June 7, 1995 CONGRESSIONAL RECORD — SENATE S7881

be conducted outside of Bosnia—in Croatia or Slovenia, for example.

Madam President, administration officials should quit fighting amongst

themselves and begin real consultations with the Congress, consultations

based on the facts and not on wild accusations or unrealistic scenarios. It is

time to take sides—with the victims of

this aggression. It is also high time for

America to exercise leadership and end

its participation in this international

failure.

Mr. DOLE. Madam President, I will

VETO OF RESCISSIONS BILL

fjust say that on the rescissions veto by

the President today, it is highly regrettable President Clinton chose a bill

cutting spending for the first veto. The

$16.4 billion rescissions bill would have

provided for $9 billion—$9 billion, a lot

of money in real savings—an important

downpayment in getting our country’s

financial house in order.

The President made a serious mistake in judgment in vetoing this measure. It would have provided funding to

the Federal Emergency Management

Agency for disaster relief, to Oklahoma

for reconstruction, and debt relief for

Jordan to support the peace process,

money for California.

Speaker GINGRICH and I have previously said we met the administration

more than halfway. The President

asked for Jordan debt relief, we met his

request. The President asked for FEMA

funds for disaster relief in 40 States,

and we met his request. The President

threatened to veto if striker replacement language was included in the bill,

we took it out. We left AIDS funding,

breast cancer screening, childhood immunization, Head Start, and other programs untouched, and still we came up

with $9 billion in net real savings.

We, in the Congress, held up our end

of the bargain, but President Clinton

missed a valuable opportunity—a golden opportunity—to join us cutting

spending.

Now, with three-quarters of the fiscal

year almost gone, we are losing the opportunity to enact real savings this

year. In the face of the budget deficit

that mortgages our children’s future,

we in the Congress will proceed to pass

a budget that puts us on the path to

balance by the year 2002. We owe it to

our children, and we owe it to our

grandchildren.

For the sake of generations to come,

it is time for the President to stop

being an obstacle in the road and join

us in our responsibility to secure our

Nation’s economic future.

THE TELECOMMUNICATIONS COMPETITION AND DEREGULATION

fACT

Mr. LOTT. Mr. President, I ask unanimous consent that the Senate proceed

to the immediate consideration of calendar No. 45, S. 652, the telecommunications bill.

The PRESIDING OFFICER (Mr. BENNETT). The bill will be stated by title.

The legislative clerk read as follows:

A bill (S. 652) to provide for a pro-competitive, deregulatory national policy framework designed to accelerate rapidly private

sector deployment of advanced telecommunications and information technologies and

services to all Americans by opening all telecommunications markets to competition,

and for other purposes.

The PRESIDING OFFICER. Is there

objection to the immediate consideration of the bill?

There being no objection, the Senate

proceeded to consider the bill.

Mr. PRESSLER. Mr. President, I rise

to begin Senate floor consideration of

S. 652—the comprehensive communications bill which the Committee on

Commerce, Science, and Transportation overwhelmingly approved late

last month on a vote of 17 to 2—The

Telecommunications Competition and

Deregulation Act of 1995.

The future of America’s economy and

society is inextricably linked to the

universe of telecomunications and

computer technology. Telecommunications and computer technology is a

potent force for progress and freedom,

more powerful than Gutenberg’s invention of the printing press five centuries

ago, or Bell’s telephone and Marconi’s

radio in the last century.

This force has helped us reach today’s historic turning point in America.

The telecommunications and computer technology of 21st-Century

America will be hair-thin strands of

glass and fiber below; the magical

crackling of stratospheric spectrum

above; and the orbit of satellites 23,000

miles beyond. With personal computers

interconnected, telephones untethered,

televisions and radios reinvented, and

other devices yet to be invented bringing digitized information to life, the

telecommunications and computer

technology unleashed by S. 652 will forever change our economy and society.

At stake is our ability to compete

and win in an international information marketplace estimated to be over

$3 trillion by the close of the decade.

The information industry already constitutes one-seventh of our economy,

and is growing.

As chairman of the Committee on

Commerce, Science and Transportation, the core of my agenda is to promote creativity in telecommunications

and computer technology by rolling

back the cost and reach of government.

Costly big-government laws designed

for another era restrain telecommunications and computer technology from

realizing its full potential. My top priority this year is to modernize and liberalize communications law through

passage of the bill before us today, S.

652: Telecommunications Competition

and Deregulation Act of 1995.

A. THE ADVENT OF TELECOMMUNICATONS

REGULATIONS

Most telecommunications policy and

regulation in America is based upon

the New Deal era Communications Act

of 1934. The 1934 Act incorporated the

premise that telephone services were a

natural monopoly, whereby only a single firm could provide better services

at a lower cost than a number of competing suppliers. Tight government

control over spectrum based services

was justified on a scarcity theory. Neither theory for big government regulation holds true today, if it ever did.

The 1934 Act was intended to ensure

that AT&T and other monopoly telephone companies did not abuse their

monopoly power. However, regulatory

protection from competition also ensured that AT&T would remain a government-sanctioned monopoly. In exchange for this government-sanctioned

monopoly, AT&T was to provide universal service. AT&T retained its government-sanctioned monopoly until

antitrust enforcement broke up the

Bell System and transferred the monopoly over local services to the Bell

Operating Companies.

The Communications Act has become

the cornerstone of communications law

in the United States. The 1934 Act established the Federal Communications

Commission, and granted it regulatory

power over communications by wire,

radio, telephone, and cable within the

United States. The Act also charged

the Federal Communications Commission with the responsibility of maintaining, for all the people of the United

States, a rapid, efficient, Nationwide

and worldwide wire and radio communications service with adequate facilities and reasonable charges.

Prior to 1934, communications regulation had come under the jurisdiction

of three separate Federal agencies.

Radio stations were licensed and regulated by the Federal Radio Commission; the Interstate Commerce Commission had jurisdiction over telephone, telegraph, and wireless common

carriers; and the Postmaster General

had certain jurisdiction over the companies that provided these services. As

the number of communications providers in the United States grew, Congress

determined that a commission with

unified jurisdiction would serve the

American people more effectively.

The 1934 Communications Act combined the powers that the Interstate

Commerce Commission and the Federal

Radio Commission then exercised over

communications under a single, independent Federal agency.

The Communications Act of 1934 was

based, in part, on the Interstate Commerce Act of 1888. For example, the requirement for approval of construction

or extension of lines for railroads was

taken directly from the ICC Act. Prior

to 1934, wire communications were regulated by the same set of laws that regulated the railroads. Radio communications were regulated under the 1927

Federal Radio Act. In 1934, the Federal

Communications Commission was created to oversee both the wireline communications and radio communications.
S7882 CONGRESSIONAL RECORD — SENATE June 7, 1995

The telecommunications industry

today is a dynamic and innovative industry, with new technology being introduced on daily basis. The telecommunications industry, however, is

regulated under a set of laws that are

antiquated and never designed to handle the challenges of today’s industry.

Telecommunications laws and regulations are not able to adequately take

into account the advent of telecommunications competition, and, indeed, have slowed the introduction of

competition into many segments of the

industry. These laws did not contemplate the development of fiber optics, the microchip, digital compression, and the explosion of wireless services. It is time to revise and amend the

1934 act to fit the new and future competitive telecommunications industry.

B. THE MODIFICATION OF FINAL JUDGMENT

Since 1984, the Bell operating companies have been restricted from entering

various lines of businesses as a result

of the consent decree entered in the

antitrust case, United States versus

Western Electric.

The consent decree, commonly referred to as the modification of final

judgment, or the MFJ, places the U.S.

District Court for the District of Columbia and Judge Harold Greene as the

administrator of the decree, and establishes a procedure by which the Bell

operating companies can obtain waivers from the decree’s restrictions.

Recent years have seen a proliferation of legislative and judicial action

to change the provisions of the original

consent decree that divested American

Telephone and Telegraph of its local

exchange service and created the regional Bell operating companies. Currently prohibited from providing long

distance service, manufacturing telecommunications equipment, and, up

until July 1991, providing information

services, the Bell operating companies

and others have long advocated open

entry into these new lines of business,

contending that such action would invigorate the telecommunications marketplace.

In opposition, certain consumer organizations, electronic publishers, long

distance carriers, the Justice Department, and other industry groups over

the past few years have opposed entry

on the grounds that the courts should

administer an antitrust consent decree

and that so long as the Bell operating

companies face little or no competition

in their core business of providing local

telephone service, they should not be

permitted to enter competitive lines of

business.

During the past 10 years a number of

waivers have been granted, but the

process has slowed in recent years.

More fundamentally, the judicial process is necessarily limited; the district

courts constitutional role is simply to

apply the law and administer the decree, and not make informed policy decisions about how communications law

and the communications and computer

industry should develop.

Moreover, given the vulnerability of

the telephone industry to selective,

cherry-picking competition, it is likely

that the limited nature of today’s competition will have a significant effect

on the industry’s revenues in general,

and on local telephone rates in particular.

Consequently, although the consent

decree served a useful purpose initially, it no longer serves the public interest at this dynamic time in the evaluation of the communications and information industry. In place of a process that subjects the communications

industry to the terms of a consent decree entered 12 years ago and administered by a single district court, the

Congress will reassert its proper policy

role and administer a new Federal policy designed to promote competition,

innovation, and protect consumers.

Prior to the implementation of the

MFJ in 1984, as noted previously, AT&T

was the monopoly telecommunications

provider in the United States. AT&T’s

Long Lines Department provided long

distance telephone service to virtually

everyone in the country. AT&T maintained owership of the 22 Bell operating

companies, which provided local telephone service on a monopoly basis to

approximately 85 percent of the population.

In addition, AT&T owned Western

Electric, which manufactured almost

all the equipment needed for the operation of the telephone network. AT&T

also owned Bell Telephone Laboratories, Bell Labs, which conducted the

most extensive research involving high

technologies and telecommunications

of any industrial research center in the

world.

The roots of the MFJ go back over

100 years. In 1882, Bell Telephone, the

predecessor of AT&T, designated Western Electric Co. as the exclusive manufacturer of its patented telecommunications equipment. During the early

1900’s Bell Telephone maintained a majority interest in Western Electric; by

1925 it had 100 percent owership of the

company.

By that same year, Bell Telephone

established Bell Telephone Laboratories to conduct its research and development. The Bell system’s rapid expansion triggered interest from the Department of Justice and the Interstate

Commerce Commission—which then

had jurisdiction over interstate telephone service—for possible antitrust

violations.

Following other antitrust action, in

1974, the Department of Justice filed an

antitrust suit against AT&T. The suit

claimed that AT&T misused its Bell

system monopoly of the local exchange

network to restrict competition in the

manufacturing of telecommunications

equipment, and in the market for

interchange service through refusal to

provide competitors with interconnection to the local networks and, therefore, access to end customers. After

years of litigation, the case was settled

in 1982 with entry of a modification of

final judgment by Judge Harold

Greene, which was negotiated by AT&T

and the Justice Department.

The debate about the proper role of

the Bell operating companies in the

communications industry has often

overshadowed the larger question of

which government bodies should be establishing national telecommunications policy. Courts make rulings, as

they should, solely on the narrow questions confronting them. Consequently,

courts do not and cannot ensure that

broader concerns about sound economic goals are fully considered.

As a result of these concerns, which

have been fueled by a period of

globalization and intense international

competition in the telecommunications industry, I believe, and the

committee believes that we in Congress as the expert in the oversight of

the telecommunications industry,

should have authority to manage these

issues in order to develop telecommunications and information policy in a coordinated manner.

At this juncture in the evolution of

the communications industry the Congress should be the locus of authority

on questions involving telecommunications competition, deregulation and

consumer protection. We have the ability to see a more complete spectrum of

issues, as compared to the narrow view

of discrete issues which a court and the

Department to Justice necessarily

takes in the context of litigation.

Moreover, we can consider broad policy

goals in establishing and administering

telecommunications policy.

C. REGULATORY LAG

While America is still the world’s

leader in information technology, we

are no longer in the position of being

unchallenged. Historically we were an

economic and technological Gulliver

standing astride a world of competitive

Lilliputians. But that’s just not true

any longer. America—especially we in

the American legislative and regulatory system—must respond and respond now.

At a minimum, government should

try to avoid doing harm. Unfortunately, government and regulators

have a rather sorry history of slowing

the introduction of new technologies

and competition. The examples of this

regulatory lag are numerous and all

too common. Regulatory lag means we

don’t get investment stimulus that

competition and new entry spur and,

more importantly, the public is denied

new service and product options.

1. Competition in customer premises

equipment:

Competition and open entry first

came to telecommunications with respect to customer premises equipment

(CPE). This competition, however, was

initially resisted by the FCC. For many

years, AT&T prohibited customers or

anyone else from connecting any equipment to its telephone network or to

telephones themselves that AT&T did

not supply. Bell tariffs forbade all foreign attachments—meaning equipment
June 7, 1995 CONGRESSIONAL RECORD — SENATE S7883

not provided by Bell itself. Unfortunately, regulators endorsed this anticompetitive practice for almost 70

years.

Through prodding from the Federal

courts, the commission eventually allowed devices deemed not injurious to

the telephone network to be connected

to the network. This was only after the

courts conferred on subscribers the

right to use their telephones in a way

that had private benefits without being

publicly detrimental

It took the Commission more than a

decade to extend the new law to include equipment that was connected

electronically, not just physically, to

the network. The Commission limited

restrictions on interconnection to protecting the network from harm. The

details of equipment interconnection

were not fully implemented until the

commission adopted part 68 of its rules

in 1975, nearly 20 years after the original court determination so that carriers themselves would be free to compete on equal terms in the open market.

2. Competition in long distance services:

The commission was equally slow in

authorizing interexchange—or long distance—competition. In the 1940s, long

distance service was provided exclusively over wires, and the same basic

economics that seemed to preclude

competition in local service applied

equally to long distance service. The

development of microwave and satellite technologies radically changed

that picture, making competition both

practical and inevitable. The first few,

faltering steps in the direction of a

competitive marketplace, were taken

by the commission in 1959 but it wasn’t

until 1980 that the commission formally adopted an open entry policy for

all interstate services.

Competition in the interexchange

market developed slowly as the commission gradually and incrementally

responded to changes in market pressures, technology, and consumer demand for new and varied long distance

services. Microwave relay technology,

developed by Bell Laboratories during

World War II, prompted the beginning

of IXC competition by offering a viable, less expensive alternative to

AT&Ts existing wireline facilities for

transmitting long distance communications.

The commission first permitted

entry of non-AT&T services for provision of private services. In 1959, the

FCC, finding a need for private services

and foreseeing no risk of harm to established services, authorized certain

private companies to provide microwave services and to establish private

microwave networks for their own internal use. Although described as a

narrow, limited decision, the Above 890

decision prompted a flood of applications from private organizations seeking authorization to establish private

microwave long-distance networks. It

also brought pressure for entry into

other fields.

MCI applied to the FCC for authority

to provide private, non-switched communications service between St. Louis

and Chicago. This service still did not

involve interconnection with AT&T’s

public network. In 1969, the commission approved MCI’s limited point-topoint system, saying it was designed to

meet the interoffice and interplant

communications needs of small businesses. Again, however, the decision

was narrow.

The commission was concerned about

permitting unregulated carriers to engage in creamskimming, and it generally still adhered strongly to the philosophy that the public network should

remain a regulated monopoly. Nonetheless, it prompted a deluge of applications seeking authorization of similar microwave facilities, reflecting a

public demand for competitive alternatives.

A few years later, the commission

formalized a policy of allowing entry of

new carriers into the private line, or

Specialized Common Carrier (SCC),

field to provide alternatives to certain

interstate transmission services traditionally offered only by the telephone

company. The commission did not,

however, define the scope of services it

was opening up to competition, a matter that would prove troublesome as

pressures for increased competition

rose.

Although each time emphasizing the

limited nature of its decision, the commission had, over the course of 2 decades, continued to approve the entry of

new providers of telephone services,

albiet at times reluctantly and with

prodding by the courts, and only in

provision of private line services.

When it came to permitting direct

competition with AT&Ts public

switched long distance service, the

Commission’s reluctance hardened.

MCI had eventually obtained approval

for its private line offerings, but when

it later proposed new switched service

in direct competition with AT&T’s

MTS services, the FCC refused approval.

In doing so, the Commission reiterated that its Specialized Common Carrier decision was meant to allow entry

only into private line service and not

into direct competition with the public

network. The Court of Appeals, however, reversed the commission’s failure

to approve MCI’s proposed offering, rejecting the commission’s argument

that its Specialized Common Carrier

decision authorized only private line

services.

After Execunet I, the commission

still refused to order AT&T to interconnect with MCI. The Court of Appeals, in Execunet II, then explicitly

mandated interconnect, emphasizing

that Specialized Common Carrier was a

broad decision to permit competition

in the long distance market and that

such competition necessarily required

AT&T to provide physical interconnection to the public network.

The Execunet decisions opened virtually all interstate IXC markets to

competition. In response to this new

judicially imposed reality, the FCC

lowered entry barriers, eliminated

rules prohibiting sharing of heavy use,

bulk rate circuits, and directed AT&T

to permit the resale and sharing of

these circuits by competitors.

During this same era, the commission approved interstate packetswitched communications network offerings that introduced value-added

networks which resold data processing

functions through basic private line

circuits, and unlimited resale and

shared use of private line services and

facilities. Tariff restrictions against

the resale and shared use of public

switched long distance services were

removed in 1980. Since this time, the

FCC has strongly supported the growth

of competition.

The resulting competition has had

well documented public benefits of

great scale and scope.

3. Enhanced Services:

The MFJ Consent Decree’s information services restriction required the

Bell Companies to seek waivers for the

provision of voice answering services,

electronic mail, videotext, electronic

versions of Yellow Pages directories,

E911 emergency service, and directory

assistance services provided to customers of nonassociated independent

telephone companies.

The restriction on the provision of

voice mail services was lifted in the

late 1980’s. In the first 2 years of RBOC

participation, the voice mail equipment market grew threefold and prices

declined dramatically. Between 1988

(when the RBOCs were permitted

entry) and 1989, the market for voice

mail services grew by 40 percent, with

total revenues rising from $452 million

to $635 million.

Prices have also fallen. For example,

telephone companies today charges as

little as $5 per month for its residential

voice messaging service. Similar services in 1987 cost 2 to 10 times more.

Output has risen. The U.S. market for

voice mail and voice response equipment increased from $300 million in

1988 to over $900 million in 1989. The

number of voice message mailboxes increased from 5.3 million in 1987 to 7.7

million in 1988 to 11.6 million in 1989.

4. Spectrum Allocation:

The introduction of both FM radio

and television was significantly delayed by years of FCC equivocation

over which bands would be assigned to

which uses. Equally egregious delays

preceded the introduction of cellular

telephone service.

FM Radio. FM radio technology was

invented in 1933, but did not receive

widespread use until the 1960s. Lack of

FCC support contributed to FM’s lack

of popularity. One glaring example occurred in 1945. By 1945, 500,000 FM receivers had been built, but were all rendered useless when the FCC decided to
S7884 CONGRESSIONAL RECORD — SENATE June 7, 1995

move FM channels to a different spectrum band. FM languished for so long

that the inventor of FM eventually

committed suicide in despair.

TV. The modern television was developed in the 1930s and exhibited by RCA

in 1939, but the FCC took 2 more years

to adopt initial standards. It was then

discovered that channel allocation was

inadequate, and the FCC froze all applications for TV licenses for 4 years,

until 1952. In the year after the freeze

alone, the number of stations tripled.

It took another 10 years before regulations for UHF/VHF frequencies were finalized.

Cellular. In 1947 Bell Labs developed

the concept of cellular communications and by 1962, AT&T had developed

an experimental cellular system. It

took another 15 years for regulation to

catch up with the new technology; in

1977 the FCC finally granted Illinois

Bell’s application to construct a developmental celluar system in Chicago.

The FCC took 8 years to finalize the

boundaries of cellular service areas.

The delay cost the cellular industry an

estimated $86 billion.

5. Out of Region Competition by Bell

Companies:

The Department of Justice, with the

concurrence of Judge Greene, originally held that the MFJ consent decree

forbade the RBOCs from providing

services outside their own regions. The

D.C. Circuit however overruled them

both and found that the BOCs are not

restricted to providing service only

within their home territories; they are

free to offer intraLATA services anywhere in the country. The RBOCs now

compete heavily against one another in

cellular service. The provision of other

local services, however, is impeded by

the interexchange restriction, which

the Department and the decree court

have so far refused to lift even outside

the service areas of the individual

RBOCs.

6. Bell Company Manufacturing:

In June 1991, outages in 5 states and

the District of Columbia forced Bell

Atlantic and other Bell companies to

work closely with a switch manufacturer to determine the cause of the

outages and prevent their recurrence.

The Department of Justice told Bell

Atlantic that, notwithstanding the

emergency, Bell Atlantic could not

work with the manufacturer without a

waiver of the decree’s manufacturing

restriction. On July 9, 1991, Judge

Greene ordered a hearing with Bell Atlantic, the Department of Justice,

AT&T, and MCI and granted the waiver

on July 10, 1991.

7. Cable Networks:

The FCC—at the behest of broadcasters—crippled and almost killed

cable television, by means of a number

of regulatory restrictions such anti-siphoning rules. The commission’s stated

justification for restricting cable was

that it did not want to jeopardize the

basic structure of over-the-air television.

8. Video Dialtone:

By defining video dialtone service as

common carriage, not broadcast, the

FCC has successfully preempted a raft

of State cable regulation and franchise

fees. It has also subjected these services to a raft of regulations. Telephone

companies have been invited to provide

a basic platform that delivers video

programming and basic adjunct services to end users, under Federal, common-carrier tariff.

Video dialtone providers must offer

sufficient capacity to serve multiple

video programmers; they must make

provision for increased programmer demand for transmission services over

time; and they must offer their basic

platform services on a nondiscriminatory basis. The dial tone moniker is

misleading; the video connections are

strictly between the telco central office and customers. But the number of

programs offered from a video dialtone

server can be expanded indefinitely.

The commission has attempted to

maintain strict separation between the

provision of video dialtone conduit, and

provision of the programming itself.

Video dialtone as defined by the commission is plainly more like telephone

carriage than like cable or broadcasting.

9. Direct Broadcast Satellite:

When the FCC first considered licensing Direct Broadcast Satellite service

(DBS) in the early 1980s, the National

Associate of Broadcasters raised the

specter of siphoning. DBS would result

in the loss of service to minorities,

rural areas, and special audiences by

siphoning programming, fragmenting

audiences, and reducing advertising

support. It would rob free local television service of advertising revenues.

UHF stations would be especially

threatened. The cable television industry joined in the assault on DBS by denying access to programming. The

service has only recently become available.

10. Computer and Software:

AT&T—which invented the transistor

and in the 1960s and 1970s developed

some of the most powerful computers—

was barred for years (by the 1956 antitrust consent decree) from competing

in the computer market against IBM.

The upshot was that IBM completely

dominated computing for many years.

AT&T had also developed the Unix operating system around which the

Internet was built—it couldn’t commercialize that aggressively either.

Now Microsoft is being accused of monopolizing the industry with the MS–

DOS and Windows alternatives.

11. Delay in RBOCC Information and

Inter-LATA Services Relief:

In 1987, the Justice Department recommended the removal of the information services restriction on the RBOCs.

This was not opposed by AT&T. In September of 1987, Judge Greene permitted

the RBOCs to enter non-telecommunications businesses without obtaining a

waiver, but did not lift the information

services ban.

On April 3, 1990, the U.S. Court of Appeals for the District of Columbia remanded Judge Greene’s decision to

continue the ban on RBOC information

services. Eventually, on July 25, 1991,

Judge Greene relented and permitted

RBOCs to provide information services.

RBOCs were finally granted the right

to provide information services more

than 4 years after the Justice Department recommended that the restriction be removed.

There have been numerous examples

of egregious delays in granting even

non-controversial decree waivers. For

example, Bell Atlantic sought a waiver

in 1985 to allow it to serve Cecil County, Maryland as part of its Philadelphia cellular system. Bell Atlantic submitted another waiver to provide cellular service to 3 New Jersey counties

through its Philadelphia-Wilmington

system on October 24, 1986.

These waivers were necessary to the

provision of uninterrupted cellular

service between Washington and New

York. Judge Greene finally granted the

second waiver on February 2, 1989, almost two-and-a-half years after it was

filed and the Cecil County waiver was

not approved until 1991, nearly 5 years

after it was first sought.

RBOCs have filed more than 200 MFJ

waivers that Judge Greene has ruled

on. These waiver requests first go to

the Department of Justice, and then

move to Judge Greene. Unfortunately,

the waiver process is also very time

consuming. The average age of an

RBOC waiver request pending before

the Department of Justice is about 21⁄2

years old.

Once the Justice Department passes

the waiver on to Judge Greene, it takes

approximately 2 years before Judge

Greene rules on it. This has made the

average waiver process more than 41⁄2

years to work its way through the system.

D. THE NEW COMPETITIVE LANDSCAPE

The competitive landscape is changing, and, if Congress does not act to

overhaul the telecommunications legal

landscape, consumers will once again

be denied benefits of competition and

new technology. Wireless services have

exploded since the Bell System breakup. Wireless counted less than 100,000

customers at that time.

Today, there are more than 25 million cellular subscribers. Additionally,

companies just spent more than $7.7

billion for the major trading area PCS

licenses. There is obviously a market

for more wireless communications.

Cable has more than doubled its subscriber base since the MFJ.

For local telephone services, States

such as New York, Illinois, and California, have been leading the way in opening the local market to competition.

Competitive access providers did not

even exist at the time of the MFJ.

Today, CAP’s are in 72 cities, and have

built 133 competing networks. Rapid

changes in technology have broken

down the natural monopoly Congress

based the 1934 act on. Competition is

still slow to fully develop in some

areas, and in some markets.
June 7, 1995 CONGRESSIONAL RECORD — SENATE S7885

History teaches us that, under existing law, the FCC and the courts have

not been able to respond to market and

technology changes in an expeditious

manner. This delay prevents the

consumer from gaining the benefits of

competition, such as lower rates, better services, and deployment of new

and better technologies.

The courts, FCC and Justice Department have been micro-managing the

growth of competition in the telecommunications industry. That is why

the committee believes it is incumbent

upon Congress to exercise its rightful

authority in this area, and pass legislation that will open the entire telecommunications industry to full competition. Without legislation, it may be

years, or decades, before America sees

the benefits of a truly open and competitive telecommunications industry.

Meanwhile our foreign competitors

are moving ahead aggressively. In

Great Britain, cable-telco competition

is growing rapidly. The major cable

players in the UK are, in fact, American telco and cable companies. Prices

for telephony provided over cable lines

are 10 to 15 percent lower than that

provided over British Telecoms network. Here in the United States by

contrast, the combination of the 1984

cable-telco prohibition and entry barriers into the local telephone market

prevent such competition from developing.

In Japan the government is providing

interest free loans to cover 30 percent

of the investment for Japan’s

broadband optical fiber network. Also

planned are favorable tax measures for

optical fiber and related investments.

Meanwhile in the United States when

American companies say they’ll invest

their own money in new networks, the

government at both the Federal and

State level visits endless regulatory

hassle on the proponents.

E. IMPORTANCE OF TELECOMMUNICATIONS TO

ECONOMIC GROWTH

At the heart our actions in the 104th

Congress is private sector economic

growth and private sector jobs through

less Government regulation. To

achieve our goal, we need increased

capital investment.

Telecommunications is an especially

important sector to spur investment

because it provides a big multiplier effect. The Japanese Government has estimated that for each dollar—or yen—

invested in telecommunications, you

get 3 dollars’ worth of economic

growth—a real telecom kicker.

America’s edge has always been our

grasp of technology. Today, telecommunications and computers are at

the cutting edge. Americans today

have the broadest choice and best

prices for these information economy

products and services in the world.

For instance, 98 percent of American

homes have television and radio, 94

percent a telephone. Close to 80 percent

have a VCR, while 65 percent subscribe

to cable TV—96 percent have the option. We are rapidly approaching 40

percent of homes with PC’s and 36 percent with video games. Multimedia and

CD–ROM sales are flourishing.

The Internet and computer on-line

services are reaching millions of Americans. DBS has been successfully

launched with 150 channels of digital

video and audio programming services.

A vibrant new wireless communications industry is growing with cellular—25 million subscribers—and paging—20 million users—soon to be joined

by Enhanced Specialized Mobile Radio,

Global Satellite Systems, and Personal

Communications Services.

First. Digitization and industry convergence meet—Regulatory apartheid:

Telecommunications policy in America, under the 1934 Communications

Act, has long been based on the now

faulty premise that information transmitted over wires could be easily distinguished from information transmitted over the air. Different regulatory

regimes were erected around these different information media.

This scheme might best be described

as ‘‘regulatory apartheid’’—each technology had its own native homeland.

These once neat separations and distinctions between the media no longer

make sense.

The explanation for the rapid convergence of previously distinct media lies

with digitization. Digitization allows

all media to become tanslatable into

each other. As Congress’ Office of Technology Assessment stated in a recent

study: ‘‘A movie, phone call, letter, or

magazine article may be sent digitally

via phone line, coaxial cable, fiberoptic cable, microwave, satellite, the

broadcast air, or a physical storage medium such as tape or disk.’’

The same technological phenomenon

to sweep the computer industry during

the 1980’s is now sweeping the telecommunications industry—we can

learn valuable lessons from the experience in the computer industry.

Second. Computers and phones:

By the early 1980’s, AT&T and IBM

were two of the largest and more powerful companies in the world. On January 8, 1982, the Federal Government

chose two different destinies for the

mammoth companies. The Government

agreed to dismiss its case against IBM;

by contrast, AT&T would be divested,

freed from all antitrust quarantines

and so permitted to enter the computer

business.

At the time, Intel was already over a

decade old. Apple was growing fast.

And IBM had just introduced a brandnew machine, based on an Intel

microprocessor. Big Blue’s new machine—its personal computer—was

small and beige. Three weeks after the

break-up of AT&T was complete, in

January 1984, Steve Jobs stepped out

on the podium at the annual stockholders’ meeting of Apple Computer and

unveiled the new Macintosh.

The impact of unfettered competition has devastated IBM. The only

thriving parts of its hardware business

today are at the bottom end, where Big

Blue’s small beige machines have been

open, standardized, and widely copied

from the day they were introduced. Between 1985 and 1992, IBM shed 100,000

employees. IBM’s stock, worth $176 a

share in 1987, collapsed to $52 by year’s

end 1992. In 1992, the New York Times

would announce ‘‘The End of I.B.M.’s

Overshadowing Role.’’ ‘‘IBM’s problems,’’ the Times noted, ‘‘are due to its

failure to realize that its core business,

mainframe computers, had been supplanted by cheap, networked PC’s and

faster networked workstations.’’ In a

desperate scramble for survival, IBM is

breaking itself into autonomous units

and spinning off some of its more successful divisions. IBM itself is only one

of many first-tier vendors of PC’s

today, with a market share of 8 percent.

The impact on the computer industry, however, has been intense competition spawning rapid technological

advancement. A $5,000 PC in 1990—featuring Intel’s 80486 running at 25 MHz—

had the processing power of a $250,000

minicomputer in the mid-1980’s, and a

million-dollar mainframe of the 1970’s.

Five years later, that same $5,000 PC is

two generations out of date—with a

third new generation on the horizon.

Systems with nearly twice the processing power of that 1990 system—using

Intel’s 486DX2–66 chip—are available

for under $1,500, and Intel runs advertisements encouraging owners of these

chips to upgrade to newer ones. Systems with more than twice the processing power of that system—featuring

Intel’s 120 MHz Pentium chip—are now

available, most for under $5,000. Intel is

currently promising faster and faster

iterations of its Pentium chips—running at 133 and 150 MHz—before it releases commercial versions of its nextgeneration P6, which promises to move

the price-performance curve astonishingly farther out than today. The computer industry is still firmly in the

grip of Moore’s Law, which holds that

the number of transistors that can be

placed on a microchip—a rough estimator of the power of the chip—doubles every 18 months.

The upshot is that consumers can

purchase systems with four times the

power of the 1980’s mainframes at onefiftieth of the price. Put another way,

systems today have over 200 times the

value of systems in 1984. By contrast,

long-distance calls today represent

only twice the value of long-distance

calls in 1984. Had price-performance

gains of the same magnitude occurred

in the long-distance market since 1984,

the results would have been equally

stunning. For example, in 1984, a 10

minute call at day rates between New

York and Los Angeles cost a little less

than $5, today it costs $2.50. Had competition and technological advances developed in the long distance market as

it did in the computer market, that

same call would cost less than 3 cents.

Alternatively, a 10 minute call from

New York to Japan—cost roughly $17

in 1984 and $14 today. Had long-distance
S7886 CONGRESSIONAL RECORD — SENATE June 7, 1995

service advanced as rapidly as the personal computer industry, that call

would cost less than 9 cents.

Third. Lessons learned:

Yet as the United States stands at

this critical crossroads—the dawn of a

new era in high technology, entertainment, information and telecommunications—America continues to operate

under an antiquated regulatory regime.

Our current regulatory scheme in

America simply does not take many

dramatic technological changes into

account.

Progress is being stymied by a morass of regulatory barriers which balkanize the telecommunications industry into protective enclaves. We need

to devise a new national policy framework—a new regulatory paradigm for

telecommunications—which accommodates and accelerates technological

change and innovation.

The very same digitization phenomenon supports the prospect of competition by telephone companies and

against telephone companies, by cable

companies and against cable companies, by long distance companies and

against long distance companies. Incumbents on opposite sides of the traditional regulatory apartheid scheme

have quite different views about which

kind of competition should come first.

If Congress cannot come to grips

with digitization and convergence, the

private sector cannot be expected to

wait. Indeed, the multifaceted deals

and alliances of the last several years

indicates that industry is not waiting.

Look at a short list of some of these

deals:

US West/Time Warner. The world’s

largest entertainment company, and

second ranking cable company,

teaming up with the RBOC for the

western United States.

AT&T/McCaw. The biggest long distance and equipment maker joining

with the biggest cellular carrier. That

came on the heels of AT&T acquiring

one of the biggest computer companies—NCR.

Sprint/Cable Alliance. The third largest long distance company—and only

company with local, long distance and

wireless capability—joining cable’s

TCI, Comcast, Cox, and Continental to

form an alliance to provide a nationwide wireless communications service—and the prospect for joining

Sprint’s broadband long distance lines

with cable’s high capacity local facilities.

Microsoft. There has been an almost

endless series of strategic alliances

being struck between Microsoft, the

world’s largest computer software company, and companies in numerous information and telecommunications

businesses for the purpose of delivering

interactive services.

HDTV Grand Alliance. The companies teaming up to bring HDTV to

America include AT&T—the largest

telecom equipment maker—General Instrument—the largest cable TV equipment maker—and Phillips—the world’s

largest TV set maker.

In addition, layered on top of these

and many other deals and alliances is

the globalization phenomenon—a

breakdown of geographic barriers: all

the RBOC’s have foreign investments;

British Telecom and MCI in partnership; Sprint planning the same with

France Telecom and Deutsche

Telecom; AT&T also working with

Singapore Telecom, Cable & Wireless’s

Hong Kong Telephone, and the Netherlands Telecom.

We can no longer keep trying to fit

everything into the old traditional regulatory boxes—unless we want to incur

unacceptable economic costs, competitiveness losses, and deny American

consumers access to the latest products and services.

Since becoming chairman of the committee I have been actively working

with leaders in the telecommunications and information industry to reform this outmoded and antiquated,

regulatory apartheid system in order

to make exciting new information,

telecommunications and entertainment services available for America.

It is time for American policymakers

to meet this new challenge much the

way an earlier generation responded

when the Russians launched Sputnik.

The response must be rooted in the

American tradition of free enterprise,

de-regulation, competition, and open

markets—to let technology follow or

create new markets, rather than Government micromanaging and stunting

developments in telecommunications

and information technology.

By reforming U.S. telecommunications policy we in Congress have an

unparalleled opportunity to unleash a

digital, multimedia technology revolution in America. By freeing American

technological know-how, we can provide Americans with immediate access

to and manipulation of a bounty of entertainment, informational, educational, and health care applications

and services.

Passing S. 652, The Telecommunications Competition and Deregulation

Act of 1995, will have profound implications for America’s economic and social welfare well into the 21st Century.

Fourth. Universal service:

An additional, but often overlooked,

reason for immediately moving forward with S. 652 and telecommunications regulatory reform concerns the

problems affecting the centerpiece of

American communications policy—

maintaining universal voice telephone

service at reasonable and affordable

prices.

The explicit subsidies—those of

known magnitude and direction—can

and should be maintained. These are

the ‘‘Universal Service Fund,’’ the

‘‘Link-Up America’’ program, and others the FCC made part of the overall

access charge system.

The implicit—or hidden—subsidies

are much more at risk. The present

scheme cannot be maintained when

new technology is changing so rapidly

and customers are provided with an

ever-increasing buffet of choices. This

implicit subsidy scheme must be reformed and fixed. We cannot afford to

wait any longer to start that reform

process.

F. WHAT S. 652 DOES: CHIEF REFORM FEATURES

First. Universal telephone service:

The need to preserve widely available

and reasonably priced telephone service is one of the fundamental concerns

addressed in The Telecommunications

Competition and Deregulation Act of

1995. The legislation as reported requires all telecommunications carriers

to contribute to the support of universal service. Only telecommunications

carriers designated by the FCC or a

State as ‘‘essential telecommunications carriers’’ are eligible to receive

support payments.

The bill directs the FCC to institute

and refer to a Federal-State joint board

a proceeding to recommend rules to

implement universal service and to establish a minimum definition of universal service. A State may add to the

definition for its local needs.

Second. Local telephone competition:

The Telecommunications Competition and Deregulation Act of 1995 reforms the regulatory process to allow

competition for local telephone service

by cable companies, long distance companies, electric companies, and other

entities.

Upon enactment the legislation preempts all State and local barriers to

competing with the telephone companies. In addition it requires local exchange carriers [LEC’s] having market

power to negotiate, in good faith,

interconnection agreements for access

to unbundled network features and

functions at reasonable and nondiscriminatory rates. This would allow

other parties to provide competitive

local telephone service through interconnection with the LEC’s facilities.

The bill establishes minimum standards relating to types of interconnection that a LEC with market power

must agree to provide if requested, including: unbundled access to network

functions and services, unbundled access to facilities and information, necessary for transmission, routing, and

interoperability of both carriers’ networks, interconnection at any technologically feasible point, access to poles,

ducts, conduits and rights-of-way, telephone number portability, and local dialing parity.

As an assurance that the parties negotiate in good faith, either party may

ask the State to arbitrate any differences, and the State must review

and approve any interconnection agreement.

The bill requires that a Bell company

use a separate subsidiary to provide

certain information services, equipment manufacturing, in-region

interLATA services authorized by the

FCC, and alarm monitoring. In addition a Bell company may not market a

subsidiary’s service until the Bell company is authorized by the FCC to provide in-region interLATA services.
June 7, 1995 CONGRESSIONAL RECORD — SENATE S7887

S. 652 also ensures that regulations

applicable to the telecommunications

industry remain current and necessary

in light of changes in the industry.

First, the legislation permits the FCC

to forbear from regulating carriers

when forbearance is in the public interest. This will allow the FCC to reduce

the regulatory burdens on a carrier

when competition develops, or when

the FCC determines that relaxed regulation is in the public interest. Second,

the bill requires a Federal-State joint

board to periodically review the universal service policies. Third, the FCC,

with respect to its regulations under

the 1934 act, and a Federal-State joint

board with respect to State regulations, are required in odd-numbered

years beginning in 1997 to review all

regulations issued under the act or

State laws applicable to telecommunications services. The FCC and joint

board are to determine whether any

such regulation is no longer in the public interest as a result of competition.

The bill modifies the foreign ownership restrictions of section 310 of the

1934 act, if the FCC determines that the

applicable foreign government provides

equivalent market opportunities to

U.S. citizens and entities.

The bill also requires that equipment

manufacturers and telecommunications service providers ensure that

telecommunications equipment and

services are accessible and usable by

individuals with disabilities, if readily

achievable, a standard found in the

Americans with Disabilities Act.

Third. Long distance relief for the

Bell companies:

The Telecommunications Competition and Deregulation Act of 1995 establishes a process under which the regional Bell companies may apply to

the FCC to enter the long distance or

interLATA market. Since the 1984

breakup of AT&T, the Bell companies

have been prohibited from providing

services between geographical areas

known as LATAs, [Local Access and

Transport Areas]. The legislation

reasserts congressional authority over

Bell company provision of long distance and restores the FCC authority

to set communications policy over

these issues. The Attorney General has

a consulting role.

The reported bill requires Bell local

companies and other LEC’s having

market power to open and unbundle

their local networks, to increase the

likelihood that competition will develop for local telephone service. It

also sets forth a competitive checklist

of unbundling and interconnection requirements.

If a Bell company satisfies the competitive checklist, the FCC is authorized to permit the Bell company to provide interLATA services originating in

areas where it provides wireline local

telephone service, if the FCC also finds

that Bell company provision of such

interLATA service is in the public interest. Out-of-region interLATA services may be provided by Bell companies

upon enactment.

S. 652 allows the Bell companies to

provide interLATA services in connection with the provision of certain other

services immediately, with safeguards

to ensure that the Bell companies do

not use this authority to provide otherwise prohibited interLATA services.

For example the reported bill requires

a Bell company to lease facilities from

existing long distance companies if it

uses interLATA service in the provision of wireless services and certain information services.

Finally, the bill requires a Bell company providing in-region interLATA

service authorized by the FCC to use a

separate subsidiary for such services.

Fourth. Manufacturing authority for

the Bell companies:

The judicial consent decree that governed the breakup of AT&T in 1984, the

MFJ, also prohibited the Bell companies from manufacturing telephones

and telephone equipment. The AT&T

breakup itself, the globalization of the

communications equipment market,

the concentration of equipment suppliers, the increasing foreign penetration

of the U.S. market, and the continued

dispersal of equipment consumption

have greatly diminished any potential

market power of the Bell companies

over the equipment market.

The bill permits a Bell company to

engage in manufacturing of telecommunications equipment once the

FCC authorizes the Bell company to

provide interLATA services. A Bell

company can engage in equipment research and design activities upon enactment.

In conducting its manufacturing activities, a Bell company must comply

with the following safeguards:

A separate manufacturing affiliate.

Requirements for establishing standards and certifying equipment.

Protections for small telephone companies—a Bell manufacturing affiliate

must make its equipment available to

other telephone companies without discrimination or self-preference as to

price delivery, terms, or conditions.

Fifth. Cable competition, video

dialtone and direct-to-home satellite

services:

The bill permits telephone companies

to compete against local cable companies upon enactment, although until 1

year after enactment the FCC would be

required to approve Bell company plans

to construct facilities for common carrier video dialtone operations. The bill

also removes at enactment all State or

local barriers to cable companies providing telecommunications services,

without additional franchise requirements.

The reported bill does not require

telephone companies to obtain a local

franchise for video services as long as

they employ a video dialtone system

that is operated on a common carrier

basis, that is, open to all programmers.

If a telephone company provides service over a cable system—that is, a system not open to all programmers—the

telephone company will be treated as a

cable operator under title VI of the 1934

act.

Whether a telephone company uses a

video dialtone network or a cable system, it must comply with the same

must-carry requirements for local

broadcast stations that currently apply

to cable companies. A separate subsidiary is not required for a Bell company

carrying or providing video programming over a common carrier platform

if the company provides nondiscriminatory access and does not cross-subsidize its video operations.

The bill maintains rate regulation

for the basic tier of programming

where the cable operator does not face

effective competition—defined as the

provision of video services by a local

telephone company or 15 percent penetration by another multichannel video

provider. The bill minimizes regulation

of expanded tier services.

Specifically the bill eliminates the

ability of a single subscriber to initiate

at the FCC a rate complaint proceeding

concerning expanded tier services. In

addition, the FCC may only find rates

for expanded tier service unreasonable,

and subject to regulation, if the rates

substantially exceed the national average rates for comparable cable programming services.

States may impose sales taxes on direct-to-home satellite services that

provide services to subscribers in the

State. The right of State and local authorities to impose other taxes on direct-to-home satellite services is limited by the bill.

Sixth. Entry by registered utilities

into telecommunications:

Under current law, gas and electric

utility holding companies that are not

registered may provide telecommunication services to consumers. There

does not appear to be sufficient justification to continue to preclude registered utility holding companies from

providing this same competition.

The bill provides that affiliates of

registered public utility holding companies may engage in the provision of

telecommunications services, notwithstanding the Public Utility Holding

Company Act of 1935. The affiliate engaged in providing telecommunications

must keep separate books and records,

and the States are authorized to require independent audits on an annual

basis.

Seventh. Alarm services:

The bill prohibits a Bell company

from providing alarm monitoring services. Beginning 3 years after enactment, a Bell company may provide

such services if it has received authorization from the FCC to provide in-region interLATA service. The bill requires the FCC to establish rules governing Bell company provision of

alarm monitoring services. A Bell company that was in the alarm service

business as of December 31, 1994 is allowed to continue providing that service, as long as certain conditions are

met.
S7888 CONGRESSIONAL RECORD — SENATE June 7, 1995

Eighth: Spectrum flexibility and regulatory reform for broadcasters:

If the FCC permits a broadcast television licensee to provide advanced television services, the bill requires the

FCC to adopt rules to permit such

broadcasters flexibility to use the advanced television spectrum for ancillary and supplementary services, if the

licensee provides to the public at least

one free advanced television program

service. The FCC is authorized to collect an annual fee from the broadcaster

if the broadcaster offers ancillary or

supplementary services for a fee to subscribers.

A single broadcast licensee is permitted to reach 35 percent of the national audience, up from the current 25

percent. Moreover, the FCC is required

to review all of its ownership rules biennially. Broadcast license terms are

lengthened for television licenses from

5 to 10 years and for radio licenses from

7 to 10 years. Finally, new broadcast license renewal procedures are established.

Ninth. Obscenity and other wrongful

uses of telecommunications:

The decency provisions in the reported bill modernize the protections

in the 1934 act against obscene, lewd,

indecent, and harassing use of a telephone. The decency provisions increase

the penalties for obscene, harassing,

and wrongful utilization of telecommunications facilities, protect

families from uninvited cable programming which is unsuitable for children,

and give cable operators authority to

refuse to transmit programs or portions of programs on public or leased

access channels which contain obscenity, indecency, or nudity.

The bill provides defenses to companies that merely provide transmission

services, navigational tools for the

Internet, or intermediate storage for

customers moving material from one

location to another. It also allows an

on-line service to defend itself in court

by showing a good-faith effort to lock

out adult material and to provide

warnings about adult material before it

is downloaded.

G. THE DEREGULATORY NATURE OF S. 652

Ronald Reagan once joked—in the

midst of a debate over the budget—that

the only reason Our Lord was able to

create the World in 6 days was that he

didn’t have to contend with the embedded base.

I have been wrestling with the communications issues since I came to

Congress. We all have. This has become

the congressional equivalent of Chairman Mao’s famous ‘‘Long March.’’

Nothing in the field is easy. We are

dealing with basic services—telephone,

TV, and cable TV—that touch virtually

every American family. We are dealing

with massive investment—more than

half a trillion dollars. We are dealing

with industries which provide almost

two million American jobs. We are

dealing with high-tech enterprises that

are critical to the future of the American economy, and our global competitiveness.

The stakes are high for everyone.

And it is the sheer number of issues

and concerns that accounts for the

complexity of any legislation.

First. A major step forward:

But let me talk briefly about some of

the major steps forward which are envisioned in this bill.

When the former head of the National Telecommunications & Information Administration testified before

the Senate, he commented that, ‘‘Everything in the world is compared to

what.’’

Well, virtually all of the bills which

the Senate or the House has dealt with

over the past generation took the concept of regulated monopoly as a given.

Whether we are talking about Congressman Lionel Van Deerlin’s bill,

H.R. 1315 in the House in the 1970’s; or

Senator PACKWOOD’s effort back in

1981—S. 898: All of these bills assumed

that monopoly, like the poor, would always be with us.

Second. A paradigm shift:

My bill changes that. Instead of conceding that concern, this bill:

Removes virtually all legal barriers

to competition in all communications

markets—local exchange, long distance, wireless, cable, and manufacturing.

It establishes a process that will require continuing justification for rules

and regulations each 2 years. Every 2

years, in other words, all the rules and

regulations will be on the table. If they

don’t make sense, there is a process established to terminate them.

It restores full responsibility to Congress and the FCC for regulating communications. Under the bill that the

House passed last spring, for example,

you would have still had a substantial,

continuing involvement in communications policy on the part of the Justice

Department and the Federal courts.

This bill brings the troops home.

Third. Genuinely deregulatory:

I understand the concerns that some

of my colleagues have raised. Senator

MCCAIN has raised the question of

whether this bill is deregulatory

enough. Senator PACKWOOD has asked if

we could not speed up the transition to

full, unregulated competition. These

are valid concerns.

But let me highlight some of the deregulatory steps which this bill makes

possible now.

First, it will make it possible for the

FCC immediately to forebear from economically regulating each and every

competitive long-distance operator.

The Federal courts have ruled that the

FCC cannot deregulate. This bill solves

that problem and makes deregulation

legal and desirable.

Second, this bill envisions removing

a whole chunk of unnecessary cable

television price controls now. We leave

the power to control basic service

charges, until local video markets are

more competitive. But the authority to

regulate the nonbasic services, the expanded tiers, is peeled back. That represents a major step toward deregulation and more reliance on competitive

markets.

Third, this bill contains a competitive checklist for determining Bell Co.

entry into currently prohibited markets like long distance and manufacturing. After Bell companies satisfy all

the requirements, the FCC must, in effect, certify compliance by making a

public interest determination.

This is not—contrary to some allegations—more regulation. At least one of

the Bell companies—NYNEX—can

probably fulfill all the checklist’s requirements very soon, because State

regulators have already required that

company to make the most of the necessary changes in the way it does business. The bill also explicitly says that

the competitive checklist cannot be expanded.

So, if you read all the provisions in

the bill in context, you will see that

there simply is no broad grant of discretion to the Federal or State regulators here. We have essentially spelled

out the recipe for competition, and it is

incumbent on them to follow it.

Fourth.—Future orientation:

Let me mention another critical aspect of this bill, it is future oriented.

Too many of the earlier measures

were focused on the status quo. What

they basically did was rearrange existing markets and services. The 1984 and

1992 Cable Television Acts, for instance, did not take steps to encourage

competition, it kept in place all the restrictions on telephone company and

broadcast competition. Moreover, the

1984 Cable Act also maintained exclusive franchising for cable television.

This bill essentially seeks to change

that focus. We assumed that cable television might become an effective competitor to local phone companies, for

instance, so we sought to get rid of any

regulations that would block that. We

also assumed that local phone companies might be effective cable competitors, so we tried to get rid of restrictions on that kind of competition.

In the case of broadcasting, we recognized that this important industry is

going to need much more flexibility to

compete effectively in tomorrow’s multichannel world. So, we will allow

broadcasters to offer more than just

pictures and sound as well as multiple

channels of pictures and sound, if they

so choose. Under this bill, they will

have the flexibility they need to compete in evolving markets.

Fifth. Safeguarding core values:

This bill is aggressively deregulatory. It seeks to achieve genuine, longterm reductions in the level and intensity of Federal, State and local governmental involvement in telecommunications.

But this bill is also responsibly deregulatory. When it comes to maintaining universal access to telecommunications services, for instance,

it does that, It establishes a process

that will make sure that rural and
June 7, 1995 CONGRESSIONAL RECORD — SENATE S7889

small-town America doesn’t get left in

the lurch.

This bill also maintains significant

Federal oversight. Telecommunications, remember, isn’t like trucking,

or railroads, or airline transportation.

The services we are talking about here

are marketed and consumed directly by

the public.

This bill seeks to advance core values. I know that the Exon Amendment—which places limits on obscene

and indecent computer communications—has sparked controversy. All

that amendment actually does is apply

to computer communications the same

guidelines and limitations which already apply to telephone communications.

Sixth. Further responsibility:

This bill also recognizes the fact that

deregulation is always a gradual, transitional process—and that Congress has

the responsibility to stay involved.

All of us know that good legislation

is only one facet of the overall deregulatory process. Other requirements are

careful scrutiny of budgets, of appointments to the FCC and other agencies,

and effective Congressional oversight.

No one should try to fool themselves

into believing that we can get away on

the cheap. We can’t.

If we are serious about deregulating

this marketplace and—more importantly—expanding the range of competitive choices available to the American public, Congress is going to have

to stay a central player.

Seventh. Summary of affirmative aspects:

Let me summarize, then, what I see

as very positive, affirmative aspects of

this bill:

First, it dispenses with the old government-sanctioned monopoly model

and replaces it with a process of open

access which will lead to more competition across-the-board, in every part

of the communications business. It

flattens all regulatory barriers to market entry in all telecommunications

markets. The more open access takes

hold, the less other government intervention is needed to protect competition. Open access is the principle establishing a fair method to move local

phone monopolies and the oligopolistic

long distance industry into full competition with one another. Completion

of the steps on the pro-competitive

checklist will give both the long distance firms and the local telephone

companies confidence that neither side

is gaming the system.

Second, it eliminates a number of unnecessary rules and regulations now—

by giving the FCC the discretion to

forebear from regulating competitive

communications services, by removing

unneeded, high-tier, cable price controls.

Third, it establishes a process for

continuing attic-to-basement review of

all regulations on a 2 year cycle.

Fourth, it seeks to create an environment that is more conducive to more

new services and more competitors—by

allowing broadcasters and cable operators, for instance, greater competitive

flexibility, and giving local and long

distance phone companies more

chances to compete as well.

Fifth, it terminates the involvement

of the Justice Department and the Federal courts in the making of national

telecommunications policy.

Sixth, the bill emphasizes effective

competition while also safeguarding

core values, such as universal service

access and limitations on indecency;

and,

Finally, it maintains the responsibility of Congress to continue to work

through the budget, oversight, and confirmation processes to move this critical sector toward full competition and

deregulation.

H. BENEFITS OF S. 652

In General. Competition and deregulation in telecommunications as a result of the Pressler Bill means:

Lower prices for local, cellular, and

long distance phone service, and lower

cable television prices, too.

More and less costly business and

consumer electronics to make U.S.

business more competitive and American citizens better informed.

Expanded customer options, as business is spurred to bring new technology

to the marketplace faster. In addition

to more choices for long distance, cellular, broadcast, and other services

where competition already exists, competition and choice in local phone and

cable services will be introduced.

High technology jobs with a future

for more Americans, economic growth,

and continued U.S. leadership in this

critical field. The President’s Council

of Economic Advisors estimates that

deregulating telecommunications laws

will create 1.4 million new jobs in the

services sector of the economy alone by

the year 2003. In a Bell Company funded study, WEFA concluded that telecommunications deregulation would

cause the U.S. economy to grow 0.5 percent faster on average over the next 10

years, creating 3.4 million new jobs by

the year 2005, and generating a cumulative increase of $1.8 trillion in real

GDP. Finally, George Gilder has estimated $2 trillion in additional economic activity with the Pressler Bill.

More exports of high-value products,

and greater success on the part of U.S.-

based telecommunications equipment

$10.25 billion, and services $3.3 billion,

companies as well as computer equipment $29.2 billion, companies as they

leverage their domestic gains to make

more sales overseas.

In Media. Competition and deregulation in electronic media including

broadcasting, cable, and satellite services means:

More Networks and Channels. In the

early 1970s, there were three national

TV networks and virtually no cable

systems. Today, there are 6 national

TV networks, plus 10,000 cable TV systems serving 65 percent of American

homes—96% have the cable option—

with DBS now offering digital service

to millions more. The average American family now has access to some 30

video channel choices. Much more is on

the way if the Pressler Bill is enacted

into law.

More News and Public Affairs. Cable

deregulation—spurred by satellite communications deregulation—made more

news and public affairs programming

available. CNN, C–SPAN, and ESPN are

prime examples. Local all news channels and local C–SPAN-oriented programming is on its way if deregulation

occurs.

More Jobs. Relaxing broadcast rules

and regulations—spurred by the growth

of cable TV—made it possible for some

300 new TV and 2,000 new radio outlets

to emerge. This created 10,000 new jobs

in broadcasting.

Small town and rural America parity. Satellites and cable TV service

means small town and rural Americans

command nearly the same media

choices only big city residents once enjoyed. This democratization has

spurred public awareness of national

and international events—as well as

encouraged fuller participation in the

political process.

Political shift. Satellites, cable, talk

radio, and C–SPAN, which were a specific result of deregulation and competition in communications, were

prime ingredients to last year’s landmark national political shift. Further

decentralization of media control

through deregulation will accelerate

this democratization phenomenon.

In telephone service. Competition

and deregulation in the telephone business means:

Lower prices. Deregulation of phone

equipment resulting in faster deployment of advanced equipment has made

it possible to reduce local phone rates

by $4 billion since 1987. More long distance competition has meant nearly

$20 billion in price cuts since 1987. Virtually all Americans now have far

more choices in phone equipment and

long distance service—and with the

Pressler Bill will see choices in local

phone services.

New options. Sixty million American

families now have cordless phones.

Twenty-five million now have cellular

phones. Fifty million have answering

machines. Twenty million have pagers.

Deregulation has allowed technology

to evolve to meet the demands of an increasingly mobile society.

Special benefits. Cellular phones

have helped millions of American

women feel safer and more secure.

They have made it possible to drive

safely under even the most severe

weather conditions, because now help

can be called.

Computer services. Competition and

deregulation in telecommunications

will speed the deployment of the socalled information superhighway. Currently, 40 percent of American homes

have a personal computer. Computers

are ubiquitous for American business.

There is one school computer for every

nine students. Competition and deregulation will mean new communications
S7890 CONGRESSIONAL RECORD — SENATE June 7, 1995

facilities that will magnify the power

of these computers.

International competitiveness. Telecommunications is a prime leverage

technology. Competition and deregulation expands business access to this

new technology. That makes American

business more competitive globally.

Deregulation also spurs U.S. production and export of high value-added

products like computers, advanced

telephone switches, mobile radios, and

fiber optics. Each dollar invested in

telecommunications results in $3 of

economic growth.

For agriculture. For agriculture,

competition and deregulation in communications means:

Efficiency. Farms today are the most

technology-intensive small businesses.

American farmers will be able to harness computer, communications, and

satellite technology to stay the world’s

most efficient lowest cost food producers.

Integration with the national community. Communications advances

help integrate the farm community

with Americans nationwide. Farm families will have the same news, public

affairs, and entertainment choices

nearly any American does.

Distance learning/telemedicine.

Schools in small town and rural areas

will be able to offer the same schooling

options as those in the suburbs and

major cities. Telemedicine systems

will improve the quality of health care

available in small town and rural

America, especially for the home

bound elderly in our society.

More jobs. Deregulation means more

modern communications systems as

costs drop for small town and rural

areas which, in turn, help these areas

attract and retain businesses and jobs.

Communications deregulation in Nebraska meant thousands of new jobs for

the State. Deregulation in North Dakota did the same—one of the country’s biggest travel agencies now operate out of Linder and employs several

hundred local people.

For Government. For Government

agencies, competition and deregulation

in telecommunications means:

Better service. With voice mail,

smart phone services—for example, to

renew your library book, press 1, facsimile, and electronic mail, Federal,

State and local agencies will be able to

provide the public better service.

Reduced cost. Technology through

deregulation and competition also

helps Government curb costs. Taxpayers thus get better service without

having to pay more. The right-sizing of

Government agencies is made possible.

Responsiveness. Using all the latest

communications technologies, Government offices will be able to greatly expand their constituent services, including here on Capitol Hill.

For business. For business, competition and deregulation in telecommunications means:

No geographical disadvantage. The

ability to locate businesses away from

center cities, and to allow many workers, especially working mothers, to

telecommute thus reducing urban traffic congestion, pollution problems, and

easing child care problems.

Expanding markets. Fax, 800-numbers, United Parcel, and Federal Express have made it possible for even the

smallest companies today to compete

on a state-wide, regional, national, and

even international scale.

Working smarter. Satellite networks,

computerized point-of-sale terminals—

cash registers—and computerized inventory systems often linked directly

to suppliers make it possible for U.S.

retailers and other businesses to stay

very competitive without being overstocked or understocked. Technology

which will be made more available

through deregulation has also allowed

stores to operate in once remote areas.

Wal-Mart has become America largest

retailer, despite its largely rural origins, chiefly because the company was

able to harness the best in contemporary communications.

For educators. For educators, competition and deregulation in telecommunications means:

Greater parity. Students in small

town and rural America, and in inner

cities, will be able to access the same

information and instructional resources only wealthy suburban districts have. Advanced math, science,

and foreign language courses that

many schools could not offer previously are available through telecommunications. This reduces the

pressures to close or consolidate small

town and rural schools and other institutions, which helps communities

maintain their unique local character.

Lower costs. Competition lowers the

cost of telecommunications equipment

and services. This makes it possible for

schools to adopt communications techniques without needing to expand

budgets and local taxes.

For law enforcement. For law enforcement, competition and deregulation in telecommunications means:

Efficiencies. Communications equipment prices will continue to fall. Police will be able to afford to buy on

board computers, advanced

radiocommunications, and other hightech systems. This magnifies the effectiveness of law enforcement budgets.

Better coordination. Advanced communications and computer systems

will result in far better coordination

among Federal, State, and local law

enforcement agencies. Nationwide

criminal records, drunk driving, stolen

car, and other checks can be undertaken quickly and cheaply. This means

law breakers will face a higher risk of

apprehension, which means a stronger

deterrent against crime.

Personal security. Advanced computer and communications technology

place home security systems within

reach of more and more American families. Easier access to cellular phones

will help Americans stay safer and feel

more secure. At the same time, these

telecommunications and information

technologies help police, fire department and emergency medical services

drastically reduce response times. In

the case of emergency medical services

far better on-the-spot service will be

provided.

For South Dakota and other small

city and rural areas:

The bill is designed to rapidly accelerate private sector development of advanced telecommunications and information technologies and services to all

Americans by opening all telecommunications markets to competition.

Recent series of television commercials have shown people sending faxes

from the beach, having meetings via

computer with people in a foreign

country, using their computer to

search for theater tickets and a host of

other services that soon will be available. My bill would make those services available even sooner by removing

restrictive regulations.

A person living in Brandon could

work at a job in Minneapolis or Chicago, students in Lemmon would be

able to take classes from teachers in

Omaha, and doctors in Freeman could

consult with specialists at the Mayo

Clinic. Telecommunications can bring

new economic growth, education,

health care and other opportunities to

South Dakota.

Competition in the information and

communications industries means

more choices for people in South Dakota. It will also mean lower costs and

a greater array of services and technologies. For instance, competing for

customers will compel companies to

offer more advanced services like caller

ID or local connections to on-line services such as Prodigy and America OnLine.

It hasn’t been that long since Ma Bell

was everyone’s source for local phone

service, long-distance service, and

phone equipment. Now there are over

400 long-distance companies and people

can buy phone equipment at any department or discount store. Under my

bill, eventually people would be able to

choose from more than one local phone

service or cable television operator.

This new competition also should

lead to economic development opportunities in South Dakota. People will be

able to locate businesses in towns like

Groton and Humboldt and serve customers in Hong Kong or New York

City. We are entering an exciting era. I

want to spur growth and bring new opportunities to South Dakota and everywhere in America.

J. CONCLUSION

S. 652 is legislation providing for the

most comprehensive deregulation in

the history of the telecommunications

industry.

Enacting this bill means ending regulatory apartheid. Under the Communications Act of 1934 and the Federal

judiciary’s Modification of Final Judgment, sectors of the communications

industry are forcibly separated and
June 7, 1995 CONGRESSIONAL RECORD — SENATE S7891

segregated. This created Governmentimposed and sanctioned monopoly

models for the telecommunications

sector.

S. 652 tears down all the segregation

barriers to competition and ends the

monopoly model for telecommunications. It opens up unprecedented new

freedom for access, affordability, flexibility, and creativity in telecommunications and information products and

services.

Passing S. 652 will hasten the arrival

of a powerful network of two-way

broadband communications links for

homes, schools, and small and large

businesses. For my home State of

South Dakota, and other States away

from the big population centers, this

reform bill will make the Internet and

other computer communications more

easily accessible and affordable.

Local phone companies, long-distance phone companies, cable TV systems, broadcasters, wireless and satellite communications entities, and

electric utility companies all will gain

freedom to compete with one another

in the communications business.

S. 652 is not only a deregulation bill,

it is a procompetitive bill. There is an

important distinction. The 1984 Cable

Act; for instance, deregulated rates for

the cable industry but explicitly kept

intact the barriers keeping telephone,

electric companies, broadcasters, and

others from competing for cable TV

service. Keeping the monopoly model

in place while lifting the lid on prices

led directly to a backlash and reregulation in the Cable Act of 1992.

This reform law will open the door

for billions of dollars of new investment and growth. The United States is

the world leader in telecommunications products, software, and services. Still, we labor under self-defeating limits on our ability to grow at

home and compete abroad. Most foreign countries retaliate for the strict

U.S. limits on foreign investment. This

keeps us out of markets where we

would have the natural competitive advantage and leaves them open to our

competitors. Telecommunications innovation and productivity is flourishing in such countries as the United

Kingdom, which has eliminated many

barriers to foreign investment. The

new legislation will lift limits on foreign investment in U.S. common carrier enterprises on a fair, reciprocal

basis.

To maintain our world leadership position we need new legislation. S. 652

will improve international competitiveness markedly by expanding exports. In 1994, according to the Department of Commerce, telecommunications services—local exchange, long

distance, international, cellular and

mobile radio, satellite, and data communications—accounted for $3.3 billion

in exports. Telecommunications equipment—switching and transmission

equipment; telephones; facsimile machines; radio and TV broadcasting

equipment, fixed and mobile radio systems; cellular radio telephones; radio

transmitters, transceivers and receivers; fiber optics equipment; satellite

communications systems; closed-circuit and cable TV equipment—accounted for $10.25 billion in exports. Finally, computer equipment accounted

for $29.2 billion in exports. With this

new legislation, telecommunications

and computer equipment and services

will be America’s No. 1 export sector.

S. 652 will spur economic growth, create new jobs, and substantially increase productivity. As noted earlier,

each dollar invested in telecommunications results in 3 dollars’ worth of

economic growth. The Clinton/Gore administration estimates that with telecommunications deregulation the telecommunications and information sector of the economy would double its

share of the GDP by 2003 and employment would rise from 3.6 million today

to 5 million by 2003. The WEFA Group,

in a Bell Company funded study, stated

that with telecommunications deregulation 3.4 million jobs would be created

in the next 10 years. In addition, the

GDP would be approximately $300 billion higher, and consumers would save

approximately $550 billion. Finally,

George Gilder recently testified before

the Senate Commerce Committee that

if telecommunications deregulation

like that contemplated in S. 652 does

not take place, America will lose up to

$2 trillion in new economic activity in

the 1990s.

S. 652 will also assist in delivering

better quality of life through more efficient provision of educational, health

care and other social services. Distance

learning and telemedicine applications

are especially important in rural and

small city areas of America. With the

advent of digital wireless technologies

the cost of providing service will be

lowered tenfold thus closing the gap

between the costs of serving urban and

rural areas.

If we in Congress do our job right, by

passing this legislation, we have the

potential to be America’s new hightech pioneers—an opportunity to explore the new American frontier of

high-tech telecommunications and

computers that will be unleashed

through bold free enterprise, de-regulatory, procompetitive, open entry

policies. By taking a balanced approach which doesn’t favor any industry segment over any other, we will

First, stimulate economic growth, jobs,

and capital investment; second, help

American competitiveness; third, minimize transitional inequities and dislocations; and fourth, actually do

something very good for universal service goals.

Mr. President, on March 28, the Committee on Commerce, Science, and

Transportation voted 17 to 2 to report

S. 652, the Telecommunications Competition and Deregulation Act of 1995.

Telecommunications policy usually

rates attention on the business pages,

not as a front-page story. Still, for the

average American family, legislation

to reform regulations of our telephone,

cable, and broadcasting industries is

surely one of the most important matters the 104th Congress will consider.

OPEN, DELIBERATE PROCESS

Mr. President, this reform legislation

was years in the making. It is the

handiwork of numerous Senators from

both parties, who have shared a common recognition that our laws are outdated and anticompetitive.

The recent hearing process which informed the Commerce Committee and

led to development of S. 652 began in

February 1994. During 1994 and 1995 the

Commerce Committee held 14 days of

hearings on telecommunications reform. The committee heard testimony

from 109 witnesses during this process.

The overwhelming message we received

was that Americans want urgent action to open up our Nation’s telecommunications markets.

At the beginning of the 104th Congress, on January 31 of this year, I circulated a discussion draft of a telecommunications deregulation bill

which reflected ideas from all the Republican members of the Commerce

Committee. I invited the comments of

ranking Democratic member HOLLINGS

and other Democratic members. In just

2 weeks time, Senator HOLLINGS presented a comprehensive response. He

has been a tremendous ally in this effort, as have many of my colleagues on

the committee.

Senator HOLLINGS and I and Democratic and Republican members of the

committee, together with the majority

and minority leaders, then engaged in

an open, deliberate, productive process

of discussion and negotiation.

Mr. President, it is accurate to say

that staff from both parties have

worked night after night, weekend

after weekend, with scarcely any respite, since before Christmas on this

bill.

Mr. President, just as it won overwhelming bipartisan support in committee, S. 652 deserves passage by a

strong bipartisan vote here on the floor

of the Senate.

When I travel around my State of

South Dakota and see the craving for

distance learning, for telemedicine, for

better access to the Internet and the

other networks taking shape to improve our productivity and quality of

life, it helps me understand the need

for this legislation, the need to work

and fight for this reform.

Mr. President, the obstacles for

progress in telecommunications are

not technical. They are political. We

have it in our power to tear those obstacles down. S. 652 does a substantial

part of the job of tearing them all

down.

RESTORING CONGRESSIONAL RESPONSIBILITY

S. 652 returns responsibility for communications policy to Congress after

years of micromanagement by the

courts. This bill will terminate judicial

control of telecommunications policy,

in particular, Federal Judge Harold
S7892 CONGRESSIONAL RECORD — SENATE June 7, 1995

Greene’s ‘‘Modification of Final Judgment’’ regime which has governed the

telephone business since the breakup of

AT&T in 1984.

When the courts control policy, they

are restricted to narrow considerations. Congress, on the other hand,

takes into account a whole range of

economic and social implications in establishing a national policy framework. S. 652 provides such an approach

to telecommunications reform.

Piecemeal policymaking by the

courts severely delays productive economic activity. The average waiver

process before the Department of Justice and the court takes an average of

41⁄2 to 5 years to complete. Such delays

cause uncertainty in markets and significantly reduce investment in telecommunications, an increasingly vital

sector of our economy.

PROFOUNDLY PRO-CONSUMER

Our electronic media are in a creative tumult known as the digital revolution. New technology is erasing old

distinctions between cable TV, telephone service, broadcasting, audio and

video recording, and interactive personal computers. In many instances,

the only thing standing in the way of

consumers and businesses enjoying

cheaper and more flexible telecommunications services are outdated

laws and regulations.

Mr. President, S. 652 is profoundly

proconsumer. The bill breaks up monopolies—that’s proconsumer. The bill

sweeps away burdensome regulations.

This will lower consumer costs—that’s

proconsumer.

The bill opens up world investment

markets for the U.S. telecommunications business. The impact will be

more jobs, new services, lower costs—

that’s proconsumer.

Mr. President, American consumers

and businesses want to enjoy the full

benefits of the digital revolution. They

want more communicating power,

more services, more openings, and

lower prices. They want wide-open

competition.

It is possible for Americans to have

all of these. The obstacles in their way

are not technical. We have the most

powerful economy, the most advanced

technological base in the world. The

obstacles are political.

The information industry already

constitutes one-seventh of the U.S.

economy. Worldwide, the information

marketplace is projected to exceed $3

trillion by the close of the decade. Today’s Federal laws prevent different

media from competing in one another’s

markets, although they have the technical ability to do so.

The regional Bell operating companies are protected with monopoly status in the local residential phone service markets. But they are barred from

manufacturing phone equipment, offering long-distance service, or competing

in a cable video market. Cable companies, though technically capable, are

forbidden to offer competing phone

service.

The status quo preserves monopolies

and keeps American consumers from

access to an array of products and service options. The existing system of law,

regulation, and court decrees, holds

back the American telecommunications industry from its full potential

to compete in world markets.

S. 652 would change all this. It would

bring about the most fundamental

overhaul of communications policy in

more than 60 years. It will break up the

monopolies and increase competition.

S. 652 immediately lifts regulations

barring local telephone companies’

entry into cable service and cable’s

entry into the local phone business.

It allows electric utilities to offer

service in both the phone and cable

markets, and provides fair, effective,

and rapid means to make certain that

local Bell companies abandon all

vestiges of monopoly. Then it allows

those companies into the long-distance

and phone equipment manufacturing

markets.

This bill ends decades of protectionism in the telephone investment markets. This will help assure access to

capital to build the Nation’s next generation informational networking.

On a reciprocal basis, it will give

Americans more freedom to profit by

making major investments in the telecommunications projects of growing

markets abroad. For households and

business in my home State of South

Dakota and all around the Nation, S.

652 means lower prices for local, cellular, and long-distance phone service

and lower cable television prices, too.

The new competition also will spur

companies to bring new technology and

services to the marketplace faster.

Phone customers would be assured

the same number of digits and the

same listing in directory assistance

and the white pages, whether they

choose the local Bell company or a new

competitor. What is more, phone numbers will be portable. A customer will

keep the same number even if he or she

moves among phone companies to get

better prices.

S. 652 promotes competition in cable

markets while protecting consumers

from surges in rates. The outcome, I

fully expect for consumers, perhaps as

soon as a year from enactment of the

bill, is plentiful competition and low

rates without Federal controls.

Freeing business from overregulation

is creative and it is proconsumer.

There was heavy skepticism 15 years

ago about deregulating natural gas

prices, but look at the results. I remember I was in the House of Representatives in those days and everybody said if we deregulate natural gas,

prices are going to soar. They did not.

They went down. Natural gas prices are

lower than ever.

Now consider how dramatic the difference in proconsumer advances have

been between an unregulated part of

the information sector—personal computers—compared with the heavily-regulated telephone sector.

The personal computer success story

is especially important in my State of

South Dakota. Because a firm that was

a tiny start-up in South Dakota a few

years ago, Gateway 2000, is now a

major player in personal computer

markets. It is one of the quality leaders in home computing products.

Computer industry entrepreneurs

were free to gamble on the personal

computer. No Federal or State regulator told them what they could and

could not build, what specifications

they had to meet, what markets to target. Market competition was fierce.

Technological progress was breathtaking.

By 1990, the upstart personal computer industry was selling for $5,000 a

computer with as much processing

power as a $250,000 minicomputer of the

mid-1980’s, more than that of a milliondollar mainframe of the 1970’s. Now

personal computers with more than

twice the processing power are available for $1,500.

The upshot, in terms of price and

power, is that today’s computer systems have over 200 times the value of

systems in 1994. Even with the historic

breakup of the AT&T long-distance

monopoly, the telephone business has

remained heavily regulated, and consumers have gained value. In 1984, a 10-

minute call from New York to Los Angeles cost $5. Today it cost $2.50. It

should cost less, and will cost less.

If competition and technological advances have developed in the long-distance market, as they had in the computer market over the same period,

that same phone call would cost less

than 3 cents today, rather than $2.50.

Three cents.

The regulatory status quo needs

shaking up. That is what S. 652 would

do. It would do less for big existing

companies than for the businesses and

services that are still waiting to be created, and many of those will be small

businesses. Most important, it would

help bring about an explosion of new

job opportunities and services for the

American people.

Let me take just a moment to describe in detail the key reforms in S.

652. First, universal telephone service,

the need to preserve widely available

and reasonably priced services is a fundamental concern addressed in S. 652.

The bill preserves universal service,

improves it, and makes it cost less.

It requires all telecommunications

carriers to contribute to the support of

universal service. Only telecommunication carriers designated by the FCC

or a State as ‘‘essential telecommunication carriers’’ are eligible to receive

support payments. The bill directs the

FCC to institute and refer to a FederalState joint board, a proceeding to recommend rules to implement universal

service and to establish a minimum

definition of universal service. A State

may add to the definition for its local

needs.

Mr. President, to smaller cities and

rural communities and others who depend upon universal service nothing is
June 7, 1995 CONGRESSIONAL RECORD — SENATE S7893

changed. They continue to enjoy affordable access to phone service as before. The most important impact of S.

652 is structural and management reform in universal service that will save

the American taxpayers $3 billion over

the next 5 years. I think that is important to say. The universal service of

this will cost less in these years.

For local telephone competition, S.

652 gives a green light to local telephone competition. The bill breaks up

the old monopoly system for local

phone service. All Federal barriers to

competition will be removed, and all

State and local barriers will be preempted. Cable companies, long-distance companies, electric companies

and other entities will gain a chance to

offer lower prices and better service for

local phone service.

Upon enactment, the legislation preempts all State and local barriers to

competing with the telephone companies. In addition, it requires local exchange carriers having market powers

to negotiate, in good faith, interconnection agreements for access to

unbundled network features and functions that reasonable and nondiscriminatory rates.

This allows other parties to provide

competitive service through interconnection with the LEC’s facilities.

The bill establishes minimum standards relating to types of interconnection that an LEC with market power

must agree to provide if requested, including the following: Unbundled access to network functions and services;

unbundled access to facilities and information; necessary for transmission,

routing, and interoperability of both

carriers’ networks; interconnection at

any technological feasible point; access

of polls, ducts, conduits, and rights of

way; telephone number portability; and

local dialing parity.

As an assurance that the parties negotiate in good faith, either party may

ask the State to arbitrate any differences, and the State must review

and approve any interconnection agreement.

There is long distance and manufacturing relief for the Bell companies.

The Telecommunications Competition

and Deregulation Act of 1995 establishes a process under which the regional Bell companies may apply to

the FCC to enter the long-distance

market. Since the 1984 breakup of

AT&T, the Bell companies have been

prohibited from providing long-distance service. S. 652 reasserts congressional authority over Bell company

provision of long distance and restores

the FCC authority to set communication policy over those issues. The Attorney General has a consulting role.

The bill requires Bell local companies and other LEC’s with marketing

power to open and unbundle their local

networks to increase the likelihood

that competition will develop for local

telephone service.

It sets forth a competitive checklist

of unbundling and interconnection requirements. If a Bell company satisfies

the checklist, the FCC is authorized to

permit the Bell company to long-distance service if this is found to be in

the public interest.

Once a Bell company has met the

checklist requirements, it also will be

allowed to enter the markets for manufacturing phone equipment.

In conducting its manufacturing activities, a Bell company must comply

with the following safeguards:

A separate manufacturing affiliate;

Requirements for establishing standards and certifying equipment;

Protections for small telephone companies. A Bell manufacturing affiliate

must make its equipment available to

other telephone companies without discrimination or self-preference as to

price delivery, terms, or conditions.

This bill also opens international investment markets.

S. 652 lifts limits on foreign ownership of U.S. common carriers. The bill

establishes a reciprocity formula

whereby a foreign national or foreignowned company would be able to invest

more than the current 25 percent limit

in a U.S. telephone company if American citizens or firms enjoyed comparable opportunities. This would

allow increased investment in and by

the U.S. telecommunications industry,

which enjoys worldwide comparative

advantage.

Finally, in the area of cable competition, the bill permits telephone companies to compete against local cable

companies upon enactment, although

until 1 year after enactment the FCC

would be required to approve Bell company plans to construct facilities for

common carrier ‘‘video dialtone’’ operations. The bill also removes at enactment all State or local barriers to

cable companies providing telecommunications services, without additional franchise requirements.

The bill maintains rate regulation

for the basic tier of programming

where the cable operator does not face

‘‘effective competition,’’ defined as the

provision of video services by a local

telephone company or 15 percent penetration by another multichannel video

provider. The bill minimizes regulation

of expanded tier services. Specifically

the bill eliminates the ability of a single subscriber to initiate at the FCC a

rate complaint proceeding concerning

expanded tier services. In addition, the

FCC may only find rates for expanded

tier service unreasonable, and subject

to regulation, if the rates substantially

exceed the national average rates for

comparable cable programming services.

In the area of spectrum flexibility

and regulatory reform for broadcasters,

if the FCC permits a broadcast television licensee to provide advanced television services, the bill requires the

FCC to adopt rules to permit such

broadcasters flexibility to use the advanced television spectrum for ancillary and supplementary services, if the

licensee provides to the public at least

one free advanced television program

service. The FCC is authorized to collect an annual fee from the broadcaster

if the broadcaster offers ancillary or

supplementary services for a fee to subscribers.

A single broadcast licensee is permitted to reach 35 percent of the national audience, up from the current 25

percent. Moreover, the FCC is required

to review all of its ownership rules biennially. Broadcast license terms are

lengthened for television licenses from

5 to 10 years and for radio licenses from

7 to 10 years. Finally, new broadcast license renewal procedures are established.

Entry by registered utilities into

telecommunications is allowed.

Under current law, gas and electric

utility holding companies that are not

registered may provide telecommunication services to consumers. There

does not appear to be sufficient justification to continue to preclude registered utility holding companies from

providing this same competition. The

bill provides that affiliates of registered public utility holding companies may engage in the provision of

telecommunications services, notwithstanding the Public Utility Holding

Company Act of 1935. The affiliate engaged in providing telecommunications

must keep separate books and records,

and the States are authorized to require independent audits on an annual

basis.

ALARM SERVICES

Beginning 3 years after enactment, a

Bell company may provide such services if it has received authorization

from the FCC to provide in-region

interLATA service. The bill requires

the FCC to establish rules governing

Bell company provision of alarm monitoring services. A Bell company that

was in the alarm service business as of

December 31, 1994 is allowed to continue providing that service, as long as

certain conditions are met.

Finally, continuous review and reduction of regulation.

The bill also ensures that regulations

applicable to the telecommunications

industry remain current and necessary

in light of changes in the industry.

First, the legislation permits the FCC

to forbear from regulating carriers

when forbearance is in the public interest. This will allow the FCC to reduce

the regulatory burdens on a carrier

when competition develops, or when

the FCC determines that relaxed regulation is in the public interest.

Second, the bill requires a FederalState Joint Board to periodically review the universal service policies.

Third, the FCC, with respect to its

regulations under the 1934 act, and a

Federal-State Joint Board with respect

to State regulations, are required in

odd-numbered years beginning in 1997

to review all regulations issued under

the act or State laws applicable to telecommunications services. The FCC and

Joint Board are to determine whether

any such regulation is no longer in the
S7894 CONGRESSIONAL RECORD — SENATE June 7, 1995

public interest as a result of competition.

In short, Mr. President, this bill promotes deregulation as far as it logically should go. It provides a kind of

‘‘sunset’’ process for all regulations

which the bill does not abolish immediately.

I welcome the coming debate and

vote on S. 652. I urge my colleagues to

reassert congressional responsibility

for telecommunications policy.

Let me say, in summary and in conclusion, Mr. President, what we are

trying to do here is to get everyone

into everyone else’s business. The economic apartheid that has been a part of

telecommunications since the act of

1934 should be brought to an end.

I believe the passage of this bill

would be like the Oklahoma land rush,

the going off of the gun, because presently a lot of investment in the United

States is paralyzed because we do not

have a roadmap for the next 5, 10, or 15

years until we get into the wireless

age.

What is happening is that many of

our companies are investing in Europe

or abroad because they are prohibited

from manufacturing or doing something here. As a result, American jobs

are being lost.

This particular bill, if we can pass it,

will provide a roadmap which businessmen and investors will be able to invest in and make an explosion of new

devices, an explosion of new jobs, and

will help our country a great deal.

I think it will help consumers by lowering prices and providing more devices, and it will also help labor by providing more jobs of the type that we

need in our country.

I wish to pay tribute again to Senator HOLLINGS and his staff and all the

Senators on the committee who have

worked so hard—and Senators in this

Chamber. I have spoken to all 100 Senators at some point on this bill and it

has been a long time getting it up. I

hope we can proceed through today and

tomorrow.

The PRESIDING OFFICER. The Senator from South Carolina.

Mr. HOLLINGS. Mr. President, as the

communications bill, S. 652, comes up

for consideration, my first urge is one

of gratitude. I want to thank the majority leader and minority leader for

their leadership in calling up this bill

and, of course, I particularly want to

thank the chairman of our committee

who has been outstanding in working

all day long in getting this bill to the

floor.

Senator LOTT on the majority side

and Senator INOUYE, who was the

chairman of our Communications Subcommittee, now the ranking member,

have been working around the clock. Of

course, particular thanks goes, again,

for our staff members. I thank the

chairman’s staff—Paddy Link, Katie

King, and Donald McLellan. On my

staff particular gratitude must go to

Kevin Curtin, John Windhausen, and

Kevin Joseph for all their efforts.

We do not extend such thanks casually. This effort started in the fall of

1993, and every Friday morning we

would meet with the Bell companies,

the regional Bell operating companies.

Every Tuesday morning the staffs

would meet again with the competing

interests of long distance and all the

other industry interests. We have continued those meetings right up to this

afternoon. We have been working,

meeting, reconciling, trying our deadlevel best to bring a complicated measure up to the modern age of telecommunications.

To this Senator, they have all done

an outstanding job. So it is not a casual ‘‘thanks,’’ but it is one that is very

genuine and sincere. We thank them all

for their cooperation and understanding.

As this bill is called up, it is good to

note and emphasize that the Commerce

Committee reported it by a vote of 17

to 2 on March 23. It is a product of

months and months of consideration

and discussion by the committee and

by Senators all involved. In the last

Congress, Senators INOUYE, Danforth,

and I sponsored S. 1822, which was approved at that time by the Commerce

Committee by a vote 18 to 2.

The committee held 31 hours of testimony, 11 days of hearings, and heard

from 86-plus witnesses. In this Congress, the committee on S. 652 has held

3 days of hearings on telecommunications reform, heard from a number of

witnesses representing a broad variety

of interests.

S. 652 achieves a very, very important objective. Most important of all

the objectives was the requirement of

universal telephone service that would

be available and affordable and continued to be outstanding. We have the finest communications services in the

world.

This Senator went through the experience of airline deregulation. And

truth is truth, and facts are facts. Do

not come and tell me how airline deregulation is working. All of the airlines have just about gone broke. And I

can tell you from paying just to go

from Charleston to Washington and

Washington to Charleston and back, it

is just an inordinate 600 and some odd

dollars. What has happened is 85 percent of America is subsidizing some 15

percent for the long haul. They talk

about market forces, market forces.

We had a good arrangement on the regulated airline service, and we have

come full circle now with regulating

foreign airlines and KLM taking over

Northwest, British Air coming in on

USAir, and all the rest being saved

while we proudly stand up as politicians blowing hot and hard how wonderful airline deregulation is working.

That is hooey.

I wanted to make sure that we did

not fall in and mess up in this particular one with the wonderful telecommunications service that we have

had. This bill promotes competition in

the telecommunications market and

restores regulatory authority over the

industry to the Federal Communications Commission. That administrative

entity has also been outstanding in

their rendering of decisions and moving

forward as best they could with the

technological developments. But the

competition of the communications

and regular telephonic service and long

distance evolved into a heck of a monopoly that we could not deregulate. I

was on the teams that worked all during the 1970’s and the early 1980’s. Finally, the Department of Justice had

to bust it up. We found out that they

were so strong politically and financially that they could cancel out any

and everybody. Senator DOLE on the

majority side, this Senator on the minority side, all during the 1980’s tried

to get it back to the FCC, and we were

blocked. This Senate passed the manufacturing bill to allow the Bell companies to get into manufacturing, passed

by a vote of 74, bipartisan, and it was

blocked over on the House side.

So the difficulty has really been in

trying to get it from Judge Greene

back into the administrative body

where the people’s decisions and policies are made by the Congress, administered by the Federal Communications

Commission, but blocked by the industry itself time and time again.

Let me also mention Judge Greene

who has done an outstanding job. I

want to make note that it was just announced that Judge Greene will enter

senior status this August. I just could

not give him enough kudos in the way

he has handled this, almost a one-man

administrative responsibility for over

10 years now in his deliberate approach

to the needs of the public by maintaining at the same time universal service.

The basic thrust of this bill is clear.

Competition is the best regulator of

the marketplace. But until that competition exists, until the markets are

opened, monopoly-provided services

must not be able to exploit the monopoly power to the consumers’ disadvantage. Competitors are ready and willing to enter the new markets as soon

as they are opened. Competition is

spurred by S. 652’s provisions, specifying criteria for entry into the various

markets.

For example, on a broad scale, cable

companies will provide telephone service; telephone companies will offer

video services, as pointed out by our

distinguished chairman; and telephone

companies will, in addition, provide to

the consumers the continued universal

service; the consumers will be able to

purchase local telephone service from

several competitors; electric utility

companies will offer telecommunications services; the regional Bell operating companies will engage in manufacturing activities. All of these participants will foster competition with

each other and create jobs along the

way. Of course, long distance will enter

the local exchange, and as the local exchange is opened, the regional Bell operating companies will enter into long
June 7, 1995 CONGRESSIONAL RECORD — SENATE S7895

distance. So we are really moving very

expeditiously into the competitive

market.

We should not attempt to micromanage the marketplace. Rather, we

must set the rules in a way that neutralizes any party’s inherent market

power so that robust and fair competition can ensue. This is Congress’ responsibility.

So this bill transfers jurisdiction

over the modified final judgment from

the courts to the Federal Communications Commission. Judge Greene, as I

mentioned, has been overseeing that

modified final judgment in an outstanding fashion. He was doing yeoman’s work in attempting to ensure

that monopolies do not abuse that

market power. Now it is time for the

Congress to reassert its responsibilities

in this area.

Let me address some of the specific

areas of importance. The need to protect advanced universal service is one

fundamental concern of the committee

in reporting S. 652. Universal service

must be guaranteed, the world’s best

telephone system must continue to

grow and develop, and we must ensure

the widest availability of telephone

service. Under this bill, all telecommunications carriers must contribute to their universal service fund. A

Federal-State joint board will define

universal service. This definition will

evolve. It is a flexible requirement—a

requirement, I should say rather, of

flexibility so that the definition will

evolve over time as technologies

change so that consumers have access

to the best possible services.

Special provisions in the legislation

address universal service in rural areas

to guarantee that harm to universal

service is avoided there. One of the

most contentious issues in this whole

discussion has been when the regional

Bell operating companies should be allowed to enter the long distance market.

Under section VII(C) of the modified

final judgment consented to buy all the

RBOC’s and attested to in the hearings

that we have had on this bill, as a

group the test has been whether the

RBOC’s seeking entry into long distance could have a substantial possibility of impeding competition in that

long distance market which it seeks to

enter.

Last year, S. 1822 contained a requirement that the Department of Justice utilize this test in considering any

application for the regional Bell operating companies’ entry into long distance. In addition, the FCC was to utilize a public interest test for considering any such application. This was an

approach to which the regional Bell operating companies agreed during the

last Congress. This year, earlier draft

provisions, however, set a date certain

for entry by the RBOC’s into the long

distance market.

So after all the hearings and much

discussion and negotiation, we determined that this self-defeating approach

of a calendar ruling there would be no

consideration of the competitive circumstances in the marketplace.

So S. 652 specifies that the FCC may

approve any application to provide

long distance if it finds, one, that the

RBOC has fully implemented the

unbundling features specified in the

competitive checklist in the new section 255 of the Federal Communications Act of 1934; two, the RBOC will

provide long distance using a separate

subsidiary; and, three, application is

consistent with the public interest,

convenience, and necessity.

Mr. President, when I mentioned that

section 255 is a new section under the

Communications Act, I should say of

1934. It is good to point out that we

have used the original Communications Act of 1934, as amended, for the

simple reason that over the 60 plus

years we now have a complex body of

law, special rulings, interpretations of

legal expressions and requirements by

the courts. We are now tasked with the

job of trying to bring competition to a

regulatory structure based on a monopoly and open up the marketplace.

I remember in an earlier debate we

had this year it was brought out that

60,000 lawyers are registered to practice

before the District of Columbia bar,

59,000 of whom are probably members

of the federal communications bar.

That is why you will see every effort to

change every little word and analyze

every phrase. So we have really had a

difficult task trying to break up the

monopoly of the local telephone companies and to open the market so competition could ensue and yet it is the

monopoly that has provided us with

the universal service we all enjoy. We

do not want to penalize or jeopardize in

any sense the regional Bell operating

companies that have been doing an

outstanding job because there is no

shortcut there. If you penalize them

and put them into an uncompetitive

position, then, of course, your rates are

bound to go up.

So S. 652 is a balanced bill. The public interest test is fundamental to my

support for the legislation. In making

this public interest evaluation, the

FCC is instructed to consult with the

Department of Justice which may furnish the Federal Communications

Commission with advice on the application using whatever standard it finds

appropriate, including antitrust analysis under the Clayton and Sherman

Acts and also section VIII(C) under the

Modified Final Judgment.

Mr. President, this is great leap from

the actual and demonstrable competition test originally proposed in S. 1822

from the last Congress. While I would

prefer a more active Department of

Justice role, and an explicit reference

in the statute to the section VIII(C)

test, I support the provisions of S. 652

because the FCC will have the benefit

of the Department of Justice views

prior to making any decision. The Department of Justice may well decide to

base its decision on whether there is a

substantial possibility that the regional Bell operating company will impede competition through use of its

monopoly power or any other standard

under the antitrust law. The report accompanying this bill makes it clear.

I might emphasize at this particular

point the leadership that already this

year has been given by the antitrust division, by the Department of Justice

and the outstanding director, Assistant

Attorney General, Ms. Anne Bingaman.

She has obtained what we as politicians have been trying over 4 years to

get together, and that is about a month

ago on national TV there appeared the

regional Bell operating company,

Ameritech, the long distance company

AT&T, the Department of Justice and

the Consumer Federation of America,

all four entities important to the entire process agreeing on the steps of

unbundling, dialing parity, access,

interconnection, all of these things all

ironed out that in the technological

world of communications we have debated back and forth over these many

years. They have gotten together. They

are going into Grand Rapids and Chicago, and, of course, the RBOC is getting into long distance.

And so while we politicians on the

floor of the Senate will be debating in

the next few days, no doubt it should

be mentioned that the Department of

Justice, under the leadership of Ms.

Anne Bingaman, has already gotten

the parties together. I am convinced

that their consent decree now before

Judge Greene will be affirmed.

S. 652 requires that an RBOC must

provide long distance using a subsidiary separate from itself to avoid any

cross-subsidization between local and

long-distance rates. These and other

safeguards in the bill should prevent

against RBOC abuses in the long-distance market.

The committee-approved bill also includes some deregulation rates for

cable television. The Democratic proposal at the beginning of the year did

not suggest any such deregulation because from 1986 to 1992 cable rates had

risen three times faster than the rate

of inflation, so that the Congress back

in 1992 overwhelmingly imposed rate

regulation and new service standards

on the cable operators.

We passed the 1992 Cable Act largely

in response to the complaints from

consumers that rates had soared beyond reason and service was poor. The

bill actually became law with the bipartisan vote to override President

Bush’s veto.

Now, since the 1992 act was adopted,

the cable industry has experienced significant growth. Subscribership is up,

stock values in cable companies have

risen dramatically, and debt financing

by the cable industry rose in 1994 by almost $4 billion over the 1993 levels. But

the Consumer Federation of America

estimates that $3 billion has been saved

for American consumers through the

rate regulation that has been put into
S7896 CONGRESSIONAL RECORD — SENATE June 7, 1995

place. Yet some in the industry maintain that cable regulation produces uncertainty in financial markets and that

cable operators will need to be able to

respond to new competitors through

additional revenues.

S. 652, therefore, changes the standard of regulation for the upper tiers of

cable programming. It makes no

changes in the regulation of the basic

tier. Under the bill, a rate for the upper

tier cannot be found to be unreasonable

unless it substantially exceeds the national average rate for comparable

cable programming.

This standard will allow cable operators greater regulatory flexibility for

the upper tiers. The bill retains the

FCC’s authority to regulate excessive

rates charged to the upper tiers.

In addition, the bill changes the definition of effective competition in the

1992 act to allow cable rates to be deregulated as soon as the telephone

company begins to offer competing

cable services in the franchise area.

Once consumers have a choice among

entities offering cable service, the need

for regulation no longer exists.

S. 652 increases the ability of any entity including television networks to

own more broadcast stations. Today,

the FCC rules allow an entity to own

broadcast stations that reach no more

than 25 percent of the Nation’s population. This limit was imposed out of

concern that broadcast stations would

be owned by a few individuals, and that

concentration would not be beneficial

to our local communities or yield the

benefits that result from the expression of diverse points of view. S. 652

would increase that level to 35 percent.

Any modification in the national

ownership cap is important because of

localism concerns. Local television stations provide vitally important services in our communities. Because local

programming informs our citizens

about natural disasters, brings news of

local events, and provides other community-building benefits, we cannot afford to undermine this valuable local

resource.

Earlier drafts of the legislation

would have eliminated many of the

FCC regulatory limits on the broadcast

industry. By contrast, S. 1822, as approved by the Commerce Committee

last year, required the FCC to conduct

a proceeding to review the desirability

of changing these rules. I think the bill

with 35 percent permeation is an acceptable compromise between those positions.

In addition, the bill repeals a prohibition on cable broadcast

crossownership. S. 652 makes no change

in the other broadcast ownership rules

such as the duopoly rule or the one-inthe-marketplace rule. Rather, the FCC

is instructed to review these rules

every 2 years, and they can change it

upon review.

This comprehensive bill strikes a balance between competition and regulation. New markets will be open, competitors will begin to offer services,

consumers will be better served by having choices among providers and services.

I urge my colleagues to support the

bill. I myself would have gone further

in several areas covered by the legislation, but I have seen that any one sector of the telecommunications industry

can stop this bill and checkmate the

others, as I have stated before. Telecommunications reform is too important to let this opportunity go by.

Finally, Mr. President, it should be

emphasized that here is one industry

that suffered from deregulation. You

cannot approach this problem in S. 652

as we bring it into the technological

age without thinking back to 1912 when

David Sarnoff was a clerk in Wanamaker’s store and the sinking of the

Titanic was occurring. They raced him

up to the roof of Wanamaker’s. He set

up his wireless, made radio contact

with the sinking ship and contacted

rescue vessels, directing not only some

of the rescue effort but the names of

survivors, working almost 72 hours

around the clock.

Everyone then got a wireless. There

was not any regulation. And by 1924,

when Herbert Hoover was the Secretary of Commerce, all of those wireless operators came rushing to the Secretary of Commerce and said, ‘‘For

heaven’s sake, we have nothing but

jamming.’’ The radio broadcasters, who

have a tremendous interest in this S.

652, went begging to be regulated. So

they were in the act of 1927 and

brought into that age then with the

1934 act.

So those who are now talking about

getting rid of the Government and, incidentally, by the way, we can save

money by getting rid of the FCC, ought

to stop, look and listen. They have to

have a sense of history. We can get rid

of total deregulation, jamming each

other and all that sort of thing, but,

after all, the public airways belong to

the public, on the one hand, and they

need a modicum of administration, on

the other hand, for this finest, finest of

communications systems in the entire

world.

Let us not talk about the FCC costing money. They are the entity this

year that already by auction has

brought in $7 billion to the Federal

Government. If you can find any other

bureau, commission, administration,

department of Government or otherwise that has reaped 7 billion bucks, I

would like to find it.

We have the money to administer all

of these things and bring it into a deregulatory, competitive position, but it

has to be done in an orderly fashion,

and everyone connected and working

on this understands that. So let us not

start talking about getting rid of the

FCC and act like you are doing something sensible.

I thank my colleagues and yield the

floor.

Mr. GORTON addressed the Chair.

The PRESIDING OFFICER. The Senator from Washington.

Mr. GORTON. Mr. President, it may

well be that the two distinguished

southern managers of this bill, the

Senators from South Dakota and

South Carolina, may never have imagined that this day would come. This is

probably the first occasion on which a

thorough philosophical change in direction in communications law has

been debated on the floor of the U.S.

Senate since the Communications Act

of 1934, some 61 years ago.

In 1934, of course, communications

was via old-fashioned dial or operatorassisted telephone through radio stations and through Western Union telegrams. The technological situation of

the time called for monopoly communications systems and the necessity of

regulation of those systems in the public interest to see that prices were not

too high.

Today, of course, technology is so totally and completely different that an

entirely different regime is needed.

Perhaps the greatest difficulty in

bringing this day on which we start

this debate to pass has been the fact

that in each long set of hearings in the

Senate Commerce Committee over a

year or more, each tentative set of conclusions on the part of these two Senators, and others, by the time those

conclusions had been reached, the technology has gone beyond those conclusions.

So there seems to be a broad agreement across both parties and many political philosophies that there should

be a large degree of deregulation as a

part of any bill, based on the proposition that we cannot tell how much

the technology will change in the next

6 months, much less the next 10 years,

and that we should accommodate it

without constantly trying to regulate

it through some form of statutory language. That is the philosophy of this

bill, a philosophy of competition rather

than of regulated monopoly.

It has been a difficult process and it

is likely to be a difficult process for

the next 3 or 4 days.

So rather than repeat anything that

the two leaders in this debate have

said, I would simply like to say from

the perspective of this Senator, as a

member of the Commerce Committee,

there have been three guiding principles in dealing with the many conflicts among groups who would like to

provide communication services, and

those three guiding principles are, of

course, deregulation, competition and

the interests of the consumers, the

users of these various services.

Mr. President, there are a number of

areas covered by this bill in which

those three interests lead to the same

conclusion: Deregulation will promote

competition, competition will promote

the consumer interest.

Those parts of the bill probably will

not be the subject of much discussion

during the course of this debate. They

have been worked out. But the three

considerations are at least slightly different and move in slightly different
June 7, 1995 CONGRESSIONAL RECORD — SENATE S7897

directions. Because of the nature of the

communications industry, which still

includes huge regulated monopolies, a

total and complete deregulation at

least carries with it the risk not of

competition but of an unregulated monopoly substituting itself for a regulated monopoly. So there must be a degree of caution in the speed and the

completeness of any kind of deregulation.

Almost always, it seems to me, Mr.

President, that competition is in the

consumer interest, though ironically

many of the so-called organized

consumer groups have little faith in

competition and in the free market and

believe in various forms of state socialism and want in many respects more

regulation. I believe, Mr. President,

that those so-called consumer representatives rarely represent the actual consumer interest.

So as we go through this debate over

particular proposed amendments during the course of the next week, it

seems to me we all have to attempt to

judge them on the basis of those three

principles: Are they deregulatory in

nature in a constructive fashion that is

consistent with the march of new technologies? Do they promote competition? And are they in the consumer interest?

Mr. President, there is only one other

major point that I want to make at

this time, and that is that of all of the

proposals with which I have had to deal

in my career in the Senate, this is perhaps the most important for the future

of our economy. Perhaps as much as 20

percent of our economy is connected

with communications in some respect

or another. And, of course, the lobbying, the attempt to influence all of us

on the part of people who are in the

communications business or wish to be

in the communications business is

fierce, is overwhelming in nature. At

the same time, the actual consumers of

these goods, our constituents, who are

not in the business, are almost totally

silent.

I have hardly gotten a handful of

telephone calls or letters from ordinary

citizens about this bill. It is too big. It

is too complicated. It is about the future. It is very difficult to come up

with an intelligent opinion off the top

of one’s head on some of the particular

controversial areas in it. And so it is

up to us to weigh the consumer interest as we work our way through this

legislation, along with those features

that will lead to competition, generally speaking, through deregulation.

My observation is that the large

companies and groups which are already in the communications business

do sincerely favor competition. But,

generally speaking, they would like to

create a competitive atmosphere in

which they are at least even, and perhaps have a little bit of an advantage.

And so the mythical even playing field

is something to which all give lipservice but each defines in a different

fashion.

Now, the new companies, the entrepreneurs, those who are just beginning

in the field, or wish to get in the field,

simply want it opened up. They want

to be able to compete, where today

they cannot. Few of them are large

enough to demand some kind of special

privileges or another. And we need to

encourage both.

We need to encourage the continued

investment in this new technology on

the part of those companies that have

been in the business literally forever.

We cannot lose their expertise and that

tremendous investment. We need to see

to it that those large companies are

able to compete against one another in

the consumer interest. At the same

time, we also need to see to it that the

niche companies, the new companies,

the people with bright new ideas, are

able to get into this business and if

they are tremendously successful, become large companies as well.

So, Mr. President, we search for deregulation, we search for competition,

and we search for the consumer interests. I think we all do so sincerely, determined that we need to make major

changes, and perhaps with a degree of

humility, that we do not know what is

going to happen tomorrow, and we wish

to craft an outline which will allow tomorrow to take place without our having crushed it by unanticipated consequences to the actions we take here.

I want to close by congratulating

both of my colleagues, the Senator

from South Dakota and also the Senator from South Carolina, who has

spent a major part of his career in this

field and who now has, I think, the enviable task of attempting to manage

this legislation wisely and successfully

to a conclusion that will benefit all of

the American people.

Mr. DOLE addressed the Chair.

The PRESIDING OFFICER. The majority leader is recognized.

Mr. DOLE. First, I thank and congratulate the chairman and the ranking member of the committee, Senator

PRESSLER and Senator HOLLINGS. We

have been promising week after week

that this bill was coming to the floor.

I do not believe it now that it is on the

floor and pending. I have every expectation, with their management skills,

that we can probably finish this bill by

Friday noon. If that is the case, we

probably would not have any votes on

Monday—if that is an incentive for

anybody. We might have debate on

some other bill but no votes on Monday. So if we can consider those incentive programs as we go along, it will be

helpful. But it is a very important

piece of legislation. It is probably the

most important bill we have considered

all year, no doubt about it. It will create jobs, opportunity, all of the things

we have talked about. I have listened

to both managers’ opening statements.

Mr. President, some may consider S.

652 to be the end of a long, long, process. And no doubt about it, telecommunications deregulation legislation has been an idea debated around

here for nearly a decade. In fact, I first

introduced telecommunications deregulation legislation in 1986.

But rather than seeing this bill as an

end to the process, I see it as a beginning: A beginning of a new era of leadership for the telecommunications industry and for America.

And one person who deserves a good

deal of credit for making this new era

a reality is Senator PRESSLER. As all

Members know, this is a tough, complex, and often contentious issue. And

Senator PRESSLER and Senator HOLLINGS have done an outstanding job at

bringing the competing interests together—or as close together as possible.

Senator HOLLINGS was the chairman

and came very close last year to getting a bill. This year, under the chairmanship of Senator PRESSLER, we are

on the floor with the bill. We have not

passed it yet, but my understanding is

that there is a lot of bipartisan support. It is not a partisan measure, a

Democrat or Republican partisan fight.

So we ought to be able to complete it

quickly, because they have done an

outstanding job of bringing the competing interests as close together as

possible.

Mr. President, leadership in telecommunications, whether it was inventing the telegraph or the microchip,

has been an American tradition. And

we will continue that tradition with

passage of this bill.

As I have said before, telecom reform

will be the real jobs stimulus package

of this decade.

Building the necessary infrastructure

will require thousands of private sector

jobs. And that is just the beginning.

Millions more will be created because

information will become more accessible. Jobs that will make America

more efficient, more productive, and

ultimately more powerful.

Looking back on Congress’ track

record, a casual observer would think

that we have a grudge against the communications industry. Fortunately,

this image is changing and Republicans

are glad to see that traditional ‘‘proregulators’’ are finally coming around

to our competitive way of thinking.

We must develop a flexible policy

that will accommodate the explosion of

new technology. That policy, of course,

is promoting competition. It is irresponsible to think we can do anything

more.

No one knows the benefits of free and

open competition better than the computer and semi-conductor industries.

Just take a look at a few of the players

in the U.S. communications industry.

Last year, the computer industry

earned revenues close to $360 billion.

Two things are amazing about that figure. First, it is twice the telephone industry’s revenues. And second, revenues from the personal computer industry, which for all intents and purposes was non-existent in 1980, account

for almost half of that figure. In other

words, revenues in personal computers
S7898 CONGRESSIONAL RECORD — SENATE June 7, 1995

have grown as much in 14 years as the

entire telephone industry did in 100.

It is not too difficult to figure out

that the computer industry benefitted

from fierce competition and minimal

government regulation. Phone companies did not.

Cable TV also exploded after it was

de-regulated in 1984. At that time, its

revenues were $7.8 billion and it employed 67,381 persons. Fast-forward to

1992. Revenues tripled and employment

numbers jumped to 108,280. While these

numbers are also good, I would suggest

that the cable TV industry would have

done much better if it had faced competition. More importantly, I would

also suggest that there would not have

been the abuses which prompted Congress to enact re-regulation in 1992.

My point is simple: competition, not

regulation, has the best record for creating new jobs, spurring new innovation, and creating new wealth.

Mr. President, America is at the

cross roads, and Congress must make a

choice. A touch choice, as we all know.

But I believe that if we ask the right

question, we will get the right Answer.

As I see it, we must ask ourselves,

‘‘who will decide the communications

industry’s future.’’

I say we allow the real technical experts to decide. And I am not talking

about government bureaucrats. Instead, we should look to the experts in

the field, the entrepreneurs, the engineers, and the innovators. It seems to

me that they will do a far better job for

our country if big government leaves

them alone.

I, for one, cannot allow government

to become the biggest player in the

telecommunications industry. Too

much is at stake. It is nonsense to

gamble away millions of new jobs. It is

nonsense to gamble away America’s

ability to compete, and win, around the

world. And it is nonsense to gamble

away the spoils that the information

age will bring.

To get there, I have worked with the

committee to develop a comprehensive

deregulatory amendment that touches

all sectors of the communications industry. It is my understanding that the

managers are not quite ready to accept

it now.

I have a list describing each provision that I will insert in the RECORD at

the end of my remarks, but for now, I

will just highlight a few of the provisions.

First, deregulate small cable TV systems. This has bipartisan support. Although views differ on deregulating the

entire cable TV industry, most of us

can agree that rural and small systems

need rate relief in order to survive.

This provision gets it done.

Second, force the Federal Communications Commission to eliminate

outdated regulations, and do so in a

timely manner. Currently, there is no

guarantee that the Commission will

ever act on requests that it forbear on

regulations. Under this amendment,

the Commission must respond within

90-days—60 more can be added if the

issue requires additional scrutiny.

Most importantly, it must provide a

written determination to justify its actions.

Third, eliminate the number of TV

stations that any one entity can own.

Currently, the limit is capped at 12.

This amendment removes that cap. I

want to point out, however, that this

amendment does not, I repeat, does not

increase the percentage of national

viewership beyond the 35 percent that

is included in the chairman’s mark.

The amendment also eliminates the

number of radio stations one can own,

unless the Commission finds that issuing or transferring a license will harm

competition.

The measure also privatizes or eliminates a number of FCC functions. The

Commission deserves credit for making

these suggestions that comprise this

provision. In other words they came

from the FCC.

I could go on at length, but I believe

I have given my colleagues a flavor of

what this amendment is about. I know

the managers and members of their

staffs are well acquainted with it.

This amendment does represent the

hard work of many Members, obviously

Members on both sides of the aisle.

Senator BURNS has been working on

this for a couple years, Senator CRAIG,

Senator PACKWOOD, Senator MCCAIN on

our side, just to name a few, and, of

course, Senator PRESSLER and Senator

HOLLINGS.

It does not matter how long we work

on it, if we cannot get it accepted, it

does not make any difference. We hope

at the appropriate time that it can be

accepted. I hope that we will continue

on the procompetitive, deregulatory

course that we have taken in a bipartisan way, and in only that way will we

ensure that today is beginning a new

renaissance for America.

Mr. President, I ask that a summary

of the deregulation package be printed

in the RECORD following my statement.

There being no objection, the material was ordered to be printed in the

RECORD, as follows:

SUMMARY OF DEREGULATION PACKAGE

Transfers Judge Green’s MFJ (consent decree) to the FCC.

Eliminates GTE’s consent decree.

Adopts definition to restrict expansion of

universal service so that it does not spiral

out of control.

Greater deregulation for small cable TV.

As the bill stands now, small cable can’t

take advantage of any rate deregulation because of the way their systems are set-up. To

take care of them, the deregulatory amendment would completely eliminate rate regulation for cable operators who serve less

than 35,000 in one franchise area, and do not

serve more than 1% of all subscribers nationwide (650,000 subscribers). Obviously, this is a

pretty broad definition of a ‘‘small’’ cable

company.

Increase the Commission’s ability to forbear on regulation.

Establish a petition driven process to force

the commission to forbear on regulation

within a 90-day period. If the Commission

does not act, or extend period by an additional 60 days, the petition shall be deemed

granted. If petition is rejected, it must be

with a written explanation. In short, it will

force the commission to justify any and all

of its regulations.

Eliminate the number of TV stations any

one entity can own.

Force the Commission to change its rules

so that any entity can reach up to 35% of

Americans with TV broadcast systems (the

current cap is at 25%).

Eliminate the number of radio stations

any one entity can own, unless it would

harm competition.

Have FCC consider eliminating rate regulation in long distance market.

Regulatory relief. Speed up FCC action for

phone companies by making any revised

charge that reduces rates effective 7 days

after it is filed with commission. Rate increases will be effective 15 days after submission. To block such changes, FCC must justify its actions.

Eliminate arcane requirement that phone

companies must File any line extension with

Commission. As it stands now, companies

have to get the commission to approve any

line extension which often takes more than a

year.

Phone companies will only have to file cost

allocation manuals on a yearly basis.

Eliminate the following FCC functions: Repeal setting of Depreciation rates; Have

Commission subcontract out its audit functions; Simplify coordination between Feds

and States; Privatize Ship radio inspections;

Permit Commission to waive construction

permits for broadcast stations as long as license application is submitted 10 days after

construction is completed.

Also terminate broadcast licenses if a station is silent for more that 12 consecutive

months. Subcontract out testing and certification of equipment. Permit operation of domestic ship and aircraft radios without license. Eliminate FCC jurisdiction over government owned radio stations. Eliminate

burdensome paperwork involved in Amateur

Radio examination. Streamline non-broadcast radio licenses renewals.

AMENDMENT NO. 1255

Mr. DOLE. Mr. President, I send my

amendment to the desk and ask for its

immediate consideration.

The PRESIDING OFFICER. The

clerk will report.

The bill clerk read as follows:

The Senator from Kansas [Mr. DOLE] proposes an amendment numbered 1255.

Mr. DOLE. Mr. President, I ask unanimous consent further reading be dispensed with.

The PRESIDING OFFICER. Without

objection, it is so ordered.

The amendment is as follows:

(c) TRANSFER OF MFJ.—After the date of

enactment of this Act, the Commission shall

administer any provision of the Modification

of Final Judgment not overridden or superseded by this Act. The District Court for the

District of Columbia shall have no further

jurisdiction over any provision of the Modification of Final Judgment administered by

the Commission under this Act or the Communications Act of 1934. The Commission

may, consistent with this Act (and the

amendments made by this Act), modify any

provision of the Modification of Final Judgment that it administers.

(d) GTE CONSENT DECREE.—This Act shall

supersede the provisions of the Final Judgment entered in United States v. GTE Corp.,

No. 83–1298 (D.C. D.C.), and such Final Judgment shall not be enforced after the effective

date of this Act.
June 7, 1995 CONGRESSIONAL RECORD — SENATE S7899

On page 40, line 9, strike ‘‘to enable them’’

and insert ‘‘which are determined by the

Commission to be essential in order for

Americans’’.

On page 40, beginning on line 11, strike

‘‘Nation. At a minimum, universal service

shall include any telecommunications services that’’ and insert ‘‘Nation, and which’’.

On page 70, between lines 21 and 22, insert

the following:

(b) 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.—Subsection (a), (b), or (c)

does 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

serves 35,000 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 does not, directly or through an affiliate, own or control a daily newspaper or a

tier 1 local exchange carrier.’’.

On page 70, line 22, strike ‘‘(b)’’ and insert

‘‘(c)’’.

On page 71, line 3, strike ‘‘(c)’’ and insert

‘‘(d)’’.

On page 79, strike lines 7 through 11 and insert the following:

(1) IN GENERAL.—The Commission shall

modify its rules for multiple ownership set

forth in 47 CFR 73.3555 by—

(A) eliminating the restrictions on the

number of television stations owned under

subdivisions (e)(1) (ii) and (iii); and

(B) changing the percentage set forth in

subdivision (e)(2)(ii) from 25 percent to 35

percent.

(2) RADIO OWNERSHIP.—The Commission

shall modify its rules set forth in 47 CFR

73.3555 by eliminating any provisions limiting the number of AM or FM broadcast stations which may be owned or controlled by

one entity either nationally or in a particular market. The Commission may refuse to

approve the transfer of issuance of an AM or

FM broadcast license to a particular entity

if it finds that the entity would thereby obtain an undue concentration of control or

would thereby harm competition. Nothing in

this section shall require or prevent the

Commission from modifying its rules contained in 47 CFR 73.3555(c) governing the

ownership of both a radio and television

broadcast stations in the same market.

On page 79, line 12, strike ‘‘(2)’’ and insert

‘‘(3)’’.

On page 79, line 18, strike ‘‘(3)’’ and insert

‘‘(4)’’.

On page 79, line 21, strike ‘‘(4)’’ and insert

‘‘(5)’’.

On page 79, line 22, strike ‘‘modification required by paragraph (1)’’ and insert ‘‘modifications required by paragraphs (1) and (2)’’.

On page 116, between lines 2 and 3, insert

the following:

(b) DOMINANT INTEREXCHANGE CARRIER.—

The Commission, within 270 days after the

date of enactment of this Act, shall complete

a proceeding to consider modifying its rules

for determining which carriers shall be classified as ‘‘dominant carriers’’ and to consider

excluding all interexchange telecommunications carriers from some or all of the requirements associated with such classification to the extent that such carriers provide

interexchange telecommunications service.

On page 116, line 3, strike ‘‘(b)’’ and insert

‘‘(c)’’.

On page 117, line 1, strike ‘‘(c)’’ and insert

‘‘(d)’’.

On page 117, line 22, strike ‘‘REGULATIONS.’’ and insert ‘‘REGULATIONS; ELIMINATION OF UNNECESSARY REGULATIONS

AND FUNCTIONS.’’

On page 117, line 23, insert ‘‘(a) BIENNIAL

REVIEW.—’’ before ‘‘Part’’.

On page 118, between lines 20 and 21, insert

the following:

(b) ELIMINATION OF UNNECESSARY COMMISSION REGULATIONS AND FUNCTIONS.—

(1) 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,’’.

(2) 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 subsection (f)

in the same manner as if that person were an

employee of the Commission.’’.

(3) SIMPLICATION OF FEDERAL-STATE COORDINATION PROCESS.—The Commission shall

simplify and expedite the Federal-State coordination process under section 410 of the

Communications Act of 1934.

(4) PRIVATIZATION OF SHIP RADIO INSPECTIONS.—Section 385 (47 U.S.C. 385) is amended

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 and inspection or certification.’’.

(5) MODIFICATION OF CONSTRUCTION PERMIT

REQUIREMENT.—Section 319(d) (47 U.S.C.

319(d)) is amended by striking the third sentence and inserting the following: ‘‘The Commission may waive the requirement for a

construction permit with respect to a broadcasting station in circumstances in which it

deems prior approval to be unnecessary. In

those circumstances, a broadcaster shall file

any related license application within 10

days after completing construction.’’.

(6) 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.’’.

(7) EXPEDITING INSTRUCTIONAL TELEVISION

FIXED SERVICE PROCESSING.—The Commission

shall delegate, under section 5(c) of the Communications Act of 1934, the conduct of routine instructional television fixed service

cases to its staff for consideration and final

action.

(8) 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.’’.

(9) 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’’.

(10) PERMIT OPERATION OF DOMESTIC SHIP

AND AIRCRAFT RADIOS WITHOUT LICENSE.—Section 307(e) (47 U.S.C. 307(e)) is amended by—

(A) striking ‘‘service and the citizens band

radio service’’ in paragraph (1) and inserting

‘‘service, citizens band radio service, domestic ship radio service, domestic aircraft radio

service, and personal radio service’’; and

(B) striking ‘‘service’ and ‘citizens band

radio service’’’ in paragraph (3) and inserting

‘‘service’, ‘citizens band radio service’, ‘domestic ship radio service’, ‘domestic aircraft

radio service’, and ‘personal radio service’’’.

(11) 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 (A) through (F), respectively.

(12) ELIMINATE FCC JURISDICTION OVER GOVERNMENT-OWNED SHIP RADIO STATIONS.—

(A) Section 305 (47 U.S.C. 305) is amended

by striking subsection (b) and redesignating

subsections (c) and (d) as (b) and (c), respectively.

(B) 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,’’.

(13) MODIFICATION OF AMATEUR RADIO EXAMINATION PROCEDURES.—

(A) Section 4(f)(H)(N) (47 U.S.C. 4(f)(4)(B))

is amended by striking ‘‘transmissions, or in

the preparation or distribution of any publication used in preparation for obtaining

amateur station operator licenses,’’ and inserting ‘‘transmission’’.

(B) The Commission shall modify its rules

governing the amateur radio examination

process by eliminating burdensome record

maintenance and annual financial certification requirements.

(14) STREAMLINE NON-BROADCAST RADIO LICENSE RENEWALS.—The Commission shall

modify its rules under section 309 of the

Communications Act of 1934 (47 U.S.C. 309)

relating to renewal of nonbroadcast radio licenses so as to streamline or eliminate comparative renewal hearings where such hearings are unnecessary or unduly burdensome.

On page 117, between lines 21 and 22, insert

the following:

(d) 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)
S7900 CONGRESSIONAL RECORD — SENATE June 7, 1995

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 paragraph (1) and inserting ‘‘filed.’’.

(2) EXTENSIONS OF LINES UNDER SECTION 214;

ARMIS REPORTS.—Notwithstanding section

305, the Commission shall permit any local

exchange 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) FOREBEARANCE AUTHORITY NOT LIMITED.—Nothing in this subsection shall be

construed to limit the authority of the Commission or a State 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.

On page 118, line 20, strike the closing

quotation marks and the second period.

On page 118, between lines 20 and 21, insert

the following:

‘‘(c) CLASSIFICATION OF CARRIERS.—In

classifying carriers according to 47 CFR 32.11

and in establishing reporting requirements

pursuant to 47 CFR part 43 and 47 CFR 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 the Telecommunications Act of 1995.’’.

On page 119, line 4, strike ‘‘may’’ and insert

‘‘shall’’.

On page 120, between lines 3 and 4, insert

the following:

‘‘(c) END OF REGULATION PROCESS.—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 90 days after the Commission receives it, unless the 90-day period is

extended by the Commission. The Commission may extend the initial 90-day period by

an additional 60 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.

On page 120, line 4, strike ‘‘(c)’’ and insert

‘‘(d)’’.

Mr. DOLE. Mr. President, I ask unanimous consent that the amendment be

laid aside.

Mr. KERREY. Reserving the right to

object, Mr. President, I am not objecting to having it laid aside. I am here to

inquire what the procedure is going to

be. The Senator is offering an amendment and is not going do debate it here

this evening? It will be laid aside?

I have not seen this copy. The Senator is not proposing it be accepted at

this moment?

Mr. DOLE. I think the managers may

be ready to accept it by tomorrow

morning.

Mr. HOLLINGS. If the Senator will

yield. That is correct. In fact, about 2

hours ago we had it worked out, but

there is some further interest on our

side that we have yet to clear. The distinguished minority leader has another

amendment that he wanted to present

at the same time, and I think we can

work that out.

That is the idea, to temporarily lay

it aside and move on.

Mr. KERREY. I will not object, but I

will inform the manager of this bill

that I will not give unanimous consent

to this being accepted until I have read

it and signed off on it.

Mr. DOLE. I have obviously no problem with that. In fact, I can give the

Senator from Nebraska a summary of

it, too. I thank my colleague.

The PRESIDING OFFICER. Without

objection, the amendment is set aside.

Mr. PRESSLER. I thought we had

this agreed to this afternoon, but I

guess the minority leader has something he would like to add or change.

But I would like to inquire of the majority leader if we cannot get agreement tonight.

Shall we make this one of the votes

at 8:30 or 9 o’clock in the morning?

Mr. DOLE. If it is acceptable, I do

not need a vote. I do not want to penalize anybody.

Mr. KERREY. Is the Senator asking

to set a time for a vote?

Mr. DOLE. Not on this amendment. I

will wait until the Senator from Nebraska indicates he has had a chance to

look at it.

Mr. STEVENS. Mr. President, I do

think that everyone should be aware

that the bill we are considering is larger in its impact on the national economy than the health care reform measure we considered last year.

This bill, in a conservative way, will

impact more than one-third of the

economy of the United States.

It is a bill that is designed to transition from the 1934 Communications Act

to a period sometime, hopefully,

around the turn of the century when

we will have deregulated telecommunications because of the competition

that we this bill will instill and guarantee.

Now, the bill will put the communications policy of the United States

back where it belongs, in the hands of

the elected representatives and the

President, and will take it out of the

courts. By setting rules for entry into

long distance by the Bell operating

companies, I think we bring to a close

an over-10-year policy-making period

by the U.S. courts.

This bill will open the local telephone market to competition. It will

bring competition and new services to

all parts of the United States.

It is not a permanent piece of legislation, in my judgment. This is not a bill

that will replace, totally, the 1934 act.

It does, however, by deregulating the

industry with appropriate safeguards,

set the stages for a new era in the

United States.

I want to call the attention of the

Senate to a provision that is very

meaningful to my area, the universal

service provision. This is a concept

that, through the existing interstate

rate pool, has brought telephone service to all parts of this Nation, including remote villages in Alaska and

throughout the Nation wherever you

are.

The concept is preserved in this bill

in a new manner. It opens up the local

market to competition while still preserving the concept of universal service. It does so by taking advantage of

new technologies which are intended to

reduce the cost of all services, including universal service.

In fact, I find it interesting that the

Congressional Budget Office has said

that this bill will reduce the cost of

universal service from the existing system by at least $3 billion over the next

5 years.

Now, tumbling technology, as I call

it, makes terrestrial distances irrelevant. By using modern technologies,

the people in Egiagik and Unalakleet

and Shishmaref, places many people

have never heard of, can be involved in

stock markets in New York, explore

the Library of Congress, and be connected with overseas sources of information. Allowing cable companies to

provide phones and phone companies to

provide cable, this bill will spur competition and reduce costs to the Nation.

There are so many new technologies

coming along, Mr. President, it is

mind-boggling. There are many provisions in this bill that are aimed at deregulating the industry so those new

technologies may compete.

It is my hope that the Senate will

recognize this bill for what it is. It is a

credit, as the distinguished leader has

said, to Senator PRESSLER, the chairman of our committee, and to Senator

HOLLINGS, the former chairman of our

committee. It is a bill of monstrous

scope that has substantial bipartisan

support.

Had we had a similar approach to the

problems of health care reform in the

last Congress, we would have had that

problem at least partially solved.

To the credit of these two Senators,

this is not a bill that attempts to solve

all of the problems of the telecommunications industry for the future. It is a bill that opens the door to

the future and, in my judgment, it is

one that it is absolutely essential be

passed.

I am told that George Gilder of the

Discovery Institute in Seattle, whom I

consider to be one of the real thinkers

of this country, has told us that not

passing this bill will cost the United

States $2 trillion in lost opportunities

in the next 5 years alone.

I happen to pay attention to Mr.

Gilder because he wrote an article the
June 7, 1995 CONGRESSIONAL RECORD — SENATE S7901

other day which answered some remarks that I made about universal

service. I do feel in the days ahead the

thinking that this man is doing will

have a great deal to do with guiding

the Nation into that ultimate system

that I foresee coming on after the turn

of the century.

Just in terms of the broad band radio

concept that is coming along and how

it will replace substantial portions of

telecommunications now carried by

wire or fiber optic cable or through satellites, that concept alone is going to

catch us by surprise if we do not know

what is happening. But at least we

know it will happen. We are not trying

to regulate that by this bill. We are not

trying to prevent it by this bill. We are

opening the door so new competitive

aspects will come into our communications policy in the United States.

This morning I introduced a bill that

I said I would offer as an amendment to

this bill if the opportunity presented

itself. I have discussed it now with the

two managers of the bill. I would like

to offer now an amendment.

First let me describe what it is. It is

an amendment that will expand the

FCC’s authority to use auctions to assign licenses for the use of radio spectrum. The members of our committee

will know that for two Congresses I argued that we should implement auctions to replace the old lottery system

that was giving windfall profits to

many and denying others access to opportunities that would start new businesses.

Under the old system, the lotteries,

there was no commitment to use this

spectrum but it was held as sort of an

item that other people might bid on

when they were willing to pay enough

money to the person who was lucky

enough to win the lottery. The person

who got the license had no intent to

use it. Now, with a bidding process,

competitive bidding, we have brought

the use of the spectrum to the point

where people who want it pay what is

necessary to get its use.

The Congressional Budget Office, as I

said before, has estimated that the

amendment I offer will raise $4.5 billion in the next 5 years. That is necessary for a strange reason. The Congressional Budget Office also estimated

that the universal service provisions in

this bill will require private industry

and private purchasers to pay $7.1 billion over the next 5 years into this system, which was the interstate rate pool

and now will become the fund for the

payment of the universal service provisions of this bill.

I remind the Senate that the universal service system contained in this

bill would result in a reduction of $3

billion from what continuation of the

existing system will cost in the next 5

years. But notwithstanding that this

bill will reduce the costs of the existing

system we know, in order to avoid a

Budget Act point of order on technical

grounds, must offset the finding of the

Congressional Budget Office that this

requirement of the private sector to

pay $7.1 billion into the pool—less than

before but they still must pay it in—

that this private payment must be offset under our congressional budget

process.

That sort of boggles my mind too,

Mr. President, but it is a requirement

and I respect the Budget Act concept.

Therefore I offer this amendment. It

will extend the auction authority until

the year 2000. That is all that is necessary to comply with the Budget Act,

5 years. It will bring in a minimum estimate, as I said, of $4.5 billion.

We have already received, under the

auction amendment that I offered 2

years ago, almost $10 billion. It was

new money, the kind of money that

was never received by the Government

before.

Under my amendment tonight, the

FCC would have the authority to use

spectrum auctions for all mutually exclusive applications for initial licenses

or construction permits except for licenses for public safety radio services

or for advanced television services, if

the advanced television licenses are

given to existing broadcast licensees as

a replacement for their existing broadcast licenses.

This means that market mechanisms

will help determine who can make the

most efficient use of spectrum that

will become available. I believe, again,

that is the best way to deal with the

future.

My amendment does not change the

basic safeguards Congress put in the

original spectrum auction legislation

after I offered it several years ago. The

expanded authority will apply only to

new license applications. It will not

apply to renewals. And the FCC may

still not consider potential revenue in

making the decision as to which type

of service new spectrum should be used

for. The revenue only becomes a factor

in determining who gets the license to

use the spectrum for any particular

purpose.

The bill I introduced this morning,

which is the same as this amendment,

would also provide authority for Federal agencies to accept reimbursement

from private parties for the cost of relocating to a new frequency. This will

allow private industry to pay to move

Government users off valuable frequencies by relocating the Government

station to a less valuable frequency at

no cost to the taxpayer, but an increase to the Treasury.

The amendment builds on what has

been a very successful beginning. Since

the existing spectrum auction authority was enacted in 1993, as I have said,

the FCC has raised in excess of $9 billion, almost $10 billion now, for the

Federal Treasury in just four auctions.

I do hope the Senate will support the

amendment.

I ask unanimous consent that Senator DOLE’s amendment be set aside for

the time being and I be allowed to submit the amendment.

Mr. KERREY. Reserving the right to

object.

The PRESIDING OFFICER (Mr.

SANTORUM). Senator DOLE’s amendment has been set aside. The Senator

does have a right to offer an amendment.

Mr. KERREY. But I object.

The PRESIDING OFFICER. Is the

Senator sending his amendment to the

desk?

Mr. STEVENS. Did the Senator object to my request to set aside Senator

DOLE’s amendment?

The PRESIDING OFFICER. Senator

DOLE’s amendment has been set aside.

There is no need for a unanimous-consent request.

AMENDMENT NO. 1256

(Purpose: To extend the authority of the

Federal Communications Commission to

use auctions for the allocation of radio

spectrum frequencies for commercial use,

to provide for private sector reimbursement of Federal governmental user costs

to vacate commercially valuable spectrum,

and for other purposes)

Mr. STEVENS. Mr. President, I send

an amendment to the desk and ask for

its immediate consideration.

The PRESIDING OFFICER. The

clerk will report.

The legislative clerk read as follows:

The Senator from Alaska [Mr. STEVENS]

proposes an amendment numbered 1256.

Mr. STEVENS. Mr. President, I ask

unanimous consent that reading of the

amendment be dispensed with.

The PRESIDING OFFICER. Without

objection, it is so ordered.

The amendment is as follows:

At the appropriate place in the bill insert

the following:

SEC. . SPECTRUM AUCTIONS.

(a) FINDINGS.—The Congress finds that—

(1) the National Telecommunications and

Information Administration of the Department of Commerce recently submitted to the

Congress a report entitled ‘‘U.S. National

Spectrum Requirements’’ as required by section 113 of the National Telecommunications

and Information Administration Organization Act (47 U.S.C. 923);

(2) based on the best available information

the report concludes that an additional 179

megahertz of spectrum will be needed within

the next ten years to meet the expected demand for land mobile and mobile satellite

radio services such as cellular telephone

service, paging services, personal communication services, and low earth orbiting satellite communications systems;

(3) a further 85 megahertz of additional

spectrum, for a total of 264 megahertz, is

needed if the United States is to fully implement the Intelligent Transportation System

currently under development by the Department of Transportation;

(4) as required by Part B of the National

Telecommunications and Information Administration Organization Act (47 U.S.C. 921

et seq.) the Federal Government will transfer

235 megahertz of spectrum from exclusive

government use to non-governmental or

mixed governmental and non-governmental

use between 1994 and 2004;

(5) the Spectrum Reallocation Final Report submitted to Congress under section 113

of the National Telecommunications and Information Administration Organization Act

by the National Telecommunications and Information Administration states that, of the

235 megahertz of spectrum identified for

reallocation from governmental to non-governmental or mixed use—
S7902 CONGRESSIONAL RECORD — SENATE June 7, 1995

(A) 50 megahertz has already been reallocated for exclusive non-governmental use,

(B) 45 megahertz will be reallocated in 1995

for both exclusive non-governmental and

mixed governmental and non-governmental

use,

(C) 25 megahertz will be reallocated in 1997

for exclusive non-governmental use,

(D) 70 megahertz will be reallocated in 1999

for both exclusive non-governmental and

mixed governmental and non-governmental

use, and

(E) the final 45 megahertz will be reallocated for mixed governmental and non-governmental use by 2004;

(6) the 165 megahertz of spectrum that are

not yet reallocated, combined with 80 megahertz that the Federal Communications

Commission is currently holding in reserve

for emerging technologies, are less than the

best estimates of projected spectrum needs

in the United States;

(7) the authority of the Federal Communications Commission to assign radio spectrum frequencies using an auction process

expires on September 30, 1998;

(8) a significant portion of the reallocated

spectrum will not yet be assigned to nongovernmental users before that authority expires;

(9) the transfer of Federal governmental

users from certain valuable radio frequencies

to other reserved frequencies could be expedited if Federal governmental users are permitted to accept reimbursement for relocation costs from non-governmental users; and

(10) non-governmental reimbursement of

Federal governmental users relocation costs

would allow the market to determine the

most efficient use of the available spectrum.

(b) EXTENSION AND EXPANSION OF AUCTION

AUTHORITY.—Section 309(j) (47 U.S.C. 309(j))

is amended—

(1) by striking paragraph (1) and inserting

in lieu thereof the following:

‘‘(1) GENERAL AUTHORITY.—If mutually exclusive applications or requests are accepted

for any initial license or construction permit

which will involve a use of the electromagnetic spectrum, then the Commission

shall grant such license or permit to a qualified applicant through a system of competitive bidding that meets the requirements of

this subsection. The competitive bidding authority granted by this subsection shall not

apply to licenses or construction permits issued by the Commission for public safety

radio services or for licenses or construction

permits for new terrestrial digital television

services assigned by the Commission to existing terrestrial broadcast licensees to replace their current television licenses.’’;

(2) by striking paragraph (2) and renumbering paragraphs (3) through (13) as (2) through

(12), respectively; and

(3) by striking ‘‘1998’’ in paragraph (10), as

renumbered, and inserting in lieu thereof

‘‘2000’’.

(c) REIMBURSEMENT OF FEDERAL RELOCATION COSTS.—Section 113 of the National

Telecommunications and Information Administration Act (47 U.S.C. 923) is amended

by adding at the end the following new subsections:

‘‘(f) RELOCATION OF FEDERAL GOVERNMENT

STATIONS.—

‘‘(1) IN GENERAL.—In order to expedite the

efficient use of the electromagnetic spectrum and notwithstanding section 3302(b) of

title 31, United States Code, any Federal entity which operates a Federal Government

station may accept reimbursement from any

person for the costs incurred by such Federal

entity for any modification, replacement, or

reissuance of equipment, facilities, operating

manuals, regulations, or other expenses incurred by that entity in relocating the operations of its Federal Government station or

stations from one or more radio spectrum

frequencies to any other frequency or frequencies. Any such reimbursement shall be

deposited in the account of such Federal entity in the Treasury of the United States.

Funds deposited according to this section

shall be available, without appropriation or

fiscal year limitation, only for the operations of the Federal entity for which such

funds were deposited under this section.

‘‘(2) PROCESS FOR RELOCATION.—Any person

seeking to relocate a Federal Government

station that has been assigned a frequency

within a band allocated for mixed Federal

and non-Federal use may submit a petition

for such relocation to NTIA. The NTIA shall

limit the Federal Government station’s operating license to secondary status when the

following requirements are met—

‘‘(A) the person seeking relocation of the

Federal Government station has guaranteed

reimbursement through money or in-kind

payment of all relocation costs incurred by

the Federal entity, including all engineering,

equipment, site acquisition and construction, and regulatory fee costs;

‘‘(B) the person seeking relocation completes all activities necessary for implementing the relocation, including construction of

replacement facilities (if necessary and appropriate) and identifying and obtaining on

the Federal entity’s behalf new frequencies

for use by the relocated Federal Government

station (where such station is not relocating

to spectrum reserved exclusively for Federal

use); and

‘‘(C) any necessary replacement facilities,

equipment modifications, or other changes

have been implemented and tested to ensure

that the Federal Government station is able

to successfully accomplish its purposes.

‘‘(3) RIGHT TO RECLAIM.—If within one year

after the relocation the Federal Government

station demonstrates to the Commission

that the new facilities or spectrum are not

comparable to the facilities or spectrum

from which the Federal Government station

was relocated, the person seeking such relocation must take reasonable steps to remedy

any defects or reimburse the Federal entity

for the costs of returning the Federal Government station to the spectrum from which

such station was relocated.

‘‘(g) FEDERAL ACTION TO EXPEDITE SPECTRUM TRANSFER.—Any Federal Government

station which operates on electromagnetic

spectrum that has been identified for

reallocation for mixed Federal and non-Federal use in the Spectrum Reallocation Final

Report shall, to the maximum extent practicable through the use of the authority

granted under subsection (f) and any other

applicable provision of law, take action to

relocate its spectrum use to other frequencies that are reserved for Federal use or

to consolidate its spectrum use with other

Federal Government stations in a manner

that maximizes the spectrum available for

non-Federal use. Notwithstanding the timetable contained in the Spectrum

Reallocation Final Report, the President

shall seek to implement the reallocation of

the 1710 to 1755 megahertz frequency band by

January 1, 2000. Subsection (c)(4) of this section shall not apply to the extent that a nonFederal user seeks to relocate or relocates a

Federal power agency under subsection (f).

‘‘(h) DEFINITIONS.—For purposes of this section—

‘‘(1) FEDERAL ENTITY.—The term ‘Federal

entity’ means any Department, agency, or

other element of the Federal government

that utilizes radio frequency spectrum in the

conduct of its authorized activities, including a Federal power agency.

‘‘(2) SPECTRUM REALLOCATION FINAL REPORT.—The term ‘Spectrum Reallocation

Final Report’ means the report submitted by

the Secretary to the President and Congress

in compliance with the requirements of subsection (a).’’.

(d) REALLOCATION OF ADDITIONAL SPECTRUM.—The Secretary of Commerce shall,

within 9 months after the date of enactment

of this Act, prepare and submit to the President and the Congress a report and timetable

recommending the reallocation of the three

frequency bands (225–400 megahertz, 3625–3650

megahertz, and 5850–5925 megahertz) that

were discussed but not recommended for

reallocation in the Spectrum Reallocation

Final Report under section 113(a) of the National Telecommunications and Information

Administration Organization Act. The Secretary shall consult with the Federal Communications Commission and other Federal

agencies in the preparation of the report,

and shall provide notice and an opportunity

for public comment before submitting the report and timetable required by this section.

Mr. STEVENS. Mr. President, I understand the Senator from South Dakota, the distinguished chairman,

wishes to offer an amendment to this.

I understand that suggestion came in

after we originally drafted the amendment I have offered.

I yield to him at this time if he

wants to offer an amendment to my

amendment.

AMENDMENT NO. 1257 TO AMENDMENT NO. 1256

(Purpose: To provide for broadcast auxiliary

spectrum relocation)

Mr. PRESSLER. Mr. President, I

send a second-degree amendment to the

amendment proposed by the Senator

from Alaska to the desk and ask for its

immediate consideration.

The PRESIDING OFFICER. The

clerk will report.

The legislative clerk read as follows:

The Senator from South Dakota [Mr.

PRESSLER] proposes an amendment numbered 1257 to Amendment No. 1256.

Mr. PRESSLER. Mr. President, I ask

unanimous consent that reading of the

amendment be dispensed with.

The PRESIDING OFFICER. Without

objection, it is so ordered.

The amendment is as follows:

At the end of the matter proposed to be inserted, insert the following:

(e) BOARDCAST AUXILIARY SPECTRUM RELOCATION.—

(1) ALLOCATION OF SPECTRUM FOR BROADCAST AUXILIARY USES.—Within one year after

the date of enactment of this Act, the Commission shall allocate the 4635–4685 megahertz band transferred to the Commission

under section 113(b) of the National Telecommunications and Information Administration Organization Act (47 U.S.C. 923(b))

for broadcast auxiliary uses.

(2) MANDATORY RELOCATION OF BROADCAST

AUXILIARY USES.—Within 7 years after the

date of enactment of this Act, all licensees of

broadcast auxiliary spectrum in the 2025–2075

megahertz band shall relocate into spectrum

allocated by the Commission under paragraph (1). The Commission shall assign and

grant licenses for use of the spectrum allocated under paragraph (1)—

(A) in a manner sufficient to permit timely

completion of relocation; and

(B) without using a competitive bidding

process.

(3) ASSIGNING RECOVERED SPECTRUM.—Within 5 years after the date of enactment of this

Act, the Commission shall allocate the spectrum recovered in the 2025–2075 megahertz

band under paragraph (2) for use by new licensees for commercial mobile services or
June 7, 1995 CONGRESSIONAL RECORD — SENATE S7903

other similar services after the relocation of

broadcast auxiliary licensees, and shall assign such licenses by competitive bidding.

Mr. PRESSLER. Mr. President, this

second-degree amendment would add a

new subsection to the underlying

amendment. The new subsection would

direct the FCC to allocate a 50 megahertz block of spectrum in the 4

gigahertz band for use by broadcast

auxiliary services within 1 year of the

enactment of the bill. In addition, this

amendment would require that all

broadcast auxiliary service licensees

currently using a 50 megahertz block of

spectrum in the 2 gigahertz band relocate their activities to the 4 gigahertz

band within 7 years of the date this bill

is enacted.

Finally, this amendment requires the

FCC to auction the vacated spectrum

in the 2 gigahertz band for use by commercial mobile services like cellular

PCS within 5 years of the date of enactment.

By moving broadcast auxiliary service licensees, who do not pay the spectrum they are using, to another less

valuable frequency, we will make

available some very valuable spectrum

for auction.

The Congressional Budget Office estimates that the auction of the 50 megahertz block of 2 gigahertz spectrum

will bring at least $3.8 billion to the

Federal Treasury.

Combined with the underlying

amendment by the Senator from Alaska, this would raise more than $7.1 billion that is needed to offset the universal services provisions of this bill.

As the Senator from Alaska last

pointed out—I commend him—this is a

technical budget problem. The universal service provisions in this bill actually saves $3 billion over what would be

paid if the existing system is left unchanged. However, with these amendments we meet the letter of the Budget

Act.

I urge my colleagues to support the

adoption of my amendment and the underlying amendment by the Senator

from Alaska.

If it is appropriate, I would urge the

adoption——

Mr. KERREY. Reserving the right to

object, Mr. President.

Mr. PRESSLER. Mr. President, we

could go into a quorum call or yield to

our colleague from Montana who has

been waiting to speak.

Mr. BURNS addressed the Chair.

The PRESIDING OFFICER. The Senator from Montana.

Mr. BURNS. I do not wish to speak

on this amendment. Might I ask a

point of order? Could it be set aside,

and I proceed with my opening statement because no time was given for

opening statements?

Mr. President, I will continue on as if

speaking on this amendment.

This is sort of a special day to me because the former chairman of the full

committee, Senator INOUYE, and I,

when I first came here 6 years ago, had

quite a time as we started I think to

react to some of the things happening

in the industry. We thought probably

we were ahead of the curve in setting

some kind of policy that would reflect

the future. We thought we were ahead

of the curve. Now we are behind the

curve because technology as it is being

developed in this area is far outpacing

the regulatory environment in which it

finds itself.

I can remember that day when we

started to make amendments and the

former chairman was very gracious

that day. There were some people

around, and I was just a freshman Senator offering some ideas that I thought

were important in the telecommunications industry, understanding that

there have been three inventions which

have happened in my lifetime that

have changed this world forever. It has

changed it so that we cannot go back

and do things the old way anymore.

Those three inventions were the transistor, the silicon chip and the jet engine. Think what they have done to our

life and our world. We can be anywhere

else in the world, from Washington,

DC, in 12 hours. We can talk and receive and interact both in video and in

voice with anybody anywhere else in

the world in 5 seconds. Sadly, we can

destroy any other society on this Earth

within 20 minutes. That is what these

three inventions have done. They have

tightened down our world where comparatively speaking it has been the size

of this building in which we stand down

to the size of a basketball. Now we are

in a global society, a global economy,

and we just cannot go back.

We will amend the Communications

Act of 1934. That is some 60 years ago

before any of these inventions were

made. So basically what we are doing

is we are driving digital, compressed

digital, vehicles now within a law that

regulates a horse-and-buggy type of

situation. So we are here and starting

out this great debate on changing an

issue that will affect each and every

one of us.

Make no mistake about it. This is a

very, very important piece of legislation. I want to give kudos to our chairman and ranking member and their

staffs because they have spent many

hours in developing this bill with

strong bipartisan support.

This bill was not drafted to satisfy

business plans of major communications providers. It was drafted to benefit communications users, and communications users are solidly behind this

bill for a number of reasons. Number

one, they think it will bring down

rates. So do I. They know it will bring

advanced services. So do I. Perhaps

more importantly, they know it will

bring them more choices in telecommunications.

I recently saw a survey that illustrates why one important group—small

American business owners—want and

need communications reform. In Montana, over 98 percent of all businesses

are classified as small businesses. The

survey of 4,600 small business owners,

which was sponsored by the National

Federation of Independent Business,

found that almost two-thirds of the

small business owners surveyed want

to be able to get long-distance telephone service from their local telephone company; and, 54 percent want

to be able to choose local service from

their long-distance company.

A full 86 percent of these small business owners want one-stop shopping for

telecommunications services. Twothirds of them want to be able to

choose one provider that can give them

both local and long-distance telephone

service presented in either way.

Of course, lower rates are very important to business owners. We all look

for a way to do things more economically, to make our business more profitable, to open more economic opportunities and job opportunities for those

folks who live in our local neighborhoods. But breaking down outdated

barriers to competition that are preventing some local telephone companies from providing long-distance service and long-distance companies from

providing local service will also bring

something else that small businesses

want—that is called convenience.

Small businesses do not have the time

nor the resources to juggle separate

vendors with separate marketing arrangements and separate billing for

long-distance and local services, cable

TV teleconferencing and, yes, even

internet. They want to be able to

choose one reliable and affordable company that can bring them all of these

services; and when they have the telecommunications problem they want to

be able to get on the phone and call one

company that is qualified to handle

every aspect of their communications

needs and their networks.

At first, deregulation will create

competition by allowing companies to

cross over and compete in new business

areas. If we do this right, however,

very soon the gray lines that now separate telecommunications businesses

will be gone. There will be seamless

networks of vertically integrated communications providers competing head

to head, tooth and nail to win the consumers’ communications dollar. Those

dollars are very big dollars. As a result,

small businesses will be able to choose

one company that can provide all their

communications services—or they will

be able to continue buying their telecommunications services piecemeal

from multiple providers if they so

choose. Either way, their decision will

be based on who has the most affordable and most advanced services.

A full 92 percent of the small businesses owners questioned in this small

business survey said that the telephone

is central to their business. I do not

doubt this. I know plenty of small businesses throughout my home state of

Montana that rely heavily on the telephone to keep their business—mom and

pop catalog shops that sell Montana

buckskin jackets to the rest of the

country or small cattle ranches that
S7904 CONGRESSIONAL RECORD — SENATE June 7, 1995

use cable TV and telecommunications

to get future prices and negotiate with

the slaughterhouses. And I do not know

many small businesses today that function well without a personal computer

and a fax machine.

How many people looked at a fax machine 10 years ago and said, ‘‘Who in

the world would ever want to use one

of those things?’’ I will bet you cannot

walk into an office and many homes

that do not have a fax machine today.

Technology is truly a thrilling thing

as it propels us towards the next century. This bill will give small business

that one-stop shopping that they want.

So we have a chance to bury outdated restrictions that were created for

another era more than 60 years ago, restrictions that draw arbitrary lines between telecommunications providers

that just do not make sense anymore.

A lot of these anticompetitive, bureaucratic rules are only good to preserve

market share for established providers.

But protecting markets and maintaining the status quo is not going to help

bring lower rates and advanced services

to small businesses and consumers in

Montana or anywhere else.

I fought very hard to ensure that

small business participated in the information age. Whether it is small

newspapers, small cable operators we

have in Montana, or the small business

of radio, these businesses are the backbone of communications in Montana.

I have sought to include nondiscrimination safeguards for small

newspapers so that small information

providers, especially in rural areas,

will be able to purchase certain elements of a common carrier service offering on the smallest per unit basis

that is technically feasible.

In addition, small cable operators,

when freed from regulatory restraints

in past legislation, will provide perhaps

our best opportunity for telecommunications services in many of our Nation’s rural areas.

They all the time talk about the information highway, that glass highway. Everybody says: When are you

going to build it? I am not real sure

that it is not already there.

It is already there. All we have to do

is take off some restrictions so that it

can be used. And there is a ramp on it

and there is a ramp off of it. That is

what we have to make sure of in this

legislation.

Finally, I had deep concerns that one

of the Nation’s most important telecommunications small business industries, radio—I am familiar with radio—

was being passed over in the effort to

deregulate information providers.

Radio ownership decisions need to be

made by operators and investors, not

the Federal Government. That is why

we need to eliminate the remaining

caps on national and local radio ownership.

Nationally, there are more than

11,000 radio stations providing service

to every city, town, and rural community in the United States. Presently,

no one can control more than 40 stations, 20 AM and 20 FM stations. Clearly, the radio market is so incredibly

vast and diverse that there will be no

possibility that any one entity could

control enough stations to be able to

exert any market power over either advertisers or radio programmers.

At the local level, while the Federal

Communications Commission several

years ago modified its duopoly rules to

permit limited combinations of stations in the same service, in the same

market, there are still stringent limits

on the ability of radio operators to

grow in their markets. Further, FCC

rules permit only very restricted or no

combinations in smaller markets.

These restrictions handcuff broadcasters and prevent them from providing the best possible service to listeners in all of our States.

So, Mr. President, this will be landmark legislation. It is legislation that

we worked on ever since the first day

we stepped into the Senate, because I

happen to believe it is key to distance

learning; it is the key to telemedicine;

it is key to the future of those States

that are remote and must be in contact

with the rest of the world.

I appreciate the work of my good

friend, the Senator from Alaska, and

how he fights very hard because no one

has cities and towns and villages that

are more remote from the rest of the

world than he has. And he understands

that. Nobody understands that in this

body more than he does. Now, we have

some vastness in Montana but it does

not compare in any way with the State

of Alaska.

So as we move this debate forward, I

hope that we will keep an open mind

and really keep our eye on the ball because we have within our grasp the

ability now to turn loose a giant in our

economic world and provide services to

people who have never had those services before.

Mr. President, I thank you and I

yield the floor.

Mr. HOLLINGS addressed the Chair.

The PRESIDING OFFICER. The Senator from South Carolina.

Mr. HOLLINGS. Mr. President, I understand momentarily my distinguished colleague from Nebraska wants

to be heard on the amendment.

I would be prepared, at the conclusion of his remarks, to urge adoption of

the Pressler amendment to the Stevens

amendment and thereupon urge adoption of the Stevens amendment itself.

The Senator from Montana, who is a

professional auctioneer, should understand that the daddy rabbit of

auctioneering is the Senator from

Alaska. He has already made $7 billion

for us, and this amendment here is

going to make up another $7 billion to

get us by a budget point of order.

But let me, in saying that, acknowledge the hard work and leadership that

the Senator from Montana has given.

Since his very initiation on the Commerce Committee itself, he has been a

leader; he has been interested; he has

been contributing; and he has been a

tremendous help in bringing this bill to

the floor.

Mr. BURNS. If the Senator will yield,

I thank the Senator for those kind

words. And if I can possibly get the job

of auctioneering the spectrum, I probably would vacate this chair which I

am standing in front of.

Mr. HOLLINGS. I am going to lead

on that one myself.

I yield the floor.

Mr. KERREY addressed the Chair.

The PRESIDING OFFICER. The Senator from Nebraska.

Mr. KERREY. Mr. President, I have

reviewed the amendment that the distinguished Senator from Alaska is offering, and as I understand it, what it

does is it offsets an adverse score that

this bill has received from the Congressional Budget Office. CBO has said this

bill, in particular the universal service

fund, is going to cost $7 billion over the

next 5 years. Even though that is $3 billion less than what the current universal service fund does, there is the need

to come up with $7 billion to avoid a

budget point of order.

Now, I point out that under the budget resolution that was passed, when

was that, 11⁄2 weeks, 2 weeks ago, I believe that the Commerce Committee is

going to be looking at having to reconcile $20 billion, $30 billion anyway, so

you are going to have your hands full.

The committee will be trying to come

up with money to try to get within the

recommendations of that budget resolution.

What this amendment does, it comes

up with that $7.1 billion in the following fashion. It extends the spectrum

actions that are scheduled to expire in

1998 for another 2 years, generating $4.5

billion according to CBO, and then it

does something that is of particular interest, I believe, Mr. President—and

many people would ordinarily oppose

this but they are not—and that is the

broadcasters have today assigned a 2-

gigahertz spectrum in order to do auxiliary services. When they are going

out in the field and they are doing

some broadcasting out in the field,

they use that 2-gigahertz spectrum.

This amendment would transfer that

over a 7-year period from 2 gigahertz to

4 gigahertz, and then that 2-gigahertz

spectrum would be auctioned off, generating an estimated $3.8 billion over

the 5-year period.

Under normal circumstances, the National Association of Broadcasters

would probably oppose this, but there

are other things in this bill that they

like, so they are not going to oppose it.

I believe that the distinguished Senator from Alaska has made a good

amendment that will in fact cover the

$7.1 billion. And so, therefore, Mr.

President, I will not object to this

being accepted by unanimous consent.

Mr. STEVENS addressed the Chair.

The PRESIDING OFFICER. The Senator from Alaska.

Mr. STEVENS. The Senator from Nebraska has demonstrated how he is a
June 7, 1995 CONGRESSIONAL RECORD — SENATE S7905

quick study. He is right. I would add

one thing. I think the National Association of Broadcasters are going to

want some additional spectrum beyond

what is in this bill. We will work that

out. But this has been scored, and we

will work that out with them as we go

forward to make sure that we understand the problem.

The simple problem is that this bill

could not go forward unless we within

its terms meet the scoring problem

that the Senator from Nebraska has

outlined.

Again, I point out we are not, however, by this bill spending money for

universal service. But the budget process now makes us account for those

moneys we must be paid by the private

sector pursuant to a mandate, and

since we are continuing a mandate,

partially reducing it somewhat for universal service, it will cost less than the

old universal service, we now must offset it.

I think it is responsible on the part

of the Government to do that because

there is always the possibility some future Congress might decide not to mandate that service but require the Government to pay it.

So we have, in effect, met the challenge of the Budget Act and, in doing

so, we will actually, within this period,

raise the additional moneys which I believe will be utilized in offsetting other

budget problems as we go along. I do

not believe that will be required by any

action of the Congress in the future to

charge the cost of universal service to

the taxpayers.

Again, in my judgment, universal

service is required so someone who

comes up to my State who wants to

call home literally can do it, or wants

to bring up a computer and be attached

to data services can make that intersection with the telecommunications

system of our country.

I believe sincerely in universal services because without the universal

services, the villages and towns of our

rural areas would be still in probably

the early part of the 20th if not the

19th century while we all go into the

21st. If they are not to be left in the position where they are without employment because they cannot attach

themselves to this new telecommunications miracle of the United States,

then I think they will be a burden on

the rest of the country.

My friend George Gilder believes that

in the future, the computer will replace, in effect, the networks because

the networks will become, in effect, a

gigantic computer network rather than

just a television network. He tells us

that what is going to happen is that we

are going to have access through the

computer industry to interconnect

America’s schools and colleges in truly

a new worldwide web of glass and air.

If people want to think about it,

there is no way we can afford to have

this bill stopped by a budget point of

order. That is the reason for our

amendments. I join in urging adoption

of these amendments.

Mr. PRESSLER. I urge the adoption

of the amendment.

Mr. HOLLINGS. First, adoption of

the Pressler amendment. If there is no

further debate, I urge the adoption of

the Pressler amendment.

VOTE ON AMENDMENT NO. 1257 AS AMENDED

The PRESIDING OFFICER. If there

is no further debate, the question occurs on agreeing to the second-degree

amendment No. 1257 offered by the Senator from South Dakota, Senator

PRESSLER.

The amendment (No. 1257) was agreed

to.

Mr. HOLLINGS. I urge adoption of

the Stevens amendment, as amended

by the Pressler amendment.

VOTE ON AMENDMENT NO. 1256

The PRESIDING OFFICER. If there

is no further debate on the Stevens

amendment No. 1256, as amended, the

question is on agreeing to the amendment.

The amendment (No. 1256), as amended, was agreed to.

Mr. PRESSLER. Mr. President, I

move to reconsider the vote by which

the amendment was agreed to.

Mr. STEVENS. I move to lay that

motion on the table.

The motion to lay on the table was

agreed to.

Mr. STEVENS. Mr. President, I wish

to thank the managers of the bill and

those patient with us. I thought it was

essential first to proceed with these

amendments. Otherwise, we would be

wasting our time if a budget point of

order had the effect of pulling the bill

down. I thank all concerned.

Mr. LOTT. Mr. President, I inquire

what the parliamentary situation is?

Are we back now to making opening

statements at this point?

The PRESIDING OFFICER. Opening

statements are appropriate at this

time.

Mr. LOTT. Mr. President, I do want

to rise in support of this legislation

and make an opening statement. I

would like to begin, as others have already done, by congratulating and

commending the distinguished Senator

from South Dakota for the hard work

that he has put into this legislation. Of

course, many members of the committee have been working on this legislation for several months. As the distinguished former chairman said earlier,

way back in 1993 there was a lot of

work going on on legislation that led

to this moment.

But I know from personal experience

and observation that the chairman of

the Commerce, Science, and Transportation Committee, Senator PRESSLER,

said immediately after the election in

1994 that this is an issue that is going

to be given high priority, a great deal

of his attention and we were going to

work together to find solutions to the

problems that had prevented its consideration last year and earlier. He made

a commitment also to make it a bipartisan effort. So that is why we are here,

because the chairman of the committee

gave this such high priority and he has

worked diligently to resolve problems

that had been delaying this legislation.

I just want to acknowledge that fact

at the very beginning of this debate.

We have a long way to go, but I know

now we have started down the path toward passing this legislation. I think it

is a tremendous undertaking.

This is big legislation. It is important legislation. It involves a significant part of the overall economy in

this country. It is going to create jobs.

It is going to raise revenue because it

is going to be such a dynamic explosive

field. We are fixing to unleash the

bounds that have been holding back

this competition and advancements

and this development. I think that no

other segment of the economy in the

next 10 years will be more dynamic and

more exciting than that of telecommunications.

I also want to commend the distinguished Senator from South Carolina

who is working at this very moment to

resolve potential problems on this legislation, but Senator HOLLINGS worked

so hard last year to bring about the

passage of the bill through the Commerce, Science, and Transportation

Committee. It did not come to consideration, partially because we just ran

out of time.

But Senator HOLLINGS again this

year has shown a commitment to get

legislation developed that we can pass.

He is the major reason we are going to

have bipartisan legislation. We should

have more legislation like this in the

Senate. This is really the first bill of

the year of major import that I believe

will pass by an overwhelming bipartisan vote. So many of our issues have

been considered in a partisan way, have

been delayed with amendments. We

have had filibusters; 50 amendments on

the budget resolution. But in this case,

we will have a chance to develop a bill

that can be bipartisan and also a bill

that will pass this body first instead of

the other body of Congress. That is no

insignificant accomplishment.

Senator INOUYE certainly has also

been very interested in telecommunications. He worked on it last year and

has been helpful this year.

The indomitable Senator STEVENS

from Alaska is always there. When the

debate gets hot and heavy, Senator

STEVENS from Alaska will always rise

to the occasion, as he has on this bill.

I have one other recognition before I

get into my comments. I want to recognize the staff members who have

done great work, hard work. It has

been laborious, tedious, and they have

solved so many problems through the

great efforts of Paddy Link, and my

own staff assistant Chip Pickering,

clearly one of the brightest young men

I have known in my life. We would not

be here without their help.

Let me begin with a quote from testimony before the committee earlier. It

begins with a quote from a Senator

from Washington State, Senator Magnuson, who served with great distinction on the Commerce, Science, and
S7906 CONGRESSIONAL RECORD — SENATE June 7, 1995

Transportation Committee. He put it

very aptly when he said in this particular area of legislation ‘‘each industry

seeks a fair advantage over its rivals.’’

And then quoting the witness that

was before the committee:

Each industry wants prompt relief so that

it can enter the others’ fields, but at the

same time wants to avoid the pain of new

competition in its own field by tactics that

will delay that competition as long as possible. It is, therefore, up to the Congress to

make the tough calls and, in effect, cut the

Gordian knot.

That is what we are trying to do with

this legislation, cut the Gordian knot

that has held this dynamic field of the

economy back now for several years.

As unbelievable as it sounds, the

Communications Act of 1934 passed in

the era of the Edsel, and it is still the

current law of the land. That act now

governs, in fact, constrains the most

dynamic sector of the U.S. economy—

telecommunications. Just as the Edsel

became a symbol of all that is outdated, so is the 1934 Communications

Act. That act is based on old technology and, consequently, on an outdated, rigid-monopoly-based-regulatory model. Boy, that sounds bad, but

that is what we have today. It is time

we changed that.

That system cannot accommodate

the rapidly developing capabilities of

new technologies and advanced networks. Instead, it acts to restrict competition, innovation, and investment.

Under that framework, markets are

allocated, not won, by the sweat of

competition. Currently monopolies,

oligopolies or, at best, limited competition exist in local long distance and

cable markets. More than 40 of our 50

States prohibit any entrepreneur or

competitor from offering—even offering—local telephone service.

The 1984 consent decree which broke

up AT&T continues to restrict the Bell

operating companies from offering long

distance or manufacturing.

We should have fixed that long ago.

It would have created jobs and would

have been positive for the economy.

Current law prohibits cable companies and telephone companies from

competing in each other’s markets.

They are willing to do that. They want

to do that. Why should we not let them

do that?

Another 1934 law, the Public Utility

Holding Company Act, PUHCA, prevents registered electric utilities from

using their infrastructure and networks to offer telecommunication services to the 49 million American homes

that they serve. All of these restrictions and regulations and allocations

are truly the equivalent of an ‘‘Edsel’’

in the space and information age. In

the case of utilities, they are already

wired, hooked up. They have the capability to offer all kinds of services. Yet,

they are told, no, you cannot do that.

Why? There is no good explanation or

justification for it—especially if we do

this legislation in a way that is fair,

open, and allows competition for all.

In stark contrast, the Telecommunications Competition and Deregulation

Act of 1995—this bill—will move telecommunications into the 21st century

and will finally leave the era of the

Edsel behind. S. 652 will achieve this

through full competition, open networks, and deregulation. That is what

this bill is all about. That is what we

say we we want. Senators stand up and

say it day in and day out, about all

kinds of situations. Well, in this bill, in

this area, that is what we would do.

This bill provides a framework where

entrepreneurs and free enterprise will

make the information superhighway a

reality, not just a conversation piece.

As a result, tremendous benefits and

applications will flow to our economy,

to education, and health care. Industries will benefit from expanding markets and opportunities, and consumers

will benefit from lower prices in their

local, long distance, manufacturing,

and cable services.

If one hears the protest of the various industries, it is not because the

bill is too regulatory; no, just the opposite is true. It is because this bill removes all of the protection and market

allocations that made their respective

businesses safe and secure from the rigors of vigorous competition.

Under S. 652, all State and local barriers to local competition are removed

upon enactment. An immediate process

for removing line of business restrictions on the Bells is put in place. Moreover, the Bell companies are given the

freedom to immediately compete out of

region and provide a broad range of

services and applications known as

incidentals. These include lucrative

markets in audio, video, cable, cellular, wireless, information services,

and signaling.

The 1934 PUHCA is amended to allow

registered electric utilities to join with

all other utilities in providing telecommunication services, providing the

consumer with smart homes, as well as

smart highways.

Upon enactment, telephone and cable

companies are allowed to compete.

Current restrictions barring telephone

cable entry are eliminated.

As the telephone/cable restriction is

removed, S. 652, rightfully, loosens and

removes cable regulation. For cable to

convert and compete in the telephone

area, it will be freed from the regulatory burdens that limit investment

and capital capability, which has been

a problem in recent years for the cable

industry.

The restrictions placed on broadcasters, also during a bygone era, before cable, wireless cable, and advanced

networks, would be reformed.

Ownership restrictions on broadcast

TV are raised. An amendment removing restrictions on radio ownership will

be adopted, and this is one we have

worked hard on, and we have broad

support now for. The FCC is granted

the authority to allow broadcasters to

move toward advanced, digital TV and

to use excess spectrum, created by

technological advance, for broad commercial purposes. Broadcast license

procedures are reformed and streamlined.

S. 652, again, moving in from the

communications policy of the past,

goes from a protectionist policy to one

appropriate for the global economy and

technology of the 21st century. The bill

promotes investment and growth by

opening U.S. telecommunications markets on a fair and reciprocal basis.

In short, S. 652 constructs a framework where everybody can compete everywhere in everything. It limits the

role of Government and increases the

role of the market. It moves from the

monopoly policies of the 1930s to the

market policy of the future.

Toward that end, the removal of all

barriers to and restrictions from competition is extremely important, and it

is the primary objective, and I believe,

the accomplishment of this legislation,

thanks to the efforts of Chairman

PRESSLER and the former chairman,

Senator HOLLINGS of South Carolina.

In addressing the local and long distance issues, creating an open access

and sound interconnection policy was

the key objective, and it was not easy

to come up with a solution that we

could get most people to be comfortable with. It is critical to recognize

the reason why all of these barriers, restrictions, and regulations exist in the

first place—the so-called bottleneck.

Opening the local network removes the

bottleneck and ensures that all competitors will have equal and universal

access to all consumers. Such access

guarantees full and, I believe, fair competition.

The open access policy makes it possible for us to move to full, free-market competition in local and long distance services, avoid antitrust dangers,

and dismantle old regulatory framework.

In fact, the Heritage Foundation

makes the following statement and

points to the open access interconnection policy:

Policymakers of a more conservative or

free market orientation should not fear

this open access policy. In fact, they should

favor it for three reasons:

First, there is a rich, common law history

that supports the open access philosophy.

They cite railroad and telegraph policy in America and common law tradition dating all the way back to the

Roman Empire.

Second, open access works to eliminate

any unfair competitive advantages accrued

by companies that have benefited from Government-provided monopolies.

Third, open access removes the need for

other regulations because the market becomes more competitive if everyone is on

equal footing.

It is the only way to address economic deregulation where a bottleneck

distribution system exists. It is the

same policy which allows market

forces, instead of regulation, to work

in the case of long distance, railroads,

and in the oil and natural gas pipeline

distribution system.
June 7, 1995 CONGRESSIONAL RECORD — SENATE S7907

It is those examples of deregulation

to which we should look, not to models

of deregulation where no bottleneck

exists, such as airline or trucking.

Open networks will provide small and

mid-sized competitors the opportunity

to flourish alongside telecommunication giants. In the long distance industry, similar requirements made it

possible for over 400 small and mediumsized companies to develop and compete with AT&T over the past 10 years.

One of the better examples of this is

a former high school basketball coach

from a small town in Mississippi by the

name of Bernie Ebbers. Opening requirements such as interconnection,

equal access, and resale made it possible for this entrepreneur to build a

small long distance company into the

fourth largest in the country—LDDS.

It is incredible what has been accomplished by this smalltown man by giving him an opportunity to get in there

and compete, and boy did he ever and is

he having an impact.

Having used the example of a small

long distance entrepreneur, it is also

important to point out what happened

over the past 10 years to the former

monopolist, AT&T. Although AT&T

lost significant market share, it has

seen the long distance market that it

has greatly expand, and its revenues

continue with strong, healthy growth.

AT&T’s current revenues, with 60

percent share in the long distance market, as opposed to what was 100 percent, are now higher than in 1984. The

same dynamic will occur in the local

and other markets. Opportunities and

markets will expand for all participants, as long as they are effective and

efficient in the competitive environment.

It is this free market model which

led me to conclude that all of the companies in my State and region and, in

fact, in the country, will benefit from

this legislation. I believe that markets

and opportunities will expand for Bell

South and LDDS, both of which are

very important in my State of Mississippi, and other long distance companies, including electric utilities—

Southern Company and Entergy in my

part of the United States, and cable

companies and broadcasters will have

new opportunities to grow and expand.

A competitive model will create a

bigger pie for all the providers, but

more importantly, it is the consumers

and the overall economy of my region,

and I believe the whole country, that

will benefit from this legislation.

For consumers and competitors, the

open access requirements will do for

telecommunications what the Interstate Highway System has done for the

shipment of tangible goods and the

movement of people and ensure that all

competitors will have a way to deliver

goods and services to anyone anywhere

on the information superhighway.

Other requirements, such as number

of portability and dialing parity are

just common sense, procompetitive,

and fair. A consumer does not want to

have to dial more digits or access

codes, and if required to do so, they

will be less likely and probably not

switch to the competitive provider.

History shows that dialing parity in

long distance services and 1–800 service

greatly enhanced competition—or the

lack of dialing parity serves as an effective barrier to that competition.

Likewise, a small business or residential consumer will not switch to the

competitor if it meant the loss of his or

her current number. They will not do

it. The disruption to a business or individual or family is too great. That is

why we had to deal with this issue in

this legislation, although there was a

lot of opposition to it.

Another key element of S. 652 is

eliminating monopoly-based regulations and putting in place a mechanism

to remove those regulations.

The bill eliminates rate-of-return

regulation, a regulatory model which

cannot logically exist in a competitive

environment created by this legislation. States are encouraged to move to

more flexible and competitive models.

S. 652 requires the FCC to forbear or

to eliminate any past or current regulation requirement which would no

longer make sense in this market base

of competition. There will be a biannual regulatory review in this legislation that would recommend the elimination, modification, or other needed

regulatory reform in the future.

Mr. President, in closing, I think it is

time to adopt this communications

policy for the future. It provides the

right framework, it removes all barriers and restrictions to free market

competition, innovation, and increased

investment.

With the passage of this legislation

our economy will grow a lot faster. We

have had tremendous estimates of the

kind of economic impact this legislation will have in the billions of dollars.

More jobs will be created, applications

in education and health care will expand more quickly, and the quality of

life will improve in both rural and

urban areas.

It is time to move beyond the culture

of timidity where the companies and

political leaders, regulators, and the

courts resist needed reform, fear competition, and opt for the security and

inferiority of the status quo.

We know that is what the election

was about last year, change in the status quo. Boy, this bill will do that. It is

time to trade in the Edsel and pass

telecommunications legislation that

will move us truly into the future.

I do want to note that I think that

the center that holds this legislation

together is the part that deals with the

entry test. When the local Bell companies get into long distance and they get

into the local unbundled market, we

have a delicate balance there.

Are they totally happy? No, they

would like a fair advantage in each

case, but we have been able to cobble

together this important balance, and I

think it is one that we should support.

I believe that we will be able to get

this legislation through.

In conclusion, Mr. President, I ask

unanimous consent to have printed in

the RECORD information specifically

citing the impact that this legislation

can have in my home State of Mississippi.

There being no objection, the material was ordered to be printed in the

RECORD, as follows:

WHAT DOES IT MEAN FOR MISSISSIPPI?

Mississippi is home to some of the Nation’s

new leaders in every segment of telecommunications.

Mississippi is prospering and benefitting

from the contributions made by the largest

and fastest growing regional company, Bell

South.

LDDS, a Jackson, MS company, is the

fourth largest long distance company in the

Nation and an expanding international force.

It is a true American success story.

M–TEL, another Jackson based company,

is a dynamic entrepreneurial and leading national company in wireless paging service.

A dynamic culture of young entrepreneurs

in cellular services is thriving throughout

the State.

Parent companies to Mississippi Power and

Mississippi Power and Light, Entergy and

Southern Company, are pioneer companies

promoting utility participation in telecommunications and advanced networks.

They will pave the way for smart homes and

highways in our State.

Cable companies of all sizes have deployed

throughout Mississippi into virtually every

small town.

Wireless cable services have exploded in

both rural and urban areas of my State.

Mississippi, in cooperation with National

Aeronautical and Space Administration, our

leading educational institutions and South

Central Bell, has deployed an advanced network which connects schools, universities,

Federal facilities, super computers and national data bases. It is an educational and

high tech model for the future and the Nation.

It is in my home State of Mississippi that

I have seen and experienced the benefits of

the communications revolution. I know what

it means to the economy and quality of life

for my State. It means the creation of high

tech jobs, attracting new industry, and promoting and connecting Mississippi to the Nation’s best educational opportunities.

As a Senator from a State which has become a leading telecommunications center, I

come to this debate with the conviction that

this legislation will serve Mississippi’s, the

Nation’s, consumers’ and competitors’ best

interest.

S. 652 promotes and accelerates the communication revolution by tearing down all

barriers and restrictions preventing the benefits of free market competition.

Mississippi’s economy, with telecommunications serving as a key catalyst, is growing

and expanding. This legislation will further

fuel its growth.

Under S. 652, Mississippi companies will

have new opportunities and expanded markets as well as the challenges of competition. South central Bell will be able to expand into long distance, cable, manufacturing and other services.

LDDS, cable companies, Southern Company, Entergy, and numerous other companies will be able, for the first time, to begin

competing for local service and combining

local, long distance and cable services.

With S. 652, Mississippi’s TV and radio

broadcasters will see old restrictions removed or raised which have stifled growth

and new business.
S7908 CONGRESSIONAL RECORD — SENATE June 7, 1995

Small cable operators in Mississippi who

have struggled under the regulatory burden

of the 1992 Cable Act, will see regulatory relief. Once again, Mississippi cable operators

will be able to expand and deploy new services, regain financial stability and prepare to

compete in new markets.

The competition among all participants

will spur innovation, products, advanced networks and lower prices for the benefit of Mississippi’s consumers and industries.

I want Mississippi to continue as a national leader in telecommunications. S. 652

will help achieve that objective.

For the Nation’s future, S. 652 is one of the

most significant pieces of economic legislation we will consider.

The President’s Council of Economic Advisors estimates the telecommunications deregulation will create 1.4 million new jobs by

the year 2003.

A study by the WEFA group, funded by the

Bell Companies, projects 3.4 million jobs by

the year 2005 and 0.5 percent greater annual

economic growth over the next 10 years.

In addition, the committee heard testimony that the Pressler bill will lead to an

additional $2 trillion in economic activity.

The communications sector, more than

any other, will shape our future economy as

well as our civic and community life. This

bill is the right policy to maximize the benefits this sector of our economy can deliver.

I urge my colleagues to support this legislation. It is time for Congress, not the courts

or bureaucracies, to establish the communications policy for the 21st century.

Mr. LOTT. Mr. President, I yield the

floor.

Mr. PRESSLER. I thank the Senator

from Mississippi for his terrific contribution. Chip Pickering has been in

every step of the way. This would not

be happening without your great leadership. I personally thank you very,

very much.

Mr. President, I am sending to the

desk a managers’ amendment which I

am cosponsoring with Senator HOLLINGS. This amendment, which has

been cleared on both sides of the aisle,

makes a number of technical and

minor changes in the bill that have

been worked out since the bill was reported by the Commerce Committee.

I ask unanimous consent that when

adopted, the text be treated as original

text for purposes of further amendment.

At this point I would like to send the

managers’ amendment to the desk.

Mr. LAUTENBERG. Mr. President,

reserving the right to object, I commend the managers of the bill thus far.

I know they are anxious to conclude a

period of a lot of hard work and having

struggled through many discussions

and agreements to get this behind.

The reason that I raise the possibility of an objection is because, in the

process of developing the managers’

amendment, it was determined that a

major research company based in New

Jersey but doing work throughout this

country, a company that has offered

many innovative ideas in this period of

new technology in communication,

would be prohibited as a result of the

present managers’ statement from engaging in manufacture, even though it

is the public declaration that they intend to be free of the regional Bell

companies ownership. There they are, a

company trying to engage in a competitive practice.

I had a discussion with two good

friends, Senator HOLLINGS on the

Democratic side and Senator PRESSLER

on the Republican side, to see if there

was any way that we could defer action

on this tonight so we might discuss the

competitive environment tomorrow

morning.

Apparently, it is the belief of the

managers that this bill has gone

through so much labor and so many

delicate steps that to further delay

that might be injurious to the success,

ultimately, of passing this bill.

So while I will not object, I would

ask the managers whether or not I can

have their support for a discussion of a

proposal to enable the competitive

character of the field to be expanded

although it is lacking in the statement

of the managers.

Mr. PRESSLER. I want to commend

my friend from New Jersey, Senator

LAUTENBERG. I know he is an experienced businessman, and I know there is

some controversy about Bellcore. It is

my belief that if Bellcore is sold and

out there competing, it should be able

to compete without restriction.

That is based on the information I

have at this moment. I know there is a

great controversy about manufacturing, because about 99 percent of manufacturing many new devises is research.

It seems to me that the Senator has

raised a very good point. As I understand it, in the managers’ amendment,

we have taken this section out so we

will be able to entertain a colloquy, or

indeed an amendment.

I have begged several Senators to

come tonight to offer amendments. We

have all these strong feelings and we

would like to get a vote on something

tomorrow morning at 9 o’clock. As I

gaze about, I do not see any amendments cropping forth. We welcome

amendments.

I want to thank the Senator from

New Jersey for raising this, because

based on the information I have, I tend

to agree with what I think his position

is. I think he has raised a good point. If

we could still adopt the managers’

amendment, that is not, as I understand it, in there. We have taken out

anything that there is controversy

about.

Mr. HOLLINGS. Mr. President, first

let me thank, as our chairman has very

dutifully done, the distinguished presiding officer, the Senator from Mississippi, Senator LOTT, for the 2 years

that we worked on S. 1822. The Senator

has been an outstanding leader on S.

652 and his staff Chip Pickering has

done exceptional bipartisan work. We

never would have gotten this far, this

balance that has been emphasized, had

it not been for Senator LOTT’s leadership. I want to thank my distinguished

colleague from New Jersey for his attitude and approach to this. What happens, I have two lists in my hands. The

list of possible amendments in my left

hand are those amendments that are

not agreed to, that we could not get

consent on from the colleagues and the

staffs on all sides. Objections have been

heard. We had a list of those things

that we thought were peripheral matters like ‘‘Replace subsidiary with affiliate where it appears,’’ number 2,

‘‘The FCC may modify the modified

final judgment with decrees once they

are transferred to the FCC,’’ and on

down the list. These are things that

both sides have agreed to.

Unfortunately, other distinguished

Members of the Senate, and particularly on our committee of Commerce,

have objected to the provision dealing

with Bellcore. As I understand it, as

the distinguished Senator from New

Jersey points out—they are very competitive. Heavens knows, they produced

the technology. If you had to measure

in percentage of communications, I

would say 90 percent of it has been produced in the Senator from New Jersey’s home State there at Bellcore.

So I am disposed to help in any way

I can the Senator from New Jersey. It

is not within my power to do so because I have, like I say, in my left hand

those amendments that are not agreed

to. And the Bellcore amendment would

have to be on that particular list.

They are not agreed to. There are at

least three Senators on the committee

who have so notified us. And if any

Senator notified me right now on any

of the other items in the managers’

amendment I would object for them if

they could not even be here. That

would be my duty as a manager of the

bill, because every Senator has to be

respected.

I have the highest respect for the

Senator from New Jersey. I will do everything possible I can to help him

with his amendment.

Mr. LAUTENBERG. With that statement, if the Senator will yield, Mr.

President, I have no objection to going

forward.

The PRESIDING OFFICER. Without

objection, the several unanimous consent requests are agreed to.

Mr. KERREY. Reserving the right to

object, is this just a unanimous consent to read the amendment?

Mr. HOLLINGS. We have to read the

amendment.

AMENDMENT NO. 1258

(Purpose: To make minor, technical, and

other changes in the reported bill)

The PRESIDING OFFICER. The

clerk will report.

The legislative clerk read as follows:

The Senator from South Dakota [Mr.

PRESSLER] for himself and Mr. HOLLINGS proposes an amendment numbered 1258.

Mr. PRESSLER. Mr. President, I ask

unanimous consent that reading of the

amendment be dispensed with.

The PRESIDING OFFICER. Without

objection, it is so ordered.

(The text of the amendment is printed in today’s RECORD under ‘‘Amendments Submitted.’’)
June 7, 1995 CONGRESSIONAL RECORD — SENATE S7909

Mr. KERREY. Reserving the right to

object, Mr. President, what are we

doing here?

The PRESIDING OFFICER. The Senator from South Dakota just asked the

amendments be considered as read.

Mr. PRESSLER. I am asking unanimous consent to adopt the managers’

amendments, which I have sent to the

desk, and which have been cleared on

both sides of the aisle.

Mr. HOLLINGS. Is that cleared with

the distinguished Senator?

Mr. KERREY. I have great respect

for the Senators from South Carolina

and South Dakota, but I have not read

the amendment. It was just brought to

me. It is 40-some pages long and I understand there is lots in it. I cannot. I

object.

The PRESIDING OFFICER. Objection is heard.

Is there debate on the amendment?

Mr. PRESSLER. I suggest the absence of a quorum.

Mr. KERREY. Mr. President, I ask

unanimous consent to withhold the request for the quorum call.

The PRESIDING OFFICER. Is there

objection?

The Senator from Nebraska seeks

recognition? The Senator from Nebraska.

Mr. KERREY. Mr. President, I know

there is some confusion. I see my friend

from South Carolina and South Dakota

as well. I have a great deal of respect

for them. I take a great deal of interest

in this legislation. They have been

kind to allow a member of my staff to

sit in on lots of the deliberation.

But I want my colleagues to understand there is a lot in this bill that is

not very well understood. I declare

straight out I will not vote for this bill

in its current form. I am here because

I see great promise in telecommunications. I see great promise, in fact, in

deregulating the telecommunications

industry and using competition to regulate as opposed to having Government

mandates and so forth do the job.

But in 1986 I signed a deregulation

bill. I may be, for all I know, the only

Member of Congress who can come to

the floor and say ‘‘I signed a deregulation bill for telecommunications.’’ And

I know that deregulation does not

mean competition. You can have deregulation and have no competition.

I call upon my colleagues who wonder about the impact of their votes.

There is a great deal of concern about,

for example, the budget resolution we

took up. ‘‘Gee, what is this going to do

to me? Is it going to be difficult to explain at home? There are lots of things

in there that might become unpopular

and am I going to pay for voting yes on

the budget resolution?′′

We have lots of issues that are extremely controversial. This is a lot

more controversial than meets the eye.

I ask my colleagues who are considering voting yes for this and want to

move it through quickly to recall what

life was like in 1984 when Mr. Baxter,

from the Department of Justice, signed

a consent decree divesting AT&T of the

Bell operating companies, filing that

decree with the Federal court here in

Washington, DC.

I remember I was Governor of Nebraska at the time and I can tell you,

you could have selected a thousand

people at random and asked them this

question: Would you like Congress to

put the Bell companies back together?

Do you like what Baxter and Judge

Greene did?

And of the thousand people I will bet

998 people would have said ‘‘Reverse it.

Put it back together. We do not like

the confusion that we have. We do not

like trying to figure out all this stuff.’’

It was not popular. Do not let anybody

be misled by this. This is going to create considerable confusion in the early

years. You are not likely to be greeted

by a round of applause by households,

consumers, who have not been consulted about this legislation.

This is not a Contract With America.

Most of the things that we have taken

up in this Senate have been carefully

polled and researched to determine

whether or not they are popular. I have

heard, whether it is the balanced budget amendment or the budget resolution

or term limits, all sorts of other

things, people come down to the floor

and say, ‘‘In November the people of

the United States of America spoke

and here is what they meant.’’ I have

heard speaker after speaker say that.

And in many cases I agreed with them,

because I ran in November of 1994.

But I did not have a single citizen,

when I was out campaigning, come up

to me and say: ‘‘Boy, make sure when

you go back, if you get reelected, if you

go back and represent us, make sure

you go back there and deregulate the

phone companies. Make sure you go

back there and deregulate the cable industry. Make sure. Bob, make sure, if

you get back there, get rid of the ownership restrictions on television stations, on radio stations. Because that

is what I want. I am really excited

about all this stuff. I really think there

is a lot in this for me. That is what I

want. That is the sort of thing I would

like to have you go back there and do.’’

The American people have not been

polled on this one. The distinguished

majority leader came down and said

there is bipartisan support. It is not a

Democratic issue. It is not a Republican issue. He is quite right. It is not.

This is an issue that has been discussed

at length and I discussed it at length

with many corporations that want to

be deregulated. They want to be deregulated. In many cases they are

right.

But if you listen to the rhetoric, just

this far, you would think that the current regulation is holding back the

telecommunications industry to such

an extent that we have lousy telephone

service, that we have noncompetitive

industries. You would think America

was somehow backwards compared to

all the rest of the world. That is not

true.

If you look at the OECD examinations of our industries, telecommunications, including the telephone companies, are among the most competitive in the world and among the most

productive in the world.

It does not mean, because a company

is regulated, that it is not productive

or that it is not competitive or that

somehow it is going to produce an unsatisfactory thing for the American

people.

I am telling my colleagues a lot of

people will come down here and say,

‘‘It must be good. There is a lot of bipartisan support for it.’’ Walk up to

the desk, check out a lot of these

amendments, see which way people are

voting—this one is going to be remembered. This vote is a big vote. In my

State I have about a million households. If you talk telecommunications

to those households they do not talk

faxes. They are not thinking about enhanced digital processing and all that

stuff. They are saying, ‘‘What is my

dial tone going to cost me? What is my

cable going to cost me?’’ That is what

they talk about.

I think we need to come down to this

floor and ask ourselves a question.

What is this bill going to do for those

households? What is it going to do for

the consumer? I hear people say it is

going to create lots of new jobs. In the

course of this debate we are going to

come down and examine the question:

Who has been creating the jobs?

(Mr. LOTT assumed the chair).

Mr. KERREY. Where are the jobs

going? One of the things I hear from

people, an awful lot of telecommunications industry people working for the

telecommunications company, is substantial downsizing. I say, ‘‘Do you

want to deregulate? Are you going do

get more jobs?’’ They say, ‘‘I do not

know. You know. It has not been working too good thus far.’’

I am down here to talk about what

this is going to do for the many households, and for the American consumers.

I look forward to the debate. There is

much in this legislation that I support.

I believe in many cases deregulation

will produce a competitive environment that will benefit the American

consumer, and that will benefit the

American household. But let no one be

mistaken. When we pass this piece of

legislation in the Senate and go to conference with the House, and get final

passage in the early days, do not expect to have the people who vote for

you say you were right. ‘‘Boy, this

thing has really worked.’’ It may take

9 or 10 years, which is what happened

with divestiture. It took us a good 10

years before people began to say, ‘‘Wait

a minute. This is working. Competition

is bringing the price down. The quality

is going up. This appears to be in fact

generating something beneficial to

me.’’

So I would like to get a little fundamental here. I very often, as I am

sure the distinguished Presiding Officer does and other Members do, get
S7910 CONGRESSIONAL RECORD — SENATE June 7, 1995

asked, ‘‘What is it that you do? What

do you in Washington, DC?’’ Do I just

come down to the floor and give

speeches? Do I just answer my telephone and answer letters and do constituent service for the people are having trouble with the IRS, the EPA, or

various other agencies of the government? Yes. I try to explain to them I

am involved with writing laws. That is

what we do here. We write laws; and

that the laws matter. I am not a lawyer.

I very often wonder whether or not

one of the most important things lawyers do is write the laws that are so

darned confusing we have to hire them

in order to tell us what is in them. But

the longer I am on the job, the longer

I am on the job of being in politics and

being a politician, the law is becoming

more important to me. I see that they

are alive. They have an impact on people, and they make a difference.

This bill has about 144 pages in it.

Every single word is important. Every

single phrase here is going to affect

something. We all know it. We have

them coming into the office saying we

are concerned about this particular

phrase, we are concerned about this

particular paragraph. I have heard it

already referenced—some of the agreements have been difficult to get. They

have been difficult to get because every

time you do something somebody says,

‘‘Gee. That is going to affect me in an

adverse way.’’

The distinguished Senator from Alaska had an amendment earlier that paid

for the cost of the universal service,

and one of the things that he did—I believe he is quite right—the National

Association of Broadcasters is going to

object. There are going to be people

who say, ‘‘I do not like where you got

the money.’’ Everything we do in this

legislation we know affects one interest group or another. But it is also

going to affect more than almost anything we have discussed thus far this

year; Indeed, perhaps for a long, long

time, every single American household.

If you have a telephone in your

home, it is going to affect you. If you

have a cable line running into your

household, this bill is going to affect

you.

I just said to citizens out there who

are wondering about what the mumbo

jumbo is about, you are going to hear

a lot. You had better pay attention because, if you have a telephone, and you

if you have a cable line coming into

your household, you had better pay attention to this legislation because it is

going to have a big impact upon you.

You are going to hear a lot of people

coming down saying this is going to be

good for you. You did not ask for it.

You did not say, ‘‘By gosh. Let us

change this law.’’ You did not ask for

this thing. But we have figured out this

is going to be good for you. And make

no mistake about it. We have really

paid careful attention to this legislation. We know exactly what it is going

to do.

Mr. President, I believe that the

American people deserve as a consequence of the impact of this legislation a good and healthy and lengthy

debate.

I heard the distinguished occupant of

the Chair earlier say he hopes this

thing does not degenerate into a filibuster. I do not intend to filibuster this

thing. I point out with great respect to

the Senator from Mississippi that 1822

would have passed last year if it had

not been filibustered and slowed up and

tied up by people who said we do not

want this thing to go. This would have

been law last year I believe. I do not

know if the Senator from South Carolina can confirm that.

I do not want to tie this thing up

with filibusters and delays. I intend,

when there is a manager’s amendment

or incidental amendment, to examine

the language because the language is

important. It is going to have an effect

on people.

I say, again for emphasis, that I believe this vote is going to be a lot more

controversial the further away you get

from it than people suspect today. One

of the things about laws that citizens

need to understand is that very often it

is about power. That is to say, who has

the power?

I joined with, again the distinguished

Senator from South Carolina, in voting

against tort reform bill a little earlier

because in my judgment that was

about power. That was about saying to

the citizens of this country you are

getting swept away saying the trial

lawyers are making life miserable for

you. Just ask yourself this question:

You get hurt out there, you have a

problem out there. Who is going to help

you? Is congress going to help you? Are

you going to call up your Congressmen

and say, ‘‘I am getting abused by the

phone and cable companies. I do not

like what is going on out there. Do you

think Congress is going to rush to your

defense? Do you think it will be possible for you to get the agencies of the

Federal Government to rally to your

cause? And you probably do not even

have enough money to buy an airplane

ticket to come back here, and if you

came back here you will not know

where to go.

This is about power. And regulations

are in place to protect the interests of

the people. That is what they are there

for. Let us deregulate.

I have a little case going on right

now in Omaha, NE, that illustrates

what I am talking about. We have a

plant in Nebraska which employees a

couple of hundred people. Unfortunately, the company processes lead,

and they put a lot of lead in the air and

water. And it has been determined—

and no one disputes it—that lead damages newborn babies without dispute.

We do not have leaded gasoline any

longer because we have decided that is

the case. We have a Clean Air Act, we

have a Clean Water Act. This company

has been out of compliance for over 15

years.

Guess how we are going to resolve it?

Do you think we resolved it because a

U.S. Senator intervened on their behalf? Do you think the Congress came

to the rescue? Do you think it was the

administrative branch? No, sir. A couple of citizens filed a suit in court. It

was the judiciary. It was the right of a

citizen to go to court and say, ‘‘This

company is not obeying the law of the

land. I am going to insist that they

obey the law of the land.’’

Mr. President, make no mistake

about it. This piece of legislation is

about who controls the airways, who

controls your telephone, who controls

the information? It is about power.

I hear a lot of people say, ‘‘Well, we

ought to get the government out of

that.’’ Let us have a debate about what

the government should or should not

do on behalf of the citizens. I am prepared to do that. I think it is a healthy

debate. Let us not presume it is quite

so easy as just saying competition is

the best regulator, which I heard three

or four or five times. Competition does

not give us clean air. Competition does

not give us clean water. Competition

would not likely make every single factory in the workplace in America safe.

Maybe somebody wants to come down

here and say that is the case.

I get 1,000 Americans who say, ‘‘You

tell me.’’ Do you trust the corporation?

You have a corporation out there that

is desperately worried about their

quarterly profits. They are worried

about bottom line. They have the

shareholders out there to perform for,

and they have to make a decision.

They have 1,000 people working for

them, and have been working for them

let us say 30 years; 30,000 man and

woman hours in that corporation. They

have to make a decision to lay all

thousand of them off, and give them no

fringe benefits, no severance pay, no

retirement. All of those things add cost

to the corporation.

I ask my Americans. Do you trust

that corporation? Do you think that

corporation is going do say ‘‘No. I

think it is right and decent; I do not

care what the stock holders say, what

Wall Street says; I am going to ignore

all of those people up in New York

City; I do not care what they say; I am

going to do the right thing; I am going

to give you severance pay; I am going

to provide you with your health care,

and take care of that retirement benefit because I care about you; you are a

human being; I am not going to treat

you like trash?’’

I do not believe many Americans are

going to say that is likely to be the

case. If a company is a mom and pop

shop, owned by an individual which

owns 100 percent of the stock, that

might be different. But when that company CEO worries about the value of

its share, that companies CEO does

things differently. They have to. I do

not say they are doing the wrong thing.

I do not blame them for doing that.

But please do not come and say that

the market is going to get the job
June 7, 1995 CONGRESSIONAL RECORD — SENATE S7911

done. The market rewards people that

produce. The market rewards a much

different set of values than the values

that I have just described with these

thousand families.

So again, the next thing I say to citizens who are wondering about these 144

pages and all of the amendments that

will be offered, it is about power and

power over your lives, power to deliver

you information, power to give you a

phone service, power to give you video

information, power to give you the

things that you say that you want.

For your information, a lot of people

who are coming down here saying get

the government out of that are very

strongly supportive of unfortunately a

title offered by the senior Senator from

Nebraska, title 4, which said we need to

have a lot more government involvement when it comes to regulating.

I understand there is going to be

some amendment to make even tougher penalties. That is popular. That one

we all know. People are fed up with obscenity and they are fed up with the

stuff they see on television and they

want us to do something about it. And

title IV attempts to do that. I hope we

are a bit careful, to say the least, with

title IV, but title IV is more Government, it is not less. Title IV is the

statement by Members of Congress

that says the market does not work

when it comes to obscenity.

Do some people want to come here

and tell me it does? Does somebody

want to come down here and say the

market is the best regulator of obscenity? I do not think so. I do not think

there is going to be a single Member

come down here and say just let the

market take care of it; we do not care

what kids are getting over the

Internet. We do not care what is coming into homes.

No. In that instance the market goes

out the window. In that instance we

say Time/Warner is putting out slime.

We have to regulate them in some fashion.

So, Mr. President, again, I have a

great deal of respect and appreciation

for the managers of this bill. They have

done an awful lot of work on it. I do intend to carefully examine the amendments that are offered. I do believe

that increased competition can be

enormously beneficial. I believe that it

can, properly done, result in lower

prices, higher quality service, particularly, as I said, if it is done in a fashion

that lets everybody compete.

Again, I do not underestimate the

difficulty of this. I am going to have a

lot of explaining to do to my citizens

to tell them why this is good for them

because in the early days when they

get competition they are going to get

confused. And in the early days they

may even get some price increases.

They may find themselves paying higher telephone service. They may find

themselves paying higher cable. We do

not know. We are saying let the market set the price, in general, once you

get to the final end of this thing. Let

the cost determine what people are

going to pay. We have a very small

amount of subsidy in the universal

service fund. We have an education provision that some people are going to

come down here and try to strike, saying the market ought to have taken

care of that. After having given speeches saying this is good for health care,

this is good for education, they do not

even want to have that provision in

this piece of legislation.

I have many problems with this bill,

Mr. President. I do believe the Department of Justice needs a role in this. I

do not think consultation is enough. I

would cite as case No. 1 why consultation is not enough, the very thing that

Members will use when they are saying

that competition works, and that is

Mr. Baxter and Judge Greene getting

together, the Department of Justice

getting together with a Federal judge

and putting together a consent decree.

It was the Department of Justice. It

was the Department of Justice that

gave us the competitive environment.

It was not the Federal Communcations

Commission. I am not calling for increased authority, increased power, but

I want them to do more than consult.

They understand competition. The

Antitrust Division of the Department

of Justice understands where and when

competition is, and they are about the

only ones in this town that, at least by

my measurement, are out there fighting to make sure that that marketplace in fact is working.

I have serious problems saying that

telephone companies can acquire cable

companies inside of their area immediately.

Mr. President, I believe we have to

have two lines coming into the home. I

believe you have to have—if it is going

to be fiber or some kind of combination

of coax and fiber, I do not know what it

is going to be, but I want two lines

coming into my home.

I have heard people talk an awful lot

about competition, and I have heard all

the companies coming in saying they

want a competitive environment. This

is one thing I know. Competition to me

means I have choice. Again, this idea of

choice is a two-edged sword. You are

going to have a lot of households out

there that are not going to be terribly

pleased with this new choice they have,

and they are not going to be terribly

happy when they see what that choice

might do.

We have to be prepared to stay with

this thing. To my mind, choice means

if a company does not give me what I

want, I can take my business someplace else. Competition means to me I

can go wherever I want and get the

service I want. And I believe in many

ways this bill does just that.

The requirements of unbundling, of

dialing parity, the requirements that

are in this legislation in title I, in my

judgment, provide a good basis for us

to have a competitive environment. Allowing the phone companies to go out

and buy cable inside their own area,

Mr. President, is going to restrict competition immediately. We are not going

to have the local cable company and

the phone company competing because

the phone company is going to have an

incentive to buy them. If they buy

them, it ends that competition.

I am prepared to hear arguments

about that, but I think allowing this

cable-Bellcore ownership in the local

area does precisely the opposite of

what this bill intends to do.

The other objections and problems

that I have with the bill I will come

later to the floor and try to address. I

see the Senator from Pennsylvania is

down here. I suspect that he wants to

make a statement. I just wanted to

stand up at this point in time and say

to the Senator from South Dakota and

the Senator from South Carolina I do

not intend to stand down here and stop

this piece of legislation from being enacted. But I do intend to stand down

here and examine every amendment

that is proposed and make sure it is an

amendment that I agree to for all the

reasons I cited earlier.

The consumers of this country, the

households of this country have not

been consulted. We are presuming that

it is going to be good for them because

we have talked to American corporations and they are saying it is going to

be good for them. They are saying this

is going to be good for consumers. The

corporations are saying it is going to

be good for those households. They are

saying it is good because they are getting more jobs, higher service, better

quality, and lower prices.

That is what they are saying. It is

not coming from households. This is

not coming from the people of the

United States of America, whether it is

the people of South Dakota, the people

of Nebraska, South Carolina, Mississippi, or Pennsylvania. We believe

that we have something here that is

going to be good for them, but they

have not come to us and said: Please do

this because we think this needs to be

done.

So I again will have many opportunities to stand and talk, and I look forward to what I hope will be a straightforward and healthy and honest debate,

something that I hope does produce a

final change in the 1934 Communications Act which I think does need to be

changed. But at the end of the day I

wish to be able to say to the consumers

of Nebraska that this is going to be

good for you. I wish to able to say to

every household in Nebraska you are

going to get benefits from it and these

are the benefits that I believe are going

to occur.

At this stage of the game, Mr. President, I cannot support this legislation

for the reasons cited, and I look forward to engaging in what I said I hope

will be a constructive debate.

Mr. PRESSLER addressed the Chair.

The PRESIDING OFFICER. The Senator from South Dakota.

Mr. PRESSLER. I thank the Senator

from Nebraska for his statement. In
S7912 CONGRESSIONAL RECORD — SENATE June 7, 1995

fact, the other day I cited him, when I

was on a national program of State legislators and they asked, in terms of a

model of a State to deregulate, what

might it be. And I suggested the work

of BOB KERREY of Nebraska when he

was Governor. I observed his work in

deregulating telecommunications in

that State, and I certainly look forward to his insights.

We have worked on a bipartisan basis

on this bill. In fact, all the Democrats

on the Commerce Committee voted for

the bill. Senator HOLLINGS did a good

job. I visited with and delivered a copy

of the original draft bill to each of the

Democrats on the Commerce Committee.

Two Republicans on the committee

voted against the bill. Eight Republicans on the committee voted for it.

This is a bipartisan bill. All the Democrats on the committee voted for it. I

think that is a very important point.

THE PUBLIC UTILITY HOLDING COMPANY ACT

PROVISIONS

Mr. D’AMATO. Mr. President, today I

rise to speak about certain provisions

in S. 652, the Telecommunications

Competition and Deregulation Act of

1995.

This bill contains provisions that

would significantly alter the Public

Utility Holding Company Act of 1935

(PUHCA). The PUHCA was originally

enacted 60 years ago to simplify the

utility holding company structure and

ensure that consumers were protected

from unfair rate increases. At that

time, there were many industry abuses

involving the pyramidal corporate

structures of holding companies which

greatly increased the speculative nature of securities issuances, led to market manipulation, and inflated the capital structure. The abuses in the industry made it nearly impossible for the

States to adequately protect utility

ratepayers.

The PUHCA limited the types of

businesses that holding companies

could acquire to utility related services. As reported out of the Commerce

Committee, Sections 102 and 206 of the

‘‘Telecommunications Competition and

Deregulation Act’’ would permit diversification of registered holding companies into the telecommunications business—without SEC approval or any

other conditions. Allowing holding

companies to diversify away from their

traditional core utility operations is a

departure from the basis principles underlying the 1935 Act.

Mr. President, my primary concern

with these sections of the ‘‘Telecommunications Competition and Deregulation Act’’ is that losses resulting

from the subsidiaries telecommunications activities could be passed on to

public utility customers in the form of

higher utility rates.

I would like to commend Senator

PRESSLER and Senator LOTT for including my provision—which addresses

these concerns—in the manager’s

amendment. My provision puts in place

the proper consumer safeguards to protect electric utility ratepayers and

stockholders from bearing the costs of

diversification by registered holding

companies into telecommunications

activities.

It requires the Federal Communications Commission, the Federal Energy

Regulatory Commission, and the State

regulators to monitor the activities

and practices of both the subsidiaries

and the parent holding companies that

engage in telecommunications activities in order to ensure that utility consumers pay only what they get.

For example, my provision would ensure that telecommunications-related

activities are conducted in a separate

subsidiary of the holding company. It

would also provide the States with the

appropriate regulatory, investigatory,

and enforcement authority to protect

utility consumers. To this effect, it

would require the States to approve

any rate increases by those utility

companies that have a telecommunications subsidiary. As a result, the

States can examine the proposed rate

increase to make sure it is justified

and that utility customers are not subsidizing the holding company’s telecommunications-related costs.

The Banking Committee has consulted the SEC as well as industry and

consumer representatives in crafting

this provision to make sure appropriate safeguards will allow the holding

companies to diversify without negative consequences to utility customers.

We have struck a reasonable balance.

As a conferee on the Telecommunications Competition and Deregulation

Act of 1995, I will be in a position to

make certain that this balance is preserved.

At the same time, I would add that

the Banking Committee intends to examine the continuing need for the

PUHCA once the Securities and Exchange Commission releases its report

and recommendations on repeal or reform of the Act.

I would like to thank Senator PRESSLER, Senator LOTT, Senator BUMPERS,

Senator SARBANES, and their staffs for

their cooperation on this issue.

MESSAGES FROM THE PRESIDENT

fMessages from the President of the

United States were communicated to

the Senate by Mr. Thomas, one of his

secretaries.

EXECUTIVE MESSAGES REFERRED

fAs in executive session the Presiding

Officer laid before the Senate messages

from the President of the United

States submitting sundry nominations

which were referred to the Committee

on Finance.

(The nominations received today are

printed at the end of the Senate proceedings.)

PETITIONS AND MEMORIALS

The following petitions and memorials were laid before the Senate and

were referred or ordered to lie on the

table as indicated:

POM–146. A petition from a citizen of the

State of Indiana relative to taxes; to the

Committee on the Judiciary.

POM–147. A resolution adopted by the

Board of Representatives, Otsego County,

New York relative to local government resources; to the Committee on the Judiciary.

POM–148. A resolution adopted by the

Council of the City of Alexandria, Virginia

relative to the flag; to the Committee on the

Judiciary.

POM–149. A concurrent resolution adopted

by the Legislature of the State of Arizona; to

the Committee on the Judiciary.

‘‘SENATE CONCURRENT RESOLUTION 1018

‘‘Whereas, the people of the State of Arizona believe that state legislatures should be

provided with a method of offering amendments to the Constitution of the United

States: Therefore be it

‘‘Resolved by the Senate of the State of Arizona, the House of Representatives concurring:

‘‘1. That the Congress of the United States

propose to the people of the United States an

amendment to the Constitution of the United States to amend the Constitution of the

United States as follows:

‘‘ARTICLE V—AMENDMENT OF THE

CONSTITUTION

‘‘The Congress, whenever two thirds of

both Houses shall deem it necessary, shall

propose Amendments to this Constitution,

or, on the Application of the Legislatures of

two thirds of the several States, shall call a

Convention for proposing Amendments,

which, in either Case, shall be valid to all Intents and Purposes, as Part of this Constitution, when ratified by the Legislatures of

three fourths of the several States, or by

Conventions in three fourths thereof, as the

one or the other Mode of Ratification may be

proposed by the Congress; Provided that no

Amendment which may be made prior to the

Year One thousand eight hundred and eight

shall in any Manner affect the first and

fourth Clauses in the Ninth Section of the

first Article; and that no States, without its

Consent, shall be deprived of its equal Suffrage in the Senate.

‘‘Whenever three-fourths of the legislatures of the States deem it necessary, they

shall propose amendments to this Constitution. These proposed amendments are valid

for all intents and purposes two years after

these amendments are submitted to Congress

unless both Houses of Congress by a twothirds vote disapprove the proposed amendments within two years after their submission.

‘‘2. That the Secretary of State of the

State of Arizona transmit copies of this Concurrent Resolution to the President of the

United States, the President of the United

States Senate, the Speaker of the United

States House of Representatives, the President of the Senate and the Speaker of the

House of Representatives of each state’s legislature of the United States of America, and

the Arizona Congressional Delegation.’’

POM–150. A concurrent resolution adopted

by the Legislature of the State of Arizona; to

the Committee on the Judiciary.

‘‘SENATE CONCURRENT RESOLUTION 1006

‘‘Be it resolved by the Senate of the State

of Arizona, the House of Representatives

concurring:

‘‘1. The following Declaration of Sovereignty is adopted:

‘‘Section I:

‘‘A. We, the legislature of the State of Arizona, hereby reaffirm the sovereignty of the

states and of the people.