[Congressional Record Volume 149, Number 60 (Saturday, April 12, 2003)]
[Extensions of Remarks]
[Pages E778-E779]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            CONCERN FOR AMERICA'S TELECOMMUNICATION INDUSTRY

                                 ______
                                 

                           HON. JOHN SHIMKUS

                              of illinois

                    in the house of representatives

                         Friday, April 11, 2003

  Mr. SHIMKUS. Mr. Speaker. I rise today out of concern for America's 
telecommunications industry.
  Service providers and equipment manufacturers are going out of 
business, workers have been laid off, and capital investment is frozen. 
Experts agree the industry is experiencing an ``economic meltdown.'' 
Once an engine of economic prosperity in the 1990s, this important 
sector is now a driver of the current recession.
  Why is this happening?
  In order to spur competition in the local phone market, the 
Telecommunications Act of 1996 required the local Bell companies to 
rent out their networks to competitors while they developed a customer 
base and built their own facilities.
  That is fine. However, many state regulators set the Bells' leasing 
rates significantly below the cost of maintaining their lines. For some 
time now, the incumbent phone companies have been bleeding money while 
big players, such as Worldcom, take advantage of these artificially low 
rates that were designed to help new entrants gain access to the 
market. Without contributing to the local infrastructure, these 
companies are cherry picking lucrative business and select residential 
customers, while leaving the Bells to serve everyone else.
  Instead of helping the little guys get started and bringing true 
competition to the local phone market, this regulation is a boondoggle 
for a few big companies at the expense of the

[[Page E779]]

regional Bells. This is not a sustainable economic model, as we are now 
witnessing.
  Recently, the Federal Communications Commission had the opportunity 
to turn things around in their Triennial Review. They failed to do so.
  Instead of correcting the rate structure and creating the regulatory 
certainty necessary to stabilize the industry, the FCC managed to 
produce even more uncertainty by punting to the states the rate 
decision they were supposed to establish. This means that the rate 
structure for local telephone service will now have to go through 
lengthy legal battles in 50 different states and in the District of 
Columbia before it is resolved. Unless something is done, for years to 
come, lawyers will profit and the status quo will prevail.
  I urge the FCC to reconsider its decision. You cannot fool an 
industry into recovery by creating a facade of competition.

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