[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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