[Congressional Record (Bound Edition), Volume 146 (2000), Part 11]
[Senate]
[Pages 16348-16349]
[From the U.S. Government Publishing Office, www.gpo.gov]



                      FCC REGULATION OF PAY PHONES

  Mr. BURNS. Mr. President, in the four years since the passage of the 
Telecommunications Act of 1996, dramatic changes have occurred in our 
telecommunications markets. We have seen competitive environments in 
such areas as wireless communication and long distance service. 
Advanced telecommunications services have great potential for 
deployment in the near term, if only the Federal Communications 
Commission would more aggressively promote them. All of this change is 
occurring in the context of an explosion of information technologies 
and the Internet.
  Yet the '96 Act dealt with much more than the high tech changes we 
read so much about these days. The legislation was designed to 
transform the entire telecommunications industry under the leadership 
of the FCC, to the benefit of all consumers. And the Act was designed 
to ensure that all Americans could have access to the vast array of 
services the Act will stimulate.
  Today I would like to briefly address one aspect of the '96 Act that 
is often overlooked in the glamour of ``high-tech.'' Public payphones 
are a critical piece of this access. For millions of Americans, public 
payphones are the only access to the telecom network.

[[Page 16349]]

And when the batteries or the signal for the wireless device fail, 
public payphones are a reliable source of inexpensive access, in an 
emergency or otherwise. Public payphones are emerging as public 
information portals, true on-ramps to the information highway, 
available to anyone at anytime.
  In order to ensure that these instruments of public access would 
continue serving as gateways of last resort and continue evolving using 
new technologies, the issue of adequate compensation for pay phone 
operators was addressed by the '96 Act. This requirement of the '96 Act 
was designed to promote fair competition and benefit consumers by 
eliminating distorting subsidies and artificial barriers. However, the 
law has not been successfully implemented, and I am calling on the FCC 
to act expeditiously to address this regulatory oversight. Payphones 
are an important segment of the telecommunications industry, especially 
in low income neighborhoods and in rural areas like those in my home 
state of Montana.
  Local telephone companies operated payphones as a legal monopoly 
until 1984, when an FCC ruling mandated that competitors' payphones be 
interconnected to local networks. Still, local telephone companies were 
able to subsidize their payphone service in competition with 
independent payphones. The '96 Act was designed to change all of this. 
It was designed to create a level playing field between all competitors 
and to encourage the widespread deployment of payphones. It did this by 
requiring local telephone companies to phase out subsidies; by 
mandating competitive safeguards to prevent discrimination by the ILECs 
and ensure fair treatment of competitors when they connect to local 
systems; and by assuring fair compensation for every call, including 
so-called ``dial around'' calls which bypass the pay phones' 
traditional payment mechanism.
  Yet the basic requirements of the '96 Act are not being implemented 
by the FCC to assure fair competition. Pay phone operators are not 
being compensated for an estimated one-third of all dial-around calls, 
particularly when more than one carrier is involved on long distance 
connections. An industry proposal to remedy this situation has been 
pending at the FCC for more than a year without any action being taken. 
And the FCC also needs to bring to a hasty resolution the issue of the 
appropriate line rate structure for payphone providers. Today, there 
are about 2.3 million pay phones nationwide. While all payphones are 
threatened by the gaps in dial-around payments, 600,000 of them are 
independently owned and are under particularly intense pressure; many 
small payphone operators now find themselves being forced to pull 
payphones or go out of business altogether. They are also in need of 
certainty regarding the rates they pay the telephone companies. This 
situation should not exist more than four years after the enactment of 
the 1996 legislation.
  I hope the FCC will act quickly to assure adequate compensation for 
each call. I hope the FCC will take immediate steps to enforce the 
requirement for non-discriminatory and fair line rates. I hope the FCC 
will take those basic steps required by the 1996 law. Fair 
competition--and the resulting benefits to consumers envisioned by 
Congress--will not occur until these actions are taken. As Chairman of 
the Senate Communications Subcommittee, I will be carefully monitoring 
actions taken by the FCC on these important issues in the weeks and 
months ahead.

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