[Congressional Record Volume 141, Number 97 (Wednesday, June 14, 1995)]
[Senate]
[Pages S8364-S8376]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        THE TELECOMMUNICATIONS COMPETITION AND DEREGULATION ACT

  The Senate continued with the consideration of the bill.


                           Amendment No. 1298

   (Purpose: To improve the provisions relating to cable rate reform)

  Mr. LIEBERMAN. Mr. President, at this time I call up amendment No. 
1298.
  The PRESIDING OFFICER. The clerk will report.
  The bill clerk read as follows:

       The Senator from Connecticut [Mr. Lieberman] proposes an 
     amendment numbered 1298.

  Mr. LIEBERMAN. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       At the appropriate place, insert the following new section:

     SEC.   . DETERMINATION OF REASONABLENESS OF CABLE RATES.

       (a) Commission Consideration.--Notwithstanding any other 
     provision of this Act or section 623(c), as amended by this 
     Act, for purposes of section 623(c), the Commission may only 
     consider a rate for cable programming services to be 
     unreasonable if it substantially exceeds the national average 
     rate for comparable programming services in cable systems 
     subject to effective competition.
       (b) Rates of Small Cable Companies.--
       (1) In general.--Notwithstanding any other provision of 
     this Act or the amendments made by this Act, the regulations 
     prescribed under section 623(c) shall not apply to the rates 
     charged by small cable companies for the cable programming 
     services provided by such companies.
       (2) Definition.--As used in this subsection, the term 
     `small cable company' means the following:
       (A) A cable operator whose number of subscribers is less 
     than 35,000.
       (B) A cable operator that operates multiple cable systems, 
     but only if the total number of subscribers of such operator 
     is less than 400,000 and only with respect to each system of 
     the operator that has less than 35,000 subscribers.

  Mr. LIEBERMAN. Mr. President, I am delighted to see occupying the 
chair at this time, the distinguished former attorney general of the 
State of Missouri, because my interest in this subject of the 
regulation of cable rates started in 1984 when I was the attorney 
general of the State of Connecticut.
  We had established a system similar in many ways, different in some 
ways, to other States and municipalities around the country to deal 
with the advent of this exciting new technology, cable television, in 
which our State--during the 1960's, originally, and the 1970's--had 
given out franchises for cable television in different areas of the 
State. These were monopolies. Because they were monopolies, which is to 
say there was only one that any consumer had any access to in the State 
of Connecticut, they were subject to a kind of public utilities 
regulation, since there was no competition.
  This went on until 1984 when the Congress in its wisdom, without the 
participation of the occupant of the chair or myself, at that time 
passed an act which prohibited the States from regulating the cost of 
cable. As I will document in a moment or two, there was a great outcry 
from many of us at the State level, first on the basis of federalism, 
that we had been deprived of this opportunity to exercise our capacity 
and obligation to protect our consumers in the State of Connecticut or 
elsewhere as we saw fit, but also because the effect of the 
congressional act of 1984 was to leave cable consumers facing 
monopolies, only one cable provider, without the benefit of protection 
from consumer protection legislation, and without the benefit of 
competition.
  What happened I will document in a moment or two, but it ultimately 
led to a very successful effort in 1992 to adopt a cable act which was 
passed with strong bipartisan majorities, and was vetoed by President 
Bush. It turned out to be the only veto of the Bush years that was 
overridden by this Congress. The Cable Act of 1992 went into effect, 
with positive effect, as I will describe in a moment. Then, suddenly as 
part of this major reform of telecommunications, there appears what 
amounts to the evisceration of that cable consumer protection.
  So just 3 years after passing that landmark legislation to bring 
competition to cable television and keep regulation until that 
competition came, just 3 years after the effort began once again to 
hold down cable rates for the millions of cable consumers around 
America until competition emerges, we are now considering a bill that I 
am afraid will undo many of the consumer protection benefits of the 
1992 Cable Act.
  The amendment that I have introduced this evening, No. 1298, will 
prevent the dismantling of the cable consumer protections of the 1992 
act.
  Mr. President, I assume we all agree--I certainly do--that 
competition is the best way to set prices. Markets can set prices much 
more accurately and effectively than regulators can. Although consumers 
cannot really reap the benefits of competition, obviously, until there 
is effective competition in their local markets, the amendment that I 
am introducing, I think, will provide consumers with some of the 
advantages of competition. Without competition, monopolies have the 
license to unreasonable rate increases. So we have a choice. When there 
is no competition, we can have regulation, or we can just simply say 
let the monopolies go.
  The cable rate regulation included in the current underlying bill 
before us, in my opinion, does not prevent monopoly abuses, and 
virtually deregulates cable, which means that 
without this amendment we are inviting the majority of cable companies 
to raise their rates. And, unfortunately, we are guaranteeing that the 
majority of our constituents, many of whom may be watching tonight, are 
going to see increases in the cost of cable television every month, 
unless we act to amend this bill. And I believe the amendment I am 
offering is a good procompetitive way to do so, consistent with the 
overall procompetitive spirit of this legislation.
  Mr. President, before my colleagues vote on this matter, I think it 
is imperative to review the current status of cable regulation and how 
it is working.
  First of all, let us ask what has happened since we passed the Cable 
Act of 1992; and, second, what impact will this legislation before us 
have? My concern again is that this legislation, if unamended, 
virtually guarantees significant cable rate increases before 
competition comes to the cable market. And today, the FCC tells us that 
only 50 of the more than 10,000 cable markets in America have effective 
competition. That means if we have constituents in the 9,950-plus other 
markets, and if this legislation goes forward as it is, they are 
probably going to see a cable rate increase.
  What I see happening here is the potential for this Congress to make 
the same mistake that was made in 1984 when the cable industry was 
deregulated based on the promise or the hope that competition was right 
around the corner.
  In 1984, it was the promise of competition from satellites to the 
traditional cable. Now it is again and still the promise of satellite 
competition plus the promise of telephone company competition. After 
the 1984 act passed the Congress, the fact is that the cost of cable 
television skyrocketed. Today only one-half of 1 percent of cable 
consumers receiving satellite service from DBS, direct broadcast 
satellite, which is the new satellite competitor, and only experimental 
efforts exist today to transmit cable over telephone lines. It is only 
natural to fear that cable rates will shoot up again under the current 
bill.
  Let me just go back over that. The promise of satellite reception for 
cable consumers, television consumers, was ripe in the air in 1984 when 
cable was deregulated. Today, 11 years later, one-half of 1 percent of 
the television consumers with multichannel service receive that service 
from the Direct Broadcast Satellite.
  The last time Congress prematurely deregulated cable rates, the 
General Accounting Office found that the price of basic cable service 
rose more than 40 percent in the first 3 years without regulation. And 
40 percent is three times the rate of inflation during that same period 
of time, 1986 to 1989, and four times the level of increases 
experienced under regulation. [[Page S8365]] 
  Mr. President, the Commerce Committee received testimony from local 
officials that demonstrated real price exorbitance. Mayor Sharpe James 
of Newark testified that rates increased by more than 130 percent from 
1986 to 1989 in his community. Mayor Eddy Patterson of Henderson, TN, 
noted rates rose 40 percent in the same period in his area. Rates shot 
up as much as 99 percent in communities in Hawaii, according to Robert 
Alm from Hawaii's Department of Commerce. David Adkisson, Mayor of 
Owensboro, KY, testified that basic receipts rose 40 percent in just 1 
year. And I can report that rates in Connecticut jumped 52 percent in 
those 3 years in the mid-1980's, led by one company which actually 
hiked its rates by an unbelievable 222 percent when there was no 
regulation and no competition, which effectively is what this bill will 
bring us back to.
  Consumer groups testified to the Commerce Committee demonstrating 
that in the few communities where there was competition, which is to 
say two cable companies going head to head, rates were about 30 percent 
lower than in the monopoly markets.
  So on the basis of that evidence this Congress moved in a bipartisan 
fashion in 1992 to pass the Cable Act. Let me now remind my colleagues 
briefly what that law does. The Cable Act--that is the law in effect 
today, before this bill--allows Federal and local officials to limit 
cable rates to a reasonable level until there is effective competition 
to the cable monopoly. This is not permanent regulation. This is not 
the heavy, immovable hand of Government. This says let us get 
regulation out of here as soon as there is competition. In other words, 
regulation sunsets, disappears. And the standard here is it disappears 
when half the residents of a community have more than one choice for 
cable service and 15 percent of them, only 15 percent of that 
community, actually select the service from the cable competitor.
  Let us talk about the results of the law. Mr. President, according to 
the Consumer Price Index for cable service, rates are down about 11 
percent from their trend line when cable was deregulated. I plotted 
here on this chart the trend of cable rate increases before rate 
regulation extrapolated to the present. That is the blue line.
  Also plotted are cable rates after rate regulation, and cable rates 
subject to competition. So the red line is the difference here in rates 
after the 1992 act went into effect, and this actually is a projection 
of what has happened in those 50 markets where there is competition, 
which is great for consumers.
  Regulation is modestly controlling monopolies. That is what the red 
line tells us. But competition is the real solution. Competition works 
at keeping cable rates under control. Without competition, regulation 
is necessary to control those price increases. On a nationwide basis--
this is an interesting number--this translates into a consumer savings 
of $2.5 billion to $3 billion per year since the adoption of the Cable 
Act of 1992.
  Furthermore, consumers were not hit by the two to three times 
inflation rate increases they used to face when cable was deregulated. 
So not only did we not have the increases, we actually had $2.5 billion 
to $3 billion of consumer savings, and there is not much that we can 
look at in the way of the cost of living in our society that went down 
during this period of time.
  While consumers have come out ahead, I want to point out that the 
cable industry has done well, contrary to its fears, under this new 
act. They have been busy developing new service and increasing revenue 
streams, and as far as I am concerned that is great news. With pay 
channels, increased advertising revenue and digital audio services, the 
cable industry has made up all of the money consumers saved from 
regulation. In addition, cable has had the money to prosper through 
expansion. And you can see in this plot the increase in subscribers 
that cable companies have had since the regulations imposed by the 
Cable Act.
  The impact of the Cable Consumer Act of 1992 saved consumers a 
substantial amount of money, $2.5 billion to $3 billion a year, and 
rates went down 11 percent. But the great news about it is that all 
that happened and the cable companies still remained healthy.
  In this chart, I am showing the increase in the number of subscribers 
the cable companies have had since the regulations imposed in the cable 
act. This is 1990, a 4.4 percent increase; 1991; and then after the 
act, 1993-1994, you can see they go up 2.8 percent; and then in 1994, 
when the act really kicked in for the full year, a 5-percent increase 
in subscriber growth to cable, which shows that the business remained 
healthy during that period of time.
  Last year, cable systems expanded their infrastructure to reach 1 
million additional homes, 1.4 additional households subscribed to basic 
cable service, and 1.1 million families purchased expanded cable 
packages.
  Pay services were taken by an additional 2 million homes, and dozens 
of new programming channels were developed and offered to the public, 
all of that growth occurring during these 2 years in which regulation 
has been in place.
  Equally important, some would say most important, the cable industry 
has been investing to compete with telephone companies in the 
multimedia services. I know that one of the arguments that the cable 
company folks have made against this amendment and for deregulation now 
before there is any competition to them has been that they have to be 
able to raise money to compete, build an infrastructure with the 
telephone companies when they get into the cable business.
  But the fact is that the chart illustrates during this period in 
which regulation has existed again for a couple of years, the capital 
expenditures of the cable industry have been very healthy. In fact, 
they have dramatically increased in the years that regulation has been 
on. We go from 1993, up to almost $3 billion; in 1994, up to almost $4 
billion, $3.7 billion.
  Since last summer, 1994, major cable companies have raised and 
invested over $15 billion in new competitive ventures. Most recently, a 
consortium that includes TCI, Comcast and Cox, raised and spent more 
than $2 billion to buy, if you will, the spectrum that was auctioned, a 
figure higher than any other set of bidders paid in the spectrum 
auction.
  Let us talk about the profit margin for the cable industry during 
this period of time. For 1993, it was 20 percent, the highest profit 
margin of any segment of the telecommunications industry, and this is 
after regulation went into effect, because there was no competition. 
Cable companies have been successful in acquiring and spending money, 
and that is the way it ought to be. I want them to grow and prosper.
  Finally, here I have plotted the average value of cable stocks as 
compared to the S&P 500. As you can see, regulation has not hurt the 
performance of cable stocks. In blue, we have cable industry stocks 
charted. The S&P 500 is in red. Here, again, you can see how healthy 
the cable industry has been--and the stock market, after all, is a 
measurement of consumer confidence in the future of this industry. Here 
we go, 1993 and 1994, during that period of time when regulation was 
instituted because there was no competition, the cable industry stock 
index performed significantly better than the Standard & Poor's 500.
  Obviously, investors do not think regulation has been bad for the 
cable industry. Just about every day newspapers announce new examples 
of major cable advancement or system upgrades or system expansion. 
Again, that is good news.
  Finally, it is critical to understand that the cable act and the FCC 
regulations allow cable operators to respond to both the threat of 
competition or actual competition in the same manner that any 
reasonable business in an unregulated market would react to such 
threats. In the face of competition, a cable operator may either 
improve service--that is what competition is all about--without any 
regulatory filings, reduce prices for any tier of service--that is what 
a normal business does when they have competition without any 
regulatory OK, they reduce their prices--they may offer new services at 
any price, all this without regulation. And, of course, under the act, 
all pay services--this is the 1992 act--all pay services and premium 
channels are already unregulated.
  Mr. President, there is only one thing the cable operator may not do 
under the Cable Act of 1992 and that is to raise rates above a 
reasonable level. [[Page S8366]] Why would any cable operator who faced 
real competition want to raise prices above a reasonable level? 
Obviously, most sensible business people would not raise prices in the 
face of that competition. But does that not all change if there is no 
competition?
  I am sorry to say that the committee bill with its repeal of these 
cable consumer protections that have worked for the consumer and the 
industry will allow the industry to raise its rates again before 
competition ever arrives and literally takes us back to 1984.
  Although proponents of this bill, S. 652, note that it does 
explicitly deregulate all cable services immediately, the bill provides 
cable operators an opportunity to raise rates back to about the level 
they would have been if we had not passed the Cable Act of 1992.
  Let me briefly explain. In this bill, S. 652 before us now, the 
standard for determining that a cable company is charging unreasonable 
rates for program services would be a comparison to the national 
average of cable system rates as of June 1, 1995, a few weeks ago. A 
cable company would have to charge rates that are substantially above 
the national average on June 1, 1995, before that company could be 
regulated.
  And this deals with what we all consider to be cable. The bill, S. 
652, leaves basic services regulated. There are three tiers of cable: 
basic, which is what you can get without cable over antenna, in most 
cases, the networks and maybe public television; the middle tier, what 
most people think of as cable--CNN, ESPN, Nickelodeon, whatever; and 
the third tier is channels unregulated.
  Today, the basic tier and middle tier are regulated. Premium channels 
are not. Under this legislation, the basic tier remains regulated, the 
middle tier is unregulated, unless the rates are found to be 
substantially above the national average. The national average will be 
recalculated every 2 years.
  So, there again, we have an incentive for the industry to increase 
its prices. Ironically, it is as if instead of a reason to reduce 
prices or hold prices, we are giving in this legislation the industry 
an incentive to increase prices, because the standard will be changed 
every 2 years. With almost 40 percent of the market dominated by two 
cable companies, the national average will be controlled by a small 
number of companies.
  For example, an average package of cable programming around this 
country now costs about $15 or $20 a month. Every cable consumer whose 
company currently charges less than this average will have a green 
light to increase their rates to $20 to $25 per month without being 
substantially above the national average, which is the standard in this 
legislation.
  In other words, consumers are likely to face at least a $5 a month 
rate increase for stations like ESPN, CNN, Discovery, Lifetime, USA 
and, in many cases, C-SPAN. Rate increases in this range would drive 
cable prices back up to the levels experienced from 1986 to 1992 when 
there was no consumer protection.
  What we are presenting here is an opportunity for the cable operators 
to go back to their old ways. What I am saying is you do not need to do 
this to keep them healthy, as the numbers I have shown indicated. Even 
if the Congress completely deregulated cable again, it--well, basically 
this amounts to complete deregulation.
  In my amendment, No. 1298, the national average would be calculated 
not by what exists on June 1, 1995, or on what exists 2 years from now 
after raising the rates. It will be calculated by including markets 
that currently have effective competition and those who become 
competitive over time, allowing the markets, not regulators to set 
prices.
  That is the point of this amendment, and that is why I think this 
amendment is so consistent with the overall thrust of this bill. It is 
procompetitive. It says let the markets, not regulators, set reasonable 
prices. Small cable companies, because they have their own economic 
pressures that control their rates, in my opinion, would be exempt from 
regulation under this amendment.
  I want to emphasize that the negotiations that resulted in some 
changes in the calculation of the national average, while moving in the 
direction of putting some pressure on these monopolies and protecting 
consumers, in my opinion, just do not go far enough. The national 
average would be calculated using the rates from June 1 of this year. 
Using a fixed date when regulation is in effect is supposed to result 
in a fair value for the national average for cable rates. But that 
date, June 1, occurs after some significant deregulation for certain 
cable systems under the FCC procedure. Using that date will increase 
the national average, therefore, leading to higher cable rates. The 
method of calculation spelled out in the bill, which is complicated, 
uses a per-channel approach, cost per channel. So let me give you an 
example based on numbers from a compilation of cost per channel rates 
in an article that appeared in Consumers Research.
  In 1990, monopoly cable systems were charging 50 percent more than 
cable companies in competitive markets on a cost per channel basis. 
Using the complex calculation described in the current bill, as 
modified by the managers amendment, there would be a significant 
increase in the cost per channel over the rates charged in competitive 
markets.
  So taking inflation into account, the average cost per channel would 
be 20 percent higher in the current bill than by simply comparing rates 
to competitive markets, as occurs in my amendment.
  So to summarize, the current bill defines a very complex method of 
calculation dreamed up by regulators. Not only is the system illogical, 
it is also unfair. And though the system of calculation may be complex, 
the result, in my opinion, will be plain and simple, and that is that 
the consumer of cable services--the millions out there across America, 
who depend on cable for their entertainment, for their information, in 
many cases today, even for their shopping--are going to be the ones to 
lose their rates. Their rates will go up. My amendment uses markets to 
set prices, not arcane formulas devised by regulators.
  In conclusion, I want to make sure we do not make the same mistake I 
believe Congress made in 1984 and that Congress recognized it made in 
1992. Consumers paid a hefty price for premature deregulation of cable 
over the last decade. I say ``premature'' because competition 
effectively exists in very few cable markets. I do not want to redo 
that mistake.
  This amendment will prevent excessive deregulation before there is 
competition, while maintaining the spirit of the underlying bill. I am 
in favor of competition. I hope it comes quickly. I hope there are more 
than one-half of 1 percent who get a competitive cable service from the 
direct broadcast satellites. I hope that the telephone companies move 
as rapidly as some suggest they will--though, I doubt it--into 
providing multi-channel services and competition with existing cable 
systems.
  Let competition set rates and protect consumers, not regulators. That 
is what my amendment is all about.
  I thank the Chair for the courtesy and the opportunity to address my 
colleagues on behalf of this amendment.
  I urge support for it, and I yield the floor.
  Mr. ROCKEFELLER. Just for the sake of the hour of 7:30, I simply ask 
unanimous consent, Mr. President, for 10 seconds to call up amendment 
No. 1292.
  The PRESIDING OFFICER. Is there objection? In the absence of 
objection, the Senator from West Virginia is recognized.
  Mr. ROCKEFELLER. I thank the Senator.


                           Amendment No. 1292

  (Purpose: To eliminate any possible jurisdictional question arising 
  from universal service references in the health care providers for 
                         rural areas provision)

  The PRESIDING OFFICER. Does the Senator call up an amendment? Would 
you repeat the number again, please?
  Mr. ROCKEFELLER. Yes. 1292.
  The PRESIDING OFFICER. The clerk will report.
  The bill clerk read as follows:

       The Senator from West Virginia [Mr. Rockefeller] proposes 
     an amendment numbered 1292.

  Mr. ROCKEFELLER. 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:

[[Page S8367]]

       In section 264 of the Communications Act of 1934, as added 
     by section 310 of the bill beginning on page 132, strike 
     subsections (a) and (b) and insert the following:
       ``(a) In General.--
       ``(1) Health care providers for rural areas.--A 
     telecommunications carrier shall, upon receiving a bona fide 
     request, provide telecommunications services which are 
     necessary for the provision of health care services, 
     including instruction relating to such services, at rates 
     that are reasonably comparable to rates charged for similar 
     services in urban areas to any public or nonprofit health 
     care provider that serves persons who reside in rural areas. 
     A telecommunications carrier providing service pursuant to 
     this paragraph shall be entitled to have an amount equal to 
     the difference, if any, between the price for services 
     provided to health care providers for rural areas and the 
     price for services provided to other customers in comparable 
     urban areas treated as a service obligation as a part of its 
     obligation to participate in the mechanisms to preserve and 
     advance universal service under section 253(c).
       ``(2) Educational providers and libraries.--All 
     telecommunications carriers serving a geographic area shall, 
     upon a bona fide request, provide to elementary schools, 
     secondary schools, and libraries universal services (as 
     defined in section 253) that permit such schools and 
     libraries to provide or receive telecommunications services 
     for educational purposes at rates less than the amounts 
     charged for similar services to other parties. The discount 
     shall be an amount that the Commission and the States 
     determine is appropriate and necessary to ensure affordable 
     access to and use of such telecommunications by such 
     entities. A telecommunications carrier providing service 
     pursuant to this paragraph shall be entitled to have an 
     amount equal to the amount of the discount treated as a 
     service obligation as part of its obligation to participate 
     in the mechanisms to preserve and advance universal service 
     under section 253(c).
       ``(b) Universal Service Mechanisms.--The Commission shall 
     include consideration of the universal service provided to 
     public institutional telecommunications users in any 
     universal service mechanism it may establish under section 
     253.

  Mr. ROCKEFELLER. I thank the Chair.
  The PRESIDING OFFICER. Without objection, the amendment will be set 
aside.
  Mr. STEVENS. Mr. President, I want to comply with the majority 
leader.
  I would like to call up my amendments 1301, 1302, 1304, already 
covered, and 1300. And I will offer a second-degree amendment to the 
1300.
  Thank you very much.
  The PRESIDING OFFICER. Is there objection?
  Mr. STEVENS. I move to lay this aside in order to continue with the 
consideration of Senator Lieberman's presentation.
  The PRESIDING OFFICER. Will the Senator suspend for just a moment?
  Was the Senator intending to call up amendment No. 1300?
  Mr. STEVENS. Yes.


                           Amendment No. 1300

  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Alaska [Mr. Stevens] offers an amendment 
     numbered 1300.

  Mr. STEVENS. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:
       On page 36, between lines 23 and 24, insert the following 
     new subsection and renumber the remaining subsections 
     accordingly:
       (a) Findings.--The Congress finds that--
       (1) the existing system of universal service has evolved 
     since 1930 through an ongoing dialogue between industry, 
     various Federal-State Joint Boards, the Commission, and the 
     courts;
       (2) this system has been predicated on rates established by 
     the Commission and the States that require implicit cost 
     shifting by monopoly providers of telephone exchange service 
     through both local rates and access charges to interexchange 
     carriers;
       (3) the advent of competition for the provision of 
     telephone exchange service has led to industry requests that 
     the existing system be modified to make support for universal 
     service explicit and to require that all telecommunications 
     carriers participate in the modified system on a 
     competitively neutral basis; and
       (4) modification of the existing system is necessary to 
     promote competition in the provision of telecommunications 
     services and to allow competition and new technologies to 
     reduce the need for universal service support mechanisms.
       On page 38, beginning on line 15, strike all through page 
     43, line 2, and insert the following:

     ``SEC. 253. UNIVERSAL SERVICE.

       ``(a) Universal Service Principles.--The Joint Board and 
     the Commission shall base policies for the preservation and 
     advancement of universal service on the following principles:
       ``(1) Quality services are to be provided at just, 
     reasonable, and affordable rates.
       ``(2) Access to advanced telecommunications and information 
     services should be provided in all regions of the Nation.
       ``(3) Consumers in rural and high cost areas should have 
     access to telecommunications and information services, 
     including interexchange services, that are reasonably 
     comparable to those services provided in urban areas.
       ``(4) Consumers in rural and high cost areas should have 
     access to telecommunications and information services at 
     rates that are reasonably comparable to rates charged for 
     similar services in urban areas.
       ``(5) Consumers in rural and high cost areas should have 
     access to the benefits of advanced telecommunications and 
     information services for health care, education, economic 
     development, and other public purposes.
       ``(6) There should be a coordinated Federal-State universal 
     service system to preserve and advance universal
      service using specific and predictable Federal and State 
     mechanisms administered by an independent, non-
     governmental entity or entities.
       ``(7) Elementary and secondary schools and classrooms 
     should have access to advanced telecommunications services.
       ``(b) Definition.--
       ``(1) In general.--Universal service is an evolving level 
     of intrastate and interstate telecommunications services that 
     the Commission, based on recommendations from the public, 
     Congress, and the Federal-State Joint Board periodically 
     convened under section 103 of the Telecommunications Act of 
     1995, and taking into account advances in telecommunications 
     and information technologies and services, determines--
       ``(A) should be provided at just, reasonable, and 
     affordable rates to all Americans, including those in rural 
     and high cost areas and those with disabilities;
       ``(B) are essential in order for Americans to participate 
     effectively in the economic, academic, medical, and 
     democratic processes of the Nation; and
       ``(C) are, through the operation of market choices, 
     subscribed to by a substantial majority of residential 
     customers.
       ``(2) Different definition for certain purposes.--The 
     Commission may establish a different definition of universal 
     service for schools, libraries, and health care providers for 
     the purposes of section 264.
       ``(c) All Telecommunications Carriers Must Participate.--
     Every telecommunications carrier engaged in intrastate, 
     interstate, or foreign communication shall participate, on an 
     equitable and nondiscriminatory basis, in the specific and 
     predictable mechanisms established by the Commission and the 
     States to preserve and advance universal service. Such 
     participation shall be in the manner determined by the 
     Commission and the States to be reasonably necessary to 
     preserve and advance universal service. Any other provider of 
     telecommunications may be required to participate in the 
     preservation and advancement of universal service, if the 
     public interest so requires.
       ``(d) State Authority.--A State may adopt regulations to 
     carry out its responsibilities under this section, or to 
     provide for additional definitions, mechanisms, and standards 
     to reserve and advance universal service within that State, 
     to the extent that such regulations do not conflict with the 
     Commission's rules to implement this section. A State may 
     only enforce additional definitions or standards to the 
     extent that it adopts additional specific and predictable 
     mechanisms to support such definitions or standards.
       ``(e) Eligibility For Universal Service Support.--To the 
     extent necessary to provide for specific and predictable 
     mechanisms to achieve the purposes of this section, the
      Commission shall modify its existing rules for the 
     preservation and advancement of universal service. Only 
     essential telecommunications carriers designated under 
     section 214(d) shall be eligible to receive support for 
     the provision of universal service. Such support, if any, 
     shall accurately reflect what is necessary to preserve and 
     advance universal service in accordance with this section 
     and the other requirements of this Act.
       ``(f) Universal Service Support.--The Commission and the 
     States shall have as their goal the need to make any support 
     for universal service explicit, and to target that support to 
     those essential telecommunications carriers that serve areas 
     for which such support is necessary. The specific and 
     predictable mechanisms adopted by the Commission and the 
     States shall ensure that essential telecommunications 
     carriers are able to provide universal service at just, 
     reasonable, and affordable rates. A carrier that receives 
     universal service support shall use that support only for the 
     provision, maintenance, and upgrading of facilities and 
     services for which the support is intended.
       ``(g) Interexchange Services.--The rates charged by any 
     provider of interexchange telecommunications service to 
     customers in rural and high cost areas shall be no higher 
     than those charged by such provider to its customers in urban 
     areas.
       ``(h) Subsidy of Competitive Services Prohibited.--A 
     telecommunications carrier may not use services that are not 
     competitive to subsidize competitive services. The 
     Commission, with respect to interstate services, and the 
     States, with respect to intrastate services, shall establish 
     any necessary cost allocation rules, accounting safeguards, 
     and guidelines to ensure that services included in the 
     definition of universal service [[Page S8368]] bear no more 
     than a reasonable share of the joint and common costs of 
     facilities used to provide those services.
       ``(i) Congressional Notification Required.--
       ``(1) In general.--The Commission may not take action to 
     require participation by telecommunications carriers or other 
     providers of telecommunications under subsection (c), or to 
     modify its rules to increase support for the preservation and 
     advancement of universal service, until--
       ``(A) 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 
     participation required, or the increase of support proposed, 
     as appropriate; and
       ``(B) a period of 120 days has elapsed since the date the 
     report required under paragraph (1) was submitted.
       ``(2) Not applicable to reductions.--This subsection shall 
     not apply to any action taken to reduce costs to carriers or 
     consumers.
       ``(j) Effect on Commission's Authority.--Nothing in this 
     section shall be construed to expand or limit the authority 
     of the Commission to preserve and advance universal service 
     under this Act. Further, nothing in this section shall be 
     construed to require or prohibit the adoption of any specific 
     type of mechanism for the preservation and advancement of 
     universal service.
       ``(k) Effective Date.--This section takes effect on the 
     date of enactment of the Telecommunications Act of 1995, 
     except for subsections (c), (d), (e), (f), and (i) which take 
     effect one year after the date of enactment of that Act.''.
       On page 43, beginning with ``receive'' on line 25, through 
     ``253.'' on page 44, line 1, is deemed to read ``receive 
     universal service support under section 253.''.
       In section 264 of the Communications Act of 1934, as added 
     by section 310 of the bill beginning on page 132, strike 
     subsections (a) and (b) and insert the following:
       ``(a) In General.--
       ``(1) Health care providers for rural areas.--A 
     telecommunications carrier shall, upon receiving a bona fide 
     request, provide telecommunications services which are 
     necessary for the provision of health services, including 
     instruction relating to such services, at rates that are 
     reasonably comparable to rates charged for similar services 
     in urban areas to any public or nonprofit health care 
     provider that serves persons who reside in rural areas. A 
     telecommunications carrier providing service pursuant to this 
     paragraph shall be entitled to have an amount equal to the 
     difference, if any, between the price for services provided 
     to health care providers for rural areas and the price for 
     similar services provided to other customers in comparable 
     urban areas treated as a service obligation as a part of its 
     obligation to participate in the mechanisms to preserve and 
     advance universal service under section 253(c).
       ``(2) Educational providers and libraries.--All 
     telecommunications carriers serving a geographic area shall, 
     upon a bona fide request, provide to elementary schools, 
     secondary schools, and libraries universal services (as 
     defined in section 253) that permit such schools and 
     libraries to provide or receive telecommunications services 
     for educational purposes at rates less than the amounts 
     charged for similar services to other parties. The discount 
     shall be an amount that the Commission and the States 
     determine is appropriate and necessary to ensure affordable 
     access to and use of such telecommunications by such 
     entities. A telecommunications carrier providing service 
     pursuant to this paragraph shall be entitled to have an 
     amount equal to the amount of the discount treated as a 
     service obligation as part of its obligation to participate 
     in the mechanisms to preserve and advance universal service 
     under section 253(c).
       ``(b) Universal Service Mechanisms.--The Commission shall 
     include consideration of the universal service provided to 
     public institutional telecommunications users in any 
     universal service mechanism it may establish under section 
     253.
  Mr. STEVENS. Mr. President, parliamentary inquiry: My amendments 
1301, 1302, and 1304 are covered by the unanimous consent agreement. Do 
I have to call them up at this time?
  The PRESIDING OFFICER. The Senator needs to call them up at this 
time, and they need to be reported.
  Mr. STEVENS. I ask that they be reported. I ask unanimous consent 
that we may proceed in this manner.


                  Amendments Nos. 1301, 1302, and 1304

  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Alaska [Mr. STEVENS] proposes amendments 
     numbered 1301, 1302, and 1304.

  Mr. STEVENS. Mr. President, I ask unanimous consent that reading of 
the amendments be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendments are as follows:
                           Amendment No. 1301

(Purpose: To modify the definition of LATA as it applies to commercial 
                            mobile services)

       At the appropriate place insert the following:
       In section 3(tt) of the Communications Act of 1934, as 
     added by section 8(b) of the bill on page 14, strike 
     ``services.'' and insert the following: ``Provided, however, 
     that in the case of a Bill operating company affiliate, such 
     geographic area shall be no smaller than the LATA area for 
     such affiliate on the date of enactment of the 
     Telecommunications Act of 1995.''
                                                                    ____


                           Amendment No. 1302

   (Purpose: To provide interconnection rules for Commercial Mobile 
                           Service Providers)

       On page 28 before line 6 inset the following:
       ``(m) Commercial Mobile Service Providers.--The 
     requirements of this section shall not apply to commercial 
     mobile services provided by a wireline local exchange carrier 
     unless the Commission determines under subsection (a)(3) that 
     such carrier has market power in the provision of commercial 
     mobile service.''
                                                                    ____


                           Amendment No. 1304
  (Purpose: To ensure that resale of local services and functions is 
      offered at an appropriate price for providing such services)

       In subsection (d) of the section captioned ``SPECTRUM 
     AUCTIONS'' added to the bill by amendment, strike ``three 
     frequency bands (225-400 megahertz, 3625-3650 megahertz,'' 
     and insert ``two frequency bands (3625-3650 megahertz''.

  Mr. STEVENS. All of my amendments will now be called up later?
  The PRESIDING OFFICER. The four amendments are now pending.
  Mr. STEVENS. I ask unanimous consent that they be set aside.
  The PRESIDING OFFICER. Without objection, it is so ordered. The 
amendments are set aside.
  Will the Senator indicate to which amendment he intended to offer a 
second-degree amendment?
  Mr. STEVENS. I intend to call up an amendment to amendment numbered 
1300, and that has been filed.
  The PRESIDING OFFICER. Thank you. Under the unanimous consent order, 
amendments are to be called up prior to 7:30. It may be that there will 
be Members of the Senate who will come forward.
  Mr. INOUYE. Mr. President, I thank the Chair.


                           Amendment No. 1280

   (Purpose: To encourage steps to prevent the access by children to 
obscene and indecent material through the Internet and other electronic 
                         information networks)

  Mr. INOUYE. On behalf of the Senator from Virginia, [Mr. Robb], I 
call up Amendment No. 1280 and ask for its immediate consideration.
  The PRESIDING OFFICER. Without objection, the clerk will report.
  The assistant legislative clerk read as follows.

       The Senator from Hawaii [Mr. Inouye], for Mr. Robb, 
     proposes an amendment numbered 1280.

  Mr. INOUYE. 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 146, below line 14, add the following:

     SEC. 409. RESTRICTIONS ON ACCESS BY CHILDREN TO OBSCENE AND 
                   INDECENT MATERIAL ON ELECTRONIC INFORMATION 
                   NETWORKS OPEN TO THE PUBLIC.

       . . . In order--
       (1) to encourage the voluntary use of tags in the names, 
     addresses, or text of electronic files containing obscene, 
     indecent, or mature text or graphics that are made available 
     to the public through public information networks in order to 
     ensure the ready identification of files containing such text 
     or graphics;
       (2) to encourage developers of computer software that 
     provide access to or interface with a public information 
     network to develop software that permits users of such 
     software to block access to or interface with text or 
     graphics identified by such tags; and
       (3) to encourage the telecommunications industry and the 
     providers and users of public information networks to take 
     practical actions (including the establishment of a board 
     consisting of appropriate members of such industry, 
     providers, and users) to develop a highly effective means of 
     preventing the access of children through public information 
     networks to electronic files that contain such text or 
     graphics,

     The Secretary of Commerce shall take appropriate steps to 
     make information on the tags established and utilized in 
     voluntary compliance with subsection (a) available to the 
     public through public information networks.
       (b) Report.--Not later than 1 year after the date of the 
     enactment of this Act, the Comptroller General shall submit 
     the Congress a report on the tags established and utilized in 
     voluntary compliance with this section. The report shall--
       (1) describe the tags so established and utilized;
       (2) assess the effectiveness of such tags in preventing the 
     access of children to electronic files that contain obscene, 
     indecent, [[Page S8369]] or mature text or graphics through 
     public information networks; and
       (3) provide recommendations for additional means of 
     preventing such access.
       (d) Definitions.--In this section:
       (1) The term ``public information network'' means the 
     Internet, electronic bulletin boards, and other electronic 
     information networks that are open to the public.
       (2) The term ``tag'' means a part or segment of the name, 
     address, or text of an electronic file.

  Mr. INOUYE. Mr. President, I ask unanimous consent that this 
amendment be in order to be taken up tomorrow.
  The PRESIDING OFFICER. Without objection, it will be set aside.
  Mr. INOUYE. I thank the Chair.
  Mr. STEVENS. Mr. President, will the Senator yield?
  The PRESIDING OFFICER. The Senator from Alaska.


                           Amendment No. 1303

  (Purpose: To ensure that resale of local services and functions is 
offered at an appropriate price for providing such services)
  Mr. STEVENS. Mr. President, in order to comply with the previous 
order, I would call up my amendment 1303 and ask unanimous consent to 
call it up at this time to qualify.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Alaska [Mr. Stevens], for himself and Mr. 
     Inouye, proposes an amendment numbered 1303.

  Mr. STEVENS. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:
       Page 86, line 25, after ``basis'' insert a comma and 
     ``reflecting the actual cost of providing those services or 
     functions to another carrier,''

  Mr. STEVENS. Mr. President, I might state that it is not my present 
intention to call this up. We are working on this, and we may not call 
this up. I just want to qualify it for the purposes of the Record.
  The PRESIDING OFFICER. Without objection, the amendment will be set 
aside.
  Mr. INOUYE. Mr. President,
   the amendment Senator Stevens and I are introducing provides an 
essential mechanism for achieving a central goal of this bill--to open 
the local exchange to competition for the first time. Today's highly 
competitive long distance market has its roots in a 1976 order by the 
Federal Communications Commission that ushered in the unrestricted 
resale of AT&T's telecommunications services by its competitors. The 
FCC order allowed competitors to purchase AT&T's excess long distance 
capacity in bulk, at non-discriminatory and often deeply discounted 
rates, and then resell those services to their own customers at 
competitive retail rates. Three companies--Sprint, MCI, and LDDS--
exploited this resale capability to grow and eventually build their own 
state-of-the-art national networks. Those networks now allow 
nationwide, long distance competition with AT&T. What's more, excess 
capacity in the three new national networks has given birth to an 
entire industry of more than 500 resellers around the country. The 
benefits of this new competition among carriers and resellers have been 
enormous--rapid technological innovations, greater consumer choice, and 
lower consumer prices.

  If our Nation's experience with competitive long distance service is 
any model--and I am convinced it is our best model--resale will be the 
essential first step in developing competitive local exchange markets. 
Given the enormous cost of building sophisticated communications 
networks throughout the country, local exchange competition will never 
have a chance to develop if competitors have to start by building 
networks that are comparable to the vast and well-established Bell 
networks. For this reason, affordable resale opportunities are the key 
to stimulating local competition. But these resale opportunities must 
be based on economically reasonable prices that reflect the actual cost 
of providing those services and functions to another carrier and not 
monopoly mark-up prices. The amendment we are offering today will 
ensure that resale opportunities in the local exchange will in fact 
stimulate the development local competition.
  Make no mistake--we want to be sure that the Bell companies are 
compensated for the actual cost of providing these facilities, 
services, and functions to competing carriers. We are not asking them 
to subsidize their competitors. But neither should these competitors be 
asked to subsidize the Bell companies. Therefore, resale prices must 
reflect the very substantial savings that will be realized by the Bell 
companies by selling their facilities on a wholesale, rather than a 
resale, basis. As a wholesaler, a Bell company is relieved of the 
obligation to provide a wide variety of services to the retail 
customer, such as billing and maintenance, that add to the cost of 
service. Similarly, the costs associated with marketing, advertising, 
and collecting on receivables are eliminated when the Bell company acts 
as a wholesaler. By ensuring that these cost-savings are accurately 
reflected in the resale prices charged to competing local carriers, we 
can guarantee a viable resale industry that will serve as an early 
stimulus for local competition.
  The amendment also leaves undisturbed pricing structuring that 
benefit residential consumers of local exchange service. As the Bell 
companies have told us, to keep residential prices affordable, they 
sometimes sell these services below their actual costs and recover the 
shortfall, where it occurs, by pricing other services above their 
costs, thereby indirectly subsidizing their residential retail rates. 
The amendment we offer today will not affect those subsidies, which 
will be counted towards the recovery of costs in setting resale prices.
  We believe the amendment properly balances the interests here in 
permitting the Bell companies to recover their costs and indeed to make 
a reasonable profit while assuring that a viable resale business can 
jump-start local competition. We simply cannot expect competitors to 
build out their own networks before they can provide full, unrestricted 
competition to current local exchange service providers. Nor can we 
expect them to enter the market if the wholesale rates offer them no 
margins for profit, such as in the Rochester experiment. The creation 
of full-scale, vigorous competition in the market for local exchange 
services is critical if our Nation's telecommunications industry is to 
provide a wide array of the best technology at low costs to consumers. 
Resale is a proven policy for achieving that competition. I urge my 
colleagues to adopt this amendment.
  Mr. STEVENS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Alaska.
  Mr. STEVENS. What is the pending business?
  The PRESIDING OFFICER. At this point, all the amendments offered have 
been set aside.


                    Amendments Nos. 1301, 1302, 1304

  Mr. STEVENS. Mr. President, is it in order to call up my three 
amendments, 1301, 1302 and 1304?
  The PRESIDING OFFICER. It is in order.
  Mr. STEVENS. I yield myself 5 minutes on the amendments, and I will 
make a simple statement on each one.
  Amendment No. 1301 is a technical clarification of the definition of 
LATA--Local Access and Transport Area--in the bill. This amendment 
clarifies that a Bell company cellular operation will continue to have 
the same size LATA as they do today.
  Mr. President, amendment No. 1302 is a technical clarification of the 
interconnection requirements of section 251, to ensure that the 
commercial mobile service portion of a local exchange carrier's network 
is not subject to the requirements of section 251, unless that carrier 
has market power in the provision of commercial mobile services.
  Mr. President, amendment No. 1304 is a technical amendment to my 
earlier amendment on spectrum auctions that the Senate adopted this 
past week. The amendment deletes the requirement that the Secretary of 
Commerce submit a timetable for the reallocation of the 225 to 400 
megahertz band of spectrum.
  I have had several discussions on this matter with the Department of 
Defense and the National Telecommunications and Information Agency. 
Both have recommended that this frequency continue to be reserved for 
military and public safety uses.
  I might point out that my amendment did not mandate the transfer of 
[[Page S8370]] that spectrum. It merely made the spectrum subject to 
the requirement that the Secretary provide a schedule for transfer. The 
Secretary could have indicated no intent to transfer. But since there 
was a problem, I am going to ask the adoption of this amendment.
  I am informed that amendment No. 1304 has no budgetary impact on the 
statement I have previously made to the Senate concerning the estimate 
of revenues pursuant to the CBO estimate process for my spectrum 
auction amendment that was adopted last week.
  If there are any questions from any Member about these three 
technical amendments, I would be pleased to respond at this time.
  I reserve the remainder of my time.
  Mr. HOLLINGS. The amendments have been cleared on this side.
  Mr. STEVENS. Mr. President, I am pleased to have the statement of the 
Senator from South Carolina that these three amendments are cleared on 
his side. I ask my friend, the chairman of the Commerce Committee, if 
he is prepared to similarly support these amendments?
  Mr. PRESSLER. Yes, we are prepared to do that. We thank the Senator 
for taking care of them in such a good manner.
  Mr. STEVENS. I yield the remainder of my time.
  Who controls the other time?
  The PRESIDING OFFICER. The Senator from South Dakota.
  Mr. PRESSLER. I propose that, if we can, we adopt the amendments.
  Mr. STEVENS. I ask unanimous consent that the amendments be 
considered, en bloc, and adopted, en bloc.
  The PRESIDING OFFICER. Without objection, the amendments are agreed 
to, en bloc.
  So the amendments (Nos. 1301, 1302, and 1304) were agreed to, en 
bloc.
  Mr. PRESSLER. Mr. President, I move to reconsider the vote.
  Mr. STEVENS. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


                    Amendment No. 1300, As Modified

  Mr. STEVENS. I send a modification to amendment No. 1300 to the desk.
  The PRESIDING OFFICER. The Senator has that right.
  The amendment is so modified.
  The amendment (No. 1300), as modified, is as follows:

       On page 36, between lines 23 and 24, insert the following 
     new subsection and renumber the remaining subsections 
     accordingly:
       (a) Findings.--The Congress finds that--
       (1) the existing system of universal service has evolved 
     since 1930 through an ongoing dialogue between industry, 
     various Federal-State Joint Boards, the Commission, and the 
     courts;
       (2) this system has been predicated on rates established by 
     the Commission and the States that require implicit cost 
     shifting by monopoly providers of telephone exchange service 
     through both local rates and access charges to interexchange 
     carriers;
       (3) the advent of competition for the provision of 
     telephone exchange service has led to industry requests that 
     the existing system be modified to make support for universal 
     service explicit and to require that all telecommunications 
     carriers participate in the modified system on a 
     competitively neutral basis; and
       (4) modification of the existing system is necessary to 
     promote competition in the provision of telecommunications 
     services and to allow competition and new technologies to 
     reduce the need for universal service support mechanisms.
       On page 38, beginning on line 15, strike all through page 
     43, line 2, and insert the following:

     ``SEC. 253. UNIVERSAL SERVICE.

       ``(a) Universal Service Principles.--The Joint Board and 
     the Commission shall base policies for the preservation and 
     advancement of universal service on the following principles:
       ``(1) Quality services are to be provided at just, 
     reasonable, and affordable rates.
       ``(2) Access to advanced telecommunications and information 
     services should be provided in all regions of the Nation.
       ``(3) Consumers in rural and high cost areas should have 
     access to telecommunications and information services, 
     including interexchange services, that are reasonably 
     comparable to those services provided in urban areas.
       ``(4) Consumers in rural and high cost areas should have 
     access to telecommunications and information services at 
     rates that are reasonably comparable to rates charged for 
     similar services in urban areas.
       ``(5) Consumers in rural and high cost areas should have 
     access to the benefits of advanced telecommunications and 
     information services for health care, education, economic 
     development, and other public purposes.
       ``(6) There should be a coordinated Federal-State universal 
     service system to preserve and advance universal service 
     using specific and predictable Federal and State mechanisms 
     administered by an independent, non-governmental entity or 
     entities.
       ``(7) Elementary and secondary schools and classrooms 
     should have access to advanced telecommunications services.
       ``(b) Definition.--
       ``(1) In general.--Universal service is an evolving level 
     of intrastate and interstate telecommunications services that 
     the Commission, based on recommendations from the public, 
     Congress, and the Federal-State Joint Board periodically 
     convened under section 103 of the Telecommunications Act of 
     1995, and taking into account advances in telecommunications 
     and information technologies and services, determines--
       ``(A) should be provided at just, reasonable, and 
     affordable rates to all Americans, including those in rural 
     and high cost areas and those with disabilities;
       ``(B) are essential in order for Americans to participate 
     effectively in the economic, academic, medical, and 
     democratic processes of the Nation; and
       ``(C) are, through the operation of market choices, 
     subscribed to by a substantial majority of residential 
     customers.
       ``(2) Different definition for certain purposes.--The 
     Commission may establish a different definition of universal
      service for schools, libraries, and health care providers 
     for the purposes of section 264.
       ``(c) All Telecommunications Carriers Must Participate.--
     Every telecommunications carrier engaged in intrastate, 
     interstate, or foreign communication shall participate, on an 
     equitable and nondiscriminatory basis, in the specific and 
     predictable mechanisms established by the Commission and the 
     States to preserve and advance universal service. Such 
     participation shall be in the manner determined by the 
     Commission and the States to be reasonably necessary to 
     preserve and advance universal service. Any other provider of 
     telecommunications may be required to participate in the 
     preservation and advancement of universal service, if the 
     public interest so requires.
       ``(d) State Authority.--A State may adopt regulations to 
     carry out its responsibilities under this section, or to 
     provide for additional definitions, mechanisms, and standards 
     to preserve and advance universal service within that State, 
     to the extent that such regulations do not conflict with the 
     Commission's rules to implement this section. A State may 
     only enforce additional definitions or standards to the 
     extent that it adopts additional specific and predictable 
     mechanisms to support such definitions or standards.
       ``(e) Eligibility For Universal Service Support.--To the 
     extent necessary to provide for specific and predictable 
     mechanisms to achieve the purposes of this section, the 
     Commission shall modify its existing rules for the 
     preservation and advancement of universal service. Only 
     essential telecommunications carriers designated under 
     section 214(d) shall be eligible to receive support for the 
     provision of universal service. Such support, if any, shall 
     accurately reflect what is necessary to preserve and advance 
     universal service in accordance with this section and the 
     other requirements of this Act.
       ``(f) Universal Service Support.--The Commission and the 
     States shall have as their goal the need to make any support 
     for universal service explicit, and to target that support to 
     those essential telecommunications carriers that serve areas 
     for which such support is necessary. The specific and 
     predictable mechanisms adopted by the Commission and the 
     States shall ensure that essential telecommunications 
     carriers are able to provide universal service at just, 
     reasonable, and affordable rates. A carrier that receives 
     universal service support shall use that support only for the 
     provision, maintenance, and upgrading of facilities and 
     services for which the support is intended.
       ``(g) Interexchange Services.--The rates charged by any 
     provider of interexchange telecommunications service to 
     customers in rural and high cost areas shall be no higher 
     than those charged by such provider to its customers in urban 
     areas.
       ``(h) Subsidy of Competitive Services Prohibited.--A 
     telecommunications carrier may not use services that are not 
     competitive to subsidize competitive services. The 
     Commission, with respect to interstate services, and the 
     States, with respect to intrastate services, shall establish 
     any necessary cost allocation rules, accounting safeguards, 
     and guidelines to ensure that services included in the 
     definition of universal service bear no more than a 
     reasonable share of the joint and common costs of facilities 
     used to provide those services.
       ``(i) Congressional Notification Required.--
       ``(1) In general.--The Commission may not take action to 
     require participation by telecommunications carriers or other 
     providers of telecommunications under subsection (c), or to 
     modify its rules to increase support for the preservation and 
     advancement of universal service, until--
       ``(A) 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 
     participation required, or the increase in support proposed, 
     as appropriate; and
       ``(B) a period of 120 days has elapsed since the date the 
     report required under paragraph (1) was 
     submitted. [[Page S8371]] 
       ``(2) Not applicable to * * * .-- * * *
       ``(j) Effect On Commission's Authority.--Nothing in this 
     section shall be construed to expand or limit the authority 
     of the Commission to preserve and advance universal service 
     under this Act. Further, nothing in this section shall be 
     construed to require or prohibit the adoption of any specific 
     type of mechanism for the preservation and advancement of 
     universal
       ``(k) Effective Date.--This section takes effect on the 
     date of enactment of the Telecommunications Act of 1995, 
     except for subsections (c), (d), (e), (f), and (i) which take 
     effect one year after the date of enactment of that Act.''.
       On page 43, beginning with ``receive'' on line 25, through 
     ``253.'' on page 44, line 1, is deemed to read ``receive 
     universal service support under section 253.''.
       In section 264 of the Communications Act of 1934, as added 
     by section 310 of the bill beginning on page 132, strike 
     subsections (a) and (b) and insert the following:
       ``(a) In General.--
       ``(1) Health care providers for rural areas.--A 
     telecommunications carrier shall, upon receiving a bona fide 
     request, provide telecommunications services which are 
     necessary for the provision of health care services, 
     including instruction relating to such services, at rates 
     that are reasonably comparable to rates charged for similar 
     services in urban areas to any public or nonprofit health 
     care provider that serves persons who reside in rural areas. 
     A telecommunications carrier providing service pursuant to 
     this paragraph shall be entitled to have an amount equal of 
     the difference, if any, between the price for services 
     provided to health care providers for rural areas and the 
     price for similar services provided to other customers in 
     comparable urban areas treated as a service obligation as a 
     part of its obligation to participate in the mechanisms to 
     preserve and advance universal service under section 253(e).
       ``(2) Educational providers and libraries.--All 
     telecommunications carriers serving a geographic area shall, 
     upon a bona fide request, provide to elementary schools, 
     secondary schools, and libraries universal services (as 
     defined in section 253) that permit such schools and 
     libraries to provide or receive telecommunications services 
     for educational purposes at rates less than the amounts 
     charged for similar services to other parties. The discount 
     shall be an amount that the Commission and the States 
     determine is appropriate and necessary to ensure affordable 
     access to and use of such telecommunications by such 
     entities. A telecommunications carrier providing service 
     pursuant to this paragraph shall be entitled to have an 
     amount equal to the amount of the discount treated as a 
     service obligation as part of its obligation to participation 
     in the mechanisms to preserve and advance universal service 
     under section 253(c).
       ``(b) Universal Service Mechanisms.--The Commission shall 
     include consideration of the universal service provided to 
     public institutional telecommunications users in any 
     universal service mechanism it may establish under section 
     253.

  I have a second-degree amendment which I filed to this amendment 
numbered 1300.
  I send that amendment to the desk and ask that my amendment numbered 
1300, be amended by that amendment in the second degree.
  The PRESIDING OFFICER. Is there objection to the modification?
  Mr. HOLLINGS. Reserving the right to object, Mr. President, what we 
are trying to do is see that amendment in the second degree. We do not 
have that.
  Mr. STEVENS. 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. PRESSLER. 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. 1280

  Mr. PRESSLER. Mr. President, I ask unanimous consent that the Senate 
now turn to the consideration of amendment 1280, that it be considered 
as read, adopted and the motion to reconsider be laid upon the table, 
all without intervening action or debate.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  So the amendment (No. 1280) was agreed to.
  Mr. PRESSLER. 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. STEVENS. 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. 1300

  Mr. STEVENS. Mr. President, I renew my request that amendment 1300 be 
amended by the second-degree amendment that is at the desk.
  What the second-degree amendment does is delete a provision that I 
added in the modification to clarify a concern that I thought had been 
expressed by the House. It was in order, and I ask to delete that one 
sentence in accordance with that amendment.
  The PRESIDING OFFICER. Without objection, the amendment is so 
modified.
  Mr. STEVENS. Mr. President, this amendment modifies the universal 
service provisions of the bill to address concerns that were raised by 
the House Ways and Means Committee.
  As we know, bills that concern the raising of revenues must originate 
in the House. We did not intend to raise revenues, and this bill does 
not do so, either before or after this amendment.
  The amendment has been cleared by both sides of the Senate, and the 
second-degree amendment has now made this amendment consistent with the 
position, as we understand it, that has been brought by the House 
Members who raised concerns about the original language in the bill 
concerning universal service.
  As amended, these universal service provisions more clearly address 
the goal of the bill, which is to target universal service support 
where it is needed.
  I will submit a statement later tomorrow, discussing in detail the 
House concerns. Again, I want to state we are doing our best to meet 
the concerns that have been expressed by the House Ways and Means 
Committee.
  There is no intention here to make this bill a revenue-raising 
measure, and it is not one. It merely intends to modify the existing 
universal service concept in telecommunications. As I pointed out 
before, the CBO has informed Members that the universal service concept 
in this bill will cost less than the current system. Therefore, it is 
not a revenue-raising measure.
  I do ask now that this amendment 1300 be adopted. I hope that my two 
friends, the managers of the bill, will agree with me that the 
amendment--which, incidentally, I assume will be printed in the Record 
before my remarks. Is that the case?
  The PRESIDING OFFICER. The Senator is correct.
  Mr. STEVENS. I point out to the Senate that the amendment makes 
specific findings of the Congress with regard to the universal service 
system that exists and has been developed through an ongoing dialog 
between industry, the various Federal-State joint boards, the FCC, and 
the courts.
  It is an ongoing system that has been predicated on rights 
established by the dialog. I believe that the findings we have now put 
in the bill clarify our intent with regard to the concept of continuing 
universal service through the use of essential telecommunications 
carriers.
  It is a modification of the existing concept, as I said, and it will 
save money for the system. I believe it will provide universal service 
in the future that will meet the expanding needs of the country, 
particularly the rural areas.
  Are my friends ready to accept the amendment numbered 1300, may I 
inquire of the distinguished Senator from South Carolina?
  Mr. HOLLINGS. Mr. President, No. 1300 has been cleared on this side.
  Mr. STEVENS. May I make a similar inquiry of the Senator from South 
Dakota? Is that amendment acceptable to the chairman of the committee?
  Mr. PRESSLER. That amendment is acceptable to the ranking member and 
I. I commend the Senator from Alaska for his efforts.
  Mr. STEVENS. Mr. President, I ask for the adoption of the amendment.
  The PRESIDING OFFICER. The question is on agreeing to the amendment.
  The amendment (No. 1300), as modified, was agreed to.
  Mr. STEVENS. I move to reconsider the vote.
  Mr. PRESSLER. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. STEVENS. I thank both the chairman and ranking member.
  I am pleased to see we were able to work this out. I hope it is 
worked out now between the Senate and the House, 
[[Page S8372]] particularly with regard to concerns raised by the House 
Ways and Means Committee members.
  Mr. BURNS. While the Senator from Alaska is on the floor, I want to 
express my appreciation for his work on this, as a supporter of 
universal service, which is the core of our telecommunications 
industry, and he has worked this out to the good, I think, of the 
industry. He has been a tireless worker in this. I appreciate his 
efforts, along with many who serve with him on the committee. We 
appreciate that very much.
  Mr. STEVENS. Mr. President, if the Senator will yield, I think due 
credit has to be given to the staff of the committee on both sides, of 
the majority and minority, and my able assistant, Earl Comstock, who 
has worked extensively and tirelessly on the subject. To us in rural 
America this is the core of this bill.
  Mr. BURNS. Mr. President, I would just want to make a few remarks 
with regard to the Lieberman amendment which the Senator spoke on just 
a little while ago.
  I want to set the record straight, because with this amendment we are 
going down the old road of reregulation. In fact, more regulation than 
was placed on the cable industry a couple of years ago.
  We saw the figures of the stock and the worth of these companies, and 
even though I want to pass along these figures, make no mistake, 
regulation is not too much of a friend to those entrepreneurial people 
who have built probably one of the greatest cable systems in the world.
  What we have done is regulated an industry, basically, that is not a 
necessity in the home. In other words, the homeowner, or whomever, has 
the freedom of not taking the service. There is still over-the-air free 
broadcast television that can be received almost everywhere in the 
United States. There may be some specific spots that do not receive 
free over-the-air television.
  Also, in my State, looking at the rates where I can remember when we 
only got the two local stations, and I think three stations from Salt 
Lake City, and maybe a public television station when cable first came 
to Billings, MT.
 That service cost about $5.50, I think, to $6, something like that. 
Today we receive between 40 or 45 channels for $21. When you figure the 
cost per channel, cable rates have not gone up any.

  And that was done at a time when there was no regulation in the cable 
industry. The explanation for the explosion in the jobs that were 
provided, the opportunity in programming, new ideas, new channels, 
exciting Discovery--all of those channels came to be under an era when 
there was no regulation.
  Since we passed the 1994 reregulation of cable, cable revenues have 
remained flat. In other words, around $23 billion in 1993; $23 billion 
in 1994.
  If you look at the cash flows on the reports of the major companies, 
companies like TCI--their cash flow, $60 billion; Time Warner Cable, 
$46 billion; Comcast, $30 billion; and Cox at $27.2 billion--those are 
flat from 1993 to 1994 and 1995.
  Stock values have dropped about 10.1 percent between September 1993 
and April 1995, while the S&P and NASDAQ indexes have risen 12.2 
percent and 14 percent respectively.
  According to A.C. Nielsen, subscriber growth rates have declined from 
3.14 percent in 1993 to 2.85 percent in 1994.
  It is very dangerous, when we start down this road of reregulating. 
Right now competition in the entertainment business and in the 
television business has never been better. And I ask my friend from 
Connecticut, why would anybody, even a telco, want to go into the cable 
business with a regulated environment where they could not recover 
their costs of investment? This is anticompetitive legislation, if I 
have ever seen it. In other words, it is, I would imagine, to those who 
are regulated, those who are already in the business--they would stay 
there. They are warm and comfortable in that cocoon. But whoever wants 
to go into the business--the investment and ability to recover under a 
regulatory environment is very, very difficult.
  So, if we want to promote competition, and that is the very heart and 
soul of this legislation, you create competition, you also create new 
technologies and new tools and force those technologies into the areas 
that need them so; and that technology gives them the tools for 
distance learning, telemedicine, and a host of services that we just 
would not see in States as remote as my home State of Montana.
  So, the argument just does not hold water. Additional regulation or 
additional rules in order to lift regulatory control is 
counterproductive, and that is what this amendment would be.
  I am sure we will have a lot of time tomorrow to make our statements 
on this. It all depends on what the agreement is. But this is a 
damaging amendment. It slows the growth in one of the most dynamic 
industries, the industry that has the potential for the most growth and 
the potential to really push new services out into America. Do you know 
what? They always talk about the glass highway, the information 
highway. If one wants to think a little bit, maybe the information 
highway is already there and it could have been built in an era where 
there was no regulation and it could be called cable.
  Think about that. Whenever we provide a competitive environment for 
both the telcos and personal communications, and also in 
telecommunications, and then in cable communications, we set the 
environment for a lot of competition, I imagine the big winner will be 
the consumers of this country and the services they receive and the 
price those services will be.
  Mr. President, I yield the floor and I suggest the absence of a 
quorum.
  The PRESIDING OFFICER (Mr. Inhofe). The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. PRESSLER. 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. PRESSLER. Mr. President, I want to identify myself with the 
remarks of the Senator from Montana. I think Senator Burns is very 
accurate on this cable thing.
  As reported by the Commerce Committee on March 30, this bill would 
maintain regulation of basic cable rates until there is effective 
competition; deregulate upper tiers of cable programming services only 
if they do not ``substantially exceed'' the ``national average'' for 
comparable programming service and redefine the effective competition 
standard to include a telephone company offering video services.
  On June 9, the Senate adopted, 77 to 8, a Dole-Daschle leadership 
amendment, of which I was also a cosponsor, which met the concerns of 
those who believe that, despite the safeguards already contained in S. 
652, it might lead to unreasonable rate increases by large cable 
operators. The Dole-Daschle amendment also deregulated small operators, 
a feature of the pending Lieberman amendment, which proposes to narrow 
the definition of effective competition and tie ``national average'' to 
systems that already face effective competition. As such, the Lieberman 
amendment is excessive and unwarranted.
  As modified by our amendment, S. 652 will now, first, establish a 
fixed date, June 1, 1995, for measuring the ``national average'' price 
for cable services and only allow adjustments every 2 years. This 
provision eliminates the possibility that large cable operators could 
collude to artificially inflate rates immediately following enactment 
of S. 652. The bill as amended, establishes a ``national average'' 
based on cable rates in effect prior to passage of S. 652, when rate 
regulation was in full force, and excludes rates charged by small cable 
operators in determining the ``national average'' rate for cable 
services.
  This provision addresses the concerns that deregulation of small 
system rates, which was included as part of the Dole-Daschle amendment 
to S. 652, would inflate the ``national average'' against which the 
rates of large cable companies would be measured. It specifies that 
``national average'' rates are to be calculated on a per-channel basis.
  This provision ensures that ``national average'' is standardized, and 
takes into account variations in the number of channels offered by 
different companies as part of their expanded program packages. It 
specifies that a market is effectively competitive only when an 
alternative multichannel video provider offers services ``comparable'' 
to cable television service.
   [[Page S8373]] This provision enables cable operators not to be 
prematurely deregulated under the effective competition provision if, 
for example, only a single channel of video programming is being 
delivered by telco, video, and dial tone providers in an operator's 
market.
  What the bill does: The basic tier, broadcast and PEG, remains 
regulated until, one, telco offers video programming, or, two, direct 
broadcast satellite, or any other competitor reaches 15 percent of the 
market penetration.
  I think that is very important because the basic tier remains 
regulated until the telco in the area has competition or until there is 
at least 15 percent of a direct broadcast satellite.
  The upper tiers of cable rates are subject to bad actor review when 
the price of program packages significantly exceeds the national 
average. I have been in some parts of the country where you see a cable 
rate that is much higher, sort out of the blue, and I think that under 
this legislation that could fall under the so-called bad actor 
provision of the legislation.
  The point we are making is that, as we move toward deregulation of 
these cable rates, there are safeguards built into this bill.
  I am very concerned that the Lieberman amendment would undo the 
carefully crafted compromise on cable deregulation that has been agreed 
to by Democrats and Republicans, and we have had several votes in 
committee and on the floor already. We have the leadership packet. This 
would tend to unravel all of that at this late moment.
  The fact of the matter is that rates continue to rise with 
regulation. Cable rates will continue to increase with regulations. 
Indeed, they have been increasing with regulations. The FCC rules allow 
rates to increase for inflation, added program costs, new equipment 
charges, and other factors.
  Actual and potential competition spurred by our bill will result in 
lower cable rates.
  I have said that, if we can pass this bill, we will have much lower 
cable rates than we would under a regulated system because we will have 
more providers, we will have direct broadcast satellite, we will have 
the video dial, and we will have the opportunity for utilities to come 
into the television market.
  We are really talking about, with this type of regulation, the 1950's 
and 1960's and 1970's when maybe you could conceivably say some of this 
was necessary when you just had one or two providers. But in the 1990's 
and on into the year 2000, we will have a broad range of competition. I 
hope that we can take advantage of that. It will result in lower cable 
rates.
  Regulation harms the cable industry. In 1994, for the first time 
ever, cable revenues remained flat--$23.021 billion in 1993, and $23 
billion again in 1994. Cash flows for major companies declined. TCI, 
$60 billion; Time Warner Cable, $46 billion; Comcast, $30.1 billion; 
Cox, $27.2 billion.
  Cable stock values dropped 10.1 percent between December 1993 and 
April 1995 while the S&P and NASDAQ indexes rose by 12.2 percent and 14 
percent, respectively. That is about a 20-percent spread.
  During the last year 16 major cable companies, representing 20 
percent of the industry, serving 12 million subscribers have sold or 
announced their intentions to exit the industry.
  Capital raised for public debt and equity offerings declined 81 
percent in 1994, $8.6 billion in 1993 to $1.6 billion in 1994.
  According to A.C. Nielsen, subscriber growth rates declined from 3.14 
percent in 1993 to 2.85 percent in 1994.
  Existing and potential competition: Direct broadcast satellite is the 
fastest growing consumer electronics product in history with 2,000 new 
subscribers a day projected to grow to 2.2 million subscribers by 
year's end and over 5 million by 2000.
  Due to program access, direct broadcast satellite offers every 
program service available on cable plus exclusive direct broadcast 
satellite programming, such as movies and sports; for example, 400 NBA 
games this season and 700 games next season.
  Cable also faces competition from 4 million C-band dishes.
  Wireless cable has 600,000 subscribers, expected to grow 158 percent 
in 2 years to 1.5 million and to 3.4 million by 2000. Bell Atlantic, 
NYNEX, and PacTel have recently invested in wireless cable.
  So the point is there are new services being offered. There is new 
competition coming forward.
  Telcos have numerous video programming trials all over the United 
States. Meanwhile the Clinton/Gore administration continues to fight in 
court to keep the cable-telco ban firmly in place.
  Cable deregulation is a prerequisite for competition in 
telecommunications.
  A central goal of this bill is to create a competitive market for 
telecommunications services.
  Cable television companies are the most likely competitors to local 
phone monopolies, but in order to develop advanced, competitive 
telecommunications infrastructures, cable companies must invest 
billions in new technologies.
  Federal regulation of television has restricted the cable industry's 
access to capital, has made investors concerned about future 
investments in the capable industry, and reduced the ability of cable 
companies to invest in technology and programming.
  Concerns about cable rate increases should be mitigated by cable's 
new competitive pressures from direct broadcast satellite services and 
from telco-delivered video programming.
  Deregulation of cable television services is a prerequisite to 
bringing competition to telecommunications and is essential to making 
the competitive model embodied in S. 652 viable.
  Cable systems pass over 96 percent of Americans homes with coaxial 
cables that carry up to 900 times as much information as the local 
phone company's twisted pair.
  Cable companies are leaders in the use of fiber optics and digital 
compression technology.
  Cable's high-capacity systems will ultimately provide virtually every 
type of communication service conceivable and allow consumers to choose 
between competing providers of advanced voice, video, and data 
services.
  Mr. President, I feel very strongly that we have reached a proper 
balance regarding cable in this bill, and to adopt the Lieberman 
amendment would undo that package that has been worked out.
  I also feel very strongly that the American public will benefit from 
what we are doing here. I mentioned earlier that I have received 500 
letters from the small business people at the White House Conference on 
Small Business who want to pass the Senate-passed bill and also urge 
President Clinton to endorse the Senate-passed bill.
  I think that we all want that procompetitive deregulatory 
environment. Everybody says that. But many of the folks out there are 
arguing to preserve regulation. I frequently see large companies using 
Government regulation to block out competition.
  I look upon this telecommunications area as a group of people in a 
room with a huge buffet of food stacked on the table. But they are all 
worried that somebody else is going to get an extra carrot. I think we 
are going to find there is plenty for all, and the consumers will 
benefit with lower telephone prices, lower cable prices, more services, 
more services for senior citizens, more services for farmers, and our 
small cities will be able to flourish.
  And it is my strongest feeling that we should continue, as we have 
done all day, to defeat these amendments tomorrow. We had a very good 
day today and yesterday in terms of holding this committee bill 
together.
  I see one of my colleagues is in the Chamber and wishes to speak. I 
am glad to have any speakers. We are trying to move forward. I thank 
you very much.
  I yield the floor.
  Mr. DASCHLE. Mr. President, this debate on S. 652 has clearly 
demonstrated the potential of emerging telecommunications technologies. 
It is truly exciting to contemplate what this legislation could mean 
for American society.
  A particularly intriguing new development in the telecommunications 
field is the creation of personal communications service [PCS]. These 
devices will revolutionize the way Americans talk, work, and play.
  While this new technology opens new vistas for personal 
communications services, its emergence also highlights the potential 
downside of entering untested areas. Specifically, concerns 
[[Page S8374]] have been raised about the potential side-effects of 
some new PCS technology on other devices such as hearing aids.
  Recently, the Government completed an auction that netted $7 billion 
for the right to provide advanced digital portable telephone service. 
It is my understanding that some of the companies that obtained these 
PCS licenses have considered utilizing a technology known as GSM--
global system for mobile communications. I am informed that people who 
wear hearing aids cannot operate GSM PCS devices, and some even report 
physical discomfort and pain if they are near other people using GSM 
technology.
  It should not be our intent to cause problems for the hearing 
impaired in promoting the personal communications services market. It 
is my view that the Federal Communications Commission [FCC] should 
carefully consider the impact new technologies have on existing ones, 
especially as they relate to public safety and potential signal 
interference problems. An FFC review is in keeping with the intent of 
S. 652, which includes criteria for accessibility and usability by 
people with disabilities for all providers and manufacturers of 
telecommunications services and equipment.
  Mr. HOLLINGS. Will the Senator yield?
  Mr. DASCHLE. I will be glad to yield to the honorable ranking member 
of the Commerce Committee.
  Mr. HOLLINGS. I thank the Senator for yielding and support his 
suggestion that the FCC investigate technologies that may cause 
problems for significant segments of our population before they are 
introduced into the U.S. market. Such review is prudent for consumers, 
and it will help all companies by answering questions of safety 
interference before money is spent deploying this technology here in 
the United States.
  Four million Americans wear hearing aids, and the Senator from South 
Dakota has raised an important issue. GSM has been introduced in other 
countries, and problems have been reported. It is reasonable that these 
problems be investigated before the growth of this technology 
effectively shuts out a large sector of our population.
  Mr. DASCHLE. I thank the Senator for his remarks, and would also like 
to commend his role in bringing telecommunications reform to the floor. 
His leadership and patience throughout this 3-year exercise that has 
spanned two Congresses is well known and widely appreciated.
  Mr. President, the public record indicates that if companies are 
allowed to introduce GSM in its presemt form, serious consequences 
could face individuals wearing hearing aids. I would urge the FCC to 
investigate the safety, interference and economic issues raised by this 
technology. I also would urge the appropriate congressional committees 
to consider scheduling hearings on this issue.
                      amendments no. 1256 and 1257

  Mr. HOLLINGS. I would direct a question to my colleague with regard 
to the Stevens amendment on expanded auction authority for the FCC, as 
amended by the Pressler amendment. These amendments will auction 
spectrum currently assigned to broadcast auxiliary licensees, and were 
adopted by voice vote Wednesday evening. This bill now conforms with 
the Budget Act. Specifically, I do not believe that it is the intention 
of the sponsors to impede the ability of local broadcasters to continue 
to deliver on-the-spot news and information.
  Mr. STEVENS. That is correct. Several concerns have been raised about 
auction of certain spectrum which we intend to address as this bill 
proceeds to conference with its companion bill in the House. In 
addition, some of these same concerns will be considered within the 
budget reconciliation bills later this summer. Therefore, we will 
continue to review these provisions to determine whether the newly-
assigned spectrum will adequately satisfy the needs of electronic news 
gathering, what, if any, interference problems will arise, and how the 
costs of such transfers should be borne.
  Mr. HOLLINGS. I thank my colleague for his comments.


                        monopoly telephone rates

  Mr. GLENN. Mr. President, I rise in support of Senator Kerrey's 
monopoly telephone rates amendment. This amendment offers critical 
protection for ratepayers from potential multibillion rate increases 
for telecommunications services during the transition to effective 
local competition.
  In mandating price flexibility and prohibiting rate-of-return 
regulation, section 301 of the bill also prohibits State and Federal 
regulators from considering earnings when determining whether prices 
for noncompetitive services are just, reasonable, and affordable. While 
the Federal Communications Commission [FCC] and many State commissions 
have instituted various price flexibility plans, most of those plans 
involve some consideration of earning. If regulators are prohibited 
from considering the earnings factor when determining the 
appropriateness of prices for noncompetitive services, the captive 
ratepayers of these services will be subject to unwarranted rate 
increases.
  Mr. President, this amendment does not change the bill's prohibition 
on rate-of-return regulation. The amendment would simply allow State 
and Federal commissions to consider earnings when authorizing the 
prices of those noncompetitive services. In this way, the amendment 
provides a safeguard against excess rate impacts in the future.
  Mr. President, the monopoly telephone rates amendment recognizes that 
it is appropriate and in the consumers' interest for State regulators 
to continue to have a roll in determining the price of noncompetitive 
services in their States, and in having the discretion to consider the 
earnings of the local telephone company. Approximately 75 cents of 
every dollar consumers spend on their overall telephone bills is for 
calls made within their State. The goal of local telephone competition 
advanced in this legislation will not be achieved overnight. In the 
interim, State regulators should have the authority to consider a 
company's earnings before setting the price level of noncompetitive 
services. I urge my colleagues to join me in voting for this amendment.
          preemption of state-ordered intralata dialing parity

  Mr. FEINGOLD. Mr. President, as an original cosponsor of the 
amendment filed yesterday by the Senator from Vermont [Senator Leahy], 
amendment number 1289, I want to discuss the important issue of 
intraLATA dialing parity.
  Mr. President, Senator Leahy's amendment was very simple. It would 
have merely clarified the rights of the States to implement pro-
competitive measures for telecommunications markets within their State 
borders, a role which we have always provided to our States. As is 
often the case in other policy areas, many States, including Wisconsin, 
are ahead of the Federal Government in deregulating telecommunications 
markets. In the case of my State, efforts to begin deregulation of 
telecommunications markets have been on-going for many years, 
culminating in a major telecommunications bill passed by Wisconsin's 
State legislature last year and signed by our Governor.
  Unfortunately, while S. 652 has the laudable goal of increasing 
competition in all telecommunications markets, without the changes that 
the Senator from Vermont and I are promoting, it would actually cripple 
existing State efforts to enhance competition in markets within their 
own borders. The legislation would prevent States from ordering 
intraLATA dialing parity in local telecommunications markets until the 
incumbent regional bell operating company is allowed access to long 
distance markets.
  IntraLATA dialing parity is complicated phraseology for a very simple 
concept. Currently, for any long distance calls that consumers make 
within their own LATA or local access and transport area--also known as 
short-haul long distance--are by default handled by the local toll 
provider. In order to use an alternative long distance company to make 
a short-haul long distance call, a consumer would have to dial a long 
string of numbers to access that service, in addition to the telephone 
number they must dial. For most consumers, that is a inconvenience they 
simply will not tolerate and [[Page S8375]] provides an advantage to 
the incumbent toll provider in providing short-haul long distance.
  Dialing Parity already exists in interstate long distance markets, 
which is why any person can place a long distance call simply by 
dialing 1 plus the area code and phone number. The call is 
automatically routed through the long distance carrier the consumer has 
preselected. This convenience simply does not exist for consumers 
making short-haul long distance calls within their own LATA.
  Wisconsin's Public Service Commission has gone through a lengthy 
multi-year process examining the technical feasibility and cost of 
requiring dialing parity for short-haul long distance, determining 
whether competition would be enhanced by this type of dialing parity 
and whether the public interest would be served by dialing parity for 
short-haul toll calls.
  Their findings indicated that not only was intraLATA dialing parity 
technically feasible, it was also in the public interest. The 
Commission stated:

       IntraLATA 1+dialing parity will benefit customers and the 
     State; will encourage the development of new products and 
     services at reduced prices; and will result in local company 
     provision of service more efficiently as the market becomes 
     more competitive.

  In 1994, State legislation directed our Wisconsin Public Service 
Commission to develop rules for 1+dialing parity for intraLATA markets. 
The Commission has not approached this in a haphazard manner, Mr. 
President. In fact the Commission has established procedures whereby a 
provider can request dialing parity and a company asked to provide that 
service to request a temporary suspension from honoring the request. 
This provides our PSC with the opportunity to review each request on a 
case by case basis if necessary. Our State legislature and our Governor 
endorsed this process in the Telecommunications Deregulation Act passed 
and signed into law last summer.
  That legislation went far beyond the issue of dialing parity but also 
allowed the toll providers to use price cap regulation instead of rate 
of return regulation. The bill also stripped certain providers of their 
monopoly status to allow for greater competition in service areas to 
which they were not previously allowed access. This legislation was 
miles ahead of Federal legislation, Mr. President.
  Mr. President, the point of this lengthy description of Wisconsin's 
deregulatory process is to emphasize that the States are well qualified 
and experienced in deregulating telecommunications markets and are 
doing so in a well-reasoned and orderly fashion.
  Senator Leahy's amendment would have simply allowed States to 
continue on their path to deregulation and increased competition in 
telecommunications markets unhampered by the Federal Government. The 
amendment would have allowed the 10 States that have already ordered 
intraLATA dialing parity and the 13 States that are currently 
considering that option, to continue their efforts without being 
derailed by this bill.
  Those States may, in some instances, determine that competition will, 
in fact, not be enhanced by providing intraLATA dialing parity in 
certain markets if the incumbent toll provider is not allowed to enter 
long distance markets. In other cases, however, a State's Public 
Service Commission's deliberative process may indicate that, in other 
markets, dialing parity should be provided regardless of whether the 
incumbent toll provider has access to long distance service. The State 
has the expertise to examine the different competitive circumstances 
for individual markets and they should be allowed to do so.
  It is inappropriate for the Congress to attempt to preempt a State's 
ability to make these types of decisions. Recently, 24 Attorneys 
General, in a letter to Senators, stated their opposition to the 
preemption of State's ability to order intraLATA dialing parity. 
Signing that letter were State Attorneys General from Wisconsin, New 
Mexico, Arizona, Arkansas, Connecticut, Delaware, Florida, Illinois, 
Iowa, Kansas, Kentucky, Massachusetts, Minnesota, Missouri, Montana, 
North Dakota, Oklahoma, Tennessee, Utah, Vermont, Washington, and West 
Virginia, among others. I ask unanimous consent that a copy of that 
letter be printed in the Record.
  Mr. President, I also ask unanimous consent that a letter from the 
Chairman of the Public Service Commission of Wisconsin, Cheryl Parrino, 
in support of this amendment and addressing the issue of Universal 
Service be printed in the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  [See Exhibit 1.]
  Mr. FEINGOLD. The amendment which I have been working on with Senator 
Leahy would have simply made clear that the bill before us shall not 
prevent a State from taking pro-competitive steps by requiring 
intraLATA dialing parity within markets under their regulatory 
jurisdiction.
  Mr. President, however, it is my understanding that there are a 
number of objections to this amendment. In response to those 
objections, the Senator from Vermont [Senator Leahy] and the Senator 
from Louisiana [Senator Breaux] have worked out a compromise which will 
allow the States that have already ordered intraLATA dialing parity, 
such as Wisconsin, as well as single LATA states to implement it 
despite the overall preemption contained in this bill. However, the 
compromise restricts companies seeking to offer competitive intraLATA 
toll services from jointly marketing their intraLATA toll services with 
their long distance services for a period of up to 3 years. There may 
be concerns with respect to this restriction that may need to be 
addressed before the legislation is enacted.
  I appreciate the hard work of my colleagues, Senators Leahy and 
Breaux in reaching this agreement. I thank them for their efforts.
                               Exhibit 1

                                         Public Service Commission


                                                 of Wisconsin,

                                                    June 12, 1995.
     Hon. Russell Feingold,
     U.S. Senator, Washington, DC.
       Dear Senator Feingold: I applaud your efforts to remove 
     preemptive language from the telecommunications bill pending 
     before the Senate. This letter is to express support for your 
     amendment that eliminates a preemption clause that prohibits 
     state actions that require intraLATA dialing parity. In 
     Wisconsin, the Public Service Commission of Wisconsin has 
     ordered full intraLATA dialing parity (1 + presubscription), 
     and it is our belief that implementation of our orders on 
     that issue will enhance competition and serve the public 
     interest. It would be a disservice to the telecommunications 
     customers of Wisconsin if federal action negated our decision 
     on this issue.
       Proponents of preemption have suggested that state actions 
     to order full dialing parity prior to federal court action 
     allowing the entry of the Regional Bell Operating Companies 
     (RBOCs) into the interLATA toll market would constitute a 
     threat to universal service. This argument is simply off 
     base.
       States, particularly state regulatory commissions, are 
     inexorably attuned to the needs of the citizens of the states 
     and are very cognizant of the need to maintain universal 
     service. Any state commission considering an order for full 
     dialing parity will have every opportunity to consider the 
     costs of that decision and the related implications for 
     universal service. The orders of the Wisconsin Commission 
     that mandate intraLATA 1 + presubscription include a process 
     whereby individual local exchange companies may request 
     Commission waivers of the requirements for dialing parity 
     implementation. This Commission will certainly consider the 
     potential costs of dialing parity implementation and modify 
     our requirements when it is in the best interests of the 
     consumers. I am confident that other state commissions would 
     give this same consideration.
       Further, in Wisconsin, legislation passed last summer 
     mandates a universal service program. This Commission will be 
     promulgating rules to assure service is available and 
     affordable to all parts of the state and to all segments of 
     the public. The safeguards available through that program 
     offer further support to actions by this Commission to move 
     forward with the introduction of competition and fair 
     competitive service standards at a pace that is reflective of 
     the specific needs of this state. Universal mandates or 
     activities are being addressed in numerous other states. 
     Those state plans should be allowed to move forward based on 
     the respective wisdom of the state legislatures or 
     commissions in those states. A blanket hold on all intraLATA 
     dialing parity by Congressional fiat gives no weight to the 
     evidence of competitive need and regulatory safeguards in any 
     individual state.
       Another argument advanced by those who support preemption 
     is that full dialing parity may cause the loss of the 
     carrier-of-last-resort obligation by the incumbent local 
     exchange carrier. In recent hearings in Wisconsin on this 
     very subject, this argument was raised. It was met by a 
     commitment from other carriers to fill that carrier-of-last-
     resort role if in fact the incumbent is no longer 
     [[Page S8376]] taking on that obligation. This argument about 
     the loss of universal service because of the carrier-of-last-
     resort impacts is without merit.
       Competition is coming to the telecommunications industry. 
     This bodes well for telecommunications customers. Federal 
     action to stunt competition in parts of the market, while 
     arguments are hashed out on the interLATA front, is a move in 
     the wrong direction. State commissions should decide on the 
     need for and pace of competition in the states. While there 
     are many advantages to establishing a national policy on 
     telecommunications, and many good points are spelled out in 
     the legislation, the preemption of the states on dialing 
     parity is not one of them.
       Again, I commend your attempts to rectify this portion of 
     the pending telecommunications bill. Please contact me if you 
     have questions on my position on this matter.
       This letter of support for your amendment is independent of 
     the merits of and schedule for interLATA relief for the 
     RBOCs.
           Sincerely,
                                                Cheryl L. Parrino,
     Chairman.
                                                                    ____

                                               State of Wisconsin,


                                        Department of Justice,

                                                     June 2, 1995.
     Hon. Russell D. Feingold,
     U.S. Senate, Washington, DC.
       Dear Senator Feingold: The undersigned state attorneys 
     general would like to address several telecommunications 
     deregulation bills that are now pending in Congress. One of 
     the objectives in any such legislation must be the promotion 
     that fosters competition while at the same time protecting 
     consumers from anticompetitive practices.
       In our opinion, our citizens will be able to look forward 
     to an advanced, efficient, and innovative information network 
     only if such legislation incorporates basic antitrust 
     principles and recognizes the essential role of the states in 
     ensuring that citizens have universal and affordable access 
     to the telecommunications network. The antitrust laws ensure 
     competition and promote efficiency, innovation, low prices, 
     better management, and greater consumer choice. If 
     telecommunications reform legislation includes a strong 
     commitment to antitrust principles, then the legislation can 
     help preserve existing competition and prevent parties from 
     using market power to tilt the playing field to the detriment 
     of competition and consumers.
       Each of the bills pending in Congress would lift the court-
     ordered restrictions that are currently in place on the 
     Regional Bell Operating Companies (RBOCs). After sufficient 
     competition exists in their local service areas, the bills 
     would allow RBOCs to enter the fields of long distance 
     services and equipment manufacturing. These provisions raise 
     a number of antitrust concerns. Therefore, telecommunications 
     deregulation legislation should include the following 
     features:
       First, the United States Department of Justice should have 
     a meaningful role in determining, in advance, whether 
     competition at the local level is sufficient to allow an RBOC 
     to enter the long distance services and equipment 
     manufacturing markets for a particular region. The Department 
     of Justice has unmatched experience and expertise in 
     evaluating competition in the telecommunications field. Such 
     a role is vital regardless of whether Congress adopts a 
     ``competitive checklist'' or ``modified final judgment 
     safeguard'' approach to evaluating competition in local 
     markets. The Department of Justice will be less likely to 
     raise antitrust challenges if it participates in a case-by-
     case analysis of the actual and potential state of 
     competition in each local market before RBOC entry into other 
     markets.
       Second, legislation should continue to prohibit mergers of 
     cable and telephone companies in the same service area. Such 
     a prohibition is essential because local cable companies are 
     the likely competitors of telephone companies. Permitting 
     such mergers raises the possibility of a ``one-wire world,'' 
     with only successful antitrust litigation to prevent it. 
     Congress should narrowly draft any exceptions to this general 
     prohibition.
       Third, Congress should not preempt the states from ordering 
     1+intraLATA dialing parity in appropriate cases, including 
     cases where the incumbent RBOC has yet to receive permission 
     to enter the interLATA long distance market. With a mere flip 
     of a switch, the RBOCs can immediately offer ``one-stop 
     shopping'' (both local and long distance services). New 
     entrants, however, may take some time before they can offer 
     such services, and only after they incur significant capital 
     expenses will they be able to develop such capabilities.
       In conclusion, we urge you to support telecommunications 
     reform legislation that incorporates provisions that would 
     maintain an important decision-making role for the Department 
     of Justice; preserve the existing prohibition against mergers 
     of telephone companies and cable television companies located 
     in the same service areas; and protect the states' ability to 
     order 1+intraLATA dialing parity in appropriate 
     cases.
       Thank you for considering our views.
           Very truly yours,
         Tom Udall, Attorney General of New Mexico; James E. 
           Doyle, Attorney General of Wisconsin; Grant Woods, 
           Attorney General of Arizona; Winston Bryant, Attorney 
           General of Arkansas; Richard Blumenthal, Attorney 
           General of Connecticut; M. Jane Brady, Attorney General 
           of Delaware; Garland Pinkston, Jr., Acting Corporation 
           Counsel of the District of Columbia; Robert A. 
           Butterworth, Attorney General of Florida; Calvin E. 
           Holloway, Sr., Attorney General of Guam; Jim Ryan, 
           Attorney General of Illinois; Tom Miller, Attorney 
           General of Iowa; Carla J. Stovall, Attorney General of 
           Kansas; Chris Gorman, Attorney General of Kentucky; 
           Scott Harshbarger, Attorney General of Massachusetts; 
           Hubert H. Humphrey, III, Attorney General of Minnesota; 
           Jeremiah W. Nixon, Attorney General of Missouri; Joseph 
           P. Mazurek, Attorney General of Montana; Heidi 
           Heitkamp, Attorney General of North Dakota; Drew 
           Edmondson, Attorney General of Oklahoma; Charles W. 
           Burson, Attorney General of Tennessee; Jan Graham, 
           Attorney General of Utah; Jeffrey L. Amestoy, Attorney 
           General of Vermont; Christine O. Gregoire, Attorney 
           General of Washington; and Darrell V. McGraw, Jr., 
           Attorney General of West Virginia.

  Ms. MOSELEY-BRAUN. I thank the Chair. I say to my colleague, I am not 
here to speak on this specific legislation, although it is obviously 
important and significant legislation. I am here to speak as if in 
morning business and with the indulgence of the sponsors and managers 
of the bill, I ask unanimous consent to be allowed to speak in morning 
business.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Ms. MOSELEY-BRAUN. I thank the Chair.

                          ____________________