[Congressional Record Volume 140, Number 93 (Monday, July 18, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: July 18, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
      UNIVERSAL SERVICE: TRANSITION FROM REGULATION TO COMPETITION

  Mr. DOLE. Mr. President, for more than a century, the United States 
has been the world's leader in communications. We invented the 
telegraph, the telephone, the computer, and the microchip. It is no 
wonder then that we are without equal in this industry and that it 
represents a major and growing part of our economy. Republicans 
recognized more than a decade ago that this would be the economic issue 
of the future and that we should develop policies that would foster 
further growth and strengthen our hand here at home and abroad. This 
debate is now centered around what some call the information highway.


                flexible policy is the role of congress

  Looking back on Congress' track record, a casual observer would 
suspect that we have a vendetta for the communications industry. 
Fortunately, this image is changing and Republicans are glad to see 
that the traditional proregulators are finally coming around to our 
competitive way of thinking. Do not get me wrong. Congress can play an 
important role. But only if we develop flexible policy that will 
accommodate the rapid explosion of new technology. It would be 
irresponsible, however, for Congress and the administration to believe 
that they can do anything more.


                 competition is better than regulation

  Now I read all the hype about Vice President Al Gore's information 
highway, and how some compare its creation to that of the Gutenberg 
press. I think cheerleaders have their place, but let us not forget 
that coaches call the plays that win games. And in this case, private 
industry, not big government, is the coach.
  I agree with Andy Grove, the CEO and president of the largest 
microchip producer in the world, Intel. Recently on the Larry King 
Show, he responded to the Gutenberg press comments by saying that,

       As I remember my history, I don't think the Government or 
     the pseudo-governmental agencies were particularly helpful in 
     propagating printed material or printing press. I don't think 
     governmental agencies are helpful in propagating new 
     technology.

  That is his quote, not mine.
  It seems to me that he has a point. Just take a look at a few of the 
players in the U.S. communications industry. Last year, the computer 
industry had revenues close to $360 billion. Two things are amazing 
about that figure. First, it is twice the telephone industry's 
revenues. And second, almost half that figure represents revenues from 
the personal computer industry--which for all intents and purposes was 
nonexistent in 1980. In other words, personal computers have done 
almost 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 
benefited from fierce competition and minimal government regulation. 
Phone companies did not. Cable TV also exploded after it was 
deregulated in 1984. At that time, its revenues were at $7.8 billion 
and employed 67,381 persons. Fast-forward to its reregulation in 1992, 
and its revenues had tripled and its employment numbers had 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 suggest that there would not 
have been the abuses which prompted Congress to consider its 
reregulation.


                     universal service is essential

  In order to get to a more competitive, less regulatory environment, 
there must be a strong and sensible transition mechanism. If we do not, 
I fear that as we move boldly toward new technologies and new 
opportunities, Kansas and the rest of the of rural America will be left 
behind. Rural areas are different. Population is sparse and telephone 
traffic volume is limited. The bottom line is that telephone service 
costs are higher.

  The concept of universal service has helped alleviate these problems 
in the past, and it can continue to do so in the future. It has made 
telephone service accessible in rural and hard-to-serve areas through 
Federal financing and by requiring the telephone companies to provide 
telephone service to every rural resident that wanted it. There is no 
doubt about it, universal service has greatly enhanced the overall 
value of the telecommunications systems in the whole Nation.
  As private industry sets out to build new systems, I do not want 
telephone customers from Plainville in Rooks County or McLouth in 
Jefferson County to pay significantly higher rates, or miss out on the 
ability to choose among all the new information sources, or lose the 
ability to compete with urban businesses just because they are in 
sparsely populated rural areas.
  Rural Americans deserve the most beneficial market structure for 
rural market conditions. They will need effective, sustainable 
universal service mechanisms to support reasonable rates for a modern 
rural network.
  Telecommunications policy should also consider the success of the 
Rural Electrification Administration and rural telephone bank programs. 
These programs have been instrumental in financing the construction and 
improvement we have today. Strong REA and RTB programs have made 
capital available at a reasonable cost. At the same time, effective 
Federal and State support mechanisms have helped make rural rates 
affordable and have provided rural Americans a telecommunications link 
to an information-rich economy and society.

  In 1972, after several years of deliberation, several other rural 
Members of Congress joined Bob Poage and I to introduce and pass the 
rural telephone bank [RTB] bill. It was patterned after the Farm Credit 
Act. Seed money was provided by the Congress, and loans were made to 
telephone companies to improve the quality of service with the same 
requirement as REA loans for service to everyone in the service area. 
The RTB loans enabled rural telephone companies to provide better 
service, such as single-party lines for computers.
  Repayment of the loans with interest has increased the capitalization 
of the bank. RTB lending loans to its owner-borrowers have supplemented 
REA loans, and together they help bring farmers and rural businesses 
new communications services needed for tomorrow. Increased services in 
these rural areas from the rural telephone companies will also help 
create better educational and health programs and improve the quality 
of rural life.
  Mr. President, it is premature, if not dangerous, for Congress to 
move forward on any piece of legislation without solving the question 
of universal service. Without it as the foundation for any 
communications proposal, rates will go up for suburban and rural 
customers--and that is not for new services, just the ones they already 
have. More competition and less regulation can fuel advances. But I, 
for one, want all the people of Kansas to have a real choice among 
information services. After all, Mr. President, we will need more than 
dirt roads if we are to link rural America to the so-called information 
superhighway.
  I think I can speak for the occupant of the chair from South Dakota, 
Senator Daschle, and my colleague from Iowa, Senator Grassley, now on 
the floor.
  Mr. President, if I could take just 1 additional minute to include 
something else in the Record.
  The PRESIDING OFFICER. The Chair informs the Senator from Kansas he 
has at least 5 minutes remaining.
  Mr. DOLE. I thank the Chair.

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