[Congressional Record Volume 147, Number 38 (Wednesday, March 21, 2001)]
[House]
[Pages H1030-H1034]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    INDEPENDENT TELECOMMUNICATIONS CONSUMER ENHANCEMENT ACT OF 2001

  Mr. UPTON. Mr. Speaker, I move to suspend the rules and pass the bill 
(H.R. 496) to amend the Communications Act of 1934 to promote 
deployment of advanced services and foster the development of 
competition for the benefit of consumers in all regions of the Nation 
by relieving unnecessary burdens on the Nation's two percent local 
exchange telecommunications carriers, and for other purposes, as 
amended.
  The Clerk read as follows:

                               H. R. 496

       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 ``Independent 
     Telecommunications Consumer Enhancement Act of 2001''.

     SEC. 2. FINDINGS AND PURPOSE.

       (a) Findings.--Congress finds the following:
       (1) The Telecommunications Act of 1996 was enacted to 
     foster the rapid deployment of advanced telecommunications 
     and information technologies and services to all Americans by 
     promoting competition and reducing regulation in 
     telecommunications markets nationwide.
       (2) The Telecommunications Act of 1996 specifically 
     recognized the unique abilities and circumstances of local 
     exchange carriers with fewer than two percent of the Nation's 
     subscriber lines installed in the aggregate nationwide.
       (3) Given the markets two percent carriers typically serve, 
     such carriers are uniquely positioned to accelerate the 
     deployment of advanced services and competitive initiatives 
     for the benefit of consumers in less densely populated 
     regions of the Nation.
       (4) Existing regulations are typically tailored to the 
     circumstances of larger carriers and therefore often impose 
     disproportionate burdens on two percent carriers, impeding 
     such carriers' deployment of advanced telecommunications 
     services and competitive initiatives to consumers in less 
     densely populated regions of the Nation.
       (5) Reducing regulatory burdens on two percent carriers 
     will enable such carriers to devote additional resources to 
     the deployment of advanced services and to competitive 
     initiatives to benefit consumers in less densely populated 
     regions of the Nation.
       (6) Reducing regulatory burdens on two percent carriers 
     will increase such carriers' ability to respond to 
     marketplace conditions, allowing them to accelerate 
     deployment of advanced services and competitive initiatives 
     to benefit consumers in less densely populated regions of the 
     Nation.
       (b) Purposes.--The purposes of this Act are--
       (1) to accelerate the deployment of advanced services and 
     the development of competition in the telecommunications 
     industry for the benefit of consumers in all regions of the 
     Nation, consistent with the Telecommunications Act of 1996, 
     by reducing regulatory burdens on local exchange carriers 
     with fewer than two percent of the Nation's subscriber lines 
     installed in the aggregate nationwide;
       (2) to improve such carriers' flexibility to undertake such 
     initiatives; and
       (3) to allow such carriers to redirect resources from 
     paying the costs of such regulatory burdens to increasing 
     investment in such initiatives.

     SEC. 3. DEFINITION.

       Section 3 of the Communications Act of 1934 (47 U.S.C. 153) 
     is amended--
       (1) by redesignating paragraphs (51) and (52) as paragraphs 
     (52) and (53), respectively; and
       (2) by inserting after paragraph (50) the following:
       ``(51) Two percent carrier.--The term `two percent carrier' 
     means an incumbent local exchange carrier within the meaning 
     of section 251(h) whose access lines, when aggregated with 
     the access lines of any local exchange carrier that such 
     incumbent local exchange carrier directly or indirectly 
     controls, is controlled by, or is under common control with, 
     are fewer than two percent of the Nation's subscriber lines 
     installed in the aggregate nationwide.''.

     SEC. 4. REGULATORY RELIEF FOR TWO PERCENT CARRIERS.

       Title II of the Communications Act of 1934 is amended by 
     adding at the end thereof a new part IV as follows:

         ``PART IV--PROVISIONS CONCERNING TWO PERCENT CARRIERS

     ``SEC. 281. REDUCED REGULATORY REQUIREMENTS FOR TWO PERCENT 
                   CARRIERS.

       ``(a) Commission To Take Into Account Differences.--In 
     adopting rules that apply to incumbent local exchange 
     carriers (within the meaning of section 251(h)), the 
     Commission shall separately evaluate the burden that any 
     proposed regulatory, compliance, or reporting requirements 
     would have on two percent carriers.
       ``(b) Effect of Commission's Failure To Take Into Account 
     Differences.--If the Commission adopts a rule that applies to 
     incumbent local exchange carriers and fails to separately 
     evaluate the burden that any proposed regulatory, compliance, 
     or reporting requirement would have on two percent carriers, 
     the Commission shall not enforce the rule against two percent 
     carriers unless and until the Commission performs such 
     separate evaluation.
       ``(c) Additional Review Not Required.--Nothing in this 
     section shall be construed to require the Commission to 
     conduct a separate evaluation under subsection (a) if the 
     rules adopted do not apply to two percent carriers, or such 
     carriers are exempted from such rules.
       ``(d) Savings Clause.--Nothing in this section shall be 
     construed to prohibit any size-based differentiation among 
     carriers mandated by this

[[Page H1031]]

     Act, chapter 6 of title 5, United States Code, the 
     Commission's rules, or any other provision of law.
       ``(e) Effective Date.--The provisions of this section shall 
     apply with respect to any rule adopted on or after the date 
     of enactment of this section.

     ``SEC. 282. LIMITATION OF REPORTING REQUIREMENTS.

       ``(a) Limitation.--The Commission shall not require a two 
     percent carrier--
       ``(1) to file cost allocation manuals or to have such 
     manuals audited or attested, but a two percent carrier that 
     qualifies as a class A carrier shall annually certify to the 
     Commission that the two percent carrier's cost allocation 
     complies with the rules of the Commission; or
       ``(2) to file Automated Reporting and Management 
     Information Systems (ARMIS) reports.
       ``(b) Preservation of Authority.--Except as provided in 
     subsection (a), nothing in this Act limits the authority of 
     the Commission to obtain access to information under sections 
     211, 213, 215, 218, and 220 with respect to two percent 
     carriers.

     ``SEC. 283. INTEGRATED OPERATION OF TWO PERCENT CARRIERS.

       ``The Commission shall not require any two percent carrier 
     to establish or maintain a separate affiliate to provide any 
     common carrier or noncommon carrier services, including local 
     and interexchange services, commercial mobile radio services, 
     advanced services (within the meaning of section 706 of the 
     Telecommunications Act of 1996), paging, Internet, 
     information services or other enhanced services, or other 
     services. The Commission shall not require any two percent 
     carrier and its affiliates to maintain separate officers, 
     directors, or other personnel, network facilities, buildings, 
     research and development departments, books of account, 
     financing, marketing, provisioning, or other operations.

     ``SEC. 284. PARTICIPATION IN TARIFF POOLS AND PRICE CAP 
                   REGULATION.

       ``(a) NECA Pool.--The participation or withdrawal from 
     participation by a two percent carrier of one or more study 
     areas in the common line tariff administered and filed by the 
     National Exchange Carrier Association or any successor tariff 
     or administrator shall not obligate such carrier to 
     participate or withdraw from participation in such tariff for 
     any other study area. The Commission may require a two 
     percent carrier to give 60 days notice of its intent to 
     participate or withdraw from participation in such common 
     line tariff with respect to a study area. Except as permitted 
     by section 310(f)(3), a two percent carrier's election under 
     this subsection shall be binding for one year from the date 
     of the election.
       ``(b) Price Cap Regulation.--A two percent carrier may 
     elect to be regulated by the Commission under price cap rate 
     regulation, or elect to withdraw from such regulation, for 
     one or more of its study areas. The Commission shall not 
     require a carrier making an election under this subsection 
     with respect to any study area or areas to make the same 
     election for any other study area. Except as permitted by 
     section 310(f)(3), a two percent carrier's election under 
     this subsection shall be binding for one year from the date 
     of the election.

     ``SEC. 285. DEPLOYMENT OF NEW TELECOMMUNICATIONS SERVICES BY 
                   TWO PERCENT COMPANIES.

       ``(a) One-Day Notice of Deployment.--The Commission shall 
     permit two percent carriers to introduce new interstate 
     telecommunications services by filing a tariff on one day's 
     notice showing the charges, classifications, regulations, and 
     practices therefor, without obtaining a waiver, or make any 
     other showing before the Commission in advance of the tariff 
     filing. The Commission shall not have authority to approve or 
     disapprove the rate structure for such services shown in such 
     tariff.
       ``(b) Definition.--For purposes of subsection (a), the term 
     `new interstate telecommunications service' means a class or 
     subclass of service not previously offered by the two percent 
     carrier that enlarges the range of service options available 
     to ratepayers of such carrier.

     ``SEC. 286. ENTRY OF COMPETING CARRIER.

       ``(a) Pricing Flexibility.--Notwithstanding any other 
     provision of this Act, any two percent carrier shall be 
     permitted to deaverage its interstate switched or special 
     access rates, file tariffs on one day's notice, and file 
     contract-based tariffs for interstate switched or special 
     access services immediately upon certifying to the Commission 
     that a telecommunications carrier unaffiliated with such 
     carrier is engaged in facilities-based entry within such 
     carrier's service area. A two percent carrier subject to 
     rate-of-return regulation with respect to an interstate 
     switched or special access service, for which pricing 
     flexibility has been exercised pursuant to this subsection, 
     shall compute its interstate rate of return based on the 
     nondiscounted rate for such service.
       ``(b) Pricing Deregulation.--Notwithstanding any other 
     provision of this Act, upon receipt by the Commission of a 
     certification by a two percent carrier that a local exchange 
     carrier that is not a two percent carrier is engaged in 
     facilities-based entry within the two percent carrier's 
     service area, the Commission shall regulate such two percent 
     carrier as non-dominant, and therefore shall not require the 
     tariffing of the interstate service offerings of such two 
     percent carrier.
       ``(c) Participation in Exchange Carrier Association 
     Tariff.--A two percent carrier that meets the requirements of 
     subsection (a) or (b) of this section with respect to one or 
     more study areas shall be permitted to participate in the 
     common line tariff administered and filed by the National 
     Exchange Carrier Association or any successor tariff or 
     administrator, by electing to include one or more of its 
     study areas in such tariff.
       ``(d) Definitions.--For purposes of this section:
       ``(1) Facilities-based entry.--The term `facilities-based 
     entry' means, within the service area of a two percent 
     carrier--
       ``(A) the provision or procurement of local telephone 
     exchange switching or its equivalent; and
       ``(B) the provision of telephone exchange service to at 
     least one unaffiliated customer.
       ``(2) Contract-based tariff.--The term `contract-based 
     tariff' shall mean a tariff based on a service contract 
     entered into between a two percent carrier and one or more 
     customers of such carrier. Such tariff shall include--
       ``(A) the term of the contract, including any renewal 
     options;
       ``(B) a brief description of each of the services provided 
     under the contract;
       ``(C) minimum volume commitments for each service, if any;
       ``(D) the contract price for each service or services at 
     the volume levels committed to by the customer or customers;
       ``(E) a brief description of any volume discounts built 
     into the contract rate structure; and
       ``(F) a general description of any other classifications, 
     practices, and regulations affecting the contract rate.
       ``(3) Service area.--The term `service area' has the same 
     meaning as in section 214(e)(5).

     ``SEC. 287. SAVINGS PROVISIONS.

       ``(a) Commission Authority.--Nothing in this part shall be 
     construed to restrict the authority of the Commission under 
     sections 201 through 208.
       ``(b) Rural Telephone Company Rights.--Nothing in this part 
     shall be construed to diminish the rights of rural telephone 
     companies otherwise accorded by this Act, or the rules, 
     policies, procedures, guidelines, and standards of the 
     Commission as of the date of enactment of this section.''.

     SEC. 5. LIMITATION ON MERGER REVIEW.

       (a) Amendment.--Section 310 of the Communications Act of 
     1934 (47 U.S.C. 310) is amended by adding at the end the 
     following:
       ``(f) Deadline for Making Public Interest Determination.--
       ``(1) Time limit.--In connection with any merger between 
     two percent carriers, or the acquisition, directly or 
     indirectly, by a two percent carrier or its affiliate of 
     securities or assets of another two percent carrier or its 
     affiliate, if the merged or acquiring carrier remains a two 
     percent carrier after the merger or acquisition, the 
     Commission shall make any determinations required by this 
     section and section 214, and shall rule on any petition for 
     waiver of the Commission's rules or other request related to 
     such determinations, not later than 60 days after the date an 
     application with respect to such merger or acquisition is 
     submitted to the Commission.
       ``(2) Approval absent action.--If the Commission does not 
     approve or deny an application as described in paragraph (1) 
     by the end of the period specified, the application shall be 
     deemed approved on the day after the end of such period. Any 
     such application deemed approved under this subsection shall 
     be deemed approved without conditions.
       ``(3) Election permitted.--The Commission shall permit a 
     two percent carrier to make an election pursuant to section 
     284 with respect to any local exchange facilities acquired as 
     a result of a merger or acquisition that is subject to the 
     review deadline established in paragraph (1) of this 
     subsection.''.
       (b) Effective Date.--The provisions of this section shall 
     apply with respect to any application that is submitted to 
     the Commission on or after the date of enactment of this Act. 
     Applications pending with the Commission on the date of 
     enactment of this Act shall be subject to the requirements of 
     this section as if they had been filed with the Commission on 
     the date of enactment of this Act.

     SEC. 6. TIME LIMITS FOR ACTION ON PETITIONS FOR 
                   RECONSIDERATION OR WAIVER.

       (a) Amendment.--Section 405 of the Communications Act of 
     1934 (47 U.S.C. 405) is amended by adding to the end the 
     following:
       ``(c) Expedited Action Required.--
       ``(1) Time limit.--Within 90 days after receiving from a 
     two percent carrier a petition for reconsideration or other 
     review filed under this section or a petition for waiver of a 
     rule, policy, or other Commission requirement, the Commission 
     shall issue an order granting or denying such petition. If 
     the Commission fails to act on a petition for waiver subject 
     to the requirements of this section within this 90-day 
     period, the relief sought in such petition shall be deemed 
     granted. If the Commission fails to act on a petition for 
     reconsideration or other review subject to the requirements 
     of this section within such 90-day period, the Commission's 
     enforcement of any rule the reconsideration or other review 
     of which was specifically sought by the petitioning party 
     shall be stayed with respect to that party until the 
     Commission issues an order granting or denying such petition.
       ``(2) Finality of action.--Any order issued under paragraph 
     (1), or any grant of a petition for waiver that is deemed to 
     occur as a result of the Commission's failure to act under 
     paragraph (1), shall be a final order and may be appealed.''.
       (b) Effective Date.--The provisions of this section shall 
     apply with respect to any petition for reconsideration or 
     other review or petition for waiver that is submitted to the 
     Commission on or after the date of enactment of this Act. 
     Petitions for reconsideration or petitions for waiver pending 
     with the Commission on the date of enactment of this Act 
     shall be subject to the requirements of this section as if 
     they had been filed on the date of enactment of this Act.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from

[[Page H1032]]

Michigan (Mr. Upton) and the gentleman from Wisconsin (Mr. Barrett) 
each will control 20 minutes.
  The Chair recognizes the gentleman from Michigan (Mr. Upton).


                             General Leave

  Mr. UPTON. Mr. Speaker, I ask unanimous consent that all Members may 
have 5 legislative days within which to revise and extend their remarks 
and to insert extraneous material on H.R. 496.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Michigan?
  There was no objection.
  Mr. UPTON. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise today in strong support of H.R. 496, the 
Independent Telecommunications Consumer Enhancement Act of 2001. This 
legislation provides common sense regulatory relief that will enable 
small and mid-size telephone companies to respond to competition in 
their service territories.
  For too long, telephone companies have been saddled with unnecessary 
and burdensome regulations that increase the costs associated with 
providing phone service. The current regulatory framework for incumbent 
local exchange carriers is, to say the least, antiquated.
  Too often, the FCC imposes one-size-fits-all rules on all carriers, 
neglecting to take into account the size of carriers and the difference 
in the level of competition faced by carriers that serve disparate 
geographic regions. Reports must be filed that are rarely, if ever, 
read probably by FCC staff, reports that literally cost millions and 
millions of dollars and certainly countless man-hours to compile.
  The FCC also imposes rigid rules on the types of price regulation 
that small and mid-size carriers may, in fact, elect. These rigid rules 
prevent a carrier from electing different regulatory treatment for 
different parts of its territory, even if the carrier serves 
distinctive regions of a State or the country, and the costs to provide 
such service in these regions is simply not the same.
  The FCC's rules also do not give small and mid-size carriers the 
flexibility to offer discounts to reflect competitive conditions in 
their service territory.
  Mr. Speaker, one final area that the bill addresses concerns the 
process through which the FCC issues decisions on mergers and waivers 
of the Commission's rules. Mr. Speaker, this process takes way too 
long. Mergers of small and mid-size carriers, or the acquisition of one 
of these carriers of access lines belonging to a large carrier, should 
be decided within 60 days. Requests for waivers or reconsideration of 
the commission's rules governing the activities of small and mid-size 
companies should not take longer than 90 days. Both of these timetables 
give the FCC plenty of time to make the review.
  Mr. Speaker, I would like to reiterate that this bill provides common 
sense relief to those incumbent local exchange carriers that possess 
fewer than 2 percent of the Nation's access lines.
  I commend in particular the gentlewoman from Wyoming (Mrs. Cubin), my 
good friend and colleague, for authoring this legislation again; and I 
urge my colleagues to support it.
  Mr. Speaker, I reserve the balance of my time.
  Mr. BARRETT of Wisconsin. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, I am pleased to join my colleagues on the Committee on 
Energy and Commerce in support of the Independent Telecommunications 
Consumer Enhancement Act. Along with the gentleman from Tennessee (Mr. 
Gordon) and the gentleman from Mississippi (Mr. Pickering), I was an 
original cosponsor of the bill introduced by the gentlewoman from 
Wyoming (Mrs. Cubin) in the previous Congress and reintroduced this 
year.
  The gentleman from Tennessee (Mr. Gordon) had intended to be here to 
manage this bill this morning, but he and his wife, Leslie, are 
welcoming their new baby daughter, Peyton Margaret, into the world this 
morning. So I offer my congratulations to both of them for that.
  The Independent Telecommunications Consumer Enhancement Act, approved 
by voice vote on the House floor last year, would relax some of the 
FCC's one-size-fits-all regulations for our Nation's small and mid-size 
local telephone companies, those with less than 2 percent of the 
Nation's phone lines.
  These companies serve rural and suburban communities across the 
country and are poised to offer broadband and other advanced services 
to customers who are often outside the scope of the larger companies. 
This bill will reduce paperwork for the smaller companies, increase 
their pricing flexibility, and allow them to bundle services on one 
bill without reopening the 1996 Telecommunications Act.
  In my State of Wisconsin, 81 of the 83 companies providing local 
service are classified as 2 percent companies. By freeing these 
companies from portions of a regulatory system designed with much 
larger companies in mind, we will be taking an important first step 
towards bridging the digital divide by allowing for increased 
investment in Internet facilities in rural and suburban areas.
  I urge my colleagues to support this common sense legislation, Mr. 
Speaker.
  Mr. Speaker, I reserve the balance of my time.
  Mr. UPTON. Mr. Speaker, I yield 5 minutes to the gentlewoman from 
Wyoming (Mrs. Cubin).
  Mrs. CUBIN. Mr. Speaker, last year I introduced legislation similar 
to H.R. 496 that began a process to force the Federal Communications 
Commission to administer small and mid-size telecommunications 
companies differently during its regulatory deliberations.
  This bill passed by unanimous voice vote in the House and in the 
Committee on Commerce. This legislation does nothing more than clear 
out the regulatory underbrush that makes it difficult for small and 
mid-size companies to offer the same types of services that their 
sometimes larger competitors do.
  Let me give my colleagues an idea of the companies in my State that 
we are talking about. H.R. 496 helps companies like small telephone 
carriers in Chugwater, Wyoming, Chugwater Telephone Company, which has 
300 access lines. All West Communications has 363 access lines. Project 
Telephone Company, 219. Union Telephone, 1,600. It is one of the 
larger. These are the types of carriers that are in my district, and my 
colleagues will find these types of carriers all over the country. 
These are the carriers we are trying to help not have to fill out the 
extraordinarily complex and expensive forms that the larger companies, 
AT&T and some of the larger companies, have to do.

                              {time}  1115

  The intention was then and it continues to be my intention today to 
lessen the regulatory burdens on small and mid-sized telephone 
companies so that they can streamline their business plans and, 
hopefully, shift some more of their resources to deploying advanced 
telecommunication services to all areas of the country, including rural 
areas.
  With the help of many of my colleagues, and I sincerely thank them, 
especially the chairman of the Committee on Commerce, the gentleman 
from Louisiana (Mr. Tauzin); the gentleman from Michigan (Mr. Upton), 
the subcommittee chairman; the gentleman from Mississippi (Mr. 
Pickering); the gentleman from Wisconsin (Mr. Barrett); the gentleman 
from Tennessee (Mr. Gordon); and the gentleman from Oklahoma (Mr. 
Largent). I really appreciate the help that they have given in getting 
this bill to this point.
  The FCC, to its credit, has made some headway in this area, and I do 
commend them for it, however, they cannot seem to get the ball across 
the goal line. In 1999, the Commission initiated a process to reduce 
accounting requirements for small telecommunications companies; and 
although we have seen some incremental steps and public meetings held, 
we have yet to see a final product. I said it last year and I will 
restate it, because I think it is very important, the Commission's time 
line on finalizing the accounting and reporting standards has changed 
like the Wyoming winds. My bill does nothing more than what the 
Commission already says it is attempting to do.
  One of the concerns I heard last year was that the bill would somehow 
make it impossible to collect sufficient cost data to determine its 
high-cost support mechanisms. My colleagues all know

[[Page H1033]]

that I represent the most rural State in the country and, as such, 
Federal universal service support is absolutely critical. I would never 
do anything to compromise universal service.
  In a letter written to me last month by the president of the National 
Association of Regulatory Utility Commissioners, or NARUC, and the 
Chair of the NARUC Telecom Committee made it clear that nothing in this 
bill, and I quote, ``precludes States from access to information needed 
in State proceedings through data requests or similar methods. We 
understand that this bill does not affect underlying accounting rules 
nor prohibitions against cross subsidies.''
  Let me be clear. This bill does nothing to take away any authority 
from the FCC in requesting necessary paperwork that it needs to do its 
job.
  Mr. Speaker, I want to be brief, which I guess is already too late, 
so I will summarize the changes and improvements that we have made to 
the bill. Last year, the gentleman from Massachusetts (Mr. Markey) and 
I worked on several modifications to the bill, a majority of which were 
incorporated into it as it passed the House. This year we have 
continued our dialogue and have come together on even more changes and 
clarifications.
  First, I want to commend the gentleman from Massachusetts for his 
concern for rural telecommunications customers and the rates that they 
pay. I am pleased that we have had the opportunity to work out language 
that will guaranty that under section 286 of the bill, which is the 
pricing flexibility section, that rural customers' rates will not 
increase when competition forces prices to go down in one area only to 
be shifted to another area to make up the difference.
  We have tightened the definition of what a 2 percent carrier is. 
There is now language in section 284 where we have installed a 
bulletproof fire wall to protect against possible gaming of the system 
when companies elect to choose tariff flexibility.
  Finally, we have reworked the merger section. And I want it to be 
clear that the merger review language only applies to those companies 
that remain 2 percent companies after the acquisition of another 
company.
  Mr. Speaker, I cannot overstate the importance of this bill for rural 
areas like Wyoming. I appreciate all of the help that I have had in 
getting it this far.
  Mr. UPTON. Mr. Speaker, I yield 2 minutes to the gentleman from 
Minnesota (Mr. Kennedy), a supporter of the bill who represents a 
district that I know is fairly rural in lots of different ways.
  (Mr. KENNEDY of Minnesota asked and was given permission to revise 
and extend his remarks.)
  Mr. KENNEDY of Minnesota. Mr. Speaker, I thank the gentleman for 
yielding me this time, and I rise in support of H.R. 496, the 
Independent Telecommunications Enhancement Act of 2001.
  H.R. 496 is good for southwest Minnesota because it helps our small 
and mid-sized telephone companies by reducing the regulatory burden 
that has been put upon them. One of my goals in Congress is to help our 
rural communities by improving their rural telecommunications 
infrastructure.
  I believe that this bill, introduced by the gentlewoman from Wyoming, 
who says she is from the most rural State, while I profess to be from 
the most rural district in the country, that this will help us meet the 
goal by reducing government regulations on smaller phone companies and 
allowing them to focus their efforts instead on providing quality and 
competitive service to rural America instead of dealing with burdensome 
regulations.
  By allowing companies to focus on improving our communities by 
deploying new services and investing in infrastructure instead of 
complying with burdensome regulations, more residents in southwest 
Minnesota and in Wyoming will have access to telecommunication services 
that their friends and families in bigger cities oftentimes already 
have.
  I believe this is a step in the right direction towards closing the 
digital divide that we face here in America, and I also believe that by 
improving rural telecommunications services and infrastructure that we 
can make our rural areas more attractive to new and existing 
businesses.
  I thank the chairman, I thank the gentlewoman from Wyoming for 
putting this forward, and I look forward to voting for it.
  Mr. BARRETT of Wisconsin. Mr. Speaker, I yield back the balance of my 
time.
  Mr. UPTON. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I know I asked unanimous consent that all Members be 
able to revise and extend their remarks, but I particularly want to 
note and request the addition for the Record of the statement by the 
vice chairman of the subcommittee, the gentleman from Florida (Mr. 
Stearns), who is chairing an important hearing on airline mergers now 
and was not able to come over and engage in the debate.
  The other thing I would just like to point out is that my district in 
particular, though it is certainly not as rural as the State of 
Wyoming, is very much what I consider a microcosm of the country. We 
have good pockets of urban and rural, farms, businesses large and 
small, and I know that, particularly as chairman of this new 
subcommittee, we have two outstanding small telephone services, one in 
Bloomingdale, Michigan, in Van Buren County, and Climax Telephone 
Company in Kalamazoo County that will benefit from this legislation, as 
we will see through the rest of the country as well.
  We do not need burdensome regulation imposed by anyone on small 
companies like these that provide really the only service, whether it 
be high-speed digital fiber to those communities, whether cable, all of 
those different things. These companies are there and they are the only 
ones there. In fact, their prosperity will only grow because of this 
legislation.
  I would note that last year we passed this legislation without 
dissent. I would think that again this year we will pass it without 
dissent as well. I ask all my colleagues to vote in support of this 
legislation.
  Mr. TOWNS. Mr. Speaker, independent telephone companies have filled 
an important role in the development of our Nation's telecommunications 
system. For decades the cooperatives and family-owned businesses made 
sure that all Americans would have access to quality telephone service. 
Entrepreneurs are buying exchanges promising to deploy improved voice 
and data service in small communities.
  Recent studies by NECA and NTIA show that small carriers like these 
are investing in broadband deployment. I support any legislation that 
would speed the deployment of advanced services, whether that's in 
Brooklyn, New York or Basin, Wyoming. The Digital Divide is a pressing 
issue in this country, not only in urban areas but rural ones as well. 
I do not look kindly on those who feel that the Digital Divide is not 
an issue in this country. Those of us who represent rural and urban 
areas know all too well the lack of access our constituents face. We 
have a responsibility to create digital opportunities for all 
Americans, not just those living in the big cities.
  I want to voice my support for this legislation, but I do have 
concerns that giving carriers too much price flexibility could put 
consumers at a competitive disadvantage. I believe we should support 
small carriers as well as consumer interests. I want to be on record as 
promoting broadband deployment in rural areas while not jeopardizing 
the affordability of basic phone services.
  Mr. MARKEY. Mr. Speaker, I rise in opposition to H.R. 496. Before I 
speak to the remaining issues of concern with the legislation that I 
believe must be rectified before it merits support, I want to begin by 
thanking Mrs. Cubin, Mr. Gordon, Mr. Dingell, and Chairman Tauzin, and 
Chairman Upton for being responsive to many of the concerns that have 
been raised about H.R. 496 since it was first introduced.
  The bill being offered today contains many helpful clarifications and 
changes embodied in it that were in response to concerns I have raised 
about the measure. I believe that in its current form it clarifies a 
number of key definitions that affect the scope of the bill. Moreover, 
the bill also contains clarifications that better capture the expressed 
intent of its advocates without some of the possible unintended 
consequences that I have warned about.
  The legislation now better defines which companies qualify as ``2 
percent carriers'' so that certain Bell Operating Companies are not 
inadvertently included in the definition. The bill also preserves 
certain Commission authority necessary to protect consumers and 
contains adjustments in provisions dealing with the introduction of new 
telecommunications services, participation in subsidy pools, and the 
pricing flexibility section.
  Again, I want to thank Mrs. Cubin and my other colleagues who have 
agreed to these

[[Page H1034]]

changes. I believe they are helpful clarifications and I believe they 
improve the bill. I would note, however, that I still believe that 
additional changes are warranted for this legislation and that I hope 
can be dealt with prior to sending this bill to the President.
  This legislation, Mr. Speaker, also known as the ``2 percent'' bill, 
directly affects small and mid-sized telephone companies and has 
repercussions for millions of consumers across the country.
  A chief concern is the ``trigger'' for key de-regulatory provisions 
in the bill, namely the pricing flexibility and pricing deregulation 
provisions. The bill on the House floor today will continue to allow 
pricing deregulation upon the arrival of ``facilities-based'' 
competition in a given service area. Facilities-based entry, however, 
is defined in the bill to include not only provision of local exchange 
switching or its equivalent, but also the ``procurement'' of such. 
Moreover, a facilities-based competitor is merely required to have at 
least one customer--I repeat, one sole customer.
  Hopefully there will be more competition. The point is that although 
competition may arrive, it may not be robust or effective in 
constraining prices. A single competitor serving a single customer is 
simply an insufficient trigger for deregulation. Such a low threshold 
will mean sweeping deregulation with only the illusion of truly 
competitive markets in many areas of the country. I hope we can 
subsequently adjust this competitive trigger so that it reflects the 
kind of significant competition that serves to constrain prices and 
drive innovation, rather than the ``paper tiger'' competition that this 
definition will permit for deregulation to occur.
  In addition, I am concerned about combining a lessening of reporting 
requirements with the continuation, and indeed, increased flexibility, 
of participation in subsidy pools. At a time when policymakers are 
struggling to extract unnecessary subsidies from the system and make 
remaining subsidies more explicit, this legislation would appear to 
make it more difficult for policymakers and regulators to discern 
whether the subsidies generally, or particular subsidy levels, are 
still justified or need to be recalibrated. Mr. Speaker, the National 
Association of Regulatory Utility Commissioners (NARUC) recently passed 
a resolution on this bill that stated in part--and I'll quote from it--
that ``appropriate reporting requirements that . . . verify proper 
distribution and use of universal service funding should continue to be 
available.''

  If these so-called 2 percent companies want to live in a truly 
competitive environment with less regulation then I'm all for that--I 
wish them well and I hope they make it in the free marketplace.
  Yet this legislation still suffers from a ``have-your-cake-and-eat-
it-too'' quality. I believe that even if we are unwilling today to 
lessen or cap the subsidy as we lessen 2 percent company regulations 
and move these companies from monopoly mindsets to greater competition, 
we must at least have accountability in the subsidy system so that it 
doesn't become even more bloated than it already is.
  I believe that this Congress needs to have a broader discussion when 
we act to eliminate certain legacy regulations to ensure that we also 
act to eliminate or limit legacy subsidies.
  In addition, I continued to believe that there is a potential in this 
bill for companies to ``game'' the regulatory system. We usually do not 
give regulated entities the opportunity to choose their form of 
regulation but this bill does just that. I want to commend the bill's 
sponsors for adjusting the bill somewhat in this area in response to my 
concerns so that a company now chooses rate-or-return regulation or 
price cap regulation and this election must be done for 1 year. 
However, clarifying that such election cannot be done on any given 
month but rather on an annual basis does not fully alleviate the 
problem. Flipping back and forth on a yearly basis still permits 
companies to game the regulatory system in my view.
  Another issue I want to highlight is the merger review section. This 
section states that any review involving a so-called 2 percent carrier 
must be approved or denied by the Commission within 60 days. I 
understand that the companies do not want merger reviews to drag on for 
years, but I would suggest that 60 days is too short and unrealistic.
  While I believe the Commission is itself is streamlining its process, 
if the majority is insistent on having a merger review ``shot clock'' I 
would suggest giving the Commission a greater period of time.
  Finally, I want to comment broadly on the overall intent of the bill 
and what I believe will be the unfulfilled promise that the sponsors of 
the bill seek to achieve. While the purpose of the bill as stated in 
its text, is to accelerate the deployment of advanced services in more 
rural areas of the country, there is no requirement that any of the 
savings a company garners through lessened regulatory obligations be 
spent or invested in deployment of new, or advanced services to rural 
areas. The legislation has no advanced services build-out requirement, 
no blueprint or timetable for deployment to rural areas for such 
services. It appears that the savings a company enjoys through this 
bill can go directly to profits and to shareholders.
  As we proceed further on this bill I would encourage Members to 
further review suggestions made by NARUC and its membership and work 
again on these issues so that consumers and the public interest are 
fully protected.
  Again, I want to thank Mrs. Cubin for the adjustments in the bill 
that she has been willing to make thus far. I enjoy working with her 
and want to continue our discussions on this bill. I believe that 
working together, along with Chairman Upton, Chairman Tauzin, Mr. 
Dingell, Mr. Gordon, Mr. Barrett, Mr. Pickering, Mr. Largent and other 
supporters of the bill, that we can ultimately reach a resolution with 
the Senate that works for everybody. In addition I want to commend and 
thank Mrs. Cubin's staff, Bryan Jacobs, and the Energy and Commerce 
Committee Republican staff, Howard Waltzman, for their efforts in 
fashioning compromises in many sections of the bill.
  Mr. BEREUTER. Mr. Speaker, today this Member received a letter from 
the chief executive officer of one of the many rural telephone 
companies in Nebraska. Great Plains Communications is based in Blair, 
Nebraska.
  Great Plains serves 33,600 lines across 13,600 square miles of rural 
Nebraska. The company's service area includes 76 communities and 63 
exchanges. That amounts to about two and one-half customers per square 
mile. Fifty of those exchanges have 6 or fewer customers per square 
mile and 20 of the exchanges have 2 or fewer subscribers per square 
mile.
  At a recent telecommunications conference at Creighton University in 
Omaha, Great Plains CEO Mick Jensen noted that most rural telephone 
companies are experiencing flat growth, that flat growth makes 
investment difficult, that costs continue to rise, and that these rural 
telephone companies lack economies of scale and are serving many 
customers with limited income.
  Across the United States more than 1,000 small, local telephone 
companies are facing similar problems as they work to provide good 
service to rural residents. These telephone companies have more limited 
financial resources and relatively higher expenses than large telephone 
companies. Yet, these small companies must function under FCC 
regulations intended for large carriers.
  Mr. Speaker, the Independent Telecommunications Consumer Enhancement 
Act will help to end ``one-size-fits-all'' regulation of small and 
rural telecommunications carriers. It will protect these carriers and 
their customers from unfair and unnecessary regulatory burdens. And, in 
doing so, it will free resources that can be used to provide advanced 
telecommunications services to residents of rural areas.
  Mr. UPTON. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Simpson). The question is on the motion 
offered by the gentleman from Michigan (Mr. Upton) that the House 
suspend the rules and pass the bill, H.R. 496, as amended.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

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