[Congressional Record Volume 141, Number 135 (Friday, August 11, 1995)]
[Extensions of Remarks]
[Pages E1699-E1700]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



[[Page E 1699]]


                       COMMUNICATIONS ACT OF 1995

                                 ______


                               speech of

                        HON. W.J. (BILLY) TAUZIN

                              of louisiana

                    in the house of representatives

                         Friday, August 4, 1995

       The House in Committee of the Whole House on the State of 
     the Union had under consideration the bill (H.R. 1555) to 
     promote competition and reduce regulation in order to secure 
     lower prices and higher quality services for American 
     telecommunications consumers and encourage the rapid 
     deployment of new telecommunications technologies:

  Mr. TAUZIN. Mr. Chairman, as a strong supporter of and coauthor of 
several provisions in the manager's amendment offered by the chairman 
of the Commerce Committee, Mr. Bliley, I would like to describe intent 
with respect to some of its provisions.
  As the author of a similar amendment on resale in full committee, I 
would like to clarify the meaning of the resale provision in section 
242(a)(3), as amended by the manager's amendment. As drafted, local 
exchange carriers, including the Bell companies, must offer services, 
elements, features, functions, and capabilities for resale at wholesale 
rates. Subsection (b) then permits the carrier to prohibit a reseller 
from offering a service, element, feature, function, or capability 
obtained at a wholesale rate to a different category of subscribers to 
which the wholesale rate applies. This provision is intended to permit 
carriers to continue, at the wholesale level, their tradition of 
classifying their retail customer services--for example, residential 
services versus business services and even of subclassifying within 
such service categories, for example, general residential and lifeline 
services. By referring only to the resale of services offered at 
wholesale rates, this provision would not prevent a local exchange 
carrier from including in its retail residential services tariffs that 
prohibit a reseller from reselling the retail residential rate to 
business customers. Many local exchange carriers have such conditions 
in their tariffs, and many State commissions use such conditions as a 
way of preserving universal residential services. The commissions 
require the local companies to offer subsidized residential services to 
promote universal service. However, the subsidized services are not 
offered to business customers, who generally are expected to cover the 
costs of their own services and to defray the shortfall from the 
subsidized residential customers. If resellers were allowed to resell 
these subsidized residential retail services for business purposes, the 
burden on others of universal service would increase. Indeed, the whole 
system of universal service would be jeopardized.
  Furthermore, section 242(b)(4)(C) requires that the rates at which 
the services, elements, features, functions, and capabilities are 
offered at wholesale pursuant to section 242(a)(3) are to cover the 
costs of items, including any cost incurred by the local exchange 
carrier in unbundling those items.
  Second, in section 245(a)(2)(A), as amended by the manager's 
amendment, the word ``predominately'' describes the extent that local 
telephone services are offered by a competing provider over its own 
telephone exchange service facilities. Included here is a short 
statement of intent with regard to this provision and specifically how 
the word ``predominately'' should be construed for legislative history.
  Third, under section 242(d)(2), the intent of the subparagraph, as 
amended by the manager's amendment, is to exempt from the joint 
marketing prohibition all carriers which have in the aggregate less 
than 2 percent of the presubscribed access lines installed nationwide; 
that is, competitive access providers such as Teleport and MFS, among 
others. The word presubscribed is important to identify those carriers 
exempted from the joint marketing provisions of the bill.
  Fourth, in section 245(d)(4) of the bill, I would like to clarify the 
meaning of the ``Standard for Decision'' provision. The subsection 
provides that the Commission cannot approve a Bell company's 
application for interLATA or manufacturing relief unless it determines 
that the company has satisfied certain conditions and that the 
company's interconnection agreements comply with the act. The 
Commission is simply required to determine whether the conditions for 
relief set forth in the law have been met by the particular Bell 
company. If they have been met, then the Commission must grant the 
applications. It is not free to require the Bell company to meet other 
requirements or to withhold approval to achieve some other public 
policy goal that the Commission might consider important. In effect, we 
are telling the Commission that if it concludes that the Bell company 
has complied with the detailed requirements that we set forth in the 
law, then it must grant the application. It may not apply any public 
interest test or requirement on its own.
  Fifth, I want to clarify our position with respect to telephone 
company entry into video markets. First and foremost, we are interested 
in competition--increasing consumer choice in programming, providers, 
services, and rates. I am confident that telephone companies will enter 
video markets with consumer choice uppermost in their minds. H.R. 1555 
encourages video competition and telephone company entry in a number of 
ways:
  First, it gives all telephone companies the choice between entering 
video markets as title II common carriers or as title VI cable 
operators. We do not intend to impose title II regulation and title VI 
regulation on telephone companies that enter video markets.
  Second, whether telephone companies choose the title II option or the 
title VI option, the bill allows them to provide voice and video 
services over integrated facilities.
  Third, if a telephone company chooses to enter the video market as a 
title II common carrier, and its affiliate provides programming on the 
telephone company's VDT platform, the bill clarifies that neither the 
telephone company nor its affiliate will be required to apply for a 
title VI franchise. Again, this is because we do not intend to impose 
title II and title VI regulation on telephone companies.
  Finally, Mr. Chairman, I am submitting an article from the July 2 
Washington Post describing my concerns about the lack of competition in 
long distance rates, something I outlined during floor debate on H.R. 
1555.
                           ``Predominately''

       Section 245, as added by the bill, provides the method by 
     which a Bell company may request authority from the FCC to 
     offer interLATA service on a State-by-State basis. Section 
     245(a)(2)(A) sets forth an additional requirement to verify 
     that the local exchange is open to competition. There must be 
     at least one competing provider that offers telephone 
     exchange service to business and residence subscribers, 
     either exclusively over its own telephone exchange service 
     facilities or predominantly over its own telephone exchange 
     service facilities in combination with the resale of the 
     services of other carriers.
       The phrase ``predominantly over its own telephone exchange 
     service facilities'' is intended to ensure that the competing 
     provider is doing more than repackaging and reselling the 
     services of the Bell company. The Commission will establish 
     guidelines for determining whether the ``predominantly'' 
     requirement of section 245(a)(2)(A) has been satisfied. It is 
     my understanding that in setting forth these guidelines the 
     Commission will consider only the local loop and switching 
     facilities used by the competing provider to provide 
     telephone exchange service. It is also my understanding that 
     the competing provider will be deemed to be providing service 
     ``predominantly'' over its facilities if more than 50% of the 
     local loop and switching facilities used by the competing 
     provider to provide telephone exchange service is owned by 
     the competing provider, or owned by entities not affiliated 
     with the Bell company that is applying for interLATA 
     authority. For example, if the competing provider uses a 
     combination of facilities, 25% of such facilities being owned 
     by the competing provider, 26% of such facilities being 
     resold facilities owned by entities not affiliated with the 
     local Bell company, and 49% of such facilities being resold 
     facilities of the local Bell company, then the 
     ``predominantly'' requirement of section 245(a)(2)(A) would 
     be satisfied. If the competing provider uses a combination of 
     facilities, 50% or more of such facilities being resold 
     facilities of the local Bell company and the remainder being 
     owned by the competing provider or obtained from entities not 
     affiliated with the local Bell company, the ``predominantly'' 
     requirement is not satisfied.
                [From the Washington Post, July 2, 1995]

                  Long-Distance Carriers in a Quandary


        on discount plans, there's no answer from many customers

                            (By Mike Mills)

       Night and day, AT&T Corp., MCI Communications Corp. and 
     Spring Corp. pummel each other with often vicious advertising 
     campaigns touting their own discount calling plans as better 
     than the rest. From the 

[[Page E 1700]]
     look of it, long-distance rates are heading nowhere but down.
       But more than 60 percent of the nation's 97 million 
     households don't subscribe to a long-distance discount plan, 
     according to industry estimates--and their rates have been 
     going up.
       The non-discounted ``basic'' rates that they pay have risen 
     nearly 20 percent since 1991, in part to help finance the 
     discount plans that they're ignoring.
       This fact is central to a debate over a broad 
     telecommunications bill now before Congress. The country's 
     seven Bell telephone companies, barred from the long-distance 
     business by court order, argue that five times since 1991 the 
     Big Three long-distance carriers have raised ``in lock step'' 
     the basic rates that most Americans pay. The long-distance 
     industry isn't really competitive, they say, and would 
     benefit from the immediate entry of the Bell companies.
       Long-distance companies counter by saying that's the wrong 
     way to look at it: Most of the country's long-distance calls 
     are made by people on discount plans, they say. Those who 
     aren't on the plans hardly call long distance at all.
       The Senate last month passed a bill giving the Bells rights 
     to gradually enter the long-distance business.
       The House is scheduled to take up its version of the bill 
     later this month.
       In the past 10 years, discount programs have emerged as the 
     chief tool of competition between AT&T, MCI and Spring, which 
     account for about 95 percent of the $75 billion-a-year long-
     distance industry, according to the Yankee Group research 
     firm. But to belong to such a plan, you have to sign up.
       ``If you're not on a plan, get on one,'' said Brian Adamik, 
     director of consumer communications at the Yankee Group.
       The right plan depends on your calling habits, according to 
     the Washington-based consumer group Telecommunications 
     Research & Action Center.
       The True Savings plan of market leader AT&T, for instance, 
     offers 25 percent to 30 percent off most domestic long-
     distance calls, as long as you make at least $10 in calls a 
     month.
       MCI's New Friends and Family matches that, then tosses in 
     50 percent discounts to customers who call within a ``calling 
     circle'' of relations or pals who also subscribe to MCI.
       Sprint tries to make things simpler with a flat rate of 10 
     cents a minute. Time-of-day restrictions often apply.
       The first question most consumers ask when they see those 
     promises of long-distance discounts is ``based on what?'' The 
     answer is, basic rates, which often rise even as the 
     discounted prices fall.
       Long-distance carriers say the Bells are focusing on basic 
     rates unfairly, and point to their discount plans as evidence 
     that their industry is competitive.
       Long-distance rates overall have declined about 70 percent 
     since the AT&T breakup, they said, adding that the Bells 
     should not be allowed into their market until the Bells first 
     show they couldn't use their control of local phone networks, 
     through which most long-distance calls pass, to favor their 
     long-distance services.
       The question then becomes: How many people pay basic 
     rates--and how many calls do they make?
       Surveys by AT&T, PNR Associates of Philadelphia and the 
     Yankee Group all arrive at the conclusion that about 60 
     million households don't belong to a plan.
       For about half of them, it's hardly worth the bother of 
     signing up: About 30 million spend less than $10 a month on 
     long-distance calls, according to the Yankee Group, and 
     wouldn't benefit from the discount plans, which generally 
     don't provide discounts unless the customer spends at least 
     $10 a month.
       That leaves about 30 million households that would benefit 
     from joining a plan.
       But, for a variety of reasons, they don't.
       ``The typical individual thinks there's something 
     attached,'' said Deanna Weaver of Burke, who recently joined 
     her first discount program. ``There isn't any risk, but some 
     people find it hard to believe.''
       Many people also may simply be tuning out the ads.
       Of 1,000 people surveyed in a recent poll by the public 
     relations company Creamer Dickson Basford, 78 percent said 
     they are tired of ads promising that one calling rate is 
     cheaper than another.
       To long-distance companies, customers who spend next to 
     nothing every month are the equivalent of people who hog 
     tables at a restaurant and order only soft drinks. In many 
     cases, carriers lose money serving them. AT&T estimates it 
     costs $3 to $5 a month to service a single customer, which 
     includes the cost of billing and payments into various 
     federal telephone funds.
       People who hardly call at all typically are basic-rate 
     customers. Long-distance companies argue that it's not unfair 
     to edge their rates up, so as to lower the numbers who are 
     money-losing propositions.
     

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