or hold a permit to

construct such a station (or both); and

‘‘(2) shall adopt regulations that allow the holders of such

licenses to offer such ancillary or supplementary services on

designated frequencies as may be consistent with the public

interest, convenience, and necessity.

‘‘(b) CONTENTS OF REGULATIONS.—In prescribing the regulations

required by subsection (a), the Commission shall—

‘‘(1) only permit such licensee or permittee to offer ancillary

or supplementary services if the use of a designated frequency

for such services is consistent with the technology or method

designated by the Commission for the provision of advanced

television services;

‘‘(2) limit the broadcasting of ancillary or supplementary

services on designated frequencies so as to avoid derogation

of any advanced television services, including high definition

television broadcasts, that the Commission may require using

such frequencies;

‘‘(3) apply to any other ancillary or supplementary service

such of the Commission’s regulations as are applicable to the

offering of analogous services by any other person, except that

no ancillary or supplementary service shall have any rights

to carriage under section 614 or 615 or be deemed a multichannel video programming distributor for purposes of section

628;

‘‘(4) adopt such technical and other requirements as may

be necessary or appropriate to assure the quality of the signal

used to provide advanced television services, and may adopt

regulations that stipulate the minimum number of hours per

day that such signal must be transmitted; and

‘‘(5) prescribe such other regulations as may be necessary

for the protection of the public interest, convenience, and necessity.

‘‘(c) RECOVERY OF LICENSE.—If the Commission grants a license

for advanced television services to a person that, as of the date

of such issuance, is licensed to operate a television broadcast station

or holds a permit to construct such a station (or both), the Commission shall, as a condition of such license, require that either the

additional license or the original license held by the licensee be

surrendered to the Commission for reallocation or reassignment

(or both) pursuant to Commission regulation.

‘‘(d) PUBLIC INTEREST REQUIREMENT.—Nothing in this section

shall be construed as relieving a television broadcasting station

from its obligation to serve the public interest, convenience, and

necessity. In the Commission’s review of any application for renewal

of a broadcast license for a television station that provides ancillary

or supplementary services, the television licensee shall establish

that all of its program services on the existing or advanced television

spectrum are in the public interest. Any violation of the Commission

rules applicable to ancillary or supplementary services shall reflect

upon the licensee’s qualifications for renewal of its license.

‘‘(e) FEES.—

‘‘(1) SERVICES TO WHICH FEES APPLY.—If the regulations

prescribed pursuant to subsection (a) permit a licensee to offer

ancillary or supplementary services on a designated frequency—
S. 652—54

‘‘(A) for which the payment of a subscription fee is

required in order to receive such services, or

‘‘(B) for which the licensee directly or indirectly receives

compensation from a third party in return for transmitting

material furnished by such third party (other than commercial advertisements used to support broadcasting for which

a subscription fee is not required),

the Commission shall establish a program to assess and collect

from the licensee for such designated frequency an annual

fee or other schedule or method of payment that promotes

the objectives described in subparagraphs (A) and (B) of paragraph (2).

‘‘(2) COLLECTION OF FEES.—The program required by paragraph (1) shall—

‘‘(A) be designed (i) to recover for the public a portion

of the value of the public spectrum resource made available

for such commercial use, and (ii) to avoid unjust enrichment

through the method employed to permit such uses of that

resource;

‘‘(B) recover for the public an amount that, to the

extent feasible, equals but does not exceed (over the term

of the license) the amount that would have been recovered

had such services been licensed pursuant to the provisions

of section 309(j) of this Act and the Commission’s regulations thereunder; and

‘‘(C) be adjusted by the Commission from time to time

in order to continue to comply with the requirements of

this paragraph.

‘‘(3) TREATMENT OF REVENUES.— ‘‘(A) GENERAL RULE.—Except as provided in subparagraph (B), all proceeds obtained pursuant to the regulations

required by this subsection shall be deposited in the Treasury in accordance with chapter 33 of title 31, United States

Code.

‘‘(B) RETENTION OF REVENUES.—Notwithstanding subparagraph (A), the salaries and expenses account of

the Commission shall retain as an offsetting collection such

sums as may be necessary from such proceeds for the

costs of developing and implementing the program required

by this section and regulating and supervising advanced

television services. Such offsetting collections shall be available for obligation subject to the terms and conditions

of the receiving appropriations account, and shall be deposited in such accounts on a quarterly basis.

‘‘(4) REPORT.—Within 5 years after the date of enactment

of the Telecommunications Act of 1996, the Commission shall

report to the Congress on the implementation of the program

required by this subsection, and shall annually thereafter

advise the Congress on the amounts collected pursuant to such

program.

‘‘(f) EVALUATION.—Within 10 years after the date the Commission first issues additional licenses for advanced television services,

the Commission shall conduct an evaluation of the advanced television services program. Such evaluation shall include—

‘‘(1) an assessment of the willingness of consumers to purchase the television receivers necessary to receive broadcasts

of advanced television services;
S. 652—55

‘‘(2) an assessment of alternative uses, including public

safety use, of the frequencies used for such broadcasts; and

‘‘(3) the extent to which the Commission has been or will

be able to reduce the amount of spectrum assigned to licensees.

‘‘(g) DEFINITIONS.—As used in this section:

‘‘(1) ADVANCED TELEVISION SERVICES.—The term ‘advanced

television services’ means television services provided using

digital or other advanced technology as further defined in the

opinion, report, and order of the Commission entitled ‘Advanced

Television Systems and Their Impact Upon the Existing Television Broadcast Service’, MM Docket 87–268, adopted September 17, 1992, and successor proceedings.

‘‘(2) DESIGNATED FREQUENCIES.—The term ‘designated frequency’ means each of the frequencies designated by the

Commission for licenses for advanced television services.

‘‘(3) HIGH DEFINITION TELEVISION.—The term ‘high definition television’ refers to systems that offer approximately twice

the vertical and horizontal resolution of receivers generally

available on the date of enactment of the Telecommunications

Act of 1996, as further defined in the proceedings described

in paragraph (1) of this subsection.’’.

SEC. 202. BROADCAST OWNERSHIP.

(a) NATIONAL RADIO STATION OWNERSHIP RULE CHANGES

REQUIRED.—The Commission shall modify section 73.3555 of its

regulations (47 C.F.R. 73.3555) by eliminating any provisions limiting the number of AM or FM broadcast stations which may be

owned or controlled by one entity nationally.

(b) LOCAL RADIO DIVERSITY.—

(1) APPLICABLE CAPS.—The Commission shall revise section

73.3555(a) of its regulations (47 C.F.R. 73.3555) to provide

that—

(A) in a radio market with 45 or more commercial

radio stations, a party may own, operate, or control up

to 8 commercial radio stations, not more than 5 of which

are in the same service (AM or FM);

(B) in a radio market with between 30 and 44 (inclusive) commercial radio stations, a party may own, operate,

or control up to 7 commercial radio stations, not more

than 4 of which are in the same service (AM or FM);

(C) in a radio market with between 15 and 29 (inclusive) commercial radio stations, a party may own, operate,

or control up to 6 commercial radio stations, not more

than 4 of which are in the same service (AM or FM);

and

(D) in a radio market with 14 or fewer commercial

radio stations, a party may own, operate, or control up

to 5 commercial radio stations, not more than 3 of which

are in the same service (AM or FM), except that a party

may not own, operate, or control more than 50 percent

of the stations in such market.

(2) EXCEPTION.—Notwithstanding any limitation authorized by this subsection, the Commission may permit a person

or entity to own, operate, or control, or have a cognizable

interest in, radio broadcast stations if the Commission determines that such ownership, operation, control, or interest will
S. 652—56

result in an increase in the number of radio broadcast stations

in operation.

(c) TELEVISION OWNERSHIP LIMITATIONS.—

(1) NATIONAL OWNERSHIP LIMITATIONS.—The Commission

shall modify its rules for multiple ownership set forth in section

73.3555 of its regulations (47 C.F.R. 73.3555)—

(A) by eliminating the restrictions on the number of

television stations that a person or entity may directly

or indirectly own, operate, or control, or have a cognizable

interest in, nationwide; and

(B) by increasing the national audience reach limitation for television stations to 35 percent.

(2) LOCAL OWNERSHIP LIMITATIONS.—The Commission shall

conduct a rulemaking proceeding to determine whether to

retain, modify, or eliminate its limitations on the number of

television stations that a person or entity may own, operate,

or control, or have a cognizable interest in, within the same

television market.

(d) RELAXATION OF ONE-TO-A-MARKET.—With respect to its

enforcement of its one-to-a-market ownership rules under section

73.3555 of its regulations, the Commission shall extend its waiver

policy to any of the top 50 markets, consistent with the public

interest, convenience, and necessity.

(e) DUAL NETWORK CHANGES.—The Commission shall revise

section 73.658(g) of its regulations (47 C.F.R. 658(g)) to permit

a television broadcast station to affiliate with a person or entity

that maintains 2 or more networks of television broadcast stations

unless such dual or multiple networks are composed of—

(1) two or more persons or entities that, on the date of

enactment of the Telecommunications Act of 1996, are ‘‘networks’’ as defined in section 73.3613(a)(1) of the Commission’s

regulations (47 C.F.R. 73.3613(a)(1)); or (2) any network described in paragraph (1) and an Englishlanguage program distribution service that, on such date, provides 4 or more hours of programming per week on a national

basis pursuant to network affiliation arrangements with local

television broadcast stations in markets reaching more than

75 percent of television homes (as measured by a national

ratings service).

(f) CABLE CROSS OWNERSHIP.— (1) ELIMINATION OF RESTRICTIONS.—The Commission shall

revise section 76.501 of its regulations (47 C.F.R. 76.501) to

permit a person or entity to own or control a network of

broadcast stations and a cable system. (2) SAFEGUARDS AGAINST DISCRIMINATION.—The Commission shall revise such regulations if necessary to ensure carriage, channel positioning, and nondiscriminatory treatment

of nonaffiliated broadcast stations by a cable system described

in paragraph (1).

(g) LOCAL MARKETING AGREEMENTS.—Nothing in this section

shall be construed to prohibit the origination, continuation, or

renewal of any television local marketing agreement that is in

compliance with the regulations of the Commission.

(h) FURTHER COMMISSION REVIEW.—The Commission shall

review its rules adopted pursuant to this section and all of its

ownership rules biennially as part of its regulatory reform review

under section 11 of the Communications Act of 1934 and shall
S. 652—57

determine whether any of such rules are necessary in the public

interest as the result of competition. The Commission shall repeal

or modify any regulation it determines to be no longer in the

public interest. (i) ELIMINATION OF STATUTORY RESTRICTION.—Section 613(a)

(47 U.S.C. 533(a)) is amended—

(1) by striking paragraph (1);

(2) by redesignating paragraph (2) as subsection (a);

(3) by redesignating subparagraphs (A) and (B) as para- graphs (1) and (2), respectively; (4) by striking ‘‘and’’ at the end of paragraph (1) (as so redesignated); (5) by striking the period at the end of paragraph (2) (as so redesignated) and inserting ‘‘; and’’; and (6) by adding at the end the following new paragraph:

‘‘(3) shall not apply the requirements of this subsection to any cable operator in any franchise area in which a cable

operator is subject to effective competition as determined under

section 623(l).’’.

SEC. 203. TERM OF LICENSES.

Section 307(c) (47 U.S.C. 307(c)) is amended to read as follows:

‘‘(c) TERMS OF LICENSES.— ‘‘(1) INITIAL AND RENEWAL LICENSES.—Each license granted for the operation of a broadcasting station shall be for a term

of not to exceed 8 years. Upon application therefor, a renewal

of such license may be granted from time to time for a term

of not to exceed 8 years from the date of expiration of the

preceding license, if the Commission finds that public interest,

convenience, and necessity would be served thereby. Consistent

with the foregoing provisions of this subsection, the Commission

may by rule prescribe the period or periods for which licenses

shall be granted and renewed for particular classes of stations,

but the Commission may not adopt or follow any rule which

would preclude it, in any case involving a station of a particular

class, from granting or renewing a license for a shorter period

than that prescribed for stations of such class if, in its judgment, the public interest, convenience, or necessity would be

served by such action. ‘‘(2) MATERIALS IN APPLICATION.—In order to expedite

action on applications for renewal of broadcasting station

licenses and in order to avoid needless expense to applicants

for such renewals, the Commission shall not require any such

applicant to file any information which previously has been

furnished to the Commission or which is not directly material

to the considerations that affect the granting or denial of such

application, but the Commission may require any new or additional facts it deems necessary to make its findings.

‘‘(3) CONTINUATION PENDING DECISION.—Pending any hearing and final decision on such an application and the disposition

of any petition for rehearing pursuant to section 405, the

Commission shall continue such license in effect.’’.

SEC. 204. BROADCAST LICENSE RENEWAL PROCEDURES.

(a) RENEWAL PROCEDURES.—

(1) AMENDMENT.—Section 309 (47 U.S.C. 309) is amended

by adding at the end thereof the following new subsection:

‘‘(k) BROADCAST STATION RENEWAL PROCEDURES.—
S. 652—58

‘‘(1) STANDARDS FOR RENEWAL.—If the licensee of a broadcast station submits an application to the Commission for

renewal of such license, the Commission shall grant the application if it finds, with respect to that station, during the preceding

term of its license—

‘‘(A) the station has served the public interest, convenience, and necessity;

‘‘(B) there have been no serious violations by the

licensee of this Act or the rules and regulations of the

Commission; and

‘‘(C) there have been no other violations by the licensee

of this Act or the rules and regulations of the Commission

which, taken together, would constitute a pattern of abuse.

‘‘(2) CONSEQUENCE OF FAILURE TO MEET STANDARD.—If any

licensee of a broadcast station fails to meet the requirements

of this subsection, the Commission may deny the application

for renewal in accordance with paragraph (3), or grant such

application on terms and conditions as are appropriate, including renewal for a term less than the maximum otherwise permitted.

‘‘(3) STANDARDS FOR DENIAL.—If the Commission determines, after notice and opportunity for a hearing as provided

in subsection (e), that a licensee has failed to meet the requirements specified in paragraph (1) and that no mitigating factors

justify the imposition of lesser sanctions, the Commission

shall—

‘‘(A) issue an order denying the renewal application

filed by such licensee under section 308; and

‘‘(B) only thereafter accept and consider such applications for a construction permit as may be filed under section

308 specifying the channel or broadcasting facilities of the

former licensee.

‘‘(4) COMPETITOR CONSIDERATION PROHIBITED.—In making

the determinations specified in paragraph (1) or (2), the

Commission shall not consider whether the public interest,

convenience, and necessity might be served by the grant of

a license to a person other than the renewal applicant.’’.

(2) CONFORMING AMENDMENT.—Section 309(d) (47 U.S.C.

309(d)) is amended by inserting after ‘‘with subsection (a)’’

each place it appears the following: ‘‘(or subsection (k) in the

case of renewal of any broadcast station license)’’.

(b) SUMMARY OF COMPLAINTS ON VIOLENT PROGRAMMING.—

Section 308 (47 U.S.C. 308) is amended by adding at the end

the following new subsection:

‘‘(d) SUMMARY OF COMPLAINTS.—Each applicant for the renewal

of a commercial or noncommercial television license shall attach

as an exhibit to the application a summary of written comments

and suggestions received from the public and maintained by the

licensee (in accordance with Commission regulations) that comment

on the applicant’s programming, if any, and that are characterized

by the commentor as constituting violent programming.’’.

(c) EFFECTIVE DATE.—The amendments made by this section

apply to applications filed after May 1, 1995.
S. 652—59

SEC. 205. DIRECT BROADCAST SATELLITE SERVICE.

(a) DBS SIGNAL SECURITY.—Section 705(e)(4) (47 U.S.C.

605(e)(4)) is amended by inserting ‘‘or direct-to-home satellite services,’’ after ‘‘programming,’’. (b) FCC JURISDICTION OVER DIRECT-TO-HOME SATELLITE SERV- ICES.—Section 303 (47 U.S.C. 303) is amended by adding at the

end thereof the following new subsection: ‘‘(v) Have exclusive jurisdiction to regulate the provision of

direct-to-home satellite services. As used in this subsection, the

term ‘direct-to-home satellite services’ means the distribution or

broadcasting of programming or services by satellite directly to

the subscriber’s premises without the use of ground receiving or

distribution equipment, except at the subscriber’s premises or in

the uplink process to the satellite.’’.

SEC. 206. AUTOMATED SHIP DISTRESS AND SAFETY SYSTEMS.

Part II of title III is amended by inserting after section 364

(47 U.S.C. 362) the following new section:

‘‘SEC. 365. AUTOMATED SHIP DISTRESS AND SAFETY SYSTEMS.

‘‘Notwithstanding any provision of this Act or any other provision of law or regulation, a ship documented under the laws of

the United States operating in accordance with the Global Maritime

Distress and Safety System provisions of the Safety of Life at

Sea Convention shall not be required to be equipped with a radio

telegraphy station operated by one or more radio officers or operators. This section shall take effect for each vessel upon a determination by the United States Coast Guard that such vessel has the

equipment required to implement the Global Maritime Distress

and Safety System installed and operating in good working condition.’’.

SEC. 207. RESTRICTIONS ON OVER-THE-AIR RECEPTION DEVICES.

Within 180 days after the date of enactment of this Act, the

Commission shall, pursuant to section 303 of the Communications

Act of 1934, promulgate regulations to prohibit restrictions that

impair a viewer’s ability to receive video programming services

through devices designed for over-the-air reception of television

broadcast signals, multichannel multipoint distribution service, or

direct broadcast satellite services.

TITLE III—CABLE SERVICES

SEC. 301. CABLE ACT REFORM.

(a) DEFINITIONS.—

(1) DEFINITION OF CABLE SERVICE.—Section 602(6)(B) (47

U.S.C. 522(6)(B)) is amended by inserting ‘‘or use’’ after ‘‘the

selection’’.

(2) CHANGE IN DEFINITION OF CABLE SYSTEM.—Section

602(7) (47 U.S.C. 522(7)) is amended by striking ‘‘(B) a facility

that serves only subscribers in 1 or more multiple unit dwellings under common ownership, control, or management, unless

such facility or facilities uses any public right-of-way;’’ and

inserting ‘‘(B) a facility that serves subscribers without using

any public right-of-way;’’.

(b) RATE DEREGULATION.—
S. 652—60

(1) UPPER TIER REGULATION.—Section 623(c) (47 U.S.C.

543(c)) is amended—

(A) in paragraph (1)(B), by striking ‘‘subscriber, franchising authority, or other relevant State or local government entity’’ and inserting ‘‘franchising authority (in

accordance with paragraph (3))’’;

(B) in paragraph (1)(C), by striking ‘‘such complaint’’

and inserting ‘‘the first complaint filed with the franchising

authority under paragraph (3)’’; and

(C) by striking paragraph (3) and inserting the following:

‘‘(3) REVIEW OF RATE CHANGES.—The Commission shall

review any complaint submitted by a franchising authority

after the date of enactment of the Telecommunications Act

of 1996 concerning an increase in rates for cable programming

services and issue a final order within 90 days after it receives

such a complaint, unless the parties agree to extend the period

for such review. A franchising authority may not file a complaint under this paragraph unless, within 90 days after such

increase becomes effective it receives subscriber complaints.

‘‘(4) SUNSET OF UPPER TIER RATE REGULATION.—This subsection shall not apply to cable programming services provided

after March 31, 1999.’’.

(2) SUNSET OF UNIFORM RATE STRUCTURE IN MARKETS WITH

EFFECTIVE COMPETITION.—Section 623(d) (47 U.S.C. 543(d)) is

amended by adding at the end thereof the following: ‘‘This

subsection does not apply to (1) a cable operator with respect

to the provision of cable service over its cable system in any

geographic area in which the video programming services

offered by the operator in that area are subject to effective

competition, or (2) any video programming offered on a per

channel or per program basis. Bulk discounts to multiple dwelling units shall not be subject to this subsection, except that

a cable operator of a cable system that is not subject to effective

competition may not charge predatory prices to a multiple

dwelling unit. Upon a prima facie showing by a complainant

that there are reasonable grounds to believe that the discounted

price is predatory, the cable system shall have the burden

of showing that its discounted price is not predatory.’’.

(3) EFFECTIVE COMPETITION.—Section 623(l)(1) (47 U.S.C.

543(l)(1)) is amended—

(A) by striking ‘‘or’’ at the end of subparagraph (B);

(B) by striking the period at the end of subparagraph

(C) and inserting ‘‘; or’’; and

(C) by adding at the end the following:

‘‘(D) a local exchange carrier or its affiliate (or any

multichannel video programming distributor using the

facilities of such carrier or its affiliate) offers video

programming services directly to subscribers by any means

(other than direct-to-home satellite services) in the franchise area of an unaffiliated cable operator which is providing cable service in that franchise area, but only if the

video programming services so offered in that area are

comparable to the video programming services provided

by the unaffiliated cable operator in that area.’’.
S. 652—61

(c) GREATER DEREGULATION FOR SMALLER CABLE COMPANIES.—

Section 623 (47 U.S.C 543) is amended by adding at the end

thereof the following:

‘‘(m) SPECIAL RULES FOR SMALL COMPANIES.—

‘‘(1) IN GENERAL.—Subsections (a), (b), and (c) do not apply

to a small cable operator with respect to—

‘‘(A) cable programming services, or

‘‘(B) a basic service tier that was the only service

tier subject to regulation as of December 31, 1994,

in any franchise area in which that operator services 50,000

or fewer subscribers.

‘‘(2) DEFINITION OF SMALL CABLE OPERATOR.—For purposes

of this subsection, the term ‘small cable operator’ means a

cable operator that, directly or through an affiliate, serves

in the aggregate fewer than 1 percent of all subscribers in

the United States and is not affiliated with any entity or

entities whose gross annual revenues in the aggregate exceed

$250,000,000.’’.

(d) MARKET DETERMINATIONS.—

(1) MARKET DETERMINATIONS; EXPEDITED DECISIONMAKING.—Section 614(h)(1)(C) (47 U.S.C. 534(h)(1)(C)) is amended—

(A) by striking ‘‘in the manner provided in section

73.3555(d)(3)(i) of title 47, Code of Federal Regulations,

as in effect on May 1, 1991,’’ in clause (i) and inserting

‘‘by the Commission by regulation or order using, where

available, commercial publications which delineate television markets based on viewing patterns,’’; and

(B) by striking clause (iv) and inserting the following: ‘‘(iv) Within 120 days after the date on which a request is filed under this subparagraph (or 120

days after the date of enactment of the Telecommunications Act of 1996, if later), the Commission shall

grant or deny the request.’’. (2) APPLICATION TO PENDING REQUESTS.—The amendment

made by paragraph (1) shall apply to— (A) any request pending under section 614(h)(1)(C) of the Communications Act of 1934 (47 U.S.C. 534(h)(1)(C))

on the date of enactment of this Act; and

(B) any request filed under that section after that

date.

(e) TECHNICAL STANDARDS.—Section 624(e) (47 U.S.C. 544(e))

is amended by striking the last two sentences and inserting the

following: ‘‘No State or franchising authority may prohibit, condition, or restrict a cable system’s use of any type of subscriber

equipment or any transmission technology.’’.

(f) CABLE EQUIPMENT COMPATIBILITY.—Section 624A (47 U.S.C.

544A) is amended—

(1) in subsection (a) by striking ‘‘and’’ at the end of paragraph (2), by striking the period at the end of paragraph (3)

and inserting ‘‘; and’’; and by adding at the end the following

new paragraph:

‘‘(4) compatibility among televisions, video cassette recorders, and cable systems can be assured with narrow technical

standards that mandate a minimum degree of common design

and operation, leaving all features, functions, protocols, and

other product and service options for selection through open

competition in the market.’’;
S. 652—62

(2) in subsection (c)(1)—

(A) by redesignating subparagraphs (A) and (B) as

subparagraphs (B) and (C), respectively; and

(B) by inserting before such redesignated subparagraph

(B) the following new subparagraph:

‘‘(A) the need to maximize open competition in the

market for all features, functions, protocols, and other product and service options of converter boxes and other cable

converters unrelated to the descrambling or decryption of

cable television signals;’’; and

(3) in subsection (c)(2)—

(A) by redesignating subparagraphs (D) and (E) as

subparagraphs (E) and (F), respectively; and

(B) by inserting after subparagraph (C) the following

new subparagraph:

‘‘(D) to ensure that any standards or regulations developed under the authority of this section to ensure compatibility between televisions, video cassette recorders, and

cable systems do not affect features, functions, protocols,

and other product and service options other than those

specified in paragraph (1)(B), including telecommunications

interface equipment, home automation communications,

and computer network services;’’.

(g) SUBSCRIBER NOTICE.—Section 632 (47 U.S.C. 552) is amended—

(1) by redesignating subsection (c) as subsection (d); and

(2) by inserting after subsection (b) the following new subsection:

‘‘(c) SUBSCRIBER NOTICE.—A cable operator may provide notice

of service and rate changes to subscribers using any reasonable

written means at its sole discretion. Notwithstanding section

623(b)(6) or any other provision of this Act, a cable operator shall

not be required to provide prior notice of any rate change that

is the result of a regulatory fee, franchise fee, or any other fee,

tax, assessment, or charge of any kind imposed by any Federal

agency, State, or franchising authority on the transaction between

the operator and the subscriber.’’.

(h) PROGRAM ACCESS.—Section 628 (47 U.S.C. 548) is amended

by adding at the end the following:

‘‘(j) COMMON CARRIERS.—Any provision that applies to a cable

operator under this section shall apply to a common carrier or

its affiliate that provides video programming by any means directly

to subscribers. Any such provision that applies to a satellite cable

programming vendor in which a cable operator has an attributable

interest shall apply to any satellite cable programming vendor

in which such common carrier has an attributable interest. For

the purposes of this subsection, two or fewer common officers or

directors shall not by itself establish an attributable interest by

a common carrier in a satellite cable programming vendor (or

its parent company).’’.

(i) ANTITRAFFICKING.—Section 617 (47 U.S.C. 537) is amended—

(1) by striking subsections (a) through (d); and

(2) in subsection (e), by striking ‘‘(e)’’ and all that follows

through ‘‘a franchising authority’’ and inserting ‘‘A franchising

authority’’.
S. 652—63

(j) AGGREGATION OF EQUIPMENT COSTS.—Section 623(a) (47

U.S.C. 543(a)) is amended by adding at the end the following

new paragraph: ‘‘(7) AGGREGATION OF EQUIPMENT COSTS.— ‘‘(A) IN GENERAL.—The Commission shall allow cable

operators, pursuant to any rules promulgated under subsection (b)(3), to aggregate, on a franchise, system, regional,

or company level, their equipment costs into broad categories, such as converter boxes, regardless of the varying

levels of functionality of the equipment within each such

broad category. Such aggregation shall not be permitted

with respect to equipment used by subscribers who receive

only a rate regulated basic service tier. ‘‘(B) REVISION TO COMMISSION RULES; FORMS.—Within

120 days of the date of enactment of the Telecommunications Act of 1996, the Commission shall issue revisions

to the appropriate rules and forms necessary to implement

subparagraph (A).’’.

(k) TREATMENT OF PRIOR YEAR LOSSES.— (1) AMENDMENT.—Section 623 (48 U.S.C. 543) is amended

by adding at the end thereof the following:

‘‘(n) TREATMENT OF PRIOR YEAR LOSSES.—Notwithstanding any

other provision of this section or of section 612, losses associated

with a cable system (including losses associated with the grant

or award of a franchise) that were incurred prior to September

4, 1992, with respect to a cable system that is owned and operated

by the original franchisee of such system shall not be disallowed,

in whole or in part, in the determination of whether the rates

for any tier of service or any type of equipment that is subject

to regulation under this section are lawful.’’. (2) EFFECTIVE DATE.—The amendment made by paragraph (1) shall take effect on the date of enactment of this Act and

shall be applicable to any rate proposal filed on or after September 4, 1993, upon which no final action has been taken by

December 1, 1995.

SEC. 302. CABLE SERVICE PROVIDED BY TELEPHONE COMPANIES.

(a) PROVISIONS FOR REGULATION OF CABLE SERVICE PROVIDED

BY TELEPHONE COMPANIES.—Title VI (47 U.S.C. 521 et seq.) is

amended by adding at the end the following new part:

‘‘PART V—VIDEO PROGRAMMING SERVICES

PROVIDED BY TELEPHONE COMPANIES

‘‘SEC. 651. REGULATORY TREATMENT OF VIDEO PROGRAMMING SERVICES.

‘‘(a) LIMITATIONS ON CABLE REGULATION.— ‘‘(1) RADIO-BASED SYSTEMS.—To the extent that a common

carrier (or any other person) is providing video programming

to subscribers using radio communication, such carrier (or other

person) shall be subject to the requirements of title III and

section 652, but shall not otherwise be subject to the requirements of this title.

‘‘(2) COMMON CARRIAGE OF VIDEO TRAFFIC.—To the extent

that a common carrier is providing transmission of video

programming on a common carrier basis, such carrier shall

be subject to the requirements of title II and section 652,
S. 652—64

but shall not otherwise be subject to the requirements of this

title. This paragraph shall not affect the treatment under section 602(7)(C) of a facility of a common carrier as a cable

system.

‘‘(3) CABLE SYSTEMS AND OPEN VIDEO SYSTEMS.—To the

extent that a common carrier is providing video programming

to its subscribers in any manner other than that described

in paragraphs (1) and (2)—

‘‘(A) such carrier shall be subject to the requirements

of this title, unless such programming is provided by means

of an open video system for which the Commission has

approved a certification under section 653; or

‘‘(B) if such programming is provided by means of

an open video system for which the Commission has

approved a certification under section 653, such carrier

shall be subject to the requirements of this part, but shall

be subject to parts I through IV of this title only as provided

in 653(c).

‘‘(4) ELECTION TO OPERATE AS OPEN VIDEO SYSTEM.—A common carrier that is providing video programming in a manner

described in paragraph (1) or (2), or a combination thereof,

may elect to provide such programming by means of an open

video system that complies with section 653. If the Commission

approves such carrier’s certification under section 653, such

carrier shall be subject to the requirements of this part, but

shall be subject to parts I through IV of this title only as

provided in 653(c).

‘‘(b) LIMITATIONS ON INTERCONNECTION OBLIGATIONS.—A local

exchange carrier that provides cable service through an open video

system or a cable system shall not be required, pursuant to title

II of this Act, to make capacity available on a nondiscriminatory

basis to any other person for the provision of cable service directly

to subscribers.

‘‘(c) ADDITIONAL REGULATORY RELIEF.—A common carrier shall

not be required to obtain a certificate under section 214 with

respect to the establishment or operation of a system for the delivery

of video programming.

‘‘SEC. 652. PROHIBITION ON BUY OUTS.

‘‘(a) ACQUISITIONS BY CARRIERS.—No local exchange carrier or

any affiliate of such carrier owned by, operated by, controlled by,

or under common control with such carrier may purchase or otherwise acquire directly or indirectly more than a 10 percent financial

interest, or any management interest, in any cable operator providing cable service within the local exchange carrier’s telephone service area.

‘‘(b) ACQUISITIONS BY CABLE OPERATORS.—No cable operator

or affiliate of a cable operator that is owned by, operated by,

controlled by, or under common ownership with such cable operator

may purchase or otherwise acquire, directly or indirectly, more

than a 10 percent financial interest, or any management interest,

in any local exchange carrier providing telephone exchange service

within such cable operator’s franchise area.

‘‘(c) JOINT VENTURES.—A local exchange carrier and a cable

operator whose telephone service area and cable franchise area,

respectively, are in the same market may not enter into any joint

venture or partnership to provide video programming directly to
S. 652—65

subscribers or to provide telecommunications services within such

market.

‘‘(d) EXCEPTIONS.—

‘‘(1) RURAL SYSTEMS.—Notwithstanding subsections (a), (b),

and (c) of this section, a local exchange carrier (with respect

to a cable system located in its telephone service area) and

a cable operator (with respect to the facilities of a local exchange

carrier used to provide telephone exchange service in its cable

franchise area) may obtain a controlling interest in, management interest in, or enter into a joint venture or partnership

with the operator of such system or facilities for the use of

such system or facilities to the extent that—

‘‘(A) such system or facilities only serve incorporated

or unincorporated—

‘‘(i) places or territories that have fewer than

35,000 inhabitants; and

‘‘(ii) are outside an urbanized area, as defined by

the Bureau of the Census; and

‘‘(B) in the case of a local exchange carrier, such system, in the aggregate with any other system in which

such carrier has an interest, serves less than 10 percent

of the households in the telephone service area of such

carrier.

‘‘(2) JOINT USE.—Notwithstanding subsection (c), a local

exchange carrier may obtain, with the concurrence of the cable

operator on the rates, terms, and conditions, the use of that

part of the transmission facilities of a cable system extending

from the last multi-user terminal to the premises of the end

user, if such use is reasonably limited in scope and duration,

as determined by the Commission.

‘‘(3) ACQUISITIONS IN COMPETITIVE MARKETS.—Notwithstanding subsections (a) and (c), a local exchange carrier may

obtain a controlling interest in, or form a joint venture or

other partnership with, or provide financing to, a cable system

(hereinafter in this paragraph referred to as ‘the subject cable

system’), if—

‘‘(A) the subject cable system operates in a television

market that is not in the top 25 markets, and such market

has more than 1 cable system operator, and the subject

cable system is not the cable system with the most subscribers in such television market;

‘‘(B) the subject cable system and the cable system

with the most subscribers in such television market held

on May 1, 1995, cable television franchises from the largest

municipality in the television market and the boundaries

of such franchises were identical on such date;

‘‘(C) the subject cable system is not owned by or under

common ownership or control of any one of the 50 cable

system operators with the most subscribers as such operators existed on May 1, 1995; and

‘‘(D) the system with the most subscribers in the television market is owned by or under common ownership

or control of any one of the 10 largest cable system operators as such operators existed on May 1, 1995.

‘‘(4) EXEMPT CABLE SYSTEMS.—Subsection (a) does not apply

to any cable system if—
S. 652—66

‘‘(A) the cable system serves no more than 17,000 cable

subscribers, of which no less than 8,000 live within an

urban area, and no less than 6,000 live within a nonurbanized area as of June 1, 1995;

‘‘(B) the cable system is not owned by, or under common

ownership or control with, any of the 50 largest cable

system operators in existence on June 1, 1995; and

‘‘(C) the cable system operates in a television market

that was not in the top 100 television markets as of June

1, 1995.

‘‘(5) SMALL CABLE SYSTEMS IN NONURBAN AREAS.—Notwithstanding subsections (a) and (c), a local exchange carrier with

less than $100,000,000 in annual operating revenues (or any

affiliate of such carrier owned by, operated by, controlled by,

or under common control with such carrier) may purchase

or otherwise acquire more than a 10 percent financial interest

in, or any management interest in, or enter into a joint venture

or partnership with, any cable system within the local exchange

carrier’s telephone service area that serves no more than 20,000

cable subscribers, if no more than 12,000 of those subscribers

live within an urbanized area, as defined by the Bureau of

the Census.

‘‘(6) WAIVERS.—The Commission may waive the restrictions

of subsections (a), (b), or (c) only if—

‘‘(A) the Commission determines that, because of the

nature of the market served by the affected cable system

or facilities used to provide telephone exchange service—

‘‘(i) the affected cable operator or local exchange

carrier would be subjected to undue economic distress

by the enforcement of such provisions; ‘‘(ii) the system or facilities would not be economically viable if such provisions were enforced; or ‘‘(iii) the anticompetitive effects of the proposed

transaction are clearly outweighed in the public

interest by the probable effect of the transaction in

meeting the convenience and needs of the community

to be served; and

‘‘(B) the local franchising authority approves of such

waiver.

‘‘(e) DEFINITION OF TELEPHONE SERVICE AREA.—For purposes

of this section, the term ‘telephone service area’ when used in

connection with a common carrier subject in whole or in part

to title II of this Act means the area within which such carrier

provided telephone exchange service as of January 1, 1993, but

if any common carrier after such date transfers its telephone

exchange service facilities to another common carrier, the area

to which such facilities provide telephone exchange service shall

be treated as part of the telephone service area of the acquiring

common carrier and not of the selling common carrier.

‘‘SEC. 653. ESTABLISHMENT OF OPEN VIDEO SYSTEMS.

‘‘(a) OPEN VIDEO SYSTEMS.—

‘‘(1) CERTIFICATES OF COMPLIANCE.—A local exchange carrier may provide cable service to its cable service subscribers

in its telephone service area through an open video system

that complies with this section. To the extent permitted by

such regulations as the Commission may prescribe consistent
S. 652—67

with the public interest, convenience, and necessity, an operator

of a cable system or any other person may provide video

programming through an open video system that complies with

this section. An operator of an open video system shall qualify

for reduced regulatory burdens under subsection (c) of this

section if the operator of such system certifies to the Commission that such carrier complies with the Commission’s regulations under subsection (b) and the Commission approves such

certification. The Commission shall publish notice of the receipt

of any such certification and shall act to approve or disapprove

any such certification within 10 days after receipt of such

certification.

‘‘(2) DISPUTE RESOLUTION.—The Commission shall have the

authority to resolve disputes under this section and the regulations prescribed thereunder. Any such dispute shall be resolved

within 180 days after notice of such dispute is submitted to

the Commission. At that time or subsequently in a separate

damages proceeding, the Commission may, in the case of any

violation of this section, require carriage, award damages to

any person denied carriage, or any combination of such sanctions. Any aggrieved party may seek any other remedy available

under this Act.

‘‘(b) COMMISSION ACTIONS.—

‘‘(1) REGULATIONS REQUIRED.—Within 6 months after the

date of enactment of the Telecommunications Act of 1996, the

Commission shall complete all actions necessary (including any

reconsideration) to prescribe regulations that—

‘‘(A) except as required pursuant to section 611, 614,

or 615, prohibit an operator of an open video system from

discriminating among video programming providers with

regard to carriage on its open video system, and ensure

that the rates, terms, and conditions for such carriage

are just and reasonable, and are not unjustly or unreasonably discriminatory; ‘‘(B) if demand exceeds the channel capacity of the

open video system, prohibit an operator of an open video

system and its affiliates from selecting the video programming services for carriage on more than one-third of the

activated channel capacity on such system, but nothing

in this subparagraph shall be construed to limit the number

of channels that the carrier and its affiliates may offer

to provide directly to subscribers; ‘‘(C) permit an operator of an open video system to

carry on only one channel any video programming service

that is offered by more than one video programming provider (including the local exchange carrier’s video programming affiliate): Provided, That subscribers have ready and

immediate access to any such video programming service;

‘‘(D) extend to the distribution of video programming

over open video systems the Commission’s regulations

concerning sports exclusivity (47 C.F.R. 76.67), network

nonduplication (47 C.F.R. 76.92 et seq.), and syndicated

exclusivity (47 C.F.R. 76.151 et seq.); and

‘‘(E)(i) prohibit an operator of an open video system

from unreasonably discriminating in favor of the operator

or its affiliates with regard to material or information

(including advertising) provided by the operator to subscrib-
S. 652—68

ers for the purposes of selecting programming on the open

video system, or in the way such material or information

is presented to subscribers;

‘‘(ii) require an operator of an open video system to

ensure that video programming providers or copyright holders (or both) are able suitably and uniquely to identify

their programming services to subscribers;

‘‘(iii) if such identification is transmitted as part of

the programming signal, require the carrier to transmit

such identification without change or alteration; and

‘‘(iv) prohibit an operator of an open video system

from omitting television broadcast stations or other unaffiliated video programming services carried on such system

from any navigational device, guide, or menu.

‘‘(2) CONSUMER ACCESS.—Subject to the requirements of

paragraph (1) and the regulations thereunder, nothing in this

section prohibits a common carrier or its affiliate from negotiating mutually agreeable terms and conditions with over-theair broadcast stations and other unaffiliated video programming

providers to allow consumer access to their signals on any

level or screen of any gateway, menu, or other program guide,

whether provided by the carrier or its affiliate.

‘‘(c) REDUCED REGULATORY BURDENS FOR OPEN VIDEO SYSTEMS.—

‘‘(1) IN GENERAL.—Any provision that applies to a cable

operator under—

‘‘(A) sections 613 (other than subsection (a) thereof),

616, 623(f), 628, 631, and 634 of this title, shall apply, ‘‘(B) sections 611, 614, and 615 of this title, and section

325 of title III, shall apply in accordance with the regulations prescribed under paragraph (2), and ‘‘(C) sections 612 and 617, and parts III and IV (other

than sections 623(f), 628, 631, and 634), of this title shall

not apply,

to any operator of an open video system for which the Commission has approved a certification under this section.

‘‘(2) IMPLEMENTATION.— ‘‘(A) COMMISSION ACTION.—In the rulemaking proceeding to prescribe the regulations required by subsection

(b)(1), the Commission shall, to the extent possible, impose

obligations that are no greater or lesser than the obligations

contained in the provisions described in paragraph (1)(B)

of this subsection. The Commission shall complete all action

(including any reconsideration) to prescribe such regulations no later than 6 months after the date of enactment

of the Telecommunications Act of 1996.

‘‘(B) FEES.—An operator of an open video system under

this part may be subject to the payment of fees on the

gross revenues of the operator for the provision of cable

service imposed by a local franchising authority or other

governmental entity, in lieu of the franchise fees permitted

under section 622. The rate at which such fees are imposed

shall not exceed the rate at which franchise fees are

imposed on any cable operator transmitting video programming in the franchise area, as determined in accordance

with regulations prescribed by the Commission. An operator of an open video system may designate that portion
S. 652—69

of a subscriber’s bill attributable to the fee under this

subparagraph as a separate item on the bill.

‘‘(3) REGULATORY STREAMLINING.—With respect to the

establishment and operation of an open video system, the

requirements of this section shall apply in lieu of, and not

in addition to, the requirements of title II.

‘‘(4) TREATMENT AS CABLE OPERATOR.—Nothing in this Act

precludes a video programming provider making use of an

open video system from being treated as an operator of a

cable system for purposes of section 111 of title 17, United

States Code.

‘‘(d) DEFINITION OF TELEPHONE SERVICE AREA.—For purposes

of this section, the term ‘telephone service area’ when used in

connection with a common carrier subject in whole or in part

to title II of this Act means the area within which such carrier

is offering telephone exchange service.’’.

(b) CONFORMING AND TECHNICAL AMENDMENTS.—

(1) REPEAL.—Subsection (b) of section 613 (47 U.S.C.

533(b)) is repealed.

(2) DEFINITIONS.—Section 602 (47 U.S.C. 531) is amended—

(A) in paragraph (7), by striking ‘‘, or (D)’’ and inserting

the following: ‘‘, unless the extent of such use is solely

to provide interactive on-demand services; (D) an open

video system that complies with section 653 of this title;

or (E)’’;

(B) by redesignating paragraphs (12) through (19) as

paragraphs (13) through (20), respectively; and

(C) by inserting after paragraph (11) the following

new paragraph:

‘‘(12) the term ‘interactive on-demand services’ means a

service providing video programming to subscribers over

switched networks on an on-demand, point-to-point basis, but

does not include services providing video programming

prescheduled by the programming provider;’’. (3) TERMINATION OF VIDEO-DIALTONE REGULATIONS.—The

Commission’s regulations and policies with respect to video

dialtone requirements issued in CC Docket No. 87–266 shall

cease to be effective on the date of enactment of this Act.

This paragraph shall not be construed to require the termination of any video-dialtone system that the Commission has

approved before the date of enactment of this Act.

SEC. 303. PREEMPTION OF FRANCHISING AUTHORITY REGULATION

OF TELECOMMUNICATIONS SERVICES.

(a) PROVISION OF TELECOMMUNICATIONS SERVICES BY A CABLE

OPERATOR.—Section 621(b) (47 U.S.C. 541(b)) is amended by adding

at the end thereof the following new paragraph:

‘‘(3)(A) If a cable operator or affiliate thereof is engaged in

the provision of telecommunications services—

‘‘(i) such cable operator or affiliate shall not be required

to obtain a franchise under this title for the provision of telecommunications services; and

‘‘(ii) the provisions of this title shall not apply to such

cable operator or affiliate for the provision of telecommunications services.

‘‘(B) A franchising authority may not impose any requirement

under this title that has the purpose or effect of prohibiting, limit-
S. 652—70

ing, restricting, or conditioning the provision of a telecommunications service by a cable operator or an affiliate thereof. ‘‘(C) A franchising authority may not order a cable operator or affiliate thereof—

‘‘(i) to discontinue the provision of a telecommunications

service, or

‘‘(ii) to discontinue the operation of a cable system, to the extent such cable system is used for the provision of a

telecommunications service, by reason of the failure of such

cable operator or affiliate thereof to obtain a franchise or franchise renewal under this title with respect to the provision

of such telecommunications service.

‘‘(D) Except as otherwise permitted by sections 611 and 612, a franchising authority may not require a cable operator to provide

any telecommunications service or facilities, other than institutional

networks, as a condition of the initial grant of a franchise, a

franchise renewal, or a transfer of a franchise.’’.

(b) FRANCHISE FEES.—Section 622(b) (47 U.S.C. 542(b)) is

amended by inserting ‘‘to provide cable services’’ immediately before

the period at the end of the first sentence thereof.

SEC. 304. COMPETITIVE AVAILABILITY OF NAVIGATION DEVICES.

Part III of title VI is amended by inserting after section 628 (47 U.S.C. 548) the following new section:

‘‘SEC. 629. COMPETITIVE AVAILABILITY OF NAVIGATION DEVICES.

‘‘(a) COMMERCIAL CONSUMER AVAILABILITY OF EQUIPMENT USED

TO ACCESS SERVICES PROVIDED BY MULTICHANNEL VIDEO PROGRAM- MING DISTRIBUTORS.—The Commission shall, in consultation with

appropriate industry standard-setting organizations, adopt regulations to assure the commercial availability, to consumers of multichannel video programming and other services offered over multichannel video programming systems, of converter boxes, interactive

communications equipment, and other equipment used by consumers to access multichannel video programming and other services

offered over multichannel video programming systems, from manufacturers, retailers, and other vendors not affiliated with any multichannel video programming distributor. Such regulations shall not

prohibit any multichannel video programming distributor from also

offering converter boxes, interactive communications equipment,

and other equipment used by consumers to access multichannel

video programming and other services offered over multichannel

video programming systems, to consumers, if the system operator’s

charges to consumers for such devices and equipment are separately

stated and not subsidized by charges for any such service. ‘‘(b) PROTECTION OF SYSTEM SECURITY.—The Commission shall

not prescribe regulations under subsection (a) which would jeopardize security of multichannel video programming and other services

offered over multichannel video programming systems, or impede

the legal rights of a provider of such services to prevent theft

of service.

‘‘(c) WAIVER.—The Commission shall waive a regulation adopted

under subsection (a) for a limited time upon an appropriate showing

by a provider of multichannel video programming and other services

offered over multichannel video programming systems, or an equipment provider, that such waiver is necessary to assist the development or introduction of a new or improved multichannel video

programming or other service offered over multichannel video
S. 652—71

programming systems, technology, or products. Upon an appropriate

showing, the Commission shall grant any such waiver request

within 90 days of any application filed under this subsection, and

such waiver shall be effective for all service providers and products

in that category and for all providers of services and products. ‘‘(d) AVOIDANCE OF REDUNDANT REGULATIONS.— ‘‘(1) COMMERCIAL AVAILABILITY DETERMINATIONS.—Determinations made or regulations prescribed by the Commission

with respect to commercial availability to consumers of converter boxes, interactive communications equipment, and other

equipment used by consumers to access multichannel video

programming and other services offered over multichannel

video programming systems, before the date of enactment of

the Telecommunications Act of 1996 shall fulfill the requirements of this section.

‘‘(2) REGULATIONS.—Nothing in this section affects section 64.702(e) of the Commission’s regulations (47 C.F.R. 64.702(e))

or other Commission regulations governing interconnection and

competitive provision of customer premises equipment used

in connection with basic common carrier communications services.

‘‘(e) SUNSET.—The regulations adopted under this section shall cease to apply when the Commission determines that— ‘‘(1) the market for the multichannel video programming distributors is fully competitive; ‘‘(2) the market for converter boxes, and interactive communications equipment, used in conjunction with that service is

fully competitive; and ‘‘(3) elimination of the regulations would promote competi- tion and the public interest.

‘‘(f) COMMISSION’S AUTHORITY.—Nothing in this section shall be construed as expanding or limiting any authority that the

Commission may have under law in effect before the date of enactment of the Telecommunications Act of 1996.’’.

SEC. 305. VIDEO PROGRAMMING ACCESSIBILITY.

Title VII is amended by inserting after section 712 (47 U.S.C. 612) the following new section:

‘‘SEC. 713. VIDEO PROGRAMMING ACCESSIBILITY.

‘‘(a) COMMISSION INQUIRY.—Within 180 days after the date of enactment of the Telecommunications Act of 1996, the Federal

Communications Commission shall complete an inquiry to ascertain

the level at which video programming is closed captioned. Such

inquiry shall examine the extent to which existing or previously

published programming is closed captioned, the size of the video

programming provider or programming owner providing closed

captioning, the size of the market served, the relative audience

shares achieved, or any other related factors. The Commission

shall submit to the Congress a report on the results of such inquiry.

‘‘(b) ACCOUNTABILITY CRITERIA.—Within 18 months after such

date of enactment, the Commission shall prescribe such regulations

as are necessary to implement this section. Such regulations shall

ensure that—

‘‘(1) video programming first published or exhibited after

the effective date of such regulations is fully accessible through

the provision of closed captions, except as provided in subsection

(d); and
S. 652—72

‘‘(2) video programming providers or owners maximize the

accessibility of video programming first published or exhibited

prior to the effective date of such regulations through the

provision of closed captions, except as provided in subsection

(d).

‘‘(c) DEADLINES FOR CAPTIONING.—Such regulations shall

include an appropriate schedule of deadlines for the provision of

closed captioning of video programming.

‘‘(d) EXEMPTIONS.—Notwithstanding subsection (b)—

‘‘(1) the Commission may exempt by regulation programs,

classes of programs, or services for which the Commission

has determined that the provision of closed captioning would

be economically burdensome to the provider or owner of such

programming;

‘‘(2) a provider of video programming or the owner of any

program carried by the provider shall not be obligated to supply

closed captions if such action would be inconsistent with contracts in effect on the date of enactment of the Telecommunications Act of 1996, except that nothing in this section shall

be construed to relieve a video programming provider of its

obligations to provide services required by Federal law; and

‘‘(3) a provider of video programming or program owner

may petition the Commission for an exemption from the

requirements of this section, and the Commission may grant

such petition upon a showing that the requirements contained

in this section would result in an undue burden.

‘‘(e) UNDUE BURDEN.—The term ‘undue burden’ means significant difficulty or expense. In determining whether the closed captions necessary to comply with the requirements of this paragraph

would result in an undue economic burden, the factors to be considered include—

‘‘(1) the nature and cost of the closed captions for the

programming; ‘‘(2) the impact on the operation of the provider or program

owner;

‘‘(3) the financial resources of the provider or program

owner; and

‘‘(4) the type of operations of the provider or program

owner.

‘‘(f) VIDEO DESCRIPTIONS INQUIRY.—Within 6 months after the

date of enactment of the Telecommunications Act of 1996, the

Commission shall commence an inquiry to examine the use of

video descriptions on video programming in order to ensure the

accessibility of video programming to persons with visual impairments, and report to Congress on its findings. The Commission’s

report shall assess appropriate methods and schedules for phasing

video descriptions into the marketplace, technical and quality standards for video descriptions, a definition of programming for which

video descriptions would apply, and other technical and legal issues

that the Commission deems appropriate.

‘‘(g) VIDEO DESCRIPTION.—For purposes of this section, ‘video

description’ means the insertion of audio narrated descriptions of

a television program’s key visual elements into natural pauses

between the program’s dialogue.

‘‘(h) PRIVATE RIGHTS OF ACTIONS PROHIBITED.—Nothing in this

section shall be construed to authorize any private right of action

to enforce any requirement of this section or any regulation there-
S. 652—73

under. The Commission shall have exclusive jurisdiction with

respect to any complaint under this section.’’.

TITLE IV—REGULATORY REFORM

SEC. 401. REGULATORY FORBEARANCE.

Title I is amended by inserting after section 9 (47 U.S.C.

159) the following new section:

‘‘SEC. 10. COMPETITION IN PROVISION OF TELECOMMUNICATIONS

SERVICE.

‘‘(a) REGULATORY FLEXIBILITY.—Notwithstanding section

332(c)(1)(A) of this Act, the Commission shall forbear from applying

any regulation or any provision of this Act to a telecommunications

carrier or telecommunications service, or class of telecommunications carriers or telecommunications services, in any or some

of its or their geographic markets, if the Commission determines

that—

‘‘(1) enforcement of such regulation or provision is not

necessary to ensure that the charges, practices, classifications,

or regulations by, for, or in connection with that telecommunications carrier or telecommunications service are just and

reasonable and are not unjustly or unreasonably discriminatory;

‘‘(2) enforcement of such regulation or provision is not

necessary for the protection of consumers; and

‘‘(3) forbearance from applying such provision or regulation

is consistent with the public interest.

‘‘(b) COMPETITIVE EFFECT TO BE WEIGHED.—In making the determination under subsection (a)(3), the Commission shall consider whether forbearance from enforcing the provision or regulation

will promote competitive market conditions, including the extent

to which such forbearance will enhance competition among providers of telecommunications services. If the Commission determines

that such forbearance will promote competition among providers

of telecommunications services, that determination may be the basis

for a Commission finding that forbearance is in the public interest. ‘‘(c) PETITION FOR FORBEARANCE.—Any telecommunications carrier, or class of telecommunications carriers, may submit a petition

to the Commission requesting that the Commission exercise the

authority granted under this section with respect to that carrier

or those carriers, or any service offered by that carrier or carriers.

Any such petition shall be deemed granted if the Commission

does not deny the petition for failure to meet the requirements

for forbearance under subsection (a) within one year after the

Commission receives it, unless the one-year period is extended

by the Commission. The Commission may extend the initial oneyear period by an additional 90 days if the Commission finds

that an extension is necessary to meet the requirements of subsection (a). The Commission may grant or deny a petition in whole

or in part and shall explain its decision in writing.

‘‘(d) LIMITATION.—Except as provided in section 251(f), the

Commission may not forbear from applying the requirements of

section 251(c) or 271 under subsection (a) of this section until

it determines that those requirements have been fully implemented.

‘‘(e) STATE ENFORCEMENT AFTER COMMISSION FORBEARANCE.—

A State commission may not continue to apply or enforce any
S. 652—74

provision of this Act that the Commission has determined to forbear

from applying under subsection (a).’’.

SEC. 402. BIENNIAL REVIEW OF REGULATIONS; REGULATORY RELIEF.

(a) BIENNIAL REVIEW.—Title I is amended by inserting after section 10 (as added by section 401) the following new section:

‘‘SEC. 11. REGULATORY REFORM.

‘‘(a) BIENNIAL REVIEW OF REGULATIONS.—In every even-num- bered year (beginning with 1998), the Commission— ‘‘(1) shall review all regulations issued under this Act in effect at the time of the review that apply to the operations

or activities of any provider of telecommunications service; and ‘‘(2) shall determine whether any such regulation is no longer necessary in the public interest as the result of meaningful economic competition between providers of such service.

‘‘(b) EFFECT OF DETERMINATION.—The Commission shall repeal

or modify any regulation it determines to be no longer necessary

in the public interest.’’. (b) REGULATORY RELIEF.— (1) STREAMLINED PROCEDURES FOR CHANGES IN CHARGES, CLASSIFICATIONS, REGULATIONS, OR PRACTICES.— (A) Section 204(a) (47 U.S.C. 204(a)) is amended—

(i) by striking ‘‘12 months’’ the first place it appears in paragraph (2)(A) and inserting ‘‘5 months’’; (ii) by striking ‘‘effective,’’ and all that follows in paragraph (2)(A) and inserting ‘‘effective.’’; and (iii) by adding at the end thereof the following: ‘‘(3) A local exchange carrier may file with the Commission a new or revised charge, classification, regulation, or practice

on a streamlined basis. Any such charge, classification, regulation, or practice shall be deemed lawful and shall be effective

7 days (in the case of a reduction in rates) or 15 days (in

the case of an increase in rates) after the date on which it

is filed with the Commission unless the Commission takes

action under paragraph (1) before the end of that 7-day or

15-day period, as is appropriate.’’. (B) Section 208(b) (47 U.S.C. 208(b)) is amended—

(i) by striking ‘‘12 months’’ the first place it appears in paragraph (1) and inserting ‘‘5 months’’; and (ii) by striking ‘‘filed,’’ and all that follows in para- graph (1) and inserting ‘‘filed.’’. (2) EXTENSIONS OF LINES UNDER SECTION 214; ARMIS

REPORTS.—The Commission shall permit any common carrier—

(A) to be exempt from the requirements of section

214 of the Communications Act of 1934 for the extension

of any line; and (B) to file cost allocation manuals and ARMIS reports

annually, to the extent such carrier is required to file

such manuals or reports.

(3) FORBEARANCE AUTHORITY NOT LIMITED.—Nothing in this

subsection shall be construed to limit the authority of the

Commission to waive, modify, or forbear from applying any

of the requirements to which reference is made in paragraph

(1) under any other provision of this Act or other law.

(4) EFFECTIVE DATE OF AMENDMENTS.—The amendments

made by paragraph (1) of this subsection shall apply with

respect to any charge, classification, regulation, or practice
S. 652—75

filed on or after one year after the date of enactment of this

Act.

(c) CLASSIFICATION OF CARRIERS.—In classifying carriers according to section 32.11 of its regulations (47 C.F.R. 32.11) and in

establishing reporting requirements pursuant to part 43 of its regulations (47 C.F.R. part 43) and section 64.903 of its regulations

(47 C.F.R. 64.903), the Commission shall adjust the revenue requirements to account for inflation as of the release date of the Commission’s Report and Order in CC Docket No. 91–141, and annually

thereafter. This subsection shall take effect on the date of enactment

of this Act.

SEC. 403. ELIMINATION OF UNNECESSARY COMMISSION REGULATIONS

AND FUNCTIONS.

(a) MODIFICATION OF AMATEUR RADIO EXAMINATION PROCEDURES.—Section 4(f)(4) (47 U.S.C. 154(f)(4)) is amended—

(1) in subparagraph (A)—

(A) by inserting ‘‘or administering’’ after ‘‘for purposes

of preparing’’;

(B) by inserting ‘‘of’’ after ‘‘than the class’’; and

(C) by inserting ‘‘or administered’’ after ‘‘for which

the examination is being prepared’’;

(2) by striking subparagraph (B);

(3) in subparagraph (H), by striking ‘‘(A), (B), and (C)’’

and inserting ‘‘(A) and (B)’’;

(4) in subparagraph (J)—

(A) by striking ‘‘or (B)’’; and

(B) by striking the last sentence; and

(5) by redesignating subparagraphs (C) through (J) as subparagraphs (B) through (I), respectively.

(b) AUTHORITY TO DESIGNATE ENTITIES TO INSPECT.—Section

4(f)(3) (47 U.S.C. 154(f)(3)) is amended by inserting before the

period at the end the following: ‘‘: and Provided further, That,

in the alternative, an entity designated by the Commission may

make the inspections referred to in this paragraph’’.

(c) EXPEDITING INSTRUCTIONAL TELEVISION FIXED SERVICE

PROCESSING.—Section 5(c)(1) (47 U.S.C. 155(c)(1)) is amended by

striking the last sentence and inserting the following: ‘‘Except for

cases involving the authorization of service in the instructional

television fixed service, or as otherwise provided in this Act, nothing

in this paragraph shall authorize the Commission to provide for

the conduct, by any person or persons other than persons referred

to in paragraph (2) or (3) of section 556(b) of title 5, United States

Code, of any hearing to which such section applies.’’.

(d) REPEAL SETTING OF DEPRECIATION RATES.—The first sentence of section 220(b) (47 U.S.C. 220(b)) is amended by striking

‘‘shall prescribe for such carriers’’ and inserting ‘‘may prescribe,

for such carriers as it determines to be appropriate,’’.

(e) USE OF INDEPENDENT AUDITORS.—Section 220(c) (47 U.S.C.

220(c)) is amended by adding at the end thereof the following:

‘‘The Commission may obtain the services of any person licensed

to provide public accounting services under the law of any State

to assist with, or conduct, audits under this section. While so

employed or engaged in conducting an audit for the Commission

under this section, any such person shall have the powers granted

the Commission under this subsection and shall be subject to sub-
S. 652—76

section (f) in the same manner as if that person were an employee

of the Commission.’’.

(f) DELEGATION OF EQUIPMENT TESTING AND CERTIFICATION

TO PRIVATE LABORATORIES.—Section 302 (47 U.S.C. 302) is amended

by adding at the end the following:

‘‘(e) The Commission may—

‘‘(1) authorize the use of private organizations for testing

and certifying the compliance of devices or home electronic

equipment and systems with regulations promulgated under

this section;

‘‘(2) accept as prima facie evidence of such compliance

the certification by any such organization; and

‘‘(3) establish such qualifications and standards as it deems

appropriate for such private organizations, testing, and certification.’’.

(g) MAKING LICENSE MODIFICATION UNIFORM.—Section 303(f)

(47 U.S.C. 303(f)) is amended by striking ‘‘unless, after a public

hearing,’’ and inserting ‘‘unless’’.

(h) ELIMINATE FCC JURISDICTION OVER GOVERNMENT-OWNED

SHIP RADIO STATIONS.—

(1) Section 305 (47 U.S.C. 305) is amended by striking

subsection (b) and redesignating subsections (c) and (d) as

(b) and (c), respectively.

(2) Section 382(2) (47 U.S.C. 382(2)) is amended by striking

‘‘except a vessel of the United States Maritime Administration,

the Inland and Coastwise Waterways Service, or the Panama

Canal Company,’’.

(i) PERMIT OPERATION OF DOMESTIC SHIP AND AIRCRAFT RADIOS

WITHOUT LICENSE.—Section 307(e) (47 U.S.C. 307(e)) is amended

to read as follows:

‘‘(e)(1) Notwithstanding any license requirement established

in this Act, if the Commission determines that such authorization

serves the public interest, convenience, and necessity, the Commission may by rule authorize the operation of radio stations without

individual licenses in the following radio services: (A) the citizens

band radio service; (B) the radio control service; (C) the aviation

radio service for aircraft stations operated on domestic flights when

such aircraft are not otherwise required to carry a radio station;

and (D) the maritime radio service for ship stations navigated

on domestic voyages when such ships are not otherwise required

to carry a radio station. ‘‘(2) Any radio station operator who is authorized by the

Commission to operate without an individual license shall comply

with all other provisions of this Act and with rules prescribed

by the Commission under this Act.

‘‘(3) For purposes of this subsection, the terms ‘citizens band

radio service’, ‘radio control service’, ‘aircraft station’ and ‘ship

station’ shall have the meanings given them by the Commission

by rule.’’.

(j) EXPEDITED LICENSING FOR FIXED MICROWAVE SERVICE.—

Section 309(b)(2) (47 U.S.C. 309(b)(2)) is amended by striking

subparagraph (A) and redesignating subparagraphs (B) through

(G) as subparagraphs (A) through (F), respectively.

(k) FOREIGN DIRECTORS.—Section 310(b) (47 U.S.C. 310(b)) is

amended—

(1) in paragraph (3), by striking ‘‘of which any officer or

director is an alien or’’; and
S. 652—77

(2) in paragraph (4), by striking ‘‘of which any officer or

more than one-fourth of the directors are aliens, or’’.

(l) LIMITATION ON SILENT STATION AUTHORIZATIONS.—Section

312 (47 U.S.C. 312) is amended by adding at the end the following:

‘‘(g) If a broadcasting station fails to transmit broadcast signals

for any consecutive 12-month period, then the station license

granted for the operation of that broadcast station expires at the

end of that period, notwithstanding any provision, term, or condition

of the license to the contrary.’’.

(m) MODIFICATION OF CONSTRUCTION PERMIT REQUIREMENT.—

Section 319(d) is amended by striking the last two sentences and

inserting the following: ‘‘With respect to any broadcasting station,

the Commission shall not have any authority to waive the requirement of a permit for construction, except that the Commission

may by regulation determine that a permit shall not be required

for minor changes in the facilities of authorized broadcast stations.

With respect to any other station or class of stations, the Commission shall not waive the requirement for a construction permit

unless the Commission determines that the public interest, convenience, and necessity would be served by such a waiver.’’.

(n) CONDUCT OF INSPECTIONS.—Section 362(b) (47 U.S.C.

362(b)) is amended to read as follows:

‘‘(b) Every ship of the United States that is subject to this

part shall have the equipment and apparatus prescribed therein

inspected at least once each year by the Commission or an entity

designated by the Commission. If, after such inspection, the

Commission is satisfied that all relevant provisions of this Act

and the station license have been complied with, the fact shall

be so certified on the station license by the Commission. The

Commission shall make such additional inspections at frequent

intervals as the Commission determines may be necessary to ensure

compliance with the requirements of this Act. The Commission

may, upon a finding that the public interest could be served

thereby—

‘‘(1) waive the annual inspection required under this section

for a period of up to 90 days for the sole purpose of enabling

a vessel to complete its voyage and proceed to a port in the

United States where an inspection can be held; or

‘‘(2) waive the annual inspection required under this section

for a vessel that is in compliance with the radio provisions

of the Safety Convention and that is operating solely in waters

beyond the jurisdiction of the United States: Provided, That

such inspection shall be performed within 30 days of such

vessel’s return to the United States.’’.

(o) INSPECTION BY OTHER ENTITIES.—Section 385 (47 U.S.C.

385) is amended—

(1) by inserting ‘‘or an entity designated by the Commission’’ after ‘‘The Commission’’; and

(2) by adding at the end thereof the following: ‘‘In accordance with such other provisions of law as apply to Government

contracts, the Commission may enter into contracts with any

person for the purpose of carrying out such inspections and

certifying compliance with those requirements, and may, as

part of any such contract, allow any such person to accept

reimbursement from the license holder for travel and expense

costs of any employee conducting an inspection or certification.’’.
S. 652—78

TITLE V—OBSCENITY AND VIOLENCE

Subtitle A—Obscene, Harassing, and

Wrongful Utilization of Telecommunications Facilities

SEC. 501. SHORT TITLE.

This title may be cited as the ‘‘Communications Decency Act

of 1996’’.

SEC. 502. OBSCENE OR HARASSING USE OF TELECOMMUNICATIONS

FACILITIES UNDER THE COMMUNICATIONS ACT OF 1934.

Section 223 (47 U.S.C. 223) is amended—

(1) by striking subsection (a) and inserting in lieu thereof:

‘‘(a) Whoever—

‘‘(1) in interstate or foreign communications—

‘‘(A) by means of a telecommunications device knowingly—

‘‘(i) makes, creates, or solicits, and

‘‘(ii) initiates the transmission of,

any comment, request, suggestion, proposal, image, or other

communication which is obscene, lewd, lascivious, filthy,

or indecent, with intent to annoy, abuse, threaten, or harass

another person;

‘‘(B) by means of a telecommunications device knowingly— ‘‘(i) makes, creates, or solicits, and

‘‘(ii) initiates the transmission of,

any comment, request, suggestion, proposal, image, or other

communication which is obscene or indecent, knowing that

the recipient of the communication is under 18 years of

age, regardless of whether the maker of such communication placed the call or initiated the communication;

‘‘(C) makes a telephone call or utilizes a telecommunications device, whether or not conversation or communication ensues, without disclosing his identity and with intent

to annoy, abuse, threaten, or harass any person at the

called number or who receives the communications;

‘‘(D) makes or causes the telephone of another repeatedly or continuously to ring, with intent to harass any

person at the called number; or

‘‘(E) makes repeated telephone calls or repeatedly initiates communication with a telecommunications device, during which conversation or communication ensues, solely

to harass any person at the called number or who receives

the communication; or

‘‘(2) knowingly permits any telecommunications facility

under his control to be used for any activity prohibited by

paragraph (1) with the intent that it be used for such activity,

shall be fined under title 18, United States Code, or imprisoned

not more than two years, or both.’’; and

(2) by adding at the end the following new subsections:

‘‘(d) Whoever—

‘‘(1) in interstate or foreign communications knowingly—
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‘‘(A) uses an interactive computer service to send to

a specific person or persons under 18 years of age, or

‘‘(B) uses any interactive computer service to display

in a manner available to a person under 18 years of age,

any comment, request, suggestion, proposal, image, or other

communication that, in context, depicts or describes, in terms

patently offensive as measured by contemporary community

standards, sexual or excretory activities or organs, regardless

of whether the user of such service placed the call or initiated

the communication; or

‘‘(2) knowingly permits any telecommunications facility

under such person’s control to be used for an activity prohibited

by paragraph (1) with the intent that it be used for such

activity,

shall be fined under title 18, United States Code, or imprisoned

not more than two years, or both.

‘‘(e) In addition to any other defenses available by law:

‘‘(1) No person shall be held to have violated subsection

(a) or (d) solely for providing access or connection to or from

a facility, system, or network not under that person’s control,

including transmission, downloading, intermediate storage,

access software, or other related capabilities that are incidental

to providing such access or connection that does not include

the creation of the content of the communication.

‘‘(2) The defenses provided by paragraph (1) of this subsection shall not be applicable to a person who is a conspirator

with an entity actively involved in the creation or knowing

distribution of communications that violate this section, or who

knowingly advertises the availability of such communications. ‘‘(3) The defenses provided in paragraph (1) of this subsection shall not be applicable to a person who provides access

or connection to a facility, system, or network engaged in the

violation of this section that is owned or controlled by such

person.

‘‘(4) No employer shall be held liable under this section

for the actions of an employee or agent unless the employee’s

or agent’s conduct is within the scope of his or her employment

or agency and the employer (A) having knowledge of such

conduct, authorizes or ratifies such conduct, or (B) recklessly

disregards such conduct. ‘‘(5) It is a defense to a prosecution under subsection

(a)(1)(B) or (d), or under subsection (a)(2) with respect to the

use of a facility for an activity under subsection (a)(1)(B) that

a person—

‘‘(A) has taken, in good faith, reasonable, effective,

and appropriate actions under the circumstances to restrict

or prevent access by minors to a communication specified

in such subsections, which may involve any appropriate

measures to restrict minors from such communications,

including any method which is feasible under available

technology; or

‘‘(B) has restricted access to such communication by

requiring use of a verified credit card, debit account, adult

access code, or adult personal identification number.

‘‘(6) The Commission may describe measures which are

reasonable, effective, and appropriate to restrict access to

prohibited communications under subsection (d). Nothing in
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this section authorizes the Commission to enforce, or is intended

to provide the Commission with the authority to approve, sanction, or permit, the use of such measures. The Commission

shall have no enforcement authority over the failure to utilize

such measures. The Commission shall not endorse specific products relating to such measures. The use of such measures

shall be admitted as evidence of good faith efforts for purposes

of paragraph (5) in any action arising under subsection (d).

Nothing in this section shall be construed to treat interactive

computer services as common carriers or telecommunications

carriers.

‘‘(f)(1) No cause of action may be brought in any court or

administrative agency against any person on account of any activity

that is not in violation of any law punishable by criminal or civil

penalty, and that the person has taken in good faith to implement

a defense authorized under this section or otherwise to restrict

or prevent the transmission of, or access to, a communication specified in this section.

‘‘(2) No State or local government may impose any liability

for commercial activities or actions by commercial entities, nonprofit

libraries, or institutions of higher education in connection with

an activity or action described in subsection (a)(2) or (d) that is

inconsistent with the treatment of those activities or actions under

this section: Provided, however, That nothing herein shall preclude

any State or local government from enacting and enforcing complementary oversight, liability, and regulatory systems, procedures,

and requirements, so long as such systems, procedures, and requirements govern only intrastate services and do not result in the

imposition of inconsistent rights, duties or obligations on the provision of interstate services. Nothing in this subsection shall preclude

any State or local government from governing conduct not covered

by this section.

‘‘(g) Nothing in subsection (a), (d), (e), or (f) or in the defenses

to prosecution under subsection (a) or (d) shall be construed to

affect or limit the application or enforcement of any other Federal

law.

‘‘(h) For purposes of this section—

‘‘(1) The use of the term ‘telecommunications device’ in

this section—

‘‘(A) shall not impose new obligations on broadcasting

station licensees and cable operators covered by obscenity

and indecency provisions elsewhere in this Act; and

‘‘(B) does not include an interactive computer service.

‘‘(2) The term ‘interactive computer service’ has the meaning provided in section 230(e)(2).

‘‘(3) The term ‘access software’ means software (including

client or server software) or enabling tools that do not create

or provide the content of the communication but that allow

a user to do any one or more of the following:

‘‘(A) filter, screen, allow, or disallow content;

‘‘(B) pick, choose, analyze, or digest content; or

‘‘(C) transmit, receive, display, forward, cache, search,

subset, organize, reorganize, or translate content.

‘‘(4) The term ‘institution of higher education’ has the meaning provided in section 1201 of the Higher Education Act of

1965 (20 U.S.C. 1141).
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‘‘(5) The term ‘library’ means a library eligible for participation in State-based plans for funds under title III of the Library

Services and Construction Act (20 U.S.C. 355e et seq.).’’.

SEC. 503. OBSCENE PROGRAMMING ON CABLE TELEVISION.

Section 639 (47 U.S.C. 559) is amended by striking ‘‘not more

than $10,000’’ and inserting ‘‘under title 18, United States Code,’’.

SEC. 504. SCRAMBLING OF CABLE CHANNELS FOR NONSUBSCRIBERS.

Part IV of title VI (47 U.S.C. 551 et seq.) is amended by

adding at the end the following:

‘‘SEC. 640. SCRAMBLING OF CABLE CHANNELS FOR NONSUBSCRIBERS.

‘‘(a) SUBSCRIBER REQUEST.—Upon request by a cable service

subscriber, a cable operator shall, without charge, fully scramble

or otherwise fully block the audio and video programming of each

channel carrying such programming so that one not a subscriber

does not receive it.

‘‘(b) DEFINITION.—As used in this section, the term ‘scramble’

means to rearrange the content of the signal of the programming

so that the programming cannot be viewed or heard in an understandable manner.’’.

SEC. 505. SCRAMBLING OF SEXUALLY EXPLICIT ADULT VIDEO SERVICE

PROGRAMMING.

(a) REQUIREMENT.—Part IV of title VI (47 U.S.C. 551 et seq.),

as amended by this Act, is further amended by adding at the

end the following:

‘‘SEC. 641. SCRAMBLING OF SEXUALLY EXPLICIT ADULT VIDEO SERVICE PROGRAMMING.

‘‘(a) REQUIREMENT.—In providing sexually explicit adult

programming or other programming that is indecent on any channel

of its service primarily dedicated to sexually-oriented programming,

a multichannel video programming distributor shall fully scramble

or otherwise fully block the video and audio portion of such channel

so that one not a subscriber to such channel or programming

does not receive it.

‘‘(b) IMPLEMENTATION.—Until a multichannel video programming distributor complies with the requirement set forth in subsection (a), the distributor shall limit the access of children to

the programming referred to in that subsection by not providing

such programming during the hours of the day (as determined

by the Commission) when a significant number of children are

likely to view it. ‘‘(c) DEFINITION.—As used in this section, the term ‘scramble’

means to rearrange the content of the signal of the programming

so that the programming cannot be viewed or heard in an understandable manner.’’.

(b) EFFECTIVE DATE.—The amendment made by subsection (a)

shall take effect 30 days after the date of enactment of this Act.

SEC. 506. CABLE OPERATOR REFUSAL TO CARRY CERTAIN PROGRAMS.

(a) PUBLIC, EDUCATIONAL, AND GOVERNMENTAL CHANNELS.—

Section 611(e) (47 U.S.C. 531(e)) is amended by inserting before

the period the following: ‘‘, except a cable operator may refuse

to transmit any public access program or portion of a public access

program which contains obscenity, indecency, or nudity’’.
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(b) CABLE CHANNELS FOR COMMERCIAL USE.—Section 612(c)(2)

(47 U.S.C. 532(c)(2)) is amended by striking ‘‘an operator’’ and

inserting ‘‘a cable operator may refuse to transmit any leased access

program or portion of a leased access program which contains

obscenity, indecency, or nudity and’’.

SEC. 507. CLARIFICATION OF CURRENT LAWS REGARDING COMMUNICATION OF OBSCENE MATERIALS THROUGH THE USE

OF COMPUTERS.

(a) IMPORTATION OR TRANSPORTATION.—Section 1462 of title

18, United States Code, is amended—

(1) in the first undesignated paragraph, by inserting ‘‘or

interactive computer service (as defined in section 230(e)(2)

of the Communications Act of 1934)’’ after ‘‘carrier’’; and

(2) in the second undesignated paragraph—

(A) by inserting ‘‘or receives,’’ after ‘‘takes’’;

(B) by inserting ‘‘or interactive computer service (as

defined in section 230(e)(2) of the Communications Act

of 1934)’’ after ‘‘common carrier’’; and

(C) by inserting ‘‘or importation’’ after ‘‘carriage’’.

(b) TRANSPORTATION FOR PURPOSES OF SALE OR DISTRIBUTION.—The first undesignated paragraph of section 1465 of title

18, United States Code, is amended—

(1) by striking ‘‘transports in’’ and inserting ‘‘transports

or travels in, or uses a facility or means of,’’;

(2) by inserting ‘‘or an interactive computer service (as

defined in section 230(e)(2) of the Communications Act of 1934)

in or affecting such commerce’’ after ‘‘foreign commerce’’ the

first place it appears;

(3) by striking ‘‘, or knowingly travels in’’ and all that

follows through ‘‘obscene material in interstate or foreign commerce,’’ and inserting ‘‘of’’.

(c) INTERPRETATION.—The amendments made by this section

are clarifying and shall not be interpreted to limit or repeal any

prohibition contained in sections 1462 and 1465 of title 18, United

States Code, before such amendment, under the rule established

in United States v. Alpers, 338 U.S. 680 (1950).

SEC. 508. COERCION AND ENTICEMENT OF MINORS.

Section 2422 of title 18, United States Code, is amended—

(1) by inserting ‘‘(a)’’ before ‘‘Whoever knowingly’’; and

(2) by adding at the end the following: ‘‘(b) Whoever, using any facility or means of interstate or foreign

commerce, including the mail, or within the special maritime and

territorial jurisdiction of the United States, knowingly persuades,

induces, entices, or coerces any individual who has not attained

the age of 18 years to engage in prostitution or any sexual act

for which any person may be criminally prosecuted, or attempts

to do so, shall be fined under this title or imprisoned not more

than 10 years, or both.’’.

SEC. 509. ONLINE FAMILY EMPOWERMENT.

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. 230. PROTECTION FOR PRIVATE BLOCKING AND SCREENING OF

OFFENSIVE MATERIAL.

‘‘(a) FINDINGS.—The Congress finds the following:
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‘‘(1) The rapidly developing array of Internet and other

interactive computer services available to individual Americans

represent an extraordinary advance in the availability of educational and informational resources to our citizens.

‘‘(2) These services offer users a great degree of control

over the information that they receive, as well as the potential

for even greater control in the future as technology develops.

‘‘(3) The Internet and other interactive computer services

offer a forum for a true diversity of political discourse, unique

opportunities for cultural development, and myriad avenues

for intellectual activity.

‘‘(4) The Internet and other interactive computer services

have flourished, to the benefit of all Americans, with a minimum of government regulation.

‘‘(5) Increasingly Americans are relying on interactive

media for a variety of political, educational, cultural, and entertainment services.

‘‘(b) POLICY.—It is the policy of the United States—

‘‘(1) to promote the continued development of the Internet

and other interactive computer services and other interactive

media;

‘‘(2) to preserve the vibrant and competitive free market

that presently exists for the Internet and other interactive

computer services, unfettered by Federal or State regulation;

‘‘(3) to encourage the development of technologies which

maximize user control over what information is received by

individuals, families, and schools who use the Internet and

other interactive computer services;

‘‘(4) to remove disincentives for the development and utilization of blocking and filtering technologies that empower parents to restrict their children’s access to objectionable or

inappropriate online material; and

‘‘(5) to ensure vigorous enforcement of Federal criminal

laws to deter and punish trafficking in obscenity, stalking,

and harassment by means of computer.

‘‘(c) PROTECTION FOR ‘GOOD SAMARITAN’ BLOCKING AND SCREEN- ING OF OFFENSIVE MATERIAL.— ‘‘(1) TREATMENT OF PUBLISHER OR SPEAKER.—No provider

or user of an interactive computer service shall be treated

as the publisher or speaker of any information provided by

another information content provider.

‘‘(2) CIVIL LIABILITY.—No provider or user of an interactive

computer service shall be held liable on account of—

‘‘(A) any action voluntarily taken in good faith to

restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious,

filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected; or

‘‘(B) any action taken to enable or make available

to information content providers or others the technical

means to restrict access to material described in paragraph

(1).

‘‘(d) EFFECT ON OTHER LAWS.—

‘‘(1) NO EFFECT ON CRIMINAL LAW.—Nothing in this section

shall be construed to impair the enforcement of section 223

of this Act, chapter 71 (relating to obscenity) or 110 (relating
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to sexual exploitation of children) of title 18, United States

Code, or any other Federal criminal statute.

‘‘(2) NO EFFECT ON INTELLECTUAL PROPERTY LAW.—Nothing

in this section shall be construed to limit or expand any law

pertaining to intellectual property.

‘‘(3) STATE LAW.—Nothing in this section shall be construed

to prevent any State from enforcing any State law that is

consistent with this section. No cause of action may be brought

and no liability may be imposed under any State or local

law that is inconsistent with this section.

‘‘(4) NO EFFECT ON COMMUNICATIONS PRIVACY LAW.—Nothing in this section shall be construed to limit the application

of the Electronic Communications Privacy Act of 1986 or any

of the amendments made by such Act, or any similar State

law.

‘‘(e) DEFINITIONS.—As used in this section:

‘‘(1) INTERNET.—The term ‘Internet’ means the international computer network of both Federal and non-Federal

interoperable packet switched data networks.

‘‘(2) INTERACTIVE COMPUTER SERVICE.—The term ‘interactive computer service’ means any information service, system,

or access software provider that provides or enables computer

access by multiple users to a computer server, including specifically a service or system that provides access to the Internet

and such systems operated or services offered by libraries or

educational institutions.

‘‘(3) INFORMATION CONTENT PROVIDER.—The term ‘information content provider’ means any person or entity that is responsible, in whole or in part, for the creation or development

of information provided through the Internet or any other interactive computer service.

‘‘(4) ACCESS SOFTWARE PROVIDER.—The term ‘access software provider’ means a provider of software (including client

or server software), or enabling tools that do any one or more

of the following:

‘‘(A) filter, screen, allow, or disallow content;

‘‘(B) pick, choose, analyze, or digest content; or

‘‘(C) transmit, receive, display, forward, cache, search,

subset, organize, reorganize, or translate content.’’.

Subtitle B—Violence

SEC. 551. PARENTAL CHOICE IN TELEVISION PROGRAMMING.

(a) FINDINGS.—The Congress makes the following findings: (1) Television influences children’s perception of the values

and behavior that are common and acceptable in society. (2) Television station operators, cable television system

operators, and video programmers should follow practices in

connection with video programming that take into consideration

that television broadcast and cable programming has established a uniquely pervasive presence in the lives of American

children.

(3) The average American child is exposed to 25 hours

of television each week and some children are exposed to as

much as 11 hours of television a day.
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(4) Studies have shown that children exposed to violent

video programming at a young age have a higher tendency

for violent and aggressive behavior later in life than children

not so exposed, and that children exposed to violent video

programming are prone to assume that acts of violence are

acceptable behavior.

(5) Children in the United States are, on average, exposed

to an estimated 8,000 murders and 100,000 acts of violence

on television by the time the child completes elementary school.

(6) Studies indicate that children are affected by the

pervasiveness and casual treatment of sexual material on television, eroding the ability of parents to develop responsible

attitudes and behavior in their children.

(7) Parents express grave concern over violent and sexual

video programming and strongly support technology that would

give them greater control to block video programming in the

home that they consider harmful to their children.

(8) There is a compelling governmental interest in

empowering parents to limit the negative influences of video

programming that is harmful to children.

(9) Providing parents with timely information about the

nature of upcoming video programming and with the technological tools that allow them easily to block violent, sexual,

or other programming that they believe harmful to their children is a nonintrusive and narrowly tailored means of achieving

that compelling governmental interest.

(b) ESTABLISHMENT OF TELEVISION RATING CODE.—

(1) AMENDMENT.—Section 303 (47 U.S.C. 303) is amended

by adding at the end the following:

‘‘(w) Prescribe—

‘‘(1) on the basis of recommendations from an advisory

committee established by the Commission in accordance with

section 551(b)(2) of the Telecommunications Act of 1996, guidelines and recommended procedures for the identification and

rating of video programming that contains sexual, violent, or

other indecent material about which parents should be informed

before it is displayed to children: Provided, That nothing in

this paragraph shall be construed to authorize any rating of

video programming on the basis of its political or religious

content; and

‘‘(2) with respect to any video programming that has been

rated, and in consultation with the television industry, rules

requiring distributors of such video programming to transmit

such rating to permit parents to block the display of video

programming that they have determined is inappropriate for

their children.’’.

(2) ADVISORY COMMITTEE REQUIREMENTS.—In establishing

an advisory committee for purposes of the amendment made

by paragraph (1) of this subsection, the Commission shall—

(A) ensure that such committee is composed of parents,

television broadcasters, television programming producers,

cable operators, appropriate public interest groups, and

other interested individuals from the private sector and

is fairly balanced in terms of political affiliation, the points

of view represented, and the functions to be performed

by the committee;
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(B) provide to the committee such staff and resources

as may be necessary to permit it to perform its functions

efficiently and promptly; and

(C) require the committee to submit a final report

of its recommendations within one year after the date

of the appointment of the initial members.

(c) REQUIREMENT FOR MANUFACTURE OF TELEVISIONS THAT

BLOCK PROGRAMS.—Section 303 (47 U.S.C. 303), as amended by

subsection (a), is further amended by adding at the end the following:

‘‘(x) Require, in the case of an apparatus designed to receive

television signals that are shipped in interstate commerce or manufactured in the United States and that have a picture screen 13

inches or greater in size (measured diagonally), that such apparatus

be equipped with a feature designed to enable viewers to block

display of all programs with a common rating, except as otherwise

permitted by regulations pursuant to section 330(c)(4).’’.

(d) SHIPPING OF TELEVISIONS THAT BLOCK PROGRAMS.—

(1) REGULATIONS.—Section 330 (47 U.S.C. 330) is amended—

(A) by redesignating subsection (c) as subsection (d);

and

(B) by adding after subsection (b) the following new

subsection (c):

‘‘(c)(1) Except as provided in paragraph (2), no person shall

ship in interstate commerce or manufacture in the United States

any apparatus described in section 303(x) of this Act except in

accordance with rules prescribed by the Commission pursuant to

the authority granted by that section.

‘‘(2) This subsection shall not apply to carriers transporting

apparatus referred to in paragraph (1) without trading in it.

‘‘(3) The rules prescribed by the Commission under this subsection shall provide for the oversight by the Commission of the

adoption of standards by industry for blocking technology. Such

rules shall require that all such apparatus be able to receive the

rating signals which have been transmitted by way of line 21

of the vertical blanking interval and which conform to the signal

and blocking specifications established by industry under the supervision of the Commission.

‘‘(4) As new video technology is developed, the Commission

shall take such action as the Commission determines appropriate

to ensure that blocking service continues to be available to consumers. If the Commission determines that an alternative blocking

technology exists that—

‘‘(A) enables parents to block programming based on identifying programs without ratings,

‘‘(B) is available to consumers at a cost which is comparable

to the cost of technology that allows parents to block programming based on common ratings, and

‘‘(C) will allow parents to block a broad range of programs

on a multichannel system as effectively and as easily as technology that allows parents to block programming based on

common ratings,

the Commission shall amend the rules prescribed pursuant to section 303(x) to require that the apparatus described in such section

be equipped with either the blocking technology described in such
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section or the alternative blocking technology described in this

paragraph.’’.

(2) CONFORMING AMENDMENT.—Section 330(d), as redesignated by subsection (d)(1)(A), is amended by striking ‘‘section

303(s), and section 303(u)’’ and inserting in lieu thereof ‘‘and

sections 303(s), 303(u), and 303(x)’’.

(e) APPLICABILITY AND EFFECTIVE DATES.—

(1) APPLICABILITY OF RATING PROVISION.—The amendment

made by subsection (b) of this section shall take effect 1 year

after the date of enactment of this Act, but only if the Commission determines, in consultation with appropriate public

interest groups and interested individuals from the private

sector, that distributors of video programming have not, by

such date—

(A) established voluntary rules for rating video

programming that contains sexual, violent, or other indecent material about which parents should be informed

before it is displayed to children, and such rules are acceptable to the Commission; and

(B) agreed voluntarily to broadcast signals that contain

ratings of such programming.

(2) EFFECTIVE DATE OF MANUFACTURING PROVISION.—In

prescribing regulations to implement the amendment made

by subsection (c), the Federal Communications Commission

shall, after consultation with the television manufacturing

industry, specify the effective date for the applicability of the

requirement to the apparatus covered by such amendment,

which date shall not be less than two years after the date

of enactment of this Act.

SEC. 552. TECHNOLOGY FUND.

It is the policy of the United States to encourage broadcast

television, cable, satellite, syndication, other video programming

distributors, and relevant related industries (in consultation with

appropriate public interest groups and interested individuals from

the private sector) to—

(1) establish a technology fund to encourage television and

electronics equipment manufacturers to facilitate the development of technology which would empower parents to block

programming they deem inappropriate for their children and

to encourage the availability thereof to low income parents;

(2) report to the viewing public on the status of the development of affordable, easy to use blocking technology; and

(3) establish and promote effective procedures, standards,

systems, advisories, or other mechanisms for ensuring that

users have easy and complete access to the information necessary to effectively utilize blocking technology and to encourage the availability thereof to low income parents.

Subtitle C—Judicial Review

SEC. 561. EXPEDITED REVIEW.

(a) THREE-JUDGE DISTRICT COURT HEARING.—Notwithstanding

any other provision of law, any civil action challenging the constitutionality, on its face, of this title or any amendment made by

this title, or any provision thereof, shall be heard by a district
S. 652—88

court of 3 judges convened pursuant to the provisions of section

2284 of title 28, United States Code.

(b) APPELLATE REVIEW.—Notwithstanding any other provision

of law, an interlocutory or final judgment, decree, or order of the

court of 3 judges in an action under subsection (a) holding this

title or an amendment made by this title, or any provision thereof,

unconstitutional shall be reviewable as a matter of right by direct

appeal to the Supreme Court. Any such appeal shall be filed not

more than 20 days after entry of such judgment, decree, or order.

TITLE VI—EFFECT ON OTHER LAWS

SEC. 601. APPLICABILITY OF CONSENT DECREES AND OTHER LAW.

(a) APPLICABILITY OF AMENDMENTS TO FUTURE CONDUCT.—

(1) AT&T CONSENT DECREE.—Any conduct or activity that

was, before the date of enactment of this Act, subject to any

restriction or obligation imposed by the AT&T Consent Decree

shall, on and after such date, be subject to the restrictions

and obligations imposed by the Communications Act of 1934

as amended by this Act and shall not be subject to the restrictions and the obligations imposed by such Consent Decree.

(2) GTE CONSENT DECREE.—Any conduct or activity that

was, before the date of enactment of this Act, subject to any

restriction or obligation imposed by the GTE Consent Decree

shall, on and after such date, be subject to the restrictions

and obligations imposed by the Communications Act of 1934

as amended by this Act and shall not be subject to the restrictions and the obligations imposed by such Consent Decree. (3) MCCAW CONSENT DECREE.—Any conduct or activity that

was, before the date of enactment of this Act, subject to any

restriction or obligation imposed by the McCaw Consent Decree

shall, on and after such date, be subject to the restrictions

and obligations imposed by the Communications Act of 1934

as amended by this Act and subsection (d) of this section

and shall not be subject to the restrictions and the obligations

imposed by such Consent Decree.

(b) ANTITRUST LAWS.— (1) SAVINGS CLAUSE.—Except as provided in paragraphs (2) and (3), nothing in this Act or the amendments made

by this Act shall be construed to modify, impair, or supersede

the applicability of any of the antitrust laws. (2) REPEAL.—Subsection (a) of section 221 (47 U.S.C.

221(a)) is repealed.

(3) CLAYTON ACT.—Section 7 of the Clayton Act (15 U.S.C.

18) is amended in the last paragraph by striking ‘‘Federal

Communications Commission,’’.

(c) FEDERAL, STATE, AND LOCAL LAW.—

(1) NO IMPLIED EFFECT.—This Act and the amendments

made by this Act shall not be construed to modify, impair,

or supersede Federal, State, or local law unless expressly so

provided in such Act or amendments.

(2) STATE TAX SAVINGS PROVISION.—Notwithstanding paragraph (1), nothing in this Act or the amendments made by

this Act shall be construed to modify, impair, or supersede,

or authorize the modification, impairment, or supersession of,

any State or local law pertaining to taxation, except as provided
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in sections 622 and 653(c) of the Communications Act of 1934

and section 602 of this Act.

(d) COMMERCIAL MOBILE SERVICE JOINT MARKETING.—Notwithstanding section 22.903 of the Commission’s regulations (47 C.F.R.

22.903) or any other Commission regulation, a Bell operating company or any other company may, except as provided in sections

271(e)(1) and 272 of the Communications Act of 1934 as amended

by this Act as they relate to wireline service, jointly market and

sell commercial mobile services in conjunction with telephone

exchange service, exchange access, intraLATA telecommunications

service, interLATA telecommunications service, and information

services.

(e) DEFINITIONS.—As used in this section:

(1) AT&T CONSENT DECREE.—The term ‘‘AT&T Consent

Decree’’ means the order entered August 24, 1982, in the antitrust action styled United States v. Western Electric, Civil

Action No. 82–0192, in the United States District Court for

the District of Columbia, and includes any judgment or order

with respect to such action entered on or after August 24,

1982.

(2) GTE CONSENT DECREE.—The term ‘‘GTE Consent

Decree’’ means the order entered December 21, 1984, as

restated January 11, 1985, in the action styled United States

v. GTE Corp., Civil Action No. 83–1298, in the United States

District Court for the District of Columbia, and any judgment

or order with respect to such action entered on or after December 21, 1984.

(3) MCCAW CONSENT DECREE.—The term ‘‘McCaw Consent

Decree’’ means the proposed consent decree filed on July 15,

1994, in the antitrust action styled United States v. AT&T

Corp. and McCaw Cellular Communications, Inc., Civil Action

No. 94–01555, in the United States District Court for the District of Columbia. Such term includes any stipulation that

the parties will abide by the terms of such proposed consent

decree until it is entered and any order entering such proposed

consent decree.

(4) ANTITRUST LAWS.—The term ‘‘antitrust laws’’ has the

meaning given it in subsection (a) of the first section of the

Clayton Act (15 U.S.C. 12(a)), except that such term includes

the Act of June 19, 1936 (49 Stat. 1526; 15 U.S.C. 13 et

seq.), commonly known as the Robinson-Patman Act, and section 5 of the Federal Trade Commission Act (15 U.S.C. 45)

to the extent that such section 5 applies to unfair methods

of competition.

SEC. 602. PREEMPTION OF LOCAL TAXATION WITH RESPECT TO

DIRECT-TO-HOME SERVICES.

(a) PREEMPTION.—A provider of direct-to-home satellite service

shall be exempt from the collection or remittance, or both, of any

tax or fee imposed by any local taxing jurisdiction on direct-tohome satellite service.

(b) DEFINITIONS.—For the purposes of this section—

(1) DIRECT-TO-HOME SATELLITE SERVICE.—The term ‘‘directto-home satellite service’’ means only programming transmitted

or broadcast by satellite directly to the subscribers’ premises

without the use of ground receiving or distribution equipment,
S. 652—90

except at the subscribers’ premises or in the uplink process

to the satellite.

(2) PROVIDER OF DIRECT-TO-HOME SATELLITE SERVICE.—For

purposes of this section, a ‘‘provider of direct-to-home satellite

service’’ means a person who transmits, broadcasts, sells, or

distributes direct-to-home satellite service.

(3) LOCAL TAXING JURISDICTION.—The term ‘‘local taxing jurisdiction’’ means any municipality, city, county, township,

parish, transportation district, or assessment jurisdiction, or

any other local jurisdiction in the territorial jurisdiction of

the United States with the authority to impose a tax or fee,

but does not include a State.

(4) STATE.—The term ‘‘State’’ means any of the several States, the District of Columbia, or any territory or possession

of the United States.

(5) TAX OR FEE.—The terms ‘‘tax’’ and ‘‘fee’’ mean any local sales tax, local use tax, local intangible tax, local income

tax, business license tax, utility tax, privilege tax, gross receipts

tax, excise tax, franchise fees, local telecommunications tax,

or any other tax, license, or fee that is imposed for the privilege

of doing business, regulating, or raising revenue for a local

taxing jurisdiction.

(c) PRESERVATION OF STATE AUTHORITY.—This section shall

not be construed to prevent taxation of a provider of direct-tohome satellite service by a State or to prevent a local taxing

jurisdiction from receiving revenue derived from a tax or fee

imposed and collected by a State.

TITLE VII—MISCELLANEOUS

PROVISIONS

SEC. 701. PREVENTION OF UNFAIR BILLING PRACTICES FOR INFORMATION OR SERVICES PROVIDED OVER TOLL-FREE TELEPHONE CALLS.

(a) PREVENTION OF UNFAIR BILLING PRACTICES.— (1) IN GENERAL.—Section 228(c) (47 U.S.C. 228(c)) is

amended—

(A) by striking out subparagraph (C) of paragraph (7) and inserting in lieu thereof the following: ‘‘(C) the calling party being charged for information conveyed during the call unless— ‘‘(i) the calling party has a written agreement (including an agreement transmitted through electronic medium) that meets the requirements of paragraph (8); or ‘‘(ii) the calling party is charged for the information in accordance with paragraph (9); or’’;

(B)(i) by striking ‘‘or’’ at the end of subparagraph (C) of such paragraph;

(ii) by striking the period at the end of subparagraph

(D) of such paragraph and inserting a semicolon and ‘‘or’’;

and

(iii) by adding at the end thereof the following:

‘‘(E) the calling party being assessed, by virtue of being

asked to connect or otherwise transfer to a pay-per-call

service, a charge for the call.’’; and
S. 652—91

(C) by adding at the end the following new paragraphs:

‘‘(8) SUBSCRIPTION AGREEMENTS FOR BILLING FOR INFORMATION PROVIDED VIA TOLL-FREE CALLS.—

‘‘(A) IN GENERAL.—For purposes of paragraph (7)(C)(i),

a written subscription does not meet the requirements

of this paragraph unless the agreement specifies the material terms and conditions under which the information

is offered and includes—

‘‘(i) the rate at which charges are assessed for

the information;

‘‘(ii) the information provider’s name;

‘‘(iii) the information provider’s business address;

‘‘(iv) the information provider’s regular business

telephone number;

‘‘(v) the information provider’s agreement to notify

the subscriber at least one billing cycle in advance

of all future changes in the rates charged for the

information; and

‘‘(vi) the subscriber’s choice of payment method,

which may be by direct remit, debit, prepaid account,

phone bill, or credit or calling card.

‘‘(B) BILLING ARRANGEMENTS.—If a subscriber elects,

pursuant to subparagraph (A)(vi), to pay by means of a

phone bill—

‘‘(i) the agreement shall clearly explain that the

subscriber will be assessed for calls made to the

information service from the subscriber’s phone line;

‘‘(ii) the phone bill shall include, in prominent type,

the following disclaimer:

‘Common carriers may not disconnect local or

long distance telephone service for failure to pay

disputed charges for information services.’; and

‘‘(iii) the phone bill shall clearly list the 800 number dialed.

‘‘(C) USE OF PINS TO PREVENT UNAUTHORIZED USE.— A written agreement does not meet the requirements of

this paragraph unless it— ‘‘(i) includes a unique personal identification number or other subscriber-specific identifier and requires

a subscriber to use this number or identifier to obtain

access to the information provided and includes

instructions on its use; and

‘‘(ii) assures that any charges for services accessed

by use of the subscriber’s personal identification number or subscriber-specific identifier be assessed to

subscriber’s source of payment elected pursuant to

subparagraph (A)(vi).

‘‘(D) EXCEPTIONS.—Notwithstanding paragraph (7)(C),

a written agreement that meets the requirements of this

paragraph is not required—

‘‘(i) for calls utilizing telecommunications devices

for the deaf;

‘‘(ii) for directory services provided by a common

carrier or its affiliate or by a local exchange carrier

or its affiliate; or

‘‘(iii) for any purchase of goods or of services that

are not information services.
S. 652—92

‘‘(E) TERMINATION OF SERVICE.—On receipt by a common carrier of a complaint by any person that an information provider is in violation of the provisions of this section,

a carrier shall—

‘‘(i) promptly investigate the complaint; and

‘‘(ii) if the carrier reasonably determines that the

complaint is valid, it may terminate the provision of

service to an information provider unless the provider

supplies evidence of a written agreement that meets

the requirements of this section.

‘‘(F) TREATMENT OF REMEDIES.—The remedies provided

in this paragraph are in addition to any other remedies

that are available under title V of this Act.

‘‘(9) CHARGES BY CREDIT, PREPAID, DEBIT, CHARGE, OR CALLING CARD IN ABSENCE OF AGREEMENT.—For purposes of paragraph (7)(C)(ii), a calling party is not charged in accordance

with this paragraph unless the calling party is charged by

means of a credit, prepaid, debit, charge, or calling card and

the information service provider includes in response to each

call an introductory disclosure message that—

‘‘(A) clearly states that there is a charge for the call;

‘‘(B) clearly states the service’s total cost per minute

and any other fees for the service or for any service to

which the caller may be transferred;

‘‘(C) explains that the charges must be billed on either

a credit, prepaid, debit, charge, or calling card;

‘‘(D) asks the caller for the card number;

‘‘(E) clearly states that charges for the call begin at

the end of the introductory message; and ‘‘(F) clearly states that the caller can hang up at or

before the end of the introductory message without incurring any charge whatsoever.

‘‘(10) BYPASS OF INTRODUCTORY DISCLOSURE MESSAGE.— The requirements of paragraph (9) shall not apply to calls

from repeat callers using a bypass mechanism to avoid listening

to the introductory message: Provided, That information providers shall disable such a bypass mechanism after the institution

of any price increase and for a period of time determined

to be sufficient by the Federal Trade Commission to give callers

adequate and sufficient notice of a price increase.

‘‘(11) DEFINITION OF CALLING CARD.—As used in this subsection, the term ‘calling card’ means an identifying number

or code unique to the individual, that is issued to the individual

by a common carrier and enables the individual to be charged

by means of a phone bill for charges incurred independent

of where the call originates.’’.

(2) REGULATIONS.—The Federal Communications Commission shall revise its regulations to comply with the amendment

made by paragraph (1) not later than 180 days after the date

of enactment of this Act.

(3) EFFECTIVE DATE.—The amendments made by paragraph

(1) shall take effect on the date of enactment of this Act.

(b) CLARIFICATION OF ‘‘PAY-PER-CALL SERVICES’’.—

(1) TELEPHONE DISCLOSURE AND DISPUTE RESOLUTION

ACT.—Section 204(1) of the Telephone Disclosure and Dispute

Resolution Act (15 U.S.C. 5714(1)) is amended to read as follows:
S. 652—93

‘‘(1) The term ‘pay-per-call services’ has the meaning pro- vided in section 228(i) of the Communications Act of 1934,

except that the Commission by rule may, notwithstanding subparagraphs (B) and (C) of section 228(i)(1) of such Act, extend

such definition to other similar services providing audio

information or audio entertainment if the Commission determines that such services are susceptible to the unfair and

deceptive practices that are prohibited by the rules prescribed

pursuant to section 201(a).’’. (2) COMMUNICATIONS ACT.—Section 228(i)(2) (47 U.S.C.

228(i)(2)) is amended by striking ‘‘or any service the charge

for which is tariffed,’’.

SEC. 702. PRIVACY OF CUSTOMER INFORMATION.

Title II is amended by inserting after section 221 (47 U.S.C. 221) the following new section:

‘‘SEC. 222. PRIVACY OF CUSTOMER INFORMATION.

‘‘(a) IN GENERAL.—Every telecommunications carrier has a duty to protect the confidentiality of proprietary information of, and

relating to, other telecommunication carriers, equipment manufacturers, and customers, including telecommunication carriers reselling telecommunications services provided by a telecommunications

carrier.

‘‘(b) CONFIDENTIALITY OF CARRIER INFORMATION.—A telecommunications carrier that receives or obtains proprietary

information from another carrier for purposes of providing any

telecommunications service shall use such information only for such

purpose, and shall not use such information for its own marketing

efforts.

‘‘(c) CONFIDENTIALITY OF CUSTOMER PROPRIETARY NETWORK

INFORMATION.— ‘‘(1) PRIVACY REQUIREMENTS FOR TELECOMMUNICATIONS

CARRIERS.—Except as required by law or with the approval of the customer, a telecommunications carrier that receives

or obtains customer proprietary network information by virtue

of its provision of a telecommunications service shall only use,

disclose, or permit access to individually identifiable customer

proprietary network information in its provision of (A) the

telecommunications service from which such information is

derived, or (B) services necessary to, or used in, the provision

of such telecommunications service, including the publishing

of directories.

‘‘(2) DISCLOSURE ON REQUEST BY CUSTOMERS.—A telecommunications carrier shall disclose customer proprietary network information, upon affirmative written request by the customer, to any person designated by the customer. ‘‘(3) AGGREGATE CUSTOMER INFORMATION.—A telecommunications carrier that receives or obtains customer proprietary

network information by virtue of its provision of a telecommunications service may use, disclose, or permit access to aggregate

customer information other than for the purposes described

in paragraph (1). A local exchange carrier may use, disclose,

or permit access to aggregate customer information other than

for purposes described in paragraph (1) only if it provides

such aggregate information to other carriers or persons on

reasonable and nondiscriminatory terms and conditions upon

reasonable request therefor.
S. 652—94

‘‘(d) EXCEPTIONS.—Nothing in this section prohibits a telecommunications carrier from using, disclosing, or permitting access

to customer proprietary network information obtained from its customers, either directly or indirectly through its agents—

‘‘(1) to initiate, render, bill, and collect for telecommunications services;

‘‘(2) to protect the rights or property of the carrier, or

to protect users of those services and other carriers from fraudulent, abusive, or unlawful use of, or subscription to, such services; or

‘‘(3) to provide any inbound telemarketing, referral, or

administrative services to the customer for the duration of

the call, if such call was initiated by the customer and the

customer approves of the use of such information to provide

such service.

‘‘(e) SUBSCRIBER LIST INFORMATION.—Notwithstanding subsections (b), (c), and (d), a telecommunications carrier that provides

telephone exchange service shall provide subscriber list information

gathered in its capacity as a provider of such service on a timely

and unbundled basis, under nondiscriminatory and reasonable

rates, terms, and conditions, to any person upon request for the

purpose of publishing directories in any format.

‘‘(f) DEFINITIONS.—As used in this section:

‘‘(1) CUSTOMER PROPRIETARY NETWORK INFORMATION.—The

term ‘customer proprietary network information’ means—

‘‘(A) information that relates to the quantity, technical

configuration, type, destination, and amount of use of a

telecommunications service subscribed to by any customer

of a telecommunications carrier, and that is made available

to the carrier by the customer solely by virtue of the

carrier-customer relationship; and

‘‘(B) information contained in the bills pertaining to

telephone exchange service or telephone toll service

received by a customer of a carrier;

except that such term does not include subscriber list information.

‘‘(2) AGGREGATE INFORMATION.—The term ‘aggregate customer information’ means collective data that relates to a group

or category of services or customers, from which individual

customer identities and characteristics have been removed.

‘‘(3) SUBSCRIBER LIST INFORMATION.—The term ‘subscriber

list information’ means any information— ‘‘(A) identifying the listed names of subscribers of a

carrier and such subscribers’ telephone numbers, addresses,

or primary advertising classifications (as such classifications are assigned at the time of the establishment of

such service), or any combination of such listed names,

numbers, addresses, or classifications; and

‘‘(B) that the carrier or an affiliate has published,

caused to be published, or accepted for publication in any

directory format.’’.

SEC. 703. POLE ATTACHMENTS.

Section 224 (47 U.S.C. 224) is amended—

(1) in subsection (a)(1), by striking the first sentence and

inserting the following: ‘‘The term ‘utility’ means any person

who is a local exchange carrier or an electric, gas, water,
S. 652—95

steam, or other public utility, and who owns or controls poles,

ducts, conduits, or rights-of-way used, in whole or in part,

for any wire communications.’’;

(2) in subsection (a)(4), by inserting after ‘‘system’’ the

following: ‘‘or provider of telecommunications service’’;

(3) by inserting after subsection (a)(4) the following:

‘‘(5) For purposes of this section, the term ‘telecommunications carrier’ (as defined in section 3 of this Act) does not

include any incumbent local exchange carrier as defined in

section 251(h).’’;

(4) by inserting after ‘‘conditions’’ in subsection (c)(1) a

comma and the following: ‘‘or access to poles, ducts, conduits,

and rights-of-way as provided in subsection (f),’’;

(5) in subsection (c)(2)(B), by striking ‘‘cable television services’’ and inserting ‘‘the services offered via such attachments’’;

(6) by inserting after subsection (d)(2) the following:

‘‘(3) This subsection shall apply to the rate for any pole attachment used by a cable television system solely to provide cable

service. Until the effective date of the regulations required under

subsection (e), this subsection shall also apply to the rate for any

pole attachment used by a cable system or any telecommunications

carrier (to the extent such carrier is not a party to a pole attachment

agreement) to provide any telecommunications service.’’; and

(7) by adding at the end thereof the following:

‘‘(e)(1) The Commission shall, no later than 2 years after the

date of enactment of the Telecommunications Act of 1996, prescribe

regulations in accordance with this subsection to govern the charges

for pole attachments used by telecommunications carriers to provide

telecommunications services, when the parties fail to resolve a

dispute over such charges. Such regulations shall ensure that a

utility charges just, reasonable, and nondiscriminatory rates for

pole attachments.

‘‘(2) A utility shall apportion the cost of providing space on

a pole, duct, conduit, or right-of-way other than the usable space

among entities so that such apportionment equals two-thirds of

the costs of providing space other than the usable space that would

be allocated to such entity under an equal apportionment of such

costs among all attaching entities.

‘‘(3) A utility shall apportion the cost of providing usable space

among all entities according to the percentage of usable space

required for each entity.

‘‘(4) The regulations required under paragraph (1) shall become

effective 5 years after the date of enactment of the Telecommunications Act of 1996. Any increase in the rates for pole attachments

that result from the adoption of the regulations required by this

subsection shall be phased in equal annual increments over a

period of 5 years beginning on the effective date of such regulations.

‘‘(f)(1) A utility shall provide a cable television system or any

telecommunications carrier with nondiscriminatory access to any

pole, duct, conduit, or right-of-way owned or controlled by it.

‘‘(2) Notwithstanding paragraph (1), a utility providing electric

service may deny a cable television system or any telecommunications carrier access to its poles, ducts, conduits, or rights-ofway, on a non-discriminatory basis where there is insufficient capacity and for reasons of safety, reliability and generally applicable

engineering purposes.
S. 652—96

‘‘(g) A utility that engages in the provision of telecommunications services or cable services shall impute to its costs of providing such services (and charge any affiliate, subsidiary, or associate

company engaged in the provision of such services) an equal amount

to the pole attachment rate for which such company would be

liable under this section.

‘‘(h) Whenever the owner of a pole, duct, conduit, or rightof-way intends to modify or alter such pole, duct, conduit, or rightof-way, the owner shall provide written notification of such action

to any entity that has obtained an attachment to such conduit

or right-of-way so that such entity may have a reasonable opportunity to add to or modify its existing attachment. Any entity

that adds to or modifies its existing attachment after receiving

such notification shall bear a proportionate share of the costs

incurred by the owner in making such pole, duct, conduit, or rightof-way accessible.

‘‘(i) An entity that obtains an attachment to a pole, conduit,

or right-of-way shall not be required to bear any of the costs

of rearranging or replacing its attachment, if such rearrangement

or replacement is required as a result of an additional attachment

or the modification of an existing attachment sought by any other

entity (including the owner of such pole, duct, conduit, or rightof-way).’’.

SEC. 704. FACILITIES SITING; RADIO FREQUENCY EMISSION STANDARDS.

(a) NATIONAL WIRELESS TELECOMMUNICATIONS SITING POLICY.—Section 332(c) (47 U.S.C. 332(c)) is amended by adding at

the end the following new paragraph: ‘‘(7) PRESERVATION OF LOCAL ZONING AUTHORITY.— ‘‘(A) GENERAL AUTHORITY.—Except as provided in this

paragraph, nothing in this Act shall limit or affect the

authority of a State or local government or instrumentality

thereof over decisions regarding the placement, construction, and modification of personal wireless service facilities.

‘‘(B) LIMITATIONS.— ‘‘(i) The regulation of the placement, construction,

and modification of personal wireless service facilities

by any State or local government or instrumentality

thereof—

‘‘(I) shall not unreasonably discriminate among

providers of functionally equivalent services; and ‘‘(II) shall not prohibit or have the effect of

prohibiting the provision of personal wireless services.

‘‘(ii) A State or local government or instrumentality

thereof shall act on any request for authorization to

place, construct, or modify personal wireless service

facilities within a reasonable period of time after the

request is duly filed with such government or

instrumentality, taking into account the nature and

scope of such request.

‘‘(iii) Any decision by a State or local government

or instrumentality thereof to deny a request to place,

construct, or modify personal wireless service facilities

shall be in writing and supported by substantial evidence contained in a written record.
S. 652—97

‘‘(iv) No State or local government or instrumentality thereof may regulate the placement, construction,

and modification of personal wireless service facilities

on the basis of the environmental effects of radio frequency emissions to the extent that such facilities comply with the Commission’s regulations concerning such

emissions.

‘‘(v) Any person adversely affected by any final

action or failure to act by a State or local government

or any instrumentality thereof that is inconsistent with

this subparagraph may, within 30 days after such

action or failure to act, commence an action in any

court of competent jurisdiction. The court shall hear

and decide such action on an expedited basis. Any

person adversely affected by an act or failure to act

by a State or local government or any instrumentality

thereof that is inconsistent with clause (iv) may petition the Commission for relief.

‘‘(C) DEFINITIONS.—For purposes of this paragraph—

‘‘(i) the term ‘personal wireless services’ means

commercial mobile services, unlicensed wireless services, and common carrier wireless exchange access

services;

‘‘(ii) the term ‘personal wireless service facilities’

means facilities for the provision of personal wireless

services; and

‘‘(iii) the term ‘unlicensed wireless service’ means

the offering of telecommunications services using duly

authorized devices which do not require individual

licenses, but does not mean the provision of directto-home satellite services (as defined in section

303(v)).’’.

(b) RADIO FREQUENCY EMISSIONS.—Within 180 days after the

enactment of this Act, the Commission shall complete action in

ET Docket 93–62 to prescribe and make effective rules regarding

the environmental effects of radio frequency emissions.

(c) AVAILABILITY OF PROPERTY.—Within 180 days of the enactment of this Act, the President or his designee shall prescribe

procedures by which Federal departments and agencies may make

available on a fair, reasonable, and nondiscriminatory basis, property, rights-of-way, and easements under their control for the placement of new telecommunications services that are dependent, in

whole or in part, upon the utilization of Federal spectrum rights

for the transmission or reception of such services. These procedures

may establish a presumption that requests for the use of property,

rights-of-way, and easements by duly authorized providers should

be granted absent unavoidable direct conflict with the department

or agency’s mission, or the current or planned use of the property,

rights-of-way, and easements in question. Reasonable fees may

be charged to providers of such telecommunications services for

use of property, rights-of-way, and easements. The Commission

shall provide technical support to States to encourage them to

make property, rights-of-way, and easements under their jurisdiction available for such purposes.
S. 652—98

SEC. 705. MOBILE SERVICES DIRECT ACCESS TO LONG DISTANCE CARRIERS.

Section 332(c) (47 U.S.C. 332(c)) is amended by adding at

the end the following new paragraph:

‘‘(8) MOBILE SERVICES ACCESS.—A person engaged in the

provision of commercial mobile services, insofar as such person

is so engaged, shall not be required to provide equal access

to common carriers for the provision of telephone toll services.

If the Commission determines that subscribers to such services

are denied access to the provider of telephone toll services

of the subscribers’ choice, and that such denial is contrary

to the public interest, convenience, and necessity, then the

Commission shall prescribe regulations to afford subscribers

unblocked access to the provider of telephone toll services of

the subscribers’ choice through the use of a carrier identification

code assigned to such provider or other mechanism. The

requirements for unblocking shall not apply to mobile satellite

services unless the Commission finds it to be in the public

interest to apply such requirements to such services.’’.

SEC. 706. ADVANCED TELECOMMUNICATIONS INCENTIVES.

(a) IN GENERAL.—The Commission and each State commission

with regulatory jurisdiction over telecommunications services shall

encourage the deployment on a reasonable and timely basis of

advanced telecommunications capability to all Americans (including,

in particular, elementary and secondary schools and classrooms)

by utilizing, in a manner consistent with the public interest, convenience, and necessity, price cap regulation, regulatory forbearance,

measures that promote competition in the local telecommunications

market, or other regulating methods that remove barriers to infrastructure investment.

(b) INQUIRY.—The Commission shall, within 30 months after

the date of enactment of this Act, and regularly thereafter, initiate

a notice of inquiry concerning the availability of advanced telecommunications capability to all Americans (including, in particular, elementary and secondary schools and classrooms) and shall

complete the inquiry within 180 days after its initiation. In the

inquiry, the Commission shall determine whether advanced telecommunications capability is being deployed to all Americans in

a reasonable and timely fashion. If the Commission’s determination

is negative, it shall take immediate action to accelerate deployment

of such capability by removing barriers to infrastructure investment

and by promoting competition in the telecommunications market.

(c) DEFINITIONS.—For purposes of this subsection:

(1) ADVANCED TELECOMMUNICATIONS CAPABILITY.—The

term ‘‘advanced telecommunications capability’’ is defined, without regard to any transmission media or technology, as highspeed, switched, broadband telecommunications capability that

enables users to originate and receive high-quality voice, data,

graphics, and video telecommunications using any technology.

(2) ELEMENTARY AND SECONDARY SCHOOLS.—The term

‘‘elementary and secondary schools’’ means elementary and

secondary schools, as defined in paragraphs (14) and (25),

respectively, of section 14101 of the Elementary and Secondary

Education Act of 1965 (20 U.S.C. 8801).
S. 652—99

SEC. 707. TELECOMMUNICATIONS DEVELOPMENT FUND.

(a) DEPOSIT AND USE OF AUCTION ESCROW ACCOUNTS.—Section

309(j)(8) (47 U.S.C. 309(j)(8)) is amended by adding at the end

the following new subparagraph:

‘‘(C) DEPOSIT AND USE OF AUCTION ESCROW

ACCOUNTS.—Any deposits the Commission may require for

the qualification of any person to bid in a system of competitive bidding pursuant to this subsection shall be deposited

in an interest bearing account at a financial institution

designated for purposes of this subsection by the Commission (after consultation with the Secretary of the Treasury).

Within 45 days following the conclusion of the competitive

bidding—

‘‘(i) the deposits of successful bidders shall be paid

to the Treasury;

‘‘(ii) the deposits of unsuccessful bidders shall be

returned to such bidders; and

‘‘(iii) the interest accrued to the account shall be

transferred to the Telecommunications Development

Fund established pursuant to section 714 of this Act.’’.

(b) ESTABLISHMENT AND OPERATION OF FUND.—Title VII is

amended by inserting after section 713 (as added by section 305)

the following new section:

‘‘SEC. 714. TELECOMMUNICATIONS DEVELOPMENT FUND.

‘‘(a) PURPOSE OF SECTION.—It is the purpose of this section—

‘‘(1) to promote access to capital for small businesses in

order to enhance competition in the telecommunications industry;

‘‘(2) to stimulate new technology development, and promote

employment and training; and

‘‘(3) to support universal service and promote delivery of

telecommunications services to underserved rural and urban

areas.

‘‘(b) ESTABLISHMENT OF FUND.—There is hereby established

a body corporate to be known as the Telecommunications Development Fund, which shall have succession until dissolved. The Fund

shall maintain its principal office in the District of Columbia and

shall be deemed, for purposes of venue and jurisdiction in civil

actions, to be a resident and citizen thereof.

‘‘(c) BOARD OF DIRECTORS.—

‘‘(1) COMPOSITION OF BOARD; CHAIRMAN.—The Fund shall

have a Board of Directors which shall consist of 7 persons

appointed by the Chairman of the Commission. Four of such

directors shall be representative of the private sector and three

of such directors shall be representative of the Commission,

the Small Business Administration, and the Department of

the Treasury, respectively. The Chairman of the Commission

shall appoint one of the representatives of the private sector

to serve as chairman of the Fund within 30 days after the

date of enactment of this section, in order to facilitate rapid

creation and implementation of the Fund. The directors shall

include members with experience in a number of the following

areas: finance, investment banking, government banking,

communications law and administrative practice, and public

policy.
S. 652—100

‘‘(2) TERMS OF APPOINTED AND ELECTED MEMBERS.—The

directors shall be eligible to serve for terms of 5 years, except

of the initial members, as designated at the time of their

appointment—

‘‘(A) 1 shall be eligible to service for a term of 1

year;

‘‘(B) 1 shall be eligible to service for a term of 2

years;

‘‘(C) 1 shall be eligible to service for a term of 3

years;

‘‘(D) 2 shall be eligible to service for a term of 4

years; and

‘‘(E) 2 shall be eligible to service for a term of 5

years (1 of whom shall be the Chairman).

Directors may continue to serve until their successors have

been appointed and have qualified.

‘‘(3) MEETINGS AND FUNCTIONS OF THE BOARD.—The Board

of Directors shall meet at the call of its Chairman, but at

least quarterly. The Board shall determine the general policies

which shall govern the operations of the Fund. The Chairman

of the Board shall, with the approval of the Board, select,

appoint, and compensate qualified persons to fill the offices

as may be provided for in the bylaws, with such functions,

powers, and duties as may be prescribed by the bylaws or

by the Board of Directors, and such persons shall be the officers

of the Fund and shall discharge all such functions, powers,

and duties.

‘‘(d) ACCOUNTS OF THE FUND.—The Fund shall maintain its

accounts at a financial institution designated for purposes of this

section by the Chairman of the Board (after consultation with

the Commission and the Secretary of the Treasury). The accounts

of the Fund shall consist of—

‘‘(1) interest transferred pursuant to section 309(j)(8)(C)

of this Act;

‘‘(2) such sums as may be appropriated to the Commission

for advances to the Fund;

‘‘(3) any contributions or donations to the Fund that are

accepted by the Fund; and ‘‘(4) any repayment of, or other payment made with respect

to, loans, equity, or other extensions of credit made from the

Fund.

‘‘(e) USE OF THE FUND.—All moneys deposited into the accounts

of the Fund shall be used solely for— ‘‘(1) the making of loans, investments, or other extensions

of credits to eligible small businesses in accordance with subsection (f);

‘‘(2) the provision of financial advice to eligible small

businesses;

‘‘(3) expenses for the administration and management of

the Fund (including salaries, expenses, and the rental or purchase of office space for the fund);

‘‘(4) preparation of research, studies, or financial analyses;

and

‘‘(5) other services consistent with the purposes of this

section.

‘‘(f) LENDING AND CREDIT OPERATIONS.—Loans or other extensions of credit from the Fund shall be made available in accordance
S. 652—101

with the requirements of the Federal Credit Reform Act of 1990

(2 U.S.C. 661 et seq.) and any other applicable law to an eligible

small business on the basis of—

‘‘(1) the analysis of the business plan of the eligible small

business;

‘‘(2) the reasonable availability of collateral to secure the

loan or credit extension;

‘‘(3) the extent to which the loan or credit extension promotes the purposes of this section; and

‘‘(4) other lending policies as defined by the Board.

‘‘(g) RETURN OF ADVANCES.—Any advances appropriated pursuant to subsection (d)(2) shall be disbursed upon such terms and

conditions (including conditions relating to the time or times of

repayment) as are specified in any appropriations Act providing

such advances.

‘‘(h) GENERAL CORPORATE POWERS.—The Fund shall have

power—

‘‘(1) to sue and be sued, complain and defend, in its corporate name and through its own counsel;

‘‘(2) to adopt, alter, and use the corporate seal, which

shall be judicially noticed;

‘‘(3) to adopt, amend, and repeal by its Board of Directors,

bylaws, rules, and regulations as may be necessary for the

conduct of its business;

‘‘(4) to conduct its business, carry on its operations, and

have officers and exercise the power granted by this section

in any State without regard to any qualification or similar

statute in any State; ‘‘(5) to lease, purchase, or otherwise acquire, own, hold,

improve, use, or otherwise deal in and with any property,

real, personal, or mixed, or any interest therein, wherever

situated, for the purposes of the Fund;

‘‘(6) to accept gifts or donations of services, or of property,

real, personal, or mixed, tangible or intangible, in aid of any

of the purposes of the Fund;

‘‘(7) to sell, convey, mortgage, pledge, lease, exchange, and

otherwise dispose of its property and assets; ‘‘(8) to appoint such officers, attorneys, employees, and

agents as may be required, to determine their qualifications,

to define their duties, to fix their salaries, require bonds for

them, and fix the penalty thereof; and ‘‘(9) to enter into contracts, to execute instruments, to incur

liabilities, to make loans and equity investment, and to do

all things as are necessary or incidental to the proper management of its affairs and the proper conduct of its business.

‘‘(i) ACCOUNTING, AUDITING, AND REPORTING.—The accounts of

the Fund shall be audited annually. Such audits shall be conducted

in accordance with generally accepted auditing standards by

independent certified public accountants. A report of each such

audit shall be furnished to the Secretary of the Treasury and

the Commission. The representatives of the Secretary and the

Commission shall have access to all books, accounts, financial

records, reports, files, and all other papers, things, or property

belonging to or in use by the Fund and necessary to facilitate

the audit.

‘‘(j) REPORT ON AUDITS BY TREASURY.—A report of each such

audit for a fiscal year shall be made by the Secretary of the
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Treasury to the President and to the Congress not later than

6 months following the close of such fiscal year. The report shall

set forth the scope of the audit and shall include a statement

of assets and liabilities, capital and surplus or deficit; a statement

of surplus or deficit analysis; a statement of income and expense;

a statement of sources and application of funds; and such comments

and information as may be deemed necessary to keep the President

and the Congress informed of the operations and financial condition

of the Fund, together with such recommendations with respect

thereto as the Secretary may deem advisable.

‘‘(k) DEFINITIONS.—As used in this section:

‘‘(1) ELIGIBLE SMALL BUSINESS.—The term ‘eligible small

business’ means business enterprises engaged in the telecommunications industry that have $50,000,000 or less in

annual revenues, on average over the past 3 years prior to

submitting the application under this section.

‘‘(2) FUND.—The term ‘Fund’ means the Telecommunications Development Fund established pursuant to this section.

‘‘(3) TELECOMMUNICATIONS INDUSTRY.—The term ‘telecommunications industry’ means communications businesses

using regulated or unregulated facilities or services and

includes broadcasting, telecommunications, cable, computer,

data transmission, software, programming, advanced messaging, and electronics businesses.’’.

SEC. 708. NATIONAL EDUCATION TECHNOLOGY FUNDING CORPORATION.

(a) FINDINGS; PURPOSE.— (1) FINDINGS.—The Congress finds as follows: (A) CORPORATION.—There has been established in the

District of Columbia a private, nonprofit corporation known

as the National Education Technology Funding Corporation

which is not an agency or independent establishment of

the Federal Government.

(B) BOARD OF DIRECTORS.—The Corporation is governed by a Board of Directors, as prescribed in the Corporation’s articles of incorporation, consisting of 15 members,

of which—

(i) five members are representative of public agencies representative of schools and public libraries;

(ii) five members are representative of State

government, including persons knowledgeable about

State finance, technology and education; and (iii) five members are representative of the private

sector, with expertise in network technology, finance

and management.

(C) CORPORATE PURPOSES.—The purposes of the Corporation, as set forth in its articles of incorporation, are—

(i) to leverage resources and stimulate private

investment in education technology infrastructure;

(ii) to designate State education technology agencies to receive loans, grants or other forms of assistance

from the Corporation;

(iii) to establish criteria for encouraging States

to—

(I) create, maintain, utilize and upgrade interactive high capacity networks capable of providing
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audio, visual and data communications for

elementary schools, secondary schools and public

libraries;

(II) distribute resources to assure equitable

aid to all elementary schools and secondary schools

in the State and achieve universal access to network technology; and

(III) upgrade the delivery and development

of learning through innovative technology-based

instructional tools and applications;

(iv) to provide loans, grants and other forms of

assistance to State education technology agencies, with

due regard for providing a fair balance among types

of school districts and public libraries assisted and

the disparate needs of such districts and libraries;

(v) to leverage resources to provide maximum aid

to elementary schools, secondary schools and public

libraries; and

(vi) to encourage the development of education telecommunications and information technologies through

public-private ventures, by serving as a clearinghouse

for information on new education technologies, and

by providing technical assistance, including assistance

to States, if needed, to establish State education technology agencies.

(2) PURPOSE.—The purpose of this section is to recognize

the Corporation as a nonprofit corporation operating under

the laws of the District of Columbia, and to provide authority

for Federal departments and agencies to provide assistance

to the Corporation.

(b) DEFINITIONS.—For the purpose of this section—

(1) the term ‘‘Corporation’’ means the National Education

Technology Funding Corporation described in subsection

(a)(1)(A);

(2) the terms ‘‘elementary school’’ and ‘‘secondary school’’

have the same meanings given such terms in section 14101

of the Elementary and Secondary Education Act of 1965; and (3) the term ‘‘public library’’ has the same meaning given

such term in section 3 of the Library Services and Construction

Act.

(c) ASSISTANCE FOR EDUCATION TECHNOLOGY PURPOSES.— (1) RECEIPT BY CORPORATION.—Notwithstanding any other

provision of law, in order to carry out the corporate purposes

described in subsection (a)(1)(C), the Corporation shall be

eligible to receive discretionary grants, contracts, gifts, contributions, or technical assistance from any Federal department

or agency, to the extent otherwise permitted by law.

(2) AGREEMENT.—In order to receive any assistance

described in paragraph (1) the Corporation shall enter into

an agreement with the Federal department or agency providing

such assistance, under which the Corporation agrees—

(A) to use such assistance to provide funding and technical assistance only for activities which the Board of Directors of the Corporation determines are consistent with the

corporate purposes described in subsection (a)(1)(C);

(B) to review the activities of State education technology agencies and other entities receiving assistance from
S. 652—104

the Corporation to assure that the corporate purposes

described in subsection (a)(1)(C) are carried out;

(C) that no part of the assets of the Corporation shall

accrue to the benefit of any member of the Board of Directors of the Corporation, any officer or employee of the

Corporation, or any other individual, except as salary or

reasonable compensation for services;

(D) that the Board of Directors of the Corporation

will adopt policies and procedures to prevent conflicts of

interest;

(E) to maintain a Board of Directors of the Corporation

consistent with subsection (a)(1)(B);

(F) that the Corporation, and any entity receiving the

assistance from the Corporation, are subject to the appropriate oversight procedures of the Congress; and

(G) to comply with—

(i) the audit requirements described in subsection

(d); and

(ii) the reporting and testimony requirements

described in subsection (e).

(3) CONSTRUCTION.—Nothing in this section shall be construed to establish the Corporation as an agency or independent

establishment of the Federal Government, or to establish the

members of the Board of Directors of the Corporation, or the

officers and employees of the Corporation, as officers or employees of the Federal Government.

(d) AUDITS.—

(1) AUDITS BY INDEPENDENT CERTIFIED PUBLIC ACCOUNT- ANTS.— (A) IN GENERAL.—The Corporation’s financial statements shall be audited annually in accordance with generally accepted auditing standards by independent certified

public accountants who are certified by a regulatory authority of a State or other political subdivision of the United

States. The audits shall be conducted at the place or places

where the accounts of the Corporation are normally kept.

All books, accounts, financial records, reports, files, and

all other papers, things, or property belonging to or in

use by the Corporation and necessary to facilitate the audit

shall be made available to the person or persons conducting

the audits, and full facilities for verifying transactions with

the balances or securities held by depositories, fiscal agents,

and custodians shall be afforded to such person or persons.

(B) REPORTING REQUIREMENTS.—The report of each

annual audit described in subparagraph (A) shall be

included in the annual report required by subsection (e)(1).

(2) RECORDKEEPING REQUIREMENTS; AUDIT AND EXAMINATION OF BOOKS.—

(A) RECORDKEEPING REQUIREMENTS.—The Corporation

shall ensure that each recipient of assistance from the

Corporation keeps—

(i) separate accounts with respect to such assistance;

(ii) such records as may be reasonably necessary

to fully disclose—

(I) the amount and the disposition by such

recipient of the proceeds of such assistance;
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(II) the total cost of the project or undertaking

in connection with which such assistance is given

or used; and

(III) the amount and nature of that portion

of the cost of the project or undertaking supplied

by other sources; and

(iii) such other records as will facilitate an effective

audit.

(B) AUDIT AND EXAMINATION OF BOOKS.—The Corporation shall ensure that the Corporation, or any of the Corporation’s duly authorized representatives, shall have

access for the purpose of audit and examination to any

books, documents, papers, and records of any recipient

of assistance from the Corporation that are pertinent to

such assistance. Representatives of the Comptroller General shall also have such access for such purpose.

(e) ANNUAL REPORT; TESTIMONY TO THE CONGRESS.—

(1) ANNUAL REPORT.—Not later than April 30 of each year,

the Corporation shall publish an annual report for the preceding

fiscal year and submit that report to the President and the

Congress. The report shall include a comprehensive and

detailed evaluation of the Corporation’s operations, activities,

financial condition, and accomplishments under this section

and may include such recommendations as the Corporation

deems appropriate.

(2) TESTIMONY BEFORE CONGRESS.—The members of the

Board of Directors, and officers, of the Corporation shall be

available to testify before appropriate committees of the Congress with respect to the report described in paragraph (1),

the report of any audit made by the Comptroller General pursuant to this section, or any other matter which any such committee may determine appropriate.

SEC. 709. REPORT ON THE USE OF ADVANCED TELECOMMUNICATIONS

SERVICES FOR MEDICAL PURPOSES.

The Secretary of Commerce, in consultation with the Secretary

of Health and Human Services and other appropriate departments

and agencies, shall submit a report to the Committee on Commerce

of the House of Representatives and the Committee on Commerce,

Science, and Transportation of the Senate concerning the activities

of the Joint Working Group on Telemedicine, together with any

findings reached in the studies and demonstrations on telemedicine

funded by the Public Health Service or other Federal agencies.

The report shall examine questions related to patient safety, the

efficacy and quality of the services provided, and other legal, medical, and economic issues related to the utilization of advanced

telecommunications services for medical purposes. The report shall

be submitted to the respective committees by January 31, 1997.

SEC. 710. AUTHORIZATION OF APPROPRIATIONS.

(a) IN GENERAL.—In addition to any other sums authorized

by law, there are authorized to be appropriated to the Federal

Communications Commission such sums as may be necessary to

carry out this Act and the amendments made by this Act.

(b) EFFECT ON FEES.—For the purposes of section 9(b)(2) (47

U.S.C. 159(b)(2)), additional amounts appropriated pursuant to subsection (a) shall be construed to be changes in the amounts appro-
S. 652—106

priated for the performance of activities described in section 9(a)

of the Communications Act of 1934.

(c) FUNDING AVAILABILITY.—Section 309(j)(8)(B) (47 U.S.C.

309(j)(8)(B)) is amended by adding at the end the following new

sentence: ‘‘Such offsetting collections are authorized to remain available until expended.’’.

Speaker of the House of Representatives.

Vice President of the United States and

President of the Senate.