[Congressional Record Volume 140, Number 144 (Thursday, October 6, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: October 6, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                   A LOPSIDED TRADE POLICY MUST STOP

                                 ______


                        HON. MICHAEL R. McNULTY

                              of new york

                    in the house of representatives

                       Thursday, October 6, 1994

  Mr. McNULTY. Mr. Speaker, during the past 2 years, the United States 
has witnessed an unprecedented level of investment in our long distance 
industry by foreign telephone companies. In 1993, British Telecom 
announced it planned to acquire a 20-percent investment--the limit 
allowed by law--in MCI, the Nation's second largest long distance 
carrier. Now, less than 1 year later, France Telecom and Deutsche 
Bundespost, France and Germany's state telephone entities, say they 
plan to make a similar level of investment in our Nation's third 
largest long distance carrier, Sprint Corp.
  Mr. Speaker, the United States has been willing to allow foreign 
entities to enter our robust domestic long distance telecommunications 
market. This is a cornerstone of our competitive telecommunications 
policy. Unfortunately, when some of our largest telecommunications 
companies attempt to break into lucrative foreign markets such as 
Germany, France, and Britain, they find the doors to these markets are 
closed.
  Robert E. Allen, chairman of AT&T, our Nation's largest long distance 
company, recently addressed a networked economy conference of 
Communications Week International here in Washington. In his keynote 
speech, Mr. Allen explained with great clarity why this lopsided trade 
policy must stop. As Mr. Allen correctly pointed out to those gathered 
at the conference, this policy is unfair and deprives U.S. customers of 
important competitive choices in the current global market. The growing 
presence of foreign, state run competitors in our domestic long 
distance marketplace also has the distinct possibility of seriously 
reducing competition in the United States, where more than 500 long 
distance companies compete for the business of American consumers.
  Mr. Speaker, I urge my colleagues to read carefully the relevant 
portions of Mr. Allen's speech, which I submit for the record. The 
issues raised need to be examined carefully by the Federal 
Communications Commission, the Department of Justice, the Department of 
Commerce and the United States Trade Representative before another 
state supported competitor gets easy access to our market while U.S. 
based competitors still do not receive comparable market access in 
other countries.

                         Lopsided Trade Policy

             (Speech by Robert E. Allen, chairman of AT&T)

       Congress has been debating the first major communications 
     legislation in this country in 60 years.
       Unfortunately, events compelled withdrawal of the Hollings 
     bill in the Senate on Friday. So apparently there won't be 
     telecommunications reform this year.
       We've supported the Hollings bill because it provides a 
     logical approach to the expansion of competition.
       It anticipated the local exchange companies' eventual 
     freedom to enter the already competitive long distance 
     market. But not until the introduction of real competition, 
     in the local exchange market, where the local exchange 
     companies still have a monopoly.
       That arranagement strikes me as fair. And hopefully, these 
     principles will be part of any legislation proposed in 
     Congress next year.
       Meanwhile, the size and relative openness of the U.S. 
     market have attracted competition from all over the 
     industrialized world. Unfortunately the open door policy of 
     the U.S. market has not generated comparable progress in 
     other countries. They want the freedom to compete for 
     customers in the United States, but they haven't taken 
     significant steps to dismantle their monopoly control at 
     home.
       I don't mean any disrespect to my fellow panelists or to 
     their companies. And I certainly don't want to suggest that 
     anyone in America should be telling another country how to 
     run its telecommunications system.
       France Telecom and the Deutsche Bundespost have crested 
     some of the best technical infrastructure in the world. 
     They've been serving their own populations for most of this 
     century without any policy advice from the United States, 
     thank you very much.
       But the problems created by closed markets transcend the 
     borders of any one nation.
       The proposal of France Telecom and Deutsche Bundespost 
     Telekom to enter the U.S. network services market through 
     their investment in Sprint goes well beyond the internal 
     policies of any of the countries involved. It underscores the 
     question of whether America can afford to open the door to 
     competitors from countries which offer very little in the way 
     of comparable market access.
       If I may be permitted to answer my own question: The time 
     for this lop-sided arrangement is long past.
       Not just because it strikes many people as unfair, but more 
     important, it deprives U.S. customers of competitive choices 
     in the global market, and it poses the risk of reducing the 
     competition that's already the strength of the U.S. market.
       Meanwhile, business and residential customers are looking 
     for the best possible combination of price and service here 
     and abroad. They want the option of buying exactly the 
     services they want from the carrier of their choice. And they 
     want that carrier to meet their needs inside and across the 
     borders of other countries.
       Even putting aside the new information services that will 
     be coming down the superhighway, competitive access is 
     crucial for delivering the full benefits of the voice and 
     data services that make up most of the global market right 
     now.
       The big multinational customers whose buying power drives 
     that market are growing impatient. They've been teased long 
     enough with the promise of competitive choices for seamless 
     global connections through the world's public switched 
     networks.
       That's impossible right now. Not because technology is 
     lacking, but because competition is lacking. And competition 
     will remain lacking as long as carriers from other countries 
     are allowed to compete in the U.S. at the same time they 
     sharply restrict access to their home markets.
       This just doesn't make sense for customers. They are being 
     denied the economic benefits of facilities-based competition 
     among carriers outside the United States.
       Permitting any country to operate this kind of a closed 
     market while its own affiliate competes on an equal footing 
     in the United States is not in the best interests of full and 
     fair competition.
       And the France Telecom/Deutsche Bundespost Telekom/ Sprint 
     deal as proposed now would not fit any reasonable definition 
     of full and fair competition.
       Not as long as France and Germany have recently made 
     significant strides in bringing international settlement 
     rates down closer to cost--a practice we'd like to see more 
     countries emulate.
       American international callers pay out $4 billion a year 
     more than the U.S. takes in from all foreign governments. An 
     estimated $2.3 billion of that is pure subsidy. It amounts to 
     a tax on Americans.
       And while they're collecting this premium to complete calls 
     from America, many countries use discriminatory rates to 
     charge carriers from other parts of the world substantially 
     less for similar access.
       High and discriminatory settlement rates are symptoms of 
     uncompetitive markets. They represent toll booths on the 
     Global Information Superhighway, and the tolls are still too 
     high.
       It's time for strong action by the U.S. government to 
     demonstrate that comparable market access is not longer an 
     abstract hope. It's a principle, a standard for 
     telecommunications trade between the U.S. and other 
     countries, and a necessity for giving customers the level of 
     services they want.
       Specifically, we are asking the Federal government to take 
     action now.
       We are requesting that the FCC act on the filing we made a 
     year ago and develop uniform rules that would make comparable 
     market access a standard for foreign carriers to enter the 
     U.S. telecom services market. And we're asking the FCC to 
     review the France Telecom/Deutsche Bundespost/Sprint deal in 
     the context of that standard.
       We're calling on the commission to use its statutory 
     authority to require foreign carriers looking to do business 
     in the U.S. to first demonstrate that their home markets are 
     open to competition in basic services, and provide the kind 
     of network interconnections that go with true competition.
       And, of course, we want the commission to insist that any 
     foreign carrier looking to compete in this market offer cost-
     based, non-discriminatory accounting rates to all U.S. 
     carriers.
       The Department of Justice is already reviewing the 
     antitrust issues raised by the France Telecom/Deutsche 
     Bundespost Telekom investment in Sprint. But I can't imagine 
     any set of conditions imposed here that would be more 
     effective than the establishment of real competition in 
     France and Germany.
       With that in mind, we're requesting that the U.S. Trade 
     representative begin negotiations to achieve comparable 
     access in France and Germany, and we're asking the U.S. 
     Congress to examine the larger issue of comparable market 
     access globally.
       This kind of attention to the market for services would be 
     entirely consistent with the support already provided by the 
     Clinton Administration for the rising trend in American 
     exports of telecommunications equipment. The freedom of 
     American carriers to provide their customers with end-to-end 
     global services should not be impeded by political 
     boundaries.
       We're not asking the U.S. government to create a draconian 
     set of market entry conditions here. The bottom line is 
     simply this: We want U.S. carriers to have the practical 
     opportunity to compete in the home markets of other carriers 
     on a comparable basis with the opportunity those carriers 
     have in the U.S.
       I have great respect for France Telecom, Deutsche 
     Bundespost Telekom and Sprint. AT&T has known them 
     individually as customers, competitors and suppliers. I don't 
     even fault the French and German companies for trying to take 
     advantage of the lop-sided market access policies in America.
       But I would find fault with American public policy if it 
     continues to allow this kind of market imbalance on a case by 
     case basis. American policy-makers should be leaders in 
     seeing that national boundaries don't stand between customers 
     and competitive choices.
       We appreciate the progressive forces at work in Europe. 
     They recognize the value and the necessity of competition in 
     delivering the benefits of the Information Superhighway.
       We applaud their efforts to open up their markets to 
     competition. And we sincerely hope that the U.S. government 
     will support those efforts by setting policies that encourage 
     full and fair competition in basic communications services.
       If our government is successful in that, America will earn 
     the gratitude of all future travelers on the Global 
     Information Superhighway, whatever their starting points, and 
     whatever their destinations. Thank you very much.

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