[Congressional Record (Bound Edition), Volume 145 (1999), Part 11]
[House]
[Pages 16338-16339]
[From the U.S. Government Publishing Office, www.gpo.gov]



    THE INTRODUCTION OF THE FAIRNESS IN TELECOMMUNICATIONS LICENSE 
                             TRANSFERS ACT

                                 ______
                                 

                           HON. HENRY J. HYDE

                              of illinois

                    in the house of representatives

                        Thursday, July 15, 1999

  Mr. HYDE. Mr. Speaker, today I am pleased to join with Chairman Gekas 
of the Subcommittee on Commercial and Administrative Law and 
Congressman Goodlatte to introduce the ``Fairness in Telecommunications 
License Transfers Act.''
  As chairman of the Judiciary Committee, the committee with 
jurisdiction over antitrust and administrative procedure matters, I 
have long been concerned about the treatment of mergers in the 
telecommunications industry. During the consideration of the 
Telecommunications Act of 1996, Ranking Member John Conyers and I were 
instrumental in updating the law to make sure that telecommunications 
mergers received a full antitrust review under the normal Hart-Scott-
Rodino process in addition to the broader public interest review of 
license transfers by the Federal Communications Commission.
  Since that time, the Committee on the Judiciary has continued to 
study this matter. On June 24, 1998, we held an oversight hearing on 
``The Effects of Consolidation on the State of Competition in the 
Telecommunications Industry.'' Chairman William Kennard of the FCC was 
invited to appear at that hearing, but he had a scheduling conflict. At 
that time, I remained hopeful that the dual review would enhance the 
process rather than detracting from it.
  I have been pleased with the Department of Justice's role in these 
mergers. Although I may not agree with their substantive decisions in 
every respect, they have reviewed these mergers in a reasonable 
procedural manner under tight time deadlines. I think that their work 
has shown that Mr. Conyers and I did the right thing in 1996 when we 
succeeded in getting these mergers into the Hart-Scott-Rodiono process.
  The FCC's record on the other hand has been disappointing to say the 
least. On May 25, 1999, Chairman Gekas's Subcommittee on Commercial and 
Administrative Law held an oversight hearing on that record entitled 
``Novel Procedures in FCC License Transfer Proceedings.'' Again, 
Chairman Kennard was invited to appear, but had a scheduling conflict. 
At that hearing, the Subcommittee heard disturbing testimony from 
Commissioner Harold Furchtgott-Rott about the utterly standardless 
decisionmaking process that the Commission employs in these matters. 
His testimony proved that the title of that hearing was instructive in 
at least two regards. First, as Commissioner Furchtgott-Roth testified, 
under current law, the FCC has authority to review license transfers--
not mergers. Second, he told us that the FCC's procedures are novel 
indeed--they are not written down anywhere.
  Let me address both these areas. On the substance of the review, I 
have not in the past opposed the FCC's consideration of competitive 
factors as part of its public interest review of license transfers. I 
thought that some additional competitive analysis might be helpful. 
Based on the experience of the last year, and particularly the 
experience of the SBC and Ameritech merger, however, I am now much more 
skeptical. Having reviewed the governing law and Commissioner 
Furchtgott-Roth's testimony. I have substantial doubts as to whether 
the FCC should be redoing the competitive analysis done under the Hart-
Scott-Rodino process. It appears to me that the license transfer 
authority was primarily intended to allow the Commission to determine 
whether the transferee is a responsible and qualified party--not to 
launch a full scale competitive analysis. At the least, the kind of 
far-flung proceeding that SBC and Ameritech have faced strikes me as 
beyond the intent of the statute.
  For that reason, Section 2 of the bill would clarify that the FCC is 
not an antitrust enforcement agency. It removes language in the Clayton 
Act that currently appears to give the FCC concurrent authority to 
enforce the antitrust laws against telecommunications carriers. That 
authority has rarely been invoked in any formal manner, but I think 
that this change will help to clarify the appropriate role of the FCC 
in license transfer review and in other areas.
  Second, we must address procedural fairness in license transfer 
proceedings. I do not think I can say it any better than Commissioner 
Furchtgott-Roth put it to the Subcommittee: ``debates about process are 
not trivial debates. To the contrary, regularity and fairness of 
process are central to a governmental system based on the rule of law. 
As the law recognizes in many different areas, the denial of a 
procedural right can result in the abridgment of a substantive right.''
  What is wrong with the FCC's procedures? Let's consider SBC and 
Ameritech as a case study. First, the FCC simply does not have any 
rules for dealing with license transfer--none. As Commissioner 
Furchtgott-Roth testified, there simply is no place to go to look up 
the rules. Rather, in the case of SBC and Ameritech, the Commission has 
adopted a ``make it up as you go'' approach. Whenever the deal has 
neared the goalposts, the goalposts have been moved. That is confusing 
and costly for all concerned.
  Second, because there are no clear rules, some license transfers are 
treated in one fashion and some in another. Thousands are dealt with in 
a perfunctory fashion, and a few are dealt with extensively. There is 
nothing inherently wrong with that, but it ought to be done according 
to some neutral principle. For example, without commenting on their 
substance, it is hard to see why the AT&T-TCI transaction was approved 
in less than six months and the SBC-Ameritech transaction still is not 
completed after more than a year. That necessarily affects competition 
between these companies. A fundamental principle of fairness is that 
similarly situated parties ought to be treated similarly. Moreover, 
government bureaucracies ought not to be dictating market outcomes.
  Third, as I just pointed out, the SBC-Ameritech transaction has been 
pending for over a year. I have usually been circumspect in commenting 
on pending matters, but because of the extraordinary delay here, I 
wrote to Chairman Kennard on March 22, 1999 asking him to act 
expeditiously. A month later, he wrote back to me stating that the 
Commission had instituted a new round of procedures and that a decision 
was possible by the end of June. The end of June has come and gone. The 
Commission and the parties have reached a tentative agreement on 26 
conditions for the merger, but the Commission has not voted on it. 
Again, without commenting on the substance of the merger, this level of 
delay is simply unacceptable. These companies are involved in fiercely 
competitive markets, and time is of the essence. Billions of dollars of 
commerce have been held hostage to bureaucratic delay.
  Fourth, I am concerned about the conditional nature of this tentative 
approval as a procedural matter. The statutory basis for such 
conditional approvals in FCC license transfer proceedings is unclear at 
best. When the number of conditions rises to 26 and they are as 
extensive as those we see here, I have to question whether this is a 
public interest review or something else. These conditions may well be 
helpful as a policy matter, and I am at least pleased that this lengthy 
process is coming to an end. However, the legal and procedural basis 
for them is less than clear to me.
  All of these examples show what is wrong procedurally with the 
consideration of license transfers at the FCC. Section 3 of our bill 
would amend the Administrative Procedure Act to require the FCC to 
write rules governing their license transfer proceedings. We do not try 
to dictate what those rules should be. We simply require that there 
must be neutral rules accessible to all in advance. That seems to me 
simple fairness. With such rules in place, all parties will have an 
equal chance in these

[[Page 16339]]

proceedings. If the FCC fails to write such rules or it does not follow 
them, parties to license transfers can bring a court action to have 
their transfers deemed approved.
  Mr. Speaker, I believe these simple changes will bring order and 
fairness to what has become a chaotic and unfair process. I urge my 
colleagues to join me, Chairman Gekas, and Congressman Goodlatte in 
passing this important legislation.

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