[Congressional Record Volume 143, Number 90 (Tuesday, June 24, 1997)]
[Senate]
[Page S6190]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KERREY:
  S. 954. A bill to assure competition in telecommunications markets; 
to the Committee on the Judiciary.


             THE TELECOMMUNICATIONS COMPETITION ACT OF 1997

  Mr. KERREY. Mr. President, the Telecommunications Act of 1996 was to 
usher in a new era of competition, choice, jobs, universal service, and 
infrastructure investment.
  Much of the promise of the new act remains unfulfilled. Most 
disappointing has been progress on the competition front. Rather than 
and explosion of competition, in the year since the law was enacted, 
there has been a disturbing trend toward consolidation.
  I rise to express serious concern about the Department of Justice's 
approach to mergers in the telecommunications industry. I feel very 
strongly that the Justice Department approval of the Bell Atlantic and 
Nynex merger is bad competition policy and bad telecommunications 
policy.
  With this merger, two strong potential competitors with two vibrant, 
rich markets are now one. This loss of competition follows the equally 
troublesome merger between Telecomm giants Pacific Telesis and 
Southwestern Bell. Perhaps most troubling is that these approvals have 
opened the door for even larger mergers.
  What was unimaginable a year ago, the reconstruction of the old Bell 
System monopoly is very much within the realm of possibility.
  Mr. President, the urge to compete should not be replaced with the 
urge to merge.
  A little more than a year ago, the Congress enacted landmark 
legislation to open telecommunications markets to competition, preserve 
and advance universal service, and spur private investment in 
telecommunication infrastructure. Over the last year, the Federal 
Communications Commission has worked around the clock to implement the 
new law. It has been a daunting task, frustrated by litigation and 
regulatory wrangling.
  While the FCC and the States struggle with implementation of the new 
law, it is important to remember that a key part of that legislation 
did not rely on regulation, it relied on the marketplace. The idea was 
to unleash pent up competitive forces among and between 
telecommunications companies. Mega mergers between telecommunications 
titans quell these market forces for increased investment, lower rates, 
and improved service.
  To unshackle the restraints of the Court supervised breakup of AT&T, 
the Congress gave Regional Bell Operating Companies instant access to 
long distance markets outside of their local service regions and access 
to long distance markets inside their regions when they opened their 
markets to local competition.
  In addition to responding to the lure of long distance markets, 
Regional Bell Operating Companies and other local exchange carriers 
were expected to covet each other's markets. The attraction of serving 
new local markets was to be a key catalyst for breaking down barriers 
to competition.
  With these mergers, local competition and long distance competition 
is lost. In addition, potential internet, video and broad band 
competition has disappeared.
  The promise of the new law was that competition, not consolidation 
would bring new services at lower prices to consumers. Where 
competition failed to advance service and restrain prices, universal 
service support would assure that telephone rates and services where 
comparable in rural and urban areas.
  When certain large telecommunications companies combine, they not 
only eliminate the potential of competition with each other in each 
other's markets, but they can create a market power which may be 
capable of resisting competition from others. They can also create the 
possibility of an unequal bargaining power when they compete with or 
deal with small, independent and new carriers.
  The promise of the Telecommunications Act was improved service and 
lower rates for consumers through competition and the advancement of 
universal service. If properly implemented, the Telecommunications Act 
of 1996 can deliver, but the disappointing merger decisions of the 
Department of Justice will make that task much more difficult.
  The legislation I introduce today would clearly institute an 
appropriate level scrutiny for mergers between large telecommunications 
companies. I believe that the antitrust laws and the Telecommunications 
Act would permit this type of analysis, without the adoption of a new 
statute, but to date, the Department of Justice has not seemed willing 
to pursue this approach.
  Under the Telecommunications Monopoly Prevention Act, new mega-
mergers would not be prohibited but be required to be reviewed in the 
context of their contribution to competition.
  This legislation is by no means a moratorium on mergers. Indeed, some 
mergers, even among large telecommunications companies, may be very 
much in the consumers interests and in the interest of competition. 
This legislation simply requires a level of review consistent with the 
vision of the Telecommunications Act.
  It is my view that the Justice Department is presently pursuing a 
standard of review for telecomm mergers which would be appropriate for 
competitive companies tending toward monopoly, but not for monopolies 
which should be moving toward competition.
  Mr. President, I ask that the text of the Telecommunications Monopoly 
Prevention Act be printed in the Record as read and urge my colleagues 
to review and support this needed piece of legislation.

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