II

105TH CONGRESS

2D SESSION S. 1928

To protect consumers from overcollections for the use of pay telephones,

to provide consumers with information to make informed decisions about

the use of pay telephones, and for other purposes.

IN THE SENATE OF THE UNITED STATES

APRIL 2, 1998

Mr. LEAHY introduced the following bill; which was read twice and referred

to the Committee on Commerce, Science, and Transportation

A BILL

To protect consumers from overcollections for the use of

pay telephones, to provide consumers with information

to make informed decisions about the use of pay telephones, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Consumer Pay Tele5 phone Protection Act of 1998’’.

6 SEC. 2. FINDINGS AND PURPOSE.

7 (a) FINDINGS.—Congress makes the following find8 ings:
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1 (1) Some payphone service providers have in2 creased the charge for the use of a coin-operated pay

3 telephone for a local call to 35 cents but have not

4 put into place a system for providing change to

5 users of such telephones for amounts deposited in

6 such telephones in excess of such charge.

7 (2) Payphone service providers should charge

8 pay telephone users only for the actual time of use

9 of pay telephones.

10 (3) Most consumers, if given a choice, would

11 prefer that any amount of such excess deposits that

12 are not refunded to consumers be used for pay tele13 phones for public health, safety, and welfare pur14 poses rather than have such excess deposits accrue

15 to the financial benefit of payphone service provid16 ers.

17 (4) There are approximately 2,000,000 pay

18 telephones in the United States, and payphone serv19 ice providers accrue substantial revenue at the ex20 pense of Americans who do not have the exact

21 amount of the charge for their use.

22 (5) A decision of the Federal Communications

23 Commission to deregulate the provision of payphone

24 service was premature and did not address ade-
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1 quately the need for local competition that would

2 benefit users of pay telephones.

3 (6) The decision of the Commission does not

4 promote the widespread deployment of affordable

5 payphone service that would benefit the general pub6 lic, nor does the decision promote the widespread de7 ployment of public interest telephones.

8 (7) The use of coin-operated pay telephones

9 represents an increasing commercial activity that

10 substantially affects interstate commerce.

11 (8) Public interest telephones should be main12 tained in each State and should be provided to pro13 mote the public safety, health, and welfare.

14 (b) PURPOSE.—The purpose of this Act is—

15 (1) to require payphone service providers—

16 (A) to provide cash change to pay tele17 phone users who deposit amounts for local tele18 phone calls in excess of the amounts charged

19 for such calls; or

20 (B) in the event that such providers do not

21 provide such change, to transfer amounts equal

22 to such change to appropriate State entities for

23 public interest purposes related to telephone

24 service;
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1 (2) to encourage such changes in pay telephone

2 technology as are needed to assure that payphone

3 service providers—

4 (A) do not overcharge pay telephone users

5 who do not have the exact amount of the charge

6 for local pay telephone calls; and

7 (B) do not charge pay telephone users for

8 any time in which pay telephones are not actu9 ally in use; and

10 (3) to require the Federal Trade Commission to

11 determine—

12 (A) whether dysfunctions exist in the mar13 ket for payphone service including locational

14 monopolies in which the size of the market con15 cerned results in the availability of payphone

16 service from a single provider; and

17 (B) whether rates for coin-operated pay

18 telephones for local telephone calls are market

19 based.

20 SEC. 3. PUBLIC INTEREST PAY TELEPHONES.

21 Section 276(b)(2) of the Communications Act of

22 1934 (47 U.S.C. 276(b)(2)) is amended to read as follows:

23 ‘‘(2) PUBLIC INTEREST PAY TELEPHONES.—

24 ‘‘(A) SENSE OF CONGRESS.—It is the

25 sense of Congress that—
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1 ‘‘(i) in the interest of the public

2 health, safety, and welfare, public interest

3 pay telephones should be available and

4 maintained in locations where there would

5 not otherwise likely be a pay telephone;

6 and

7 ‘‘(ii) such public interest pay tele8 phones should be fairly and equitably sup9 ported.

10 ‘‘(B) USE OF FUNDS.—In accordance with

11 such regulations as the Commission shall pre12 scribe, each State agency that receives amounts

13 under subsection (c)(2)(A) shall use such

14 amounts to promote or otherwise support the

15 installation, maintenance, and use of public in16 terest pay telephones, including specially de17 signed payphones for the disabled and the pro18 vision of payphone service in remote locations,

19 nursing homes, emergency homeless shelters,

20 hospitals, facilities that assist the disabled,

21 schools, and other appropriate locations deter22 mined by the State agency concerned.’’.
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1 SEC. 4. REQUIREMENT FOR CHANGE AT PAY TELEPHONES.

2 (a) REQUIREMENT.—Section 276 of the Communica3 tions Act of 1934 (47 U.S.C. 276), as amended by section

4 3 of this Act, is further amended—

5 (1) by redesignating subsections (c) and (d) as

6 subsections (d) and (e), respectively; and

7 (2) by inserting after subsection (b) the follow8 ing new subsection (c):

9 ‘‘(c) CHANGE AT PAY TELEPHONES.—

10 ‘‘(1) REQUIREMENT.—

11 ‘‘(A) IN GENERAL.—Except as provided in

12 paragraph (2), a payphone service provider

13 shall provide any individual using a pay tele14 phone of such provider to make a telephone call

15 described in subparagraph (B) an amount of

16 cash change equal to the amount (if any) by

17 which the amount deposited by the individual

18 for the call exceeds the charge for the call.

19 ‘‘(B) COVERED TELEPHONE CALLS.—Sub20 paragraph (A) applies to any local telephone

21 call the charge for which exceeds 10 cents.

22 ‘‘(2) ALTERNATIVE USE OF EXCESS COLLEC23 TIONS.—

24 ‘‘(A) TRANSFER.—In accordance with such

25 regulations as the Commission shall prescribe, a
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1 payphone service provider may, in lieu of pro2 viding cash change under paragraph (1)—

3 ‘‘(i) transfer any excess amounts col4 lected by the provider at pay telephones to

5 the State agency in the State in which the

6 telephones are located that is responsible

7 for the support of public interest pay tele8 phones under subsection (b)(2); or

9 ‘‘(ii) if the State has no such agency

10 by reason of a determination under sub11 paragraph (B), transfer such excess

12 amounts to the Commission for use under

13 subparagraph (D).

14 ‘‘(B) STATE OPTION.—

15 ‘‘(i) STATE OPTION.—The chief execu16 tive officer of each State may determine

17 whether or not to permit the transfer of

18 funds to an agency of such State under

19 subparagraph (A).

20 ‘‘(ii) REVOCATION.—The chief execu21 tive officer of a State may revoke any pre22 vious decision with respect to the State

23 under this subparagraph.

24 ‘‘(iii) NOTICE.—The chief executive

25 officer of a State shall notify the Commis-
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1 sion, in writing, of any determination or

2 revocation of a determination under this

3 subparagraph.

4 ‘‘(C) USE BY STATES.—

5 ‘‘(i) IN GENERAL.—A State agency re6 ceiving amounts under subparagraph (A)

7 shall utilize such amounts for purposes of

8 promoting and supporting public interest

9 pay telephones in the State under sub10 section (b)(2).

11 ‘‘(ii) ADDITIONAL USE.—In the event

12 that amounts received by a State agency

13 under subparagraph (A) exceed the

14 amounts determined by the agency to be

15 required to properly promote and support

16 public interest pay telephones in the State,

17 the agency shall utilize the excess amounts

18 for purposes relating to providing universal

19 service or improving telephone service in

20 the State under section 254.

21 ‘‘(D) USE BY COMMISSION.—

22 ‘‘(i) DEPOSIT.—The Commission shall

23 deposit any amounts received by the Com24 mission under subparagraph (A) in an ac-
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1 count in the Treasury established for that

2 purpose.

3 ‘‘(ii) AVAILABILITY.—Under such reg4 ulations as the Commission shall prescribe,

5 the Commission shall utilize amounts in

6 the account under clause (i) to assist

7 States that receive amounts under sub8 paragraph (A) with additional assistance

9 to promote and support public interest pay

10 telephones under subsection (b)(2).

11 ‘‘(E) NOTICE TO CONSUMERS.—

12 ‘‘(i) IN GENERAL.—In the event a

13 payphone service provider decides to trans14 fer excess amounts deposited at any given

15 pay telephone under subparagraph (A) for

16 purposes of supporting public interest pay

17 telephones under subsection (b)(2), the

18 provider shall post at such pay telephone a

19 notice informing potential users of such

20 pay telephone that any such excess amount

21 shall not be returned as cash change or

22 credit but shall be utilized for such pur23 poses.

24 ‘‘(ii) ADDITIONAL NOTICE.—Nothing

25 in clause (i) shall be interpreted to limit a
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1 State from requiring additional notices

2 with respect to the matters set forth in

3 that clause.

4 ‘‘(3) REGULATIONS.—

5 ‘‘(A) REQUIREMENT.—Not later than one

6 year after the date of enactment of the Con7 sumer Pay Telephone Protection Act of 1998,

8 the Commission shall prescribe the regulations

9 required under this subsection.

10 ‘‘(B) ADDITIONAL ELEMENTS.—The regu11 lations shall—

12 ‘‘(i) provide for the monitoring of the

13 compliance of payphone service providers

14 with the provisions of this subsection;

15 ‘‘(ii) ensure that such providers do

16 not pass any costs relating to such compli17 ance to consumers; and

18 ‘‘(iii) ensure that the implementation

19 of such provisions do not result in any re20 duction in payphone service, including the

21 imposition of time limits on local telephone

22 calls or other reductions or limitations in

23 such service.

24 ‘‘(C) EFFECTIVE DATE.—The regulations

25 shall provide that the provisions of the regula-
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1 tions take effect not earlier than 6 months after

2 the date of the final issuance of the regulations

3 and not later than 12 months after that date.’’.

4 (b) STUDY OF ALTERNATIVE TECHNOLOGIES.—

5 (1) IN GENERAL.—Not later than 18 months

6 after the date of enactment of this Act, the Federal

7 Communications Commission shall submit to Con8 gress a report on the availability of technologies or

9 systems that permit persons who do not have exact

10 change to utilize pay telephones for local telephone

11 calls without being overcharged for such calls.

12 (2) ELEMENTS.—The report shall address the

13 use of tokens, cash debit cards, systems for crediting

14 the monthly telephone bills of individuals who use

15 pay telephones, and such other technologies and sys16 tems as the Commission considers appropriate.

17 SEC. 5. STUDY OF COMPETITIVENESS OF PAY TELEPHONE

18 MARKET.

19 (a) STUDY.—

20 (1) IN GENERAL.—The Federal Trade Commis21 sion shall, in consultation with the Federal Commu22 nications Commission, carry out a study of competi23 tion in the market for intrastate payphone service,

24 including—
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1 (A) whether or not locational monopolies in

2 such service exist by reason of the size of par3 ticular markets for such service;

4 (B) whether or not potential users of such

5 service are effectively barred from choice in

6 such service in particular markets by reason of

7 difficulties in identifying a variety of payphone

8 service providers in such markets;

9 (C) whether or not rates for local pay tele10 phone calls are market-based; and

11 (D) whether or not there is evidence of mo12 nopoly pricing in such service.

13 (2) SCOPE OF COMMENT.—In carrying out the

14 study, the Federal Trade Commission shall seek

15 comment from a variety of sources, including State

16 and local public entities, consumers and consumer

17 representatives, and payphone service providers and

18 their representatives.

19 (b) REPORT.—Not later than one year after the date

20 of enactment of this Act, the Federal Trade Commission

21 shall submit to Congress a report on the results of the

22 study carried out under subsection (a). The report shall

23 include the findings of the Commission with respect to the

24 matters set forth under paragraph (1) of that subsection.
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1 (c) FEDERAL COMMUNICATIONS COMMISSION AC2 TION.—Notwithstanding any provision of the Communica3 tions Act of 1934 (47 U.S.C. 151 et seq.), the Federal

4 Communications Commission may, as a result of the study

5 under subsection (a), conduct a rule-making proceeding in

6 order to accomplish any of the following:

7 (1) To set limitations on rates for local pay

8 telephone calls.

9 (2) To permit the States to establish rates for

10 such calls on a cost basis.

11 (3) To set limitations on the commissions that

12 payphone service providers may pay to persons who

13 lease space to such providers for pay telephones.

14 (4) To prohibit payphone service providers from

15 entering into exclusive contracts with persons who

16 lease space to such providers for pay telephones

17 which contracts cover multiple locations.

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