[Congressional Record Volume 141, Number 93 (Thursday, June 8, 1995)]
[Senate]
[Pages S7942-S7972]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        THE TELECOMMUNICATIONS COMPETITION AND DEREGULATION ACT

  The PRESIDING OFFICER. Under the previous order, the Senate will 
resume consideration of S. 652, which the clerk will report.
  The assistant 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.
       Pending:
       Dole amendment No. 1255, to provide additional deregulation 
     of telecommunications services, including rural and small 
     cable TV systems.
       Pressler-Hollings amendment No. 1258, to make certain 
     technical corrections.

  The Senate resumed consideration of the bill.
  The PRESIDING OFFICER. Who seeks time?
  The Senator from South Dakota.
  Mr. PRESSLER. Mr. President, we are resuming consideration of the 
telecommunications bill. We had opening [[Page S7943]] statements last 
night and we urged Senators to bring amendments to the floor. We 
eagerly are awaiting the many amendments because we only have a certain 
amount of time and we are urging all offices and all Senators who have 
amendments to bring them to the floor. We are ready to go, as we have 
emphasized in our opening speeches last night.
  Let me just reiterate, I think the movement of this bill is very 
important to America. It will create an explosion of new jobs, of new 
devices, and of new activities. I know there are a variety of 
amendments. We have welcomed them. I am prepared to yield the floor to 
any other Senator who has statements at this time.
  The PRESIDING OFFICER. Who seeks recognition?
  The Senator from Nebraska.
  Mr. KERREY. Mr. President, I restate at the beginning what I said 
last evening; that is, I believe the distinguished chairman, the 
Senator from South Dakota, and the distinguished ranking member, the 
Senator from South Carolina, have done an awful lot of work on this, a 
lot of good work. I appreciate the work they have done. They allowed me 
to be involved in many of these steps.
  But I say for emphasis, I cannot support this bill. I do not believe 
it provides the kind of protection for consumers that needs to be 
provided. I believe many of the statements that have been made thus far 
overestimate the impact upon the economy and underestimate the 
disruption that will occur to households throughout this country.
  No Member should doubt this. Any Member who doubts the impact of this 
legislation should go back and read clippings from 1984, when William 
Baxter and Judge Greene signed a consent decree, or when the U.S. 
Government and AT&T signed a consent decree in Judge Greene's court. 
Talk to consumers and talk to households and citizens in 1984 and 1985, 
and you will find an awful lot of those folks will say, ``Why don't you 
put the phone company back together?''
  I believe that action was good. That action was taken by the 
Antitrust Division of the Department of Justice. I say that for 
emphasis. Justice is given a consultative role in this legislation. But 
they were the prime mover in breaking up the monopoly that many people 
cite as the reason for wanting to go even further today.
  Second, you will hear people come to the floor and say and act as if 
somehow the regulations are really tying up American business. I intend 
to come to the floor and bring profit and loss statements and to bring 
economic analysis.
  Where do you go in this world to find better phone service? Where do 
you go in this world to find better cable? Where do you go in this 
world to find businesses doing better than American businesses in 
telecommunications? It may be in fact it is true that our regulations 
need to be changed. But please let us not come down here and act as if 
we have these corporations all handcuffed as if they are not making any 
money, sort of hamstrung and cannot move and cannot reach the customers 
they want to reach to generate the revenue they are trying to generate.
  This piece of legislation will touch roughly half of the U.S. 
companies in America and every single American household. Citizens who 
wonder how it is going to affect them need to pay careful attention to 
the 146 pages of legislation that is before this body today. The law 
matters. The law determines how people behave. This law governs the 
behavior of American corporations in nine basic communications 
industries. If you are a household or a citizen who is affected by the 
broadcast industry, this legislation affects you because this 
legislation affects the broadcast industry. If you are a home or a 
citizen who has cable coming into your household, this affects you. 
This legislation affects the regulations governing the cable industries 
of America and the telephone coming into your household.
  This 146 pages in S. 652 affects you because this deregulates the 
telephone industries in America in a very dramatic and I believe 
generally constructive fashion. If you are a person who goes to the 
movies, or you are a person who buys CD-ROM's or buys records of any 
kind, this affects you because it affects Hollywood, and it affects the 
music recording business. It is written into this law.
  If you have a newspaper coming into your household, or you subscribe 
to magazines or electronic publishing of any kind, it affects you 
because this legislation affects American publishers as well. If you 
buy a computer or use a computer in the workplace, it affects you 
again. If you purchase consumer electronics or are a consumer of 
wireless services or satellite services, all the nine basic 
communications industries, all growing relatively rapidly, all affect 
each and every single American citizen in their homes and in their 
workplace.
  Let no Member of this Senate underestimate the impact of this 
legislation. We had a great debate over the budget resolution. I know 
from my own personal experience with that legislation that there was a 
great deal of concern. Gosh, what if you vote for it, is it going to be 
a problem? Are people going to get angry with you? There are changes in 
Medicare, and cuts in programs. Are people going to get unhappy because 
we finally are asking them to pay the bills of the Government? The 
answer is probably yes. Probably they are going to get a little bit 
upset.
  This piece of legislation is more dramatic than the budget 
resolution. This piece of legislation affects Americans far more 
intimately than that budget resolution. There is not an American 
citizen that will not be affected by this piece of legislation.
  Last night on the floor of the Senate the distinguished Senator from 
South Dakota said:

       The recent hearing process which informed the Commerce 
     Committee and led to the development of S. 652 began in 
     February 1994. In 1994 and 1995, the Commerce Committee held 
     14 days of hearings on telecommunications reform. The 
     committee heard from 109 witnesses during this process. The 
     overwhelming message we received was that Americans want 
     urgent action to open up our Nation's telecommunications 
     market.

  Mr. President, I challenge that statement. I challenge the statement 
that we can conclude from the hearing process that ``Americans want 
urgent action to open up our Nation's telecommunications market.''
  Tell me who it was that in a town hall meeting stood up and said, 
``Senator Gregg, would you go to Congress and make sure you get down 
there and change the laws to help our telecommunications market?'' 
Where do we have polling data that shows what the people of South 
Dakota or Nebraska or South Dakota or New Hampshire or elsewhere say 
about this particular piece of legislation? Were they heard in the 
hearing procession?
  If you look, in fact, at the hearings held on this bill, on January 
9, 1995, the committee had their first hearing. They heard from the 
distinguished majority leader, the Senator from Kansas, Senator Dole. 
They heard from the chairman of the House full Committee on Commerce, 
Congressman Bliley. They heard from the chairman of the Subcommittee on 
Telecommunications, Jack Fields. That was panel No. 1.
  Then on the 2d of March, the committee held another hearing. They 
heard from Anne Bingaman, who is the Chief of the Antitrust Division at 
the Department of Justice. They heard from Larry Irving, Assistant 
Secretary of the National Telecommuncations Information Administration 
in the Department of Commerce, which is being proposed to be abolished, 
an interesting witness; Kenneth Gordon, representing NARUC, a State 
regulatory agency. That is panel No. 2 on the 2d of March.
  Also, on the 2d of March another panel, Peter Huber, senior fellow 
from the Manhattan Institute; George Gilder, senior fellow from the 
Discovery Institute; Clay Whitehead with Clay Whitehead & Associates; 
Henry Geller from the Markle Foundation; John Mayo, professor at the 
University of Tennessee; Lee Selwyn, professor of economics and 
technology.
  Then on the 21st of March the committee met again. This is the third 
hearing on this particular piece of legislation. On that day there were 
three panels.
  Panel No. 1: Decker Anstrom with the National Cable Association; 
Richard Cutler, Satellite Cable Services; Gerald Hassell, Bank of New 
York; Roy Neel, U.S. Telephone Association; Bradley Stillman, Consumer 
Federation of America. [[Page S7944]] 
  Then the second panel: U. Bertram Ellis, Ellis Communications, Inc.; 
Edward Fritts, National Association of Broadcasters; Preston Padden, 
Fox Network; Jim Waterbury of NBC Affiliates.
  Panel No. 3: Scott Harris from the FCC, not on behalf of the FCC but 
his own personal testimony; and Eli Noam, Communications Institute for 
Teleinformation. That was the third set of hearings.
  On the 23d of March, the full committee had their markup, and the 
bill was reported out 17 to 2.
  I would like to put on my glasses and read the small print of some of 
the things that were said in these hearings. Just again, the idea here 
is I am respectfully challenging what I think is a very important 
statement, a very important statement that lots of others are going to 
make as well; that is, that the overwhelming message we received was 
that Americans ``want urgent action to open up our Nation's 
telecommunications market.'' Keep that in mind.
  What do the households in your State want? What do the citizens of 
your State want? What do the people who elected you and sent you here 
to the U.S. Congress want? What do they want?
  Let us see what they wanted as we look at the hearings that were 
held. They said: First, there were the three Members of Congress.

       Senator Dole advocated quick passage of telecommunications 
     legislation. He noted that rural Americans are concerned 
     about telecommunications legislation, as it offers tremendous 
     opportunities for economic growth. He testified that 
     legislation should underscore competition and deregulation, 
     not reregulation.
       Chairman Bliley stated that the goals of telecommunications 
     legislation should be to: one, encourage a competitive 
     marketplace; two, not grant special Government privileges; 
     three, return telecommunications policy to Congress; four, 
     create incentives for telecommunications infrastructure 
     investment, including open competition for consumer hardware; 
     and, five, remove regulatory barriers to competition.
       Chairman Fields stated telecommunications reform is a key 
     component of the legislative agenda of 104th Congress. He 
     chastised those who speculated that Congress will be unable 
     to pass telecommunications legislation this year. He asserted 
     that the telecommunications industry is in a critical stage 
     of development, and that Congress must provide guidance.

  I did not hear any of those three witnesses come and say ``Americans 
want urgent action to open up the telecommunications market.'' They are 
talking about American corporations. They are talking about American 
industry and advising them that they want to do things that they are 
currently unable to do because the regulations say they are prohibited 
from doing it. That is what this bill is about, businesses that want to 
do something that they are currently not allowed to do. That is what it 
is all about--change in the law. All of these various businesses do 
something that they currently cannot do. In many cases, I support it. 
But I am not getting calls from people at home saying, ``Gee, Bob, I 
hope you are really getting there because we want to make sure that our 
Nation's telecommunications markets get opened, there is a very urgent 
need to do it.''
  Listen to panel No. 1, second hearing:

       Anne Bingaman testified that the administration favors 
     legislation that is comprehensive and national in scope, 
     opens the BOC local monopoly, and provides for 
     interconnection at all points.
       She claims that local loop competition will bring consumers 
     the same benefits that long distance competition brought 
     consumers when the Justice Department broke up AT&T.

  I believe that Anne Bingaman is right, but I caution my colleagues it 
took 7 or 8 years before the consumers gave you a round of applause. 
There was a long period of time after 1984 when people, at least in my 
State, were saying what in the Lord's name is going on here? All of a 
sudden I cannot get a phone into my house; I have to go to a different 
provider; I have competition; I have choice. What the heck is going on? 
What was wrong with what they had? they were saying to me. I said, 
well, stay with this thing. It is going to work. We are going to open 
up the long distance market. We are going to have competition. It is 
going to be good. Trust me. I trust it is going to be good.
  And it has worked. It was not coming from home, Mr. President. It was 
not coming from households and citizens who said, Gee, Governor, would 
you write a letter to the Justice Department, old Bill Baxter back 
there, and see if he can get together with AT&T and file a document 
down in Judge Greene's court because we would really like to see the 
RBOC's spun off, and all that sort of thing.
  It has worked. Anne Bingaman is correct that it worked. But it took 
years before we understood that citizens began to see the benefits.

       Larry Irving agreed that opening telecommunications markets 
     will promote competition, lower prices, and increase consumer 
     choice. He stated that the government must maintain its 
     commitment to universal service. He stated the 
     administration's concern that private negotiations may not be 
     the best way to open the local loop to competition. He also 
     asserted that a date certain for elimination of the MFJ 
     restrictions will hurt efforts to negotiate interconnection 
     agreements with Bell operating companies.
       Kenneth Gordon stated the State regulators, including those 
     in Massachusetts, were once a barrier to competition, but are 
     now at the forefront of promoting competition. He said that 
     States must also retain control of universal service.

  And he goes on to make some other additional comments.
  But these three witnesses are beginning to talk about the consumers. 
They are beginning to talk about the impact upon the American people. 
They are beginning to express, particularly the last witness, Larry 
Irving, they are beginning to express concern for what happens when 
deregulation and competition come in. But, again, no overwhelming 
testimony here. None of them comes in and says we have to do this 
because the American people are banging down our doors and urging us to 
do this; no statement that has the overwhelming support of the American 
people; merely saying that we think it is right to deregulate; we think 
it will be good to deregulate; we think this will be good for the 
people.
  Now, how many of us understand the 1994 election? A lot of us here 
have heard people come down to the floor and say it was this, that, and 
the other thing. I agree with an awful lot of it. Most of us understand 
one of the things that was going on in 1994, people said we do not 
think you people in Congress understand. We do not have any power. We 
are disenfranchised. We do not feel a part of this process.
  Mr. President, they have not been a part of this process, in my 
judgment. This is about power. Corporations should do things they 
currently cannot do. They are telling us it is going to be good for the 
American people. They are telling us it is going to be good for 
consumers. They are telling us it is going to be good for jobs. They 
are telling us it is going to be good for the people. It is not the 
people telling us it is going to be good for them, Mr. President.
  Then on that same date, on the second panel, Peter Huber noted that a 
date certain for entry is necessary because the FCC and the Department 
of Justice are very slow to act. And this is a very important issue. We 
have to get the witnesses coming in and saying that the FCC is a 
terrible regulatory body and they are very slow. This is all language 
to give you the impression that somehow American communications 
businesses are burdened down by these nasty bureaucrats over at FCC. 
Peter Huber said he advocated swift enactment of legislation with a 
date certain for entry into restricted lines of business.
  Then George Gilder, the greatest advocate of deregulation of all, 
also advocated swift congressional action, claiming that 
telecommunications deregulation could result in a $2 trillion increase 
in the net worth of U.S. companies.

       He said the U.S. needs an integrated broadband network with 
     no distinction between long haul, short haul, and local 
     service.

  Clay Whitehead comes in and says:

       Congress should not try to come in and chart the future of 
     the telecommunications industry but should try to enable it. 
     He also advocated a time certain for entry into restricted 
     lines of business.

  Then Henry Geller comes in. He agrees with the previous speakers that 
Congress should act soon.

       He said that a time certain approach would work for the 
     ``letting in'' process, allowing competition in the local 
     loop, as well as the ``letting out'' process.
       Geller advocated that the FCC should allow users of 
     spectrum the flexibility to [[Page S7945]] provide any 
     service, as long as it does not interfere with other 
     licensees.
       John Mayo testified that the spread of competition in other 
     markets over the last decade supports the opening of the 
     local loop. He said that the interLATA telecommunications 
     competition has been a success and Congress should follow the 
     same model for local exchange competition.
       Lee Selwyn asserted that there will be no true competition 
     in the local loop unless all participants are required to 
     take similar risks. Selwyn also testified that premature 
     entry by the Bell operating companies into long distance 
     could delay the growth of competition for local service.

  I frankly do not know who all these individuals are. I do not know 
whether they are consultants for one company or another. I suspect that 
all of them have a fairly defined sense of view, defined either by the 
companies or encouraged by the companies as a result of previously 
reached conclusions.
  Again, I do not hear individuals coming in and saying, do you know 
what it is like out in the households today trying to get cable 
service, trying to keep phone service? Do you know what consumers are 
saying out there today? Do you know what individuals are saying when 
all of these entities have downsized over the last 4 or 5 years? Any 
expression of concern for what technology does to families on the 
underside of that two-edged sword? Any expression of concern from any 
of these highfalutin individuals that are paid a lot of money to 
provide us with their advice about what is going on out there in 
America?
  No, just swift action, by God. Let us get the laws out of the way, 
get rid of the regulations. Let these companies do whatever they see 
fit, whatever they decide is best for the bottom line. Whatever they 
decide is best for the shareowners will in the end be better for their 
customers.
  Then on March 21, Mr. President, three panels come before the 
committee. This is getting a little lengthy. I do not think I will read 
every single one of these.
  Decker Anstrom, from the cable industry, they support 
telecommunications legislation because the cable industry is ready to 
compete.
  Roy Neel agreed with Anstrom. He is with the U.S. Telephone 
Association. He agrees that cable regulation repeal would allow for 
investments incentive.

       Richard Cutler testified that the 1992 Cable Act had a 
     devastating effect on small cable operators.
       Bradley Stillman said that the 1992 Cable Act resulted in 
     lower programming and equipment prices for consumers.

  Weighing in that in fact the Cable Act of 1992 did work.

       Gerald Hassell stated that true competition will only 
     develop if both cable and telephone survive and flourish.

  I happen to agree with that. I think if we are to have competition at 
the local loop, we have got to make sure we have two lines coming in.
  One of my problems with this legislation is it allows acquisition of 
cable in the area by the telephone company. You folks out there right 
now in your households, you have a cable line coming in; you have a 
phone line coming in. You may not have both for long. You may have one 
line and only one opportunity to choose. That is not my idea of 
competition.
  Panel No. 2.

       Bertram Ellis testified that the local ownership 
     restrictions no longer serve the public interest. He said 
     that allowing local multiple ownership will permit new 
     stations to get on the air that would not otherwise be able 
     to survive. He also stated that local marketing agreements--
     joint venture between broadcasters--

  Et cetera, et cetera. Open it all up. Let us get rid of the 
restrictions. I do not care if they own 50 percent of the market, 100 
percent of the market. I do not care who controls. Just let the flow of 
the cap determine the public interest.
  There is no public interest here involved any longer. We do not care 
who controls the information, who controls the stakes, who controls the 
radio, the newspaper.
  Mr. President, again, as I said at the start, this is about 
information. It is about communication. And it does matter who controls 
it. It does matter if we have one single individual controlling a 
significant portion of the local market, controlling our access to 
information. It does matter. There is a consumer interest.
  I am an advocate of deregulating the telecommunications industry. I 
do not know that I am, but I may be the only Member of Congress who can 
stand here and say that I signed a bill in 1986 that deregulated the 
telecommunications industry in Nebraska, that removed the requirement 
of them to go to the local public service commission for rate increases 
because I thought, and believe still, it would free up capital and they 
were in fact just spending a lot of money on lawyers and not really 
serving the public's interest requiring the companies to come forward. 
So I am an advocate of deregulation. But I also believe there are times 
when we need to declare and protect the public interest. And I do not 
believe in many cases this piece of legislation does that. I have 
already heard people come to the floor and say the best regulator is 
competition.
  That is not true, Mr. President. If you want to get goods and 
services delivered in the most efficient fashion, competition does 
that. That is true. If you are trying to get goods and services at the 
highest quality and lowest price, competition is the best way to get 
the job done.
  However, competition is not the best regulator. The only time we 
should be regulating is when we say we have the public interest in 
doing this. There is no other way of getting it done. The market is not 
going to be able to accomplish it. We agree there is going to be cost 
on businesses to do it. We believe it is a reasonable cost. We measure 
the cost. We assess the cost. We do not go blindly and say there is no 
cost to this deal. We understand the costs going in. But we say the 
public interest is so great that we believe it is necessary to do that. 
That is the purpose of regulation. Competition is not the best 
regulator. It is the best way to get goods and services delivered in a 
highly efficient fashion. But competition, unless you believe, unless 
you are prepared to come down to the floor and say American public 
corporations performing for their shareowners and American CEO's 
performing for their shareowners, worrying about what the analysts are 
going to say on Wall Street about the value of their stock, facing a 
decision of laying off 1,000 people that would improve the value of 
their stock--and make no mistake about it, analysts love cold blooded 
CEO's. You read it in the paper all the time.
  Some CEO just takes over a company, reduces the force by 20 percent. 
What do the analysts say? ``Buy the stock; this guy is doing the right 
thing.'' So they are rewarding the downsizing, they are rewarding the 
cutting of the employee base.
  Does it improve the productivity of the company? Absolutely. Does it 
make the company more competitive? Absolutely. Make no mistake, it has 
a devastating impact upon those families, upon those individuals who 
work for the company.
  We do not find, I think, any evidence that CEO's are heartless, but 
when they are out there trying to perform for their share owners, they 
are not trying to satisfy some public interest, they are trying to 
satisfy the interest of people who own shares in their stock.
  On that same day, Preston Padden advocated deregulation; Jim 
Waterbury said retain some ownership rules; on panel three they had 
Scott Harris testifying on behalf of himself, not the FCC, and Eli 
Noam, an expert in telecommunications. The two individuals debated a 
section of our telecommunications law called 310(b), which is foreign 
ownership. That is enough. That should give people some sense of what 
went on.
  There were three hearings--three hearings, Mr. President. Three 
hearings that were held, four if you include the statements made by the 
majority leader, the chairman of the House Commerce Committee, and the 
chairman of the Subcommittee on Telecommunications. There were three 
total hearings, and I do not believe that the sum and substance of 
those hearings justifies the conclusion that the American people 
overwhelmingly back this particular piece of legislation.
  Mr. President, I was on a trip this past week, a trip with the 
Intelligence Committee on narcotics. We went to Colombia, Peru, and 
Bolivia. One of the places I went was down in the Amazon River Basin on 
the Ucayali River. I went to church on Sunday, to mass actually, more 
appropriately, a Catholic [[Page S7946]] church in Pucallpa, Peru. It 
just happened that Sunday was celebration of Pentecost. Being a good 
Christian man, I go to church regularly, but I must confess, I did not 
remember all the details of what Pentecost meant. I listened carefully. 
Just by coincidence, the service, the Pentecost is about communication. 
The prayer of Pentecost is that we appeal to the Holy Spirit to come 
and fill our hearts with his love. That is the appeal.
  The priest that Sunday said to the congregation that the tongue is 
the most powerful organ in the human body, that it delivers the word 
and a word can unite us, it can divide us, it can cause us to love one 
another, it can cause us to hate one another. The word coming from God 
can change our life. The word coming from human beings can inform us, 
change us and can cause us to reach all kinds of conclusions.
  That is what this debate is about, Mr. President. You can turn on the 
news tonight, you can pick up the newspaper in the morning, and you 
watch and read what is going on. These people have the control over 
what they are going to put on the air, what they are going to put in 
the newspaper, what they are going to have in the form of serving up 
information to you and me. It is about power, Mr. President, power to 
do what they want to do.
  Again, I am not against deregulation, I am not against changing the 
1934 Communications Act, but this piece of legislation is being driven 
by a desire of corporations to do things that they currently are not 
allowed to do.
  I also brought down here this morning some additional things. I do 
not know if the managers want to speak. I will be glad to yield or keep 
going and read some things that the press has said about this whole 
process.
  I am not an apologist of the press. Sometimes they get it right, 
sometimes they get it wrong. Form your own impression. This is people 
observing this whole process, and this is what they say about it. Let 
us see if you hear anything about the American people coming here in 
airplanes and buses and demonstrating out front with placards, 
``Deregulate the telecommunications industry.''
  Here is one from Ken Auletta, ``Pay Per Views,'' in the New Yorker, 
June 5, 1995. Mr. Auletta says:

       The hubris was visible at the House Commerce Committee 
     briefings, on January 19th and 20th. Held in the Cannon 
     Office Building, they were closed to the press and to the 
     Democrats. At dinner the first night, Gingrich was the 
     featured speaker, and he took the occasion to attack the 
     media as too negative and too biased, and even unethical. 
     After the speech, Time-Warner's CEO, Gerald Levin, rose and 
     gently rebuked Gingrich for being too general in his remarks. 
     Surely Gingrich did not mean to tar all journalists with the 
     same brush--to lump, say, Time in with the more 
     sensationalist tabloid press? ``I hope you don't mean all of 
     us,'' Levin concluded. ``Yes, I do,'' Gingrich is reported to 
     have replied. ``Time is killing us.'' And, according to 
     several accounts, he went on to say that he had been 
     particularly incensed by Time's account of his mother's 
     interview with Connie Chung, of CBS . . .
       [O]thers found it chilling that the Speaker would press the 
     CEO's to have their journalistic troops hold their fire. 
     ``We're at greater risk now of that kind of pressure having 
     an impact.''

  The interviewee went on to say:

       ``Traditionally, there has been a separation between news 
     and corporate functions. Given the consolidation, you may 
     have more instances where the top business executives, who 
     have many corporate policy objectives, may find it tempting 
     to impose control over their news divisions to advance 
     corporate objectives.'' . . .

  Another observation is from ``The Mass-Media Gold Rush,'' Christian 
Science Monitor, Jerry Landay, reporting June 2, 1995:

       The players are limited to the cash-rich: The regional 
     phone companies, networks and cable companies, and 
     conglomerates such as Time-Warner. Smaller ownership groups, 
     such as local television stations, are distressed. They 
     expect the balance of power to swing to the cash-rich 
     networks, which will gobble up many of them . . .

  It goes on to say:

       To influence the House legislation, legions of lobbyists 
     swept across Capitol hill, with bags of campaign cash. Over 
     the past 2 years the communications industry has handed out 
     some $13 million. Republican lawmakers literally invited 
     industry executives to tell them what they wanted. They're 
     getting most of it.

  The next one is from Congressional Quarterly Weekly. The headline is: 
``GOP Dealing Wins the Votes for Deregulatory Bill.''

       After doling out legislative plums to broadcasters, phone 
     companies and carriers, top Republicans on the House Commerce 
     Committee won bipartisan backing for a bill to promote 
     competition and deregulation in the telecommunications 
     industry. The committee's leaders--Chairman Thomas J. Bliley, 
     Jr., R-VA, and Telecommunications and Finance Subcommittee 
     Chairman Jack Fields, R-Texas--engaged in a lengthy give-and-
     take with committee members and telephone company lobbyists 
     over the bill's rules for competition in local and long-
     distance phone markets. . . .
       The intra-industry horse trading left consumer advocates 
     feeling frustrated and ignored on the sidelines. . . . The 
     biggest winners at the markup were broadcast networks, media 
     conglomerates and cable companies.

  The next one is from the New York Times, Edmund L. Andrews. Headline: 
``House Panel Acts to Loosen Limits on Media Industry.'' Dateline, May 
26, 1995:

       Rolling over the protests of several Democrats, the House 
     Commerce Committee voted today to kill most cable television 
     price regulation and lift scores of restrictions on the 
     number of television, radio and other media properties a 
     single company may own. . . .
       ABC, NBC and CBS and other large broadcasters like the 
     Westinghouse Electric Company, the Tribune Company and Ronald 
     O. Perelman's New World Communications Group all lobbied for 
     sharply increasing the number of television and radio 
     stations a company could own nationwide. . . .
       But industry lobbyists have seldom met more receptive 
     lawmakers. Committee Republicans have held numerous meetings 
     with industry executives since January, some behind closed 
     doors, at which they implored companies to offer as many 
     suggestions as possible about the ways Congress could help 
     them.

  Next, an article that appeared in the Washington Post, a longer 
article that I will take pieces from, written by Mr. Mike Mills on the 
23d of April, 1995:

       The Bells--the folks who bring you local phone service--
     like to play political hardball, and they have been 
     remarkably successful at it. This year, the Bells stand a 
     very good chance of winning most of the prize they've sought 
     for the last decade: Freedom from U.S. District Judge Harold 
     H. Greene. . . . If they get what they want, the Bells can 
     claim a place among history's most powerful Capitol Hill 
     lobbyists, ranking them with the oil industries of the 1970's 
     and the steel trusts of the turn of the cen- 
     tury. . . .
       All that lobbying costs money. According to the Federal 
     Communications Commission, the Bells' individual phone 
     companies spent $64 million on State and Federal lobbying 
     expenses in 1993 and $41 million in 1992. Bell lobbyists 
     themselves say their annual budget for influencing Congress 
     has been $20 million a year in recent years, but has dropped 
     to half of that this year. . . .

  It goes on and on:

       ``Right now, the doors to the candy stores are wide open,'' 
     said Brian Moir, who heads a coalition of business telephone 
     users fighting the Bells.

  These are the customers, Mr. President, make no mistake about it. 
These business users are the customers. These are not the companies 
providing the service. These are people using the service. This man 
says, ``. . . the doors to the candy store are wide open.''
  It continues:.

       The Bells figure, ``Why focus on one thing? Just go in with 
     a frontloader.'' They're covering the waterfront. And why 
     not? Moir estimates that if States' regulatory powers are 
     limited, the Pressler bill will raise the typical Bell 
     residential telephone bill by $3 to $6 a month. For the 
     companies, that would raise it at least $24 billion over 4 
     years.

  An editorial in the Baltimore Sun called ``Communicating Again,'' 
April 3, 1995:

       Still, there are hundreds of billions of dollars at stake, 
     and the lobbying is as fierce as Washington has seen in many 
     years. Though the rivals like to make their cases in terms of 
     what's best for the consumer, the quarrel is really over who 
     gets a head start in capturing market share.

  No one can deny that that is true.
  Edmund L. Andrews, ``Big guns lobby for long-distance; insiders are 
trying to influence bill,'' Raleigh News & Observer, March 28, 1995:

       With so much at stake, and so little to pin on labels of 
     right and wrong, the various factions are seeking a personal 
     edge by throwing into the fray as many people with friends in 
     high places as possible. All of which made telecommunications 
     as much of a bonanza for lobbyists this year as health care 
     was last year. ``Everybody in this town who has a pulse has 
     been hired by the long-distance coalition or the Bell 
     operating companies,'' said Michael Oxley, R-Ohio, a member 
     of the Commerce Committee. ``It's just amaz- 
     ing. . . .''

  Michael Ross with the Pittsburgh Post-Gazette, January 20, 1995. 
Headline: ``Gingrich Defends Book Deal; [[Page S7947]] GOP Beats 
Murdoch.'' I am sorry I brought in all this. This article is talking 
about this bill:

       Besides Murdoch, there were 10 other executives at the 
     Capitol session, including Thomas Murphy of Capital Cities/
     ABC; Robert Wright, NBC; Howard Stringer, CBS; Bill Korn of 
     Group W; and John Curley of 
     Gannett. Gingrich was to address a private dinner last night 
     for the communications firm chiefs in the Cannon House Office 
     Building. . . .
       Gingrich said the meeting yesterday was closed because ``we 
     want their advice on how the United States can be the most 
     competitive country in the world, and we would just as soon 
     not have them give advice with the Japanese and Europeans 
     listening.''

  I do not believe it is the Japanese and the Europeans they were 
trying to keep out.

       GOP organizers sought to keep the meeting secret, excluding 
     notice of the events from the official daily calendar. But 
     word leaked out from the executives, prompting protests from 
     consumer advocates and from the committee's former Democratic 
     chairman, Rep. John Dingell of Michigan, now the ranking 
     minority member.

  The last one is a piece that appeared in the Washington Post, again 
Mike Mills:

       Consumer advocates yesterday protested plans by House 
     Republicans to hold 2 days of private meetings with top 
     communications executives that will feature a dinner with 
     House Speaker Newt Gingrich. . . .
       Media will not be present so Members and chief executive 
     officers of various companies. . . . have honest and 
     informative discussions.''

  Boy, if that is not a keyword to telling you to hang on to your 
billfold I have not heard one.

       ``What policies can the Congress promote or repeal that 
     would help your company to be more competitive and successful 
     domestically?'' the letter asked. ``And, second, what 
     obstacles does your company face when trying to do business 
     abroad?''

  I do not mind in general saying to any company in America, is there 
anything we are doing we should not be doing, anything we are doing 
with regulations or rules that do not make any sense at all? Lord 
knows, we have lots of things we do to small business and big business 
alike that add no value at all to the public interest, that you really 
cannot defend it all, have been around a long time, and you scratch 
your head trying to figure out why they are even there.
  But that is not this invitation. This does not say after you 
established what the public interest is, is there anything here you 
would like to get out of the way that makes no sense at all; is there 
any nonsensical regulation? This did not add any qualifier in the 
public interest.
  This merely says is there anything out there adding cost to your 
business that you would like to get rid of? It would be like me saying, 
``I would like to drive about 90 miles an hour, would that be OK? Can 
you get the law of Nebraska to let me drive my automobile 90 miles an 
hour? I find that a major inconvenience. I like to drive fast. Why 
don't you have a meeting and ask people driving automobiles what they 
think about that? Maybe we can change the rules and regulations to 
accommodate them as well.''
  Mr. President, I will wrap this up by quoting from an article, I 
believe it was David Sanger of the New York Times. The article 
describes the conflict between the United States of America and the 
Japanese over automobiles. It was assessing the impact of, I think, the 
correct decision by the Trade Representative to say to the Japanese, 
``It is time to open up your market and let our parts, in particular, 
be sold and loosen the restrictions so we can begin to sell automobiles 
in Japan.'' It was trying to measure the impact. It interviewed a man 
who was the trade minister from Indonesia, I believe.
  You know, we are worried about Japan and the United States. They are 
the big ones. They are the big elephants in this jungle. And they have 
a saying in Asia. They say that when the elephants fight, the grass 
gets trampled. But even worse, they said, is when the elephants make 
love. That is what we have here, Mr. President. We have a real lovefest 
going on.
  Corporations have basically all signed off on this deal. They have 
had the opportunity to look at the language. They have had the 
opportunity to examine the details, and they are saying it looks pretty 
good to them. I say it is time for us to come to the floor to debate 
this. I hope we are, in fact, able to enact legislation. I intend and 
expect to support it. I cannot support it in its current form, but I 
want the American consumer to be heard on the floor of the Senate. I 
want the interests of American households to be considered and the 
interests of the average American citizen to be considered when this 
piece of legislation, which is important, is being debated.
  I yield the floor.
  Mr. DORGAN. What is the pending business?
  The PRESIDING OFFICER. The pending measure is amendment No. 1258 
offered by the managers of the bill.
  Mr. DORGAN. This is the managers' amendment.
  The PRESIDING OFFICER. Is there further debate on that amendment?
  Mr. HOLLINGS. We can go right ahead with the Senator's amendment.
  Mr. PRESSLER. If it has not been laid aside, and if it is proper at 
this point, we will lay that amendment aside so that the Senator from 
North Dakota can offer his amendment.
  I ask unanimous consent that the managers' amendment be laid aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from North Dakota is recognized.


                           Amendment No. 1259

   (Purpose: To require certain criteria upon the designation of an 
            additional Essential Telecommunications Carrier)

  Mr. DORGAN. Mr. President, I send an amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER (Mr. Kyl). The clerk will report.
  The legislative clerk read as follows:

       The Senator from North Dakota [Mr. Dorgan] proposes an 
     amendment numbered 1259.
  The amendment is as follows:

       On line 24 of page 44, strike the word ``may'' and insert 
     in lieu thereof ``shall''.

  Mr. DORGAN. Mr. President, in the telecommunications bill there is a 
provision with respect to universal service that describes certain 
conditions in which the State designates additional essential 
telecommunications carriers that may impose certain requirements. I 
think it is sufficiently important to say the State shall impose those 
requirements. I would like to explain why this is important to me and 
why I think it is important to rural America.
  Before I do, let me comment on a couple of broader points about this 
legislation. Clearly, there would never be a circumstance where 
legislation affecting the telecommunications industry would be moving 
through the Congress without their being an intense interest by the 
telecommunications industry. The fact is that without congressional 
involvement in trying to set some new rules for competition, the 
industry itself is out creating the rules.
  That is why universal service legislation is necessary. We must 
establish some guidelines about where we move in the future and what is 
in the public interest as we do that.
  I come from a rural State. I know there are a lot of people in this 
Chamber who worship at the altar of competition and the free market. 
That is wonderful. But, I have seen deregulation. I have seen the mania 
for deregulation that does preserve for some people in this country 
wonderful new opportunities of choice and lower prices: Example: 
Airline deregulation. There was a move in this country and in these 
Chambers for airline deregulation, saying this will be the nirvana. If 
we get airline deregulation, Americans are going to be better served 
with more choices, more flights, lower prices, better service.
  Well, that is fine. That has happened for some Americans but not for 
all Americans. Deregulation in the airline industry has had an 
enormously important impact if you live in Chicago or Los Angeles. If 
you want to fly from Chicago to Los Angeles you check the official 
airline guide and find out what flights are offered. You have a broad 
range of choices, a vast array of carriers competing in a market that 
is densely populated, where they have an opportunity to make big money. 
In this market, there is intense competition for the consumers dollar 
in both choice and price.
  But I bet if you go to the rural regions of Nebraska, and I know if 
you go [[Page S7948]] to the rural regions of North Dakota and ask 
consumers, what has airline deregulation done to their lives, they will 
not give you a similar story. They will not tell you that airline 
deregulation has been good, providing more choices and lower fares. 
That has not been the case.
  In fact, airline deregulation has largely, in my judgment, hurt 
consumers in rural America. We have fewer choices at higher prices as a 
result of deregulation.
  For that reason, when we talk about deregulation and setting the 
forces of competition loose in order to better serve consumers, we need 
to understand how it works. Competition works in some cases to an 
advantage of certain consumers. In other cases, it does not.
  That is why when the telecommunications legislation was crafted I was 
very concerned about something called the universal service fund. For 
those who don't know, I want to explain what the universal service fund 
is.
  It probably stands to reason that it is presumably less expensive to 
put telephone service into New York City when you spread the fixed 
costs of the telephone service over millions of telephone instruments; 
less expensive to do it there than to go into a small town of 300 
people that is 50 to 100 miles from the nearest population center. How 
will you decide how to spread the fixed costs of telephone service over 
300 people? The fact is, you have a higher cost of telephone service in 
rural areas of our country.
  We have always understood, however, that a telephone in Grenora, ND, 
is just as important as a telephone in New York City, because if you 
don't have the telephone in Grenora, the person in New York City cannot 
call them, and vice versa.
  The universal service nature of communications is critical. The 
presence of one telephone instrument makes the other telephone 
instrument, no matter where it is in this country, more valuable.
  That is why we have, as a country, decided that an objective of 
universal service makes good sense. We have generally tried to move in 
that direction to see that we use a universal service fund to even out 
the costs and the price to the consumer.
  Therefore, even in the higher cost areas, the lower populated, more 
rural areas, we are able to bring the cost down to the consumer with a 
universal service fund by moving money into those areas to try to help 
keep prices down for the consumer. Therefore, consumers will be able to 
afford this service and we will have a more universal nature of that 
service.
  Well, in this legislation, Mr. President, we understood that there 
will be substantial competition in many areas of telecommunications. 
Take my home county of Hettinger County, ND, a very small county, 
several thousand people, about three towns, the largest of which is 
1,200 or 1,400 people, no one will be rushing in to provide local 
telephone service in Hettinger County.
  This is not a case where you fire the gun and at the starting line 
you have eight contestants lined up to find out who can win the 
commercial battle to serve the telephone needs of that small rural 
county. You might, however, have someone decide to come in and serve 
one little town in that county, because maybe it would be worthwhile to 
serve that little town, but only that town.
  If they bring telephone needs to that town and take the business away 
from the existing service carrier, the rest of the services would be 
far too expensive and the whole system collapses.
  For that reason, in this legislation we described a condition in 
which, if someone comes in and decides to serve in one of those areas, 
one of the conditions is that they would have to serve the entire area. 
They would be required to serve the entire area as a condition of 
receiving these support payments from the universal service fund.
  Then the bill also said that in designating an additional essential 
telecommunications carrier to come in and compete in a rural area, 
aside from requiring they have to serve the entire area, they cannot 
come in and cherry-pick and pick one little piece out.
  Aside from that, the bill said that the States may require there be a 
designation; that the designation would be: First, in the public 
interest; second, encourage development of advanced telecommunications 
services, and third, protect public safety and welfare.
  My universal service amendment very simply says that provision of law 
shall be changed from ``may'' to ``shall.'' In other words, the States 
shall require that there be a demonstration of those three approaches.
  I think it is very important that those who live in rural America, 
who are not going to bear the benefit of the fruits of competition, are 
given protection.
  That is the purpose of my offering a universal service amendment. 
This amendment is supported by the National Telephone Cooperative 
Association, National Rural Telecom Association, the USTA, Organization 
for Protection and Advancement of Small Telephone Companies.
  They understand, like I understand, that the chant of competition is 
not a chant that will be heard in the rural reaches of our country. We 
are simply not going to see company after company line up to compete 
for local service in many rural areas.
  If that does not happen, and it will not, we need to make certain 
that the kind of telephone service that exists in rural counties will 
be the kind of telephone service that brings them the same opportunity 
as others in the country will be provided.
  We should make sure that we have a buildout of the infrastructure, so 
this information highway has on ramps and off ramps--yes, even in rural 
counties of our country.
  If we, in the end of this process, finish the building out of an 
infrastructure in telecommunications by having a continued, incessant 
wave of mergers and consolidations into behemoth companies that are 
trying to fight to serve where the dollars are, big population centers, 
affluent neighborhoods, but decide to leave the rural areas of the 
country without the build-out of the infrastructure and without the 
opportunities that they should have, we will, in my judgment, have 
failed.
  Mr. President, while I am on my feet I would like to comment on a 
couple of other points in this legislation. I supported the legislation 
coming out of the Commerce Committee and indicated then that I had some 
difficulties with several provisions in it.
  One concern I have deals with the provision in the legislation on the 
subject of ownership restrictions.
  It is interesting that we have in this bill the inertia to try to 
provide more competition, and then we, in this attempt to say to those 
who want to own more and more television stations, yes, we will lift 
the barrier here, we will change the rules so that you can come in and 
consolidate and buy and own more television stations.
  That does not make sense to me. That is moving in the opposite 
direction. The telecommunications bill is about competition. I do not 
think we should say it is fine with us if one group or consortium 
decides to buy more and more television stations and we lift the 
ownership limit from 25 to 30 percent--some say to 50 percent--of the 
audience share. I think that flies exactly in the opposite direction of 
competition.
  Consolidation is the opposite of competition. I intend to offer an 
amendment on this and hope we will preserve the opportunity to decide 
what is in the public interest with the Federal Communications 
Commission. Instead of having an artificial judgment in this bill that 
says let us lift the restrictions and allow people to come in and buy 
more and more television stations into some sort of ownership group. I 
do not think that comports at all with the notion of competition. I am 
going to offer an amendment on that at some point.
  I would like to talk also about the issue of the role of the Justice 
Department. I know Senator Strom Thurmond and others are interested in 
this subject. I intend to offer an amendment on the subject of the role 
of the Justice Department in this bill. The question of when the 
regional Bell Companies are free to engage in competition for long 
distance relates to when there is competition in the local service 
area, in the local exchange. When will the Bell Service Companies open 
themselves to local competition? When they do, when there is true local 
competition, then they have a right [[Page S7949]] and ought to be able 
to compete in the long distance markets.
  The problem is that in the telecommunications bill, the role of the 
Justice Department--which ought to be the location of where the 
judgments about whether or not there is competition in the local 
exchanges--is rendered a consultative role. The Justice Department is 
defanged here, and I do not think that ought to be the role of the 
Justice Department. Again, I think this flies in the face of all of the 
discussions I heard about the virtues of competition. If we are talking 
about competition being virtuous, then let us make sure competition 
exists before we release the Bell Companies to engage in competition 
with the long distance industry.
  How do you best determine competition exists? With the mechanism we 
have always used to determine it. The antitrust judgments and 
evaluations by the Justice Department. It does no service, in my 
judgment, to the American people to decide to take out the traditional 
role of the Justice Department in preserving and protecting the 
interests of competition with respect to this issue when the Bell 
Companies will be set loose to engage in competition in the long 
distance business. So I also intend to offer an amendment on that 
issue. That is a critically important issue.
  In conclusion, I think there is much in the telecommunications bill 
that is useful, valuable and will provide guidance to the direction of 
the telecommunications industry and its service to the American people, 
but this legislation is not perfect. This legislation has some 
problems. I pointed that out when I supported it out of the Commerce 
Committee.
  I have a great friend on the floor, Senator Hollings, the ranking 
member on the Commerce Committee, who I think is one of the best on 
telecommunications issues. I have been pleased to work with Senator 
Pressler, who I think has done a remarkable job in bringing this bill 
to the floor as well. But let us not say, ``Now, gee, this bill came 
from high on stone tablets and cannot be changed. We cannot accept any 
changes here.'' I think universal service is one amendment we can 
accept, but there are going to be some big changes proposed, some of 
which will have merit.
  You can say, ``This bill is carefully balanced on the scale. We read 
the meter with expertise and just cannot make changes.'' It is like the 
argument of a loose thread on a $20 suit. You pull the thread and the 
arms fall off. We have people coming here and saying if this amendment 
is agreed to, the coalition breaks apart, the balance of the bill 
somehow is skewed, and the bill will fail.
  We must, in the intervening days as we debate this legislation, take 
a hard look at a whole range of issues. The Justice Department role, 
yes. I have not mentioned the foreign ownership issue, but that is also 
of concern to me. The concentration of ownership in this country of 
television stations, as an example. Those are all issues I think are of 
great concern and we ought to weigh carefully.
  I hope the Chair and the ranking member on this legislation will 
entertain constructive and useful proposals to strengthen and improve 
this legislation in the public interest of this country.
  Mr. President, I have sent the amendment to the desk. I believe this 
amendment may be acceptable. In any event, at this point, I yield the 
floor.
  The PRESIDING OFFICER. The Senator from South Carolina.
  Mr. HOLLINGS. Right to the point, Mr. President, the distinguished 
Senator from North Dakota has a good amendment. I should make a couple 
of comments, though, with reference to his references and those of my 
friend, the distinguished Senator from Nebraska, who has been very 
participatory, and a cosponsor of the legislative reform in 
communications reform.
  With respect to the general picture here on communications, the 
Senator from North Dakota is right. We do think this is balanced, that 
it cannot be balanced any more, that this bill did come down from on 
high and we are not going to accept any amendments.
  That is out of the whole cloth. I learned long ago I could not pass a 
communications bill by itself, that the Democrats could not pass a 
communications bill by itself and the Republicans could not pass a 
communications bill by itself. We really have to work this out in a 
bipartisan fashion. Senator Pressler has given us the necessary 
leadership and I am committed to working with him in a bipartisan 
fashion. That maybe I have created an atmosphere where there will be no 
amendments and we know it, the opposite is the case. We are begging 
Senators to come, as we begged the Senator from North Dakota to hasten 
on and present that amendment.
  A word should be said about the industry and the service that we have 
because comments have been made about all of these entities involved, 
and there are 30-some. People should understand. We have the long 
distance industry, the cable industry, the wireless cable, the regional 
Bell Operating Companies, the independent telephone companies, the 
rural telephone companies, newspaper industry, electronic publishing 
industry, the satellite industry, the disabled groups, the broadcast 
industry, electric utilities, computer industry, consumer groups, 
burglar alarm industry, telemessage industry, pay phone industry, 
directory publishing industry, software industry, manufacturers, retail 
manufacturers, direct broadcast satellite industry, cellular industry, 
PCS, States, public service committees, commissions, the cities, the 
Federal Communications Commission, the Clinton administration, the 
Department of Justice, the Secretary of Education--all the public 
entities.
  Communications is a very splendid thing. With respect to not wanting 
to open up all the markets, I had a good friend who took a poll with 
what you call a peer review group, testing thing, what do they call 
that thing when they get them all together?
  Mr. DORGAN. A focus group.
  Mr. HOLLINGS. A focus group. Thank you, Senator.
  They had a focus group in Maryland last week and 90 percent of them 
have never heard of the Contract With America. That is all I heard 
about since January. In fact, it started in November, I think. But they 
still had not heard of the contract. You can bet your boots the Senator 
from Nebraska is right; people are not storming the doors for a 
communications bill. In fact, with all of these entities calling on the 
Senators and having to make up their minds, yes or no, the Senators 
from the South say let that communications bill go, let us not call it 
up now, let us delay it, we did last year because there are so many 
tough decisions to be made. But on the information superhighway, 
Congress and Government are squatting right in the middle of the road 
and the technology is rushing past it.
  The information superhighway is there. We have been a hindrance, 
obstacle to it, and what we are trying in this balanced approach and 
bipartisan approach is to remove the obstacle of Government, with the 
view of the Senator from North Dakota that universal service continue. 
He is right on target. I have been very much concerned having 
experienced the airline deregulation. So we want to make certain that 
they can come in and render this service. In that light, our 
communications system has been the best in the world. Yes. The Bell 
Operating Companies, because these parties are so competitive--I have 
not necessarily been in love with either side because it is hard--they 
are really individually competitive. But after all, AT&T, long 
distance, has to file tariffs. They are controlled by the public, and 
operate in the interest of the public convenience and necessity. Every 
one of the Bell Companies have to respond, not just to the FCC but to 
the individual public service commissions. They operate on the basis of 
public convenience and necessity. They have a monopoly, yes, but their 
profits are controlled, and everything else.
  If there is anything operating as a large corporate entity in the 
interest of the public, it has been the Bell Operating Companies. They 
have been most responsive. We have as a result the finest 
communications system in the world. Let us maintain it. On universal 
service, let us extend it. Let us not be in any way doubtful about it 
because the lead-in word that goes into this particular requirement 
about another universal service carrier is ``shall.'' 
[[Page S7950]] The language reads, ``If the commission with respect to 
interstate services designates more than one common carrier as an 
essential telecommunications carrier, such carrier shall meet''--
``shall'' meet. That is the law as we now propose it. But later on we 
say the State ``may'' check off these things that are highly important. 
The truth is they ``shall.'' And I hope we can accept the amendment of 
the Senator from North Dakota and show that we did not think the bill 
came down from on high.
  Let us hear from the chairman.
  Mr. PRESSLER. Mr. President, we accept the amendment of the Senator 
from North Dakota on this side of the aisle. I want to commend him for 
his work on this subject. He is a friend of mine, and an outstanding 
leader in this area. Let me say that this subject of serving the 
smaller cities and rural areas is very important. I have spoken 
frequently on that in our committee.
  We are prepared to accept this amendment. We urge other Senators with 
amendments to bring them to the floor. We are ready to go here on the 
floor.
  Mr. STEVENS. Mr. President, will the Senator yield at that point?
  Mr. PRESSLER. Yes.
  The PRESIDING OFFICER. The Senator from Alaska.
  Mr. STEVENS. Mr. President, I know that the Senator represents areas 
similar to mine, the author of the amendment. I know that he wants the 
States to have powers and to change the word ``may'' to ``shall,'' as a 
mandate to the State. What worries me about the Senator's amendment is 
not that it is saying that the States shall require a finding by the 
authorized agency, but that States may require additional 
considerations to be met. The word ``may'' in this bill right now gives 
the State the authority to determine what findings shall be made by its 
designated agency. By turning this to ``shall'' I wonder if we are 
limiting the States' discretion in terms of the findings that shall be 
made by a designated agency before it permits an additional carrier.
  Mr. President, I do not want to argue it now. I agree with the 
manager of the bill to take the amendment. But I do want the Senator to 
know, my good friend, Senator Dorgan, that I want to look at this in 
conference. I believe this section is going to have to be revised in 
conference anyway. It is in a different form than the House bill, as I 
understand it. But I do think that we should not mandate States as to 
what their findings must be before they can deal with additional 
carriers. I believe that smaller States in particular would prefer to 
have more flexibility.
  I am just wondering out loud if the Senator's amendment is fixing 
this so that the State has no alternative once it makes those findings 
to permit the additional carrier, and what the impact of the Federal 
law will have on the State should the State legislature attempt to 
state that its agency must make additional or alternative findings in 
this regard.
  Again, I conferred with the managers of the bill. I think we 
understand where the Senator is coming from. We want the States to have 
authority. But I really think he is confining the authority by changing 
it to ``shall.'' But I do believe the States might want to--any State--
might want to have other standards other than those stated in this 
bill. I wonder if the Senator might have us look at that.
  Mr. DORGAN. If I might respond, I too respect the point raised by the 
Senator from Alaska. My intention would not be to prohibit States from 
adding additional requirements. My intention is that this would 
represent a set of requirements at a minimum that we should expect to 
be met. But to the extent a State would wish to add additional 
requirements, I do not believe that would be prohibited with this 
language. This language establishes the minimum requirements that must 
be met. That is the purpose of the universal service amendment.
  Mr. STEVENS. Mr. President, as I stated, I am not going to ask for a 
rollcall vote. I am not going to object to the change. But I do think 
that when we get to conference we are going to have to figure out how 
we give States greater flexibility. I do not think we ought to have a 
mandate that indicates that the States must find Federal requirements 
are met before it can designate an additional essential 
telecommunications carrier, in that it cannot add any additional State 
requirements, or it cannot reduce these designated findings and 
substitute others that might be more applicable to its situation with 
regard to size and competition and whatever else that might be 
involved.
  It does seem to me that we ought to be very careful about delineating 
to a State what findings it must make with regard to the designation of 
common carriers as essential telecommunications carriers. We are 
basically talking about the findings that are necessary to deal with 
universal service. The concept of that was really borrowed from the 
essential air service approach, and the way it is done actually, as I 
pointed out to the Senator from Nebraska last night, reduces the costs 
of universal service about $3 billion a year. Those services are 
provided by those who are users of this national system. This allows 
the States to designate additional carriers. I would not want the 
restrictions that are applied in this bill to lead to a lack of 
flexibility as far as the States are concerned to designate additional 
carriers in circumstances which might be unique.
  I could go on at length about some of our unique situations. I do 
think we ought to have flexibility for the State to manage it, provided 
that we understand that the impact of the multiple essential carriers 
is going to be that there be a change in the concept of universal 
service.
  The Senator's amendment deals with universal service concepts as 
modified in this bill, and I would like to see the States have as much 
flexibility as possible, keeping in mind that there is a built-in 
limitation in the Senator's amendment that will reduce the availability 
of universal service in rural States.
  I hope that the Senator understands what I am trying to say. I agree 
to accept the amendment, but I do think we have to find some way as we 
go further to say that this does not prevent the State from modifying 
these findings in the event its legislature determines that other 
standards are more adaptable to its circumstances with regard to the 
providing of universal service within its boundaries.
  Mr. DORGAN. If the Senator will yield for one additional point, Mr. 
President, I understand what the Senator is saying, and I do not want 
to prevent anything being done to respond to peculiar or unique 
circumstances or when a State determines that something else might be 
necessary with respect to these kinds of requirements. It is not my 
intention to interrupt or to prevent that.
  I do think, however, when we are talking about the use of the 
universal service fund, the requirement that this result in the build-
out of the telecommunications infrastructure even to rural areas, boy, 
I think that ought to be a national requirement.
  Those of us who come from rural areas want to say if you are going to 
certify a new essential telecommunications area in an area that would 
be eligible for universal service funds, we want that certification to 
be based on a couple of themes that they think are important, one of 
which is this ought to result in the build-out of the infrastructure in 
rural areas. We know that build-out will occur in urban areas because 
that is where the money is, and we are just saying we want that same 
opportunity to exist in rural areas.
  But I am not suggesting that these three tests be limited. I think 
that States may well find they have unique circumstances and want to 
add additional tests or additional requirements, and I do not in any 
way want to prevent that. So I will look forward to working with the 
Senator from Alaska as we go to conference on this legislation.
  Mr. STEVENS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Alaska.
  Mr. STEVENS. I tried to go into this a little bit last night, and I 
do not know whether this is the time now, but I just point out to my 
friend that the April issue of the bulletin known as Personal 
Communications contains an article that mentions Donald Cox, who is the 
former Bellcore wireless leader who is now at Stanford. He has 
calculated that digital-based station technologies will lower capital 
costs for wireless customers to $14 compared to the current cellular 
cost of $5,555. [[Page S7951]] 
  What it really means is we have the possibility of moving into a new 
domain as far as digital radio is concerned that will deal with 
telecommunications competing with telephone companies. One of the 
things in this amendment is that we will now require that the State 
must find that there will not be a significant adverse impact on users 
of telecommunications services or on the provisions of universal 
service.
  I question whether at the time of the transition into these new 
technologies a State should have to make findings that are based upon 
the use of the old technology. That is one of the problems. If you lock 
a State into findings, I think you may hamper the transition to less 
costly services and, of course, that is where I am coming from. That is 
why I support this bill. I think it will lower the cost ultimately of 
service to rural areas by bringing in additional providers of service. 
It should not be tied to the old wire services that we have relied upon 
in the past.
  Mr. President, I do not have any opposition to the suggestion that we 
adopt the Senator's amendment, but I do want to serve notice that in 
conference, I may wish, because of the amendment, to modify the whole 
section.
  Mr. KERREY addressed the Chair.
  The PRESIDING OFFICER (Mrs. Hutchison). The Senator from Nebraska.
  Mr. KERREY. Madam President, I have no objections to this amendment. 
I would like to point out, the distinguished Senator from North Dakota, 
as well as the chairman and ranking member and the distinguished 
Senator from Alaska and others, worked very hard to try to craft this 
particular title and this particular section of title I so as to make 
certain that areas that are not likely to benefit from competition will 
continue to be served with the same high quality service that they are 
currently receiving.
  This particular provision is a recognition, and I think most do 
recognize, that competition all by itself will not work and that we do 
have to allow competition to determine many things. But this particular 
section I think has been very carefully put together, and it indicates 
how an essential carrier is designated. It describes the obligations of 
that particular carrier. It describes how we set up a multiple 
essential carrier. It describes resale enforcement and interchange of 
principles.
  Madam President, earlier when I made a statement, my staff tells me 
that I made a mistake at the beginning. If I did, I apologize. I was 
pulling a quote from the chairman, and I do not know if I said Senator 
Hollings or Senator Pressler, but it was the chairman's quote last 
night, and I do not again mean to be intentionally confrontational when 
I say that statement that says, ``The overwhelming message we received 
was that Americans want urgent action to open up our Nation's 
telecommunications markets,'' what we are doing, in fact, is what the 
distinguished Senator from North Dakota described and the Senator from 
South Carolina, Senator Hollings, described as well. We are trying, 
with this law, to work our way into a competitive environment and 
create a structure that will enable competition to occur in a fashion 
that is minimally disruptive, but it will be disruptive.
  Title I describes not just the transition to competition in the 
universal service, but it lays out all the various interconnection 
requirements. It describes separate subsidiary safeguard requirements. 
That is a structure that is offered as a protection. I believe the 
Senator from South Carolina in particular has been concerned about 
that. It describes foreign investment and ownership reform, and 
infrastructure sharing. Title I describes the removal of restrictions 
to competition, describes how that is going to occur, how we remove 
entry barriers.
  There is limitation on local and State taxation of satellite 
services. I might point out that for those concerned about putting a 
mandate upon the State, indeed, we are intervening with the State 
regulatory mechanism. This legislation intervenes and says--and I know 
the Senator from Alaska understands that we are intervening, and we are 
saying you cannot do rate-based rate of return regulation; you are 
going to go to price caps. You have a range of motion under price caps.
  But we all need to understand what price caps do. It essentially 
moves us in a direction where the market will determine what the price 
is going to be. It is a much different kind of regulatory scheme than 
we have right now. There are many States, I guess 10 or so, on a price 
cap system of regulation. This would take the other 40 along. I do not 
object to that. I think it is a fair and reasonable thing to do. But it 
is a relatively dramatic action to come to the State level and say that 
we are going to require you to regulate in this fashion, and we say 
there is a limitation on how you can tax your satellite services, and 
so forth.
  Title I, as we remove the restrictions to competition, does lots of 
other things that I will look forward to describing at a later date.
  Madam President, as I said, I do not object at all to the change 
asked for in this amendment.
  Mr. PRESSLER. I urge adoption of the amendment, Madam President.
  The PRESIDING OFFICER. Is there further debate on the amendment? If 
not, the question is on agreeing to the amendment.
  So the amendment (No. 1259) was agreed to.
  Mr. PRESSLER. Mr. President, I move to reconsider the vote.
  Mr. HOLLINGS. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. DORGAN. Mr. President, today the Senate begins consideration of 
comprehensive telecommunications legislation, S. 652, the 
Telecommunications Competition and Deregulation Act of 1995. This 
legislation has been incubating in the Congress for a number of years 
and throughout the past few years, the Senate has appeared to be on the 
brink of passing this landmark legislation that would reform which is 
arguably the most dynamic and fast growing industry in our economy--
telecommunications.
  The underlying agenda of this legislation is to promote competition 
in all areas of telecommunications. We already have a competitive long 
distance industry and there is some competition in cellular service 
throughout the country. Clearly, telecommunications competition has had 
a positive impact. Since the AT&T breakup in 1982, competition in the 
long distance industry has lead a reduction in long distance prices and 
it has spawned the deployment of four nationwide fiber optic networks--
the backbone of the information superhighway.
  This legislation attempts to promote competition in other areas of 
telecommunications, such as in the local exchange and in cable. As a 
general proposition, I support this notion of promoting competition. I 
think competition will lead to lower prices and greater availability of 
telecommunications services. However, Congress must proceed in caution 
as we break down barriers and ease regulation.
  First, a one-size-fits-all approach to competition in the local 
exchange may have destructive implications. In large, high-volume urban 
markets, competition will certainly be positive. However, in smaller, 
rural markets, competition may result in high prices and other 
problems. The fact is that some markets; namely, high-cost rural areas, 
competition may not serve the public interest. If left to market forces 
alone, many small rural markets would be left without service.
  That is why the protection of universal service is the most important 
provision in this legislation. S. 652 contains provisions that make it 
clear that universal service must be maintained and that citizens in 
rural areas deserve the same benefits and access to high quality 
telecommunications services as everyone else. This legislation also 
contains provisions that will ensure that competition in rural areas 
will be deployed carefully and thoughtfully, ensuring that competition 
benefits consumers rather than hurts them. Under this legislation, 
States will retain the authority to control the introduction of 
competition in rural areas and, with the FCC, retain the responsibility 
to ensure that competition is promoted in a manner that will advance 
the availability of high quality telecommunications services in rural 
areas. [[Page S7952]] 
  My second concern is that in our drive to deregulate and eliminate 
barriers, that competition may be impeded. Currently, there are over 
500 long-distance carriers that offer service nationwide. Virtually 
every American has a competitive choice as to what carrier they want to 
use for long distance services. Long distance
 rates have reduced by over 40 percent in the past 10 years because of 
competition. The same choice does not avail itself to consumers with 
respect to local exchange service.

  The second danger we confront in passing this legislation is that we 
could impede competition where it currently exists. Under S. 652, the 
regional Bell operating companies [RBOC's] would be permitted to 
reenter the long distance market. In the early 1980's, the old Bell 
system was divested because the monopoly in the local exchange 
seriously impeded competition for long distance services. After nearly 
14 years of separation from the long distance market, the RBOC local 
networks want to compete for long distance services. This legislation 
will permit that.
  The question is not whether or not the RBOC's should be permitted 
into long distance. The question is under what conditions. 
Unfortunately, this bill is flawed in that it does not provide for an 
adequate role for the Justice Department to determine that RBOC entry 
into long distance services will not harm what is already a 
successfully competitive market.
  I intend to offer an amendment to this legislation that will provide 
for a role for the Justice Department. It seems to me that given the 
history of the AT&T breakup and the threat that the local exchange 
monopolies could use their power to impede competition, the Justice 
Department must ensure that the appropriate conditions are present 
before the RBOC's can be permitted to offer long distance services.
  In addition, I will offer an amendment that will improve the 
universal service provisions in the bill. Under the bill as reported by 
the Senate Commerce Committee, only ``essential telecommunications 
carriers'' [ETC's] would be eligible to receive universal service 
support. The reason is that ETC's would be required to take on the same 
universal service obligations as the incumbent carriers. I believe that 
this condition is imperative to ensure that universal service is 
maintained in rural areas.
  However, the bill falls short in ensuring that when a State 
designates an additional ETC for qualification for universal service 
support, that the best interests of rural consumers are paramount. 
Under my amendment, States would be required to ensure that the 
designation of an additional ETC in a market, that such designation: 
(a) protects the public interest; (b) promotes the deployment of 
advanced telecommunications infrastructure; and (c) protects public 
safety and welfare.
  Finally, I have two other amendments that I intend to offer. I intend 
to offer an amendment that will strike the bill's provisions dealing 
with the liberalization of broadcast ownership rules and require, 
instead, the FCC to review and modify broadcast ownership rules on a 
case-by-case basis. Under my amendment, the FCC would review and modify 
broadcast ownership rules in such a way as to ensure that broadcasters 
can compete fairly with other media sources while at the same time 
protecting localism and diversity of voices in each local market.
  Under the bill in its present form, the national television ownership 
limits would be increased from the current 25 percent viewership cap to 
35 percent with permission to increase beyond that amount later. It 
seems to me that encouraging further concentration in the national 
media is not a desirable goal and it is my hope that we can correct 
this provision in this legislation.
  Mr. President, the goals of this legislation are laudable. However, I 
believe that certain changes are necessary and I intend to work with my 
colleagues to improve the bill and move this important legislation 
forward.
  The PRESIDING OFFICER. The question occurs on the managers' 
amendment.
  Mr. PRESSLER. I move to lay the managers' amendment aside so our 
friend from Arizona may offer his amendment.
  The PRESIDING OFFICER. The Senator from Arizona is recognized.
  Mr. McCAIN. Madam President, may I inquire as to the parliamentary 
situation? The pending business is the managers' package of amendments?
  The PRESIDING OFFICER. The managers' amendment has just been laid 
aside.
  Mr. McCAIN. I thank the Chair. Madam President, I will make some 
comments and remarks concerning this legislation, and then, if the 
parliamentary situation allows it, I will begin offering amendments.
  I note the presence of my colleague from Alaska, who has agreed that 
we would take up one of my amendments as soon as possible, and I will 
be as brief as possible. But I am sure my friend from Alaska 
understands this is a very complex issue and one which probably, in my 
view, will have more impact on America than any other piece of 
legislation that we will consider not only this year but for several 
years.
  Some estimates are that health care reform would have as little as 
one-third the impact financially on America as this legislation does.
  There is no doubt that there are tens of billions of dollars at 
stake. I personally, Madam President, have never seen an issue in my 
now 9 years as a Member of this body have such intense and continued 
and high-priced lobbying. We have as head of one lobbying group a 
former majority leader of the Senate. We have names who are well known 
to all of us in Washington. I doubt if there is a single lobbying group 
inside the beltway that has not had a contract at one time or another 
to lobby on this issue. All of that is not by accident. In fact, Madam 
President, it is because the stakes are enormously high here. One 
phrase, one comma, one or two words in the appropriate place has 
enormous and significant impact.
  So I think this issue should be well debated. I think that there are 
opposing views as to what this legislation does, but let us not have 
any doubt about the impact of this legislation on the very future of 
our Nation. This is all about information and how Americans will 
acquire that information and how Americans will pay for it and who will 
be eligible for it and who will not and to what degree we will regulate 
this industry or deregulate this industry.
  I wanted to start out by applauding the efforts of the chairman of 
the committee, Senator Pressler, who has worked on this issue not only 
as chairman of the committee but for many years. I have had the 
privilege and opportunity of working with him. He has done an 
outstanding job. I know of no other committee chairman who has spent as 
much time on this issue as Chairman Pressler has. I am very 
appreciative of the work he and his staff have done. There are many 
aspects of this legislation which I think are not only excellent 
measures but very important ones and will contribute to the 
deregulation of this industry.
  I also would like to recognize the efforts of the distinguished 
ranking minority member of the committee, Senator Hollings, who also 
has been involved in this issue for many years. I respect his indepth 
knowledge of the issue. He and I have had disagreements about the 
philosophy of regulation or deregulation, but there are no personal 
differences that we have. I not only respect but admire his advocacy of 
what he feels is the best type of legislation for us to pursue.
  I understand the disappointment that the Senator from South Carolina 
felt last year when he had worked so very hard for this legislation and 
had it stymied at the very end of the session.
  Before I go into details, Madam President, let me just state my 
fundamental philosophy and why these amendments that I will be 
proposing today flow from them. We need to have a deregulated industry. 
In the past, we have deregulated the airline industry, the trucking 
industry, the railroad industry in America, and there is very little 
doubt in my mind that world events, as well as national events, 
indicate very clearly and very strongly that the free enterprise 
system, unfettered by Government interference and regulation, not only 
prospers best but provides the best services for the citizens of any 
nation, including this one.
  The people will come to this floor and argue that the airline 
industry is [[Page S7953]] in bad shape, that they have lost billions 
of dollars, and some of the great names in the airlines industry, like 
Eastern Airlines and Pan Am, have disappeared from the scene. But the 
fact is my constituents can fly from one place to another in this 
country more easily and at a lower cost than they could in 1974 when 
the airline industry was deregulated.
  I will freely admit that I do not ride in the comfort that I used to. 
In fact, when the four CEO's testified before the Aviation Subcommittee 
the week before last, I wanted to relate that two mornings previously I 
had flown from Phoenix, AZ. The airline, which will remain unnamed, 
advertised a breakfast. And that breakfast turned out to be a banana 
and a bagel. I think that something has to be changed at least in their 
description of what breakfast is.
  At the same time, I paid far less than I would have in 1974, 21 years 
ago, for that airline ticket. If I had chosen to, although I would not 
have, and paid a significant additional amount of money and rode in 
first class, I probably would have gotten more than a banana and a 
bagel.
 But we have deregulated those industries, and we have found that the 
less regulation and interference that exists in those industries, the 
better off we are.

  Madam President, there are those that will argue this is a 
deregulatory bill. It is advertised as that. I do not deny that. And I 
think some aspects are deregulatory in nature. Let me just quote from 
the report itself, which indicates that there is a $7 billion increase 
in revenues that will be required, and a $1.5 million per-State 
additional cost will be required to implement this law. And perhaps as 
compelling as anything else, $82 million will be required in additional 
funding for the Federal Communications Commission. ``CBO estimates the 
telecommunications firms would have to pay an additional $7 billion 
over the next 5 years to comply with universal service requirements of 
the bill and believes that these amounts should be included as revenues 
in the Federal budget.'' The managers have accounted for that with 
spectrum auction, is my understanding.
  ``CBO estimates that enacting S. 652 would increase the spending 
requirement for the FCC by about $81 million over the 1996-2000 
period.''
  Madam President, how can you have a bill that is deregulatory that is 
going to cost us an additional $81 million over a 5-year period in 
order to deregulate the industry? I do not think so. In fact, Madam 
President, there are additional--at least according to this morning's 
Wall Street Journal, there are 80 new regulatory functions for the FCC, 
all designed, of course, to ensure fairness and competition. Eighty new 
regulatory functions for the FCC. And, of course, the most egregious of 
which, in my view, is the so-called public interest aspect of the bill, 
which, frankly, places an enormous amount of power and authority in the 
hands of the FCC.
  Let me make it clear for the Record that this legislation is a 
substantial improvement over S. 1822 from the 103d Congress. With all 
due respect, I have to say that any legislation that advertises itself 
as deregulatory and has a requirement for domestic content in it, 
which, according to the U.S. Trade Representative, was a direct 
violation of NAFTA and GATT, of course, it is an insult to one's 
intelligence to call it deregulatory. So at least we got rid of the so-
called domestic content aspect of it. And we have made other 
substantial improvements in this bill.
  Let me note that it is an improvement, but it does little in the way 
of fundamental deregulation. Why is it that every time I talk to 
someone in this industry--and there are many--they say, ``I am in favor 
of total deregulation, but * * *'' There is always a ``but.'' And guess 
what? They have to have some kind of special dispensation for their 
industry to make sure that they have a level playing field. Apparently, 
the only way you get a level playing field is to have some kind of 
special deal for this or that segment of the industry.
  As the Heritage Foundation noted in its report card on S. 652,

       Unfortunately, while a modest improvement on current law 
     misses the opportunity to benefit consumers by opening the 
     industry to real competition, if this legislation becomes 
     law, as structured today, consumers will not be able to look 
     forward to serious telecommunications deregulation or 
     competition in the short-term.

  The Heritage Foundation graded S. 652, unfortunately, albeit 
accurately--the bill scored an overall grade of a C-minus. It is my 
understanding that the managers are offering amendments that will raise 
that grade somewhat. I applaud their efforts. Senator Packwood and I 
are also offering amendments which will raise the grade of the bill and 
will result in substantially better, more deregulatory, more 
proconsumer legislation.
  As I said before, Madam President, we will have one opportunity this 
decade to substantially reform the telecommunications industry. I think 
we are all in agreement that if we do not pass this bill within a 
relatively short period of time the legislation will probably not be 
reconsidered until at least 2 years from now. And, of course, we do not 
want that to happen.
  I urge my colleagues to remember that on November 8, the American 
people demanded a change--less Government and more freedom to innovate 
and compete. S. 652, like last year's bill, is based on the belief that 
all the woes of the communication industry could be solved by the glory 
of increased regulation. History tells us that regulation binds and 
restricts industry growth and innovation and transfers decisionmaking 
from entrepreneurs and thus customers to bureaucrats. These regulatory 
shackles do little to benefit the public.
  Madam President, in free markets, less Government usually means more 
innovation, more entrepreneurial opportunities, more competition, and 
more benefits for consumers. This point was made exceedingly clear by 
the Wall Street Journal when it stated on April 8, 1994,

       It is truly humorous for politicians to think they can 
     somehow fine-tune or stage-manage the rapidly developing 
     world of advanced technologies that includes emerging 
     financial and corporate structure, entire armies of engineers 
     and software wizards. The people who will actually bring this 
     exciting future to life are put in lead shoes when the FCC 
     and the Congress micromanages.

  Madam President, one of the arguments that will be made today by my 
friend from Alaska is that this is a interim bill, that this is one 
step on the path toward total deregulation. My response to that is that 
I would have to be convinced as to where that is needed and why. I note 
that my friend from South Carolina is smiling at me. I understand that, 
since we have a fundamental philosophical disagreement. The Senator 
from South Carolina, I believe, did not support airline deregulation or 
trucking deregulation, and does not probably support the kind of 
deregulation that I am in favor of. We have a fundamental philosophical 
difference in the role of Government and whether the Government should 
regulate the market or let the free market play. I have heard many 
times my friend from South Carolina talk and how he laments that there 
is no longer the direct flights to Charleston, SC. I lament that, too. 
There is not nearly the comfort or the convenience there used to be. 
But the fact is--and I have provided the facts many times--that the 
people of South Carolina can get back and forth from Charleston, and 
most any other part of South Carolina less expensively and more 
conveniently than they ever had in the past, under Government 
deregulation. We used to have, under airline regulation, a special 
flight that went from here to a certain destination because there was a 
certain Senator who was a chairman of a committee. That flight used to 
be mostly empty, but that flight stayed in existence at least as long 
as that was the case.
  It is important to note that without any regulations the television 
manufacturing industry has managed to achieve a very high penetration 
rate for televisions in this country, even higher than that of 
telephones. We must ask the fundamental question: Why do more American 
homes have TV sets than have telephones? Whatever the answer, the facts 
demonstrate that an industry can achieve virtual universal penetration 
without Government-imposed regulation.
  Madam President, I want to highlight some of the problems I see with 
this legislation. First and foremost, it is not deregulatory. According 
to estimates published by the FCC itself, this bill will require it to 
take over 60 new regulatory or administrative actions. [[Page S7954]] 
  This bill also expands the current telecommunications service 
subsidies scheme. As the Heritage Foundation notes,

       Instead of attempting to reform or eliminate this 
     destructive subsidy system, the Pressler bill actually 
     expands its scope. For example, the bill maintains current 
     price controls, continues inefficient rate averaging, and 
     expands the telecommunications entitlements.
  The Heritage Foundation continues:

       The continuation of the failed subsidy policies of the 
     past, combined with an expanding definition of universal 
     service, mandated under the bill, places at risk almost 
     everything else the bill hopes to accomplish. Once personal 
     computers, online service, set top boxes, and other future 
     technologies become part of a package of mandated benefits, 
     to which every American must have access, it is likely these 
     technologies will be regulated and thus made less 
     competitive. Further, according to CBO, enacting S. 652 would 
     increase spending requirements for the FCC by about $81 
     million over the period from 1996 to the year 2000.

  I wish the managers would explain to me, how do you deregulate and 
increase the cost to the enforcing agency of the enforcement of 
regulations? Is it to help them make a transition? Or is it, in 
reality, to enforce the additional 80 new regulations that are a part 
of this bill? I do not think any American would believe that a bill is 
truly deregulatory if it costs $81 million, payable to the regulators, 
to enforce.
  On this point, I want to again quote the Heritage Foundation.

       The bill does not contain any serious discussion of the 
     future of the Federal Communications Commission. Policymakers 
     appear unconcerned with the role the agency plays in the 
     deregulatory process, and apparently do not realize it was 
     part of the problem they hope to correct.

  I am going to--I hope, before we finish this bill--look at what the 
Federal Communications Commission has done when we have given them a 
broad charter, such as determining what is in the public interest. I 
will tell you what the record shows--that is, that they have never 
really been able to determine what is in the public interest, and if 
they have, their conclusion has been more regulation.
  That is not a criticism of the FCC. That is the nature of 
bureaucracies, the nature of regulatory bodies when you set them up. 
How should we expect anything else? That is their business.
  The Congress should follow the model established by the congressional 
Democrats in the Carter administration in the late 1970's when they led 
the battle to deregulate the airlines. From the start, the future of 
the Civil Aeronautics Board, which regulated the airline industry, was 
on the table. It was well understood by most in Congress that 
deregulating the airlines would mean eliminating the CAB. A few years 
later, the CAB was abolished.
  Just the opposite occurs in this bill. The bill actually expands the 
ability and policymaking ability of the FCC. As noted by the CBO, as I 
said, it will cost an additional $81 million over the next 5 years.
  I want to enumerate some of the other problems in this bill. I 
mentioned it before, and I will mention it again, because it is really 
a very crucial item. The FCC administered public interest tests, which 
allowed the FCC to use subjective criteria in determining whether an 
RBOC can compete in other lines of business. The public interest test 
gives the FCC policymaking authority. The FCC's authority and power 
should be lessened, not enhanced. The public interest test allows the 
FCC to establish policy and control private companies and whole 
industries. Such ill-defined discretionary power would prevent full 
competition in the communications industry for years, if not decades. 
It should be eliminated, or at least amended so that compliance with 
the competitive checklist is deemed to be in compliance with the public 
interest test.
  The Snowe-Rockefeller public users language in the bill should be 
stricken. The bill mandates at-cost telecommunication rates for 
schools, any medical facility, or libraries.
  First, in my view, the Congress should not be establishing specific 
rates for specific groups. Such decisions should be made by the free 
market or, at a minimum, on the State level.
  Second, many political causes that operate out of such entities, such 
as proabortion operations, would be given a federally mandated benefit 
that others in society would not be able to receive. The provision 
should be eliminated.
  Mr. President, if we are interested in making sure that low-income 
individuals have access to a telephone, we have a proposal
 that simply is to provide vouchers for those who need it.

  It seems to me that to provide vouchers to those who are low income, 
Americans who need a telephone service or anything else should be the 
recipients directly of the ability to purchase that service. When we go 
through other bureaucracies, other industries, what we do is increase 
the cost. Obviously, we distort the entire situation.
  I intend to offer an amendment that would establish the voucher 
program in lieu of the urban rural subsidy scheme that currently 
exists. The current system and that envisioned under S. 652 seeks to 
ensure that Americans receive telecommunication services at similar 
rates, by giving the corporations that offer such services a subsidy. 
Instead of giving subsidies often to well-to-do people, we should be 
giving the funds directly to the needy consumer. I intend to discuss 
this issue more fully when I offer the amendment.
  Last, we must closely examine the universal service fund mechanism in 
the bill. I have serious concerns about the potential of this 
legislation, as drafted, to create a new telecommunications entitlement 
program.
  Furthermore, I am very concerned that the Budget Committee has not 
dealt sufficiently with the budgetary impact of this legislation. CBO 
has stated that the bill contains a Government mandate that will force 
telecommunications firms to have to pay an additional $7 billion over 
the next 5 years to comply with the universal service requirements of 
the bill. CBO believes that these accounts should be included as 
revenues in the Federal budget.
  Mr. President, the budgetary ramifications of this bill cannot and 
should not be ignored. As CBO noted, the costs associated with S. 652 
fall within the budget function 370. As such, they would increase 
direct budget authority in function 370 by $7 billion.
  Additionally, proponents claim that the new Federal tax contained in 
this bill should not be counted on the budget but, instead, be 
considered off budget, since it is budgetarily neutral. That simply is 
not correct.
  CBO states that receipts generated by this bill would be on budget, 
and I believe they are correct. Regardless of how the money is used, it 
should be counted in the budget.
  There are those who argue that this bill saves consumers money. I 
wish that could be proven, but it cannot. In fact, the opposite appears 
to be true.
  First, some have estimated that the current telecommunications 
subsidy scheme totals $10 billion, and since this bill streamlines and 
makes explicit some subsidies, that this bill results in $3 billion in 
savings. That is not an accurate statement.
  How much money totals in the subsidy scheme is not accurately known. 
Some state $10 billion; others claim the number is much closer to $20 
billion.
  The reality is that the bulk of all this money is currently 
controlled by the States and is inherent in the rate scheme. In this 
bill, we are effectively federalizing $7 billion of the $20 billion. Is 
money saved by such action? I do not know.
  I do know that CBO claims that it will cost $81 million to implement 
this bill on the Federal level and $1.25 million per year per State to 
implement this measure. I do know that the Federal Government does not 
have an outstanding reputation for efficiency and cost savings.
  I also know that it is impossible to estimate the future costs of 
this legislation. The evolving definition of universal service 
contained in the bill will allow the FCC to expand service. Any such 
expansion of service will cost money.
  The State of Colorado, for example, by the end of this year, will 
finally implement a single-party dialing scheme throughout the State. 
Doing so is good for the people of Colorado. But I will want to note 
that doing so costs money. It is not done for free.
  Additionally, I am very concerned about the future costs of the 
public user section of this bill. When we subsidize telephone service 
for all schools, libraries, and medical facilities, there are costs in 
doing so. Those costs must be borne by someone. [[Page S7955]] 
  The bill allows the FCC and a Federal-State joint board to determine 
what services qualify as universal service. These services are what 
this new Federal telecommunications tax will pay for.
  I want to emphasize after this bill passes, the FCC, not the 
Congress, will be determining how high this new telecommunications tax 
will rise. Let me repeat this: After this bill is signed into law, the 
FCC will be determining how much is paid into the universal service 
fund. That is wrong, and the impacts are staggering.
  Additionally, CBO estimates that the cost of the bill to State and 
local governments will be substantial. The CBO report states:

       Implementing the provisions of S. 652 would result in 
     increased costs to most States. The bill would require States 
     to promulgate regulations, direct various audits of Bell 
     companies, and to participate in various joint Federal-State 
     boards.

  CBO states, based on information from the National Association of 
Regulatory Utility Commissioners' estimates, that States will incur 
costs approaching $125 million over the next 5-year period.
  Again, I ask the question: What kind of deregulatory bill costs the 
Federal Government extra to implement and the State governments extra 
money to implement? It does not make sense.
  Mr. President, we are moving this bill forward without fully 
understanding its impact, in my view, on the industry and the economy 
as a whole, and most importantly, the consumer.
  I have been assured, Mr. President, that we will fix many of the 
bill's problems in conference. I have seen too many things happen in 
conference behind closed doors. I think there is no time, when special 
interests have more impact in a conference behind closed doors. I have 
no confidence that this will be ``fixed'' in conference.
  In closing, Mr. President, I hope we can improve the bill. 
Deregulation will result in winners and losers in the communications 
industry. That is the unfortunate reality. But consumers will be the 
biggest winners. They will have increased options and lower prices.
  The bill we pass should result in that goal becoming a reality. If 
the bill cannot do that, then we should amend it. If that is not 
possible, we should start again.
  Mr. President, this morning in the Wall Street Journal, there is an 
article called ``Locals' Access,'' and it begins with a quote that says 
``It's an inside-the-beltway game, a wise guy's game,'' a quote from 
Larry Irving, of the Commerce Department.
  Mr. President, the article goes on to say:
              [From the Wall Street Journal, June 8, 1995]

                             Locals' Access

       It's a harsh verdict, but after watching the House Commerce 
     Committee approve a misshapen telecommunications bill, we 
     reluctantly have to agree with Mr. Irving's assessment. The 
     once-grand enterprise of opening the Information Highway has 
     become a wise guy's game.
       The recent committee markup was packed with lobbyists, many 
     of whom paid $1,000 for their seats by hiring a student to 
     wait in line for three days to reserve a spot. The bill that 
     emerged from this familiar Beltway bog was dripping with new 
     restrictions on competition--all of course in the name of 
     ``deregulation.'' This is what happens when Republicans 
     forget the November election and start behaving like the 
     locals.
       The GOP decline on this issue was put in stark relief with 
     the release of a study on telecom deregulation last week by 
     the Progress & Freedom Foundation. The report, prepared by a 
     distinguished group of scholars and welcomed by Speaker Newt 
     Gingrich, sets a truly radical agenda: Abolish the FCC and 
     replace it with a smaller executive branch agency. Get rid of 
     the current regulatory hodgepodge, leaving in place only the 
     Justice Department's antitrust functions. Get the government 
     out of the spectrum business by creating ``property rights'' 
     on the I-Way. Shrink subsidies for the officially protected 
     groups down to the smallest possible level.
       This vision, which combines Republican principles with the 
     realities of the 21st century marketplace, is what the GOP 
     should be doing--but isn't. Oh sure, Congressman Jack Fields 
     and Senator Larry Pressler--the chief architects of the 
     Republican approach--have promised that abolishing the FCC 
     will be the next item on their agenda. But after a bruising, 
     months-long battle over this telecom bill, Congress is hardly 
     likely to revisit the subject anytime soon.
       The Fields and Pressler legislation comes to the Senate 
     floor this week, and far from phasing out the FCC, it gives 
     the agency some 80 new regulatory functions--all designed, of 
     course, to ensure ``competition'' and ``fairness.'' By taking 
     this approach, Republicans have aligned themselves with the 
     Clintonites' French Bureaucrat worldview and against the real 
     entrepreneurs.
       In fairness, it must be said that the Republicans' failure 
     of political vision is matched and made possible by that of 
     industry. Over and over, telecom CEOs have told us that all 
     they want to do is compete without government interference. 
     But when confronted with a wide-open legislative process, the 
     temptation seems irresistible to seek provisions burdening 
     competitors.

  Mr. President, having been lobbied by representatives of the 
telecommunications industry, I can attest to that for a fact.

       The problem here is a familiar one--the telecom companies 
     lean too heavily on their ``insider'' Washington 
     representatives, whose skill is chiseling arcane special 
     provisions out of an arcane process. These people are part of 
     the reason the public is cynical about Washington. The CEOs 
     know what's right, but are given to believe it's never 
     attainable. Consider ``universal service.''
       Numerous telecom CEOs have told us how awful this 
     entitlement is: It distorts market signals. It offers huge 
     subsidies to recipients who aren't means-tested. It costs the 
     economy billions. But every CEO hastily adds: Of course, we 
     can't oppose universal service; remember the political 
     realities.
       In short, the imagination that builds such remarkable 
     private networks and products stops at the Capitol steps. 
     Nobody is making the case to the public against universal 
     service. Where are the TV commercials pointing out that Harry 
     & Louise would be forced to subsidize telephone service to 
     their rich neighbor's summer home? Instead industry lobbyists 
     and Republicans have quietly united behind a new universal 
     service entitlement, whose cost, by CBO estimates, would be 
     $7 billion.
       It would be a tragedy if this approach becomes law--for all 
     concerned. The telecom industry, which now represents one-
     seventh of the economy, wouldn't create the 2.1 million new 
     jobs that real deregulation would bring by the year 2000. The 
     Republican Party would see its mantle as the party of new 
     ideas tarnished. And the American people would be delayed in 
     receiving the benefits of full competition--everything from 
     new cable channels to interactive television to services not 
     yet imagined.
       Newt Gingrich and Bob Dole have to get involved to prevent 
     their political managers from blowing this chance to 
     deregulate America's fastest growing industry. The leadership 
     should declare: Enough compromises, already. Let's get back 
     to first principles, with the Progress & Freedom Foundation 
     report an excellent place to rediscover them.
  I want to read a letter I received yesterday from the Citizens for a 
Sound Economy.

       Dear Senator McCain: I am writing on behalf of Citizens for 
     a Sound Economy (CSE) to express our support for the 
     amendments you intend to offer during floor debate on S. 652, 
     the Telecommunications Competition and Deregulation Act of 
     1995. We commend your efforts to improve the legislation by 
     streamlining regulatory review processes and taking steps to 
     rein in the current universal service system.
       S. 652, as reported by the Commerce Committee, eliminates 
     or reduces a number of regulatory hurdles to 
     telecommunications competition, cable rate regulation, and 
     broadcast ownership restrictions. It provides spectrum 
     flexibility for broadcasters. It also eliminates some rate of 
     return regulation, and provides transition mechanisms to 
     competitive pricing, a periodic review of regulations, and 
     authority for regulatory forbearance.
       Given the outdated regulatory scheme currently used to 
     regulate the telecommunications industry, this legislation is 
     a step forward. While we strongly urge adoption of the 
     amendments discussed below, which would strengthen the bill, 
     CSE believes the Senate should pass S. 652 even if these 
     amendments fail.
       ``Public interest'' review. S. 652 would condition a Bell's 
     entry into the long-distance market upon a showing that the 
     company had undertaken specified steps (a ``checklist'') to 
     open its local network to competition. Even after the Bell 
     company complies with the checklist, however, the FCC would 
     have to determine whether Bell entry is consistent with the 
     public interest.
       CSE supports your amendment to deem the public interest 
     standard to be met when a Bell company has met the 
     requirements specified in the checklist. The requirement of 
     an FCC ``public interest'' determination in addition to the 
     checklist requirements is unnecessary and will result only in 
     delay in bringing additional long distance competition to 
     consumers. Moreover, this ``public interest'' requirement is 
     ill-defined and thus invites virtually endless litigation 
     over whether Bell entry is in the public interest. Unlike the 
     public interest test, the checklist is objective, and 
     conditioning long-distance entry solely on meeting its 
     requirements provides some certainty in the process. 
     Objective criteria also reduce the temptation of existing 
     providers to use regulatory processes to protect their 
     market.
       Universal service amendments. S. 652 takes some steps 
     toward making universal service subsidies explicit, which CSE 
     strongly supports. We also support your amendments to 
     [[Page S7956]] prevent potential unchecked expansion of the 
     current flawed system.
       First, S. 652 mandates cost-based rates for schools, 
     libraries, and medical facilities. This provision should be 
     stricken, as your amendment proposes. The federal government 
     should not favor particular entities to receive preferential 
     rates. If local or state ratepayers wish to subsidize these 
     entities, that determination can be made at the local or 
     state level. Moreover, the community-user provision raises 
     difficult questions. For example, is a parochial school 
     entitled to the discounts? Should Americans who oppose 
     abortion be required to subsidize the telecommunications 
     services provided to an abortion clinic? Giving such benefits 
     to certain institutions in society raises questions of 
     fairness and touches upon constitutional issues. Therefore, 
     GSE supports elimination of this provision.
       Second, S. 652 defines universal services as an ``evolving 
     level'' of services that includes, at a minimum, services 
     subscribed to by a substantial majority of residential 
     customers. Your amendment would narrow this definition to 
     exclude entertainment services and telecommunications 
     equipment. There is simply no justification to require 
     consumers to subsidize access to interactive video games or 
     the purchase of computers.
       Finally, CSE supports your amendment to require 
     congressional notification of the amount of universal service 
     contributions and of any increases. This is essential to 
     foster congressional oversight of a potentially fast-growing 
     entitlement. It also will facilitate accountability to 
     consumers who are paying for universal service support in 
     their telephone bills.
       In conclusion, CSE supports your amendments to further 
     streamline the regulatory structure governing the 
     telecommunications industry. In addition, while we recognize 
     that S. 652 is not perfect, we urge the Senate to act on the 
     bill.

  Mr. President, the Heritage Foundation also wrote a memorandum to me 
and to Senator Packwood, and I ask unanimous consent their letter be 
printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                      The Heritage Foundation,

                                     Washington, DC, June 6, 1995.
     Re Improving S. 652

     Hon. John McCain,
     Hon. Bob Packwood
       I am writing on behalf of the Heritage Foundation 
     concerning S. 652, The Telecommunications Competition and 
     Deregulation Act of 1995, which the Senate is scheduled to 
     begin debate on as early as Wednesday morning. While the bill 
     makes considerable strides toward the liberalization of the 
     telecommunications market, the legislation is also riddled 
     with much unnecessary regulation and new mandates. Federal 
     Communications Commission (FCC) Chairman Reed Hundt made this 
     clear when he announced recently that the agency ``will need 
     substantial resources'' to implement the legislation. ``We'll 
     need economists, statisticians, and business school 
     graduates,'' Hundt went on to say.
       Although this may be the type of deregulation FCC 
     bureaucrats like, it is falls well short of what most experts 
     and consumers would view as true deregulation. I fact, a 
     recent scoring of S. 652 by the Congressional Budget Office 
     revealed the bill would require approximately $60 million in 
     additional FCC spending over the 1996-2000 period.
       Realizing the need for a more deregulatory approach, you 
     plan to introduce a package of amendments on the Senate floor 
     that will correct much of the bill's overly regulatory 
     emphasis. Only by including amendments such as these can the 
     Senate assure S. 652 will be deregulatory in both rhetoric 
     and reality.
       Cutting out the regulatory fat. Although S.652 makes some 
     important improvements over current law, most experts agree 
     too much regulatory fat has been added to the bones of the 
     bill. Whether it was added to appease special industry 
     interests or particular legislators makes little difference--
     the fact remains that the bill contains dozens of new rule-
     making powers and open-ended mandates for the FCC.
       Your amendments would correct many of these flaws by 
     offering language that would do the following.
       Eliminate lengthy potential delays that would result from a 
     ``public interest'' test on Baby Bell entry into new markets 
     by demanding that the FCC allow such firms to enter new 
     markets once they have satisfied a pre-determined checklist 
     of requirements.
       End numerous unnecessary common carrier regulations by 
     requiring mandatory FCC forbearance when markets are deemed 
     competitive.
       Sunset transitional regulations to ensure rules do not 
     become permanent fixtures.
       Eliminate price controls and expensive mandates on carriers 
     that serve rural health care providers, schools, and 
     libraries.
       Narrowly define universal service as basic phone service 
     and create a more efficient, pro-competitive delivery 
     mechanism.
       Adopting these provisions would improve markedly the 
     deregulatory scope of the bill. In fact, comparing a report 
     card of the relevant section of S. 652 that your amendments 
     focus on, illustrates the magnitude of this improvement. (See 
     Table 1).

A REPORT CARD ON THE PRESSLER PLAN FOR TELECOM (S. 652) WITH AND WITHOUT
                       PACKWOOD-McCAIN AMENDMENTS                       
------------------------------------------------------------------------
                                                     Grade              
                Report card item                    without   Grade with
                                                  amendments  amendments
------------------------------------------------------------------------
Elimination of barriers to entry and regulation   B-          A-        
 (telephony).                                                           
Elimination of telecommunications bureaucracy...  D-          B         
Elimination of telecommunications entitlements..  F           B+        
------------------------------------------------------------------------

       Many of the amendments that Commerce Committee Chairman 
     Larry Pressler (R-SD) plans to offer as part of a 
     ``manager's'' package could also broaden the deregulatory 
     nature of the bill. Specifically, if the Chairman offers 
     amendments further scaling back cable rate regulation, adding 
     more substantial broadcast deregulation, vacating the GTE 
     consent decree, eliminating asymmetrical regulations on AT&T, 
     as well as language broadening the scope of the spectrum 
     auctioning authority of the FCC, then this bill overall would 
     score a solid ``B''. But, again, this would be the case only 
     if all the free-market oriented amendments being proposed are 
     adopted.
       Although the adoption of these amendments would clearly 
     improve the scores S. 652 receives, to obtain perfect marks 
     the Senate would need to include language that: 
     unconditionally eliminated all barriers to entry in every 
     segment of the market after one year; completely devolved all 
     authority for the delivery of universal service to the 
     states; repealed all cable regulations and created a clear 
     and unconstrained legal environment for the delivery of video 
     services; privatized completely the radio spectrum by 
     creating property rights in wireless spectrum holdings; 
     unconditionally repealed all protectionist foreign ownership 
     barriers; eliminated entire bureaus and departments at the 
     FCC; and made explicit mention of the preeminence of the 1st 
     Amendment in the emerging telecommunications legal 
     environment.
       However, inevitable political trade-offs and compromises 
     probably diminish the chances such comprehensive reform 
     language could be inserted into the bill so late in the 
     legislative process. In addition, certain issues such as 
     continued downsizing of the FCC bureaucracy and the 
     privatization of the radio spectrum could be handled in 
     separate bills later this session.
       Last chance till 1997. If the S. 652 fails to pass the 
     Senate, in all likelihood there is little chance legislation 
     would resurface until the next Congressional session in 1997. 
     Such deregulatory delay would cost both the industry and 
     consumers billions of dollars in lost economic output, higher 
     prices, and foregone job opportunities.
       However, the overly regulatory baggage attached to S. 652 
     would also impose significant costs on the industry and 
     consumers and, therefore, should be removed if Congress 
     desires a rapid and unfettered transition to free markets. 
     The Packwood-McCain amendments would strip out such elements 
     of the bill and facilitate such a beneficial transition. If 
     coupled with deregulatory language found in Senator 
     Pressler's amendment package, S. 652 could then be considered 
     truly ``deregulatory'' in both rhetoric and reality.
  Mr. McCAIN. I will quote from the memorandum from the Heritage 
Foundation. It says:

       While the bill makes considerable strides toward the 
     liberalization of the telecommunications market, the 
     legislation is also riddled with much unnecessary regulation 
     and new mandates. Federal Communications Commission (FCC) 
     Chairman Reed Hundt made this clear when he announced 
     recently that the agency ``will need substantial resources'' 
     to implement the legislation. ``We'll need economists, 
     statisticians, and business school graduates,'' Hundt went on 
     to say.
       Although this may be the type of deregulation FCC 
     bureaucrats like, it is falls well short of what most experts 
     and consumers would view as true deregulation. In fact, a 
     recent scoring of S. 652 by the Congressional Budget Office 
     revealed the bill would require approximately $60 million in 
     additional FCC spending over the 1996-2000 period.
       Your amendments would correct many of these flaws by 
     offering language that would do the following:
       Eliminate lengthy potential delays that would result from a 
     ``public interest'' test on Baby Bell entry into new markets 
     by demanding that the FCC allow such firms to enter new 
     markets once they have satisfied a pre-determined checklist 
     of requirements.
       End numerous unnecessary common carrier regulations by 
     requiring mandatory FCC forbearance when markets are deemed 
     competitive.
       Sunset transitional regulations to ensure rules do not 
     become permanent fixtures.
       Eliminate price controls and expensive mandates on carriers 
     that serve rural health care providers, schools, and 
     libraries.
       Narrowly define universal service as basic phone service 
     and create a more efficient, procompetitive delivery 
     mechanism. It shows increases in grade with this amendment.

  The Heritage Foundation concludes by saying:

       If the S. 652 fails to pass the Senate, in all likelihood 
     there is little chance legislation would resurface until the 
     next Congressional session in 1997. Such deregulatory delay 
     [[Page S7957]] would cost both the industry and consumers 
     billions of dollars in lost economic output, higher prices, 
     and foregone job opportunities.
       However, the overly regulatory baggage attached to S. 652 
     would also impose significant costs on the industry and 
     consumers and, therefore, should be removed if Congress 
     desires a rapid and unfettered transition to free markets. 
     The Packwood-McCain amendments would strip out such elements 
     of the bill and facilitate such a beneficial transition. If 
     coupled with deregulatory language found in Senator 
     Pressler's amendment package, S. 652 could then be considered 
     truly ``deregulatory'' in both rhetoric and reality.
  That is what I am hoping we can add here.


                           Amendment No. 1260

 (Purpose: To require Congressional notification before the imposition 
            or increase of universal service contributions)
  Mr. McCAIN. Mr. President, I send an amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER (Mr. DeWine). The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Arizona [Mr. McCain] proposes an amendment 
     numbered 1260.

  Mr. McCAIN. 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:
       On page 42, strike out line 23 and all that follows through 
     page 43, line 2, and insert in lieu thereof the following:
       ``(j) Congressional Notification of Universal Service 
     Contributions.--The Commission may not take action to impose 
     universal service contributions under subsection (c), or take 
     action to increase the amount of such contributions, until--
       ``(1) the Commission submits to the Committee on Commerce, 
     Science, and Transportation of the Senate and the Committee 
     on Commerce of the House of Representatives a report on the 
     contributions, or increase in such contributions, to be 
     imposed; and
       ``(2) a period of 120 days has elapsed after the date of 
     the submittal of the report.
       ``(k) Effective Date.--This section takes effect on the 
     date of the enactment of the Telecommunications Act of 1995, 
     except for subsections (c), (e), (f), (g), and (j), which 
     shall take effect one year after the date of the enactment of 
     that Act.''.

  Mr. McCAIN. Mr. President, this amendment would mandate that the 
Congress be notified in advance of any action taken by the Federal 
Communications Commission that would result in increased receipts to 
the Government. In other words, increasing taxes. There is a 
substantial debate about whether this bill mandates taxes or not. I 
believe it does. I believe this bill should be blue slipped by the 
House of Representatives due to the fact that the Constitution mandates 
that all tax bills originate in the House.
  According to CBO:

       CBO estimates that telecommunications firms would have to 
     pay an additional $7 billion over the next 5 years to comply 
     with the universal service requirements of the bill and 
     believes that these amounts should be included as revenues in 
     the Federal budget.

  What may be a receipt to many here is a tax to many in Arizona. We 
can debate semantics for some time, whether a receipt is a tax or not. 
I do not intend to do so. But to my constituents, Government-mandated 
collection of revenues, which we then spend, in my view and their view 
is a tax.
  It is true many of the costs that CBO calculated in this bill 
currently exist. They are part of a large telecommunications subsidy 
scheme controlled by the States. That does not change the fact that we 
are now federalizing that money into some that constitutes a tax.
  I am very concerned about this new tax. As I noted, the Constitution 
states that all revenue measures originate in the House. I have 
contacted the House Parliamentarian regarding this matter, and it is my 
understanding that they are very concerned about precisely this issue. 
After all the hard work of the chairman and ranking member of the 
Commerce Committee--and they have worked very hard on this matter--I 
fear it may be for very little due to the tax problem.
  Further, under provisions of this bill, not the House nor the Senate 
but the FCC will have the ability to originate or increase taxes, 
federally mandated taxes to be paid by companies. Either way, I believe 
that is an abrogation of congressional duty.
  Under the evolving definition of universal service contained in the 
bill, the FCC in conjunction with a Federal-State joint board can at 
any time change the definition of universal service. Although I applaud 
the committee for accepting the suggestion I made for tightening the 
bill's definition of universal service, I remain concerned. However, 
the definition is changed. The FCC in the future could mandate call 
waiting, three-way calling, and any other number of services that no 
one has yet thought of for all Americans. Such services do not come for 
free. They come with a substantial cost.
  The bill allows the FCC to force all telecommunications companies to 
pay into the universal service fund an amount necessary to subsidize 
such services. And, yes, these costs, the costs of paying federally 
mandated access, will be passed on to the consumer. When American 
companies are taxed, when American consumers are taxed, when anyone is 
taxed in this country, the Congress--not an executive branch agency--
should be making these decisions.
  Because of the structure of the bill it is not possible to allow the 
Congress to veto FCC authority we give them. Such a legislative veto 
bill violates the Chadha decision. This amendment, however, does 
mandate that the FCC notify the Congress of its intent to raise the 
fees that it charges communications companies. The Congress could then 
act to stop the FCC. We could choose to do anything. But it is 
imperative that we know of such changes and have time to act.
  I understand that some will state that any such changes promulgated 
by the FCC would appear in the Federal Register, and, therefore, the 
notification requirements mandated by this amendment are not needed. I 
disagree. We should not allow tax-for-fee increases to occur merely 
after notification in the Federal Register. Direct notification is 
appropriate. Congressional committees should concur. That is exactly 
what this amendment does.
  I ask that it to be adopted.
  Mr. President, I believe that the managers of the bill are receptive 
to this amendment. I would ask for the yeas and nays. But I am not sure 
it is necessary to do so.
  Mr. PRESSLER. We will accept this amendment. We commend the Senator 
from Arizona for his support.
  Mr. STEVENS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Alaska.
  Mr. STEVENS. I join in recommending that it be accepted. But I want 
to point out some things to my friend from Arizona.
  I, too, have no objection to this concept of notification of 
increased requirements for the requirement to report if there is going 
to be increased cost for universal service and if there is going to be 
an increase in the universal service contributions.
  I point out in the first instance that I believe the House is 
operating under a misinterpretation of this bill. If we do not enact 
this bill, the cost of the universal service under existing law will be 
about $10 billion. If we do enact it, it will be more than $3 billion 
less. I do not understand why the House indicated it would have an 
objection to a bill that would reduce the existing cost of universal 
service. Because of the change in this system the Congressional Budget 
Office has indicated that even though private contributions do not come 
through the Treasury, and private expenses do not come through the 
Treasury, as I said before since it is a mandate, it would be included 
in the budget process. But I have every reason to believe, and I do 
believe, that the cost of these systems will decline dramatically in 
the period ahead, and it is because primarily of this bill opening the 
door to telecommunications competition.
  Again, I want to quote my friend George Gilder who indicated that 
``the computer industry will double its cost effectiveness every 18 
months. The wireless conversions of digital electronics and spectronics 
will allow the industry to escape its copper cage and achieve at least 
a tenfold drop in the real price of telephonic service in the next 7 
years.''
  I believe, and everything I have read comes to the same conclusion, 
with more competition and the addition of the new technology, tumbling 
as it is, we should see an ever-decreasing cost of telecommunications 
services. We have modified this bill so that it reflects the approach 
of the essential air [[Page S7958]] service. It is not a universal 
service concept as exists under existing law. It is certainly not a 
tax. There is no way that this could be determined a tax. It is 
continuing the process that the industry itself started in the 
interstate rate pool. The interstate rate pool to my knowledge has 
never been included in the budget process. But because now we are 
limiting it, the Congressional Budget Office has decided that it ought 
to be referred to in the budget process.
  Again, Mr. President, that is merely taking into account the money 
that customers pay and then having that money paid out pursuant to the 
provisions of the bill. But it is not paid to the Government. Surely it 
is stretching the Budget Act, as I have said before.
  But I do want to say to my friend from Arizona, Mr. President, I made 
some comments about the long statement my friend made before. Let me 
say this at the very outset. The intention of this bill is to take the 
regulation of the telecommunications service away from the courts. What 
we have done is restored the States rights and we have reestablished 
oversight in the FCC. If you want to look at the cost of the courts 
over the last 10 years under the modified final judgement and add it to 
what we have put out for the Justice Department antitrust operation in 
that time, we are reducing the cost to the Government of the 
administration of the telecommunications law because the courts will 
not have jurisdiction over these cases that they have had before under 
the modified final judgment.
  I do believe that we have a series of matters we ought to discuss. 
But I certainly want to compliment the Senator from Arizona in terms of 
his approach of pushing further and further for deregulation. But the 
deregulation comes about as we increase competition. If we just 
deregulate the monopolies in their own areas, we will not end up with a 
kind of telecommunications competition that will bring about this 
constant reduction in costs because of the entrance into this 
telecommunications area of these new technologies.
  Above all, I urge Members of the Senate to look at the studies that 
have been made about what is going to happen as we do in fact bring in 
the new technologies and allow them to compete. We are really not going 
to be talking about telephones. My friend from Arizona said we ought to 
have telephone service for these people. Telephone service in the 
future is going to be like giving people vouchers to ride in an Edsel. 
We are not talking about telephone service anymore. We are talking 
about telecommunications connections which will enable people in rural 
America to have computer services just like everyone else. As George 
Gilder points out, the computer is going to be so pervasive that it 
will be the means of communication for most Americans by the turn of 
the century. It will not be telephones. There will be what amounts to 
phone connections in the computers.
  By the way, the cost of the computers themselves is coming down at 
such a great rate. The cost of the base stations that will implement 
the interconnections are coming down. If we have the ability to use the 
broadband radio the way it has been described and use it for 
interconnections, I tell my friend from Arizona the report from the 
FCC, if anything I would modify it and say let us know the extent to 
which the costs are being reduced as well as increased because the 
progress is going to be in reduction, just as this bill reduces it by 
almost 30 percent just by the changes we have made. The communications 
industry itself in 7 years is going to reduce that tenfold.
  I do not believe that we should oppose an amendment which would 
require a report from the FCC of increases in universal service 
contributions.
  Mr. KERREY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. KERREY. Mr. President, I do not know whether or not this might be 
the appropriate time for us to have a rollcall vote on the amendment of 
the Senator from Arizona.
  Prior to making some comments about that amendment, I point out to my 
colleagues that many of the things that the Senator from Arizona said 
in his statement I said last night and again today. It might surprise 
some to hear me say this, but I, in fact, might embrace a lot of the 
things that the Senator from Arizona is trying to propose. I do think 
if you are going to move to a competitive environment the quicker you 
can get there the better off in many ways, and that to hold this thing 
back might make it difficult for us to get consumers to understand how 
it is we are going to adjust because there is going to be substantial 
adjustment to the changes we are proposing in a regulatory structure.
  I must say again, as I have said a number of times, I am not getting 
a lot of complaints from citizens saying, ``Gee. I do not like the way 
this is thing is working.'' I do not get a lot of people coming to me 
talking about enhanced services and all of that. I do not hear people 
say the current regulation makes it difficult for technology to be 
deployed. And I happen to be a relatively high-end consumer. I must 
tell you I have not been struggling to get existing technology, and 
hearing the companies say that it is not cost-effective.
 We are not going to provide you the kind of services that existing 
technology allows under variety.

  It really is not that the regulation prevents them from doing it. 
They just are not doing it. So in a competitive environment, if they do 
not provide it to me, I will go someplace else. I will get somebody 
else to provide the service for me.
  As I see this legislation it is attempting to move us to a point 
where I at the local level--and I know competition, by the way. Let me 
stop here a little bit and define it. Competition for me means I 
choose. If I do not like what you are giving me, I will go someplace 
else. In my particular business, if my customers do not like what I put 
on the table in front of them, they have a lot of choices, lots of 
places they can go. To me, the idea of competition is not AT&T 
competing with MCI or Bell Atlantic competing with CTI and all that 
sort of stuff. Those are big companies coming into a competitive 
environment.
  What I think of competition is potentially a whole generation of 
entrepreneurs who are not here lobbying, by the way, that are not 
talking to us, that are not asking for anything. In fact, if you look 
at the jobs created in the State of Nebraska in technology, they are 
created by businesses that have not even contacted my office. They are 
created by people who are not even aware of S. 652. When I am at home 
on the weekend, and I say what do you think about S. 652, is it going 
to help or hurt? They say what the heck is that? I have to ship it to 
them and show them what it is all about.
  The new entrepreneurs that are coming in for services with the ones 
that are likely to have customers are saying, boy, this is working; 
this is terrific.
  I say, as I envision competition, there are four big areas where 
people are going to be able to compete, if we transition this thing 
properly. One is people are going to come in and say to me as a 
consumer you do not have to buy dial tone separately; you do not have 
to buy video separately; you do not have to buy all your information 
separately.
  I have about $70 or $80 for local and long-distance telephone 
service. I have about $40 or so for cable--I do not know the exact 
dollar amount--and about $30 for other sort of published accounts, 
published documents, newspapers, and magazines that are coming in. I 
have $150 a month. If we deregulate properly, entrepreneurs coming 
knocking on my door or contacting me through E-mail or however they 
want to get to me say, Bob, you are spending 150 bucks a month, we can 
do it for $89.95, and we can give it to you in a different form, 
faster, clearer, and better than what you are getting right now.
  In that kind of an environment--instead of buying dial tone 
separately, cable separately, and all these other sorts of services 
separately, I buy them in a package--I believe the consumers will be 
excited about it, because I believe price will go down and quality will 
go up.
  Second, we are going to have competition in switching. By that I mean 
people say, well, gee, the phone is the one that is doing all the 
switching. It is not true. There are a lot of entrepreneurs coming 
online today that are doing switching, that have the technology, that 
have the gear, that have [[Page S7959]] the hardware, the software in a 
remote location and they are switching long-distance calls, and they 
can do it cheaper and do it faster and better.
  There is going to be competition in switching. You have this idea 
that you have somebody down in an office still sort of either doing it 
manually or digitally, moving these packets about. Well, that can be 
done in lots of different locations in lots of different ways and there 
is going to be competition, the second area of switching, of getting 
whatever information you got, whatever bundle of goods and services you 
want to move from point A to point B. They are going to get those 
bundles wherever you want and retrieve whatever you desire to retrieve 
in a most competitive fashion.
  Third, there is going to be competition in content, if we do it 
right, if we do not yield to people who say, as the Senator from 
Arizona was saying, I really like competition but could you just kind 
of protect me a little while until I figure out how I am going to 
compete with somebody who has 2 people working in his office instead of 
2,000. How do I compete against an entrepreneur that understands that 
he has to keep his salary down and his fringe benefits down and other 
sorts of things down in order to be able to compete.
  The fourth area is there is going to be a tremendous amount of 
competition in a whole range of services. As I said, I consider myself 
relatively high in, but this stuff still confuses me an awful lot, and 
I am going to be paying people to tell me how to connect this hardware 
with that hardware and how to get on this network and that network, how 
to make it work inside my office or make it work inside my home--all 
kinds of questions that I am going to have on all kinds of new 
services. There will not be one company that comes when you have a 
problem in your home to call up and say, gee, I have a question here. 
And the company says, well, I can get to you next Thursday or next 
Friday or, gee, we do not really get into that kind of thing, Bob. We 
are not involved with that kind of thing.
  That whole world, if we write the language of this law correctly, can 
create a competitive environment that I think will benefit consumers 
and I think prices will go down and quality will go up.
  So I share many of the concerns the Senator from Arizona raised and I 
declare it right up front. It may be there is potential for compromise 
where it may not be so obvious that there is potential for compromise 
between myself and the Senator from Arizona and the Senator from 
Oregon, who have an amendment. Unfortunately, I have not seen that one. 
We are talking about this one smaller amendment that deals with the 
universal service fund, and I would like to talk about that now.
  The universal service fund that we have right now is rather 
complicated. I will not even pretend to describe it to you because 
frankly I do not understand it. But I do understand one thing, and that 
is that we do have subsidies going on to people who are not using them 
quite right. Sometimes it is used to keep the price of residential 
service artificially low. You can go to some places in America today, 
they are paying $6, $7, $8 for basic residential service where you go 
to a city with no universal service fund where they are paying $14. The 
business rates are substantially lower and the technology has not been 
upgraded.
  In many cases the universal service fund is not being used in a 
fashion that you think of when you hear it described. You say, well, 
gee, I need the universal service fund because I have people out there 
who cannot afford it. Well, that is terrific; if they cannot afford it, 
let us help them get it. The idea of a voucher may have merit. In fact, 
it may have merit to go in that direction rather than having this very, 
very difficult to administer thing and very difficult for us to 
understand from our vantage point. In fact, there are an awful lot of 
us who, up until the last 2 or 3 years, were not even aware that there 
was a universal fund being administered and checks written and 
redistributed out throughout the country, and they come and tell us 
such things as the entire State of Georgia as I understand it is a 
universal service fund. I do not know if that is true or not, but I was 
told recently that is the case.
  Well, I mean that just indicates how difficult it is to sit here in 
Washington, DC, with a good idea in mind; little people cannot afford 
to buy the local or residential service, making sure they are able to 
buy the product. It is a terrifically good idea to help somebody be 
able to communicate out of their home that otherwise might not be able 
to communicate. But it is difficult for us with that good idea to put 
it in practice. And I think if we were to have a lengthy debate about 
how the current universal service fund operates it might inform an 
awful lot of us as to why this system needs to be changed. We are 
basically accepting the status quo, and I declare and disclose, I 
participated with the farm team as we tried to keep this universal 
service idea alive.
  As the Senator from Arizona cited, some corporate entity that he 
discussed this issue with, they said, well, we do not like it, but you 
know the politics of it; we have to keep it in place, and we sort of 
presumed the same thing.
  It may be there is the mobility of altering the way we operate that 
universal service fund, but let us presume for the moment that we are 
going to keep the universal service fund the way it is. As I said, I am 
open to suggestions of ways to do it differently. Presuming that is the 
case, if you look at the language of this bill, what it is attempting 
to do--and I now turn to my friend from Arizona because I really have a 
question as to how he sees this thing working. The idea that we have in 
subsection (c) on page 40 of the act, which is referenced in this 
amendment, is that if you are going to have a universal service fund, I 
mean if that is the idea that we are going to keep this universal 
service fund concept alive and use that method of funding, what is 
going to happen is you are going to get new telecommunications 
companies coming into the arena.
  The idea is they should make a contribution as well; that it should 
not be just the phone companies or should not just be the existing 
entities that are making a contribution to the universal service fund; 
that, in fact, it should be everyone who is now providing these new 
information services should be making a contribution.
  As I see this--maybe the Senator from Alaska, who understands this 
well, can comment--as I see what this does, it actually provides an 
opportunity for a reduction in the assessment that the established 
carriers are paying into a universal service fund because it broadens 
the base of contribution. That is the idea of subsection (c). I do not 
have strong feelings against this amendment. I do not mind having the 
FCC notify. I think it makes genuinely good sense. It was blank on my 
copy of the amendment. As I understand it, it is 120 days. The Senator 
from Arizona in his amendment is saying from the time notification of 
the committee occurs and the time the assessment can occur there will 
be a 120-day period lapse?
  Mr. McCAIN. The Senator is correct.
  Mr. KERREY. Will the Senator from Alaska comment? Am I right, are we 
not trying in subsection (c) to say we are broadening the contribution 
base? If I had new companies coming on-line providing service at the 
local level, they should make a fair share contribution to the 
universal service fund? As I say, I am not trying to oppose this 
amendment, I want to make sure we do not get something in here that 
ends up coming back to haunt us.
  We are trying to actually broaden the base of the universal service 
fund contribution which should for telephone ratepayers result in a 
reduction of the levy that they currently have for a universal service 
fund payment.
  Mr. STEVENS. Mr. President, if the Senator will yield to allow me to 
answer that question, that is the intent of the bill. When new 
providers of service enter into competition, they will contribute to 
the fund as those who are currently providing the service. So it will 
broaden the contribution to the fund.
  The courts have held that the current universal service system is not 
a tax. I do not view this as a tax. I view it as one of the 
requirements to enter the system in a competitive spirit. I think CBO 
itself did not say it was a tax but said it had to be taken into 
account in the budget process. [[Page S7960]] 
  What we are saying is those who provide the services will contribute 
to the fund. It will broaden the base, as the Senator indicated.
  I accept the Senator's amendment. If nothing else, it will give 
Congress notice every year how the cost of this system is going down by 
virtue of what we have done.
  Mr. KERREY. I would, in fact, love to have the FCC provide in 
notification some explanation of how this fund works. I would not mind 
that at all, if I could understand the thing once and for all.
  The question I have is really the 120-day period. Notification is not 
a problem for me. The question is, does this delay? Would this have the 
impact, do you believe, of delaying an opportunity for reducing the 
levy on other carriers?
  Mr. McCAIN. I say to my friend from Nebraska, if he will yield, it is 
only if there is an indication of an increase would the 120-day prior 
notification----
  Mr. KERREY. The language of the amendment says ``may not take action 
to impose universal service contributions under subsection (c), or take 
action to increase the amount of such contributions, until--''.
  Subsection (c) is an attempt to broaden the base of contributions, to 
get new providers of services who are currently not contributing to the 
universal service fund to make a contribution to the universal service 
fund.
  My concern is that if that is what we are trying to do, we could 
delay the actual reduction that is currently being imposed on other 
carriers. I do not know if that is right or not. I just raise the 
question.
  Mr. McCAIN. Mr. President, I will say to my friend from Nebraska, 
that is not the intent of the legislation. I can see how it would 
possibly be interpreted that way. But what we were trying to say is 
they may change the formula, which would not have an immediate impact, 
but then would have an impact later on.
  That is why the first part of it says ``may not take action to impose 
universal service contributions.'' In other words, the immediate impact 
may not be an increase in rates but the long-term impact would be. As I 
say, I will glad to modify the amendment in such a fashion that if 
there is a rate reduction, which would be contemplated in any event, 
this would not apply.
  I ask unanimous consent to modify the amendment to reflect the 
colloquy just discussed between myself and the Senator from Nebraska. 
We will write it up.
  The PRESIDING OFFICER. The Chair advises the Senator he can modify 
his amendment, but the Chair will need the modification. The Chair does 
not have the modification.
  Mr. McCAIN. With the indulgence of the Chair, we will have it in 
approximately 1 minute. In the meantime, I suggest the absence of a 
quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. McCAIN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                    Amendment No. 1260, As Modified

  Mr. McCAIN. Mr. President, I send a modification to the desk and ask 
for the appropriate portion to be read by the clerk. It is a new 
paragraph.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       On page 2, after line 6 of the amendment, add the 
     following: (3) The provisions of this paragraph shall not 
     apply to any action taken that would reduce costs to carriers 
     or consumers.

  The amendment, as modified, is as follows:
       On page 42, strike out line 23 and all that follows through 
     page 43, line 2, and insert in lieu thereof the following;
       ``(j) Congressional Notification of Universal Service 
     Contributions.--The Commission may not take action to impose 
     universal service contributions under subsection (c), or take 
     action to increase the amount of such contributions, until--
       ``(1) the Commission submits to the Committee on Commerce, 
     Science, and Transportation of the Senate and the Committee 
     on Commerce of the House of Representatives a report on the 
     contributions, or increase in such contributions, to be 
     imposed; and
       ``(2) a period of 120 days has elapsed after the date of 
     the submittal of the report.
       ``(3) The provisions of this paragraph shall not apply to 
     any action taken that would reduce costs to carriers or 
     consumers.
       ``(k) Effective Date.--This section takes effect on the 
     date of the enactment of the Telecommunications Act of 1995, 
     except for subsections (c), (e), (f), (g), and (j), which 
     shall take effect one year after the date of the enactment of 
     that Act.''.

  Mr. McCAIN. Mr. President, I hope that will satisfy the Senator from 
Nebraska.
  Mr. KERREY. It most assuredly does. I appreciate the change made, and 
I believe it is an improvement. I have no objection to the amendment.
  The PRESIDING OFFICER. The question is on agreeing to the amendment, 
as modified.
  So the amendment (No. 1260), as modified, was agreed to.
  Mr. PRESSLER. Mr. President, I move to reconsider the vote by which 
the amendment was agreed to.
  Mr. HOLLINGS. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


                           Amendment No. 1261

       (Purpose: To prevent excessive FCC regulatory activities)

  Mr. McCAIN. Mr. President, I send an amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Arizona [Mr. McCain], for himself, Mr. 
     Packwood, Mr. Craig, Mr. Kyl, Mr. Gramm, Mr. Abraham, and Mr. 
     Burns, proposes an amendment numbered 1261.

  Mr. McCAIN. Mr. President, I ask unanimous consent that the reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:
       On page 90, line 6, after ``necessity.'', insert: ``Full 
     implementation of the checklist found in subsection (b)(2) 
     shall be deemed in full satisfaction of the public interest, 
     convenience, and necessity requirement of this 
     subparagraph.''

  Mr. McCAIN. Mr. President, I understand that my colleague from Alaska 
has a very important commitment. He wanted this amendment raised at 
this time. I am more than happy to do so. I understand that it is a 
very important one, in his view. As always, I look forward to vigorous 
discussion of this amendment.
  Mr. President, this amendment would clarify the role of the FCC 
regarding public interest tests contained in the bill. It is supported 
by Senators Packwood, Craig, Abraham, Kyl, and Gramm and a letter 
supporting this amendment was signed by Senators Packwood, McCain, 
Craig, Burns, Kyl, Gramm, Hatch, Thomas, and Breaux.
  As S. 652 is currently drafted, it contains two substantial hurdles 
for a regional Bell operating company before the company can fully 
compete in any marketplace. I believe the consumer would be better off 
if such hurdles did not exist and companies were allowed to compete at 
a date certain.
  I understand that some believe there is a need for a competitive 
checklist. Originally, the approach that others and myself favored 
allowed competition at a date certain. It was my understanding, in 
dealing with my colleagues on this issue, that the compromise would be 
a checklist that the regional Bell operating companies would have to 
comply with.
  During the compromise, obviously, that changed. And so in addition to 
the checklist, we went back and placed judgment of this in the hands of 
the FCC in the form of public interest.
  Entrepreneurs, not the Congress, nor the FCC, should make these kinds 
of decisions, in my view. Neither I nor anyone else in the Senate wants 
the FCC to act contrary to public interest. My concern is that 
different individuals will have different interpretations of what is in 
the public interest. I strongly believe that our interpretation and 
that of the commissioner of the FCC would be different.
  A finding of public interest is an ill-defined, arbitrary standard 
which implies almost limitless policymaking authority to the FCC. The 
public interest test gives the FCC policymaking authority. The purpose 
of this bill should be to lessen the FCC's authority, not to enhance 
it. The public interest test allows the FCC to act to establish a 
policy and control private companies and whole industries. I believe 
that it can prevent full competition for a very long period of time. 
[[Page S7961]] 
  The bill States that the FCC must find that allowing a Bell company 
into other areas of business is ``consistent with the public interest, 
convenience and necessity.''
  Mr. President, this amendment would not radically change this bill. 
It preserves the competitive checklist that everybody agrees will 
ensure that local markets are open. Competition is in the public 
interest. I do not think we need the FCC to tell us that. The amendment 
will pare down the bureaucracy envisioned by the bill. As FCC 
Commissioner Hunt stated, ``The FCC will need substantial resources to 
implement this legislation. We will need economists, statisticians, and 
business school graduates.''
  I do not know how much of the additional $81 million that will have 
to be spent by the FCC in order to implement this spending legislation 
would entail in determining what is in the public interest. But I would 
imagine that, given my knowledge of the nature of bureaucracies, it 
would consume a very large amount of money. And as the Commissioner of 
the FCC himself has stated, ``We will need economists, statisticians 
and business school graduates.''
  I am sure business schools around the country are pleased to note 
that there will be new job openings. However, I would like to see that 
employment in the private sector rather than on the taxpayers' payroll.
  Mr. President, I ask unanimous consent that Senator Burns be added as 
an original cosponsor to the pending amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. McCAIN. Finally, I know that this issue is a contentious one. I 
also understand that there is substantial and significant opposition to 
this amendment. But the whole thrust of this amendment, in my view, is 
to accelerate what is the stated goal of the legislation, which is a 
deregulatory climate, and one which has less and less Government 
interference and regulation, rather than a continuum, where a somewhat 
amorphous definition of public interest which is defined not by those 
who are competing, not by consumers or the Members of this body, but an 
unelected bureaucracy.
  I yield the floor.
  Mr. STEVENS. First let me thank my friend from Arizona for his 
courtesy. I understand Senator Packwood and others wish to speak on 
this matter. I have a long-standing appointment that I think is very 
important to the national defense. I do wish to make that appointment. 
I am pleased that we can take up this amendment now.
  I would like to set the stage a little bit for the amendment, because 
I think Members may not understand the context of the Senator from 
Arizona's amendment.
  This bill adds a new section, section 255, to the Communications Act 
of 1934. This will set forth the process for the entry of regional Bell 
companies into long-distance services. This is the provision that 
brings to a close the restrictions of the modification of final 
judgment.
  This section has been the most controversial section in this bill. It 
has been the subject of intense negotiation between all segments of the 
industry. As the Senator from Arizona mentioned, there are some people 
that have been involved in it for a long, long time, that are coming 
back to talk to us about it. Members of the Senate have been involved 
now for well over 2 years in the whole negotiation of this section. It 
goes back to the days when the Senator from South Carolina was 
chairman.
  By necessity, the language in this bill represents a compromise 
between a series of competing viewpoints.
  Under the language of the bill, a regional Bell company may provide 
long-distance service when the FCC determines that the Bell company has 
fully implemented a specific checklist, which is found in the bill, 
which the Senator from Arizona mentioned; that the Bell company has 
complied with the separate subsidiary requirements; and the approval is 
consistent with the public interest, convenience and necessity. It is 
this last concept that the Senator from Arizona wishes to change.
  This determination by the FCC must be made on the basis of the record 
as a whole, after a public hearing and consultation with the Attorney 
General, and is subject to the substantial evidence standard of review 
by the courts.
  Let me point out that, although CBO has scored that this bill will 
cost, I think, $61 million over a 5-year period--more than the current 
FCC requirements--it does not score the decrease in costs of the 
involvement by the Attorney General or the involvement by the courts. 
So this is one of the penalties of the system that we operate under. 
But it is not a significant amount when one looks at the total amount 
of revenue being brought in now by the FCC under the spectrum auction 
concept that I authored, which will reach $10 billion in the near 
future. I think that the $61 million over a 5-year period, compared to 
the billions of dollars they will bring in--and more will come in under 
this bill than if the bill is not enacted. But we do not score that 
under the budget process, Mr. President. So it is a very difficult 
thing to handle.
  Some argue that the three-pronged test is too difficult--that there 
should be no discretion left to the FCC to consider the public 
interest. Others argue--I am sure you are going to hear this--that it 
is too weak, and that an independent review and approval by the 
Department of Justice is necessary to protect the public interest.
  In other words, I think you are going to have an amendment come in 
here that is the opposite of what Senator McCain wishes--to delete the 
FCC's involvement--to one that says the FCC's requirement is not 
enough, that we must also have the Attorney General involved to protect 
the public interest.
  In my judgment, this compromise we have worked out is just right. The 
FCC has a long history of considering public interest, convenience, and 
necessity. That was the bedrock principle of the 1934 Communications 
Act.
  In order to transition to this new era and take the courts out--
because under the modified final judgment, the courts have been 
determining communications policy through administrative hearings under 
court jurisdiction. In order to take them out, the parties involved 
wanted to be assured that, at least for this transition period, the 
oversight role of the FCC would be restored. And the determination by 
the FCC in this case is subject to a heightened standard of review.
  Now, mind you, we have not just put it back to the way it was before 
the modified final judgment. It is no longer a case of the FCC not 
being arbitrary and capricious, which is the standard under a long 
series of precedence in the courts; the FCC must have substantial 
evidence on the record as a whole to support a decision to either grant 
or deny a request by a Bell company to enter a long-distance market.
  In other words, in this compromise, the FCC comes back, the matter is 
taken from the courts, it comes back to the FCC, but under a standard 
that was stronger than it was before the FCC's jurisdiction was removed 
to the courts under the modified final judgment.
  That evidence must support any determination by the FCC that the 
approval is not in the public interest, just as it must support any 
decision that the approval is in the public interest. To make any 
finding under this provision, the FCC must have substantial evidence. 
That means there will be an opportunity for all to be heard. That may 
be what has caused the $61 million over 5 years increase in costs to 
the FCC.
  This is a heightened standard of review, and it is a double-edged 
sword that will accomplish one of the main goals of the bill, and that 
is to end the rule of the courts over telecommunications policy in this 
country.
  I think that the substantial evidence standard will prevent abuse by 
the FCC of the public interest review, just as it will help protect the 
FCC decision in the grant of approval from a suit by competitors.
  If the Senate takes out the public interest test and asks the FCC to 
base their decision only on the statutory checklist, I think that would 
invite abuse. Instead of considering the checklist on the merits and 
addressing any policy concerns in the public interest portion of the 
review, the FCC would have no alternative but to try to manipulate the 
checklist if they feel the application should be denied on policy 
grounds. [[Page S7962]] 
  Likewise, I think the courts would have an incentive to question the 
fact-finding process used by the FCC in making the determination solely 
on the basis of a checklist.
  Now, I do believe if the court wants to find the process inadequate, 
we would be right back where we are now with the courts taking 
jurisdiction once again over the decisions and affect the 
telecommunications policy of the country.
  The checklist contains 14 technical requirements for interconnection 
and unbundling of the Bells' local exchange networks. However, the list 
is not self-explanatory or self-implementing. One of the requirements 
is there must be the capability to exchange telecommunications between 
customers of the Bell company and an interconnecting carrier.
  Now, I believe the reading of the checklist itself shows where the 
FCC is going to be involved in discretion in some way. The Senator from 
Arizona argues that the checklist is all that is needed and it should 
be straightforward for the FCC to implement. Paragraph 4 of subsection 
(b) of this bill specifically prohibits the FCC from limiting or 
expanding the terms of the checklist.
  But the trouble is, how will the FCC decide that the capability to 
exchange communications exists? If we have just the checklist and the 
FCC decides that the capability to exchange communications efficiently 
does not yet exist, then it would be off to the courts again, because 
obviously no person that seeks approval of the FCC is going to take 
that denial without going to court. As a matter of fact, no protester 
is going to take the denial without going to court. I say it should 
only go to court with the increased standard that exists under this 
bill.
  If it goes to court, the court will decide if the broad terms of the 
checklist have been met. They will second-guess the FCC in endless 
arguments over what the FCC based its decision on.
  Our provision is clear, and will prevent abuse by both the FCC and 
the courts.
  One of the reasons the FCC must be involved is to ensure that there 
is a concept of understanding of what is the public convenience and 
necessity, whether or not anyone is going to be harmed by the 
availability of the new service, and under what conditions those people 
are going to be harmed.
  Now, we are going into a whole new concept of how rates are computed. 
We are going into a whole new concept of how service is provided. I 
believe that the gatekeeper in this process, in this period we are in 
now, must be the FCC, but under the standards we have agreed to now, 
which are higher standards than the FCC has had before and certainly 
higher than even the courts have followed under the period of the 
modified final judgment.
  In other words, I tell my friend, we do have the occasion of being 
opposed here on the floor quite often. I understand what the Senator 
wants to do, but again I am hopeful that we succeed in not making the 
changes that the Senator from Arizona wants at this time because I 
think without this bill the final step of the integration of Alaska and 
Hawaii with the rest of the United States will not come about. Without 
this bill we will not have the stimulus, the development of this 
competition between the regional Bells and the long distance carriers, 
between the Bells themselves, and even more than that, between 
providers of new communication, through new technological systems that 
I think will ultimately lower the cost for everybody.
   Let me, in closing, say this to my friend from Arizona: One of the 
things that has gotten me involved in this over the years is that when 
I came to the Senate, on every advertisement concerning phone service 
was a little tag line at the bottom of the television or on the radio 
announcement saying ``Not applicable to Hawaii and Alaska.''
  My friend Senator Inouye and I, serving on the Commerce Committee, 
started what we called rate integration from the offshore States. That 
led, really, into a whole concept of what that meant, why we had higher 
costs to start with and how we could bring about a reduction in the 
costs of communications to our States and at the same time an increased 
amount of service.
  Actually when I came to the Senate, the Army was running the 
telephone service for Alaska. Alaska communication service was an Army 
concept. We brought about the sale of that to a private carrier, and 
part of that sale was a commitment that telephone service would be 
expanded rapidly within the State of Alaska. That has been done--but 
not totally even yet.
  One of the reasons I am deeply involved in this, I say to my friend 
from Arizona, is I still believe that the process we are going through 
is decreasing the cost. I think we can show that the whole process, 
even of rate integration that Senator Inouye and I instituted, brought 
about a reexamination of the interstate rate pool, a determination 
that, yes, it could be expanded to Alaska and Hawaii. It was expanded 
to Hawaii first, and it is still being expanded to Alaska.
  As that came about, the contributions from individual consumers rate 
pool has declined in the past. It will continue to decline now. It was 
a private mechanism, integration of the telephone service. It continues 
to be a private mechanism under this bill. But with the competition 
that this bill now will bring in to the providers of telephone service 
per se, communication service will come through satellite service, like 
DBS; it will come to us through radio service; through fiber optic 
cable, in one instance; through the old links that are there, the 
systems that have existed even before we became a State.
  What I am saying is that the net impact of this bill will be the 
completion, really, of the process that Senator Inouye and I started in 
trying to integrate Alaska and Hawaii totally into the telephone system 
of the United States.
  When this bill passes, there will be no distinction between the 
service to any portion of the country. We will have the concepts of 
telecommunication and the freedom to enter and compete, to bring new 
telecommunication systems into the arena, and to have the ability to 
compete with existing carriers, existing carriers whose costs of 
installation may have been a magnitude of 10 for 100 times what the new 
service will be.
  My request to the Senate is that the amendment of the Senator from 
Arizona be defeated. Again, I hope the time comes when we are both in 
the Senate when we can join together and say we passed through this 
interim period and it is time to totally deregulate telecommunications 
of this country.
  I think we will live to see that day. I do not think it is here now. 
I do not think it will even come about without this bill, because 
without this bill we are still under the courts. This is the bill that 
takes back to the legislative process the regulation of the 
telecommunications industry in the United States.
  The PRESIDING OFFICER. The Senator from South Carolina.
  Mr. HOLLINGS. Mr. President, the distinguished Senator from Arizona 
allowed that he and I had different philosophies. He is right. But let 
me talk about different facts, which brings about a confidence in this 
particular Senator's philosophy.
  As the Senator from Arizona was talking about the improvements of 
deregulation in the airlines we went out and doublechecked. If you want 
a round trip ticket on USAir, Charleston, SC, to Washington, it is 
$628. But if you want to go 500 miles further, right across Charleston 
to Miami and back to Washington, it is only $658. Miami is 1,000 miles 
away, Charleston is a halfway point at 500 miles. So what you have in 
essence--and this is the fact, not the philosophy, and it is a very 
understandable one--you go an additional 1,000 miles just for $30.
  It is what you call economies of distance in the airline industry. 
Fearing this, listening to certain experts at the time--Senator Howard 
Cannon, of Nevada, was the chairman of the Commerce Committee. I was 
engaged then in a communications bill. I was chairman of the 
Subcommittee on Communications and I could not make all the hearings 
and check. I said, ``Be sure the small- and medium-size towns are 
protected.''
  He said, ``Oh, yes, we have the protection. We have the protection. 
Do not worry. This is going to work in the public interest.'' 
[[Page S7963]] 
  And the opposite, of course, has been the fact. The fact is, yes, I 
had three airline routes coming up, three direct to Washington and 
three going back with National Airlines. I now have only one. For a 
time I had none. We worried about National Airlines continuing. They 
sold out to Pan Am. National is gone. We wondered about Pan Am's 
survival. Pan Am is gone. We wondered about Piedmont and Piedmont is 
gone. Air Florida crashed out here. And the very rights, the slots that 
the distinguished Senator from Arizona and I debate, were sold off by 
Air Florida, and we lost those landing rights that had been premised 
and founded on public convenience and necessity.
  What has happened in the transportation industry, both by truck and 
airlines and otherwise, is the public convenience and necessity--the 
communities got the airports and facilities and developed them. They 
enticed an airline to come along with them to Washington. They had 
hearings before the old Civil Aeronautics Board. And on the basis of 
public convenience and necessity, proper service at an affordable 
price, they were awarded the routes and the carriage and everybody was 
making money, holding fire. The equipment was sound. They were 
competing. And everyone was happy until someone came to town with this 
virus to get rid of the Government, deregulate, deregulate, deregulate.
  So what has happened is exactly what we feared. I voted for airline 
deregulation, so I am a born-again regulator. I learned anew there is 
no education in the second kick of a mule. I can tell you here and now, 
I have learned the hard way, trusting going with the amendment of the 
Senator from Arizona in doing away with convenience and necessity of 
the public. Because we go right immediately to what has occurred. What 
has occurred, the fact is that all of the American airlines are on the 
ropes. And who is taking over? The regulated ones. KLM is coming over 
and coming in and saving Northwest. British Air is saving USAir. Those 
are all the regulated airlines in Europe are taking over the so-called 
deregulated where we are running around like ninnies: Deregulate, 
deregulate, market forces, market forces.
  It is just like this silly trade crowd running around hollers about 
free trade. Free trade, free trade--there is no such thing as free 
trade. The Japanese mercantilist, protectionist system is taking us 
over.
  I was talking last night with the distinguished Senator from New 
Jersey. He was talking about Bellcore and the research. Do not worry 
about Bellcore. The Japanese are right next door, hiring the same 
research scientists from Bellcore like gangbusters. They do not have to 
move. They are in the same homes. Their children go to the same 
schools. And they are taking it over.
  We are against industrial policy. We run around saying we cannot have 
industrial policy. We have the Japanese industrial policy here. That is 
what we have. How much do you think it costs for that Lexus? $55,000. 
How much does it cost back in Tokyo? It costs $85,000. And that is why 
I oppose the amendment of the Senator from Arizona, because the size, 
the financial size can take over here.
  How are you going to regulate? We are not against size in the Bell 
Companies, but they built themselves up into the largest financially-
wealthy-sized company that you can find in this country. On cash flow, 
the average, for example, AT&T, is 19 percent cash flow margin. The 
cash flow margin of a Bell Company is 46 percent. Why do you think the 
Bell companies are not all in with zeal for a communications bill? Who 
wants to get out of a cash flow margin of 46 percent to get into a 
business that is 19 percent? Come on. So, if one is going to occur, 
they want to make darned sure that it occurs very, very gradually.
  The amendment of the Senator from Arizona is that if you take off 
this convenience and necessity, then they can get down this checklist 
they have about the unbundling, interconnection, dial parity--go right 
on down the checklist. But using their size they come like Japan. They 
will have loss leaders, as we call it.
  I practiced law in the antitrust courts for a large grocery chain, 
the Piggly-Wiggly, in South Carolina. We got up to 120-some stores. 
They said we had a loss leader for a half-gallon of milk. We proved 
otherwise, but I had to go all the way to the Supreme Court to prove 
it. So we know about Robinson-Patman. We know about Sherman. We know 
about the Clayton Act.
  But the public convenience and necessity goes to the philosophy and 
difference. The distinguished Senator from Arizona, when he says 
politics and politicians take over--I think it was Elihu Root--I hate 
to quote a Republican--but Elihu Root, the Republican Secretary of 
State for Teddy Roosevelt, who said that politics was the practical art 
of self government, and someone has to attend to it if we are going to 
have it. And going along talking he concluded with a very cogent 
observation: ``The principal ground for reproach against any American 
citizen should be that he is not a politician.'' In representative 
America we all count. In this particular body that is what we are here 
for. We are representing the public convenience and necessity.
  I know one way we can agree. The Senator from Arizona and I will 
agree we have the best communications system in the world. He nods.
  ``Let the record show, if your Honor please, that the witness 
nodded.''
  Now, Mr. President, I have the Communications Act of 1934 in my hand 
and I can read from it, I understand the Senator from Alaska has other 
commitments.
  But I have it documented. Reading here again, as the Senator from 
Arizona was speaking, it appears 73 times-- the ``public interest'' and 
``convenience.'' In title I of the 1934 act it appears five times; in 
title II of the act, eight times; in title III of the 1934 act, 43 
times; in title IV, one time; in title V, zero times, but in title VI, 
12 times; in title VII four times. Seventy-three times back in 1934 
when they believed in Government, when the Government at that time was 
taking this ``market forces, market forces,'' throwing us into the 
depths of the Depression. The Government saved us, and got us out of 
the Depression and saved this great United States of America. The minds 
of the representatives of the people here in this Congress were 
thinking right. They were thinking the public interest, public 
convenience and necessity--73 times.
  So it is that as we come here the networks all came to Washington--
ABC, NBC, CBS, and the rest. And on the basis of public convenience and 
necessity were licensed to use the public spectrum. The public 
convenience and necessity has gone along all the way, and we cannot do 
away with it. We are never going to pass a communications bill in this 
Congress, I am convinced, with these kind of market forces--
``deregulate, deregulate, market forces controlling.'' On the contrary, 
we want to get out of the way of the technology. A new technology could 
come in that we do not know about.
  The Senator from Alaska is reading very interesting articles which 
are being written in these various magazines, and communications 
editorials. Yes. There could be a takeover by computerization from 
telephones. What will happen there about the public convenience and 
necessity? It will not be a checklist down there for computers. We have 
the unbundling and all the checklists. But there still has to be that 
FCC, the public airwaves, the public being protected and particularly 
for universal service.
  So we are very supportive, very strongly of the philosophy that the 
market forces are best. We have found that there are many instances, 
particularly in public transportation, public health, public safety, 
and public communications that, as I said on yesterday or last evening 
when we opened up, the one industry, the communications industry, was 
the one that came and begged for regulation. They were not begging for 
market forces. They tried it on for size.
  I will go back two sentences. Our friend David Sarnoff was on top of 
that Wanamaker Building at the sinking of the Titanic. He picked up the 
actual radio signal, directed some of the rescues, picked up the names 
of survivors, stayed on station there for some 72 hours. And everyone 
got themselves a wireless. By 1924, everybody had a wireless. So nobody 
had a wireless because they just jammed the airwaves. So they came to 
Herbert Hoover, Secretary of Commerce. And they said, 
[[Page S7964]] ``Mr. Secretary, for Heaven's sake, regulate us.'' The 
market force of the people's spectrum up here is jammed. No one can get 
no one. As a result, we passed the 1927 act, and then the formative 
act, of course, in 1934.
  So we wanted to take hold of our senses here in the National 
Government as we try to get ourselves out as a roadblock to the 
information superhighway, because the technology is on course, and the 
superhighway is already being developed. We in Congress can go home and 
adjourn for 10 years. They are going to get it. But whether they are 
going to get it in a monopolistic fashion, and whether concerned about 
the rural areas, about the less-populated areas, concerned about the 
general public convenience and necessity against monopolistic practices 
and prices, they can come in.
  I can tell you right now. If I ran one of those Bell companies, you 
would just deregulate everything. I would go down the checklist, and if 
you did not have this public convenience and necessity provision in 
here, I lost leave of you. I would price it below cost. Just go like 
they are pricing this Lexus. I got a Toyota Cressida. I just checked 
the price of that--$21,800 in downtown Washington; $31,800 in Tokyo. 
Look at Business Week at the end of the year. Last year, they took 
over--in spite of Detroit's comeback, having a quality product, and 
making big profits--the Japanese took over 1.2 percent additional of 
U.S. market at a loss of $2.5 billion.
  You give me one of these Bell companies and the checklist, and I got 
it. I can comply with it. But I can put you out of business unless you 
have public convenience and necessity. This is what the Bell companies 
want so they can run amuck.
  The other one is going to come with the Department of Justice. My 
senior colleague is going to come with it. That is the long-distance 
crowd. So they can muck it up over there at the Justice Department.
  So you have the Bell companies wanting a little. And we have the 
long-distance crowd wanting a little favor over here. We have not tried 
to fight them. For what? The public convenience and necessity.
  Several Senators addressed the Chair.
  Mr. PRESSLER. Mr. President, I ask unanimous consent that a time be 
set for a vote on this at 2:15 and that the time from now until then be 
equally divided between the Senator from Arizona and myself. I would 
like to vote at 1:30. There is a Senator at the White House, another 
Senator wants to speak at 2 and cannot; no amendments, and an up-and-
down vote, at 2:15.
  The PRESIDING OFFICER. Is there objection?
  Mr. McCAIN. Mr. President, very briefly, I always appreciate the 
educational experience of listening to the Senator from South Carolina 
on a broad variety of issues, including the airlines.
  The PRESIDING OFFICER. Does the Senator reserve the right to object?
  Mr. McCAIN. No.
  Mr. PRESSLER. I would like to lay aside my request until we hear from 
the leader. And then the Senator will yield to me to ask unanimous 
consent.
  The PRESIDING OFFICER. Is the request withdrawn?
  Mr. PRESSLER. Yes, temporarily.
  Mr. McCAIN. If there is anyone who would ever be interested, I would 
enjoy a long, extended public debate on the issue of airline 
deregulation, although that is not the issue before the Senate today. I 
felt compelled to call the travel organization here in the Senate. And 
the Senator from South Carolina might be interested in knowing that 
there are six USAir flights between Dulles and Charleston, and three 
United Airlines flights between Dulles and Charleston, and many of 
those seats are available for $249. I will find out and submit for the 
Record what exactly that cost was in 1974 before the deregulation of 
the airlines.
  Mr. PRESSLER. Mr. President, I ask unanimous consent that a vote 
occur on this amendment, and no further amendments, up or down, at 
2:15, and that the time between now and then be equally divided between 
the Senator from Arizona and myself, and that all Senators be on notice 
that the vote will occur at 2:15. I think we have accommodated 
everybody. We have to move this bill forward.
  The PRESIDING OFFICER. Is there objection?
  Mr. HOLLINGS. I have to momentarily object, Mr. President.
  Mr. McCAIN. I informed the Senator from Alaska that one of the 
Senators requested that we hold it until 2:15.
  The PRESIDING OFFICER. Objection is heard.
  Mr. CRAIG addressed the Chair.
  The PRESIDING OFFICER. The Senator from Idaho.
  Mr. CRAIG. Mr. President, I am pleased to join my colleagues, 
Senators McCain and Packwood, in offering this amendment to define the 
public interest test.
  As currently written, S. 652 gives the Federal Communications 
Commission in my opinion exceptionally broad discretion in defining a 
Bell company's fitness to provide interLATA long distance services.
  The bill authorizes the FCC to block, if you will, the Bell companies 
from offering interLATA services if it deems that their entry into the 
long-distance business is not ``in the public interest''--even after 
full compliance with a comprehensive interconnection and unbundling 
checklist, which is now included in S. 652.
  The current language in the bill gives the FCC an open field to 
interpret the public interest standard any way it wishes. The FCC 
could, for example, decide that a market share test is required before 
Bell company entry into long distance on the grounds that the test is 
in the public interest.
  A market share test in my opinion is anticompetitive and will only 
serve to prolong long-distance competition. It would put the fate of 
the Bell companies' long-distance plans in the hands of their 
competitors. And in a market environment, it is always amazing to me 
that somehow Federal regulations would allow that kind of thing to 
happen. Potential competitors could choose to delay their own entry 
into the local phone market in order to prolong the entry of one of the 
Bell companies into the interLATA market.
  In order to avoid the potential abuse of the public interest 
standard, it should at a minimum state that any kind of market share 
test be barred from the FCC's consideration of this standard.
  Mr. President, of particular concern is the extraordinary time and 
resources it takes for the FCC to make a public interest determination. 
The FCC's typical review process includes hearings and rulemakings and 
comments and replies and painstaking analyses. The committee report on 
S. 652 states that the public interest test for all Bell company 
provisions of long distance service must be based on substantial 
evidence on the record as a whole.
  The report goes even further than the current FCC public interest 
standard by requiring the applications of heightened judicial scrutiny 
of the substantial evidence standard as opposed to the lesser arbitrary 
and capricious standard. In other words, in a bill that is deregulatory 
in some areas, Mr. President, this appears to be a bill that in this 
area is even more regulatory. And that is, of course, exactly why this 
amendment is now in this Chamber.
  In an industry where new technologies are evolving at a record pace, 
this regulatory bureaucracy is counterproductive and it unnecessarily, 
in my opinion, delays delivery of beneficial services to the customers. 
And I would suggest, Mr. President, we are in the Chamber today 
debating a new world for the consuming public and not a new world for 
the companies involved, if that, of course, is the intent of S. 652.
  A case in point is the history of cellular phone technology. Back in 
the 1970's, AT&T asked the FCC to allocate spectrum for the development 
of cellular services. Because of all of the encompassing nature of the 
public interest test, it took a decade--let me repeat, it took a 
decade--for the FCC to determine how best to allocate the spectrum.
  Now, that is a 10-year delay in the ability of a communications 
technology that has become one of the fastest growing consumer products 
in America's history. Of course, we know, since the day we entered the 
cellular world, we have seen more growth in 10 years and more 
productivity and more jobs than the bureaucratic nightmare of the 10 
years it took to open up the marketplace.
  Another example of how time consuming and labor intensive the public 
[[Page S7965]] interest test can be is to look at video, the concern 
over video dial tone. The Commission first addressed the idea of 
additional cable TV competition from television companies in early 
1991. It has taken more than 4 years for the FCC to create a general 
framework for video dial tone, and with each successive ruling more and 
more constraints have been placed on telephone companies wishing to 
offer cable TV services.
  That is not the way to foster competition. And it is not giving 
consumers the additional cable choices they have all asked for and they 
think in a free market they ought to be able to receive. In effect, the 
FCC 4-year delay has prevented robust competition in the cable 
industry. I would argue that this is hardly in the public interest and 
yet, in this legislation, that kind of bureaucracy would largely still 
exist and might even be enhanced over current law.
  Cable industry competition would have been far preferable to the 
stifling regulations that have been imposed under the 1992 Cable Act. 
My last example concerns the Commission ruling in the mid-1980's 
allowing telephone companies to provide new services like voice mail 
that enhanced basic telephone service. In other words, some people 
would ask you today: What did we do before voice mail? Well, I will 
tell you what we did. We had a great, complicated process in many of 
our offices just to get communications through to the individual, and 
where you did not have the ability to hire the person to take the phone 
call, often your phone went unanswered or a call went unreturned. 
Today, we know voice mail works marvelously well.
  Boise, my State capital, was among the first US West cities to offer 
voice mail service, and the service is now available from telephone 
companies across the Nation. It is clear to me that services like voice 
mail provide real benefits to consumers and to businesses yet, even 
after a decade, the public interest issue is still unresolved.
  The Ninth Circuit Court of Appeals has twice questioned the FCC's 
public interest determination when it allowed telephone companies to 
offer new services to consumers. Because of the legal situation 
surrounding these FCC orders issued nearly a decade ago, phone 
companies are currently offering voice mail and other services under, 
believe it or not, a special waiver--not a standard rule of the 
marketplace, but a special exception or a special waiver.
  Mr. President, with the heightened public interest standard included 
in S. 652, a decade-long wait for cellular service or resolution of 
voice mail issues, believe it or not, could take even longer while the 
consuming public believes that now to be a standard of the industry.
  Before closing, Mr. President, I would like to share a few quotes 
from a March 8, 1995, paper on S. 652 entitled ``Deregulating 
Telecommunications,'' written by Thomas Hazlett from the University of 
California, Davis.
  In this article, he reviews the public interest standard.
  While he praises the deregulatory provisions included in the bill, 
and there are some and they deserve to be recognized, he qualifies that 
praise by stating that the bill, through the inclusion of the public 
interest test, ``fails to move us beyond the highly regulatory paradigm 
under which we live today.'' Hazlett argues that S. 652 retains the 
source of all anticonsumer policies since the 1934 act that we are now 
changing under this legislation, the public interest test. He states 
this:

       This is not a proconsumer standard. This fundamental defect 
     is further revealed in the bill's [four] announced 
     objectives: Nowhere is consumer protection listed as a goal 
     of this legislation.

  Mr. President, let me repeat that. In a bill that is argued to be 
positive for consumers, nowhere in this bill is consumer protection 
listed as a goal of the legislation. I think this is wrong, and Mr. 
Hazlett says he believes it is wrong, also.

       Indeed, the very first aim of this or any 
     telecommunications policy should be: ``Lower prices, improved 
     choice, and better, more innovative services for consumers.'' 
     The glaring omission of this goal is far more than a systemic 
     problem.

  Mr. President, Mr. Hazlett goes on to discuss the origins and purpose 
of the public interest standard at its inception in the 1927 Radio Act, 
and the subsequent 1934 Cable Act, which we are now amending today. 
This standard was included at the behest of incumbent radio 
broadcasters:

       The industry liked it because it would allow Government a 
     legal basis for denying licenses to newcomers. Senator C.C. 
     Dill, the author of both the 1927 and the 1934 acts, liked it 
     because it would not only allow the industry what it wanted, 
     it would give policymakers such as himself political 
     discretion to shape the marketplace.

  Let me repeat that. It would allow public policymakers political 
discretion to shape a marketplace; in other words, a political free 
marketplace and not the marketplace that creates the kind of 
competition that is self-regulating at best.

       This was terribly important to the Senator at the time, 
     Dill wrote later, because established principles of law were 
     already shaping spectrum access rights as private property.

  In other words, Mr. President, the public interest test was the 
regulatory means by which the policymaker--that is us--not the 
marketplace and certainly not the consumers, could control the 
development of technology in the market. And we know that has never 
worked. The explosion of service and the quality of service that the 
American consumer now expects in telecommunications has only been 
created in the last decade as we move toward a more deregulated 
environment.
  This was hardly a competitive criteria, and let me suggest that in 
this legislation, that test will stifle the kind of competitive 
environment that we want to create.
  One last point I would like to share from this article brings us to 
our current situation. Mr. Hazlett argues, and I would agree, that even 
after years of use of public-interest standard, we still do not know 
what it means.
  In 1993, FCC Commissioner Duggan lashed out at Commission critics who 
claimed this, saying it was not impossible to define public interest, 
and that the Commission would proceed to do so. That was 1993.
  William Mayton wrote an interesting article in the Emory Law Journal 
in 1989 which pointed out how curious a standard the public-interest 
standard is by defining whatever a Government agency does in the public 
interest is the public-interest standard.
  I find that fascinating, and yet the FCC today still struggles in its 
ability to define and to appropriately announce to the policymaker and 
to the consuming public. In short, Mr. President, anything could be 
deemed either in or against the public interest, and unless you treat 
it in the marketplace where the public ultimately makes the decision, 
then the public interest is in the eye and in the mind of the 
Commissioner or the policymaker, and that is not necessarily, and in 
almost all instances has never been, in the public interest.
  Therefore, it is a standard that has no standard. This is the most 
subjective test possible, and I would argue that it will not, in 
effect, serve the interests of the American people.
  Congress should clearly define the parameters of the public-interest 
standard and outline the factors that should be weighed in the making 
of the determination.
  I submit that the competitive interconnection and unbundling 
checklist is in the public interest and fully meets the standard, and 
that should be the only provision in this law as an amendment to the 
1934 act that frees the marketplace and determines the public interest. 
That is why I am in strong support of this legislation.
  Mr. PRESSLER. Will my friend yield for a unanimous-consent request?
  Mr. CRAIG. I yield back the remainder of my time.
  Mr. PRESSLER. The Senator need not do that.
  Mr. CRAIG. I am through.
  Mr. PRESSLER. We finally, after much negotiation, arrived at the time 
of 2:10 for the vote on this amendment. I shall move to table at that 
time. I ask unanimous consent that we vote at 2:10 this afternoon.
  The PRESIDING OFFICER (Mr. Abraham). Is there objection?
  Mr. CRAIG. Mr. President, I reserve the right to object.
  Mr. BURNS addressed the Chair.
  The PRESIDING OFFICER. Is there an objection?
  Mr. CRAIG. I object.
  The PRESIDING OFFICER. Objection is heard.
  Mr. BURNS. Mr. President, if the Senator from Idaho does not have the 
floor at this time----
[[Page S7966]]

  Mr. CRAIG. I do not.
  The PRESIDING OFFICER. The Senator from Idaho has yielded the floor. 
The Senator from Montana.
  Mr. BURNS. I thank the Chair. I will not be long, but I want to agree 
with my friend from Idaho in one respect. Public interest is kind of 
like art or beauty: It is in the eye of the beholder.
  When we talk about putting up different barriers, we are really 
saying that it is going to be a select few who will decide who gets in 
the business and who does not, where I think most of us believe that 
the marketplace should dictate that, because from that comes 
perfection, and from that comes a very competitive medicine: Lower 
rates for everybody who wants to use that service.
  There are those who serve in this body and those who will serve 
without this body that can take a public service interest before the 
FCC and completely delay the advancement of any kind of technology or 
any kind of deployment of any kind of services in the 
telecommunications industry by just a delaying tactic that would 
prevent any kind of progress to be made in that area.
  Whenever we start talking about this industry, what are we referring 
to? The Senator from Nebraska [Mr. Kerrey] was saying there is no 
public clamor for change in this area, but there is a clamor to allow 
new technologies to be introduced, to do more things with the tools 
that we have now. That is what it is all about. We talk about great 
distances, and we talk about remote areas and new services that will be 
provided to our rural areas and our remote areas. We are trying to 
dictate technology such as digital, digital compression, and all of 
those kinds of new technologies, trying to deploy it under an act that 
was written some 60 years ago and that has served this industry very 
well, by the way. But we are talking about the nineties-and-beyond 
technology. In other words, we are trying to do something in the 
nineties with a horse-and-buggy kind of regulatory environment that 
does not serve either one very well.
  Unnecessary delay will hinder job creation because it will prevent 
openings of communications markets to competition simultaneously. One 
has to have incentives in order to progress in this industry or in any 
other industry. If there is no competition at home, there is no 
competition internationally because this is where we hone our skills.
  This amendment only helps to clarify and define the public interest. 
It is like I said, there are many definitions of public interest. That 
is why I support this amendment. It will do things not only in this 
industry but other industries and send a strong signal that we are a 
strong country within and without in the competitive marketplace, 
especially in new technologies and the deployment of those new 
technologies.
  This bill already removes all legal barriers, as well as mandates the 
Bell companies fully comply with the requirements concerning 
interconnection, unbundling, resale, portability, and dialing parity. 
In other words, we have already gone through this business of 
interoperability of competition on the same lines. And that, too, has 
to be confronted in this bill.
  So I rise in support of this amendment and just believe that it has 
to be done in order to make this bill in final passage truly a 
procompetitive and proconsumer piece of legislation.
  Mr. President, I thank you, and I yield the floor.
  Mr. PRESSLER. Mr. President, the public interest, convenience, and 
necessity standard is the bedrock of the Communications Act of 1934 and 
the foundation of all common carrier regulation. I am surprised that 
this standard has come under attack.


                  where ``public interest'' originated

  The public-interest standard has been part of English common law 
since the 17th century. In a treatise on seaports by Lord Hale, this 
fundamental concept was stated: When private property ``is affected 
with a public interest, it ceases to be subject only to private 
control.''
  This public-interest concept is the basis for the government's 
authority to regulate commerce, in general, and common carriers, in 
particular. The public-interest standard has been a cornerstone of U.S. 
common carrier law for more than a century.
  The U.S. Supreme Court applied the public-interest concept to 
American commerce for the first time in 1876. In Munn versus Illinois, 
the Supreme Court considered the possible constitutional limits upon 
government regulation of business. In Munn, the Court relied on Lord 
Hale's statement regarding public interest. The Supreme Court added 
that this principle ``has been accepted without objection as an 
essential element in the law of private property ever since.'' Two 
hundred years of English common law supported this precedent.
  The 19th century U.S. Supreme Court summarized the common law public 
interest test as follows:

       Property does become clothed with a public interest when 
     used in a manner to make it of public consequence, and affect 
     the community at large. When, therefore, one devotes his 
     property to a use in which the public has an interest, he in 
     effect, grants to the public an interest in that use, and 
     must submit to be controlled by the public for the common 
     good, to the extent of the interest he has thus created.

  The public interest is fundamental to the law of common carriage. The 
Supreme Court in Munn noted that this common-law principle was the 
source of ``the power to regulate the charges of common carriers'' 
because ``common carriers exercise a sort of public office, and have 
duties to perform in which the public is interested.''
  The Communication Act's public interest,
   convenience, and necessity standard grew out of this common-law 
notion of property that is ``clothed with a public interest'' and 
therefore subject to control ``by the public for the common good.''

  The public-interest standard was first codified in the Transportation 
Act of 1920, which extended Federal regulation of railroads. The 
public-interest standard governed the grant of licenses under the Radio 
Act of 1927, the forerunner of the Communications Act's broadcast and 
spectrum licensing provisions.
  The phrases ``public interest'' and ``public interest, convenience 
and necessity'' appear throughout the Communications Act of 1934 as the 
ultimate yardstick by which all of the FCC's different regulatory 
functions and responsibilities are to be guided. For example, the 
public-interest standard specifically applies to the physical 
connections between carriers (section 201(b)); the acquisition or 
construction of new lines (section 214); the imposition of accounting 
rules on telephone companies (section 220(h)); the review of 
consolidations and transactions concerning telephone companies (section 
222(b)(1)); and the grant, renewal, and transfer of licenses to use the 
electromagnetic spectrum.
  Thirty-two States and the District of Columbia have public-interest 
standards in their communications statutes similar to the standard in 
the Communications Act.


                       public interest and s. 652

  Despite the fundamental nature of the public-interest standard to 
communications regulation, questions have been raised about the 
inclusion of the public-interest standard in relation to the 
competitive checklist in S. 652. Critics say the public-interest 
standard will frustrate the Bell companies' ability to enter the 
interLATA market. The fear appears to be that the FCC will use the 
public-interest standard to keep the Bell companies out of the 
interLATA market even though they have, in fact, opened their markets 
to competition by complying with the checklist.


                       public interest has limits

  These critics assume the FCC's discretion is unrestrained. This is 
not
 the case. The FCC's functions and powers are not open-ended. The 
Communications Act specifies in some detail the kinds of regulatory 
tasks authorized or required under the act. In addition, the act 
specifies procedures to be followed in performing these functions. Such 
delineations of authority and responsibility define the context in 
which the public-interest standard shall be applied. By specifying 
procedures, the act sets further boundaries on the FCC's regulatory 
authority.

  S. 652 is no different. The bill would require the FCC to make two 
findings before granting a Bell company's application to provide 
interLATA telecommunications service: First, that the Bell operating 
company has fully implemented the competitive checklist in new section 
255(b)(2); second, that [[Page S7967]] the interLATA services will be 
provided through a separate affiliate that meets the requirements of 
new section 252. In addition, the Commission must determine that the 
requested authority is consistent with the public interest convenience, 
and necessity.
  Opponents of the public-interest standard in section 255 argue that a 
Bell company could fully implement the checklist, meet the separate 
affiliate standards, and be arbitrarily denied authority to provide 
interLATA service by the FCC. This simply is not the case.
  The FCC's public-interest review is constrained by the statute 
providing the agency's authority. For example, the FCC is specifically 
prohibited from limiting or extending the terms used in the competitive 
checklist. In addition, the procedures established in S. 652 ensure 
that the FCC cannot arbitrarily deny Bell company entry into new 
markets.


                The Truth of public interest in S. 652.

  In S. 652, Congress directs the FCC to look at three things: the 
implementation of the checklist, separate affiliate compliance, and 
consistency with the public interest. The FCC's written determination 
of whether to grant the Bell company's request must be based on 
substantial evidence on the record as a whole. A reviewing court would 
look at the entire hearing record. If the FCC would find that a Bell 
company meets the checklist and separate affiliate requirements, but 
denies entry based on the public interest, the agency's reasoning must 
withstand this heightened judicial scrutiny. Those who oppose public-
interest review would ask us to sanction action that the FCC 
affirmatively finds to be inconsistent with the public interest. How 
could this be good public policy?
  Mr. President, on earlier points, I will point out that the Citizens 
for a Sound Economy has endorsed the bill that is before us. It has 
endorsed some of the amendments, but also the entire bill.
  This bill is much more deregulatory than any we have had before us. 
It is not a perfect bill. But it will be a great step toward 
deregulation and a pro-market competition.
  Let me also say that we will be reducing the costs of the Justice 
Department administration. It seems for some reason the Justice 
Department wants to stay in the regulation business. The Justice 
Department is to enforce certain antitrust standards and to carry out 
certain other functions.
  In our bill, the FCC refers their decision to the Attorney General 
and the Attorney General can make a recommendation as to whether to use 
the 8(c) test or whether to use the Clayton standard test, or indeed 
whether to use the public interest standard, or any other standard that 
he deems necessary. So we still have involved consultation with the 
Justice Department in our bill.
  There are many other points to be made here regarding this bill. But 
I believe we have completed debate on this amendment.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. CRAIG. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. President, I ask unanimous consent that the McCain amendment vote 
occur at 2:10, and the time between now and 2:10 be equally divided in 
the usual form, and no amendments be in order. I further ask unanimous 
consent to table the McCain amendment at 2:10.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. THOMAS. Mr. President, I strongly support the amendment offered 
by my colleagues--Senators McCain, Packwood, Craig, and others--to 
clarify the public interest standard in the bill.
  This public interest test will certainly cause unnecessary delays in 
the deregulation of the telecommunications industry. The public 
interest is a vague and subjective standard. A deregulatory bill, as 
this bill is supposed to be, should establish clear and objective 
criteria to open the industry to competition. This bill does not. 
Instead it dictates that a few folks at the Federal Communications 
Commission [FCC] will decide when true competition begins on the 
information superhighway.
  The FCC's regulatory track record is horrendous. In addition, 
allowing the FCC to interpret what is in the public interest introduces 
a perverse incentive for FCC officials to slow down deregulation. 
Increased competition decreases the agency's workload and diminishes 
its need for existence. At a time when we are downsizing Government, we 
ought not to be expanding the role of the FCC. The bottomline is that 
FCC officials cannot create competition with bureaucratic entry tests.
  By delaying true competition, this bill hurts consumers. According to 
several studies, this delay could result in billions in lost economic 
output and millions of new jobs. With such severe economic costs, it 
makes little sense to delay competition with this public interest 
standard. Quick deregulation will ensure that all companies face the 
most ruthless regulator of all--the American consumer.
  This amendment puts all parties on equal footing--the Bells can offer 
long distance services when long distance companies can offer local 
telephone service--no sooner, no later.
  Mr. President, the bottomline is that competition is in the public 
interest. It expands consumer options, lowers prices, creates new jobs 
and increases our international competitiveness. I urge my colleagues 
to join me in supporting this proconsumer amendment.
  Mr. CRAIG. Mr. President, after many years of failed attempts, this 
Congress will have the overdue opportunity to reform the 1934 
Communications Act. Senator Pressler, the chairman of the Commerce, 
Science, and Transportation Committee, is to be commended for his 
efforts to get legislation passed out of the committee and onto the 
floor of the Senate.
  Mr. President, the Telecommunications Competition and Deregulation 
Act of 1995, S. 652, is a very comprehensive bill covering all areas of 
the telecommunications industry. S. 652 is a vast improvement over the 
status quo.
  However, it could be made more deregulatory, better enhancing 
competition in the marketplace. Therefore, I hope that the final bill 
passed by the Senate will incorporate a number of deregulatory 
amendments.
  As I mentioned, this is a very comprehensive bill, so I will limit my 
remarks at this time, to more general issues of concern and interest. 
First, and foremost, it is important that we do not lose sight of the 
ultimate goal of reforming the 1934 act, which should be to establish a 
national policy framework that will accelerate the private sector 
deployment of advanced telecommunications and information technologies 
and services to all Americans by opening all telecommunications markets 
to competition.
  In addition, working toward that goal should spur economic growth, 
create jobs, increase productivity, and provide better services at a 
lower cost to consumers.
  Passing legislation that will open competition in this $250 billion 
industry will have broad-reaching effects.
  It is important that we seize this opportunity to limit the 
Government's role in this vibrant sector of our economy.
  Last year we debated health care--that is, impact. It is not often 
that the Congress has an opportunity to write telecommunications 
legislation. Therefore, it is important that we pass legislation that 
is clear, forward-looking, and does not perpetuate regulations that 
outlive their usefulness or create monopolies.
  It is my position that the best way to achieve this is to move toward 
a competitive system by removing barriers to access in the various 
sectors of industry. Let me emphasize this point, because I think it 
reflects some of the differences of opinion on how to get to 
competition, competition will exist when all barriers to market access 
have been removed.
  To deregulate through regulation reminds me a little of the term 
widely referred to in last year's health care debate, ``Managed 
Competition.'' I am very concerned that efforts to control deregulation 
through regulation will put the Government in the position of 
determining the winners and losers in the marketplace.
  This is not a role for the Government to play. As a conservative, and 
one who [[Page S7968]] strongly believes in limited Government, I am 
very concerned about the powers delegated to the FCC in S. 652, which 
could allow unnecessary
 delays in fully opening the telecommunications market.

  In short, S. 652, as I read it, deregulates through regulation. It 
gives an inch with new competitive freedoms--then takes a mile with new 
layers of regulatory conditions and market entry barriers. It is my 
hope that we can preserve the pro-competitive aspects of S. 652 and 
clarify those sections that unnecessarily restrict competition.
  With that in mind, there are several amendments that I will be 
supporting during debate on this bill, which will promote deregulation 
and competition.
  First and foremost, we must ensure that the bill provides for the 
elimination of obsolete regulations, once certain competitive 
conditions are met. In order to achieve those competitive conditions, 
there should be clear, reasonable and objective requirements or 
conditions that will remove access barriers that currently protect 
monopolies.
  Having said that, once those barriers protecting monopolies are 
removed, a competitive marketplace is established and there should be 
open competition. More specifically, if a market is contestable, 
regulators should not interfere with natural competitive forces.
  Competition will provide the lowest price, the best delivery of new 
services, and infrastructure investment--not regulators.
  Mr. President, I think it is important to emphasize that this is not 
just an industry bill. This legislation has the potential of creating 
thousands of new jobs and enhancing access to a wide array of 
communication and information services to all Americans, but especially 
folks who live in rural or remote communities.
  According to a recent study by the WEFA group, which is an 
econometric forecasting agency, competition in the telecommunications 
industry will dramatically benefit the American economy.
  The WEFA study concluded that delaying competition just 3 years will 
result in a loss of 1.5 million new U.S. jobs, and $137 billion in real 
gross domestic product by the year 2000.
  Conversely, the study found that the immediate and simultaneous 
opening of all telecommunications markets would create 2.1 million new 
jobs by the turn of the century, and about 3.4 million over the next 10 
years.
  The study also shows that during the next decade, full competition in 
telecommunications would increase GDP by $298 billion; save consumers 
nearly $550 billion through lower rates and fees for services; and 
increase the average household's annual disposable income by $850.
  In Idaho alone, thousands of jobs would be created with simultaneous 
and immediate competition. According to the WEFA study, Idahoans would 
benefit from the creation of 7,400 new jobs by the year 2000.
  In addition to the issue of job creation, rural States have a great 
deal at risk if we do not pass legislation to deregulate 
telecommunications.
  There are many examples in my home State of Idaho that demonstrate 
how current regulations reduce customer choice, restrict growth and 
access to new technologies.
  In March 1994, U.S. West Communications was forced to cancel two new 
information services in Idaho, Never-Busy fax and Broadcast fax, due to 
the MFJ requirement that equipment providing the services must be 
located in each LATA. Because of population density, there were not 
enough customers to support the cost of maintaining the necessary 
equipment in the Boise LATA.
  Technically, one piece of equipment can serve several States, but the 
law requires the extra expense of replicating equipment in each LATA 
just to meet outdated regulations that are not consistent with market 
demands.
  In addition, Boise was selected by U.S. West to be one of the first 
areas in the company to be wired for broadband service, giving 
residential and business customers access to voice, video, and data 
over a single line. Due to the long timeframe associated with the FCC 
approval process and limitations of current MFJ regulations, the 
project has been delayed indefinitely.
  In 1988, the Idaho Legislature approved one of the first modified 
regulation structures in the country.
  All services except local exchange services with five or fewer lines 
were completely deregulated. As a result of opening the marketplace, 
over 150 companies now provide long-distance calling within the State.
  The total volume of calling has increased by 60 percent and the long-
distance market share of U.S. West has declined by over 15 percent. The 
end result has been a reduction in both the prices paid by the long-
distance carriers to gain access to the network and the price paid by 
the consumer for services. This, in spite of the fact that local 
exchange services were still perceived to be what some would term as a 
``monopoly'' service. Opening Idaho's market has enhanced competition 
and improved prices for consumers.
  In both an article and an editorial, the Idaho Statesman outline how 
businesses in Idaho were able to save millions of dollars through 
increased productivity and improved services because of the 
infrastructure and services offered by the local telephone company as a 
result of the modified regulation made possible by legislation I have 
described.
  The Statesman recognizes the value of a competitive communications 
marketplace, and has been proactive in its editorials in encouraging an 
open telecommunications industry.
  Mr. President, I would like to take a few moments to discuss some 
concerns on the need for deregulation on the cable industry. Let me 
begin by saying that I opposed the Cable Act of 1992, and voted against 
passage of the bill.
  Since the enactment of S. 12, I have received numerous complaints 
from fellow Idahoans who felt that the changes resulting from S. 12 
worsened rather than improved their cable service and cost. In 
addition, a number of very small independent cable systems in Idaho 
have been in jeopardy of closure because of the astronomical costs 
associated with implementing the act.
  A rural community hardly benefits, if it loses access to cable 
services because the local small business that provides the service 
cannot handle the burden of Federal regulations. Quite the opposite is 
true.
  Competition, not regulation, will encourage growth and innovation in 
the cable industry, as well as other areas of telecommunications, while 
giving the consumers the benefit of competitive prices.
  As I mentioned before, Mr. President a central goal of S. 652 is to 
create a competitive market for telecommunications services. Cable 
companies are one of the most likely competitors to local telephone 
monopolies. Cable companies will require billions of dollars in 
investment to develop their infrastructures in order to be competitive 
providers.
  The Federal regulation of cable television has restricted the cable 
industry's access to capital, made investors concerned about future 
investments in the cable industry, and reduced the ability of cable 
companies to invest in technology and programming.
  Mr. President, rate regulation will not maintain low rates and 
quality services in the cable industry. Competition will.
  New entrants in the marketplace such as direct broadcast satellite 
[DBS] and telco-delivered video programming will provide competitive 
pressures to keep rates down.
  In short, Mr. President, deregulation of the cable industry is 
essential for a competitive telecommunications market--and it is 
necessary as an element of S. 652, and the competitive model envisioned 
in the bill.
  It is my preferred position that S. 652 should completely repeal the 
Cable Act. However, I am very supportive of efforts to repeal rate 
regulation for premium tiers, and
 complete relief of rate regulation for small cable companies, who have 
been hit so severely by the 1992 Cable Act.

  Before closing, Mr. President, I would like to take a moment to share 
some interesting letters I have received from various groups outside 
the telecommunications industry. First and foremost, I was very 
interested as a member of the Senate Veterans affairs Committee to see 
the great interest veterans service organizations have in seeing a 
deregulatory bill passed.
  In a letter form James J. Kenney, the national executive director of 
AMVETS, he states the following:


[[Page S7969]]

       America's veterans and their families have a real stake in 
     the debate in Congress over competition in 
     telecommunications.
       We know that full competition--now--means millions of new 
     jobs spread throughout every section of our economy. A recent 
     study by the WEFA group calculated that 3.4 million new jobs 
     would be produced over the next ten years if all 
     telecommunications companies were allowed to compete right 
     away. These jobs are desperately needed for the estimated 
     250,000 men and women who are being discharged every year due 
     to downsizing of the military . . . .
       Veterans want Congress to be on our side in this fight--to 
     stand up for us--for new jobs and lower prices. We don't want 
     to have to wait for the benefits of new competition. . . .
       On behalf of AMVETS and all of America's veterans, I urge 
     you to move forward quickly in assuring that S. 652 will be a 
     telecommunications reform bill that will allow immediate and 
     simultaneous competition in the marketplace.

  Mr. President, I intend to stand up for our veterans, and other of 
our citizens. I think this letter shows just how important this bill is 
to all Americans and the benefits that we can all enjoy from a robust 
and competitive telecommunications market.
  Another interesting letter on this legislation, written by former 
Surgeon General C. Everett Koop, M.D. and Jane Preston, M.D., and 
president of the American Telemedicine Association, also urges the 
Congress to ``Pass telecommunications reform legislation that opens up 
full competition in both local and long distance communications without 
delay.''
  Their interest in S. 652 is the potential advances it can bring to 
the medical field through greater access to telemedicine.
  As a member of the Senate/House ad hoc Committee on Telemedicine and 
Informatics, I agree with the interests outlined in this letter.

       One of the single largest obstacles to the Deployment of 
     Telemedical services LATA boundaries. Many of those involved 
     in the field of telemedicine see LATA boundaries as ``toll 
     booths on the information highway.'' The existence of LATA 
     boundaries, (and accompanying high rates for long distance 
     services) was not a problem in the early stages of 
     telemedicine research and demonstration projects. . . . 
     However, with the development of telemedicine projects as on-
     going, financially viable operations and with the steady 
     increase in telemedical interactions, the cost of long 
     distance services has become a major program. Therefore, we 
     ask you to eliminate this barrier by lifting existing 
     restrictions and allowing all companies to compete 
     immediately for local and long distance services.

  The letter goes on to describe the many health care uses of the 
telecommunications infrastructure such as the training and education of 
health care professionals, consultation, and diagnostics, in addition 
to all the administrative functions that use the system. This is 
especially important to the future of the delivery of health care in 
remote and rural communities.
  Mr. President, I don't support the unnecessary Government regulation 
of private industry. Some will argue that the regulations incorporated 
in S. 652 are not only necessary, but they are the only way we can 
reach a competitive marketplace. I disagree. There will be a number of 
amendments offered to curb the regulations that remain in this bill. 
With these clarifications and improvements, I am confident that S. 652 
will positively change the telecommunications landscape for the 
betterment of American consumers and the national economy. I hope my 
colleagues will join me in support of those amendments.
  The PRESIDING OFFICER. Who yields time?
  If neither side yields time, time will be charged equally against 
both sides.
  The Senator from Idaho.
  Mr. GRAIG. Mr. President, I suggest the absence of a quorum. I ask 
that no time elapse equally.
  The PRESIDING OFFICER. Without objection, it is so ordered. The clerk 
will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. LOTT. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. LOTT. Mr. President, may I inquire about the time arrangement at 
this point?
  The PRESIDING OFFICER. At this point we have a vote on the McCain 
amendment set for 2:10. At this point, there are remaining 2 minutes 3 
seconds on Senator Pressler's time for discussion on that amendment, 
and 20 minutes remaining on Senator McCain's amendment.
  Mr. LOTT. Let me ask it this way. Is there time in here that I may 
use that is not designated on one side or the other?
  The PRESIDING OFFICER. It would take unanimous consent to proceed in 
that fashion. But the effect would be potentially delaying the vote if 
the advocates and proponents of the amendment were to withhold this 
time.
  Mr. LOTT. Mr. President, I ask unanimous consent that I be allowed to 
speak against the amendment for the next 5 minutes.
  Mr. STEVENS. Reserving the right to object, I shall not object, so 
long as it comes off both sides. I understand that is agreeable to 
Senator McCain. We still want the vote at 2:10.
  The PRESIDING OFFICER. There are only 2 minutes left of Senator 
McCain's time. If that were to be equally divided, it would exhaust all 
the time he has left plus additional time.
  Mr. STEVENS. Senator Pressler has 2 minutes.
  The PRESIDING OFFICER. I believe Senator McCain has 2 minutes because 
the last speaker spoke, I thought, in support of the amendment.
  Mr. STEVENS. Mr. President, as I understand it, consistent with 
Senator McCain's desire, just take the time and allow the Senator to 
speak.
  Mr. LOTT. Mr. President, I think we all understand that. I will be 
brief. I want to be recognized briefly to speak against this amendment. 
I think what we have here is a classic case of the defeat of the good 
in pursuit of the perfect. Perhaps this legislation is not perfect, but 
it has been worked out very laboriously in a bipartisan way. It may not 
be totally perfectly deregulatory. I am sure it would be wonderful if 
we could eliminate the FCC. A lot of us would like to see no need for 
the FCC. But we are going from what has been a monopolistic system, an 
antiquated system, to a new, dynamic, open, more competitive, and much 
less regulatory system. This language, the public interest standard, 
that is included in the bill is a very important part of the core. It 
was a part, an important part, of putting together the agreement on the 
entry test. In my opinion, it is sort of part of the checklist. Once 
the Bell companies meet the checklist, there is this one additional 
thing, the public interest question. I think it is important to make 
sure that we have a fair and level playing field. This is part of that 
effort to make sure that we have done it right.
  Our purpose here is to have more competition and less regulation. But 
I do not believe it is going to be constructive at this point if we 
take that public interest language out of there.
  So I urge my colleagues, if we are going to keep this compromise 
agreement together, we need to leave this language in there.
  I urge the defeat of the McCain amendment.
  I yield the floor.
  Mr. McCAIN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Arizona.
  Mr. McCAIN. How much time remains?
  The PRESIDING OFFICER. Eighteen minutes forty seconds.
  Mr. McCAIN. Mr. President, I yield myself such time as I may consume.
  I really am struck by the comments of the Senator from Mississippi 
because it is exactly what is in this editorial of the Wall Street 
Journal. It is not a good idea to have the public interest provision in 
the bill, but let us do it because we have a compromise here. Let us 
make a bad deal, but it is a deal. I cannot tell my colleague from 
Mississippi how deeply I am disappointed in his position on this issue.
  I had many conversations with him when we were talking about a 
checklist and how a checklist would satisfy the concerns of those who 
were in opposition to this legislation. Now, obviously, that was not 
enough. But we are going to make a deal. Let us change the debate 
around here. Instead of debating a piece of legislation, let us make a 
deal. The fact is the public interest aspect being added onto a 
checklist negates the entire checklist. What in the world is the need 
to have a checklist to say we comply with the checklist and then send 
it over to the [[Page S7970]] FCC to decide what the amorphous position 
of the public interest is? The reason we will not do away with the 
checklist is we went down this road of concession after concession. We 
decided first that we will not have a checklist, then whether we needed 
a checklist. Then that was not sufficient to get enough support, so we 
added the public interest clause. So we end up with a meaningless 
checklist.
  What in the world is the sense of having a checklist then after the 
checklist has been complied with? OK, it has been complied with, but it 
is up to you, FCC. What relevance does a checklist have?
  Mr. President, I continue to be disappointed at what the Wall Street 
Journal describes as the ``problem here is a familiar one.'' Companies 
lean too heavily on their insider Washington representatives whose 
skill is chiseling arcane special provisions out of an arcane process. 
These people are part of the reason the public is cynical about 
Washington. The CEO's know what is right, but they are given to believe 
it is never attainable considering universal service.
  Mr. President, I am aware that this amendment will probably not be 
passed. But this is a clear example of what is wrong with the way we do 
business here in Washington. In the face of principle, we now 
compromise, and instead of doing so, let us have a bad deal, but it is 
better than no deal at all. I do not agree with that. I believe that we 
do a great disservice to the people whom we represent in the name of 
deregulation to add 80, according to the Wall Street Journal, 80 new 
regulatory functions, all designed, of course, to ensure competition 
and fairness.
  Part 1 of those 80 new regulatory functions--part of the $81 million 
that the FCC is going to need to enforce this deregulation, and, of 
course, in the words of the Commissioner of the Federal Communications 
Commission, they will need accountants, statisticians and business 
school graduates. So let us call this what it is--a plus to some 
special interests and perhaps some improvement in the status quo but 
certainly not deregulatory legislation.
  I reserve the remainder of my time.
  The PRESIDING OFFICER. Who yields time?
  Mr. STEVENS. I yield such time as is remaining to the Senator from 
Nebraska.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. KERREY. Mr. President, I thank the Senator from Alaska.
  I rise in opposition to the amendment. The most difficult thing to 
have happen in the law that we are deliberating here is the competition 
at the local level. That is the most perplexing and most difficult part 
of all. By competition, I do not mean competition for phone service. I 
do not mean competition for cable service. I do not mean competition 
for information businesses that want to preserve this kind of line of 
business distinction. I mean competition to package information 
services, not coming from the big guys that we talk to all the time in 
this town, but from that new entrepreneur that hires their lawyers at 
$50 an hour, not by the dump truck load, who need to make certain they 
will have an opportunity to compete.
  This checklist, such as it is, I do not know if the checklist is 
going to work. There are 14 things on the checklist. Take a look at it. 
You tell me. One of the problems that I have in this whole mechanism is 
that it says the FCC is supposed to determine whether or not we have 
competition. How do I determine? Well, I have a checklist.
  Then I have one final test that, by the way, has been litigated many, 
many times over the course of time. The Supreme Court has spoken many 
times on this issue. They understand the intent with a lot more clarity 
than meets the eye in this area. This is an effort to make certain that 
in fact we do get competition at the local level. I assure my 
colleagues, if we do not get competition at the local level, our 
consumers, our citizens, households are not going to be happy because 
their rates will not come down for overall information services. Their 
quality will not go up. Only in the competitive environment will that 
happen. Only if the provider of services knows that the customer can 
walk and go someplace else is there going to be a competitive 
environment, and only if the law encourages and allows new 
entrepreneurs and startup companies, as I believe the language in this 
bill allows, and that the amendment will strike.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. McCAIN. Mr. President, I yield my remaining time to the Senator 
from Oregon.
  Mr. PACKWOOD. Mr. President, I thank my good friend from Arizona. I 
apologize for being late. The Finance Committee met from 9:30 until 
about quarter of 1. I have just gotten here now.
  I realize the time constraints we are under, and I am not going to 
make a lot of long opening comments. This amendment is a simple 
amendment. No matter how anybody cuts it and attempts to parcel the 
bill, there are two competitive tests in this. I am going to refer to 
them as section A and section B, and they are genuinely competitive, 
objective tests. But then there is a conjunction at the end of the 
second section. We get into this public interest. It reads, ``And if 
the Commission determines that requested authorization is consistent 
with the public interest, convenience and necessity,'' and what not.
  What that means is that if any applicant meets the first two, which 
are objective and measurable, they still have to get over the hurdle of 
the third test, which is the public interest test. That is amorphous. 
That is anything the Federal Communication wants it to be. It is an 
unneeded test. It is going to be a test that is going to tie up every 
applicant not for weeks, not for months, but for years as we go through 
not some kind of an objective what is the public interest but on every 
single application to extend service to consumers, every single 
application to get more competition into the communications field, 
every one of those is going to have to pass a subjective public 
interest test, because I can assure the Presiding Officer and I can 
assure this Chamber that anybody who opposes one of your competitors 
getting into your business is going to say it is not in the public 
interest and you are going to have to prove that it is in the public 
interest.
  And here is where I wish to complain about established bureaucracy 
generally, and I do not mean it critically, but I do mean it in the 
sense that there is a great tendency of any regulatory body to like 
what is. And there is a triangle between applicants and regulators and 
employees who used to be with the regulators, who now represent the 
applicants and who will also be representing the opponents of the 
applicants. And there will be a cozy tendency not to want to expand.
  I am just going to give 3 minutes of history here on deregulation 
efforts I have seen since I have been on the Commerce Committee. I have 
been on it now since 1977, and I have been through every single 
deregulatory phase that we have had. Airlines in 1978--no one in the 
airline industry except United Airlines, to their credit, favored 
deregulating the airlines, nor did any of the unions that worked for 
the airlines want deregulation. In 1980, truck deregulation was opposed 
by the American Trucking Association and the Teamsters Union and not 
very enthusiastically looked at by the Interstate Commerce Commission, 
which then regulated trucking. We deregulated trucking by and large in 
1980, and the Interstate Commerce Commission has shrunk from about, as 
I recall, 2,200 employees in 1981 down to around 500 or 600 now. My 
hunch is that the life of the Interstate Commerce Commission is not 
long in being. But because we deregulated, they shrunk down.
  Now, what is the one thing that we left unregulated--I should not say 
we--that was left unregulated. When AT&T agreed with the antitrust 
division for the modified final judgment in 1982, the one thing that is 
not part of that judgment was cellular phones. Why? Because nobody 
cared. In 1982, you had 100,000 cellular phone customers. Do you know 
what the historical analogy is?
  It is England and France after World War I, when they decided to 
divide up the Turkish territories, Turkey being an ally with Germany in 
World War I, and they lost. Turkey had control of the entire Middle 
East. England and [[Page S7971]] France divided it up. England took 
Israel, Jordan, and Iraq; France took what became Lebanon and Syria. 
Nobody wanted Saudi Arabia--nothing but a desert. So it was left to 
drift on its own. No one knew there was any oil. I am sure Britain and 
France would have carved it up also if they thought they wanted it.
  Nobody cared about cellular phones in 1982, so with 100,000 then, 25 
million now, and 28,000 new customers a day, we will be at about 120 
million cellular phone users by the year 2002. There are only 150 
million telephone subscribers now. The reason this service is growing--
and is it competitive? Read the advertisements. Hear the television. 
Listen to the radio. Competitive? Are the prices coming down? Is it big 
competitor after big competitor about some interesting small-niche 
competitors that understand this business, and because they are small 
and often personally held, they can beat AT&T or MCI or Bell Atlantic? 
That never would have happened had they been included in the modified 
final judgment.
  I can see exactly what is to happen if we do not get rid of this 
public interest part of this bill. In is going to come a smart young 
engineer who worked for AT&T until he or she was 38 and decided to 
leave and form a little niche company of their own, and they are going 
to want to get into Bell Atlantic's territory. We think this is Bell 
versus AT&T. They are going to want to get into that territory, and 
they are going to make an application. And they are going to be kept 
out, or Bell Atlantic is going to be kept out if they want to get into 
AT&T's territory because they do not meet the public interest test.
  Mr. President, of all of the areas of business in this country that 
no longer need regulation, communications is it. The argument is made 
that we are operating under an act that was passed in 1934. That is 
true. If we pass this act today, this takes us up to about 1964, 1974 
at most.
  Mr. President, we are not 5 to 10 years from the day that wired 
systems are going to be irrelevant. We are going to go back to 
broadband broadcasting where your computers are going to be hooked up 
by radio waves or the equivalent rather than wires, and we are going to 
have more spectrum than we know what to do with. And we are going to be 
hobbled because this bill will not give the freedom to competitors that 
is necessary, and the public interest test will do more to stop that 
freedom of competition than any other single thing.
  I hope very much the Senate will adopt this amendment. This amendment 
by itself will do more to make sure that we have the equivalent of the 
kind of competition we have seen in cellular in the last 10 years than 
any other single thing this Senate will consider.
  I thank the Chair.
  Mr. McCAIN addressed the Chair.
  The PRESIDING OFFICER (Mr. Grams). The Senator from Arizona.
  Mr. McCAIN. I ask unanimous consent that Senator Thomas be added as a 
cosponsor.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. PRESSLER. Mr. President, I move to table.
  Mr. HOLLINGS. I move to table.
  The PRESIDING OFFICER. Does the Senator from Arizona yield back his 
time?
  The Senator yields back his time.
  Mr. PRESSLER. I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The question now is on agreeing to the motion 
to table the amendment. The yeas and nays have been ordered. The clerk 
will call the roll.
  Mr. LOTT. I announce that the Senator from Mississippi [Mr. Cochran] 
is necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
who desire to vote?
  The result was announced--yeas 68, nays 31, as follows:

                      [Rollcall Vote No. 243 Leg.]

                                YEAS--68

     Akaka
     Ashcroft
     Bennett
     Biden
     Bingaman
     Bond
     Boxer
     Bradley
     Bryan
     Bumpers
     Byrd
     Campbell
     Chafee
     Cohen
     Conrad
     D'Amato
     Daschle
     Dodd
     Dorgan
     Exon
     Feingold
     Feinstein
     Ford
     Glenn
     Gorton
     Grams
     Grassley
     Harkin
     Hatfield
     Hollings
     Hutchison
     Inhofe
     Inouye
     Jeffords
     Kassebaum
     Kennedy
     Kerrey
     Kerry
     Kohl
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lott
     Lugar
     Mikulski
     Moseley-Braun
     Moynihan
     Murkowski
     Murray
     Nickles
     Nunn
     Pell
     Pressler
     Pryor
     Reid
     Robb
     Rockefeller
     Roth
     Sarbanes
     Simon
     Snowe
     Specter
     Stevens
     Thompson
     Thurmond
     Warner
     Wellstone

                                NAYS--31

     Abraham
     Baucus
     Breaux
     Brown
     Burns
     Coats
     Coverdell
     Craig
     DeWine
     Dole
     Domenici
     Faircloth
     Frist
     Graham
     Gramm
     Gregg
     Hatch
     Heflin
     Helms
     Johnston
     Kempthorne
     Kyl
     Mack
     McCain
     McConnell
     Packwood
     Santorum
     Shelby
     Simpson
     Smith
     Thomas

                             NOT VOTING--1

       
     Cochran
       
  So the motion to table the amendment (No. 1261) was agreed to.
  Mr. PRESSLER. Mr. President, I move to reconsider the vote.
  Mr. HOLLINGS. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


                         Privilege of the Floor

  Mr. PRESSLER. Mr. President, I ask unanimous consent that Rosanne 
Beckerle be permitted privilege of the floor.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DOMENICI. Mr. President, I ask unanimous consent that Erica Gum, 
an intern in my office, be permitted privilege of the floor during the 
remaining debate of this issue.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 1262

  Mr. McCAIN. Mr. President, I send an amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. Without objection, the pending amendment is 
set aside.
  The clerk will report.
  The legislative clerk read as follows:

       The Senator from Arizona [Mr. McCain] proposes an amendment 
     numbered 1262.

  The amendment is as follows:

       Strike Section 310 of the Act and renumber the subsequent 
     Sections as appropriate.

  Mr. McCAIN. Mr. President, this amendment would strike the provisions 
in the bill that force private companies to give preferential rates to 
certain other entities.
  Specifically, the bill mandates that any health care facility, 
library, or school receive telephone service at cost. In other words, 
the telephone company must offer such service at reduced rates.
  We all support helping education, furthering the ability of all 
individuals to have access to libraries, and helping people get medical 
help.
  Mr. President, I am very concerned that the provisions of this bill 
go too far. Rural health providers will be provided with these low, 
preferential rates. I question whether such action will help low income 
rural Americans receive health care or will it help wealthy doctors 
become even wealthier when their telephone bills are reduced.
  I question whether such an across-the-board mandate for schools to 
receive preferential rates is really necessary for wealthy suburban 
schools?
  And for all of these provisions, I must question does anyone truly 
know the cost involved here?
  For the following reasons, the public users section of this bill 
should be struck.
  First, these provisions amount to an unfunded mandate. Earlier this 
year we passed legislation to discourage us from passing unfunded 
mandates on to companies. Make no mistake, this is an unfunded mandate.
  Second, many States are already giving some entities preferential 
rates. There is no reason we should federalize a legitimate function of 
the States.
  Third, if we are to pass such a provision, at a minimum, it must be 
means tested. There is no reason to give preferential rates to 
individuals who do not need them.
  Fourth, we do not have an accurate assessment of how much this 
entitlement will cost. [[Page S7972]] 
  Last, these provisions contain huge loopholes that many will exploit. 
Will abortion clinics apply for preferential rates as medical 
facilities? Will law firms with legal libraries seek preferential 
rates? These terms are not precisely defined in the bill and are open 
to exploitation.
  Mr. President, as an example of what would be provided, it says in 
the bill on page 134, paragraph 3:

       Health Care Provider. The term ``health care provider'' 
     means post-secondary educational institutions, teaching 
     hospitals, and medical schools.

  After reading through the bill language and also after consultation 
with staff, I am told that the term ``elementary school'' means a 
nonprofit institutional day or residential school that provides 
elementary education as determined under State law.
  Does that mean a nonprofit private school falls under this? Does it 
mean, as I said before, that clinics that perform abortions are a 
medical facility? Does it, under the term ``secondary school,'' mean a 
nonprofit institutional day or residential school that provides 
secondary education, as determined under State law, except that such 
term does not include any education beyond grade 12?
  Does this mean private schools? I know that some private schools such 
as private parochial schools are not very wealthy. I also know that we 
all know there are certain private schools that are extremely well off.
  Mr. President, I just think this is a wrong idea. It passed by a vote 
of 10 to 8 in the committee without a large amount of debate.
  I hope we can strike this from the bill. I have no idea how much this 
would cost. I believe that we have spoken very loudly and clearly that 
unfunded mandates are something that we are rejecting. I urge the 
adoption of this amendment.
  Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  Mr. BRYAN. Mr. President, I ask unanimous consent that we might 
return to morning business for 3 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BRYAN. Mr. President, I thank the Chair and the distinguished 
managers of the bill.


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