[Congressional Record Volume 144, Number 41 (Thursday, April 2, 1998)]
[Senate]
[Pages S3143-S3145]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LEAHY:
  S. 1928. A bill to protect consumers from overcollections for the use 
of pay telephones, to provide consumers with information to make 
informed decisions about the use of pay telephones, and for other 
purposes; to the Committee on Commerce, Science, and Transportation.


               the consumer pay telephone protection act

  Mr. LEAHY. Mr. President, I have voiced my great disappointment many 
times with how the Telecommunications Act of 1966 is costing consumers 
millions of dollars.

  I complained about this at the time that Act passed, and continue to 
be concerned that Vermonters are being taken to the cleaners.
  I was one of five Senators to vote against that bill. I thought it 
was clear then, and it should be clear by now to everyone, that the 
Telecommunications bill means higher costs for consumers.
  As other hi-tech industries, such as computer technology, offer lower 
and lower prices over time--the telephone and cable TV industries are 
presenting consumers with higher and higher charges.
  For example, I am mad as heck that pay phone charges in Vermont went 
up to 35 cents--from 10 cents.
  But what annoys me more is that if I do not have exact change--if I 
use two quarters--the change the phone company keeps is more than the 
ten cents the call used to cost.
  I have been know to say ``keep the change'' in restaurants, or when I 
buy a newspaper.
  But I do not like phone companies taking my change. I am fed up with 
pay phone service providers nickel and diming consumers.
  This bill will make phone companies provide change to consumers at 
the pay phone--or provide a credit in the amount of the lost change to 
the consumer or to states to be used to help consumers.
  My bill will also give the FCC broad powers to give states authority 
to control pay phone rates, if necessary.
  The bill permits pay phone providers in Vermont to issue a credit 
when

[[Page S3144]]

change is not provided to the consumer which would go to Vermont. This 
means that Vermont could provide better pay phone service for public 
safety or health reasons.
  For example, this fund could be used by states to provide better pay 
phone service to those with disabilities, or those living in nursing 
homes. It would provide funding for pay phones to be placed in remote 
areas in case of emergencies.
  I would rather this change go directly to the consumer, and believe 
when this bill is fully implemented that most consumers will not be 
overcharged for calls.
  In the meantime, however, I would rather have the change used to 
benefit Vermonters than go to the phone companies.
  There are over 2 million pay phones in the United States. The 
Washington Post explained on Monday that if 75 percent of those pay 
phones charge 35 cents for a local call and if just one person a day 
overpays 15 cents at each of those phones, companies would get more 
than $230,000 extra a day, or about $7 million a month.

  My guess is that this hugely underestimates the size of this 
windfall.
  Keep in mind this windfall, in Vermont, is on top of the raise from 
10 cents to 35 cents. I have also noticed fewer and fewer phone booths 
except at places such as airports or train stations where consumers are 
in a hurry and may not have time to track down change.
  My bill goes beyond just keeping phone companies from getting 
windfall profits. It calls for a national investigation of monopoly 
pricing and price gouging in the pay telephone markets.
  It goes further than that--it then gives the Federal Communications 
Commission the tough new authority to deal with this problem. It allows 
them to give states the right to establish rates for local calls if 
necessary to stop this overcharging. Remember, when Vermont was in 
charge before the Telecommunications Act passed the pay phone rates 
were a dime.
  My bill will also encourage the development of new technologies so 
that consumers are not overcharged for local phone calls to begin with.
  My bill also provides funding--and the money comes from telephone 
companies not consumers--for public interest pay phones. These are 
phones which the FCC has determined each state should provide to its 
citizens in areas where there otherwise might not be a phone. They did 
this in a decision issued on October 7, 1996.
  This was a good idea--but there is no federal funding to implement 
the decision.
  In addition, it is uneconomic for a phone company to provide a pay 
phone in remote areas of Vermont. But in a roadside emergency these 
phones could be vital. My bill would provide for this program using 
money that now just goes out of your pockets to the phone companies.
  Also, public interest pay phones could be placed in nursing homes, 
emergency homeless shelters, emergency rooms in hospitals, and other 
similar places.
  Emergency 911 calls would be free from these phones, and other calls 
would cost but at least there would be a phone in a location where 
there otherwise might not be one.
  What is best about this approach is that Vermont would decide how to 
use this funding that now goes directly into the coffers of phone 
companies.
  I have also designed the bill in a way that prevents phone companies 
from trying to take advantage of this situation.
  The bill gives the FCC board powers to ensure that the pay phone 
providers ``do not pass any costs relating to such compliance to 
consumers.''
  It also mandates that the FCC monitor this situation and ensure that 
implementation does not result in any reduction in pay phone service.
  The bill requires that pay phone companies which charge more than 10 
cents for local phone calls provide either cash change or other 
alternatives to consumers, or credits to states equal to the value of 
the unpaid change.
  These credits to states would be used by states for 
telecommunications activities that promote the public interest, such as 
safety, health, emergency services, or education and promote public 
interest pay phones in hospitals, schools, emergency homeless shelters, 
facilities for the disabled, and at similar types of locations.
  The bill directs the FCC, within one year of the bill's enactment, to 
issue proposed rules that apply to pay phone providers that charge more 
than 10 cents for local pay phone calls. Companies would have to 
provide for cash change or automatically credit the appropriate public 
service agency in the respective states to account for instances in 
which change is not provided at the pay phone.
  The bill requires that the FCC ensure that pay phone providers do not 
pass any costs of compliance with this bill on to consumers and that 
pay phone providers in no way reduce or limit service based on this 
anti-windfall requirement.
  The FCC is given major new powers to take action to prevent any price 
gouging including giving states back the authority to regulate the 
price of local calls.
  The bill requires that small stickers or other notice be posted on 
pay phones for the purpose of advising consumers when cash change will 
not be provided.
  The bill directs the FCC to reconsider its rules under which the FCC 
removed authority from states to regulate the charge for local calls 
made over pay phones. The FCC would reexamine the need for states to 
have greater decision making roles where local competition between pay 
phone providers is not present.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1928

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Consumer Pay Telephone 
     Protection Act of 1998''.

     SEC. 2. FINDINGS AND PURPOSE.

       (a) Findings.--Congress makes the following findings:
       (1) Some payphone service providers have increased the 
     charge for the use of a coin-operated pay telephone for a 
     local call to 35 cents but have not put into place a system 
     for providing change to users of such telephones for amounts 
     deposited in such telephones in excess of such charge.
       (2) Payphone service providers should charge pay telephone 
     users only for the actual time of use of pay telephones.
       (3) Most consumers, if given a choice, would prefer that 
     any amount of such excess deposits that are not refunded to 
     consumers be used for pay telephones for public health, 
     safety, and welfare purposes rather than have such excess 
     deposits accrue to the financial benefit of payphone service 
     providers.
       (4) There are approximately 2,000,000 pay telephones in the 
     United States, and payphone service providers accrue 
     substantial revenue at the expense of Americans who do not 
     have the exact amount of the charge for their use.
       (5) A decision of the Federal Communications Commission to 
     deregulate the provision of payphone service was premature 
     and did not address adequately the need for local competition 
     that would benefit users of pay telephones.
       (6) The decision of the Commission does not promote the 
     widespread deployment of affordable payphone service that 
     would benefit the general public, nor does the decision 
     promote the widespread deployment of public interest 
     telephones.
       (7) The use of coin-operated pay telephones represents an 
     increasing commercial activity that substantially affects 
     interstate commerce.
       (8) Public interest telephones should be maintained in each 
     State and should be provided to promote the public safety, 
     health, and welfare.
       (b) Purpose.--The purpose of this Act is--
       (1) to require payphone service providers--
       (A) to provide cash change to pay telephone users who 
     deposit amounts for local telephone calls in excess of the 
     amounts charged for such calls; or
       (B) in the event that such providers do not provide such 
     change, to transfer amounts equal to such change to 
     appropriate State entities for public interest purposes 
     related to telephone service;
       (2) to encourage such changes in pay telephone technology 
     as are needed to assure that payphone service providers--
       (A) do not overcharge pay telephone users who do not have 
     the exact amount of the charge for local pay telephone calls; 
     and
       (B) do not charge pay telephone users for any time in which 
     pay telephones are not actually in use; and
       (3) to require the Federal Trade Commission to determine--
       (A) whether dysfunctions exist in the market for payphone 
     service including locational monopolies in which the size of 
     the market concerned results in the availability of payphone 
     service from a single provider; and

[[Page S3145]]

       (B) whether rates for coin-operated pay telephones for 
     local telephone calls are market based.

     SEC. 3. PUBLIC INTEREST PAY TELEPHONES.

       Section 276(b)(2) of the Communications Act of 1934 (47 
     U.S.C. 276(b)(2)) is amended to read as follows:
       ``(2) Public interest pay telephones.--
       ``(A) Sense of congress.--It is the sense of Congress 
     that--
       ``(i) in the interest of the public health, safety, and 
     welfare, public interest pay telephones should be available 
     and maintained in locations where there would not otherwise 
     likely be a pay telephone; and
       ``(ii) such public interest pay telephones should be fairly 
     and equitably supported.
       ``(B) Use of funds.--In accordance with such regulations as 
     the Commission shall prescribe, each State agency that 
     receives amounts under subsection (c)(2)(A) shall use such 
     amounts to promote or otherwise support the installation, 
     maintenance, and use of public interest pay telephones, 
     including specially designed payphones for the disabled and 
     the provision of payphone service in remote locations, 
     nursing homes, emergency homeless shelters, hospitals, 
     facilities that assist the disabled, schools, and other 
     appropriate locations determined by the State agency 
     concerned.''.

     SEC. 4. REQUIREMENT FOR CHANGE AT PAY TELEPHONES.

       (a) Requirement.--Section 276 of the Communications Act of 
     1934 (47 U.S.C. 276), as amended by section 3 of this Act, is 
     further amended--
       (1) by redesignating subsections (c) and (d) as subsections 
     (d) and (e), respectively; and
       (2) by inserting after subsection (b) the following new 
     subsection (c):
       ``(c) Change at Pay Telephones.--
       ``(1) Requirement.--
       ``(A) In general.--Except as provided in paragraph (2), a 
     payphone service provider shall provide any individual using 
     a pay telephone of such provider to make a telephone call 
     described in subparagraph (B) an amount of cash change equal 
     to the amount (if any) by which the amount deposited by the 
     individual for the call exceeds the charge for the call.
       ``(B) Covered telephone calls.--Subparagraph (A) applies to 
     any local telephone call the charge for which exceeds 10 
     cents.
       ``(2) Alternative use of excess collections.--
       ``(A) Transfer.--In accordance with such regulations as the 
     Commission shall prescribe, a payphone service provider may, 
     in lieu of providing cash change under paragraph (1)--
       ``(i) transfer any excess amounts collected by the provider 
     at pay telephones to the State agency in the State in which 
     the telephones are located that is responsible for the 
     support of public interest pay telephones under subsection 
     (b)(2); or
       ``(ii) if the State has no such agency by reason of a 
     determination under subparagraph (B), transfer such excess 
     amounts to the Commission for use under subparagraph (D).
       ``(B) State option.--
       ``(i) State option.--The chief executive officer of each 
     State may determine whether or not to permit the transfer of 
     funds to an agency of such State under subparagraph (A).
       ``(ii) Revocation.--The chief executive officer of a State 
     may revoke any previous decision with respect to the State 
     under this subparagraph.
       ``(iii) Notice.--The chief executive officer of a State 
     shall notify the Commission, in writing, of any determination 
     or revocation of a determination under this subparagraph.
       ``(C) Use by states.--
       ``(i) In general.--A State agency receiving amounts under 
     subparagraph (A) shall utilize such amounts for purposes of 
     promoting and supporting public interest pay telephones in 
     the State under subsection (b)(2).
       ``(ii) Additional use.--In the event that amounts received 
     by a State agency under subparagraph (A) exceed the amounts 
     determined by the agency to be required to properly promote 
     and support public interest pay telephones in the State, the 
     agency shall utilize the excess amounts for purposes relating 
     to providing universal service or improving telephone service 
     in the State under section 254.
       ``(D) Use by commission.--
       ``(i) Deposit.--The Commission shall deposit any amounts 
     received by the Commission under subparagraph (A) in an 
     account in the Treasury established for that purpose.
       ``(ii) Availability.--Under such regulations as the 
     Commission shall prescribe, the Commission shall utilize 
     amounts in the account under clause (i) to assist States that 
     receive amounts under subparagraph (A) with additional 
     assistance to promote and support public interest pay 
     telephones under subsection (b)(2).
       ``(E) Notice to consumers.--
       ``(i) In general.--In the event a payphone service provider 
     decides to transfer excess amounts deposited at any given pay 
     telephone under subparagraph (A) for purposes of supporting 
     public interest pay telephones under subsection (b)(2), the 
     provider shall post at such pay telephone a notice informing 
     potential users of such pay telephone that any such excess 
     amount shall not be returned as cash change or credit but 
     shall be utilized for such purposes.
       ``(ii) Additional notice.--Nothing in clause (i) shall be 
     interpreted to limit a State from requiring additional 
     notices with respect to the matters set forth in that clause.
       ``(3) Regulations.--
       ``(A) Requirement.--Not later than one year after the date 
     of enactment of the Consumer Pay Telephone Protection Act of 
     1998, the Commission shall prescribe the regulations required 
     under this subsection.
       ``(B) Additional elements.--The regulations shall--
       ``(i) provide for the monitoring of the compliance of 
     payphone service providers with the provisions of this 
     subsection;
       ``(ii) ensure that such providers do not pass any costs 
     relating to such compliance to consumers; and
       ``(iii) ensure that the implementation of such provisions 
     do not result in any reduction in payphone service, including 
     the imposition of time limits on local telephone calls or 
     other reductions or limitations in such service.
       ``(C) Effective date.--The regulations shall provide that 
     the provisions of the regulations take effect not earlier 
     than 6 months after the date of the final issuance of the 
     regulations and not later than 12 months after that date.''.
       (b) Study of Alternative Technologies.--
       (1) In general.--Not later than 18 months after the date of 
     enactment of this Act, the Federal Communications Commission 
     shall submit to Congress a report on the availability of 
     technologies or systems that permit persons who do not have 
     exact change to utilize pay telephones for local telephone 
     calls without being overcharged for such calls.
       (2) Elements.--The report shall address the use of tokens, 
     cash debit cards, systems for crediting the monthly telephone 
     bills of individuals who use pay telephones, and such other 
     technologies and systems as the Commission considers 
     appropriate.

     SEC. 5. STUDY OF COMPETITIVENESS OF PAY TELEPHONE MARKET.

       (a) Study.--
       (1) In general.--The Federal Trade Commission shall, in 
     consultation with the Federal Communications Commission, 
     carry out a study of competition in the market for intrastate 
     payphone service, including--
       (A) whether or not locational monopolies in such service 
     exist by reason of the size of particular markets for such 
     service;
       (B) whether or not potential users of such service are 
     effectively barred from choice in such service in particular 
     markets by reason of difficulties in identifying a variety of 
     payphone service providers in such markets;
       (C) whether or not rates for local pay telephone calls are 
     market-based; and
       (D) whether or not there is evidence of monopoly pricing in 
     such service.
       (2) Scope of comment.--In carrying out the study, the 
     Federal Trade Commission shall seek comment from a variety of 
     sources, including State and local public entities, consumers 
     and consumer representatives, and payphone service providers 
     and their representatives.
       (b) Report.--Not later than one year after the date of 
     enactment of this Act, the Federal Trade Commission shall 
     submit to Congress a report on the results of the study 
     carried out under subsection (a). The report shall include 
     the findings of the Commission with respect to the matters 
     set forth under paragraph (1) of that subsection.
       (c) Federal Communications Commission Action.--
     Notwithstanding any provision of the Communications Act of 
     1934 (47 U.S.C. 151 et seq.), the Federal Communications 
     Commission may, as a result of the study under subsection 
     (a), conduct a rule-making proceeding in order to accomplish 
     any of the following:
       (1) To set limitations on rates for local pay telephone 
     calls.
       (2) To permit the States to establish rates for such calls 
     on a cost basis.
       (3) To set limitations on the commissions that payphone 
     service providers may pay to persons who lease space to such 
     providers for pay telephones.
       (4) To prohibit payphone service providers from entering 
     into exclusive contracts with persons who lease space to such 
     providers for pay telephones which contracts cover multiple 
     locations.
                                 ______