[Congressional Record Volume 141, Number 98 (Thursday, June 15, 1995)]
[Senate]
[Pages S8422-S8423]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


          TELECOMMUNICATIONS COMPETITION AND DEREGULATION ACT

  The Senate continued with the consideration of the bill.
  Mr. PRESSLER. I hope Senators will come to the floor and use their 
time on the telecommunications bill.
  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. LIEBERMAN. 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for the quorum call be rescinded.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. 1298

  Mr. LIEBERMAN. Mr. President, I thank the Chair.
  Last night I called up amendment No. 1298. I would like to proceed 
for the half-hour allocated under the unanimous consent agreement.
  The PRESIDING OFFICER. The Senator from Connecticut is recognized for 
up to 15 minutes, under the previous order.
  Mr. LIEBERMAN. Mr. President, this amendment aims to maintain 
protection for the millions of cable consumers around America who, for 
the last 2 years, faced with cable systems that they enjoy, that they 
need, that they want to purchase, but faced with only one choice of a 
cable system in all but 50 of the more than 10,000 cable markets in 
America, are about to lose their consumer protection if the bill, as 
drafted and before the Senate, S. 652, passes.
  I just think that would be a shame. In a way, an outrage, because of 
the way in which the cable consumer protections that were enacted in 
1992, and were in effect for less than 2 years, have benefited 
consumers, and not hurt the cable industry.
  Think about it, Mr. President. We are talking here about monopolies 
that exist in more than 10,000 markets in America. Only 50 have 
effective competition according to the FCC, and yet we will remove a 
consumer protection regulation that exists in the current system that 
has dropped rates cumulatively 11 percent, that has seen continued good 
health in the cable industry.
  What is the rationale for this? The rationale seems to be in this 
overall reform of telecommunications, surprisingly, this termination of 
these consumer protection regulations that have just existed for a 
couple of years and worked so well.
  Apparently, the argument by the cable industry has been they need to 
have rates deregulated. They need to take the cap off. They need to be 
free of any rule of reason, without competition, without regulation, 
because they need to go to the capital markets to raise capital so they 
can be ready to compete with the telephone companies direct broadcast 
satellites that are coming in.
  Mr. President, the facts I showed last night show that not only have 
the cable companies continued to make money, with an operating margin 
industrywide of 20 percent--the highest of any element of the 
telecommunications industry--but their capital expenditures have 
continued to go up. In 1993, almost $3 billion; in 1994, $3.7 billion. 
Plenty of opportunity under regulation to raise money.
  Perhaps as significant, take a look at what the market says. This is 
a bill that is procompetitive. It is market-oriented. Let me show the 
chart that talks about the cable index stocks.
  We believe in markets. That is what this bill is all about. The blue 
line is an index of cable industry stocks. Look what happened in 1993 
after regulation goes on: It shoots up, comes down, stays high, much 
higher than the S&P Standard 500 stock index. This is a measure of the 
market. Investors say the regulation that we put on was reasonable. It 
did not make them feel that these stocks were a bad investment. In 
fact, they continue to raise over the average stocks in the market.
  I ask here, with this amendment, why are we doing this? On the face 
of it, respectfully, I would say it looks like the cable industry has 
used this overall reform of telecommunications to basically jump on or 
jump in to hide in a kind of Trojan horse of telecommunications reform, 
and put inside that horse an opportunity to raise rates.
  I will say the system created in this bill is complicated. The bottom 
line is simple: Rates to most cable consumers in America are going to 
rise; by one estimate, $5 a month for a service that a lot of people 
consider to be a necessary, basic source of information, recreation, 
entertainment, even shopping, now, in their lives.
  If the amendment I propose passes, I am convinced that rates will 
remain stable, the cable industry will continue to be competitive, and 
the rates will remain regulated only until there is competition. Part 
of what is happening here is the hope being raised of immediate 
competition in the cable business.
  In 1984 when Congress last deregulated cable, and the consumers paid 
deeply out of their pockets for the ensuing years, until 1992 when we 
put regulation back on, the hope was raised that direct broadcast 
satellites were going to provide enormous competition for cable 
television.
  Today, 11 years after 1984 when that argument was made, less than 1 
percent of cable consumers, multichannel service consumers, get their 
television from direct broadcast satellites.
  Telephone companies are authorized by the legislation before us to 
come into the cable business. I hope they do and I hope they do 
rapidly. When they are providing competition, the regulation will go 
off. But I am not so sure any of us can say that is going to happen 
next year or 3 years from now or 5 years from now or, in some cases, 10 
years from now.
  What this bill, without the amendment I am proposing, will do in that 
interim, it will simply take off the protection for consumers.
  Incidentally, it substitutes, in place of that protection, a very 
ornate, complicated standard that there is no regulation unless the 
cable system charges substantially higher than the per channel average 
nationally on June 1, 1995. That is very complicated and actually shows 
you do not need regulation to have regulation. You can have all the 
problems of regulation through legislation.
  My alternative here is simple and market oriented. It says a cable 
company will be subject to regulation if it charges substantially more 
than the national average in markets that are competitive. So my 
standard is not what the average is on June 1, 1995, or, as the bill 
suggests, what it will be 2 years from now after cable rates are 
raised. Then we are going to have substantially higher charges than the 
average 2 years later. My basis is what the market says where there is 
competition. As competition spreads throughout America, that standard 
will change and the consumers will benefit.
  I want to respond to just a few comments that were made against the 
amendment last night as I wait for some of my colleagues who want to 
speak on this to come to the floor. There was some reference to the 
special status of smaller cable companies. I want to stress that no 
small cable company will be affected under my amendment. We are 
exempting any cable company that has less than 35,000 customers or any 
multiservice operator--that is, any company that owns more than one 
cable system--that has less than 400,000 customers. I am not interested 
in regulating these small, mom and pop cable operators. They are 
already economically responsible and I believe accountable to their 
communities, and therefore they are exempt from regulation.
  Last night my friend and colleague from South Dakota suggested that 
cable revenues have remained flat for the first time in 1994. In fact, 
the cable [[Page S8423]] act resulted in over $800 million in decreases 
in equipment charges and over $400 million in decreases for consumers 
in service charges. The fact that revenues--even taking this view that 
they remained flat indicates that the cable industry is thriving and is 
a highly profitable industry, even under regulation. Again, there is a 
20-percent operating margin, the highest in the telecommunications 
business in 1993, and the stock market indicates continued consumer 
confidence in the business. All of that under regulation.
  The distinguished chairman of the committee mentioned that public 
debt offerings dropped under regulation. Respectfully, I claim the 
opposite. Debt financing for the cable industry climbed from $6.9 
billion in 1993 to $10.8 billion in 1994, an almost $4 billion 
increase, continuing a pattern of steady growth in debt financing since 
1991, uninterrupted by the very reasonable regulation that we put on in 
1992 on a bipartisan basis.
  As for investments and access to capital, the major cable companies 
are consolidating and buying up other monopolies right and left and 
they are spending a lot of money doing so. For example, in February 
1995, Time Warner offered $2.7 billion for Cablevision Industries 
systems. In January 1995, Time Warner offered $2.24 billion for Houston 
Industries cable systems. In January 1995, Intermedia Partners, TCI, 
and others offered $2.3 billion for Viacom's cable system. And the list 
goes on.
  I am not saying this is wrong. I am happy about it. What I am 
pointing out here is that the cable industry, under the very reasonable 
consumer protection regulations that we have had on for the last 2 
years, has been a healthy industry with lots of capital to invest. 
There is no reason to believe that will not continue to be the case 
under the amendment that I put forth. Let us remember, the great fear 
here of the cable industry is competition from the telephone 
companies--and they are regulated.
  Often cited are the companies that are selling out these systems, 
these cable systems. But I want to say those who are selling are doing 
so at a very healthy profit.
  One other argument that arises again is that competition is just 
around the corner. As I have indicated, I hope so. I hope competition 
is around the corner. I hope we can get the regulation out of here. But 
right now, to receive a direct broadcast satellite system, a consumer 
has to invest about $700 to buy the equipment and then pay a monthly 
charge at least as large as the current cable bills. At the moment, 
again, less than 0.5 percent of subscribers are choosing this DBS 
satellite. As my friend and colleague from South Dakota points out, at 
the current rate of subscription, in 5 years there will be 5 million 
subscribers to DBS. Mr. President, 5 million subscribers is only 8 
percent of the current subscribers to cable. And 8 percent, in my 
opinion, is not effective competition in any market, certainly not 
under the bill, not under the law as it stands now.
  As for the telephone companies, they are only doing experiments in 
some markets. It will take time before they are active competitors. If 
any competitor surprises us and gets to the market more rapidly, 
hallelujah, that is great news. All the regulation I am advocating will 
go away once competition hits the market. That is what this amendment 
is about. Let us let competition work for the consumer and for the 
industry.
  Mr. President, I understood Senator Leahy was going to come to the 
floor to speak to the amendment. Not seeing him on the floor, I reserve 
whatever time I have remaining and yield the floor.
  The PRESIDING OFFICER. Who seeks recognition?
  Mr. LIEBERMAN. Mr. President, seeing no one seeking recognition, 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. SIMON. 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. 1283, as Modified

  Mr. SIMON. Mr. President, I call up my amendment No. 1283.
  The PRESIDING OFFICER. The amendment of the Senator from Illinois, 
No. 1283, has already been called up.
  Mr. SIMON. Mr. President, I have not had a chance to talk to Senator 
Pressler or Senator Hollings. But I would be willing to have a 20-
minute time agreement, 10 minutes on my side and 10 minutes on the 
other side. I am not sure that anyone is going to speak in opposition. 
I would welcome no one speaking in opposition. But I do believe that at 
least one Member on the other side wants to vote against it.
  The PRESIDING OFFICER. The Chair informs the Senator from Illinois 
that, under the previous order, time is limited to 30 minutes on first-
degree amendments.
  Mr. SIMON. I am willing to reduce that to 20 minutes.
  Mr. PRESSLER. That is the best music I have heard this morning.
  The PRESIDING OFFICER. The Senator is willing to either use or yield 
back whatever time he does not wish to use.
  Mr. SIMON. Mr. President, let me outline what the situation is right 
now. We now have under the FCC rule a limit of 20 FM stations and 20 AM 
stations that may be owned by any one entity. The Dole amendment takes 
the cap off that completely. The most that is owned by any one entity 
right now is Infinity. They own 27 stations. CBS owns 26.
  Under the bill as it is right now, anyone--the Dan Coats Co.--can 
theoretically own every radio station in the United States. Obviously, 
I do not think that would happen. But I think diversity in this field 
is extremely important.
  My amendment raises that cap of 20 and 20 to 50 and 50 so that there 
could be 100 stations owned by any one entity. That is a 150-percent 
increase over where we are right now.
  I think that is reasonable. I just think it is not in the public 
interest to have a concentration. Economic concentration generally is 
not good, but particularly in the media I think there are dangers to 
the future of our country.
  Bill Ryan of the Washington Post and Newsweek wrote in Broadcast and 
Cable of May 27, and said,

       The whole world is trying to emulate the local system of 
     broadcasting that we have in this country, and here we are 
     creating a structure that will abolish it or put it in the 
     hands of a very, very few. I think it is unsound.

  Let me add that my friends in Infinity and CBS both have no objection 
to this amendment--the people who own the largest numbers right now. 
The National Association of Broadcasters do. Let me just say candidly 
that I worked with Senator Strom Thurmond and a few others here in 
trying to negotiate with them some kind of limitation or sensible 
packaging on liquor advertising on radio. They resisted any change. 
Here again, they want to have it all. I have been in this business of 
politics long enough so that when you have leadership at the National 
Association of Broadcasters that is so narrow minded that it wants to 
have it all, the pendulum is going to swing from one extreme to 
another. They are making a great mistake. I have yet to talk to a 
single radio station owner who does not think this is a sensible 
amendment.
  I hope that my friends on the floor of the Senate and the House would 
vote for this amendment.
  Mr. President, I reserve the remainder of my time.
  Mr. President, I question the presence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. SIMON. 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. SIMON. Mr. President, I ask unanimous consent to speak as if 
morning business for 2 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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