[Congressional Record Volume 145, Number 96 (Thursday, July 1, 1999)]
[Senate]
[Pages S8085-S8087]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HOLLINGS:
  S. 1312. A bill to ensure full and expeditious enforcement of the 
provisions of the Communications Act of 1934 that seek to bring about 
competition in local telecommunications markets, and for other 
purposes; to the Committee on Commerce, Science, and Transportation.


       the telecommunications competition enforcement act of 1999

  Mr. HOLLINGS. Mr. President, I rise to introduce, S. 1312, the 
Telecommunications Competition Enforcement Act of 1999.
  The United States has a telecommunications system that is unequaled. 
We have worked hard to ensure that consumers in all parts of the 
country have access to this system and enjoy services at an affordable 
price. Therefore, when the Bell companies asked us to allow them to 
enter the long distance market, it was with great caution that we began 
to develop policies that would change the existing framework. We did 
not want to jeopardize existing service as we phased in competition 
into local markets and allowed local phone companies to enter the long 
distance market.
  Bell companies worked with Congress to create the fourteen point 
checklist and they celebrated the passage of the 1996 Act. They then 
filed applications with the Federal Communications Commission (FCC) to 
enter the long distance market. However, the FCC found that the Bell 
companies had not opened their local markets to competition, and 
therefore, under the 1996 Act, could not enter the long distance 
market. Once the Bell companies realized that they were not going to 
get into the long distance market before they complied with the 1996 
Act, they began a strategy of litigation to delay competition into 
their local markets and hold on to their monopolies. They appealed the 
FCC's decisions to the Court of Appeals and challenged the 
constitutionality of the Act taking their case to the Supreme Court. 
Having lost in those forums they have now come to Congress seeking 
changes to the Act that only three years ago they championed. As a 
result bills have been introduced in the Senate and the House that 
significantly amend the 1996 Act, harm competition in the local 
markets, and slow the delivery of advanced, affordable services to 
consumers.
  Therefore, I introduce this legislation as part of a continuing 
effort to promote competition in the local telecommunications markets. 
I am frustrated by the broken promises of the Bell companies given that 
not a single Bell company has adequately opened its local phone market 
to competition since the enactment of the Telecommunications Act of 
1996. According to wall street analysts, as of the end of last year new 
entrants had only 2.5 percent of all access lines while Bell companies 
and incumbent local exchange carriers continued to control over 97 
percent of those lines into the home.
  Three years ago when we passed the 1996 Act, Bell companies 
proclaimed that they would open their markets immediately and begin 
competing. In fact, they and their lawyers helped write the 14 point 
checklist--their roadmap into the long distance market in their region. 
All these companies have to do to provide long distance service in 
their regions is to follow that roadmap and meet the requirements of 
Section 271.
  I remember the excitement by the local phone companies at the time of 
the 1996 Act. On March 5, 1996, Bell South-Alabama President, Neal 
Travis, stated that the ``Telecommunications Act now means that 
consumers will have more choices . . . We are going full speed ahead . 
. . and within a year or so we can offer [long distance] to our 
residential and business wireline customers.''
  And, on February 8, 1996, USWest's President of Long Distance, 
Richard Coleman, issued this statement: ``The Inter-LATA long distance 
potential is a tremendous business opportunity for USWest. Customers 
have made it clear they want one-stop shopping for both their local and 
long distance service. We are preparing to give them exactly what 
they've been asking for.'' He went on to predict that USWest would meet 
the 14 point checklist in a majority of its states within 12-18 months.
  Ameritech's chief executive office, Richard Notebaert February 1, 
1996,

[[Page S8086]]

noted his support of the 1996 Act by stating that, ``[t]he real open 
competition this bill promotes will bring customers more choices, 
competitive prices and better quality services . . . [T]his bill will 
rank as one of the most important and far-reaching pieces of federal 
legislation passed this decade . . . It offers a comprehensive 
communications policy, solidly grounded in the principles of the 
competitive marketplace. It's truly a framework for the information 
age.''
  Those were the statements of the local phone companies in 1996. What 
has happened since then? The answer is very little. In fact, rather 
than meet their promises, the local phone companies were in federal 
court challenging the FCC's implementation of the Act less than one 
year after its enactment. In addition, only five applications for 
Section 271 relief have been filed at the FCC--and none have met the 
requirements of section 271. On more than one occasion, the FCC's 
decision to deny a 271 application has been upheld by the D.C. Circuit 
Court. One of the regional Bell companies even challenged the 
constitutionality of section 271--a challenge the court of appeals 
denied and the Supreme Court refused to hear. Today, there are no 271 
applications on file at the FCC and not a single application has been 
presented to the FCC since July 1998.
  What this means for the customer is that the choice and the local 
competition we tried to create with the passage of the 
Telecommunications Act has been thwarted by the very companies that 
promised to compete. Instead, they have chosen to litigate, complain, 
and combine. Just two days ago, the Chairman of the FCC decided to 
grant SBC and Ameritech approval to merge their operations. In 
permitting the merger to go forward, the FCC has conditioned approval 
on future performance--performance which SBC has not met in the three 
years since the passage of the 1996 Act. In fact, on the same day 
conditional approval of the SBC and Ameritech merger was announced, SBC 
agreed to pay $1.3 million to settle disputes surrounding alleged 
violations of sections of the 1996 Act dealing with the provision of 
long distance service. One company will now control one-third of all 
access lines in the United States even though its market is not open to 
competition. Competition again becomes a casualty of the unwillingness 
of Bell companies, to open their markets and let go of their 
monopolies.

  Today, there are companies seeking to connect to the Bell networks 
and provide service to consumers. However, these companies often times 
experience significant difficulties in obtaining access to these 
networks. Thus, while I applaud the efforts of the competitive local 
exchange carriers, long distance carriers, and the cable industry to 
provide facilities-based local competition, I must express my 
disappointment that not a single regional bell operating company has 
sufficiently opened its markets to competition.
  Since the beginning of this Congress, many of the Bell companies have 
been meeting with Senators and Representatives, often accompanied by 
the same lawyers who helped write the Telecommunications Act. But this 
time their message is different. They are asking us to change the rules 
of the game. They now want to offer lucrative high-speed data services 
for long distance customers without first having to open their local 
markets to competition. They maintain that they should be permitted to 
continue their hold on the local customer as they provide data services 
because the 1996 Act did not contemplate the provision of such 
services. To state it plainly--they are wrong. The Telecommunications 
Act clearly contemplated the provision of advanced services--data and 
otherwise. In fact, the Act had an entire section dedicated to 
promoting the development and deployment of advanced services. To quote 
the Act, ``advanced telecommunications capability'' is defined as 
``high-speed switched, broadband telecommunications capability that 
enables users to originate and receive high-quality voice, data, 
graphics, and video telecommunications using any technology.''
  Regardless, nothing in the 1996 Act prevents phone companies from 
providing high speed data services to consumers inside and outside 
their region. They are already providing DSL service to customers 
inside their region. And, under the 1996 Act, Bell companies can 
provide long distance service in their region once they open their 
local markets. We must hold to this principle if we want consumers to 
have a choice of service providers. In fact, a number of Bell companies 
are working to meet Section 271 requirements. I applaud those attempts 
which, if successful, will ultimately provide new and innovative 
services at low prices to consumers.
  Therefore, I reject their proposed legislative solutions, and 
instead, forward a different proposal. By 2001, five years will have 
passed since the Telecommunications Act became law. I believe, it is 
reasonable to expect Bell companies to have at least one-half of their 
markets in their region open to competition by 2001 and all of their 
markets in their region open to competition by 2003. The legislation 
that I introduce today accomplishs just that. My bill requires the 
Federal Communications Commission to assess a forfeiture penalty of 
$100,000 per day if a Bell operating company has not met the section 
271 checklist in at least half of the states in its region by February 
8, 2001--the five year anniversary of President Clinton signing the 
Telecommunications Act into law. Moreover, if the FCC finds that a Bell 
operating company has not met the section 271 checklist throughout its 
region by February 8, 2003, the Commission is required to order the 
company to divest its telecommunications network facilities within six 
months, in states in which it is not in compliance with the checklist.
  With respect to non-Bell incumbent local exchange carriers with more 
than 5 percent of the access lines in the nation, the Commission, upon 
the petition of any interested party, is required to investigate 
whether the carrier's markets are open to competition to determine 
whether such carrier has complied with the interconnection requirements 
of the Act. A determination that such an incumbent local exchange 
company has not opened its markets shall result in a $50,000 per day 
forfeiture penalty, to be imposed by the FCC, if the company does not 
come into compliance within 60 days. In addition, the FCC shall order 
the company to cease and desist in marketing and selling long distance 
services to new customers, if it has not complied within the 60 day 
grace period.
  Lastly, to protect competition once the Bell companies have met the 
section 271 checklist requirements, this bill provides the FCC with 
additional enforcement tools. If, at some point after meeting the 
checklist requirements, a Bell company fails to meet one or more 
provisions of the checklist, the FCC shall impose a forfeiture penalty 
of $100,000 for each day of the continuing violation. Moreover, if, 
after meeting the checklist requirements, the Bell company willfully, 
knowing, and repeatedly fails to meet one or more provisions of the 
checklist, the FCC shall require the Bell company, within 180 days, to 
divest its telecommunications network facilities in states in which the 
repeated violations have occurred.
  While these penalties may appear severe, severe action needs to be 
taken to force dominant market providers to open their markets to 
competition. During the debate over the Telecommunications Act, we did 
not include such a strong approach. Rather, we settled on a rational 
and reasonable set of procedures--endorsed by the local phone 
monoplies--that provided incentives to open their local markets while 
preserving the integrity of the premier communications networks in the 
world. That approach seemed particularly palatable in light of the 
statements issued at the time of enactment of the 1996 Act by the local 
phone companies promising an early opening of the local phone market 
pursuant to the requirements of the Section 271 checklist.

  Today, our communications networks remain the envy of the world and 
the development of innovative advanced services is accelerating 
rapidly. Unfortunately, the rollout of those services on a competitive 
basis to all Americans is being thwarted by the failure of Bell 
companies to open their markets to competition. Those same monopolists 
told us their markets

[[Page S8087]]

would be open months ago. This legislation seeks to hold them to their 
word.
  I ask consent that a summary of the bill be printed in the Record.
  There being no objection, the summary was ordered to be printed in 
the Record, as follows:

       The Telecommunications Competition Enforcement Act of 1999


                                SUMMARY

       A Bell Operating Company (BOC) is required to meet the 
     market opening requirements of the section 271 checklist of 
     the Telecommunications Act of 1996 for half of the states in 
     its region by February 8, 2001. The FCC is required to assess 
     a forfeiture penalty of $100,000 for each day a BOC is in 
     violation of this requirement.
       A BOC is required to meet the market opening requirements 
     of the section 271 checklist of the Telecommunications Act of 
     1996 for all the states in its region by February 8, 2003. 
     The FCC is required to order a BOC to divest its 
     telecommunications network facilities within 180 days in 
     which it is in violation of this requirement.
       Upon petition by any interested party, the FCC is directed 
     to investigate whether incumbent local exchange carriers 
     (ILEC) with more than 5 percent of the nation's access lines 
     (that are not Bell Companies) have opened their markets to 
     competition pursuant to Section 251(c) of the 
     Telecommunications Act of 1996.
       Upon a determination that such ILECs are not in full 
     compliance with Section 251(c), the FCC shall set forth the 
     reasons for non-compliance and grant 60 days for the ILEC to 
     come into full compliance. Absent such compliance after that 
     60 day period, the FCC is required to assess a civil 
     forfeiture penalty of $50,000 for each day of the continuing 
     violation and order the company to cease and desist in 
     marketing and selling long distance services to new 
     customers.
       If upon meeting the checklist requirements, a BOC fails to 
     meet one or more provisions of the checklist, the FCC shall 
     impose a forfeiture of $100,000 for each day of the 
     continuing violation. If upon meeting the checklist 
     requirements, the BOC knowingly, willfully, and repeatedly 
     fails to meet one or more provisions of the checklist, the 
     FCC shall require the BOC, to divest its telecommunications 
     network facilities, within 180 days, in states in which 
     repeated violations have occurred.


                             JUSTIFICATION

       The Telecommunications Act of 1996 required Bell Operating 
     Companies (BOCs) to open their markets to competition. Yet, 
     not a single BOC has met the market opening requirements of 
     the Section 271 checklist. No Section 271 applications have 
     been filed at the FCC since July of 1998. Only five 
     applications have been filed since 1996--none of which 
     complied with Section 271.
       In the three years since enactment, however, the BOCs have 
     pursued a strategy of stonewalling and litigation that has 
     delayed implementation of the critical interconnection, 
     unbundling, collocation, and resale requirements of the Act.
       Now, BOCs are seeking legislative relief from the pro-
     competitive provisions of the Telecommunications Act. They 
     argue that they will provide rural America with advanced 
     communications services, but only if they are allowed to 
     provide long distance service to their current customers. The 
     truth is that BOCs can provide advanced services today. 
     However, to get into the long distance market, they must open 
     their local markets to competition. This bill provides an 
     incentive for them to do just that.
       By requiring a date certain by which the local phone 
     monopolies must open their markets, and by accompanying that 
     requirement with federal enforcement authority, we can be 
     assured that American consumers will obtain the benefits of 
     local competition.
                                 ______