Congressional Record, Volume 143 Issue 98 (Friday, July 11, 1997)

[Congressional Record Volume 143, Number 98 (Friday, July 11, 1997)]
[Senate]
[Pages S7284-S7295]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

CLOTURE MOTION

Mr. NICKLES. Mr. President, I send a cloture motion to the desk.
The PRESIDING OFFICER. The cloture motion having been presented under
rule XXII, the Chair directs the clerk to read the motion.
The assistant legislative clerk read as follows:

Cloture Motion

We, the undersigned Senators, in accordance with the
provisions of rule XXII of the Standing Rules of the Senate,
do hereby move to bring to a close debate on Executive
Calendar No. 104, the nomination of Joel I. Klein to be
Assistant Attorney General:
Trent Lott, Orrin Hatch, Kay Bailey Hutchison, John
McCain, Olympia Snowe, Dan Coats, Pat Roberts, Rod
Grams, R.F. Bennett, Thad Cochran, Jim Inhofe, Sam
Brownback, W. V. Roth, Chuck Hagel, J. Warner, Larry E.
Craig.

Mr. NICKLES. Mr. President, I further ask unanimous consent that the
cloture vote occur at 6 p.m., on Monday, July 14, and the mandatory
quorum under rule XXII be waived.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. NICKLES. Mr. President, I further ask unanimous consent that if
cloture is invoked, there be 3 hours remaining for debate, with 2 hours
under the control of Senators Hollings, Dorgan, and Kerrey of Nebraska,
and 1 hour under the control of Senator Hatch.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. NICKLES. Mr. President, I yield the floor.
Mr. HATCH addressed the Chair.
The PRESIDING OFFICER. The Senator from Utah.
Mr. HATCH. Mr. President, I rise today on behalf of Mr. Joel Klein,
who has been nominated for the position of Assistant Attorney General
of the Antitrust Division of the Department of Justice. Mr. Klein was
reported out of the Judiciary Committee unanimously on May 5. As his
record and testimony reflect, Joel Klein is a fine nominee for this
position, and I am pleased that his nomination has finally been brought
before the full Senate today. He has my strong support and, I believe,
the strong support of every member of the Judiciary Committee.
Now, I believe Mr. Klein is as fine a lawyer as any nominee who has
come before this committee. He graduated magna cum laude from Harvard
Law School before clerking for Chief Judge David Brazelon of the D.C.
Circuit and then Supreme Court Justice Lewis Powell. Mr. Klein went on
to practice public interest law and later formed his own law firm, in
which he developed an outstanding reputation as an appellate lawyer
arguing--and winning--many important cases before the U.S. Supreme
Court. For the past 2 years, Mr. Klein has ably served as Principal
Deputy in the Justice Department's Antitrust Division, and for the past
several months he has been the Acting Assistant Attorney General for
the Antitrust Division.
It is clear, both from his speeches and his enforcement decisions,
that Mr.

[[Page S7285]]

Klein is well within the mainstream of antitrust law and doctrine and
will be a stabilizing influence at the Antitrust Division of the
Justice Department. While no one doubts his willingness to take
vigorous enforcement actions when appropriate, it is a credit to Mr.
Klein that the U.S. Chamber of Commerce and the National Association of
Manufacturers and other business associations have written in strong
support of his nomination to lead the Antitrust Division. They believe
he will be good for American business. And I think they are right.
At the same time, Mr. Klein has demonstrated a sense of direction and
a vision for the Antitrust Division, which is important in a leader. He
is committed to enforcing our Nation's antitrust laws in order to
uphold our cherished free enterprise system and protect consumers from
cartels and other anticompetitive conduct. So, I am certain that Mr.
Klein will also be very good for consumers.
Antitrust doctrine has had its ups and downs over the years--although
we may not all agree on which times were which. At this point, however,
I am hopeful that antitrust is entering a more mature and more stable
period. Although antitrust analysis is fact-intensive and will always
contain gray areas, I hope Mr. Klein will work to help make antitrust
doctrine as clear and predictable as possible so that companies know
what is permitted and what the Antitrust Division will challenge. This
will help businesses compete vigorously without the worry and chilling
effects that result from uncertainty. I suggest that the Division's
goal should be to avoid burdens on lawful business activities while
appropriately enforcing the law against those who clearly violate it.
Finally, I would like to add that personally I have been very
impressed with Mr. Klein. He strikes me as a person of strong
integrity, as a highly competent and talented lawyer who is well-suited
to lead the Antitrust Division. While I expect we may not always agree
on every issue, I believe that Mr. Klein's skills and expertise and his
personal integrity will be a service to the Department of Justice, to
antitrust policymakers, and to the health of competition in our
economy. I look forward to working with him in the coming years.

In what appears to be a last-ditch effort to scuttle Mr. Klein's
nomination, there are some who have now floated an allegation that the
nominee's participation in a particular merger decision was somehow
improper. Upon examination, let me say that it appears to me that these
reports are wholly unfounded and provide no basis whatsoever for
questioning Mr. Klein's conduct. I understand that, with respect to the
matter at issue, Mr. Klein consulted with the proper ethics officials
and was assured that his participation raised no conflict of interest
or even the appearance thereof. Based on what we know, this judgment
appears sound, and I am confident that the nominee has conducted
himself appropriately. I hope that nobody in this body will use this
extraneous, ill-founded notion as an eleventh hour basis for opposing
Mr. Klein's nomination. I am confident, having worked with him over the
years, knowing him personally as well as I do, having watched him in
action, having seen him make decisions, and having seen him apply the
law, that Mr. Klein is a man of high integrity, and I urge my
colleagues to cast their votes in his favor.
I might add that some will suggest that Mr. Klein is misapplying the
Telecommunications Act and has taken questionable positions on
particular mergers. I will refrain here from passing judgment on any
particular decision and from engaging in a detailed debate on
telecommunications antitrust policy. I fully recognize that there are
some very, very important issues at stake here, especially in light of
a number of ambiguities left in the wake of the telecommunications law.
I also recognize that there have been some controversial mergers in
this area, and yet other potentially landmark mergers which have not
yet come to pass.
In short, telecommunications competition and antitrust policy is one
of the most important, yet somewhat unsettled, policy areas affecting
our emerging, transforming economy. The looming policy decisions to be
made in this area cannot be ignored. Indeed, I plan to have the
Judiciary Committee and/or our Antitrust Subcommittee fully explore
these issues.
But I believe it is neither fair nor wise to hold a nominee hostage
because of such concerns, especially one as competent and decent as
Joel Klein. In my view, sound public policy is best served by bringing
this nominee up for a vote, permitting the Justice Department to
proceed with a confirmed chief of the Antitrust Division, and for us in
Congress to move forward and work with the Department and other
involved agencies in the formulation and implementation of
telecommunications policies.
I hope that all Senators, and especially those of the President's own
party, will permit the administration's nominee to be voted on.
Finally, let me just say this: I believe that the President deserves
a great deal of credit for picking Joel Klein as one of his chief
nominations for this year. There are times when I disagree with the
President, but I have to say when he does a good job and when he does
nominate good people, as he has in these areas in the past in some of
the areas of law, in particular, and I cite with particularity some
people at Justice, the Director of the FBI and so many other law
enforcement aspects of our Government, then I will support the
President.
I will do what I can to show support for him and to encourage him to
continue to pick the highest quality people for these positions. I am
confident that Joel Klein is of the highest quality. I am confident
that he is one of the finest lawyers in this country in this field and
I feel absolutely confident that he will do one of the best jobs in
history at the Antitrust Division. Anything less than that, I would be
disappointed in. I believe he will. He is a fine man. I hope this body
will support him.
I hope when we have the cloture vote on Monday we will invoke cloture
and have the debate, allow anybody to say what they want to, but then
hopefully vote Mr. Klein up for this position so he can fully embrace
this position and fulfill it and do what needs to be done. That is all
I will say today.
I know my colleagues on the other side may have some comments. I
yield the floor.
Mr. HOLLINGS. Mr. President, the Telecommunications Act of 1996 was
an historic achievement of bipartisan consensus. The act was intended
to promote competition in every sector of the communications industry,
including the broadcast, cable, wireless, long distance, local
telephone, manufacturing, pay telephone, electronic publishing, cable
equipment, and direct broadcast satellite industries. At the time of
its passage, the law had the support of the Clinton administration and
almost every sector of the communications industry.
Mr. President, the Telecommunications Act was the result of many
years of debate in the Congress. In 1991, I authored legislation to
allow the Regional Bell Operating Companies [RBOC's] into
manufacturing. That bill passed the Senate by almost two-thirds of the
Senate, but the House could not pass it. In 1993 I introduced S. 1822
which was a comprehensive effort to update the Communications Act of
1934. Again, we tried to pass the legislation, but at each stage, one
industry blocked the other. As a result, communications policy was set
by the courts, not by Congress and not by the Federal Communications
Commission [FCC], the expert agency.
It is now almost 18 months after the historic law was passed and
critics are already hailing it as a failure because of recent mergers
and the apparent lack of competition. In actuality we will not know the
impact of the law for years to come. Yet a critical factor that will
determine its success has more to do with how the law is being enforced
than what the statutory language says.
First, it is important to note that many of the decisions we made
were based on the commitment that the respective industries were going
to compete against each other. Telephone companies were going to enter
the cable television market. The cable industry was going to enter the
local telephone service market. And long distance companies would enter
the local telephone service market.

[[Page S7286]]

Now, 18 months later, we're seeing more of the opposite. But I am not
ready to simply blame the industry for deciding not to compete.
Everyone knows that it's more natural for monopolies to defend their
market share than to willingly give it up. Furthermore, competition can
only occur if the new competitors are provided the legal and economic
opportunity to compete for market share. Thus, the success of the law
depends upon its implementation and oversight.
One major element of the implementation is the rules adopted by the
FCC. The FCC has been working nonstop for the past 18 months to adopt
rules to implement the law. I have some concerns about how the FCC has
interpreted certain provisions, and I have been working with the FCC on
those issues. One problem, though, has been that the rules themselves
are not in effect because these same companies that pledged competition
have instead sought consolidation and litigation.

An example of why vigorous enforcement of the act is necessary is
reflected in the difficulty new entrants are experiencing in trying to
enter the local telephone market. Financial reports today detail MCI's
problems that it faces in trying to break into the local telephone
market. MCI will record approximately $800 million in losses this
year--almost double its expected loss. AT&T also wrote to the FCC
outlining the need for greater enforcement of the act if new entrants
are to be successful in trying to enter the local market.
Three of the FCC's major rulemakings are now tied up in the courts.
The interconnection rules have been stayed by the Eighth Circuit Court
of Appeals since last fall. The universal service rules and access
charge rules also were recently challenged in the courts. The list goes
on with a number of other proceedings being tied up in the courts. The
most outrageous example thus far is last week's announcement that SBC,
the Bell Telephone Co. for the Southwestern United States, is
challenging the constitutionality of the statute itself--18 months
later!
It is important to note that SBC already has merged with Pacific Bell
and almost merged with AT&T. At the same time SBC was trying to merge
with AT&T, it was seeking to enter the long distance market to
supposedly compete with AT&T. SBC was denied in its initial request to
enter the long distance market, so instead of challenging the FCC
decision, SBC simply decided to seek continued protection from the
courts. The irony, of course, is that for 10 years, the
telecommunications industry argued that the courts should not
administer communications policy.
With all this litigation going on, it's no wonder the media believes
the law was a failure. I think it's time we focused more on why there
appears to be more consolidation than competition. Also, I think the
Congress needs to be more attentive to whether the administration's
nominees support the policies advocated by the administration during
consideration of the legislation.
Let there be no doubt that much of the competition provisions were
combined with a transition to greater deregulation. In exchange for
less regulation, there had to be competition to protect consumers. That
is not happening. Competition and deregulation were all we heard on the
floor of the Senate, but all we're now seeing is consolidation and
deregulation without the competition. It doesn't appear that some in
the administration today share the same views about competition as the
administration did in 1995 when the law was being debated.
Because the litigation strategy of some incumbents appears to have
prevented competitors from entering the various markets, the Antitrust
Division at the Department of Justice is now tasked with a far greater
role than anyone envisioned. But the nominee before us today has made
certain statements and taken certain actions in his acting capacity
that concern me greatly. His actions raise further concern with the
direction of the administration's policies with respect to its
interpretation of the Telecommunications Act of 1996. I believe that
these issues need clarification before Mr. Klein's nomination should be
brought to a vote in the Senate.
Whether or not robust competition develops in the local telephone
service market depends upon the administration's commitment to vigorous
enforcement of the act. Unfortunately, while serving as Acting Chief of
the Antitrust Division, Mr. Klein has explicitly contradicted specific
statutory mandates and conference report directions that the Congress,
working with the White House, fought against all odds to have added to
the Telecommunications Act of 1996. Several Members have asked Mr.
Klein, Attorney General Reno, and the White House about these concerns
and have asked them to demonstrate that the Antitrust Division will
follow the explicit meaning of the Telecommunications Act. So far,
there has not been a satisfactory response to our concerns.
Mr. President, with respect to my colleague in discussing the
character of Mr. Klein, there is no question about Mr. Klein being of
the highest character and integrity.
But what really occurs, Mr. President, and I have had to respond to a
lot of calls from good friends, it was not his character but his
ability, even though he is a smart lawyer, to administer the law as
written.
There is no question in my mind that, of course, you have those who
believe in weak antitrust. We went through that in the Reagan years. I
have been the chairman of the State, Justice, Commerce Subcommittee of
appropriations for the Antitrust Division, and during those particular
years the Reagan administration cared less whether we had antitrust. To
the credit of the distinguished wife of our distinguished Senator from
New Mexico, Anne Bingaman, came in there and we really beefed up the
department, and we even brought to task none other than Bill Gates of
the computer world. So when you can do that you know you have a good
antitrust head in power.
When I saw this particular gentleman take over it gave me misgivings.
Right to the point, as the newspaper said, from the very beginning when
I put my hold on this particular nomination, I said I would be glad to
discuss it that afternoon, I was not going to politic it around, I have
other work to do. But as a matter of conscience, I thought I ought to
bring these things to the attention of my colleagues.
There is no better place to look at the nominee than this particular
New York Times editorial entitled ``A Weak Antitrust Nominee.'' I ask
unanimous consent to have this printed in the Record.
There being no objection, the article was ordered to be printed in
the Record, as follows:

[From the New York Times, July 11, 1997]

A Weak Antitrust Nominee

The next head of the Justice Department's antitrust
division will have a lot to say about whether the 1996
Telecommunications Act breaks the monopoly chokehold that
Bell companies exert over local phone customers. He will rule
on mergers among telecommunications companies and advise the
Federal Communications Commission on applications by Bell
companies to enter long-distance markets. Thus it is
disheartening and disqualifying that President Clinton's
nominee, Joel Klein, is scheduled to come up for confirmation
today in the Senate with a record that suggests he might
knuckle under to the powerful Bell companies and the
politicians who do their bidding.
Senators Bob Kerrey, Ernest Hollings and Byron Dorgan have
threatened to block the vote today and put off until next
week a final determination of Mr. Klein's fate. But the
Administration would do its own telecommunications policy a
favor by withdrawing the nomination and finding a stronger,
more aggressive successor.
Mr. Klein, who has been serving as the Government's acting
Assistant Attorney General for Antitrust, demonstrated his
inclinations when he overrode objections of some of his staff
and approved unconditionally the merger of Bell Atlantic and
Nynex. That merger will remove Bell Atlantic as a potential
competitor for Nynex's many dissatisfied customers. Mr. Klein
refused even to impose conditions that would have made it
easier for state and Federal regulators to pry open Nynex's
markets to rivals such as AT&T.
Worse, Mr. Klein sent a letter to Chairman Conrad Burns of
the Senate communications subcommittee, who runs political
interference for the Bell companies, that committed the
antitrust division to pro-Bell positions in defiance of the
1996 act.
That act invites the Bell companies to provide long-
distance service, but only if the Bells first open their
systems to rivals that want to compete for local customers.
Yet in the letter to Mr. Burns, Mr. Klein explicitly rejected
Congress's interpretation of requirements to be imposed on
the Bells in favor of his own, weaker standard.

[[Page S7287]]

In a subsequent submission to the Federal Communications
Commission, Mr. Klein further weakened a requirement that
before the Bells enter long-distance service they face a
competitor that is serious enough to build its own switches
and wires. Mr. Klein has also upset some senators by seeming
to minimize the importance, provided in the 1996
Telecommunications Act, of Justice's advice to the F.C.C. on
applications by Bell companies to enter long distance.
True, Mr. Klein has blocked applications by two Bell
companies, SBC and Ameritech, to offer long-distance service
before they had opened their local markets to competition.
But by pandering to Mr. Burns, he has created strong doubts
that he can provide aggressive antitrust leadership.

Mr. HOLLINGS. And there is no better way to bring this right to the
focus of concern.
Let me refer, without having to put the entire article of the Wall
Street Journal from this morning into the Record, a headline, Mr.
President, that ``MCI Widens Local Market Loss Estimate.'' The very
first sentence,

MCI communications corporation is calling for tougher
regulatory action to break the competitive advantages enjoyed
by the regional Bell telephone companies and the local phone
markets,

and they said its losses from entering that business could total $800
million this year, more than double its original estimate. And then the
article continues.
The point is, it is very difficult to break into a monopoly and it is
very difficult to get a monopoly to give up marketshare. That has been
quite obvious, working in telecommunications since I have been here, 30
years, that this is the keenest, most competitive, most take-advantage
crowd you have ever seen. We are bogged down right now into the courts.
All the promises about going into each other's businesses to compete
have been forestalled, and mergers on course and everything else of
that kind, so in writing this legislation we had a back and forth with
the best of Washington lawyers on all sides, on every word, coaching
us, more or less, for the last 4 years, until February of this last
year, when we passed the bill.
For that 4-year period, we got into the requirements--we call it a
checklist--that the regional Bell operating companies had to comply
with to open up their markets before they could get into long distance,
ipso facto, allow them into long distance, with the monopoly control of
whoever is going to receive the call locally, and you have a
monopolistic situation and they will run a touchdown and the long
distance companies and all competition will be extinguished. So we had
a debate over every particular facet.
One particular requirement is labeled here in section 271 of the
particular act and it is referred to in the actual conference report on
page 33 in the report language, section 271. Let me read it so it is
intelligently understood here:

. . . the Bell operating company is providing access and
interconnection to its network facilities for the network
facilities of one or more unaffiliated competing providers of
telephone exchange services . . . [as defined in section
347(A)] to residential and business subscribers.

For the unattuned, the emphasis should be to ``residential and
business subscribers.''
We wanted to have a facilities-based competitor operating there
before that particular Bell company could take off into the long
distance competition. There is no question in my mind that the
distinguished gentleman under consideration, Mr. Joel Klein, understood
this.
He made a talk on March 11 at the Willard Inter-Continental Hotel
here in Washington to the Glasser Legalworks Seminar, and the seminar
was entitled ``Competitive Policy In Communications Industries: New
Antitrust Approaches.''
On page 9 of that particular talk, I quote Mr. Klein himself.

Now, let me add a few words about how we will apply this
standard to RBOC applications under Section 271 of the Act.
Our preference, though we recognize that it may not always
occur, is to see actual, broad-based--i.e., business and
residential--entry into a local market.

And it goes on and on explaining.
When my friend from Montana, the chairman of the Subcommittee on
Communications on the Committee of Commerce here in the U.S. Senate,
Senator Conrad Burns saw that, he wrote a letter to Mr. Klein. I am
sorry I do not have my hand immediately on that letter itself, but he
listed a series of questions in his letter to the Acting Assistant
Attorney General, and the Acting Assistant Attorney General, Joel Klein
on May 20, answered the letter.
I ask unanimous consent, so it will be understood, in fairness to
everybody, the entire letter and the enclosure be printed in the Record
at this point.
There being no objection, the material was ordered to be printed in
the Record, as follows:

Department of Justice,

Antitrust Division,

Washington, DC, May 20, 1997.
Hon. Conrad Burns,
U.S. Senate, Washington, DC.
Dear Senator Burns: Thank you for your letter of May 15,
1997. I welcome the opportunity to respond to your questions
and look forward to working with you and the Subcommittee on
Communications in implementing the Telecommunications Act of
1996.
Before responding to each of your specific questions. I
thought it might be helpful if I made a few general
observations. To begin with, I wholeheartedly agree with your
statement that ``the basic point of the Telecommunications
Act is that regulators should stand aside and let market
forces work once fair competition is possible.'' I want to
assure you that the Department of Justice shares that view.
The sooner market forces can fully displace regulatory
efforts, the better the Nation's consumers will be.
Second, we welcome the prospect of letting the Bell
Operating Companies (BOCs) into long distance service.
Additional entry into that business, under appropriate
circumstances, will enhance competition and will thereby
further longstanding goals of the Department of Justice.
Third, the standard that we are applying under the Act is,
I believe, a competition standard, designed to ensure that
the local market is open to competitive entry; it is not a
metric test, and it does not require that a BOC lose any
particular portion of market share before the Justice
Department will support its entry into in-region long-
distance. On the contrary, I agree with your point that
``local telephone competition may be slow in coming to rural
states for reasons having nothing to do with BOCs' steps
to satisfy the checklist.'' If competition is slow in
coming to a rural state because of the independent
business decisions by potential competitors, and not
because of any BOC actions or non-actions that
unreasonably impair competition, the Department would
support in-region long-distance entry. If my speech
conveyed any other impression--i.e., that we were seeking
to use the metric or market-share test that Congress
rejected during the legislative process culminating in the
1996 Act--I regret the confusion.
Let me amplify this point by setting forth my understanding
of the statutory requirements under section 271. The three
basic requirements are that a petitioning BOC must: (1)
satisfy either Track A or Track B's entry requirements; (2)
satisfy the 14-point checklist; and (3) satisfy the
``separate subsidiary'' requirements of section 272. Beyond
that, and in addition to these requirements, the FCC must
find that ``the requested authorization is consistent with
the public interest, convenience, and necessity.'' 47 U.S.C.
Sec. 271(d)(3)(C). In making its decision, the FCC must give
``substantial weight to the Attorney General's evaluation.''
Sec. 271(d)(2)(A). The Attorney General, in turn, is required
to evaluate the application ``using any standard the Attorney
General considers appropriate.'' Sec. 271(d)(2)(A) (emphasis
supplied). It was in the context of this specific statutory
language--i.e., ``any standard''--that I said in my speech
that Congress had given the Department a ``broad swath'' in
terms of its ability to evaluate section 271 applications. At
the same time, I clearly share your view that any standard we
use should be a competition standard. I have also made clear
my view that we should explain our standard before any BOC
filed a 271 application so that we would not be seen as
playing a game of ``gotcha,'' whereby we would ``change the
rules of the game'' after an applicant had filed with the
FCC.
In order to accomplish these goals, almost immediately
after I became Acting Assistant Attorney General last
October, I asked all BOCs as well as any other interested
party, to give me their views of an appropriate competition
standard under Section 271 and to answer several questions
that would help the Department to formulate its position in
that regard. Based on the comments the Department received,
we developed the standard that I announced in my March 11
speech.
In formulating this standard, I specifically rejected using
the suggestion in the Conference Report that the Department
analyze BOC applications employing the standard used in the
AT&T consent decree--objecting to BOC in-region long-distance
entry unless ``there is no substantial possibility that the
BOC or its affiliates could use its monopoly power to
impede competition in the market such company seeks to
enter.'' H.R. Conf. Rep. 104-458, at 148 (1996). That
standard, which had barred BOC entry into long distance
since their divestiture from AT&T, struck me as
insufficiently sensitive to the market conditions, and I
was concerned that it would bar BOC entry even where it
would be competitively warranted.

[[Page S7288]]

On the other hand, the Department's standard examines
whether a BOC's systems are sufficiently developed so that a
new entrant into its market can have confidence that, when it
signs up a new customer, that customer will be switched
effectively and will get service from the new carrier. Our
general preference is to see these systems operate in
practice. Once we are confident that this transitioning will
work effectively, we will be able to conclude that the local
market is open to competition. By the same token, we also
realize, as I indicated earlier, that in some areas--
particularly rural States--it is certainly possible that due
to the business decisions of particular companies, there may
be no new entrants for local service, A BOC should not be
excluded from in-region long-distance entry in such cases.
I believe that the standard we adopted is fair, balanced,
and reasonable. Most important, I believe it is consistent
with Congress's intent in the 1996 Act and that, if it is
implemented fairly, it will maximize the benefits to the
American public across the board--in local markets, long-
distance markets, and with respect to one-stop shopping. As
you so well put it in your letter, ``once fair competition is
possible''--and that's what our standard is designed to
test--then ``regulators should stand aside and let market
forces work.'' That is a pro-market, antitrust view, and I
can assure you that the Division will work to implement it.
I have responded to your specific questions in the
Attachment to this letter. I look forward to talking with you
regarding these and other telecommunications issues.
Sincerely,
Joel I. Klein,
Acting Assistant Attorney General.
Enclosure.

Questions and Answers

1. In your speech you used the following terms--``real''
and ``broad-based competition,'' ``actual, broad-based
entry,'' ``true broad-based entry,'' ``tangible entry,''
``large-scale entry,'' and entry on a ``large-scale basis.''
What do those terms mean to the Department?
By referring to ``real,'' ``actual, broad-based'' entry and
similar terms, I intended to express the Department of
Justice's general preference (though not mandatory
requirement) to see actual entry by competing carriers that
are selling both business and residential telephone service
on more than a non-trivial basis (though not in any specific
numbers). Such entry provides both (1) meaningful evidence
that the Bell Operating Company (BOC) has taken the necessary
steps to open its local market and (2) an opportunity to
measure the performance of the BOC in making available the
statutorily required services and facilities. The Department,
however, does not view such entry as a necessary precondition
to BOC long distance entry. Rather, we intend to look for
such entry where we would expect it to occur and, if it is
not occurring, to investigate why that is the case. Thus, in
my March 11 speech to which you refer, I stated that ``[o]ur
preference, though we recognize that it may not always occur,
is to see actual, broad-based i.e., business and
residential--entry into a local market.''
2. How many residential customers have to be served by a
competitor to meet the Department's entry test?
The Department's approach to whether the FCC should grant a
particular application by a BOC to enter into in-region long-
distance service does not turn on any numerical threshold for
the amount of residential customers that must be served by a
competitor before a BOCC meets the threshold for entry into
in-region long-distance service. If a significant number
(though not necessarily a large percentage) of residential
customers are being served in a particular state, it is
likely that the BOC has taken appropriate steps to open that
state to local competition. At the same time, it is not
necessarily the case that, if no residential customers are
being served by a competitor of the BOC, the BOC has not
taken the appropriate steps to open up a state to local
competition. As the Department stated in its FCC filing in
the SBC Oklahoma matter, ``if the absence or limited nature
of local entry appears to result from potential competitors'
choices not to enter--either for strategic reasons relating
to the Section 271 process, or simply because of decisions to
invest elsewhere that do not arise from the BOC's compliance
failures or barriers to entry in the state--this should not
defeat long distance entry by a BOC which has done its part
to open the market.''
3. How many business customers have to be served by a
competitor to meet the Department's entry test?
The Department's approach to whether the FCC should grant a
particular application by a BOC to enter into in-region long-
distance service does not turn on any numerical threshold for
the amount of business customers that must be served by a
competitor for a BOC to receive a recommendation from the
Department in favor of its entry into in-region long-distance
service. If a significant number (though not necessarily a
large percentage) of business customers are being served in a
particular state, it is likely that the BOC has taken
appropriate steps to open that state to local competition. At
the same time, it is not necessarily the case that, if no
business customers are being served by a competitor of the
BOC, the BOC has not taken the appropriate steps to open up a
state to local competition. As the Department stated in its
FCC filing in the SBC Oklahoma matter, ``if the absence or
limited nature of local entry appears to result from
potential competitors' choices not to enter--either for
strategic reasons relating to the Section 271 process, or
simply because of decisions to invest elsewhere that do not
arise from the BOC's compliance failures or barriers to entry
in the state--this should not defeat long distance entry by a
BOC which has done its part to open the market.''
4. Does there have to be more than one competitor in the
local exchange market to meet the Department's entry test?
No. Although it is likely that there will be more than one
competitor in many local exchange markets, in certain (most
likely rural) markets, it is possible that such entry will
not be forthcoming in the foreseeable future. If, in such
circumstances, the absence of entry does not reflect a BOC's
failure to help open the market to competition, the
Department would support long distance entry by the BOC.
5. Does a BOC have to face competition from AT&T, MCI or
Sprint to meet the department's entry test?
No. There is no single competitor, or combination of
competitors, that is required to compete with any particular
BOC in order for the Department to support its entry into in-
region long-distance. For example, our analysis of SBC's
application in Oklahoma focused on the efforts of Brooks
Fiber to enter the local market in Oklahoma. At no point did
we suggest that the application was deficient because none of
the three major interexchange carriers had entered Oklahoma.
6. How do you reconcile Congress' rejection of a metric
test for BOC entry into the long distance market with your
statement that ``successful full-scale entry'' is necessary
in order for the Department to ``believe the local market is
open to competition?''
In my judgment, the Department's entry standard is
consistent with Congress's decision to reject a metric test.
We do not require any shift in the level of market share as a
condition of entry. Rather, we think that the openness of a
local market can be best assessed by the discretionary
judgment of the FCC, relying in part on the Department of
Justice's competitive assessment, and based on the evaluation
of the particular circumstances in an individual state. While
this inquiry may involve an assessment of actual competition,
it does not focus on any metric or market share.
7. You have used the metaphor that the Department ``want(s)
to make sure that gas actually can flow through the
pipeline'' before allowing interLATA entry. How many orders
for resold services must be processed by a BOC in order to
satisfy this standard?
The Department does not require any particular number of
orders to be processed as a precondition to receiving our
support for a Section 271 application. Our inquiry seeks to
determine, whether the systems offered by the BOC to its
competitors will hold up, as a practical matter. This is very
important to new entrants trying to compete for customers,
but it is also not always easy to effectuate because of real-
world technical impediments which, in our experience, have
cropped up often. For example, in California, the orders for
resold services by competitors, when placed on a non-trivial
scale, led to a serious backlog in PacBell's wholesale
operations. This problem, in turn, created a real impediment
to entry by new competitors, whose customers and potential
customers became very concerned.
8. How many orders for unbundled network elements must be
processed by a BOC to satisfy this standard?
The Department does not require any particular use of
unbundled loops as a precondition to receiving our support
for a Section 271 application. Unbundled loops should be
available, as both a practical and legal matter, for use by
competitors without running into problems that will retard
competitive entry.
9. How much market share must a BOC lose to its competitors
to demonstrate that ``gas can flow through the pipeline?''
The ``gas in the pipeline'' metaphor does not reflect any
intention to measure the market share of competitors or any
shift in share to entrants, or to require any minimum shift
in share. In fact, our SBC evaluation notes that we are
willing to use alternate measures other than actual
commercial usage as proof that the ``pipeline can carry
gas.'' For example, if the same systems are in place in
different states, the use of those systems in other states
can be a useful indicator of whether or not competitors will
be able to receive what they need from the BOC. Similarly, in
some cases, we expect that comprehensive testing--carrier to
carrier, internal and/or independent auditing--may be able to
demonstrate that a BOC's support systems will enable entrants
to compete effectively.
10. FCC Chairman Reed Hundt testified on March 12, 1997,
before the Senate Commerce Committee that a BOC that
satisfied the checklist but did not have an actual competitor
in its market would meet the entry standard. Do you agree
with Chairman Hundt?
My answer would depend on the specific circumstances
presented by a given application. Under the Department's
approach, it is possible that a BOC satisfying the checklist,
but not facing an actual competitor, could merit entry into
in-region long-distance service under Section 271. The most
critical factor, as I have indicated, is whether the BOC has
taken the necessary steps to allow

[[Page S7289]]

competition in its market. If there are no competitors in a
particular state because of market conditions--rather than
because of artificial impediments to entry--we would support
BOC entry into long distance in that state.
11. If the Department opposes a BOC interLATA application,
do you believe the FCC should reject the application? If so,
wouldn't that give the Department's recommendation
``preclusive effect'', something that the Act specifically
prohibited?
We believe the FCC should give our analysis substantial
weight, which is the specific statutory requirement adopted
by Congress in the Telecommunications Act of 1996. The FCC,
however, is not required to follow our recommendation blindly
or reflexively and should certainly consider the statutory
framework and the comments of others in making its ultimate
decision.
12. You have also stated that the checklist, the
facilities-based requirement, the separate subsidiary
requirement and the option of ``Track B'' (the statement of
terms and conditions) are all ``necessary, through not
sufficient, to support entry''. What more must a BOC
demonstrate to obtain the Department's support?
The Department views the FCC's public interest
determination, which is expressly included in Section
271(d)(3)(C), as a fourth requirement. We view this
determination as reflecting Congress' decision to condition
BOC entry into long distance on a discretionary judgment by
the FCC, based in part on the Department of Justice's
competitive assessment, that a particular applicant will best
serve the interests of affected consumers in maximizing
telecommunication competition in all markets.
13. Do you believe that Track B can be used only if no one
has requested interconnection under Track A?
No. For Track A to apply, a potential facilities-based
carrier (be it predmoninantly or exclusively facilities
based) must request access to a checklist item. If no such
carrier requests such access, the BOC is free to proceed to
apply for long distance entry under Track B. Moreover, even
if a potential facilities-based carrier does request access
to a checklist item, the BOC still may utilize Track B if
``the only provider or providers making such a request have
(i) failed to negotiate in good faith as required by Section
252, or (ii) violated the terms of an agreement approved
under Section 252 by a provider's failure to comply, within a
reasonable period of time, with the implementation schedule
contained in an agreement.'' 47 U.S.C. Sec. 271(c)(1)(B).
14. Can a BOC rely on Track B if it has received
interconnection requests from potential competitors, but
faces no ``competing provider'' which is actually providing
telephone exchange service to residential and business
customers predominantly over its own facilities?
As our evaluation of SBC's Section 271 application explains
in greater detail, a ``competing provider'' need not be
operational as of the date of its request to initially
qualify as a ``competing provider'' for purposes of
determining the application of Track A. See SBC Evaluation at
13-17. We believe this view comports with the language and
purpose of the statute and is expressly supported by the
Conference Report, which states that Track B serves only to
ensure that a BOC is not ``effectively prevented from seeking
entry into the interLATA services market simply because no
facilities-based competitor that meets the criteria set out
in [Track A] has sought to enter the market.'' H.R.
Conf. Rep. 104-458, at 148 (1996) (emphasis supplied).
Even so, a BOC's application may still be considered under
Track B if ``the only provider or providers making an
interconnection request have (i) failed to negotiate in
good faith as required by Section 252, or (ii) violated
the terms of an agreement approved under Section 252 by a
provider's failure to comply, within a reasonable period
of time, with the implementation schedule contained in an
agreement.'' 47 U.S.C. Sec. 271(c)(1)(B).
15. What if the requesting interconnectors under Track A do
not ask for, or wish to pay for, all of the items in the
checklist? Can the BOC satisfy the entry test by
supplementing their interconnection agreements with a filing
under Track B to cover at least all remaining items in the
checklist?
As explained in greater detail in our SBC filing, the basic
view of the Department is that ``[a] BOC is providing an
item, for purposes of checklist compliance, if the item is
available both as a legal and practical matter, whether or
not competitors have chosen to use it.'' SBC Evaluation at 23
(emphasis supplied). Accordingly, under certain
circumstances--i.e., where there are checklist items that
have not been requested by any Track A qualifying provider--a
firm offer to provide an item through a sufficiently clear
provision in a statement of generally available terms,
coupled with the requisite showing of practical availability,
would suffice to constitute ``providing'' that item for
purposes of checklist compliance.

Mr. HOLLINGS. I refer by emphasis that he says on question one: ``In
your speech''--Senator Burns is referring to the speech made by Mr.
Klein--``In your speech you used the following terms--`real' and
`broad-based competition', `actual, broad-based entry', `true broad-
based entry', `tangible entry', `large-scale entry', and entry on a
`large-scale basis'. What do those terms mean to the Department?''
The rest is right there, but by way of emphasis, let me quote Mr.
Klein in response: ``Thus, in my March 11 speech to which you refer, I
stated that `[o]ur preference, though we recognize it may not always
occur, is to see actual, broad-based * * * business and residential--
entry into a local market.' ''
Now, Mr. President, it is very interesting because these
communications lawyers, and I ought to know, because if you work with
them over the years you begin to learn. What should interest anybody
looking at qualifications of this particular nominee, he puts in
italics ``[o]ur preference, though we recognize it may not always
occur''--and thereupon, you could not believe it, Mr. President, you
could not believe it, our Mr. Klein had the unmitigated gall, in
response to his italic to file an opinion here, an addendum to the
evaluation of the Department, the U.S. Department of Justice in the
matter of the application of SBC Communications, Inc., docket 97-121.
When? The day after that letter was sent, and here is what he says--
because you get the hint in the letter but you get the fact in this
addendum.
Let me quote:

The statute requires that both business and residential
subscribers be served by a competing provider, and that such
provider must be exclusively or predominantly facilities-
based. It does not, however, require that each class of
customers (i.e., business and residential) must be served
over a facilities-based competitor's own facilities. To the
contrary, Congress expressly provided that the competitor may
be providing services ``predominantly'' over its own
facilities ``in combination with the resale of'' BOC
services. . . . Thus, it does not matter whether the
competitor reaches one class of customers--e.g.,
residential--only through resale, provided that the
competitor's local exchange services as a whole are provided
``predominantly'' over its own facilities.

Now, Mr. President, you have section 271, that particular provision
turned right on its head. I have no better authority, Mr. President,
not if this particular Senator's opinion is of any value, and I might
say that no one Senator wrote the Telecommunication Act of 1996, but
immodestly, if there is one that had more involvement than anybody
else, it was me. I had put out a bill S. 1822; Senator Pressler put out
his bill, S. 652. We changed it around back to S. 1822. Everyone knows
that. Look at the finished documents. I worked around the clock, and I
worked with Chairman Bliley, the Republican chairman on the House side.
Here in a letter of June 20, 1997, to the Honorable Reed Hundt by
Chairman Bliley, Chairman of the FCC.

Mr. President, I ask unanimous consent that that letter be printed in
the Record.
There being no objection, the letter was ordered to be printed in the
Record, as follows:

U.S. House of Representatives,

Committee on Commerce,

Washington, DC, June 20, 1997.
Hon. Reed Hundt,
Chairman, Federal Communications Commission, Washington, DC.
Dear Chairman Hundt: I recently read with interest and
dismay the Department of Justice's additional comments
regarding SBC Communications Inc.'s (SBC's) application to
provide in-region, interLATA services in the State of
Oklahoma. The Department therein clarified its views on
section 271(c)(1)(A) of the Communications Act, as amended.
As the primary author of this provision, I feel compelled to
inform you that the Department misread the statute's plain
language. As you rule on SBC's application and future BOC
applications, you should not overlook the clear meaning of
section 271 or its legislative history.
The Department argued that a BOC should be allowed to enter
the in-region, interLATA market under ``Track A'' (i.e.,
section 271(c)(1)(A)) if a competing service provider offers
facilities-based services to business customers and resale
services to residential customers, so long as the combined
provision of both services is predominantly over the
competing service provider's facilities. In other words, the
Department wrongly takes the view that section 271(c)(1)(A)
is satisfied if a competitor is serving either residential or
business customers over its own facilities.
Section 271(c)(1)(A), however, clearly requires a different
interpretation. To quote the statute, a competing service
provider must offer telephone exchange service to
``residential and business subscribers . . . either
exclusively over their own telephone exchange service
facilities or predominantly over their own telephone exchange
service facilities.'' Track A is thus satisfied if--and only
if--a BOC faces facilities-based competition in both
residential and business markets. Neither the statute nor its
legislative history permits any other interpretation; I know
this because I drafted both texts.

[[Page S7290]]

In the end, the Department's recent misinterpretation of
section 271 reinforces a point I frequently made during
Congressional debate over the Telecommunications Act of 1996:
the Department of Justice does not have the expertise to make
important telecommunications policy decisions. The FCC, by
contrast, does have the necessary expertise, which explains
why Congress gave you and your colleagues--and no one else--
the ultimate authority to make important decisions, such as
the decision to interpret section 271. I remind you that the
Department's role in this matter is a consultative one, and
should be treated as such.
Let me conclude by noting that, while this letter focuses
exclusively on Department's interpretation of section
271(c)(1)(A), it should not be construed to mean that the
balance of the Department's comments were either consistent
or inconsistent with Congressional intent.
Sincerely,
Tom Bliley,
Chairman.

(Mr. HUTCHINSON assumed the chair.)
Mr. HOLLINGS. Mr. President, I see another Senator wishing to talk.
But, Mr. President, there it is. Here we have a Deputy Attorney General
nominee that is not going to carry out President Clinton's policy, nor
the language of the statute.
I ask unanimous consent to have printed in the Record a letter from
President Clinton to me on October 26, 1995.
There being no objection, the letter was ordered to be printed in the
Record, as follows:

The White House,

Washington, DC, October 26, 1995.
Hon. Ernest F. Hollings,
Ranking Member, Committee on Commerce, Science, and
Transportation, U.S. Senate, Washington, DC.
Dear Fritz: I enjoyed our telephone conversation today
regarding the upcoming conference on the telecommunications
reform bill and would like to follow-up on your request
regarding the specific issues of concern to me in the
proposed legislation.
As I said in our discussion, I am committed to promoting
competition in every aspect of the telecommunications and
information industries. I believe that the legislation should
protect and promote diversity of ownership and opinions in
the mass media, should protect consumers from unjustified
rate increases for cable and telephone services, and, in
particular, should include a test specifically designed to
ensure that the Bell companies entering into long distance
markets will not impede competition.
Earlier this year, my Administration provided comments on
S. 652 and H.R. 1555 as passed. I remain concerned that
neither bill provides a meaningful role for the Department of
Justice in safeguarding competition before local telephone
companies enter new markets. I continue to be concerned that
the bills allow too much concentration within the mass media
and in individual markets, which could reduce the diversity
of news and information available to the public. I also
believe that the provisions allowing mergers of cable and
telephone companies are overly broad. In addition, I oppose
deregulating cable programming services and equipment rates
before cable operators face real competition. I remain
committed, as well, to the other concerns contained in those
earlier statements on the two bills.
I applaud the Senate and the House for including provisions
requiring all new televisions to contain technology that will
allow parents to block out programs with violent or
objectionable content. I strongly support retention in the
final bill of the Snowe-Rockefeller provision that will
ensure that schools, libraries and hospitals have access to
advanced telecommunications services.
I look forward to working with you and your colleagues
during the conference to produce legislation that effectively
addresses these concerns.
Sincerely,
Bill Clinton.

Mr. HOLLINGS. He writes:

Dear Fritz: I enjoyed our telephone conversation today
regarding the upcoming conference on the telecommunications
reform bill and would like to follow up on your request
regarding the specific issues of concern to me as proposed
legislation.

I am reading just part of it now.

As I said in our discussion, I am committed to promoting
competition in every aspect of the telecommunications and
information industries. I believe that the legislation should
protect and promote diversity of ownership and opinions in
the mass media, should protect consumers from unjustified
rate increases for cable and telephone services, and in
particular, should include a test specifically designed to
ensure that the Bell companies entering into long distance
markets will not impede competition.

Now, Mr. President, that is why we wrote 271 the way we wrote it.
That is why we wrote it that way. There isn't any question, as the
chairman has said, this is bipartisan. This isn't because some Senator
is enraged or upset or something else like that. I have been here long
enough to get enraged or upset. I have seen a lot of good ones go
through and several bad ones.
I thought having participated on the ground and worked for 4 years in
getting this formative act that was voted on by 95 U.S. Senators--they
voted on this particular language when it passed this particular body.
They understand not only that this isn't just a singular mistake, we
have the proposition of the gentleman, Mr. Klein, also coming forward
and disregarding entirely, gratuitously, and summarily throwing out the
VIII(c) test, which I will have time to refer to on here later on.
My point here is that we really worked hard to get participation.
There were those who didn't want the antitrust provision. They wanted
one-stop shopping at the Federal Communications Commission. We worked
hard to make sure that this was done right. We realized many times that
they don't have antitrust lawyers like Reed Hundt, who is now the
Chairman and understands the law, and you necessarily don't have
antitrust lawyers coming in as members and commissioners at the Federal
Communications Commission. So to give emphasis to opening up the market
for free and open competition, we put in the antitrust provisions in
there for its opinion to be provided to the Federal Communications
Commission. We worked hard to provide it. We worked diligently on the
VIII(c) test, which was Judge Greene's test for over 12 years now in
the breakup of AT&T, and every one of the Bell Operating Companies
attested to that particular language. And here comes the particular
nominee casting aside, in a gratuitous fashion, that requirement, on
the one hand, and changing over the statute just on a letter from a
Senator, on the other hand.
When you have that kind of weak nominee, you have thwarted the intent
of the Congress and the President of the United States and the
Telecommunications Act of 1996.
I yield the floor.
Mr. DeWINE addressed the Chair.
The PRESIDING OFFICER (Mr. Roberts). The Senator from Ohio is
recognized.
Mr. DeWINE. Mr. President, as the chairman of the Antitrust, Business
Rights and Competition Subcommittee of the Senate Judiciary Committee,
I rise today to urge my colleagues to support the nomination of Joel
Klein as Assistant Attorney General for the Antitrust Division.
Mr. President, the head of the Antitrust Division, obviously, plays a
critical role in assuring that our antitrust laws are enforced wisely
and vigorously. The importance of that role really cannot be
overstated. Strong enforcement of antitrust laws is necessary to foster
and to protect competition. As we all know, competition is good
business, it gives businesses increased incentives to innovate, either
by creating new products and services, finding ways to improve existing
products, or by lowering costs. That type of innovation is good for
both business and for consumers.
Maintaining the competitive foundation of the American economy has
always been a difficult task. And as our economy grows and changes,
it's only getting more difficult. We often discuss globalization of the
economy as allowing more and more American companies the opportunity to
compete in the international marketplace and, because of that, they
have flourished in this international environment. In order to build on
this success, it is essential that we apply the antitrust laws in order
to protect our companies from unfair, anticompetitive actions on the
part of foreign businesses and foreign governments.
In my view, Mr. President, Joel Klein is qualified to lead our
efforts toward that stronger, more efficient antitrust enforcement. Mr.
Klein is a superbly qualified attorney, with a great deal of
substantive knowledge regarding both the jurisprudence and the
enforcement of the antitrust laws. He has shown his abilities over the
last few months in his capacity as the Acting Assistant Attorney
General. He has shown this by leading the Antitrust Division through a
series of very complex, difficult analyses, particularly in the area of
telecommunications.

As we all know, telecommunications issues have become very important
and, many times, quite controversial. Now, some have expressed concerns
regarding Mr. Klein's interpretation of

[[Page S7291]]

section 271 of the Telecommunications Act in a way that some believe
will make it too easy for the Regional Bell Operating Companies, or the
RBOC's, to enter the long distance market. However, Mr. President, in
both instances where the Antitrust Division has been called upon to
evaluate an RBOC application to enter the long distance market, the
Antitrust Division has recommended against the RBOC. In other words,
Mr. President, some people believe that Mr. Klein has been too hard on
The RBOC's. The ironic thing about this debate is that when you really
analyze it, you will see that Mr. Klein has received criticism from
both sides of these issues.
Now, Mr. President, these decisions involve complex factual, complex
legal, and complex economic analyses. Yes, each decision has angered
some of the parties involved, but I believe Mr. Klein has done his job
in a responsible and principled way. I may not agree with every
decision made by the Antitrust Division, but what is important, I
believe, is whether or not the nominee has interpreted the law
responsibly and fairly. Interpreting a complex matter, such as the
Telecommunications Act, is certainly not easy. I expect Mr. Klein's
decisions will not please everyone. They certainly will not please
everyone, given that it seems everyone has their own interpretation of
this law. In fact, I think he should be praised for his willingness to
take on these important and controversial issues. Rather than skirt
controversy, Mr. Klein has done his job as best he can. I believe it is
time that the U.S. Senate does its job. I believe that we need to
discuss Mr. Klein's qualifications and the merits of this particular
matter, and then I believe we need to vote on this confirmation.
Mr. President, we cannot continue to move forward in this area of
antitrust enforcement without the sort of calm, principled leadership
that Joel Klein will provide. America will need an Assistant Attorney
General with a strong understanding of antitrust doctrine and the
willingness and ability to enforce the laws in an aggressive but
evenhanded manner. I believe, Mr. President, that it is vitally
important that the competitive foundation of our economy be maintained,
and that the antitrust laws must be enforced and must be enforced
fairly. Joel Klein, I believe, shares these goals, and I believe that
he has proven he has the expertise and the ability to put those goals
into practice. I believe, therefore, Mr. President, we should confirm
his nomination without further delay.
Mr. President, as we have already heard on this floor, there is going
to be a vigorous debate about this nominee. Each Senator has to
exercise his or her constitutional obligations. Each one of us has to
decide whether we will vote ``yes'' or vote ``no.'' I merely ask,
however, that we do vote, that after a good, thorough, and vigorous
debate, we bring this matter to a close. Quite frankly, this
administration has had some problems, for whatever reason, in filling
some of the key positions at Justice. They are slowly beginning to take
care of that matter. I believe that in the Senate we have an
obligation--now that we have the nomination in front of us--to proceed,
and to proceed without unnecessary and undue delay.
Frankly, it is not helpful to have a vacancy in one of the key
positions. Mr. Klein has, for some months, been the acting head of the
Antitrust Division. I believe that he has carried out his duties well,
as I have already said, in that particular job. But it is not helpful
and it is not good for this nomination to continue to be pending, and
it is not good for him to continue to be in the position of the acting
head of the Antitrust Division.

So, as we have this debate--and it will be a good debate; I am sure
it will go on for some time--I merely urge my colleagues to bring this
matter at some point to a vote in the near future so that we can move
on with the business of antitrust in this country.
I thank the Chair.
I yield the floor.
Mr. DORGAN addressed the Chair.
The PRESIDING OFFICER. The Senator from North Dakota is recognized.
Mr. DORGAN. Mr. President, no one in this country at any time should
ever have a problem sleeping as long as there is an opportunity to talk
about antitrust issues. It is for many some of the most boring,
lifeless set of issues available to discuss anywhere in public
politics. Antitrust enforcement--what on Earth is it?
When I came to Washington, DC, I threatened to put the picture of the
1,000 lawyers who are hired in our Government for antitrust enforcement
purposes on the cartons of milk in grocery stores because I felt that
these 1,000 lawyers hired by our Government for antitrust enforcement
had surely vanished. I knew that we were paying 1,000 of them. But it
was clear to me there was no antitrust enforcement, so they must have
vanished.
So it is a decade and half later and we are now talking about
antitrust issues again. And the discussion today is with confirming a
nomination to head the Antitrust Division at the Department of Justice.
This is, while boring for many people, an important question because
we have what is called a free market system in our country. A free
market system only works to the extent that you have referees who are
willing to intervene in circumstances where people try to rig the
market and where there is not open competition and where there is
monopoly pricing in circumstances where the market is not free. In many
cases, that is the same as stealing.
You go back to the beginning of the century and you will find
examples in a range of industries--petroleum, natural gas, a whole
range of industries, railroads--in which there were monopolies and
trusts. They were stealing from the American public. We put in place a
number of things to deal with that.
One, we prosecuted some people and threw some people in jail.
Second, we put in place certain legislation which said that if the
free market is going to be free, then let's make sure there are some
referees to keep it free. That is the whole issue of antitrust
enforcement.
Today the issue is, shall a Mr. Joel Klein from the Justice
Department, who is now acting in this role as Assistant Attorney
General for Antitrust Enforcement, be confirmed by the Senate?
President Clinton sent his name down here and asked for confirmation.
And I am standing here to say that Mr. Klein, by all accounts, has a
distinguished career.
I met with Mr. Klein yesterday. He is a very likable fellow who has
much to commend him. But I believe it is not the time to proceed to
this nomination because a number of very important questions remain
unanswered. The Senator from South Carolina mentioned some of them.
We had an enormous fight on the floor of the Senate about the
Telecommunications Act. For the first time in 60 years, we reformed the
telecommunications laws in this country. One of the fights we had on
that legislation was about what the role of the Justice Department with
respect to whether or not there is competition with local phone service
providers so that the Bell system can be freed then to go to compete
against long distance companies. When is there effective competition
locally that would free the Bells to compete in the long distance
system? We said let's have an important role for the Justice Department
in that area. We specifically talked about the test for that role, what
is called the 8(c) test.

Now we have a person who is down at the Justice Department and writes
a letter to a colleague of ours when questioned about all of these
issues, and he says, ``Well, I specifically reject the so-called 8(c)
test,'' in terms of how the Justice Department will evaluate the kinds
of activities that are involved in whether or sufficient competitive
market place conditions exist before a Bell company can enter the long
distance market.
There are a range of issues that we want to have answered. I have
written to the President and Senator Kerrey has written to the Attorney
General. We have received no responses at this point. We would like
responses to a series of questions about positions taken by this
nominee.
I am not standing here suggesting that Mr. Klein is unworthy. I am
saying at this point that the questions, which are very serious
questions, have not yet been answered. We have asked them, but they
have not yet been answered.
In light of that, I don't think any name should proceed until we
receive answers to very important questions.

[[Page S7292]]

The Bell Atlantic-NYNEX merger was approved by Mr. Klein. Why was
that approved without conditions? We had some abbreviated discussion of
that yesterday. But I think we need more information about that. Why
was that not approved with some conditions? We had the opportunity to
establish conditions. How does this decision relate to the stated
objective that the Department of Justice is really concerned about
promoting competition?
I would like more information about the Justice Department's
interpretation of facilities-based competition, which is a standard
that we discussed at some length in the Telecommunications Act. Why? I
would like to ask and like to get some additional answers.
Does the nominee before us specifically reject the so-called 8(c)
standard outright when Congress specifically recommended that standard
for evaluating the issues of competition? And where does the nominee
stand on the issue of media concentration?
It is very hard to see that a telecommunications bill, which by its
nature was to promote more competition, is moving in the direction of
being successful when we have, instead of more competition, more
concentration. We have behemoth organizations marrying up and two
becoming one or four becoming two and two becoming one. So, by
definition, you have less competition. We have more and more galloping
concentration in the telecommunications industry--television, radio,
and all the rest of it. And, yet, I would like to know, where does the
Justice Department and where does this nominee stand on the issue of
concentration?
Is that alarming, or do we have people who want to shake the pom-poms
to become cheerleaders for it, as Mr. Baxter did when he was at the
Department of Justice? There wasn't any merger that wasn't big enough
for him. It didn't matter. The bigger, the better. That is not the role
of the Department of Justice and antitrust enforcement, in my judgment.
I am here to say that this is premature. This nomination should not
be considered until we have received sufficient answers to some of
these questions.
Again, let me reemphasize. I am not standing here today to say that
Mr. Klein is not someone without distinguished credentials. I have met
him. I kind of like him. But there are a number of questions
unresolved, and those questions should be resolved. The Senate should
insist that they be resolved before we move this nomination forward.
So I will speak at some length on Monday. The Senator from Nebraska,
Senator Kerrey, Senator Hollings, and I believe, will also speak and
explain the kinds of answers we are awaiting from the administration,
from both the President and the Attorney General, before we proceed on
this nomination.
We have every right in this nomination process to say that before
this nomination proceeds, there are certain questions we think the
American people deserve an answer to. I intend to ask them not only
today but on Monday, and we hope perhaps before this process is
complete, that the Attorney General might respond or the White House
might respond to the questions that have been put to them about some of
the things that have been written, some of the things that have been
spoken and said, and some of the decisions that have been made by the
Acting Assistant Attorney General in the Antitrust Division.
Mr. President, I will speak at greater length on this subject on
Monday. I yield the floor.
I make a point of order that a quorum is not present.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. KERREY. 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. KERREY. Mr. President, I have come to the floor to talk about the
nomination of Joel Klein to be the head of the Antitrust Division of
the Department of Justice.
I have had the opportunity on a couple of occasions to meet and to
talk with Mr. Klein, and I like him personally and I admire his career
and what he has done as an individual.
However, I have serious reservations about his capacity to serve in
this position. He has been nominated. I appreciate and respect the
President's confidence in him. But it is with deepest sincerity that I
say, although I would like to support his nomination for high office
and hope that by the time the Senate votes on this nomination I can
support him, at this time I believe that his nomination requires much
more deliberation. I am especially troubled by many of the
administration's telecommunications policies and especially in this
case Mr. Klein's interpretation of the 1996 Telecommunications Act.
I have asked Attorney General Reno by letter to clarify the policy
Mr. Klein will be required to implement should Mr. Klein be confirmed.
In 1995, when this bill was being debated, I led, unfortunately, at
times a filibuster in the Chamber when this bill was being discussed
because I wanted the Department of Justice to have a role in
determining whether or not there was competition before other entities
were going to be allowed to expand their services. The
Telecommunications Act should work, but it will only work if we have an
unrelenting dedication on the part of all Government agencies, the FCC
and the Antitrust Division of the Department of Justice, their
unrelenting attention and dedication to making certain we have
competition.
Mr. President, just recently, I met with Joel Klein. I like him and
admire him. It is the second time I have had a chance to visit with him
since he was nominated by the President to serve as the Assistant
Attorney General for Antitrust. It is with the deepest sincerity, that
I say that I would like to support his nomination for this high office.
I hope that by the time the Senate votes on this nomination that I can
support him.
At this time, however, I believe that this nomination requires
considered deliberation. I am deeply troubled by the administration's
telecommunications policies and Mr. Klein's interpretation of the
Telecommunications Act of 1996. I have asked the Attorney General to
clarify the policy Mr. Klein will be required to implement should he be
confirmed.
My colleagues know that in 1995, I led a filibuster against the
Senate Commerce Committee version of the Telecommunications Act to
assure that the American people were fully aware of the monumental
decisions being made by the Senate. I believed then, as I do now, that
only an unrelenting dedication to competition and universal service by
the Congress and the executive branch could make that legislation
beneficial to consumers.
For days, with the support of the Clinton administration, my
colleagues and I fought to assure that the law would embrace real
competition and universal service. If it did not, it would simply be
one more piece of legislation for the big, the powerful, and moneyed
interests.
On the Senate floor we were successful in making the commitment to
vigorously pursue competition central to the decision to end the court
supervised Modified Final Judgement [MFJ] which controlled the
activities of the seven Baby Bells and AT&T following the breakup of
the Bell System.
The bottom line, Mr. President, was that the American people did not
ask for the Telecommunications Act. I do not recall one Nebraskan
complain to me that telephone service was too expensive or that their
service was poor. For most Americans, when asked about their phone
service, they might quote Andy Griffth from the old AT&T commercial,
and say ``rings true, and not a lick of trouble * * *.''
While there was satisfaction for most residential consumers, there
were a host of new technologies and opportunities to bring the benefits
of the information revolution to all Americans which the monopoly
organization of the telecommunications marketplace was stifling. Every
day of the status quo represented a lost opportunity for American
homes, schools, and economic development.

There were proposals to invest Government funds in building the
utopian information superhighway, there were regulatory initiatives to
prod monopolies to invest in the future.
The pathway chosen to bring advanced services, lower prices, and more

[[Page S7293]]

choices to consumers was to fundamentally change the economics of
telecommunications services from a regulated monopoly to a competitive
market. The price for opening all markets to competition, however, was
an obligation by all telecommunications carriers to contribute to the
support of universal service.
The vision of telecommunications reform was that competition would
spur investment, innovation, and choice and universal service support
would assure that no American would be left behind.
It was and is a grand vision. One which if properly implemented can
energize the economy, enhance productivity, build wealth, enhance
freedom, and revolutionize the way Americans work, learn, and relax.
A significant part of the battle on the Telecommunications Act
centered on the appropriate role for the Department of Justice in
telecommunications policy. The first draft of the Telecommunications
Act, written by Senator Pressler on behalf of the Republicans on the
Senate Commerce Committee had no role for the Department of Justice and
did not even explicitly reserve the Department's preexisting antitrust
powers.
As passed by the Senate Commerce Committee and the full Senate, the
Department's antitrust authority had been preserved and the Department
was given an advisory role in the FCC's decision to allow the Regional
Bell Operating Companies, RBOCs, to enter the long-distance market
within their own regions.
To strengthen the bill Senators Dorgan, Leahy, Thurmond, and I
proposed amendments to strengthen the role of the Department of
Justice.
I believed and continue to believe that the Department of Justice
using its powers under the antitrust laws and the new law would and
should be the bulwark against the abuse of monopoly power. I was
confident that the Department of Justice would steadfastly be on the
side of the consumer and fight for a vision of telecommunications
competition which served the interests of all Americans.
I opposed the Senate passed bill, because it did not have a strong
enough role for the Department of Justice.
I voted for the conference agreement in large part, because the role
of the Department had been strengthened. Specifically, the bill as
enacted, gave the Department's opinion on Bell entry into long distance
``substantial weight,'' and eliminated the ability of the Federal
Communications Commission to approve a merger of telephone companies
which bypassed antitrust review.
Mr. President, the effort to protect and enhance the role of the
Department of Justice was a hard fought fight. President Clinton, even
threatened a veto of the bill if it had a weak role for the Department.
Having fought and won the legislative battle, I am particularly
concerned about recent comments made by Acting Assistant Attorney
General Klein regarding the Department of Justice's role in
facilitating competition under the Telecommunications Act of 1996.
In response to questions by the chairman of the Senate Communications
Subcommittee, Mr. Klein said that he ``specifically rejected using the
suggestion in the Conference Report that the Department analyze Bell
Operating Company (BOC) applications employing the standard used in the
AT&T consent decree''. This standard, known as the 8(c) test would
reject BOC entry into in-region long distance unless ``there is no
substantial possibility that the BOC or its affiliates could use its
monopoly power to impede competition in the market such company seeks
to enter.''
While the Telecommunications Act gave the Attorney General the
authority to choose any standard she sees fit to evaluate Bell entry
into in-region service, I have asked the Attorney General to clarify
the Department's policy on this matter. I am hopeful that a
clarification from the Attorney General can put Mr. Klein's comments
into a fuller and more appropriate context.
I certainly hope that Mr. Klein's statement does not mean that a Bell
Operating Co. should be allowed to enter the in-region long distance
market even if there is a ``substantial possibility that the BOC or its
affiliates could use monopoly power to impede competition.''
In fairness to Mr. Klein, he put forward an alternate test known as
the ``irretrievably open to competition test.'' Unfortunately, it is
placed in a context, which at least implies that the 8(c) test is too
tough on Bell Operating Companies.
During the consideration of the Telecommunications Act, President
Clinton wrote in a letter to Members of Congress that the
Telecommunications Act should ``include a test specifically designed to
ensure that the Bell companies entering into long distance markets will
not impede competition * * *'' I hope that Mr. Klein and the Attorney
General can set this record straight as to the administration's policy.

Mr. Klein also wrote to Chairman Burns that ``we think that the
openness of a local market can be best assessed by the discretionary
authority of the FCC, relying in part on the department of Justice's
competitive assessment, and based on the evaluation of the particular
circumstances in an individual state.''
Mr. President, I fought hard to include DOJ in the process of
determining when Bell Operating Companies enter in region long distance
markets because of the legal and economic expertise of the Antitrust
Division. It would be tragic if the Department abdicate its role in
this area.
The Federal Communications Commission [FCC] is not the only agency
equipped to make decisions about the openness of markets. A market
cannot be competitive if it is not open. The Department's
responsibility under the act and the Nation's antitrust laws is most
serious and should be aggressively pursued by the Antitrust Division.
Although the ultimate decision lies with the FCC, the Department must
accept its important role as the expert in competition and market power
and adopt a meaningful entry standard based on procompetitive
principles. I am not yet convinced that the Department has done that.
To me, what is most important is that the Attorney General put
forward a test which Mr. Klein will implement which is unrelenting in
its commitment to competition.
The Kerrey test of competition would be as simple as do customers
have a choice? If the answer is no, you do not have competition.
The ideal open telecommunications market would allow an entrepreneur,
new to the market to offer bundled services to the home. To do that
there must be full access to the local exchange carrier at fair prices.
If it takes a legion of lawyers, lobbyists, and investment bankers to
even offer a new service to a customer of a monopolist, you do not have
an open market.
On a separate but equally important competition issue, I remain very
concerned about recent mergers between large telecommunications
providers. The decision by the Department of Justice to approve the
Bell Atlantic/NYNEX merger without any conditions is troubling.
Reports of AT&T's efforts to bring two BOC's back into it's fold
should give everyone pause. A year ago, such action would have been
laughable. I feel strongly that the Bell Atlantic merger approval,
personally supervised by Mr. Klein sent exactly the wrong message to
the market. I fear that this merger will lead to a new round of large
telecommunications mergers which could greatly reduce any chance for
the swift adoption of a vibrant, competitive telecommunications market.

Competitive entry could be frozen while real and potential
competitors court, woo, and marry each other. As to unions between the
progeny of the former Bell System, I believe that it is generally not a
good idea for family members to wed!
One thing is certain, Congress did not intend to replace the urge to
compete with the urge to merge.
While the FCC and the States struggle with implementation of the new
telecommunications 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

[[Page S7294]]

titans quell these market forces for increased investment, lower
rates, and improved service.
I can accept an honest disagreement on competitive impact of the Bell
Atlantic/NYNEX merger. I want the head of the Antitrust Division to
follow the law, even if it provokes my ire. It is in honest
disagreement that we can examine the effectiveness of the law. If the
law needs to be changed, let's change it.
Beyond that, there are elements of the Bell Atlantic/NYNEX decision
which are deeply troubling to me. Those concerns could be relieved if I
were convinced that the competitive concerns received full, open, and
deliberate consideration and that efforts were made to mitigate the
loss of actual and potential competition. Most importantly, this merger
should not be a precedent for a no holds barred approach to
telecommunications combinations.
The history of telecommunications service in America is at a critical
point. At risk is a lifeline service important to every citizen of this
Nation. The Department's commitment to using its full authority to
promote competition is important to achieving an environment where
consumers come first and entrepreneurs are encouraged to challenge the
status quo.
The bold vision of the Telecommunications Act is a promise yet
unfilled. The man or woman who executes the responsibilities of this
office will have a profound effect on every American, and not only in
telephone service.
Our antitrust laws form the keystone of our market economy. They
stand between every American and the tyranny of raw, unbridled economic
power. The person entrusted with the enforcement of those laws must
have an unwavering commitment to a marketplace built on full, fair, and
open competition.
As the Senate fully considers this nomination, I am willing to be
convinced that Joel Klein is that person.
Mr. President, the need for competition is the overriding imperative
of this Telecommunications Act. I am not in business as a monopoly. My
business is such that customers come in. If they do not like what I am
serving them, do not like the price, they go elsewhere, and as a
consequence of that we pay very close attention to the customer. And
those customers right now who are buying local services, especially
residential service at the local level, they still have two choices:
Take it or leave it.
That is not competition. I do not come to the floor here criticizing
the regional Bell operating companies or AT&T or any other long
distance providers. I am just very much aware, if I am a monopoly, I do
very much business if I have to compete, if I have to satisfy my
customers' desires, demands for high quality and a reasonable and fair
price.
There is a businessman in Nebraska who owns many things, and one of
the things he owns is newspapers. I once asked him how he managed to
make money in the newspaper business, and he said to me, well, it's
real simple; he takes advantage of two of America's most endearing and
enduring institutions, monopoly and nepotism.
Mr. President, with the Telecommunications Act need to ensure that
the monopolies face competition, they come to us, the RBOC's and AT&T
and the other carriers are all coming to us saying they want to
compete. What they need to make sure happens is that there is
competition, that you get rigorous and vigorous competition at the
local level.
In addition to that, though it is not the role of Antitrust at
Justice, it is the role of the FCC to make certain that on the table we
have before us those things that the market will not get done.
There are some things that competition will not get done for us.
There is a need to make certain we have real service. There is a need
to make certain that areas that are remote are getting good service.
There is a need to make certain people with lower incomes are going to
get universal service. There are all sorts of things the market will
not get done, and we have to put them on the table. I think we have an
easier time surfacing those things and debating those things than we do
in making certain that at the local level we have competition.
As I said, Mr. President, it is not an easy thing to accept that
competition if you are in business right now and you are a monopoly. It
is easy to talk about it, but it is not easy to do it. There is a lot
of pressure on Justice and FCC to make decisions and determinations
that are anticompetitive under the veil and cloak of competitive
language.
I am very much concerned, not by his actions, but by some statements
and a particular letter he wrote in response to a concern of a Member
of this body about a speech that Mr. Klein had given. The letter, in my
judgment, gives away the authority that this Senate and the House of
Representatives, when we finally passed the Telecommunications Act of
1996, gave the Department of Justice.
Mr. Klein appeared to me, in this letter, to give away the authority
that this law gives the Department of Justice. I, for one, need to hear
from the Attorney General saying that she believes that the Department
of Justice has this authority and she intends to make certain that
Antitrust exercises that authority before I am going to be willing to
vote for Mr. Klein.
It is a difficult job being head of Antitrust. As far as I am
concerned, the Antitrust Division of the Department of Justice creates
a lot of jobs because they insist on competition. I believe you get
more jobs in a competitive environment, not less. I believe competition
determines in a much better way who is being successful in giving the
customer what they want and, as a consequence, much more likely in the
long term to create jobs than if we allow entities to perform
vertically monopoly, or near monopoly, control over the marketplace,
and, in that kind of environment, to be able to basically say, as I
indicated earlier, to the customer, ``Take it or leave it; I don't care
whether you like the price, whether you like the service; I am saying
to you, you have to take it or leave it.''
This is one of the most difficult things we have ever gone through,
going from a monopoly to a competitive environment. It is going to be
wrenching and difficult for rural areas and for private sector
companies that have to adjust their hiring policies, have to adjust
their personnel policies, have to adjust their marketing policies. I
know that this kind of change is going to force the private sector, the
monopoly private sector, to go through substantial change. But it is
the intent of this legislation that they go through that change. It is
only if we have a competitive environment, again, acknowledging there
are some things the market will not do for rural areas, and we have to
make sure, in order to achieve universal service, that we identify
those things upfront or it will not happen.
But acknowledging and setting aside those things, it is terribly
important for the consumers to take advantage of the benefits of what
the Telecommunications Act of 1996 allows. It is vitally important that
both the FCC and Antitrust at Justice insist on a competitive
environment in order for that to happen.
I regret at this stage in the game having to say I do not support Mr.
Klein. As I indicated, my view can be changed, depending upon what the
Attorney General says in response to a letter I have sent to her. My
hope is she will indicate she intends to make certain that Antitrust,
whoever is confirmed, will carry out the intent of the law as debated
fully on this floor and as enacted both by the Senate and the House of
Representatives.
It would be my hope to be able to vote for Mr. Klein. At this stage
in the game, I will not. At this stage in the game, I hope this body
deliberates a good deal of time upon not just Mr. Klein, but what is
going to happen if Antitrust and Justice doesn't enforce the law, what
is going to happen to consumers of this country if we don't get a
competitive environment.
The only reason we had benefit in the long distance environment with
reduced price and increased quality was the presence of competition. In
the absence of that, the consumers of this country are going to come
back to us and say that that law wasn't very darn good.
All of us who voted for that act have a lot at stake. All of us who
voted for the Telecommunications Act of 1996 have a lot at stake, and
the job that Mr. Klein does, or whoever it is at

[[Page S7295]]

Antitrust and all the Commissioners who are going to be nominated over
at FCC, as well, all need to take a lot of time in deliberating over
what those individuals are going to do before we vote to confirm them
as a consequence of the impact that they are going to have, not just
upon us, but especially upon the consumers, upon whom all of us, at the
end of the day, depend.
Mr. President, I look forward to having an opportunity later to come
down, and I most especially look forward to not only yielding the
floor, but listening to the majority leader. I yield the floor.
Mr. LOTT addressed the Chair.
The PRESIDING OFFICER (Mr. Stevens). The majority leader.

____________________