[Congressional Record Volume 141, Number 190 (Thursday, November 30, 1995)]
[Senate]
[Pages S17847-S17851]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           TELECOMMUNICATIONS

  Mr. DORGAN. Mr. President, I know the Senator from Nebraska will 
probably want to stay for a couple of minutes. The Senator from 
Nebraska and I 

[[Page S17848]]
wanted to visit for a couple of minutes about the conference that is 
now taking place between the Senate and the House on the 
telecommunications bill. The Senate has passed a telecommunications 
bill, and so has the House, and it is now in conference.
  The impact of the telecommunications legislation will be very 
substantial all across this country. What is happening in the 
conference, and the reason that I came to the floor today, is very 
disturbing to me. The issue of reforming the telecommunications laws 
and regulations in this country is very real, and very necessary. It is 
also very important. The Communications Act has not been changed 
significantly since it was written in the 1930's.
  Clearly, we ought to pass a telecommunications bill. But it ought to 
be in the right way. If it is done in the wrong way rural areas in 
America will be left out.
  I voted against the legislation that we passed in the Senate. I also 
believe that the Senator from Nebraska voted against, because we saw 
some very serious problems. We hope some of those problems will be 
fixed in conference, but it appears that some of them will be made 
worse in conference.
  Before I talk about the larger issues, I want to talk about one that 
is most important to me: universal service. From the standpoint of 
someone who comes from a rural State, the market system is not going to 
decide that the income stream in a rural State is going to persuade 
people to come and engage in robust competition to provide new services 
in rural areas. That is why the notion of universal service is critical 
to rural areas.
  What kind of a telephone system do you have in rural areas? Do you 
have a telephone in the smallest town in North Dakota? Sure, we do. Why 
do we have a telephone there? Because the existing universal system has 
made that possible. It is much more expensive, per person, to have a 
small number of telephones in a small community in terms of fixed cost 
than it is to have millions of telephones in New York City. But we have 
decided that it is a matter of universal importance for everyone to 
have modern communications equipment so that everyone can communicate 
with one another.
  The fact that there is a telephone in Regent, ND, makes a telephone 
in New York City more valuable because that New York telephone can 
communicate with someone on the receiving end in Regent, ND. It is a 
very small community, and I am guessing it does cost more to have 
telephones in Regent, ND, than in New York City. However, we have a 
universal service fund that is designed to equalize those costs and 
make sure that we have universal opportunity and universal service in a 
critical area called communication.
  What will be the result of this new telecommunications bill? What 
about new kinds of communications? What about new technology? Will they 
be available in rural areas, or will they only be available in some of 
wealthiest neighborhoods? Will they only been available in some of the 
largest cities?
  There were 24 Senators, 13 Republicans and 11 Democrats, including 
myself, who joined together in a bipartisan group to write to the 
Senate conferees in support of the rural provisions that are in the 
Senate bill. These provisions are very important to rural States. The 
problem we have at this point is that the conferees from the House side 
are trying to strip those provisions out. This is not a partisan fight. 
It is a bipartisan determination on the part of the Senate to want to 
retain those provisions. I want to speak a little more about those 
provisions later.
  Let me go on to a couple of the larger issues in the bill that deal 
with macroeconomic things that Senator Kerrey and I have also been 
involved in. I am concerned about the two areas in this bill dealing 
with competition. One, the legislation lifts entirely the limits on how 
many TV stations one person can own in America. We now have a limit of 
12. I think it is in the public interest to say one can only own 12 TV 
stations and no more than 12. Currently, it is no more than 12 TV 
stations reaching no more than 25 percent of the population.
  The bill says, on the other hand, that one can own as many TV 
stations as one likes. Let us just take the cap off, the sky is the 
limit. One can go right ahead and by as many TV stations as one can 
muster up the money to buy. One can also own as many radio stations as 
one wants to buy. That makes no sense to me. That kind of concentration 
moves in exactly the wrong direction. Concentration is the opposite of 
competition. One cannot support a bill like this and call it 
competition--when, in fact, it provides for more concentration. Yet, 
that is exactly what is happening.
  It also true with respect to the question of when the Bell systems 
are allowed to go compete in long distance. They should not be allowed 
to compete in long distance service until there is competition in the 
local service exchange. The question is, when is there meaningful 
competition in the local service exchange so that competition in the 
long distance industry will not be harmed? We had a big fight about 
that on the floor of the Senate. It was a close vote.
  The Senator from Nebraska and I offered an amendment that said let us 
let the Justice Department, using the Clayton standard, evaluate 
whether or not a baby Bell's entrance into long distance will lessen 
competition or tend to create a monopoly before they should be 
permitted to compete in the long distance area. The fact is, we lost. 
We lost because a lot of folks wanted to vote for a position that is, 
in my judgment, anticompetition and proconcentration.
  I want to read what a few of the editorials say about the 
telecommunications bill that is now in conference, and why I and many 
others think it desperately needs reform.
  USA Today says: ``Monopolies win, you lose.'' That is their simple 
description of the bill.
  Business Week says: ``If Congress really wants a free phone market, 
with the competition and lower prices that will come with it, it 
shouldn't be quite so generous to those local monopolists, the Baby 
Bells.''
  The Oregonian says: ``. . . a single owner could control all the 
media outlets and communications links in a given market--a scary 
monopoly.''
  The Tennessean says: ``. . . the problem with the bill is that it 
removes most telephone and cable rate restrictions without first 
assuring that competition is in place.''
  The Denver Post says: ``If the current bill becomes law, phone prices 
may rise and consumers will have fewer--and not more--choices.''
  The Charleston Gazette says: ``. . . the bill trashes long-time rules 
that have restricted concentration of media ownership . . . 
Deregulation and `reform' have increasingly become code words for 
freeing huge corporations from the Government oversight that prevents 
them from gouging the public and developing stifling monopolies.''
  Some of us feel very strongly that we ought to pass a bill that 
promotes competition, that opens the marketplace to more competition, 
and, yes, eliminates some regulations where competition can replace 
regulations. But there are two premises that are troublesome with that 
point. One is, you do not have competition in many rural areas. Often 
you have a circumstance where you only have one interest willing to 
serve, and that service sometimes has to be required. The economics 
simply do not dictate service. So you cannot deal with that quite the 
same way; ergo, we have the question about universal service and the 
need to make sure that exists in the legislation.
  Second, we are very concerned about a circumstance where legislation 
in the telecommunications area allows such concentration that one 
entity really in a community can own the newspaper, can own the major 
television station, can own the cable company, can own it all, control 
ideas, control thought, and determine what is published, what is not. 
That is pretty scary. It is not moving in the direction of competition. 
It is moving in the direction of concentration, and it is exactly in 
the wrong direction.
  So my hope is that those in the conference will understand that if 
they bring to the floor of the Senate a conference report that backs 
away on the protections in this bill for rural States, they are going 
to have a lot of trouble. If they bring to the floor the piece of 
legislation that they left the floor with and do nothing in the area of 
concentration or fixing those problems, they will have very big trouble 
because 

[[Page S17849]]
some of us will not want to let a conference report like that continue 
to move.
  So I would be happy to yield some time to the Senator from Nebraska 
on this subject as well.
  Let me yield the floor and ask if the Senator from Nebraska seeks 
time.
  Mr. KERREY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Nebraska is recognized.
  Mr. KERREY addressed the Chair.
  The PRESIDING OFFICER (Mr. Ashcroft). The Senator from Nebraska.
  Mr. KERREY. I really quite agree with the Senator from North Dakota. 
I think the legislation passed here was well intended. People who voted 
for it understand there is a lot of change going on out there, and we 
need to embrace that future and try to change our regulatory structure. 
But it is possible for us to change it in a fashion that reduces 
competition. In fact, without some kind of meaningful role for the 
Department of Justice as we move from a monopoly to a market situation, 
as we move from a situation where the Government is making all the 
decisions to a situation where it is the marketplace making the 
decisions, if we do not have the agency that in fact has demonstrated 
the ability in this area as it did with AT&T to manage that kind of 
situation, I think we will end up with less, not more, competition.
  I bring a story told at church Sunday by Father Jim Schultz from 
Omaha, NE. He told the story that kind of describes what happens out 
there right now in the marketplace when you are dealing with a 
monopoly.
  The story is about a man who dies and goes to the pearly gates, and 
St. Peter says, ``Well, you are right on the edge. We can't decide 
whether you are going to go to Heaven or Hell, so you get to decide.'' 
There are two doors. One goes to Heaven and one goes to Hell. St. Peter 
opens up one door and there is a big party going on with a band and 
everything, everybody is happy and great looking people inside there. 
St. Peter says, ``Well, this is Hell.'' The man says, ``That's odd.''
  So St. Peter looks at the next door. He opens up the door and goes 
inside, and there are a bunch of people sitting around in chairs, real 
sad and angry. He says, ``That's Heaven.'' He says, ``Take an hour and 
decide and let me know.''
  An hour later the man comes back and says to St. Peter, ``I think 
I'll do Hell.'' He opens up the door. The people are dead. The smell is 
stale, trash all over. He goes to St. Peter and he says, ``What 
happened? An hour ago there was a great party, looked like a lot of 
fun, looked like the place to go.'' St. Peter says, ``An hour ago, you 
were a prospect. Now you are a customer.''
  In a monopoly, that is the situation. I had a recent example of that 
in Nebraska where a school trying to get enhanced services was told by 
the telephone company: ``You do not need it. You really do not need 
that enhanced service. We are not going to provide it to you because we 
do not think you really need it. We do not think you really should have 
this kind of service.''
  When you have a situation where the company can say to you, ``We are 
not going to satisfy your needs,'' you do not have competition. When 
you have that kind of a situation going on, you really do have two 
choices--take it or leave it. That is the only thing you can do.
  We have built a tremendous telecommunications system in this country 
by using a combination of Government regulation and market forces, and 
as a consequence we not only have a tremendous telecommunications 
system but in any community in the country you get high quality 
service. You can go to Alliance, NE, or Ainsworth, NE, or a rural 
community in Nebraska and find your telephone service is going to be as 
good as it is in Omaha because you have the same kind of service and 
same high quality of service as a consequence of the law of the land 
saying that is what universal service is to mean, that is what our 
customers as citizens ought to be able to have.
  Mr. DORGAN. I wonder if the Senator will yield for a question.
  Mr. KERREY. Be pleased to.
  Mr. DORGAN. The people who are living in Nebraska or North Dakota in 
a small community know when they make a long distance call, they have 
the opportunity to choose from literally hundreds of long-distance 
carriers. What they have experienced is that, because of hundreds 
involved in competition, long-distance service prices have been driven 
down substantially for long-distance service. Competition, good 
competition generally provides the consumers with a better price.
  The debate we had in the Senate was when should the Baby Bells, which 
are local monopolies at this point, engage in long-distance service and 
to try to capture the long-distance market. The answer should be when 
there is competition in the local phone service in the communities. It 
is only when the Bells have competition, then, and only then, they 
should be released to go compete in long distance.
  On the question: How do you know when there is competition? I say: 
let those who know about competition make that decision--the Justice 
Department. Of course, a lot of folks did not want that to happen. I 
think we had 43 votes that supported the notion that the Justice 
Department should have a meaningful role. But we need to make sure that 
competition really exists. That is what is in the interest of the 
consumers. Otherwise, we move right back towards recreating phone 
monopolies that control not only local service but long distance as 
well.
  Mr. KERREY. The Senator is quite right. As a matter of fact, in the 
language last year, we had a Justice Department role, and we replaced 
it this year. The committee decided to replace it this year with a 10-
part competitive checklist. The real test of competition is a very 
simple test. One of the reasons I am of the belief that you have to 
have a Department of Justice role of some kind--I am willing to drop 
down to Clayton; I am willing to look at alternative standards--is that 
the 10-part checklist does not really satisfy the consumer. I know when 
I have choice. If I have choice, the person who is trying to sell me 
something knows that if they do not get the price and the quality in 
the range I think I am willing to pay for, I will shop someplace else. 
I will go someplace else.
  If I have that kind of choice and that kind of alternative, then I 
have competition. If I do not have it, I do not have competition. If I 
have one company supplying all my news and one company supplying all my 
newspaper and one company that says here is your phone service and one 
company says here is your cable service, there is no choice. All I have 
basically is a question: Do I want it? Yes or no. I do not have any 
impact upon the quality and I do not have any impact upon the price.
  Mr. President, I hope that colleagues do not suffer under the 
illusion that the Senator from North Dakota and I--I certainly do not 
want to create the impression that I am not willing to embrace the 
future and indeed make a bet. I think we have to risk here. I think we 
are talking about moving in a rather dramatically different direction.
  I noted with considerable interest on the front page of the New York 
Times this morning--I think that is an old picture--Steve Jobs, 
cofounder of Apple, started a new company called Pixar--what is it? 
Hold on a minute here. Pixar Animation Studios is the name of the 
company, and he invested $68 million in it. They did a public offering 
yesterday, I believe, and thought it would go for about $22 a share. It 
turned out the market bid it up to close to $40, and all of a sudden he 
has $1.2 billion. His company created $1 billion worth of wealth 
yesterday. The United States of America is $1 billion wealthier as a 
consequence of this individual's decision to start a company that 
provides animation, in this case to Disney that put out a movie--what 
is it called? The Toys or something like that. I have not seen it, but 
it had $38 million worth of revenue over the weekend, which is pretty 
darned good.
  In the article as well there is mention of a company I am familiar 
with. James Clarke started a company called Netscape. He also created 
$1 billion worth of wealth.
  This is important for us. This country is a wealthy country as a 
consequence of somebody getting an idea and putting it out in the 
marketplace, and all of a sudden you have value, you have something 
that is worth something. 

[[Page S17850]]

  It is important that these men generate wealth. It is important that 
we continue to create ways that create wealth so we know the market is 
doing some extraordinary things.
  What I see, both with Netscape and Pixar Animation, is that this old 
computer that we saw sitting around our kids' bedrooms, and so forth, 
over the years is being converted into a communications tool. It used 
to just calculate, and increasingly we are using it to communicate.
  Indeed, I am working with the University of Nebraska trying to figure 
out a way to leverage intellectual property because they are pricing 
themselves out of the market. As the demand for college goes up and the 
demand for an educated person goes up, we are getting a doubling and 
tripling and quadrupling of what that university has to do. Our 
taxpayers do not have enough money to continue building and hiring more 
and more people. We have to leverage more intellectual property, and we 
are looking for a way to do it through computers. We know to get that 
done we essentially have to pass a three-part test.
  Test No. 1 is, Are you willing to embrace the future? Because if you 
are not, it is not going to work. If you want to hold on to the old way 
of teaching, say so. Because if you hold on to the old way of teaching, 
you are not going to be able to get your costs down. And, secondly, you 
have to be willing to place a bet, which means not only more money in 
these areas, which unquestionably is the case, but you are going to 
risk your reputation a little bit. You are going to take a chance on a 
roll.
  So I understand that at some point we cannot really be sure what this 
legislation is going to do. And I am an advocate of changing the law; I 
wish to break down the regulatory barriers so that consumers in their 
homes can make a single choice. What we have done is we have set up a 
system of regulation that says over here we have television, over here 
we have radio, over here we have dial tone, and over here we have 
print. That is what we have done. What has happened is the technology 
has obliterated those distinctions, and our regulatory structure still 
maintains them.
  So instead of being able to go to a single provider and buy it all 
packaged together--which, in my judgment, is the only way 100 million 
people in residences are going to see a decline in price and an 
increase in quality--you still have to buy them separately. As a 
result, costs are higher.
  So I hope that colleagues do not suffer under the illusion that I 
somehow want to hold down the status quo. I am willing to embrace the 
future and willing to place a bet, but I want to see real vigorous 
competition and choice at the local level. I want to see that. I want 
to vote for this bill. I want it to come back out of conference and to 
probably vote for it. I do not want to just stand over here and say 
``no,'' and hold my breath and try to hold it up.
  But unless we get vigorous competition at the local level--and I do 
not want to hold up the RBOC's. I want to be able for them to go out 
and compete. I am uncomfortable watching their top-end customers 
whittle away while they do not compete in long distance itself. I would 
like to be able to liberate them, but I want them to be liberated at 
the moment when I am sure that we have very vigorous competition at 
that local level.
  So I hope that conferees understand that the Senator from North 
Dakota and I are not sitting here saying that we do not realize the law 
needs to be changed. We know the law needs to be changed. We know there 
is an exciting and important opportunity for wealth generation, for job 
generation, for education, for improving the way that our own 
Government operates, trying to make it more efficient, trying to 
improve the quality of life for our citizens.
  This piece of legislation, this law is extremely important, but it is 
important that we have in our own mind some kind of vision for what the 
world is going to look like. Otherwise, all we are doing is trying to 
fashion some sort of compromise between the various corporate entities, 
and I think at the end of the day it will not create the kinds of 
change that in fact are already occurring out there in the market.
  Mr. DORGAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. DORGAN. Mr. President, let me add just a couple comments to what 
the Senator from Nebraska said. The status quo has been monopoly and 
concentration. I do not believe in the status quo. I think competition, 
especially in market areas where competition is supportable, 
competition is a much better arbiter of what happens in the marketplace 
than the effects of concentration or monopoly. That is what we said 
with respect to whether the Bells should go compete in long distance.
  We thought we ought to do it with competition with local exchanges, 
that true competition with local exchanges would help customers. And we 
think that makes a lot of sense. When there is true competition, they 
ought to be free to compete in long distance. If there is not true 
competition in local exchanges, to free them up to compete in a long 
distance market that has been competitive and has had the effect of 
driving down prices, that will, in fact, ruin a market system that has 
worked. That is what we are saying.
  The second area is this issue of increased concentration that serves 
no one's interests, in my judgment. I was on a television program a 
while back because I asked for some hearings on bank mergers. The 
interviewer said, ``Well, gee, these two big banks are merging and are 
able to get rid of 8,000 people who are duplicates.'' Getting rid of 
duplicate people, does that not make sense? Is that not efficiency? And 
is that not what is called efficiency? You can make that case for going 
to one bank.
  Why not have one bank in America? That would be the most efficient, 
probably. It would not make the most sense. I mean, efficiency--my 
hometown had two grocery stores. I suppose you could make the case we 
should have only had one because it would be more efficient. I think 
people were probably advantaged by having a little competition on Main 
Street. It was a small town, but nonetheless competition in that little 
area probably served the people of my hometown pretty well.
  So this area of concentration bothers me a great deal, and I hope 
through this conference they can address that once again.
  I want to finally make this point. The Senator from Nebraska and I 
both represent rural States. The question of what kind of 
telecommunications service you have in a town of 2,000 people versus a 
town of 2 million is very important, and the proposals to drop in this 
conference what we put in on the Senate side, on a bipartisan basis, 
are these sorts of things. We put in on the Senate side requirements 
that rural areas have access to service that are reasonably comparable 
to those offered in urban areas, services that reasonably are 
comparable in rates as urban areas, the benefits of advanced 
telecommunications services for health care, education, economic 
development, as urban areas do.
  Why is that important? Well, the universal service system in this 
country has guaranteed that up to this point, but if these guarantees 
are dropped--and one side wants to drop them at this point--and if this 
bill comes back without these kinds of provisions, this 
telecommunications bill, in my judgment, this telecommunications bill 
will be a full-scale retreat for a quarter century for many rural 
areas, and we will just be left in the dust here.
  That is why we wanted at this point to at least serve notice to the 
conferees that this is not unimportant to some of us. If they think 
they are going to bring a bill back here that is not procompetition, 
but instead is proconcentration and promonopoly, and if they think they 
are going to bring a bill back here that says, rural people, you do not 
count much, well, we count in the Senate. That is for sure.
  It is true that the population decisions are made with respect to the 
representation in the House. I mean, the House is, of course, 
apportioned by population. But at least rural States count in the U.S. 
Senate. Someone who lives in Hutchinson County, ND, finds it just as 
important to have an advanced telecommunications system and good 
telephone service and good health care service and other things as 
someone who lives in St. Louis. 

[[Page S17851]]

  So these are very important issues for all of us. And we hope--I 
notice that the conference committee did not meet today because there 
is a flareup that does not relate, I think, to what we are talking 
about. But we hope when these conferees meet they understand the 
importance of getting this right when they bring this bill back to the 
House and the Senate, because otherwise I do not think you will have a 
conference report pass the Senate.
  Mr. KERREY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. KERREY. Mr. President, so people wonder what the impact of this 
is going to be, and 94 percent of American homes have telephones, 60 
percent have cable--I believe those are the numbers--and nearly 100 
percent have television sets, and more people have telephones and 
television sets than have running water. It is a substantial success 
story we have that kind of penetration into American households.
  Every single household in America is going to be affected by this, 
and we are talking about trying to describe a significant change in the 
way they are going to be coming into contact with their providers. I 
think, as a consequence, it is very important for us to decide in our 
own minds what kind of an environment are we trying to create.
  One of the pieces that is in here that seems a little contrary to my 
own desire for competition--in fact, a little more than just a little 
contrary, it is contrary, but it is necessary to build a bridge in that 
competitive environment--is the Snowe-Rockefeller-Exon-Kerrey 
provisions having to do with education.
  I am very pleased, and I ask unanimous consent that a letter written 
by the chairman of the conference committee, Senator Pressler, 
indicating that he intends to hold and support the Senate's view on 
that provision, be printed in the Record at this time.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

         U.S. Senate, Committee on Commerce, Science, and 
           Transportation,
                                Washington, DC, November 28, 1995.
     Hon. J. Robert Kerrey,
     U.S. Senate, Washington, DC.
       Dear Bob: Thank you for your cosigned letter regarding the 
     amendment contained in S. 652 which will ensure affordable 
     access to telecommunications services for schools, libraries, 
     and rural health care providers.
       As Chairman of the conference, I have the responsibility to 
     advance the interests of the Senate. As your letter 
     indicates, there is strong support for this amendment to S. 
     652 in the Senate, and I am aware that many in the House 
     support the provision, too. I think this provision left the 
     Senate with strong bipartisan consensus, and the view of the 
     Senate that it should be adopted is strong. Since two of the 
     sponsors of the amendment also are Senate conferees on the 
     bill, I know they, too, will argue forcefully for its 
     inclusion in the final bill.
       Thank you for taking the time to contact me, Bob. I will 
     try to keep you apprised of our progress in conference.
           Sincerely,
                                                   Larry Pressler,
                                                         Chairman.

  Mr. KERREY. Mr. President, this idea of technology being a 
constructive force in our lives is sometimes a difficult sell to make 
to people, particularly with software, because they have experienced 
the joy of downsizing as we get more efficient. They sometimes wonder 
what good this is all going to be, or particularly in an educational 
environment, people, like myself, remember the old ``talking head'' 
environment that was there with the television sets coming into the 
classroom.
  I really want to emphasize that I think the only way that we are 
going to be able to increase the amount of learning that goes on, 
whether it is in the home, which I think is the first line of defense 
in education--if we can increase the amount of learning that goes on in 
the home, it is going to be an awful lot easier to make an educational 
form work inside the school, since the homes were there before the 
schools were--it will make it an awful lot easier for any of our 
institutional efforts to succeed.
  This technology gives us the opportunity to provide continuous 
learning inside of the home environment. It is going to be very 
difficult for us to do the sorts of things we want unless we embrace a 
future that changes the way we teach and changes the way we use 
technology unless we are willing to bet not only to change the law but 
also change the allocation of resources.
  It is going to be very difficult to make this work unless we, as 
adults, with the responsibility to make these decisions, say that this 
is going to become part of our core competency, whether that is a 
school or that is in a university or whether that is a government 
agency that is trying to operate in some kind of an efficient fashion.
  So I am here this afternoon to say that I want to embrace change. I 
do embrace change. I am working on it all the time, particularly in the 
environment of our schools. But we can put change in place that makes 
things worse.
  I say to the men and women who are on the conference committee, my 
colleagues and Members of the House that are on this conference 
committee, I urge you to put a meaningful role in there for Justice, 
some kind of role in there for Justice or, in my judgment, you are 
going to regret that you did not. You will regret that you did not 
because we are not going to have the kind of competitive environment 
that we need to have at that local level to enjoy the benefits that we 
all promise at least when we talk about supporting change in the law.

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