[Senate Report 104-23]
[From the U.S. Government Publishing Office]



   104th Congress 1st            SENATE                S. Rpt.
         Session
                                                        104-23
_______________________________________________________________________

                                     

                                                        Calendar No. 45

                     TELECOMMUNICATIONS COMPETITION

                      AND DEREGULATION ACT OF 1995

                               __________

                              R E P O R T

                                 of the

                  COMMITTEE ON COMMERCE, SCIENCE, AND
                             TRANSPORTATION

                                   on

                                 S. 652




   March 30 (legislative day, March 27), 1995.--Ordered to be printed
       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

    ONE HUNDRED FOURTH CONGRESS

           FIRST SESSION

  LARRY PRESSLER, South Dakota, 
             Chairman
                                     BOB PACKWOOD, Oregon
                                     TED STEVENS, Alaska
                                     JOHN McCAIN, Arizona
                                     CONRAD BURNS, Montana
                                     SLADE GORTON, Washington
                                     TRENT LOTT, Mississippi
                                     KAY BAILEY HUTCHISON, Texas
                                     OLYMPIA SNOWE, Maine
ERNEST F. HOLLINGS, South Carolina   JOHN ASHCROFT, Missouri
DANIEL K. INOUYE, Hawaii
WENDELL H. FORD, Kentucky
J. JAMES EXON, Nebraska
JOHN D. ROCKEFELLER IV, West Virginia
JOHN F. KERRY, Massachusetts
JOHN B. BREAUX, Louisiana
RICHARD H. BRYAN, Nevada
BYRON L. DORGAN, North Dakota
  Patric G. Link, Chief of Staff
Kevin G. Curtin, Democratic Chief 
    Counsel and Staff Director
                                                        Calendar No. 45
104th Congress                                                   Report
                                 SENATE

 1st Session                                                     104-23
_______________________________________________________________________


 
      TELECOMMUNICATIONS COMPETITION AND DEREGULATION ACT OF 1995

                                _______


   March 30 (legislative day, March 27), 1995.--Ordered to be printed

_______________________________________________________________________


      Mr. Pressler, from the Committee on Commerce, Science, and 
 Transportation, submitted the following original bill; which was read 
                    twice and placed on the calendar

                              R E P O R T

                             together with

                     ADDITIONAL AND MINORITY VIEWS

                         [To accompany S. 652]
    The Committee on Commerce, Science, and Transportation 
reports favorably an original bill to provide for a pro-
competitive, deregulatory national policy framework designed to 
accelerate rapidly private sector deployment of advanced 
telecommunications and information technologies and service to 
all Americans by opening all telecommunications markets to 
competition, and for other purposes, and recommends that the 
bill do pass.
    The Committee on Commerce, Science, and Transportation, to 
foster the further development of the Nation's 
telecommunications infrastructure through competition and 
deregulation, and for other purposes, considered an original 
bill, the Telecommunications Competition and Deregulation Act 
of 1995, reports favorably thereon and recommends that the bill 
as amended do pass.

                          Purpose of the Bill

    The purposes of the bill are to revise the Communications 
Act of 1934 (the 1934 Act) to provide for a pro-competitive, 
de-regulatory national policy framework designed to accelerate 
rapidly private sector deployment of advanced 
telecommunications and information technologies and services to 
all Americans by opening all telecommunications markets to 
competition, and for other purposes.
    Among the major issues addressed by the bill are: (1) long 
distance entry by the Bell Operating Companies (BOCs); (2) 
telephone company entry into cable; (3) competition for local 
telephone service; (4) entry of registered electric utilities 
into telecommunications; (5) broadcasters' rights to provide 
additional services; (6) protection and advancement of 
universal telephone service; and many other issues.

                          Background and Needs

                        A. Historical Background

1. The Communication Act of 1934

    At the time Congress passed the 1934 Act, AT&T held a 
virtual monopoly over telephone service. AT&T was the sole 
provider of long distance service, was the primary manufacturer 
of communications equipment, and owned the Bell Operating 
Companies, which provided most of the local telephone service 
in the country. At the same time, AM radio was just beginning 
to develop a mass audience. Yet the amount of available 
spectrum for radio stations was limited, and radio stations 
frequently interfered with each other's signals. Legislation 
was necessary for two reasons: for telephone service, 
legislation was necessary to prevent AT&T from abusing its 
monopoly and for spectrum-based services, legislation was 
necessary to prevent interference among competing users of the 
spectrum and to prevent a few large entities from acquiring all 
spectrum rights.
    To address these needs, the Congress passed the 1934 Act, 
modeled after the Interstate Commerce Act. Title I of the 1934 
Act creates the FCC, title II establishes the regulations for 
all ``common carriers'' (providers of telephone services), and 
title III establishes the rules for broadcast services using 
the radio spectrum. Titles IV and V deal with judicial review 
and enforcement.

2. Changes in the telephone services market

    Changes in technology and consumer preferences have made 
the 1934 Act a historical anachronism. For instance, the 1934 
Act presumes that telephone service is provided by monopoly 
carriers and imposes strict regulatory requirements on all 
common carriers whether they are monopolies or not. Since the 
1970s, when competition first began to emerge in the markets 
for telephone equipment, information services, and long 
distance services, the FCC has struggled to adopt rules that 
recognize a need to reduce regulatory burdens, especially on 
new entrants.

3. Changes in the broadcast and cable markets

    The broadcast markets have undergone similar changes. While 
the 1934 Act successfully permitted the FCC to establish 
regulations for the introduction of over-the-air television, 
the Act was not prepared to handle the growth of cable 
television. Cable television, first known as community antenna 
television, or CATV, was not a common carrier (title II) or a 
broadcaster (title III). Congress responded by passing the 
Cable Communications Policy Act of 1984 (the 1984 Cable Act), 
which created a new title VI of the 1934 Act and established 
the FCC's regulatory authority over cable operators.
    The 1984 Cable Act prohibited telephone companies from 
providing video programming directly to subscribers in the same 
region where they provide telephone service (the so-called 
cable-telco prohibition), thereby preventing telephone 
companies from competing with cable operators. As the cable 
industry prospered through the late 1980s, it began to spend 
greater resources on developing its own programming. Rather 
than simply retransmitting broadcasting signals, the cable 
industry now competes with broadcasters for audience shares and 
advertising.
    The growth of cable programming has raised questions about 
the rules that govern broadcasters and telephone companies. 
Although broadcasters provide their services for free to 
consumers, they are currently restricted to providing one 
channel of programming over their spectrum, while a cable 
system can provide several channels. Broadcasters are seeking 
the right to obtain additional revenue streams through the 
provision of additional services over their spectrum.
    Other changes raise questions about the cross-ownership 
restrictions. Telephone companies are seeking the right to 
provide cable service in competition with the cable companies. 
Similarly, cable companies are seeking the right to provide 
telephone service. Federal district courts have found that the 
1984 cable-telco cross-ownership ban is unconstitutional under 
the First Amendment.

4. Changes in global communications market

    Section 310(b) of the 1934 Act establishes limits on the 
grant of U.S. telecommunications licenses to foreign entities.
    With an exploding worldwide demand for telecommunications 
equipment and services, this limitation inhibits the ability of 
U.S. firms to compete in a global market. Foreign countries 
point to section 310(b) as a reason to deny U.S. companies 
entry into their markets.
    The bill creates a system of reciprocity for common 
carriers.The FCC may grant a common carrier license to an 
alien, or foreign corporation if the FCC finds that there are 
equivalent market opportunities for U.S. companies in the 
foreign country where the alien is a citizen or a corporation 
is organized.
5. The Modification of Final Judgment (MFJ)

    In 1982, the Department of Justice (DOJ) settled an 
antitrust case against AT&T. Under the agreement, AT&T agreed 
to spin off its local telephone companies in exchange for 
maintaining its equipment and long distance businesses. AT&T 
and DOJ agreed that the 22 Bell Operating Companies (BOCs) 
would be combined into 7 Regional Bell Operating Companies. 
(RBOCs). The decree took effect on January 1, 1984.
    The MFJ also provided that the BOCs would be barred from 
providing long distance (the ``interLATA'' restriction) or 
information services and from manufacturing communications 
equipment. These restrictions were imposed out of concern that 
the BOCs would use their monopoly over local telephone service 
to harm consumers and gain an unfair advantage over competitors 
in the long distance, manufacturing, and information services 
markets.
    The ``line-of-business'' restrictions on the BOCs were not 
intended to be permanent. In 1991, the District Court removed 
the information services restriction entirely, but the 
restrictions on manufacturing and long distance continue to 
apply.

6. The Public Utility Holding Company Act of 1935

    Unlike most electric utility companies, the Public Utility 
Holding Company Act of 1935 (PUHCA) restricts the 10 registered 
electric utility holding companies 1 and their operating 
subsidiaries from making investments outside of the utility 
business. Specifically, section 11 of PUHCA restricts 
registered companies to businesses that are ``reasonably 
incidental, or economically necessary or appropriate'' to the 
operations of an integrated utility system and that are 
``necessary or appropriate in the public interest.'' As 
administered by the Securities and Exchange Commission (SEC), 
these requirements mean that registered holding companies are 
generally limited to investments that primarily involve their 
core electric utility business. Thus, for example, while a 
registered holding company is generally able to own an internal 
telecommunications system necessary for control of power plants 
and other utility uses, it and its subsidiaries are limited in 
their ability to sell excess telecommunications capacity to 
other parties.
    \1\ Under  PUHCA,  registered  holding  companies  are generally 
those  that operate multistate systems. The 10 registered electric 
utility holding companies are: Central and South West Corp., the 
Southern Co., Entergy Corp., American Electric Power Co., Inc., New 
England Electric System, Allegheny Power System, Inc., General Public 
Utilities Corp., Eastern Utilities Associates, Unitil Corp., and 
Northeast Utilities. In addition, there are three gas registered 
holding companies: Columbia Gas System, Consolidated Natural Gas Co., 
and National Fuel Gas Co. The changes made by section 302(b) of the 
bill apply equally to all registered companies.
---------------------------------------------------------------------------
    PUHCA restricts registered holding companies from investing 
in telecommunications infrastructure, specifically the 
construction of fiber optic links and other facilities for 
general service to the public. In addition, many end-use 
applications that could provide the incentive for investment in 
infrastructure construction may also exceed core utility 
functions and thus impede the ability of a registered holding 
company to invest. As a result, registered holding companies 
may be precluded from competing in telecommunications and 
information markets, thus potentially limiting consumer choice 
and resulting in higher prices, unless current PUHCA 
restrictions are loosened with respect to investment in 
telecommunications infrastructure and applications. Entry by 
utilities could significantly promote and accelerate 
competition in telecommunications services and deployment of 
advanced networks.

                      B. Need for the Legislation

1. Universal service and local competition

    The need to protect and advance universal service is one of 
the fundamental concerns of the Committee in approving the 
Telecommunications Competition and Deregulation Act of 1995. 
The bill addresses the universal service concerns in several 
ways.
    First, it makes explicit the FCC's current implicit 
authority to require common carriers to provide universal 
service. Second, the legislation provides a mechanism to 
achieve greater consistency between Federal and State actions 
to protect universal service.
    The bill sets forth a Federal responsibility for 
establishing universal service policies, but recognizes the 
primary importance of the States in developing policies to 
define, protect and advance universal service. It creates a 
Federal-State Joint Board through which the FCC can obtain the 
States' views with regard to appropriate universal service 
mechanisms. The Joint Board after receiving the States' 
recommendations may propose modifications of amendments to the 
definition of and the adequacy of support for universal 
service.
    The bill directs the FCC and the Joint Board to base their 
policies on several principles. Among others, these include: 
providing quality services at just, reasonable, and affordable 
rates; providing access to advanced telecommunications and 
information services in all regions of the nation; and, 
providing consumers in rural and high cost areas access to 
services comparable to those provided in urban areas.
    The legislation reforms the regulatory process to allow 
competition for local telephone service by cable, wireless, 
long distance, and satellite companies, and electric utilities, 
as well as other entities.
    The bill preempts almost all State and local barriers to 
competing with the telephone companies upon enactment of the 
bill. In addition, the measure requires telecommunications 
carriers with market power over telephone exchange or exchange 
access service to open and unbundle network features and 
functions to allow any customer or carrier to interconnect with 
the carrier's facilities. Several States (such as New York, 
California, and Illinois) have taken steps to open the local 
networks of telephone companies.
    The bill gives the FCC greater regulatory flexibility by 
permitting the FCC to forbear from regulating carriers when it 
is in the public interest. This provision will allow the FCC to 
reduce the regulatory burdens on new entrants. It will also 
permit the FCC to reduce the regulatory burdens on the 
telephone company when competition develops or when the FCC 
determines that relaxed regulation is in the public interest.

2. Long distance relief for the BOCs

    The bill establishes a process under which the BOCs may 
apply to enter the interLATA market. It reasserts Congressional 
authority over this issue.
    Section 255 of the bill establishes a checklist of specific 
actions BOCs must meet in order to fully open local telephone 
service to competitors. The checklist requires the BOCs to make 
specific facilities and services available on an unbundled 
basis to other providers. Among other specific requirements, 
the BOCs must provide access to poles, ducts and conduits; 
offer emergency and directory assistance; and provide 
transmission and switching services unbundled from other 
communications services so other carriers can purchase these 
services on an as-needed basis. By opening up local telephone 
service and long distance to competition, the Committee 
anticipates consumers will have a greater choice of services 
and providers.
    Upon an FCC finding that a BOC has complied with the 
checklist and other measures, the BOC will be permitted to 
offer long distance services.

3. Manufacturing authority for the BOCs

    Section 222 of the bill removes BOC manufacturing 
restrictions by tying entry into manufacturing to the 
competitive checklist in new section 255(b) of the 1934 Act.
    The bill provides certain authority immediately. At 
enactment, BOCs may engage in research or design activities 
related to the manufacture of telecommunications equipment or 
customer premises equipment. Further, BOCs would be permitted 
to enter into royalty agreements with other manufacturers.
    BOCs are permitted to enter immediately into arrangements 
with an unaffiliated manufacturer in developing a product 
(either with funding or technical assistance) and would receive 
royalties upon the manufacturer's sale of the product to third 
parties.
    When BOCs have been found by the FCC to be permitted into 
long distance, they may also enter manufacturing. In conducting 
their manufacturing activities, the BOCs must comply with the 
following safeguards:
          No Joint Manufacturing--To prevent collusion, the 
        BOCs cannot manufacture in conjunction with one 
        another. The bill requires that, if the BOCs decide to 
        manufacture, they will create independent manufacturing 
        entities that will compete with each other as well as 
        with existing manufacturers.
          Separate Affiliates--The BOCs must conduct all their 
        manufacturing activities through separate affiliates. 
        The affiliate must keep books of account for its 
        manufacturing activities separate from the telephone 
        company and must file this information publicly.
          No Self-dealing--(1) The BOC must make procurement 
        decisions and award all supply contracts using open, 
        competitive bidding procedures, must permit any person 
        to participate in establishing standards and certifying 
        equipment used in the network, may not restrict sales 
        or equipment to other local exchange carriers, and must 
        protect proprietary information concerning standards 
        and certification of equipment unless specifically 
        authorized.
          No Cross-subsidization--The BOC is prohibited from 
        subsidizing its manufacturing operations with revenues 
        from its telephone services.
          Protections for Small Telephone Companies--A BOC 
        manufacturing affiliate must make its equipment 
        available to other telephone companies without 
        discrimination or self-preference as to price delivery, 
        terms, or conditions.
          Close Collaboration--Any BOC may engage in close 
        collaboration with any unaffiliated manufacturer.

4. Telephone company entry into cable

    The bill permits telephone companies to enter cable and 
cable to offer telephone services immediately upon enactment.
    The bill does not require telephone companies to obtain a 
local franchise as long as they employ a video dial-tone system 
that is operated on a common carrier basis open to all 
programmers. If a telephone company provides service over a 
``cable system'' (that is, a system that is not open to all 
other programmers), the telephone company will be treated as a 
cable operator under title VI of the 1934 Act. Video providers 
are required under section 214 of the 1934 Act to seek a 
certificate from the FCC to construct facilities to provide 
these services. The bill lifts this section 214 requirement 
effective one year after enactment.

5. Entry by the registered electric utilities into communications

    Allowing registered holding companies to become vigorous 
competitors in the telecommunications industry is in the public 
interest. Consumers are likely to benefit when more well-
capitalized and experienced providers of telecommunications 
services actively compete. Competition to offer the same 
services may result in lower prices for consumers. Moreover, 
numerous competitors may offer consumers a wider choice of 
services and options.
    Under current law, holding companies that are not 
registered may already compete to provide telecommunication 
services to consumers. There does not appear to be sufficient 
justification to preclude registered holding companies from 
providing this same competition. Rather, there are compelling 
reasons for allowing registered holding companies to compete in 
the telecommunications market.
    First, electric utilities in general have extensive 
experience in telecommunications operations. Utilities operate 
one of the Nation's largest telecommunications systems--much of 
it using fiber optics. The existence of this system is an 
outgrowth of the need for real time control, operation and 
monitoring of electric generation, transmission and 
distribution facilities for reliability purposes. Within the 
utility world, registered holding companies are some of the 
more prominent owners and operators of telecommunications 
facilities. For example, one registered holding company, the 
Southern Co., has approximately 1,700 miles of fiber optics 
cables in use, with several hundred more miles planned.
    Second, electric utilities are likely to provide 
economically significant, near-term applications such as 
automatic meter reading, remote turn on/turn off of lighting, 
improved power distribution control, and most importantly, 
conservation achieved through real-time pricing.
    With real-time pricing, electric customers would be able to 
reprogram major electricity consuming appliances in their homes 
(such as refrigerators and dishwashers) to operate according to 
price signals sent by the local utility over fiber optic 
connections. Electricity costs the most during peak demand 
periods. Since consumers tend to avoid higher than normal 
prices, the result of real-time pricing would be significant 
``peak shaving'' reduction in peak needs for electric 
generation. Because electric generation is highly capital 
intensive, reductions in demand can become a driving force for 
basic infrastructure investment in local fiber optic 
connections. Registered holding companies are leaders in the 
development of real-time pricing technology.
    Third, registered holding companies have sufficient size 
and capital to be effective competitors. Collectively, 
registered companies serve approximately 16 million customers--
nearly one in five customers served by investor-owned 
utilities. Three registered companies who have been active in 
the telecommunications field, Central and South West, Entergy, 
and Southern Co., have contiguous service territories that 
stretch from west Texas to South Carolina.
    To ensure that PUHCA amendments which allow registered 
holding companies to invest in telecommunications and related 
businesses are in the public interest, section 102(h) and 
section 206 of the reported bill contain consumer protection 
provisions. The bill requires any registered holding company 
that provides telecommunications services to provide that 
service through a separate subsidiary. It shall conduct all 
transactions with its subsidiary on an arm's length basis and 
shall not discriminate in the provision or procurement of 
goods, services, facilities and information between its 
subsidiary and any other entity. The bill also prohibits cross-
subsidization and provides State commissions and the Federal 
Energy Regulatory Commission (FERC) access to books and records 
of communications entities associated with registered holding 
companies. It allows independent audits by State commissions of 
affiliate transactions.

6. Alarm services

    The U.S. alarm industry today protects the life, safety, 
and property of more than 17 million homes and businesses. The 
industry is a full and vigorous competitive market with more 
than 13,000 alarm companies employing approximately 130,000 
workers.
    The Committee believes the legitimate concerns of the alarm 
industry have been addressed in sections 251 and 252 of the 
bill. The interconnection requirements will open the local 
exchange monopoly to competitors, thus providing the alarm 
industry with alternative service providers. Further, section 
252 ensures that any BOC entering the alarm industry will 
create a separate subsidiary for the alarm entity, and the BOC 
is prohibited from cross-subsidizing its alarm business.
    The Committee bill allows the BOCs into the alarm business 
after they have received approval to provide long distance. 
When BOCs are permitted to provide these services, the bill 
establishes an expedited complaint proceeding at the FCC in the 
event of perceived anticompetitive practices by a BOC.

7. Spectrum flexibility for broadcasters

    The bill permits broadcasters to use their spectrum for new 
services so long as they continue to provide broadcast 
programming that meets their public interest obligations.
    As technology becomes more advanced, local broadcasters 
have had to experiment with and inaugurate new services. The 
conversions from black-and-white to color and from monaural to 
stereo sound, and the increase in electronic remote news-
gathering, have all brought changes to the future viability of 
local broadcasting. Other changes have come from the desire to 
provide new services to underserved populations, e.g., closed 
captioning for the hearing impaired and second language 
channels. Some services, such as teletext, have failed. But in 
every instance, technical advances have facilitated the 
provision of new services that have been introduced by the 
broadcast industry in its existing broadcast spectrum. While 
the Government has played an important facilitating role, 
setting broad technical and service standards, the ultimate 
success of each innovation has been determined by the public 
and the marketplace.
    The bill acknowledges that the public has been well served 
by this process. Despite the introduction of numerous costly 
improvements in service, local broadcast service remains 
universally available, reaching 98 percent of American homes, a 
degree of coverage which exceeds even the percentage of homes 
receiving telephone service. As a consequence, the leadership 
of the local television broadcasting system in introducing new 
services and technologies has benefited all citizens, not just 
those who can afford subscription services and live in areas 
where those services are available.
    Advanced television, digital compression, and other 
technological service innovations hold the potential to bring a 
variety of new services to consumers. Broadcasters seek to 
pursue these opportunities within existing broadcast radio 
spectrum, without governmental financial support, in a manner 
which will assure the continued availability of top quality 
broadcast service to all Americans. Broadcasters who use the 
spectrum for commercial services are required to pay fees for 
the use of this spectrum.
8. Obscenity and other wrongful uses of telecommunications

    During consideration of the bill in Executive Session, an 
amendment was offered to address an increasing number of 
published reports of inappropriate uses of telecommunications 
technologies to transmit pornography, engage children in 
inappropriate adult contact, terrorize computer network users 
through ``electronic stalking,'' and seize personal 
information.
    The amendment, which was adopted by voice vote, modernizes 
the protections in the 1934 Act against obscene, lewd, 
indecent, and harassing use of a telephone. These protections 
are brought into the digital age. The provisions increase the 
penalties for obscene, harassing, and wrongful utilization of 
telecommunications facilities; protect privacy; protect 
families from uninvited cable programming which is unsuitable 
for children; and give cable operators authority to refuse to 
transmit programs or portions of programs on public or leased 
access channels which contain obscenity, indecency, or nudity. 
The measure specifically excludes from liability 
telecommunications and information service providers and system 
operators who are not themselves knowing participants in the 
making or otherwise responsible for the content of the 
prohibited communications.

9. Conclusion

    There are several reasons for this legislation. The 1934 
Act has not been rewritten since its original passage. Its 
provisions are no longer adequate in a world of competition for 
telephone services and increasing diversity of media. Further, 
much of current communications policy is being set by a single 
Federal district court enforcing the MFJ. Reducing regulation 
of the telecommunications industry will spur the development of 
new technologies and increase investment in these industries, 
which will create jobs and greater choices for consumers. The 
United States telecommunications industry is competitive 
worldwide. By reducing regulation and barriers to competition, 
the bill will help ensure the future growth of these industries 
domestically and internationally.

                          Legislative History

    During the 104th Congress, several legislative proposals 
were introduced to address the need for telecommunications 
reform. One of these bills, S. 1822, was introduced in February 
1994 by Senator Hollings and Senator Danforth, Chairman and 
Ranking Republican Member, respectively, of the Committee on 
Commerce, Science and Transportation, among others. Altogether, 
the Committee heard 31 hours of testimony from 86 witnesses 
during 11 days of hearings. In open executive session on August 
11, 1994, the Committee reported a substitute to S. 1822, the 
Communications Act of 1994, by a vote of 18-2. The measure was 
not considered by the full Senate before the end of the 
Congress.
    At the beginning of the 105th Congress, on January 31, 
1995, a Republican draft entitled ``The Telecommunications 
Competition and Deregulation Act of 1995'' was circulated by 
Senator Pressler, Chairman of the Committee on Commerce, 
Science and Transportation. A Democratic response entitled 
``The Universal Service Telecommunications Act of 1995'' 
followed from Senator Hollings, Ranking Democratic Member of 
the Committee on Commerce, Science and Transportation, on 
February 14, 1994.
    The full Committee on Commerce, Science and Transportation 
held 3 days of hearings.

                        January 9, 1995 Hearing

    The first full committee hearing was on January 9, 1995 and 
dealt with telecommunications legislation in the 104th 
Congress.
    Witnesses were the Hon. Bob Dole (R-KS), Senate Majority 
Leader Hon. Thomas Bliley (R-VA), Chairman, House Commerce 
Committee Hon. Jack Fields (R-TX), Chairman, House Commerce 
Committee Subcommittee on Telecommunications and Finance.
    Senator Dole advocated quick passage of telecommunications 
legislation. He noted that rural Americans are concerned about 
telecommunications legislation, as it offers tremendous 
opportunities for economic growth. He testified that 
legislation should underscore competition and deregulation, not 
reregulation.
    Chairman Bliley stated that the goals of telecommunications 
legislation should be to: (1) encourage a competitive 
marketplace; (2) not grant special government privileges; (3) 
return telecommunications policy to Congress; (4) create 
incentives for telecommunications infrastructure investment, 
including open competition for consumer hardware; and (5) 
remove regulatory barriers to competition.
    Chairman Fields stated that telecommunications reform is a 
key component of the legislative agenda of the 104th Congress. 
He chastised those who speculated that Congress will be unable 
to pass telecommunications legislation this year. He asserted 
that the telecommunications industry is in a critical stage of 
development, and that Congress must provide guidance.

                         March 2, 1995 Hearing

    The committee again held a hearing on March 2, 1995 dealing 
with telecommunications policy reform.
                               Witnesses

Panel I

Hon. Anne K. Bingaman, Assistant Attorney General for 
        Antitrust, U.S. Department of Justice
Hon. Larry Irving, Assistant Secretary for Communications and 
        Information, National Telecommunications and 
        Information Administration
Hon. Kenneth Gordon, Chairman, Massachusetts Department of 
        Public Utilities, testifying on behalf of NARUC

Panel II

Peter Huber, Senior Fellow, Manhattan Institute
George Gilder, Senior Fellow, The Discovery Institute
Clay Whitehead, President, Clay Whitehead Associates
Henry Geller, Communications Fellow, Markle Foundation
John Mayo, Professor of Economics, University of Tennessee
Lee Selwyn, President, Economics and Technology, Inc.

                                Panel I

    Anne Bingaman testified that the Administration favors 
legislation that is comprehensive and national in scope, opens 
the BOC local monopoly, and provides for interconnection at all 
points. She claims that local loop competition will bring 
consumers the same benefits that long distance competition 
brought consumers when the Justice Department broke up AT&T.
    Larry Irving agreed that opening telecommunications markets 
will promote competition, lower prices, and increase consumer 
choice. He stated that the government must maintain its 
commitment to universal service. He stated the Administration's 
concern that private negotiations may not be the best way to 
open the local loop to competition. He also asserted that a 
date certain for elimination of the MFJ restrictions will hurt 
efforts to negotiate interconnection agreements with BOCs.
    Kenneth Gordon stated that State regulators, including 
those in Massachusetts, were once a barrier to competition, but 
are now at the forefront of promoting competition. He said that 
states must also retain control of universal service. He 
advocated using the states as laboratories for determining how 
best to regulate common carriers. States are moving away from 
cost-based regulation, but do not yet know which form of 
incentive-based regulation works best. He said that the bill 
should not mandate price regulation.

                                Panel II

    Peter Huber noted that a date certain for entry is 
necessary because the FCC and the Department of Justice are 
very slow to act. He advocated swift enactment of legislation 
with a date certain for entry into restricted lines of 
business.
    George Gilder also advocated swift Congressional action, 
and claimed that telecommunications deregulation could result 
in a $2 trillion increase in the net worth of U.S. companies. 
He said the U.S. needs an integrated broadband network with no 
distinction between long haul, short haul, and local service.
    Clay Whitehead said that Congress should not try and chart 
the future of the telecommunications industry, but should try 
to enable it. He also advocated a time certain for entry into 
restricted lines of business.
    Henry Geller agreed with the previous speakers that 
Congress should act soon. He said that a time certain approach 
will work for the ``letting in'' process (allowing competition 
in the local loop) as well as the ``letting out'' process 
(allowing BOCs to provide interLATA telecommunications). Geller 
advocated that the FCC should allow all users of spectrum the 
flexibility to provide any service, as long as it does not 
interfere with other licensees. He also contended that the FCC 
should expand auctions to include all commercial licenses, 
including broadcast licenses.
    John Mayo testified that the spread of competition in other 
markets over the last decade supports opening the local loop. 
He said that interLATA telecommunications competition has been 
a success and Congress should follow the same model for local 
exchange competition. He testified against a date certain 
approach for BOC long distance entry.
    Lee Selwyn asserted that there will be no true competition 
in the local loop unless all participants are required to take 
similar risks. Selwyn also testified that premature entry by 
the BOCs into long distance could delay the growth of 
competition for local service.

                         March 21, 1995 Hearing

    The Committee held a final hearing on March 21, 1995 
dealing with telecommunications policy reform, specifically in 
the areas of cable rate deregulation, broadcast ownership, and 
foreign ownership.

                               Witnesses

Panel I

Decker Anstrom, President & CEO, National Cable Association
Richard A. Cutler, President, Satellite Cable Services
Gerald L. Hassell, Senior Executive VP, The Bank of New York
Roy Neel, President & CEO, United States Telephone Association
Bradley C. Stillman, Telecommunications Policy Director, 
        Consumer Federation of America

Panel II

U. Bertram Ellis, Jr., President & CEO, Ellis Communications, 
        Inc.
Edward O. Fritts, President & CEO, National Association of 
        Broadcasters
Preston R. Padden, President Network Distribution, Fox 
        Broadcasting Company
Jim Waterbury, Chair, NBC Affiliates Association

Panel III

Scott Harris, Bureau Chief, International Bureau, Federal 
        Communications Commission
Eli Noam, Director, Columbia Institute for Tele-Information

    Decker Anstrom testified that NCTA supports 
telecommunications legislation because the cable industry is 
ready to compete, and legislation must include rate regulation 
relief for cable. He said that cable will be the competing wire 
to the telephone industry, and cable's coaxial cable carries 
900 times more information than telephone's twisted copper 
pair. The problem, he said, is that cable does not have the 
capital or, in some states, the authority to compete with the 
local exchange carriers.
    Roy Neel agreed with Anstrom that cable rate regulation 
repeal would allow for investment incentives. He also noted 
that price regulation for cable is much less burdensome than 
telephone company regulation, and stated that 
telecommunications deregulation must be addressed in the bill 
in order to create a level playing field.
    Richard Cutler testified that the 1992 Cable Act has had a 
devastating effect on small cable operators. He said that small 
operators thought that they would be protected under the Act, 
but the FCC forgot about the needs of small cable systems 
(those with less than 1,000 subscribers). He said that small 
cable operators need fair pole attachment rates and non-
discrimination in programming rates. He also said that the 
legislation should include the ability for joint ventures, 
mergers, and buy outs.
    Bradley Stillman said that the 1992 Cable Act resulted in 
lower programming and equipment prices for consumers. He 
asserted that cable has actually increased its subscribership 
and revenues during this period of rate regulation, and he 
opposed any rate deregulation.
    Gerald Hassell stated that true competition will only 
develop if both cable and telephone survive and flourish. He 
said that cable is the most likely source of competition to the 
telephone industry, but cable does not have the capital to 
rebuild its systems. Under rate regulation, he continued, there 
is no incentive to invest in infrastructure.

                                Panel II

    Bertram Ellis testified that the local ownership 
restrictions no longer serve the public interest. He said that 
allowing local multiple ownership will permit new stations to 
get on the air that would not otherwise be able to survive. He 
also stated that local marketing agreements--joint venture 
between broadcasters which allow for local economies of scale--
are very helpful and should be allowed to continue.
    Eddie Fritts stated that the radio ownership rules should 
be modified in light of the impending new digital satellite 
radio service. Digital satellite radio will create 60 new 
nationwide radio stations. He also said that broadcasters need 
spectrum flexibility to compete with other multichannel video 
providers. Finally, Fritts contended that telephone companies 
should have a separate subsidiary for providing video to the 
home.
    Preston Padden advocated deregulation of the broadcast 
industry. He noted that the draft bill would allow seven very 
strong companies into the video marketplace, and that 
broadcasters will need deregulation to compete.
    Jim Waterbury stated that Congress should retain some 
ownership rules, such as the cable/network cross ownership ban 
and the network ownership cap. He said that there must be 
checks and balances between the affiliates and networks. He 
believes that eliminating the ownership rules could harm 
localism.

                               Panel III

    Scott Harris, testifying on behalf of himself and not the 
FCC, stated that Section 310(b) is an impediment to U.S. 
competition overseas, and should be revised. He said that a 
revision of Section 310(b) should include: elimination of the 
difference between investment in a holding company and direct 
investment; a public interest test that includes analysis of 
the home market of the petitioning company; the ability for the 
FCC to take into account new developments in foreign 
regulations; and a modification of the ban on foreign 
government ownership of communications licenses to allow for 
satellite news gathering.
    Eli Noam claimed that the Europeans are resistant to 
opening their telecommunications markets, but noted that the 
U.S. market is not fully open. He said that the U.S. can either 
open its market unilaterally, or open markets based on 
reciprocity. He also noted that the FCC already has some 
discretion, so Congress does not need to act to achieve the 
desired result. He continued, however, that from an 
international image perspective, it would benefit the U.S. to 
pass a law revising Section 310(b). Noam generally agreed with 
the provision in the draft bill, but suggested that the FCC, 
not USTR should make the open market analysis.

                    March 23, 1995 Executive Session

    In an open executive session of March 21, 1995, the 
Committee reported ``The Telecommunications Competition and 
Deregulation Act of 1995,'' by a vote of 17 to 2.
                      Regulatory Impact Statement

    In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following evaluation of the regulatory impact of the 
legislation, as reported.
    The bill, as reported, contains FCC requirements and 
statutory modifications to the 1934 Act, to update the 
regulatory structure to reflect changes in the 
telecommunications marketplace. The bill requires FCC 
proceedings that are necessary to establish the rules for 
greater competition in the local exchange telephone markets 
that traditionally have been dominated by regulated monopolies. 
The procompetitive rules that will be established by these 
proceedings will reduce substantially the costs level of 
regulation. In addition, the bill amends the 1934 Act to allow 
the FCC to forbear from regulation under certain circumstances. 
Also, the FCC and States are required to give carriers pricing 
flexibility when they face competition. The States are 
prohibited from using rate of return regulation but are given 
maximum flexibility in providing alternative forms of 
regulation during the transition to competition.
    The bill also requires a biennial review of regulations, 
beginning in 1997, that would require the FCC to determine and 
eliminate any regulation no longer necessary in a competitive 
marketplace. The Federal-State Joint Board shall review State 
laws and notify the Governors of any States' regulations 
determined to no longer be in the public interest.
    Under this legislation, the FCC will establish the national 
minimum standards for opening local telephone networks and 
other competitive requirements. The States are then responsible 
for administering, implementing and resolving disputes as 
telecommunications carriers meet these obligations.
    This legislation authorizes the BOCs to engage in the 
manufacture of telecommunications equipment and customer 
premises equipment, the provision of telecommunications 
equipment, and the provision of long distance service under 
certain conditions. The bill would replace the current 
antitrust prohibition with regulatory safeguards designed to 
prevent the BOCs from engaging in anticompetitive behavior. 
With respect to the provision of long distance services and 
manufacturing, the FCC is required to conduct proceedings to 
authorize such services by the BOCs.
    In addition, the BOCs and all telephone companies are 
allowed to provide video programming services in their 
telephone service areas in an effort to promote greater choice 
and competition in the video marketplace. Once competition 
emerges in the video marketplace, current rate regulations 
imposed on the cable industry will become unnecessary and will 
sunset, removing the burden of rate regulation from the FCC and 
the industry. In addition, regulation of the upper tier cable 
service is removed, subject to a bad actor standard, further 
reducing FCC regulatory responsibilities.
    The legislation requires the FCC to take actions regarding 
universal service, public access, and public rights-of-way, 
infrastructure sharing and network planning, State oversight of 
rural markets, rates for pole attachments, and guidelines for 
carriers of last resort.
    The legislation pays special attention to the needs of 
rural areas. The bill allows States to adopt regulations to 
require competitors to obtain State approval before being 
permitted to compete in areas served by rural telephone 
companies and impose obligations on competitors to serve an 
entire service area. The FCC, on the other hand, must modify 
its rules on unbundling for rural telephone companies and may 
waive the requirements for carriers serving up to 2 percent of 
the Nation's access lines.
    The bill also amends PUHCA to allow registered utilities to 
provide telecommunications services under safeguards to protect 
ratepayers and competitors from cross-subsidization and 
discriminatory conduct.
    The measure allows the FCC to adopt regulations to allow 
broadcasters the right to use their broadcast spectrum for 
``ancillary and supplementary'' services and the FCC may 
require fees for such services.
    The rulemakings required by the legislation will have to be 
initiated and completed within a variety of timeframes. After 
the FCC adopts its rules, the States and industry participants 
must comply with them. The legislation is designed to remove as 
many regulatory burdens as possible to allow for the 
development of a fully competitive marketplace in all sectors 
of the telecommunications industry.
                       number of persons covered

    The bill's regulatory provisions cover a variety of 
segments within the telecommunications industry. Most of the 
provisions involving the BOCs and other telephone companies 
affect activities which are already regulated by various State 
commissions and the FCC. Thus, the regulatory provisions 
concerning the telephone companies are unlikely to increase the 
number of persons affected by regulation, and provisions 
deregulating portions of cable service will reduce the number 
of persons affected.

                            economic impact

    The bill is likely to stimulate tremendous economic growth 
and investment by the private sector. The potential to 
stimulate jobs, investment, and export opportunities for the 
American economy is immense. A competitive local telephone 
exchange is likely to produce increased economic activity and 
investment. In addition to boosting overall economic output and 
productivity, these activities are likely to generate 
significant tax revenues for local and State governments and 
the Federal Government. Most of the regulatory provisions 
impact companies that are already regulated and are unlikely to 
impose much of an economic burden.

                                privacy

    The bill will not have any adverse impact on the personal 
privacy of individuals affected and will give greater control 
over such information to the consumer.

                               paperwork

    The bill requires the FCC to adopt rules to implement the 
provisions of the bill. Reporting requirements on affected 
industry participants should not increase.

                      Section-by-Section Analysis

SEC. 1. Short Title

    Section 1 provides that the bill may be cited as the 
``Telecommunications Competition and Deregulation Act of 
1995.''

Sec. 2. Table of Contents

    Section 2 provides a table of contents for the bill.

Sec. 3. Purpose

    Section 3 establishes that the purpose for the bill is to 
increase competition in all telecommunications markets and 
provide for an orderly transition from regulated markets to 
competitive and deregulated telecommunications markets 
consistent with the public interest, convenience, and 
necessity.

Sec. 4 Goals

    Section 4 identifies the policy goals and objectives of the 
bill. The bill is intended to establish a national policy 
framework that will accelerate rapidly the private sector 
deployment of new and advanced telecommunications and 
information technologies and services to all Americans by 
opening all telecommunications markets to competition.

Sec. 5. Findings

    Section 5 includes the findings of Congress.

Sec. 6. Amendment of Communications Act of 1934

    Section 6 provides that, except as noted, an amendment or 
repeal described in the bill is an amendment or repeal of a 
section or provision of the Communications Act of 1934 (47 
U.S.C. 151 et seq.)

Sec. 7. Effect on other laws

    Section 7(a) states that, except as provided in sections 
7(b) and (c), nothing in the bill shall be construed to modify, 
impair, or supersede the applicability of any antitrust law. 
For example, the provisions of this bill shall not be construed 
to grant immunity from any future antitrust action against any 
entity referred to in the bill.
    Section 7(b) states that the bill shall supersede the 
applicability of the MFJ to the extent that it is inconsistent 
with the bill. Provisions of the MFJ that are not directly 
inconsistent with the provisions of this bill are not 
superseded by this bill, except as provided by section 7(c).
    Section 7(c) transfers administration of the GTE consent 
decree and any provision of the MFJ not overriden or superseded 
by the bill to the FCC and provides that the U.S. District 
Court for the District of Columbia shall have no further 
jurisdiction over any provision of the MFJ or the GTE consent 
decree.
Sec. 8. Definitions

    Section 8(a) includes definitions of the MFJ, the GTE 
Consent Decree, and an ``integrated telecommunications service 
provider.'' An ``integrated telecommunications service 
provider'' means a person engaged in the provision of multiple 
services, such as voice, data, image, graphics, and video 
services, which make common use of all or part of the same 
transmission facilities, switches, signaling, or control 
devices.
    Section 8(b) adds several definitions to section 3 of the 
Communications Act of 1934 (47 U.S.C. 153) including 
definitions for ``local exchange carrier,'' 
``telecommunications,'' ``telecommunications service,'' 
``telecommunications carrier,'' ``telecommunications number 
portability,'' ``information service,'' ``rural telephone 
company,'' and ``service area.''
    New subsection (kk) defines ``Local exchange carrier'' to 
mean a provider of telephone exchange service or exchange 
access service. ``Telephone exchange service'' is already 
defined in section 3 of the 1934 Act.
    ``Telecommunications'' is defined in new subsection (ll) to 
mean the transmission, between or among points specified by the 
user, of information of the user's choosing including voice, 
data, image, graphics, and video, without change in the form or 
content of the information, as sent and received, with or 
without benefit of any closed transmission medium. This 
definition excludes those services, such as interactive games 
or shopping services and other services involving interaction 
with stored information, that are defined as information 
services. The underlying transport and switching capabilities 
on which these interactive services are based, however, are 
included in the definition of ``telecommunications services.''
    The term ``telecommunications service'' defined in new 
subsection (mm) of section 3 of the 1934 Act means the offering 
of telecommunications for a fee directly to the public or to 
such classes of users as to be effectively available to the 
public, regardless of the facilities used to transmit the 
telecommunications service. This definition is intended to 
include commercial mobile services, competitive access 
services, and alternative local telecommunications services to 
the extent they are offered to the public or to such classes of 
users as to be effectively available to the public.
    ``Telecommunications service'' does not include information 
services, cable services, or ``wireless'' cable services, but 
does include the transmission, without change in the form or 
content, of such services.
    Subsection (nn) defines ``telecommunications carrier'' to 
mean any provider of telecommunications service, except that 
the term does not include aggregators of telecommunications 
services as defined in section 226 of the 1934 Act. The 
definition amends the 1934 Act to explicitly provide that a 
``telecommunications carrier'' shall be treated as a common 
carrier for purposes of the Act, but only to the extent that it 
is engaged in providing telecommunications services.
    New subsection (oo) defines ``telecommunications number 
portability'' to mean the ability of users of 
telecommunications services to retain, at the same location, 
existing telecommunications numbers without impairment of 
quality, reliability, or convenience when switching from one 
telecommunications carrier to another. Number portability 
allows consumers remaining at the same location to retain their 
existing telephone numbers when switching from one 
telecommunications carrier to another.
    New subsection (pp) defines ``information service'' similar 
to the FCC definition of ``enhanced services.'' The Committee 
intends that the FCC would have the continued flexibility to 
modify its definition and rules pertaining to enhanced services 
as technology changes.
    Subsection (rr) adds a definition of ``rural telephone 
company'' that includes companies that (i) do not serve areas 
containing any part of an incorporated place of 10,000 or more 
inhabitants, or any incorporated or unincorporated territory in 
an urbanized area, or (ii) have fewer than 100,000 access lines 
in a State.
    New subsection (ss) adds to the 1934 Act a definition of 
``service area.'' ``Service area'' means a geographic area 
established by the FCC and the States for the purpose of 
determining universal service obligations and support 
mechanisms. The service area of a rural telephone company means 
such company's study area until the FCC and States, based on a 
recommendation of a Federal-State Joint Board, establish a 
different definition.

                   title I--transition to competition
Sec. 101. Interconnection requirements

    Section 101 adds a new section 251 entitled 
``Interconnection'' to the 1934 Act. Subsection 251(a) imposes 
a duty on local exchange carriers possessing market power in 
the provision of telephone exchange service or exchange access 
service in a particular local area to negotiate in good faith 
and to provide interconnection with other telecommunications 
carriers that have requested interconnection for the purpose of 
providing telephone exchange service or exchange access 
service. The obligations and procedures prescribed in this 
section do not apply to interconnection arrangements between 
local exchange carriers and telecommunications carriers under 
section 201 of the 1934 Act for the purpose of providing 
interexchange service, and nothing in this section is intended 
to affect the FCC's access charge rules. Local exchange 
carriers with market power are required to provide 
interconnection at reasonable and nondiscriminatory rates.
    The FCC will determine which local exchange carriers have 
market power for purposes of this section. In determining 
market power, the relevant market shall include all providers 
of telephone exchange service or exchange access service in a 
local service area, regardless of the technology used to 
provide such service.
    The obligation to negotiate interconnection shall apply to 
a local exchange carrier or a class of local exchange carriers 
that are determined by the Commission to have market power in 
providing exchange services. The references to a ``class'' of 
carriers are intended to relieve the Commission of the need to 
make a separate market power determination for each individual 
carrier. These references are not intended to require the local 
exchange carriers to engage in negotiations as a class, 
although subsection 251(a)(2) provides that multilateral 
negotiations are permitted. However, a local exchange carrier 
that chooses to participate in multilateral negotiations will 
be subject to an individual obligation to negotiate in good 
faith and will remain subject to the time limitations contained 
in this and other provisions of section 251.
    The Committee intends to encourage private negotiation of 
interconnection agreements. At the same time, the Committee 
recognizes that minimum requirements for interconnection are 
necessary for opening the local exchange market to competition.
    New Section 251 provides two alternative methods for 
reaching interconnection agreements. The Committee intends that 
the interconnection required under this section will be 
implemented in a manner that is transparent to customers of the 
local exchange carrier and the connecting telecommunications 
carrier.
    New subsection 251(b) provides a list of minimum standards 
relating to types of interconnection the local exchange carrier 
must agree to provide, if sought by the telecommunications 
carrier requesting interconnection. The minimum standards 
include unbundled access to the network functions and services 
of the local exchange carrier's network, and unbundled access 
to the local exchange carrier's telecommunications facilities 
and information, including databases and signaling, that are 
necessary for transmission and routing and the interoperability 
of both carriers' networks. The negotiation process established 
by this section is intended to resolve questions of economic 
reasonableness with respect to the interconnection 
requirements. That is, either the parties resolve the issue or 
the State will impose conditions for interconnection consistent 
with section 251 and the FCC rules.
    The minimum standards also require interconnection to the 
local exchange carrier's network that is at least equal in 
type, quality, and price to the interconnection the carrier 
provides to any other party, including itself or affiliated 
companies. At a minimum, the Committee intends that any 
technically feasible point would be any point at which the 
local exchange carrier provides access to any other party, 
including itself or any affiliated entry. Access to poles, 
ducts, conduits, and rights-of-way owned or controlled by the 
local exchange carrier is also a minimum standard.
    Number portability and local dialing parity are included in 
the minimum standards of subsection 251(b). If requested, a 
local exchange carrier must take any action under its control 
to provide interim or final number portability as soon as it is 
technically feasible. Section 307 of the bill adds new section 
261 of the Act which establishes a neutral telecommunications 
numbering administration and defines interim and final number 
portability. The FCC will determine when final number 
portability is technically feasible. A similar requirement 
applies to local dialing parity.
    The minimum standards also cover resale or sharing of the 
local exchange carrier's unbundled telecommunications services 
and network functions. The carrier is not permitted to attach 
unreasonable conditions to the resale or sharing of those 
services or functions. Subsection 251(b) provides certain 
circumstances where it would not be unreasonable for a State to 
limit the resale of services included within the definition of 
universal service.
    Additional minimum standards relate to reciprocal 
compensation arrangements, reasonable notice of changes in the 
information necessary for transmission and routing of services 
over the carrier's network, and schedules of itemized charges 
and conditions. The Committee intends that reciprocal 
compensation may include compensation arrangements, including 
in-kind exchange of traffic or traffic balance measures such as 
those included in the New York settlement agreement concerning 
Rochester Telephone.
    Consistent with the Committee's intent that carriers be 
encouraged to negotiate and resolve interconnection issues, 
subsection 251(c) makes clear that a local exchange carrier may 
meet its section 251 interconnection obligations by negotiating 
and entering into a binding agreement that does not reflect the 
minimum standards listed in subsection 251(b). However, each 
such negotiated interconnection agreement must include a 
schedule of itemized charges for each service, facility, or 
function included in the agreement, and must be submitted to a 
State under subsection 251(e).
    Subsection 251(d) provides procedures under which any party 
negotiating an interconnection agreement may ask the State to 
participate in the negotiations and to arbitrate any 
differences arising in the negotiations. A State may be asked 
to arbitrate at any point in the negotiations.
    In addition to the possibility of arbitration by the State, 
subsection 251(d) provides a more formal remedy under which any 
party may petition the State to intervene in the negotiations. 
If issues remain unresolved more than 135 days after the date 
the local exchange carrier received the request to negotiate, 
any party to the negotiations may petition the State to 
intervene for the purpose of resolving any issues that remain 
open in the negotiation. Requests to the State to intervene 
must be made during the 25 day period that begins 135 days 
after the local exchange carrier received the negotiation 
request. The State is required to resolve any open issues and 
conduct its review of the agreement under subsection 251(e) not 
later than 10 months after the date on which the local exchange 
carrier received the request to negotiate. In resolving any 
open issues the solution imposed by a State must be consistent 
with the FCC's rules to implement this section, the minimum 
standards required under subsection 251(b) and the provisions 
of paragraph 251(d)(6) with respect to any charges imposed. 
Paragraph 251(d)(6) provides that any charge determined by the 
State through arbitration or intervention shall be based on the 
cost of that unbundled element and may include a reasonable 
profit. The bill specifically provides that the State may not 
use or require a rate of return or other rate based proceeding 
to determine the cost of an unbundled element.
    Subsection 251(e) requires that any interconnection 
agreement under section 251 must be submitted to the State for 
approval. The State must approve or reject the agreement and 
make written findings as to any deficiencies in the agreement. 
An agreement successfully negotiated under subsection (c) by 
the parties without regard to the minimum standards set forth 
in subsection 251(b) may only be rejected if the State finds 
the agreement discriminates against a telecommunications 
carrier that is not a party to the agreement. However, approval 
of such an agreement does not relieve the parties of any 
obligations that may be applicable under other provisions of 
the 1934 Act.
    The State may reject interconnection agreements negotiated 
under subsection (d) if the State finds the agreement does not 
meet the minimum standards set forth in subsection 251(b), or 
if the State finds that implementation of the agreement is not 
in the public interest. Subsection 251(e) also provides that no 
State court has jurisdiction to review the State's approval or 
rejection of an interconnection agreement.
    New section 251(f) requires a State to make a copy of each 
agreement approved by the State under subsection 251(e) 
available for public inspection and copying within 10 days 
after the agreement is approved. Subsection 251(f) allows a 
State to charge a reasonable and nondiscriminatory fee to the 
parties to an agreement to cover the State's costs of approving 
and filing such an agreement.
    New section 251(g) requires a local exchange carrier to 
make available any service, facility, or function provided 
under an interconnection agreement to which that local exchange 
carrier is a party to any other telecommunications carrier that 
requests such service, facility, or function on the same terms 
and conditions as are provided in that agreement. The Committee 
intends this requirement to help prevent discrimination among 
carriers and to make interconnection more efficient by making 
available to other carriers the individual elements of 
agreements that have been previously negotiated.
    Subsection 251(i) requires the FCC to promulgate rules to 
implement section 251 within 6 months after enactment. If a 
State fails to carry out its responsibilities under section 251 
in accordance with the rules promulgated by the FCC, the 
Committee intends that the FCC assume the responsibilities of 
the State in the applicable proceeding or matter.
    Subsection 251(i) also requires the FCC or a State to waive 
or modify the requirements of the minimum standards of 
subsection 251(b) in the case of a rural telephone company, and 
allows the FCC or a State to waive or modify those requirements 
in the case of a local exchange carrier with fewer than two 
percent of the nation's subscriber lines installed in the 
aggregate nationwide. In order to waive or modify the 
requirements of subsection 251(b) for such companies or 
carriers, the FCC or a State must determine that the 
application of such requirements would result in unfair 
competition, impose a significant adverse economic impact on 
users of telecommunications services, be technically 
infeasible, or otherwise not be in the public interest. The 
Committee intends that the FCC or a State shall, consistent 
with the protection of consumers and allowing for competition, 
use this authority to provide a level playing field, 
particularly when a company or carrier to which this subsection 
applies faces competition from a telecommunications carrier 
that is a large global or nationwide entity that has financial 
or technological resources that are significantly greater than 
the resources of the company or carrier.
    New subsection 251(j) provides that nothing in section 251 
precludes a State from imposing requirements on 
telecommunications carriers with respect to intrastate services 
that the State determines are necessary to further competition 
in the provision of telephone exchange service or exchange 
access service, so long as any such requirements are not 
inconsistent with the FCC's rules to implement section 251.
    New subsection 251(k) provides that nothing in section 251 
is intended to change or modify the FCC's rules at 47 CFR 69 et 
seq. regarding the charges that an interexchange carrier pays 
to local exchange carriers for access to the local exchange 
carrier's network. The Committee also does not intend that 
section 251 should affect regulations implemented under section 
201 with respect to interconnection between interexchange 
carriers and local exchange carriers.

Sec. 102. Separate subsidiary and safeguard requirements
    Section 102 of the bill amends the 1934 Act to add a new 
section 252 to impose separate subsidiary and other safeguards 
on certain activities of the Bell companies. Section 102 
requires that to the extent a regional Bell operating company 
engages in certain businesses, it must do so through an entity 
that is separate from any entities that provide telephone 
exchange service. Subsection 252(b) spells out the structural 
and transactional requirements that apply to the separate 
subsidiary, subsection 252(c) details the nondiscrimination 
safeguards, subsection 252(d) iimposes restrictions on joint 
marketing, and subsection 252(e) sets forth additional 
requirements with respect to the provision of interLATA 
services. Where consistent with the requirements of this 
section, the activities required to be carried out through a 
separate subsidiary under this section may be conducted through 
a single entity that is separate and distinct from the entity 
providing telephone exchange service.
    The activities that must be separated from the entity 
providing telephone exchange service include telecommunications 
equipment manufacturing and interLATA telecommunications 
services, except out-of-region and incidental services (not 
including information services) and interLATA services that 
have been authorized by the MFJ court. A Bell company also 
would have to provide alarm monitoring services and certain 
information services through a separate subsidiary, including 
cable services and information services which the company was 
not permitted to offer before July 24, 1991. In a related 
provision, section 203 of the bill provides that a Bell company 
need not use a separate affiliate to provide video programming 
services over a common carrier video platform if it complies 
with certain obligations.
    The Committee believes that the ability to bundle 
telecommunications, information, and cable services into a 
single package to create ``one-stop-shopping'' will be a 
significant competitive marketing tool. As a result, and to 
provide for parity among competing industry sectors, the 
Committee has included restrictions on joint marketing certain 
services both in section 252(d) and in new section 255(b)(3). 
Under subsection 252(d) of this section the Bell operating 
company entity that provides telephone exchange service may not 
jointly market the services required to be provided through a 
separate subsidiary with telephone exchange service in an area 
until that company is authorized to provide interLATA service 
under new section 255. In addition, a separate subsidiary 
required under this section may not jointly market its services 
with the telephone exchange service provided by its affiliated 
Bell operating company entity unless such entity allows other 
unaffiliated entities that offer the same or similar services 
to those that are offered by the separate subsidiary to also 
market its telephone exchange services. In section 255(b)(3) 
telecommunications carriers are not permitted to jointly market 
interexchange service with local exchange service purchased 
from the Bell operating company in any area in which that 
company is not authorized to provide interLATA services.
    Additional requirements for the provision of interLATA 
services are included in new section 252(e). These provisions 
are intended to reduce litigation by establishing in advance 
the standard to which a Bell operating company entity that 
provides telephone exchange service or exchange access service 
must comply in providing interconnection to an unaffiliated 
entity.
    Subsection 252(f) of new section 252 establishes rules to 
ensure that the Bell companies protect the confidentiality of 
proprietary information they receive and to prohibit the 
sharing of such information in aggregate form with any 
subsidiary or affiliate unless that information is available to 
all other persons on the same terms and conditions. In general, 
a Bell company may not share with anyone customer-specific 
proprietary information without the consent of the person to 
whom it relates. Exceptions to this general rule permit 
disclosure in response to a court order or to initiate, render, 
bill and collect for telecommunications services.
    New subsection 252(g) provides that the FCC may grant 
exceptions to the requirements of section 252 upon a showing 
that granting of such exception is necessary for the public 
interest, convenience, and necessity. The Committee intends 
this exception authority to be used whenever a requirement of 
this section is not necessary to protect consumers or to 
prevent anti-competitive behavior. However, the Committee does 
not intend that the FCC would grant an exception to the basic 
separate subsidiary requirements of this section for any 
service prior to authorizing the provision of interLATA service 
under section 255 by the Bell operating company seeking the 
exception to a requirement of this section.
    Public utility holding companies that engage in the 
provision of telecommunications services are required to do so 
through a separate subsidiary under new section 252(h). In 
addition, a State may require a public utility company that 
provides telecommunications services to do so through a 
separate subsidiary. The separate subsidiary for public utility 
holding companies is required to meet some, but not all, of the 
structural separation and nondiscrimination safeguard 
provisions that are applicable to Bell operating company 
subsidiaries. New subsection 252(h) provides that a public 
utility holding company shall be treated as a Bell operating 
company for the purpose of those provisions of section 252 that 
subsection (h) applies to those holding companies.
    New subsection 252(i) provides that a company that is a 
subsidiary of a holding company that also owns a Bell operating 
company shall be considered to meet the separate subsidiary 
requirements, so long as that subsidiary does not provide 
telephone exchange service. The Committee included this 
provision to allow for a subsidiary that is not a subsidiary of 
the Bell operating company that provides telephone exchange 
service to meet the requirements of section 252, so long as 
both entities are owned and controlled by the same holding 
company. However, this provision is not intended to lessen the 
structural or nondiscrimination safeguards required by new 
section 252.
    Subsection (b) of section 102 requires the Commission to 
promulgate any regulations necessary to implement new section 
252 of the 1934 Act within nine months of the date of enactment 
of this bill. The subsection also provides that any separate 
subsidiary established or designated by a Bell operating 
company for purposes of complying with new section 252(a) prior 
to the issuance of the regulations shall be required to comply 
with the regulations when they are issued.
    Section 102(c) provides that the amendment to the 1934 Act 
made by this section takes effect on the date of enactment of 
this bill.

Sec. 103. Universal service

    Section 103 of the bill establishes a Federal-State Joint 
Board to review existing universal service support mechanisms 
and make recommendations regarding steps necessary to preserve 
and advance this fundamental communications goal. Section 103 
also establishes a new section 253 of the 1934 Act to clearly 
articulate the policy of Congress that universal service is a 
cornerstone of the Nation's communications system. This new 
section is intended to make explicit the current implicit 
authority of the FCC and the States to require common carriers 
to provide universal service. The clear statutory requirements 
for universal service in new section 253 are intended to 
provide continued consistency between Federal and State actions 
to advance universal service, and for greater certainty and 
competitive neutrality among competing telecommunications 
providers than the existing implicit mechanisms do today. As 
new section 253 explicitly provides, the Committee intends that 
States shall continue to have the primary role in implementing 
universal service for intrastate services, so long as the level 
of universal service provided by each State meets the minimum 
definition of universal service established under new section 
253(b) and a State does not take any action inconsistent with 
the obligation for all telecommunications carriers to 
contribute to the preservation and advancement of universal 
service under new section 253(c).
    Section 103(a) of the bill requires the FCC to institute a 
Federal-State Joint Board under section 410(c) of the 1934 Act 
to recommend within 9 months of the date of enactment new rules 
regarding implementation of universal service. Consistent with 
all Joint Boards established under section 410(c), the 
recommendations of the Joint Board are advisory in nature, and 
the FCC is not required to adopt the recommendations. However, 
the Committee intends that the FCC shall give substantial 
weight to the Joint Board recommendations.
    In making its initial recommendations to the FCC and the 
States, the Committee intends that the Joint Board will 
thoroughly review the existing universal service system, 
including any definitions used by the different States and in 
particular both Federal and State support mechanisms. The 
language of the bill does not presume that any particular 
existing mechanism for universal service support must be 
maintained or discontinued; however, the Committee intends that 
the universal service support mechanisms implemented under new 
section 253 shall be, to the extent possible consistent with 
the goal of ensuring universal service, transparent, explicit, 
equitable and nondiscriminatory to all telecommunications 
carriers. Because the existing universal service support system 
relies to a significant extent on nontransparent internal cost-
shifting by monopoly providers, the Committee expects that the 
Joint Board will recommend appropriate transition mechanisms 
and timeframes for implementation of any new support mechanisms 
for universal service. Based on testimony presented to the 
Committee concerning the size and nature of existing implicit 
universal service support mechanisms, the Committee expects 
that the preservation and advancement of universal service, 
including the evolving definition of universal service, can be 
accomplished without any increase in the overall nationwide 
level of universal service support that occurs today.
    In addition, the Committee expects that the Joint Board 
will make recommendations concerning all other matters related 
to universal service, including the appropriate division of 
responsibilities between the FCC and the States, the 
appropriate size of service areas, guidelines for designation 
and relinquishment of essential telecommunications carrier 
status, and how support payments, if any, should be allocated 
when an essential telecommunications carrier resells universal 
service using the facilities of another carrier.
    Section 103(a) also provides that at least once every four 
years the FCC is required to institute a new Joint Board 
proceeding to review the implementation of new section 253 
regarding universal service, and to make recommendations 
regarding any changes that are needed. The Committee expects 
that each Joint Board periodically instituted under this 
section shall review as necessary the extent of universal 
service, the definition of universal service, the adequacy of 
support mechanisms, if any, and whether and to what extent 
further steps should be taken to adjust any such mechanisms to 
meet the requirements of this section. The Committee expects 
that competition and new technologies will greatly reduce the 
actual cost of providing universal service over time, thus 
reducing or eliminating the need for universal service support 
mechanisms as actual costs drop to a level that is at or below 
the affordable rate for such service in an area; however, the 
Committee intends that any action to reduce or eliminate 
support mechanisms shall only be done in a manner consistent 
with the obligation to preserve and advance universal service 
for all Americans.
    Section 103(b) of the bill requires the FCC to complete any 
proceeding to implement the recommendations of the initial 
Joint Board within one year of the date of enactment of the 
bill, and of any other Joint Board on universal service matters 
within one year of receiving such recommendations.
    Section 103(c) of the bill simply clarifies that the 
amendments to the 1934 Act made by the bill do not necessarily 
affect the FCC's existing separations rules for local exchange 
or interexchange carriers. However, this subsection does not 
prohibit or restrict the FCC's ability to change those 
separations rules through an appropriate proceeding.
    Section 103(d) establishes new section 253 in the 1934 Act. 
New section 253(a) establishes seven principles on which the 
Joint Board and the FCC shall base policies for the 
preservation and advancement of universal service. The 
Committee intends that the Joint Board and the FCC will take 
into account each of these principles in making recommendations 
and implementing new regulations to restructure the existing 
universal service system. The term ``affordable'' is made in 
reference to what consumers are able and willing to pay for a 
particular service included in the definition of universal 
service. The Committee intends that the States will have the 
primary role in determining what is an affordable rate for any 
particular area.
    Subsection (b) of new section 253 provides that the FCC 
shall define universal service, based on recommendations from 
the public, Congress, and the Joint Board. The Committee 
intends that the Joint Board and FCC will periodically update 
the list of telecommunications services included in the 
definition of universal service in order to ensure that all 
Americans share in the benefits of new telecommunications 
technologies. The Committee notes that universal service is 
defined in new section 253(b) as an ``evolving level of 
intrastate and interstate telecommunications services. . . .'' 
As defined under the 1934 Act (as amended by this bill), 
``telecommunications services'' includes the transport of 
information or cable services, but not the offering of those 
services. This means that information or cable services are not 
included in the definition of universal service; what is 
included is that level of telecommunications services that the 
FCC determines should be provided at an affordable rate to 
allow all Americans access to information, cable, and advanced 
telecommunications services that are an increasing part of 
daily life in modern America.
    Put another way, the Committee intends the definition of 
universal service to ensure that the conduit, whether it is a 
twisted pair wire, coaxial cable, fiber optic cable, wireless, 
or satellite system, has sufficient capacity and technological 
capability to enable consumers to use whatever consumer goods 
that they have purchased, such as a telephone, personal 
computer, video player, or television, to interconnect to 
services that are available over the telecommunications 
network. The Committee does not intend the definition of 
universal service to include the purchase of equipment, such as 
a computer or telephone, that is owned by the consumer and is 
not integral to the telecommunications service itself.
    To ensure that the definition of universal service evolves 
over time to keep pace with modern life, the subsection 
requires the FCC to include, at a minimum, any 
telecommunications service that is subscribed to by a 
substantial majority of residential customers. By this the 
Committee intends that the definition of universal service 
should include that level of telecommunications service that is 
used by a substantial majority of residential consumers to 
access advanced telecommunications services, information 
services, and cable services. For example, touch tone telephone 
service is widely available today and is used by a substantial 
majority of residential customers to access services like voice 
mail, telephone banking, and mail order shopping services. 
These same services cannot be accessed using rotary party line 
services that are still used in some areas today. As a result, 
the Committee would not view rotary party line service as 
sufficient to meet the minimum definition of universal service. 
Similarly, in the year 2010, touch tone service might not 
satisfy the evolving definition of universal service if the 
substantial majority of residential consumers use two-way 
interactive full motion video service as the primary means of 
communicating.
    Subsection (c) of new section 253 requires all 
telecommunications carriers, including competitive access 
providers and any other carrier that meets the definition of a 
telecommunications carrier, to contribute on an equitable and 
nondiscriminatory basis to the preservation and advancement of 
universal service. This requirement includes carriers that 
concentrate their marketing of services or network capacity to 
particular market segments, such as high volume business users. 
Requiring all telecommunications carriers to contribute to 
universal service will spread the cost over all customers for 
any telecommunications service and prevent distortion of 
competitive forces.
    The FCC or a State may require any other telecommunications 
provider, such as private telecommunications providers, to 
contribute to the preservation and advancement of universal 
service, if the public interest so requires. The purpose of 
this provision is to allow the FCC or a State to require 
contributions, for instance, from those who bypass the public 
switched telephone network through their own or leased 
facilities. The Committee intends to preserve the FCC's 
authority over all telecommunications providers. In the event 
that the use of private telecommunications services or networks 
becomes a significant means of bypassing networks operated by 
telecommunications carriers, the bill retains the FCC's 
authority to preserve and advance universal service by 
requiring all telecommunications providers to contribute.
    New section 253(c) does not require providers of 
information services to contribute to universal service. 
Information services providers do not ``provide'' 
telecommunications services; they are users of 
telecommunications services. The definition of 
telecommunications service specifically excludes the offering 
of information services (as opposed to the transmission of such 
services for a fee) precisely to avoid imposing common carrier 
obligations on information service providers.
    The total of any contributions required under this 
subsection shall be no more than that reasonably necessary to 
preserve and advance universal service as defined under section 
253(b). The requirement to contribute to universal service is 
based on the long history of the public interest, convenience, 
and necessity that is inherent in the privilege granted by the 
government to use public rights of way or spectrum to provide 
telecommunications services. In a monopoly environment this 
requirement took the form of an obligation to provide service 
throughout an entire area; in the competitive environment of 
the future it may not be necessary or desirable to meet the 
requirement to provide universal service by imposing on all 
telecommunications providers the obligation to provide service 
throughout an entire area. Instead, the public interest may be 
better served by having carriers contribute to a fund or other 
support mechanisms which would be used to provide support 
payments to one or more telecommunications carriers that agree 
to undertake the service obligation that might otherwise be 
imposed on all providers.
    Subsection (d) of new section 253 provides that the FCC and 
the States may impose or require various mechanisms to enforce 
any contribution that may be required under subsection (c) to 
preserve and advance universal service. Such mechanisms may 
include service obligations, financial contributions, 
discounted rates, or any other mechanisms that the FCC or a 
State finds is appropriate. The Committee expects that the FCC 
or a State will take into account the need to provide a 
transition from the existing system of support mechanisms to 
any new system that may be established. Any such new system 
shall, where appropriate, be based on transparent, external 
mechanisms which are applied to all telecommunications carriers 
in an equitable manner.
    Subsection (e) of new section 253 provides that a State may 
adopt additional definitions, mechanisms, and standards to 
preserve and advance universal service within such State, 
provided that they are not inconsistent with the regulations of 
the FCC. The Committee intends that the States will continue to 
have a substantial role in the preservation and advancement of 
universal service under new section 253. This subsection simply 
clarifies that nothing in new section 253 is intended to 
prohibit a State from imposing or requiring universal service 
obligations that the State finds appropriate which are in 
addition to the requirements contained in the bill, so long as 
those requirements do not conflict with the measures contained 
in new section 253. To the extent that a State adopts 
requirements to preserve and advance universal service that are 
in addition to those contained in new section 253, the 
Committee intends that the State would be responsible for 
establishing additional contribution mechanisms to provide for 
such requirements.
    Subsection (f) of new section 253 provides that only 
telecommunications carriers which are designated as essential 
telecommunications carriers under new section 214(d) shall be 
eligible to receive support payments, if any, established by 
the FCC or a State to preserve and advance universal service. 
Any such support payments must accurately reflect the amount 
reasonably necessary to preserve and advance universal service. 
In some areas of the country, particularly areas that are 
already subject to competition in the provision of services 
included in the definition of universal service, the Committee 
expects that support payments would not be needed in order to 
provide universal service at just, reasonable, and affordable 
rates. The Committee intends this requirement to provide the 
flexibility for the FCC to reduce or eliminate support payments 
to areas where they are no longer needed, while continuing or 
even increasing support payments to areas that do need such 
support. For example, some consumers in areas that do not 
require support payments in general may need individual 
assistance in order to procure universal services; in other 
areas the cost of providing service may be unaffordable for 
most consumers, so service throughout that area may require 
support payments to ensure that universal service is provided.
    Subsection (f) is not intended to prohibit support 
mechanisms that directly help individuals afford universal 
service. For instance, nothing in this section is intended to 
limit or eliminate the Lifeline and Link-up America programs 
currently enforced by the Commission and States, and other 
similar programs.
    Subsection (g) of new section 253 provides that the FCC and 
the States shall base the amount of support payments, if any, 
on the difference between the actual cost of providing 
universal service and the revenues a carrier may obtain from 
providing such service at an affordable rate. In determining 
the ``actual cost'' the Committee intends for the Commission to 
determine what costs are ``reasonably necessary,'' as required 
by subsection (f). The Committee intends that the FCC and the 
States shall make any universal service support payments 
explicit and that the payments would be restricted to those 
areas that are in need of such support. To the extent that an 
essential telecommunications carrier receives support payments, 
those payments shall be used only for the maintenance and 
upgrading of facilities serving consumers in the area for which 
such support is provided.
    Subsection (h) of new section 253 simply incorporates in 
the 1934 Act the existing practice of geographic rate averaging 
and rate integration for interexchange, or long distance, 
telecommunications rates to ensure that rural customers 
continue to receive such service at rates that are comparable 
to those charged to urban customers. This provision is not 
intended to alter existing geographic rate averaging policies 
as enforced by the FCC on the date of enactment, including the 
FCC's proceeding entitled ``Integration of Rates and Services 
for the Provision of Communications by Authorized Common 
Carriers between the United States Mainland and the Offshore 
Points of Hawaii, Alaska, and Puerto Rico/Virgin Islands'' (61 
FCC2d 380 (1976)). As is the case today, States shall continue 
to be responsible for enforcing this subsection with respect to 
intrastate interexchange services, so long as the State rules 
are not inconsistent with FCC rules and policies on rate 
averaging. Maintaining affordable long distance service in high 
cost remote areas as well as in lower cost metropolitan areas 
benefits society as a whole by fostering a nationwide economic 
marketplace. The Committee intends this provision to ensure 
that competition in telecommunications services does not come 
at the cost of higher rates for consumers in rural and remote 
areas.
    In establishing competitively neutral universal service 
support mechanisms the Committee expects that, consistent with 
the requirement to preserve and advance universal service, the 
FCC and the Joint Board will consider mechanisms that make 
implicit subsidies more explicit from access charges.
    Subsection (i) of new section 253 prohibits 
telecommunications carriers from subsidizing competitive 
services with revenues from non-competitive services. The FCC 
and the States are required to establish any necessary cost 
allocation rules, accounting safeguards, and other guidelines 
to ensure that universal service bears no more than a 
reasonable share (and may bear less than a reasonable share) of 
the joint and common costs of facilities used to provide both 
competitive and noncompetitive services. For instance, this 
provision, at a minimum, prevents any assignment of direct 
costs associated with the provision of competitive 
telecommunications services, information services, or video 
programming services to telephone exchange service or exchange 
access service, as long as such exchange or exchange access 
service remains noncompetitive.
    In general, joint and common costs should be allocated 
based on the demand each service places on the network. The 
share allocated to competitive services should thus be more 
than the incremental costs that such services not included in 
universal service impose on any jointly used facilities. In 
fact, the Joint Board, the FCC and the States may decide that 
competitive services not included in universal service shall 
bear all of the fixed and nonincremental costs of facilities 
jointly used to provide noncompetitive universal service and 
competitive services, if such allocation is necessary as a 
mechanism to preserve and advance universal service. However, 
in implementing any such cost allocation mechanism, the FCC and 
the Joint Board shall seek to ensure that such allocation is 
explicit and applied in a competitively neutral manner.
    Subsection (j) of new section 253 states that the 
subsections that provide that all telecommunications carriers 
shall contribute to universal service, preserve the States' 
authority to adopt their own definitions and mechanisms, 
establish eligibility for universal service support, and 
control the level of universal service support shall take 
effect one year after the date of enactment of this bill.

Sec. 104. Essential telecommunications carriers

    Section 104 of the bill would amend section 214(d) of the 
1934 Act by designating the existing text of section 214(d) as 
paragraph (1) and by adding seven new paragraphs regarding 
designation of essential telecommunications carriers. It is the 
intent of the Committee that the authority of the FCC and the 
States to designate essential telecommunications carriers 
parallels their traditional certification authority. These 
amendments are not intended to change the traditional 
jurisdictional division between Federal and State authority 
with respect to telecommunications. Thus the bill provides that 
the FCC shall designate essential telecommunications carriers 
for interstate services and the States shall designate such 
carriers for intrastate services, which the Committee intends 
should include intrastate interexchange services.
    New paragraph (2) of section 214(d) makes explicit the 
implicit authority of the FCC or a State to require a common 
carrier to provide service to any community or portion of a 
community that requests such service. In the event that more 
than one common carrier provides service in an area, and none 
of the carriers will provide service to a community or portion 
thereof in that area which requests service, this paragraph 
gives the FCC or a State the authority to decide which common 
carrier is best suited to provide such service. If the FCC or a 
State orders a carrier to provide service to a community or 
portion thereof under this paragraph, it shall designate such 
carrier an essential telecommunications carrier.
    Paragraph (3) of new section 214(d) provides that the FCC 
or a State may designate a common carrier as an essential 
telecommunications carrier for a particular service area, thus 
making that carrier eligible for support payments to preserve 
and advance universal service, if any such payments are 
established under new section 253 of the 1934 Act. Any carrier 
designated as an essential telecommunications carrier must 
provide universal service and any additional services specified 
by the FCC or a State throughout the service area for which the 
designation is made. In addition, these services must be 
offered throughout that service area at nondiscriminatory rates 
established by the FCC or a State, and the carrier must 
advertise those rates using media of general distribution.
    The Committee intends that essential telecommunications 
carriers will only be designated in those areas where the 
actual cost of providing universal service is greater than the 
amount that the carrier providing those services may recover 
based on the affordable rate for those services established by 
the FCC or a State. For areas where carriers may provide 
universal service for costs (including a reasonable profit) 
that are at or below the affordable rate, no designation would 
be needed.
    New paragraph (4) of section 214(d) allows the FCC or a 
State to designate more than one common carrier as an essential 
telecommunications carrier for a particular service area. The 
decision to make such an additional designation is at the 
discretion of the FCC or a State. In addition, the bill permits 
a State to require additional findings before designating more 
than one common carrier as an essential telecommunications 
carrier. The Committee intends that the same obligations and 
risks would apply to each essential telecommunications carrier 
designated for a particular service area.
    To the extent that more than one common carrier is 
designated as an essential telecommunications carrier, each 
additional carrier so designated must meet the same 
requirements with respect to service throughout the same 
service area at nondiscriminatory rates established by the FCC 
or a State, as well as the advertisement of those rates.
    New paragraph (5) of section 214(d) requires the FCC and 
the States to establish rules governing the use of resale by a 
carrier to meet the requirements for designation as an 
essential telecommunications carrier, as well as rules to 
permit a carrier that has been designated as an essential 
telecommunications carrier to relinquish that designation so 
long as at least one other carrier has also been designated as 
an essential telecommunications carrier for that area. The 
Committee expects that these rules will be based on 
recommendations from the Joint Board required under section 
103(a) of the bill, and will ensure that a carrier using resale 
has at least some facilities in the area being served and that 
the carrier has adequate financial resources to fulfill its 
commitment to provide universal service throughout that area. 
The Committee notes that such commitment may require a carrier 
to build or extend facilities in an area in order to provide 
service, particularly if the carrier whose services are being 
resold should choose to cease service in that area. To this end 
new paragraph (5) also requires the FCC and the States to 
provide appropriate rules to govern how quickly an essential 
telecommunications carrier whose services are being resold may 
cease service to an area, in order to provide other essential 
telecommunications carriers adequate notice to extend their 
facilities or to arrange for the purchase of replacement 
facilities or services.
    New paragraph (6) of section 214(d) sets forth the 
penalties applicable to an essential telecommunications carrier 
which refuses an FCC or State order to provide universal 
service within a reasonable period of time. In determining what 
constitutes a reasonable period of time, the bill provides that 
the FCC or a State must consider the nature of the construction 
required to provide such service, the time interval that 
normally would attend such construction, and the time needed to 
obtain regulatory or financial approval.
    New paragraph (7) of section 214(d) of the Act requires the 
FCC or a State to designate an essential telecommunications 
carrier for interexchange services for any unserved community 
or portion thereof that requests such service. An essential 
telecommunications carrier designated under this paragraph must 
provide service at nationwide geographically averaged rates, in 
the case of interstate services, and geographically averaged 
rates in the case of intrastate services. The Committee intends 
that the requirement to provide nationwide geographically 
averaged rates includes the rate integration provided for in 
the FCC's proceeding entitled ``Integration of Rates and 
Services for the Provision of Communications by Authorized 
Common Carriers between the United States Mainland and the 
Offshore Points of Hawaii, Alaska, and Puerto Rico/Virgin 
Islands'' (61 FCC2d 380 (1976)). The FCC or a State may allow a 
carrier designated under this paragraph to receive support 
payments, if any, that may be provided under section 253. The 
Committee intends that a carrier designated under this 
paragraph would only be eligible for support payments if such 
payments were necessary to compensate a carrier for services to 
a community or portion thereof that such carrier was actually 
ordered by the FCC to serve because no other carrier would do 
so.
    New paragraph (8) of section 214(d) grants the FCC 
authority to promulgate guidelines for the States to implement 
this section. The Committee intends that the FCC will use this 
authority to delegate to the States authority that has 
traditionally been exercised in this area by the States, and, 
if necessary, to establish guidelines to provide for 
consistency among the States in the implementation of these 
amendments.

Sec. 105. Foreign investment and ownership reform

    Section 105 adds a new subsection (f) to section 310 of the 
1934 Act. Existing section 310(b) of the 1934 Act provides in 
relevant part that an alien may not obtain a common carrier 
license, and that an alien may not own more than 25% of any 
corporation that directly or indirectly owns or controls any 
corporation to which a common carrier license is granted.
    New subsection (f) creates a system of reciprocity for 
common carrier licenses. Paragraph (1) states that the FCC may 
grant to an alien, foreign corporation, or foreign government a 
common carrier license that would otherwise violate the 
restrictions in section 310(b), if the FCC finds that there are 
equivalent market opportunities for U.S. companies and citizens 
in the foreign country where the alien is a citizen, in which 
the foreign corporation is organized, or in which the foreign 
government is in control. This determination will be made on a 
market segment specific basis. The Committee believes that the 
FCC has the requisite expertise to make this market segment 
specific determination.
    Foreign countries point to section 310(b) as a reason to 
deny U.S. companies entry into their markets. By applying a 
reciprocity rule, U.S. markets will be open to foreign 
investment from that country, to the same extent that the 
foreign markets are open to U.S. investment.
    When the FCC makes its determination, the FCC may look 
beyond where the corporation is organized if the corporation is 
owned, in whole or in part, by individuals, corporations, or a 
foreign government whose home is not where the corporation is 
organized. This will prevent a foreign entity from organizing 
in a country with a more open policy toward U.S. investment 
than its home country, in order to circumvent the U.S. 
reciprocity restrictions.
    Paragraph (2) allows the FCC to take into account changing 
circumstances through a ``snapback'' provision. If the FCC 
determines that a foreign country for which the FCC has already 
made a favorable determination under paragraph (1) changes its 
policies and no longer meets the reciprocity required for such 
a determination, the FCC will apply the restrictions of section 
310(b) to aliens, corporations, and governments of that 
country, and shall withdraw licenses granted that could not 
otherwise be held under section 310(b). This will deter 
countries from imposing stringent restrictions on U.S. 
companies after entities from that country have been granted 
U.S. common carrier licenses.
    The FCC must enforce the provision on a market segment by 
market segment basis. For instance, if a foreign company wishes 
to acquire a common carrier license, the openness of the 
foreign market to U.S. communications equipment manufacturers 
is not the relevant market to examine. If a foreign company 
wishes to acquire a common carrier license, the FCC should 
examine the openness of the foreign country's common carrier 
market to U.S. investment.

Sec. 106. Infrastructure sharing

    Subsection (a) requires that within one year of the date of 
enactment, the FCC shall prescribe rules requiring local 
exchange carriers that were subject to Part 69 of the FCC's 
rules on the date of enactment to share network facilities, 
technology, and information with qualifying carriers. The 
qualifying carrier may request such sharing for the purpose of 
providing telecommunications services or access to information 
services in areas where the carrier is designated as an 
essential telecommunications carrier under new section 214(d). 
The bill does not grant immunity from the antitrust laws for 
activities undertaken pursuant to this section.
    Subsection (b) establishes the terms and conditions of the 
FCC's regulations. Such regulations shall:
          (1) not require a local exchange carrier to take any 
        action that is economically unreasonable or contrary to 
        public interest;
          (2) permit, but not require, joint ownership of 
        facilities among local exchange carriers and qualifying 
        carriers;
          (3) ensure that the local exchange carrier not be 
        treated as a common carrier for hire with respect to 
        technology, information or facilities shared with the 
        qualifying carrier under this section;
          (4) ensure that qualifying carriers benefit fully 
        from sharing;
          (5) establish conditions to promote cooperation;
          (6) not require a local exchange carrier to share in 
        areas where the local exchange carrier provides 
        telephone exchange service or exchange access service; 
        and
          (7) require the local exchange carrier to file with 
        the FCC or State, any tariffs, contract or other 
        arrangement showing the rate, terms, and conditions 
        under which such local exchange carrier is complying 
        with the sharing requirements of this section.
    Subsection (c) requires that local exchange carriers 
sharing infrastructure must provide information to sharing 
parties about deployment of services and equipment, including 
software.
    Subsection (d) defines those carriers eligible to request 
infrastructure sharing under this section. Sharing is limited 
to qualifying carriers. A qualifying carrier is defined as a 
telecommunications carrier which lacks economies of scale and 
is a common carrier providing telephone exchange service or 
exchange access service, as well as any other service included 
within the definition of universal service to all consumers in 
the service area where the carrier has been designated as an 
essential telecommunications carrier under new section 214(d).

            TITLE II--REMOVAL OF RESTRICTIONS TO COMPETITION

                  Subtitle A--Removal of Restrictions

Sec. 201. Removal of entry barriers

    Section 201 is intended to remove barriers to competition 
in the provision of local telephone service. It adds a new 
section 254 entitled ``Removal of Entry Barriers'' to the 1934 
Act.
    Subsection (a) of new section 254 preempts any state and 
local statutes and regulations, or other state and local legal 
requirements, that may prohibit or have the effect of 
prohibiting any entity from providing interstate or intrastate 
telecommunications services.
    Subsection (b) of section 254 preserves a State's authority 
to impose, on a competitively neutral basis and consistent with 
the universal service provisions of new section 253, 
requirements necessary to preserve and advance universal 
service, protect the public safety and welfare, ensure the 
continued quality of telecommunications services, and safeguard 
the rights of consumers. States may not exercise this authority 
in a way that has the effect of imposing entry barriers or 
other prohibitions preempted by new section 254(a).
    Subsection (c) of new section 254 provides that nothing in 
new section 254 affects the authority of local governments to 
manage the public rights-of-way or to require, on a 
competitively neutral and nondiscriminatory basis, fair and 
reasonable compensation for the use of public rights-of-way, on 
a nondiscriminatory basis, provided any compensation required 
is publicly disclosed.
    New section 254(d) requires the FCC, after notice and an 
opportunity for public comment, to preempt the enforcement of 
any state or local statutes, regulations or legal requirements 
that violate or are inconsistent with the prohibition on entry 
barriers contained in subsection (a) or the other provisions of 
section 254.
    Subsection (e) of new section 254 simply clarifies that new 
section 254 does not affect the application of section 
332(c)(3) of the 1934 Act to commercial mobile service 
providers.
    Subsection 201(b) of the bill establishes the principles 
applicable to the provision of telecommunications by a cable 
operator. Paragraph (1) of this subsection adds a new paragraph 
3(A) to section 621(b) of the 1934 Act, which sets forth the 
jurisdiction of and limitations on franchising authorities over 
cable operators engaged in the provision of telecommunications 
services. Specifically, a cable operator or affiliate engaged 
in the provision of telecommunications services is not required 
to obtain a franchise under Title VI of the 1934 Act, nor do 
the provisions of Title VI apply to a cable operator or 
affiliate to the extent they are engaged in the provision of 
telecommunications services. Franchising authorities are 
prohibited from ordering a cable operator or affiliate to 
discontinue the provision of telecommunications service, 
requiring cable operators to obtain a franchise to provide 
telecommunications services, or requiring a cable operator to 
provide telecommunications services or facilities as a 
condition of an initial grant of franchise, franchise renewal, 
or transfer of a franchise. However, the Committee intends that 
telecommunications services provided by a cable company shall 
be subject to the authority of a local government to manage its 
public rights of way in a non-discriminatory and competitively 
neutral manner and to charge fair and reasonable fees for its 
use. These changes do not affect existing federal or state 
authority with respect to telecommunications services.
    Paragraph 2 of subsection 201(b) amends Section 622(b) of 
the 1934 Act by inserting the phrase ``to provide cable 
services,'' in the franchise fee provision of the 1934 Act. 
This change is intended to make clear that the franchise fee 
provision is not intended to reach revenues that a cable 
operator derives for providing new telecommunications services 
over its system that are different from the cable-related 
revenues operators have traditionally derived from their 
systems.
    Subsection (c) of section 201 of the reported bill 
clarifies that this bill, and the 1934 Act as amended by this 
bill, shall not be construed to modify, impair, or supersede, 
or authorize the modification, impairment, or supersession of 
any state or local law pertaining to taxation, provided such 
taxation is consistent with the requirements of the 
Constitution of the United States, this bill, the 1934 Act, or 
any other applicable federal law.

Sec. 202. Limitation on State and local taxation of direct-to-home 
        satellite services

    Section 202 of the reported bill authorizes States to 
impose on direct-to-home service providers the responsibility 
to collect and remit State and local sales taxes on direct-to-
home services provided to customers in the State or local 
jurisdiction. In those States in which the local sales taxes 
are administered by the State, the direct-to-home service 
provider shall remit both State and local sales taxes to the 
State. In those States in which local sales taxes are not 
administered by the State, the direct-to-home service provider 
shall, in most circumstances, be required to remit local sales 
taxes directly to those local jurisdictions. The Committee 
included this provision without taking any position on the 
current law regarding constitutional standards for nexus.
    Under Section 202, direct-to-home service providers are 
granted an exemption from any other local taxes or fees imposed 
on the provision of direct-to-home services if the service 
providers do no more than (1) broadcast programming and 
services via satellite to subscribers within the local 
jurisdiction and bill for the service from outside of the 
jurisdiction, and (2) solicit and place orders for the sale of 
direct-to-home services on the site of retail outlets and 
establishments that are unrelated to the direct-to-home service 
provider, including consumer electronics retail outlets and 
retailers of satellite antennas, which orders are filled and 
billed for from a point outside of the local taxing 
jurisdiction, regardless of where the subscriber makes an 
initial payment for an initial subscription to the direct-to-
home service. The Committee intends this section to allow 
direct-to-home service providers an exemption from any other 
local taxes or fees imposed on direct-to-home services in any 
local jurisdiction in which the direct-to-home service provider 
engages only in the limited business activities that are 
specified in this section. If the direct-to-home service 
provider holds any interest in property or maintains an office 
in the local jurisdiction, or engages in any business activity 
in the local jurisdiction beyond those specifically mentioned, 
it will not be exempt from any local tax imposed on direct-to-
home services.
    Section 202 does not exempt direct-to-home service 
providers from any State tax imposed on direct-to-home 
services.
    By establishing the conditions under which a State may 
impose State and local sales taxes on direct-to-home service, 
the Committee has clarified a potential area of contention 
between this nascent industry and the State and local 
governments. In addition, the Committee has preserved a source 
of revenue for local governments while reducing the regulatory 
burden on the service.

Sec. 203. Elimination of cable and telephone company cross-ownership 
        restriction

    Subsection 203(a) of the bill amends section 613(b) of the 
1934 Act. In general, the existing provisions of 613(b) of the 
1934 Act bar telephone companies from providing video 
programming directly to subscribers in their telephone service 
areas, except in rural areas. However, several federal courts 
recently have found this provision to be unconstitutional. New 
subsection 203(a) repeals the existing telephone/cable cross-
ownership ban and permits local exchange carriers to provide 
video programming directly to subscribers under certain 
conditions.
    Subsection 203(a) provides that, to the extent that the 
carrier provides programming through a common carrier video 
platform, neither it, nor any video programming provider making 
use of such platform shall be deemed to be a cable operator 
providing cable service. Under current law, a programmer who 
uses a video dialtone network to deliver programming to 
subscribers is not a cable operator.
    To the extent that a carrier or its affiliate provides 
video programming directly to subscribers through a cable 
system, the carrier or its affiliate shall be deemed to be a 
cable operator providing cable service and shall be subject to 
the provisions of Title VI of the 1934 Act. This provision 
promotes parity by ensuring that telephone companies are 
regulated the same way as other service providers.
    As amended by subsection 203(a), new subsection 613(b) of 
the 1934 Act contains requirements for common carrier video 
platforms and special provisions relating to Bell company 
activities. Section 613(b) does not impose a separate 
subsidiary requirement on a Bell company in connection with 
programming provided over a common carrier video platform 
(imposed by section 102 of the bill) if the company satisfies 
certain requirements. Section 613(b) also reiterates the 
separate subsidiary obligation for providing programming as a 
cable operator under new section 252. Notwithstanding a 
carrier's nondiscrimination obligations, subsection 613(b)(4) 
establishes that local broadcast stations and public 
educational and governmental entities may use common carrier 
video platforms at the incremental cost-based rate. These 
provisions recognize that local broadcast stations and local 
public, educational and governmental (PEG) entities provide 
unique services to the local community. Such access furthers 
the Government's compelling interests in education, in 
facilitating widespread public discourse among all citizens and 
in improving democratic self-governance. The provision of lower 
rates for broadcast stations and PEG entities is consistent 
with the provisions of the 1984 Cable Act and the 1992 Cable 
Act, which ensured that broadcast stations and PEG entities 
receive access to cable systems.
    In addition, a provider of video platform services must 
provide local broadcast stations with access to the video 
platform for transmission of television broadcast programming, 
on the first tier of programming, and at rates no higher than 
incremental-cost. Each of these new provisions relating to 
video dialtone programming takes effect upon enactment.
    Subsection 203(b) of the bill adds subsection 214(e) to the 
1934 Act, effective one year after enactment. Subsection 214(e) 
removes the requirement for a certificate under section 214 to 
construct facilities to provide video programming services.
    Subsection 203(c) of the bill requires the FCC to prescribe 
regulations within one year of enactment of the Act that:
          (1) require a telecommunications carrier that 
        provides video programming directly to subscribers to 
        ensure that they are offered the means to obtain access 
        to the signals of broadcast television stations as 
        readily as they are today;
          (2) require such a carrier to display clearly and 
        prominently at the beginning of any program guide or 
        menu the identity of any signal of any television 
        broadcast station it carries;
          (3) require such a carrier to ensure that viewers are 
        able to access the signal of any television broadcast 
        station it carries without first having to view 
        advertising or promotional material, or a navigational 
        device, guide, or menu that omits broadcasting services 
        as an available option;
          (4) except as required by paragraphs (1) through (3), 
        prohibit such carrier and a multichannel video 
        programming distributor using the facilities of such 
        carrier from discriminating among video programming 
        providers with respect to material or information 
        provided by the carrier to subscribers for the purposes 
        of selecting programming, or in the way such material 
        or information is presented to subscribers;
          (5) require such carrier and a multichannel video 
        programming distributor using the facilities of such 
        carrier to ensure that video programming providers and/
        or copyright holders are able suitably and uniquely to 
        identify their programming services to subscribers;
          (6) if such identification is transmitted as part of 
        the programming signal, require a telecommunications 
        carrier that provides video programming directly to 
        subscribers and a multichannel video programming 
        distributor using the facilities of such carrier to 
        transmit such identification without change or 
        alteration;
          (7) consistent with other provisions of Title VI of 
        the Communications Act of 1934 (47 U.S.C. 521 et seq.) 
        prohibit such carrier from discriminating among video 
        programming providers with regard to carriage and 
        ensure that the rates, terms, and conditions for such 
        carriage are just, reasonable, and nondiscriminatory;
          (8) extend to such carriers and multichannel video 
        programming distributors using the facilities of such 
        carrier the FCC's regulations concerning network 
        nonduplication and syndicated exclusivity; and
          (9) extend to such carriers and multichannel video 
        programming distributors using the facilities of such 
        carrier the protections afforded to local broadcast 
        signals in sections 614(b)(3), 614(b)(4)(A), and 
        615(g)(1) and (2) of the 1934 Act.
    Subsection 203(d) provides that any disputes must be 
resolved by the FCC within 180 days after notice of the dispute 
is submitted to the FCC. The FCC is authorized at that time, or 
in a separate proceeding, to award damages or require carriage 
to any person denied carriage, or award damages for any other 
violation of this section. An aggrieved party may also seek 
other remedy available at law.

Sec. 204. Cable Act Reform

    Subsection (a) of section 204 of the bill limits the rate 
regulation currently imposed by the Cable Television Consumer 
Protection and Competition Act of 1992, Public Law 102-385. 
Under existing section 623 of the 1934 Act, rates for the basic 
(broadcast) tier of service, as well as the expanded (cable 
programming services) tier of service have been regulated by 
the FCC.
    Rate regulation for the basic tier is justified where the 
cable operator retains its monopoly because, for many 
consumers, the basic cable tier is their best, and sometimes, 
only access to over-the-air broadcast stations. The Committee 
feels strongly that this tier should remain affordable for all 
those consumers who need to use cable television as an antenna 
service to receive broadcast signals.
    Cable operators argue that rate regulation for the expanded 
tier, however, does not fall under the same principle. While 
the expanded tier of service does provide a variety of 
satellite-delivered programming, some maintain that it is not a 
consumer necessity. Therefore, rates should only be regulated 
for those operators that take advantage of their monopoly 
position to raise rates beyond acceptable levels.
    Cable operators argue that cable rate regulation, as 
implemented by the FCC, has hurt cable's access to capital and 
the financial markets. Cable is the most logical competitor to 
telephone companies for residential services. Without access to 
capital, cable operators believe that they will not be able to 
spend the necessary funds to rebuild and upgrade their systems 
to compete with telephone companies for telephone customers, 
and thus, give consumers greater choices.
    On the other hand, consumer groups allege that the cable 
rate regulations are essential to protecting consumers from 
unjustified rate increases. Consumer groups note that cable 
operators borrowed more money in 1994 than they borrowed in 
1993, and they note that the major cable companies recently 
spent millions of dollars in the auctions for new Personal 
Communications Services (PCS). Consumers also point out that 
the vast majority of consumers subscribe to expanded tiers of 
cable service in addition to the basic tier.
    The bill adopted by the Committee adopts a compromise on 
cable rate regulation. Paragraph (1) amends the rate regulation 
provisions of section 623 of the 1934 Act for the expanded 
tier. First, it eliminates the ability of a single subscriber 
to initiate a rate complaint proceeding at the FCC. Franchising 
authorities and other relevant State and local government 
entities still retain the ability to initiate a rate 
proceeding. Second, rates for cable programming services will 
only be considered unreasonable, and subject to regulation, if 
the rates substantially exceed the national average rates for 
comparable cable programming services. This means that the 
``bad actors'' will be rate-regulated, while the ``good 
actors'' will not be subject to Commission-imposed rates.
    Paragraph (2) amends section 623(l)(1). Section 623(l)(1) 
provides cable operators subject to effective competition are 
not subject to rate regulation, including regulation of the 
basic tier. The amendment to the definition of effective 
competition contained in the bill allows the provision of video 
services by a local exchange carrier, either through a common 
carrier video platform, or as a cable operator, in an 
unaffiliated cable operator's franchise area to satisfy the 
effective competition test. In other words, under the bill, if 
a telephone company offers video services in a cable operator's 
franchise area, the cable operator's basic and expanded tiers 
of service will not be regulated.
    Subsection (b) of section 204 of the bill amends section 
628(c)(2)(B)(iii) of the 1934 Act by eliminating ``other direct 
legitimate economic benefit'' from the permissible reasons for 
discrimination in the price charged for the distribution of 
video programming to cable operators and other multichannel 
video carriers.
    Subsection (c) of section 204 provides that the provisions 
of this section take effect on the date of enactment.

Sec. 205. Pole attachments

    Section 205 of the reported bill amends section 224 of the 
1934 Act, the pole attachment provisions. Section 224., which 
was added to the 1934 Act in 1978, requires the FCC to ensure 
that the rates, terms, and conditions for attachments by cable 
television systems to poles, ducts, conduits, and rights-of-way 
owned or controlled by utilities, including telephone 
companies, are just and reasonable.
    Section 205 modifies section 224 of the 1934 Act to require 
that access to utility poles be granted to cable operators, 
whether the attachment is used to provide cable services or 
telecommunications services.
    Section 205 requires the FCC to prescribe regulations, 
within 1 year of the date of enactment, to ensure that 
utilities charge just, reasonable, and nondiscriminatory rates 
for attachments used to provide telecommunication services, 
including attachments used to provide cable services.
Sec. 206. Entry by utility companies

    This section explicitly permits electric, gas, water and 
steam utilities (other than a public utility holding company 
which is an associate company of a registered holding company) 
to provide telecommunications services, information services, 
any other services subject to the jurisdiction of the FCC, and 
any products or service incidental to those services. 
Subsection (a) preempts any other laws to the contrary, 
including the Public Utility Holding Company Act of 1935 
(PUHCA). The Securities and Exchange Commission is also 
specifically excluded from enforcing PUHCA with respect to 
these telecommunications activities, and may not review any 
such activity.
    Subsection (b) permits the Federal Energy Regulatory 
Commission and State commissions to prohibit cross-
subsidization of any kind by a public utility holding company 
which is an associate company of a registered holding company.
    Subsection (c) requires any subsidiary company, affiliate, 
or associate company that is an associated company of a 
registered holding company to maintain separate books, records 
and accounts, and provide access to such records, books, and 
accounts to State commissions and the Federal Energy Regulatory 
Commission.
    Subsection (d) specifically allows States to request an 
annual, independent audit of a public utility company that is 
an associated company of a registered holding company and is 
providing telecommunications services, to review transactions 
between the public utility company, and the subsidiary, 
affiliate, or associate company engaged in such activity. The 
company must bear the costs of the audit, and the auditor's 
report must be sent to the State commission within 6 months of 
the request for such an audit.
    Subsection (e) defines all terms in this section defined 
under PUHCA as having the same meaning. Subsection (f) states 
that this section is effective upon enactment.

Sec. 207. Broadcast reform

    If the FCC, by rule, permits a licensee to provide advanced 
television services, subsection (a) of section 207 of the bill 
requires the FCC to adopt rules to permit broadcasters 
flexibility to use the advanced television spectrum for 
ancillary or supplementary services. The broadcaster must 
provide at least one free, over-the-air advanced television 
broadcast service on that spectrum. Similar rules for current 
broadcast spectrum must also be adopted.
    Paragraph (2) requires that if the licensee offers 
ancillary or supplementary service for which payment of a 
subscription fee is required, or is compensated for 
transmitting material furnished by a third party, then the FCC 
will collect an annual fee from the licensee. The fee shall be 
based, in part, on the licensee's total amount of spectrum, and 
the amount of spectrum used and the amount of time the spectrum 
is used for those ancillary and supplementary services. The 
fee, however, cannot exceed the amount, on an annualized basis, 
paid by licensees providing competing services on spectrum 
subject to auction.
    Paragraph (3) states that licensees are not relieved of 
their public interest requirements. Paragraph (4) defines 
``advanced television services'' as a television service using 
digital or other advanced technology to enhance audio quality 
and visual resolution. The paragraph also defines ``existing'' 
spectrum as that spectrum used for television broadcast 
purposes as of the date of enactment.
    Subsection (b) requires the FCC to change its rules 
regarding the amount of national audience a single broadcast 
licensee may reach. The current cap is 25% of the nation's 
television households. The amendment will raise that to 35%. 
The FCC is also required to review its ownership rules 
biennially, as part of its overall regulatory review required 
by new section 259 of the 1934 Act. This provision is effective 
upon enactment.
    Subsection (c) amends section 307(c) of the 1934 Act to 
increase the term of license renewal for television licenses 
from five to ten years and for radio licenses from seven to ten 
years.
    Subsection (d) amends the broadcast license renewal 
procedures. Under current law, at the time a broadcast license 
is up for renewal, anyone can file a competing application for 
the broadcaster's license. This subsection amends section 309 
of the 1934 Act by adding a new subsection (k) which gives the 
incumbent broadcaster the ability to apply for its license 
renewal without competing applications. A broadcaster would 
apply for its renewal, and the FCC would grant such a renewal, 
if, during the preceding term of its license the station has 
served the public interest, convenience, and necessity, has not 
made any serious violations of the 1934 Act or of the FCC's 
rules, and has not, through other violations, shown a pattern 
of abuse.
    The FCC may not consider whether the granting of a license 
to a person other than the renewal applicant might serve the 
public interest, convenience, and necessity prior to its 
decision to approve or deny the renewal application. Under this 
section, the FCC has discretion to consider what is a serious 
violation of the 1934 Act. If a licensee does not meet those 
criteria, the FCC may either deny the renewal, or impose 
conditions on the renewal. Once the FCC, after conducting a 
hearing on the record, denies an application for renewal, it is 
then able to accept applications for a construction permit for 
the channel or facilities of the former licensee.
       Subtitle B--Termination of Modification of Final Judgment

Sec. 221. Removal of long distance restrictions

    Section 221(a) of the bill adds a new section 255 to the 
1934 Act entitled ``Interexchange Telecommunications 
Services.'' This section establishes the criteria that will be 
used by the Commission to determine when a Bell operating 
company may provide interLATA services in the region in which 
it is the dominant provider of wireline telephone exchange 
service or exchange access service. In addition, this section 
allows a Bell operating company to immediately provide 
interLATA services outside the region in which that company is 
the dominant provider of wireline telephone exchange service or 
exchange access service, as well as interLATA services within 
that region which are incidental to the provision of specific 
services, subject to certain requirements.
    Subsection (a) of new section 255 establishes the general 
requirements for the three different categories of service: in 
region interLATA; out of region interLATA; and incidental 
services. Each of these categories is addressed in more detail 
in the following subsections of section 255.
    New section 255(b) establishes specific interLATA 
interconnection requirements that must be fully implemented in 
order for the FCC to provide authorization for a Bell operating 
company to provide in region interLATA services. The FCC is 
specifically prohibited from limiting or extending the terms of 
the ``competitive checklist'' contained in subsection (b)(2). 
The Committee does not intend the competitive checklist to be a 
limitation on the interconnection requirements contained in 
section 251. Rather, the Committee intends the competitive 
checklist to set forth what must, at a minimum, be provided by 
a Bell operating company in any interconnection agreement 
approved under section 251 to which that company is a party 
(assuming the other party or parties to that agreement have 
requested the items included in the checklist) before the FCC 
may authorize the Bell operating company to provide in region 
interLATA services.
    Finally, section 255(b) includes a restriction on the 
ability of telecommunications carriers to jointly market local 
exchange service purchased from a Bell operating company and 
interexchange service offered by the telecommunications carrier 
until such time as the Bell operating company is authorized to 
provide interLATA services in that telephone exchange area. 
This restriction is similar to one imposed on the Bell 
operating companies in new section 252, and the Committee 
intends it to provide parity between the Bell operating 
companies and other telecommunications carriers in their 
ability to offer ``one stop shopping'' for telecommunications 
services.
    New subsection 255(c) provides the process for application 
by a Bell operating company to provide in region interLATA 
services, as well as the process for approval or rejection of 
that application by the FCC and for review by the courts. The 
application by the Bell operating company must state with 
particularity the nature and scope of the activity and each 
product market or service market, as well as the geographic 
market for which in region interLATA authorization is sought. 
Within 90 days of receiving an application, the FCC must issue 
a written determination, after notice and opportunity for a 
hearing on the record, granting or denying the application in 
whole or in part. The FCC is required to consult with the 
Attorney General regarding the application during that 90 day 
period. The Attorney General may analyze a Bell operating 
company application under any legal standard (including the 
Clayton Act, Sherman Act, other antitrust laws, section VIII(c) 
of the MFJ, Robinson-Patman Act or any other standard).
    The FCC may only grant an application, or any part of an 
application, if the FCC finds that the petitioning Bell 
operating company has fully implemented the competitive 
checklist in new section 255(b)(2), that the interLATA services 
will be provided through a separate subsidiary that meets the 
requirements of new section 252, and that the provision of the 
requested interLATA services is consistent with the public 
interest, convenience, and necessity. As noted earlier the FCC 
is specifically prohibited from limiting or extending the terms 
used in the competitive checklist, and the Committee intends 
that the determination of whether the checklist has been fully 
implemented should be a straightforward analysis based on 
ascertainable facts. Likewise, the Committee believes that the 
FCC should be able to readily determine if the requested 
services will or will not be provided through a separate 
subsidiary that meets all of the requirements of section 252. 
Finally, the Committee notes that the FCC's determination of 
whether the provision of the requested interLATA services is 
consistent with the public interest, convenience, and necessity 
must be based on substantial evidence on the record as a whole.
    The Committee believes that the application of heightened 
judicial scrutiny of the substantial evidence standard to the 
public interest determination, as opposed to the lesser 
arbitrary and capricious standard, promotes competition and 
prevents anti-competitive behavior. The public interest, 
convenience, and necessity standard is the bedrock of the 1934 
Act, and the Committee does not change that underlying premise 
through the amendments contained in this bill. However, in 
order to prevent abuse of that standard, the Committee has 
required the application of greater scrutiny to the FCC's 
decision to invoke that standard as a basis for approving or 
denying an application by a Bell operating company to provide 
interLATA services. In addition, the Committee believes that 
the use of the substantial evidence standard is in the best 
interests of the parties and the public, in that it should 
reduce litigation and intervention by the courts by requiring 
the FCC to clearly articulate the evidence underlying any 
decision to grant or deny an application.
    Subsection (c) also requires a Bell operating company which 
is authorized to provide interLATA services under this 
subsection to provide intraLATA toll dialing parity throughout 
the market in which that company is authorized to provide 
interLATA service. In the event that the FCC finds that the 
Bell operating company has not provided the required intraLATA 
toll dialing parity, or fails to continue to provide that 
parity (except for inadvertent interruptions that are beyond 
the control of the Bell operating company), then the FCC shall 
suspend the authorization to provide interLATA services in that 
market until that company provides or restores the required 
intraLATA toll dialing parity. Lastly, subsection (c) provides 
that a State may not order a Bell operating company to provide 
intraLATA toll dialing parity before the company is authorized 
to provide interLATA services in that area.
    Bell operating companies (including any subsidiary or 
affiliate) are permitted under new section 255(d) to provide 
interLATA telecommunications services immediately upon the date 
of enactment of the bill if those services originate in any 
area in which that Bell operating company is not the dominant 
provider of wireline telephone exchange service or exchange 
access service.
     New subsection 255(e) establishes the rules for the 
provision by a Bell operating company of in region interLATA 
services that are incidental to the provision of specific 
services listed in paragraph (1) of subsection (e). This list 
of specific services is intended to be narrowly construed by 
the FCC. A Bell operating company must first obtain 
authorization under new section 255(c) before it may provide 
any in region interLATA services not listed in subsection 
(e)(1). In addition, the Bell operating company may only 
provide the services specified in subparagraphs (C) and (D) of 
subsection (e)(1), which in general are commercial mobile 
services and information storage and retrieval services, 
through the use of telecommunications facilities that are 
leased from an unaffiliated provider of those services until 
the Bell operating company receives authority to provide 
interLATA services under subsection (c). Finally, subsection 
(e) requires that the provision of incidental services by the 
Bell operating company shall not adversely affect telephone 
exchange ratepayers or competition in any telecommunications 
market. The Committee intends that the FCC will ensure that 
these requirements are met.
    The terms ``interLATA'', ``audio programming services'', 
``video programming services'', and "other programming 
services" are defined in new section 255(f).
    Subsection (b) of section 221 of the bill removes the equal 
access requirements imposed by the MFJ on the provision of 
commercial mobile services by Bell operating companies or their 
subsidiaries or affiliates. This section applies only to the 
restriction imposed by the MFJ, and is not intended to waive or 
modify any requirement imposed by the FCC under the 1934 Act. 
This subsection also prohibits a Bell operating company or any 
subsidiary or affiliate from blocking access by subscribers to 
the interexchange carrier of their choice through an access 
code.

Sec. 222. Removal of manufacturing restrictions

    Section 222 of the bill adds a new section 256 to the 1934 
Act entitled ``Regulation of Manufacturing by Bell Operating 
Companies''. Based in large part on S. 173, introduced by 
Senator Hollings and others in the 102d Congress and approved 
by the Senate on June 3, 1991, this new section removes the 
restrictions on manufacturing imposed by the MFJ on the Bell 
operating companies under certain conditions, and allows those 
companies to engage in manufacturing subject to certain 
safeguards.
    New section 256(a) permits a Bell operating company, 
through a separate subsidiary that meets the requirements of 
new section 252, to engage in the manufacture and provision of 
telecommunications equipment and the manufacture of customer 
premises equipment (CPE) as soon as that company receives 
authorization to provide in region interLATA services under new 
section 255(c). This linkage promotes competition and economic 
efficiency by providing incentives for the Bell operating 
company to meet the requirements of section 255 while providing 
greater certainty to the Bell company with respect to when it 
can enter the restricted lines of business.
    Subsection (b) of new section 256 requires that a Bell 
operating company engaged in manufacturing may only do so 
through a separate subsidiary that meets the requirements of 
new section 252.
    New section 256(c) is intended to ensure that a Bell 
operating company continues to make available to local exchange 
carriers telecommunications equipment and any software integral 
to that equipment that is manufactured by the Bell operating 
company's subsidiary as long as there is demand for that 
equipment. In addition, subsection (c) prohibits a Bell 
operating company from discriminating among local exchange 
carriers with respect to bids for services or equipment, 
establishing standards or certifying equipment, or the sale of 
telecommunications equipment and software. A Bell operating 
company and any entity that the company owns or controls also 
is required to protect any proprietary information submitted to 
it with contract bids or with respect to establishing standards 
or certifying equipment, and may not release that information 
to anyone unless specifically authorized to do so by the owner 
of the proprietary information.
    The Committee intends that the manufacturing subsidiary's 
obligation to sell telecommunications equipment to an 
unaffiliated local telephone exchange carrier is a reciprocal 
one. This obligation may only be enforced on the manufacturing 
subsidiary if the local telephone company either does not 
manufacture equipment (by itself or through an affiliated 
entity), or it agrees to make available to the Bell operating 
company any telecommunications equipment (including software 
integral to such equipment) that the local telephone company 
manufactures (by itself or through an affiliated entity) 
without discrimination or self-preference as to price, 
delivery, terms, or conditions.
    New section 256(d) permits a Bell operating company or its 
subsidiaries or affiliates to engage in close collaboration 
with any manufacturer of customer premises equipment or 
telecommunications equipment not affiliated with the Bell 
operating company during the design and development of 
hardware, software, or combinations thereof related to customer 
premises equipment or telecommunications equipment. This 
section is not intended to provide a waiver of applicable 
antitrust laws; rather it is intended to make clear that such 
close collaboration is necessary to permit the interconnection 
of networks and the interoperability of equipment, and should 
not in and of itself be considered an anticompetitive activity.
    Subsection (e) of new section 256 simply authorizes the FCC 
to prescribe such additional rules and regulations as the FCC 
determines necessary to carry out the provisions and purposes 
of section 256.
    Administration and enforcement of new section 256 are 
provided for in subsection (f) of that section. Paragraph (1) 
of new subsection 256(f) makes clear that the FCC has the same 
authority, power, and functions with respect to the Bell 
operating company as it has with respect to enforcement or 
administration of title II for any other common carrier subject 
to the 1934 Act. Paragraph (2) allows any local exchange 
carrier injured by an act or omission of the Bell operating 
company or its manufacturing subsidiary which violates the 
requirements of new section 256 to bring a civil action in any 
U.S. District Court to recover the full amount of any damages 
and to obtain any appropriate court order to remedy the 
violation. In the alternative, the local exchange carrier may 
seek relief from the FCC pursuant to sections 206 through 209 
of the 1934 Act.
    New section 256(g) makes clear that nothing in new section 
256 is intended to change the status of Bell Communications 
Research (Bellcore). Bellcore was created by the MFJ and is 
owned jointly and equally by the seven Regional Bell operating 
companies. It provides a centralized organization for the 
provision of engineering, administrative, and other services. 
One such service is providing a single point of contact for 
coordination of the Bell operating companies to meet national 
security and emergency preparedness requirements. The Committee 
does not intend to disrupt Bellcore's current activities.
    New section 256 also does not authorize Bellcore to do 
anything more than it is authorized to do today. Subsection (g) 
specifically states that nothing in this section permits 
Bellcore or any successor entity that is jointly owned by any 
of the Bell operating companies, to manufacture or provide 
telecommunications equipment or manufacture CPE. Accordingly, 
the Committee intends that Bellcore will continue to be barred 
from engaging in any activities which fall within the scope of 
the MFJ manufacturing prohibition, as it has been construed by 
the courts (i.e. product design and development, as well as the 
fabrication of telecommunications equipment and CPE).
    Finally, subsection (h) of new section 256 provides 
definitions of ``customer premises equipment'', 
``manufacturing'', and ``telecommunications equipment''.
    Subsection (b) of section 222 of the bill permits the Bell 
operating companies to continue to engage in activities in 
which they were authorized to engage prior to the date of 
enactment of the bill. The District Court has granted waivers 
permitting the Bell operating companies and their affiliates to 
manufacture and provide telecommunications equipment and CPE 
outside the United States. Neither section 222 of the bill nor 
new section 256 of the 1934 Act is intended to alter or void 
such authority.

Sec. 223. Existing activities

    Section 223 provides that nothing in this bill is intended 
to prohibit a Bell company from engaging in any activity 
authorized by an order pursuant to section VII or VIII(c) of 
the MFJ entered on or before the date of enactment.

Sec. 224. Enforcement

    Section 224 of the bill adds new section 257 to the 1934 
Act. New section 257 provides specific penalties for violations 
of new sections 251, 252, and 255. These penalties are in 
addition to any other penalties that may be applicable under 
the 1934 Act or other law.
    Subsection (a) of new section 257 establishes civil penalty 
of up to $1 million dollars per day for a telecommunications 
carrier that fails to implement any applicable requirements of 
new sections 251 or 255. This penalty is also applicable to any 
failure by a telecommunications carrier to comply with the 
terms of an interconnection agreement approved under section 
251. The Committee expects that the FCC or a State will 
consider the gravity of the offense and the size of the 
telecommunications carrier involved in establishing the 
appropriate penalty; however, the Committee expects carriers to 
faithfully execute their obligations under these sections in 
order to promote competition, and intends that intentional 
violations should be severely punished.
    New section 257(b) establishes two additional penalties 
that are applicable only to a Bell operating company that 
repeatedly, knowingly, and without cause fails to (i) implement 
an interconnection agreement approved under section 251, (ii) 
comply with the requirements of that agreement, (iii) comply 
any applicable separate subsidiary requirements, or (iv) meet 
its obligations under section 255 for the provision of 
interLATA services. For repeated intentional violations of the 
interconnection or separate subsidiary requirements a Bell 
operating company may be fined up to $500,000,000 by a United 
States district court of competent jurisdiction. In the case of 
repeated intentional failure to meet the obligations imposed 
under section 255 for the provision of interLATA services by a 
Bell operating company, the FCC may suspend the authorization 
to provide those services. The Committee intends that these 
penalties should be used to correct serious anticompetitive 
behavior by a Bell operating company. The standard of 
repeatedly, knowingly, and without reasonable cause is not 
intended to be or to invoke a criminal standard; however, it is 
intended to be a standard that requires a pattern of action 
that could not have occurred by mistake or unintentional 
omission.
    New section 257(c) establishes a private right of action in 
United States district court for any person who is injured in 
its business or property by violations of this section. The 
court is permitted to award simple interest on the amount of 
actual damages from the date that an injured party files its 
claim with the court.
    Subsection (b) of section 224 of the bill amends existing 
law to permit radio and television advertisements by gambling 
institutions in any state in which such advertisements or the 
activity of gambling is not otherwise prohibited.

Sec. 225. Alarm monitoring services

    Section 225 amends Part II of Title II of the 
Communications Act of 1934 (47 U.S.C. 251 et seq.) by adding 
Section 258 entitled ``Regulation of Entry Into Alarm 
Monitoring,'' which authorizes a Bell operating company to 
provide alarm monitoring services three years after the date of 
enactment if the Bell operating company has been authorized by 
the FCC to provide in-region interLATA service and requires the 
FCC to establish rules governing the provision of alarm 
services by a Bell operating company.
    The one exception to this general rule is contained in 
subsection 258(f). It provides that the limitations of 
subsections (a) and (b) do not apply to any alarm monitoring 
services provided by a Bell company that was in that business 
as of December 31, 1994, as long as certain conditions 
specified in that subsection are met.

                    TITLE III--AN END TO REGULATION

Sec. 301. Transition to competitive pricing

    Subsection (a) sets forth provisions relating to price 
flexibility, the elimination of rate-of-return regulation and 
consumer protection. Paragraph 301(a)(1) directs the FCC and 
States to provide telecommunications carriers with pricing 
flexibility for their rates within a year of enactment. It 
permits the FCC or the States to establish rates for services 
included in the definition of universal service and the 
contribution, if any, all carriers must make to the 
preservation and advancement of universal service.
    Subparagraph 301(a)(2) requires the FCC and States to 
ensure that residential rates remain just, reasonable, and 
affordable as competition in the provision of telephone 
exchange service and exchange access service grows. If there is 
only one carrier providing a service in a market, this section 
permits the FCC or a State to set the rate for such service if 
that is required to protect consumers. Under this subsection, a 
regulation must cease when it is no longer needed to protect 
consumers. The subsection also requires the FCC to establish 
cost allocation guidelines for essential telecommunications 
carriers for the allocation of costs of such carriers' 
facilities where they are used for universal services and for 
video programming services, if such allocations are needed to 
protect consumers.
    Subparagraph 301(a)(3) directs the FCC and the States to 
adopt alternative forms of regulation for Tier 1 companies as 
part of a plan that includes measures to protect consumers. It 
specifically directs that such new forms shall not include 
regulation of the rate of return of those carriers. The new 
forms of regulation must promote any or all of a specific list 
of goals. The FCC or the States may apply such alternative 
forms of regulation to any other telecommunications carrier 
subject to the 1934 Act. Any such alternative form of 
regulation must be consistent with preserving and advancing the 
goals of universal service and other purposes.
    Subsection 301(b) provides that any rules adopted by the 
FCC or a State for the distribution of universal support 
payments must include a plan for the orderly transition from 
the system in existence on the date of enactment to the one 
adopted under this bill. The transition plan must phase in 
pricing flexibility for essential telecommunications carriers 
which are also rural telephone companies and require the FCC 
and States, where permitted by law, to modify any regulatory 
requirements (including repayments of loans and depreciation of 
assets) applicable to essential telecommunications carriers to 
more accurately reflect conditions in a competitive market.
    Subsection 301(c) defines the term ``subscriber list 
information'' and requires local exchange carriers to provide 
subscriber list information on a timely and unbundled basis and 
at nondiscriminatory and reasonable rates, terms and conditions 
to anyone upon request.

Sec. 302. Biennial review of regulations

    This provision adds a new section 259 entitled ``Regulatory 
Reform'', to the 1934 Act.
    New subsection 259(a) requires the FCC, with respect to its 
regulations under the 1934 Act, and a Federal-State Joint Board 
for State regulations, to review in odd-numbered years 
beginning with 1997 all regulations issued under the 1934 Act 
or State laws applicable to telecommunications services. It 
directs further that they shall determine whether competition 
has made those regulations unnecessary to protect the public 
interest. Subsection 259(b) requires the FCC to repeal any 
regulations under the 1934 Act that are found to be no longer 
in the public interest and directs the Federal-State Joint 
Board to notify the governor of any State of State regulations 
it determines are not needed.

Sec. 303. Regulatory forbearance

    This section amends the 1934 Act by inserting after section 
259 a new section 260 entitled ``Competition in Provision of 
Telecommunications Service.''.
    New section 260(a) empowers the FCC to forbear from 
applying any regulations or provision of the 1934 Act to a 
telecommunications carrier or service, or to a class of 
carriers or services in any or some geographic areas if the FCC 
makes certain determinations. They include determinations that: 
(1) enforcement is not needed to ensure the charges, practices, 
classifications or regulations of the carrier or carriers are 
just and reasonable and not unjustly or unreasonably 
discriminatory; (2) enforcement is not needed to protect 
consumers; and (3) forbearance is in the public interest.
    New section 260(b) directs the FCC, in making its 
determinations under subsection 260(a), to consider whether 
forbearance will promote competitive market conditions--
including the extent it will enhance competition among 
providers of telecommunications services. If the FCC determines 
that forbearance will promote competition among carriers, that 
finding may form the basis of a finding that forbearance is in 
the public interest.
    Subsection (c) of new section 260 provides that the FCC may 
not waive the requirements of new section 251(b) or 255(b)(2) 
until after it determines that those requirements have been 
fully implemented.

Sec. 304. Advanced telecommunications incentives

    Section 304 of the bill is intended to ensure that one of 
the primary objectives of the bill--to accelerate deployment of 
advanced telecommunications capability--is achieved. Section 4 
of the bill states clearly that this bill is intended to 
establish a national policy framework designed to accelerate 
rapidly the private sector deployment of advanced 
telecommunications. More specifically, the bill's goal is ``to 
promote and encourage advanced telecommunications networks, 
capable of enabling users to originate and receive affordable, 
high-quality voice, data, image, graphics, and video 
telecommunications services.''
    Section 304 ensures that advanced telecommunications 
capability is promptly deployed by requiring the FCC to 
initiate and complete regular inquiries, at least every few 
years (beginning two years after the date of enactment), to 
determine whether advanced telecommunications capability 
(particularly to schools and classrooms) is being deployed in a 
``reasonable and timely fashion.'' Such determinations shall 
include an assessment by the FCC of the availability, at 
reasonable cost, of equipment needed to deliver advanced 
broadband capability. If the FCC makes a negative 
determination, it is required to take immediate action to 
accelerate deployment. Measures to be used include: price cap 
regulation, regulatory forbearance, and other methods that 
remove barriers and provide the proper incentives for 
infrastructure investment. The FCC may pre-empt State 
commissions if they fail to act to ensure reasonable and timely 
access.
    The Committee recognizes that advanced telecommunications 
capability and networking in the classroom currently is not 
available to the vast majority of American elementary and 
secondary school students. For example, a recent study by the 
U.S. Department of Education indicates that only three percent 
of U.S. classrooms have Internet access. Section 304 of the 
bill encourages States and the FCC to utilize regulatory 
incentives--and in particular, alternative regulation 
proceedings--as a means to promote the deployment of broadband 
capability to elementary and secondary schools.
    The Committee believes that this provision is a necessary 
fail-safe to ensure that the bill achieves its intended 
infrastructure objective. The goal is to accelerate deployment 
of an advanced capability that will enable subscribers in all 
parts of the United States to send and receive information in 
all its forms--voice, data, graphics, and video--over a high-
speed switched, interactive, broadband, transmission 
capability.

Sec. 305. Regulatory parity

    This provision sets forth several requirements for the FCC 
to perform within 3 years of enactment and periodically 
thereafter. Subsection 305(1) directs the FCC to modify or 
terminate regulations under Titles II, III or VI of the 1934 
Act necessary to implement the changes contemplated by this 
bill.
    Subsection 305(2) similarly directs the FCC, for integrated 
telecommunications service providers, to take into account any 
disparate and unique histories and relative market power of 
such providers in making modifications and adjustments in 
regulations as appropriate to enhance competition between such 
providers. In subsection 305(3), the FCC is directed to 
periodically reconsider any modifications or terminations it 
has made in order to move to a time when the same set of 
regulations will apply to the services provided by integrated 
telecommunications service providers.

Sec. 306. Automated ship distress and safety systems

    Section 306 provides that notwithstanding any other 
provision of the 1934 Act, any ship documented under the laws 
of the United States operating in accordance with the Global 
Maritime Distress and Safety System provisions of the Safety of 
Life at Sea Convention is not required to be equipped with a 
radio telegraphy station operated by one or more radio officers 
or operators.

Sec. 307. Telecommunications numbering administration

    Section 307 adds a new section 261 to the 1934 Act. New 
section 261 requires local exchange carriers to provide for 
number portability and also requires the neutral administration 
of a nationwide telephone numbering system.
    Subsection 261(a) requires that, as of the date of 
enactment, interconnection agreements reached under section 251 
must, if requested, provide for interim number portability.
    Interim number portability may require that calls to or 
from the subscriber be routed through the local exchange 
carrier's switch. Some method of call forwarding or similar 
arrangement could be used to satisfy this requirement. The 
method of providing interim number portability and the amount 
of compensation, if any, for providing such service is subject 
to the negotiated interconnection agreement, pursuant to 
section 251.
    Subsection 261(b) provides that final number portability 
shall be made available, upon request, when the FCC determines 
that final telecommunications portability is technically 
feasible. Subsection 261(d) states that the cost of such number 
portability shall be borne by all providers on a competitively 
neutral basis.
    Congress believes that the implementation of final number 
portability is an important element in the introduction of 
local competition. It will require that local exchange 
carriers, parties seeking interconnection, and manufacturers 
cooperate in seeking a solution.
    Subsection 261(c) of new section 261 requires that all 
providers of telephone exchange service or exchange access 
service comply with the guidelines, rules, or plans, of the 
entity or entities responsible for administering a nationwide 
neutral number system. This provision is not intended to affect 
the Commission's ongoing proceeding on numbering 
administration.
    Subsection 261(c)(2) requires that all telecommunications 
carriers which provide local exchange or exchange access 
service in the same telephone service area be assigned the same 
numbering plan area code. This effectively eliminates an 
overlay of one area code on top of another. This requirement 
will ensure competitive neutrality so that new entrants in the 
market will not have to require their subscribers to dial more 
digits than dialed by subscribers of the incumbent carrier.
Sec. 308. Access by persons with disabilities

    Section 308(a) adds a new section 262 to the 1934 Act 
entitled ``Access by Persons with Disabilities.'' Section 262 
requires that manufacturers of telecommunications equipment and 
customer premises equipment ensure that equipment is designed, 
developed, and fabricated to be accessible and usable by 
individuals with disabilities, if readily achievable.
    Similarly, providers of telecommunications services must 
ensure that telecommunications services are accessible to and 
usable by individuals with disabilities, if readily achievable. 
In addition, the Commission is required to undertake a study of 
closed captioning and to promulgate rules to implement section 
262. Section 308(b) adds a FCC study of video description.
    The Committee recognizes the importance of access to 
communications for all Americans. The Committee hopes that this 
requirement will foster the design, development, and inclusion 
of new features in communications technologies that permit more 
ready accessibility of communications technology by individuals 
with disabilities. The Committee also regards this new section 
as preparation for the future given that a growing number of 
Americans have disabilities.
    Section 262(a) of this new section defines the terms 
``disability'' and ``readily achievable.'' Both definitions are 
taken from the Americans with Disabilities Act of 1990 
(``ADA'') (P.L. 101-336). The Committee intends the definition 
of disability to principally cover individuals with functional 
limitations of hearing, vision, movement, manipulation, speech, 
or interpretation of information. The term ``readily 
achievable'' means ``easily accomplishable and able to be 
carried out without much difficulty or expense.''
    New section 262(b) requires manufacturers of 
telecommunications and customer premises equipment to ensure 
that such equipment is designed, developed, and fabricated to 
be accessible to and usable by individuals with disabilities, 
if readily achievable. The Committee intends this requirement 
to apply prospectively to such new equipment manufactured after 
the date for promulgation of regulations by the Commission.
    New section 262(c) requires providers of telecommunications 
service to ensure that such service be accessible to and usable 
by individuals with disabilities, if readily achievable. The 
Committee intends this requirement to apply prospectively to 
such new services provided after the date for promulgation of 
regulations by the Commission.
    New section 262(d) requires that whenever the provisions of 
subsections (b) and (c) are not readily achievable, the 
manufacturer of telecommunications and customer premises 
equipment, or the provider of telecommunications service, shall 
ensure that such equipment or service is compatible with 
existing peripheral devices or specialized customer premises 
equipment commonly used by individuals with disabilities to 
achieve access, if readily achievable.
    New section 262(e) requires the Architectural and 
Transportation Barriers Compliance Board (``Board'') to develop 
guidelines for accessibility of telecommunications and customer 
premises equipment and telecommunication service, as lead 
agency in consultation with the National Telecommunications and 
Information Administration and the National Institute of 
Standards and Technology, within 1 year of enactment of this 
Act. The Board shall periodically review and update such 
guidelines. The Committee expects that manufacturers of 
equipment and providers of service will be fully included in 
this process. The Committee has elsewhere assigned 
responsibility for promulgating regulations for this new 
section to the Commission. The Committee envisions that the 
guidelines developed by the Board will serve as the starting 
point for regulatory action by the Commission, much as, for 
example, the Board prepares minimum guidelines on accessibility 
under section 504 of ADA that serve as the basis for rulemaking 
by the U.S. Department of Justice.
    New section 262(f) requires the Commission to ensure that 
video programming is accessible through closed captions and 
that video programming providers or owners maximize the 
accessibility of video programming previously published or 
exhibited through the provision of closed captions. This 
subsection further provides the Commission with authority to 
exempt various program and providers of video programs from 
this requirement. In addition, a provider of video programming 
or program owner may petition the Commission for an exemption 
from the requirements of this subsection.
    This subsection also requires the Commission to undertake a 
study of the current extent of closed captioning of video 
programming and of previously published video programming; 
providers of video programming; the cost and market for closed 
captioning; strategies to improve competition and innovation in 
the provision of closed captioning; and such other matters as 
the Commission considers relevant.
    New section 262(g) requires the Commission to prescribe 
regulations to implement all provisions of this new section, 
not later than eighteen (18) months after the date of enactment 
of this Act. As noted above, such regulations shall be 
consistent with the standards developed by the Board in 
accordance with section 262(e) of this new section.
    New section 262(h) authorizes the Commission to enforce 
this new section. The Commission shall resolve, by final order, 
a complaint alleging a violation of this section within 180 
days after the date such complaint is filed.
    Subsection (b) of section 308 requires that the Commission 
undertake within 6 months of enactment of this Act a study of 
the feasibility of requiring the use of video descriptions on 
video programming in order to ensure the accessibility of video 
programming to individuals with visual impairments. ``Video 
description'' is defined as the insertion of audio narrative 
descriptions of a television program's key visual elements into 
natural pauses between the program's dialogue.

Sec. 309. Rural markets

    Section 309 adds to the 1934 Act a new section 263 entitled 
``Rural Markets.''
    Subsection (a) of section 263 provides that except as 
provided in new section 251(i)(3) a State may not waive or 
modify the interconnection requirements of new section 251 of 
the 1934 Act. A State may adopt statutes or regulations that 
are no more restrictive than:
          (1) to require a commitment by each competing carrier 
        to offer universal service comparable to that available 
        from the rural telephone company for that area and to 
        make service available to all consumers in the area 
        within 24 months of approval, either using the 
        applicant's facilities or through its facilities and 
        resale of another carrier's facilities, and subject to 
        the same terms and conditions and rate structure 
        applicable to the rural telephone company currently 
        providing universal service;
          (2) to require approval of an application by a 
        competing telecommunications carrier based on 
        sufficient written public findings and conditions that 
        demonstrate that the approval is in the public interest 
        and will not have a significant adverse impact on users 
        of telecommunications services or on the provision of 
        universal service;
          (3) to encourage development and deployment of 
        advanced telecommunications and information 
        infrastructure and services in rural areas; or
          (4) to protect the public safety and welfare, ensure 
        the continued quality of telecommunications and 
        information services, or safeguard the rights of 
        consumers.
    New section 263(b) of the 1934 Act authorizes the FCC to 
preempt any State statute or regulation that is inconsistent 
with the FCC's regulations implementing this section, or that 
arbitrarily or unreasonably discriminates in the application of 
the statute or regulation. The FCC must act upon a petition 
filed for preemption within 180 days after receipt. Pending its 
decision, the FCC may suspend or modify the application of any 
applicable State statute or regulation.

Sec. 310. Telecommunications services for health care providers for 
        rural areas, educational providers, and libraries

    Section 310 of the bill amends the 1934 Act by adding a new 
section 264 entitled ``Telecommunications Services for Certain 
Providers.'' This section is intended to ensure that health 
care providers for rural areas, elementary and secondary 
schools, and libraries are able effectively utilize modern 
telecommunications services in the provision of medical and 
educational services to all parts of the Nation.
    New section 264(a) requires that a telecommunications 
carrier that is designated as an essential telecommunications 
carrier under new section 214(d) shall provide 
telecommunications services necessary for the provision of 
health care services to any health care provider serving 
persons who reside in rural areas at rates that are reasonably 
comparable to rates charged for such services in urban areas. 
Subsection (a) also requires that any telecommunications 
carrier shall provide those services included in the definition 
of universal service to elementary and secondary schools and 
libraries at rates that are affordable and not higher than the 
incremental cost to the carrier of such services. In most cases 
the Committee expects that the incremental cost of such 
services will be less than the affordable rate established for 
universal service in that area. However, in those cases in 
which the incremental rate is greater than the affordable rate 
for such services, then the Committee intends that support 
payments, if any, may be used to offset the costs to the 
carrier of providing such service.
    Subsection (b) of new section 264 provides that, if the FCC 
adopts rules for the distribution of support payments for 
universal service, then the FCC shall include the amount of 
support payments reasonably necessary to provide universal 
service (including any costs related the provision of 
comparable rates under subsection (a)(1)) to public 
institutional telecommunications users in any support 
mechanisms the FCC may establish under new section 253. Public 
institutional telecommunications users are defined under 
subsection (d) of new section 264 to mean elementary and 
secondary schools, libraries, and health care providers (as 
those entities are defined under subsection (d)).
    New section 264(c) requires the FCC to establish rules to 
enhance, to the extent technically feasible and economically 
reasonable, the availability of advanced telecommunications and 
information services to elementary and secondary schools, 
health care providers, and libraries. In addition, the FCC is 
required to establish rules to ensure that appropriate 
requirements and standards are established for 
telecommunications carriers that connect public institutional 
telecommunications users to the public switched network, and to 
determine under what circumstances a telecommunications carrier 
may be required to connect those users to that network.
    Subsection (d) of new section 264 provides definitions of 
``elementary and secondary schools'', ``universal service'', 
``health care provider'', and ``public institutional 
telecommunications user''. The definition of universal service 
gives the FCC the authority to establish a separate definition 
of universal service under new section 253(b) for application 
only to public institutional telecommunications users.

Sec. 311. Provision of pay phone service and telemessaging service

    Section 311 of the bill adds a new section 265 to the 1934 
Act, to address certain practices of the Bell operating 
companies with regard to telemessaging and pay phone services. 
This section is designed to prohibit cross-subsidization 
between a Bell operating company's telephone exchange or 
exchange access services and its pay phone and telemessaging 
services. Existing joint-cost rules are not adequate to prevent 
such activities.
    This section prohibits a Bell operating company from 
discriminating between affiliated and nonaffiliated pay phone 
and telemessaging services, under rules set forth by the FCC. 
These provisions are necessary to ensure the continued 
participation of small businesses in telemessaging services. 
The Committee is hopeful that these safeguards will preserve 
such a competitive environment. If, however, the FCC finds that 
these safeguards are insufficient, the FCC may require the Bell 
operating companies to provide telemessaging services through a 
separate subsidiary.
    New section 265 directs the FCC to complete, within 18 
months after the date of enactment of the bill, a rulemaking 
proceeding to prescribe regulations to carry out this new 
section. The FCC also is directed to determine whether, in 
order to enforce the requirements of section 265, it is 
appropriate to require the Bell operating companies to provide 
pay phone service or telemessaging services through a separate 
subsidiary that meets the requirements of new section 252, as 
added to the 1934 Act by section 102 of the bill.
    The FCC's rules could include, for example, a prohibition 
on a Bell operating company's joint marketing of telemessaging 
and telephone exchange services, unless such a marketing 
opportunity were also made available to nonaffiliated 
telemessaging providers on equivalent terms. Prohibited 
discrimination could also include providing preferential access 
to customer proprietary network information or network 
technical information to its own pay phone or telemessaging 
subsidiary. The rules could also require a Bell operating 
company to provide the same opportunities for involvement in 
network planning, design, and implementation to affiliated and 
nonaffiliated telemessaging providers.
    Pay phone services are defined to include the provision of 
telecommunications service through public or semipublic pay 
telephones, and includes the provision of inmate phone service 
in correctional institutions.
    Public pay phones are a regulatory anomaly. Public pay 
phone competition did not emerge until after the AT&T 
divestiture. By then, the FCC had completed the broad outlines 
of the framework for regulating the Bell operating company's 
telecommunications offerings that are competitive with services 
offered by independent providers. As a result, the regulatory 
status of public pay phones has been inadequately addressed.
    At divestiture, the Bell System public pay phones were 
assigned to the Bell operating companies. Public pay phones 
were simply treated as a part of local exchange service because 
only the local telephone companies provided this service. 
Similarly, at the time of the FCC's Computer II 2 
decisions, Bell operating companies' public pay phones were 
technologically dependent on central office switch 
functionality for monitoring and control of all aspects of coin 
calling (a dependence which largely persists today, but 
primarily because of Bell operating company choice rather than 
technological imperative). Public pay phones were, therefore, 
treated as a ``basic service'' offering. The Bell operating 
companies were allowed to bundle both the network access line 
and the pay station terminal equipment; the Bell operating 
companies were not required to unbundle the pay station from 
the central office functionality and network support service, 
as was done with all other customer premises equipment. 
Similarly, unlike other customer premises equipment, pay 
telephone terminal equipment was not deregulated and was not 
removed from regulated accounts. See Tonka Tools, Inc., FCC 85-
269, 58 RR2d 903 (1985).
    \2\ Amendment of Section 64.702 of the Commission's Rules and 
Regulations, (``Second Computer Inquiry''), Final Decision, 77 FCC 2d 
384 (``Computer II Final Decision''), recon., 84 FCC 2d 50 (1980) 
(``Computer II Reconsideration''), further recon., 88 FCC 2d 512 
(1981), aff'd sub nom. Computer and Communications Indus. Ass'n v. FCC, 
693 F.2d 198 (D.C. Cir. 1982), cert. denied, 461 U.S. 938 (1983), 
second further recon., FCC 84-190 (released May 4, 1984).
---------------------------------------------------------------------------
    Shortly after divestiture, technological constraints that 
had dictated the FCC's treatment of public pay phones in 
Computer II and the MFJ's assignment of pay phones to the Bell 
operating companies were overcome. Independent public pay phone 
providers developed the technology to use onboard 
microprocessors to replicate in the telephone terminal itself 
most of the control and supervision functions performed by the 
central office for Bell operating company public pay phones. 
The FCC recognized the right of independent public pay phone 
providers to interconnect these ``instrument-implemented'' 
devices to the interstate network. Registration of Coin 
Operated Telephone, FCC 84-270, 57 RR2d 133 (1984). The FCC 
left to the States the authority to regulate intrastate rates 
and other terms of interconnection. Universal Pay Phone 
Company, FCC 85-222, 58 RR2d 76 (1986). The States have 
regulated the rates charged to end users by independent public 
pay phones providers and the rates charged by Bell operating 
companies to independent public pay phones providers for the 
local exchange services the independent public pay phone 
providers use in offering service to the public.
    Independent public pay phone providers have emerged to 
provide some competition to local exchange company public 
telephones. But neither Federal nor State legislators or 
regulators have gone back to reexamine the anomalous ``dual 
regulatory'' regime under which pay phone competition has 
grown. On the one hand, independent public pay phone providers 
offer their pay phones as deregulated customer premises 
equipment and purchase local exchange facilities from the 
telephone company on a tariffed, arm's-length basis. On the 
other hand, telephone companies offer their public pay phone 
services as a bundled offering of network services and premises 
equipment that are totally integrated into local exchange 
operations. There is thus the incentive and the potential for 
all the forms of discrimination, cross-subsidy, and leveraging 
of bottleneck facilities that both the divestiture and the 
FCC's regulatory regime for competitive Bell operating company 
offerings are supposed to prevent.
    Semipublic pay phones are also included within the 
definition of pay phone services. Although the cost of 
maintaining a semipublic pay phone is paid for by the location 
owner, whereas the cost of a public pay phone is borne by the 
pay phone provider, semipublic pay phones are similar to public 
pay phones in that both services are offered by the Bell 
operating companies on a bundled basis and are integrated into 
local exchange operations. Therefore, semipublic pay phones 
also are included in new section 265's definition of pay phone 
service. Section 265 also includes inmate phone systems within 
the definition of pay phone service.
    New section 265 is intended to promote a more evenhanded 
competitive environment. In order to address the competitive 
imbalance, the Bell operating companies are prohibited from 
cross-subsidizing and from preferring or discriminating in 
favor of their own pay phone operations. The FCC should 
consider applying to pay phone services the same guidelines 
designed to prevent cross-subsidy and discrimination in the 
Bell operating company's offering of other customer premises 
equipment.3 Bell operating companies should provide the 
same treatment to their own and competitors' pay phones with 
respect to rates, terms, and conditions of interconnection to 
network facilities and other carrier services on which pay 
phone operations depend. The FCC is directed to conduct 
rulemaking proceedings to implement new section 265.
    \3\ See e.g., In the Matter of Separation of Costs of Regulated 
Telephone Service From Costs of Nonregulated Activities: Amendment of 
Part 31, the Uniform System of Accounts for Class A and Class B 
Telephone Companies, to Provide for Nonregulated Activities and to 
Provide for Transactions between Telephone Companies and their 
Affiliated, 104 FCC2d 59 (1986).
---------------------------------------------------------------------------
    Nothing in Section 265 is intended to limit the authority 
of the FCC to address these structural issues, or other pay 
phone related issues, under the existing provisions of the 1934 
Act. The Committee believes the FCC already has authority to 
address these issues. Indeed, a petition requesting the FCC to 
address these issues has been pending for almost 7 years.4 
Section 265 is intended to ensure that these longstanding 
problems are addressed.
    \4\ In the Matter of the Public Telephone Council, Petition for 
Declaratory Ruling that Bell Operating Company Pay Telephones are 
Customer Premises Equipment for Regulatory Purposes, filed July 18, 
1988.
---------------------------------------------------------------------------
    There may be special issues to be addressed regarding pay 
phone services. For instance, there may be situations where it 
is desirable to have public pay phones placed in certain areas 
where the volume of traffic would not otherwise justify a pay 
phone. Examples might include some public schools, certain 
sections of some cities, certain rural areas. Nothing in this 
section is intended to remove the current authority of the FCC 
or the States to address these issues, or to prevent the FCC or 
the States from regulating pay phone service, including the 
regulation of rates to end users charged by all public phone 
providers, both independent companies and the Bell operating 
companies.

       TITLE IV--OBSCENE, HARASSING, AND WRONGFUL UTILIZATION OF 
                     TELECOMMUNICATIONS FACILITIES

Sec. 401. Short title

    Section 401 provides that Title IV of the bill may be cited 
as the ``Communications Decency Act of 1995.''
    The information superhighway should be safe for families 
and children. The Committee has been troubled by an increasing 
number of published reports of inappropriate uses of 
telecommunications technologies to transmit pornography, engage 
children in inappropriate adult contact, terrorize computer 
network users through ``electronic stalking'' and seize 
personal information.
    Consistent with the Constitution, the provisions of the 
Communications Decency Act modernize the existing protections 
against obscene, lewd, indecent or harassing uses of a 
telephone. These protections are brought into the digital age. 
The decency provisions increase the penalties for obscene, 
indecent, harassing or other wrongful uses of 
telecommunications facilities; protect privacy; protect 
families from uninvited and unwanted cable programming which is 
unsuitable for children and give cable operators authority to 
refuse to transmit programs or portions of programs on public 
or leased access channels which contain obscenity, indecency, 
or nudity.
    The Communications Decency Act applies to those who 
knowingly and intentionally create and send prohibited messages 
or use telecommunications devices to harass an individual. The 
provisions specifically exclude from liability 
telecommunications and information service providers and 
systems operators who are not themselves knowing participants 
in the making of or otherwise responsible for the content of 
the prohibited communications.
    The provisions seek to encourage telecommunications and 
information service providers to deploy new technologies and 
policies which would allow users to control access to 
prohibited communications. The incorporation of such technology 
where reasonable and appropriate would be a defense against 
liability under section 223 for the provision of a 
telecommunications facility used for a prohibited activity. In 
addition, telecommunications and information service providers 
may not be sued for their good faith actions taken to prevent 
the use of their systems or services for prohibited purposes.
Sec. 402. Obscene or harassing use of telecommunications facilities 
        under the Communications Act of 1934

    Section 401 of the bill replaces ``telephone'' references 
in section 223 of the 1934 Act to ``telecommunications device'' 
and the term ``communication'' is added to current law 
references to ``conversation.'' The terms ``telecommunications 
device'' and ``communication'' as well as other additions to 
section 223 are intended to be flexible enough to provide 
individuals and children protection against obscene, lewd, 
lascivious, filthy, indecent or harassing, uses of 
telecommunications devices. For the purposes of this amendment, 
the terms ``obscene'' and ``indecent'' are separate and 
distinct standards.
    The revisions are intended to accommodate changing 
technologies. In addition, penalties for section 223 violations 
are increased from a maximum $50,000 fine and/or six months 
imprisonment to a maximum $100,000 fine and/or two years 
imprisonment.
    By providing a new defense to liability under Sec. 223 (b), 
for those services for which a prohibited activity is not a 
predominant element, the revisions avoid liability to providers 
of computer services who do not expressly intend to disseminate 
or display prohibited communications. Nothing in this or other 
defenses to Sec. 223 are intended to narrow the application of 
the existing dial-a-porn law or to provide a defense for the 
person who created and sent the prohibited communication.

Sec. 403. Obscene programming on cable television

    Section 403 of the bill amends section 639 of the 1934 Act 
to increase the maximum fine for transmitting obscene 
programming on cable television from $10,000 to $100,000.

Sec. 404. Broadcasting obscene language on radio

    Section 404 amends existing law to increase the maximum 
fine for broadcasting obscene language on radio from $10,000 to 
$100,000.

Sec. 405. Interception and disclosure of electronic communications

    Section 405 amends existing law to clarify that all 
communication including ``digital'' communication are protected 
from unauthorized interception. Nothing in this section limits 
the ability of law enforcement to execute properly authorized 
wire tap warrants.

Sec. 406. Additional prohibition on billing for toll-free telephone 
        calls

    Section 406 of the bill amends section 228(c)(6) of the 
1934 Act to add protection against the use of toll free 
telephone numbers to connect an individual to a ``pay-per-
call'' service. Published reports have indicated that toll free 
numbers have been used to defeat the blocking of ``pay-per-
call'' numbers by connecting a caller to a ``pay-per-call'' 
service after a toll free connection has been made. Households, 
businesses and other institutions have been billed for ``pay-
per-call'' charges even though ``pay-per-call'' blocking 
techniques were used. This provision is intended to stop that 
practice.

Sec. 407. Scrambling of cable channels for nonsubscribers

    Section 407 of the bill adds a new section 640 to the 1934 
Act entitled ``Scrambling of Cable Channels for 
Nonsubscribers.'' This section requires cable television 
operators to fully scramble or otherwise block upon subscriber 
request and at no charge to the subscriber, the audio and video 
portions of programming unsuitable for children.

Sec. 408. Cable operator refusal to carry certain programs

    Section 408 amends Title VI of the 1934 Act to give cable 
operators the authority to refuse to transmit any public access 
or leased access program or portion of a public access program 
which contains obscenity, indecency or nudity.
                   ADDITIONAL VIEWS OF SENATOR BURNS

                              introduction

    The bill as reported by the Committee represents an 
affirmative step forward. Congress plainly needs to quickly 
resolve the fundamental competitive and technology issues which 
are affecting the U.S. telecommunications field. This is a 
critical sector. Policy should not continue to be made by 
regulators and the Federal courts. It is our responsibility. 
Through sound legislation, we have the opportunity to foster 
substantial new investment and domestic jobs creation, while 
expanding the competitive choices available to all Americans, 
including rural and small town residents. I am pleased that 
Chairman Pressler has been willing to move forward with 
comprehensive telecommunications reform. I believe that this 
bill is a positive first step.
    I do have several concerns with the bill as it now stands, 
however. First, I share many of the concerns raised by Senators 
Packwood and McCain, and other colleagues, that the 
procompetitive changes this bill mandates are too incremental, 
and too dependent upon subsequent administrative 
decisionmaking. When it comes to encouraging marketplace 
competition, greater investment and domestic jobs creation by 
the private sector, Congress could--and should--do more.
    Second, I am concerned about the amendment proposed by 
Senators Snowe and Rockefeller and adopted by the Committee, 
which potentially creates a whole new class of preferential 
telecommunications service entitlements for a diversity of 
groups, ranging from migrant health centers to hospitals, to 
potentially, highly controversial community health service 
clinics. The Snowe/Rockefeller amendment also creates some 
ambiguity as to its treatment of private education facilities 
such as religious based schools as well as home schooling, 
which has grown in popularity in my home state of Montana.
    Third, I am concerned about the Kerrey Amendment, which 
also was adopted by the Committee and endeavors to create 
special rates and privileges for certain select customers of 
video channel service.
    Fourth, I am uncomfortable with the cable rate regulation 
language that was contained in the Chairman's mark. In 1992, at 
a time when we should have encouraged cable companies to 
enhance their networks and provide additional, new programming, 
Congress chose instead to tie cable's hands behind its back by 
rolling back rates and providing regulatory uncertainty. The 
actions of this Committee provided only limited rate relief for 
our larger cable operators and virtually no relief for small 
cable operators.
    Fifth, if we are to truly open the telecommunications 
market to increased competition, we can no longer afford to 
hold back such participants as the broadcasters by continuing 
to impose ownership restrictions across the industry. In 
particular, I believe that we need to eliminate radio's 
national and local ownership restrictions.

                         competition needed now

    As Senators McCain and Packwood have noted, the bill 
conditions Bell company entry into long-distance and other 
competitive endeavors on those firms complying with a 
``competitive checklist'' of nonstructural and other 
safeguards. I have no quarrel with the need for such 
safeguards. It is axiomatic that the strength conferred by 
protected local telephone service markets should not be 
available to gain unfair advantage in competitive endeavors.
    But this bill, by its own terms, removes any protections 
from local telephone service markets. That having been done--
within one year, under this measure--and Bell companies having 
satisfied the ``competitive checklist,'' they should be allowed 
to compete then, not at some indefinite future time. Their 
ability to compete should also not be subject to an ill-defined 
``public interest'' finding by the Federal Communications 
Commission (FCC). Some FCC approval may be warranted. But the 
scope of the agency's discretion needs to be limited in the 
bill or accompanying legislative history. Unless that is done, 
the opportunity will be created for Bell company rivals to game 
the regulatory system, in an effort to stave off indefinitely 
the arrival of genuine competition.
    Allowing Bell Companies to compete soon is especially 
important to residents of rural, less well-populated, and small 
town America. In these markets, competitive options are few to 
begin with. The major firms, understandably, prefer to focus on 
large urban customers, not rural America. If rural America is 
to benefit from the same competitive options that are routinely 
available to urban subscribers, that competition will have to 
come in major part from the telecommunications companies which 
are already committed to serving these areas.

                       the rockefeller amendment

    Under this amendment, any communications company designated 
as an ``essential carrier'' would be obliged to provide 
``universal service''--presumably at preferential rates--to a 
number of specified health care institutions. These include 
medical schools, not-for-profit hospitals, and community health 
centers. Given the recent announcement by Planned Parenthood, 
the largest provider of birth control and abortion services in 
the country, that it would seek to establish a nationwide 
network of nonprofit neighborhood health facilities, with this 
one amendment I am afraid the Senate is being inadvertently 
drawn into an area of high controversy which I, for one, 
believe we should avoid.
    In addition, I am troubled by the potential disparate 
treatment that this provision may impose on our educational 
system. I believe the mandate on businesses to provide 
universal service to schools either fails to consider those 
educated at private institutions or home schools, or, in the 
alternative, raises serious questions about the appropriate 
role of government in mandating such provisions.
    I have no disagreement with my colleagues regarding the 
contribution which advanced telecommunications can make in 
society. Where I do part company, however, is the proposal to 
establish, in effect, an off-budget entitlement program--a 
system that buries much of the cost of providing 
telecommunications service to our health and educational 
systems, in the telephone rates all Americans pay.
    I believe that the concerns of my colleagues have been 
adequately addressed through language in the bill on advanced 
telecommunications incentives without imposing unnecessary and 
burdensome mandates on business. The marketplace is already 
moving in the right direction. Technological progress through 
competition and deregulation in the marketplace is the 
appropriate approach to ensuring that our health and education 
providers share in the National Information Infrastructure.

                          the kerrey amendment

    Additionally, I am concerned about the Kerrey amendment 
that was adopted during Committee consideration of this bill. 
As initially drafted, section 203 of the bill would have 
amended Sec. 613(b) of the 1984 Cable Act (47 U.S.C. Sec. 
533(b)) to oblige telephone company-affiliate providers of 
``video platform services'' to grant local broadcast stations 
system access ``at rates no higher than the incremental-cost-
based rates of providing such access.'' In effect, the bill 
would mandate minimal-cost ``must carry'' for local stations. 
Given the fact that local broadcast stations are licensed to 
serve all of their community, and the fact that cable 
television systems are already under a general ``must carry'' 
obligation, this is an appropriate requirement, in my judgment.
    Under the Kerrey Amendment, however, entitlement to 
``incremental-cost-based rates'' would be broadened, to include 
all educational, charitable, and government users. Telephone-
affiliated cable systems, in other words, would be required to 
offer these three additional groups very low-cost channel 
access. Significantly, this access would not necessarily be 
conditioned on the programming which these favored groups 
choose to offer. There is nothing in the Amendment, nor in the 
underlying law, to prevent a charitable institution from 
obtaining cheap channels and then using those channels for 
expanded fund-raising, for example, or to distribute the 
services of a for-profit affiliate of the charity.
    I appreciate the sentiment which motivated this amendment. 
But Congress simply must place some dietary curb on its 
continued appetite for free lunches. If cable channel capacity 
is offered at low rates to charities, schools, government 
agencies, etc., both direct and opportunity costs are incurred. 
That is, the cable system must expend some money to make the 
channel capacity available. And because channel capacity is 
used for such purposes, it obviously is not available to be 
used for others.
    The cable television industry already is saddled with 
extensive--and expensive--``PEG-channel'' obligations (public, 
educational, and government). But those obligations figured, of 
course, in the original franchise bids that cable companies 
submitted to local franchising authorities. PEG-channels, in 
short, were part of the winning cable company's initial 
business case. Here, however, we are simply imposing a similar 
obligation on telephone-affiliated video service providers--
without regard to the demand for such special channels, much 
less the costs involved.
    I do not dispute the possibility that some support, some 
subsidization of these presumably worthy undertakings might 
conceivably be warranted. We have no record sufficient to 
enable us to estimate the need for such support, however. Nor 
does the Committee hearing record from this year--or last's--
provide us with any firm basis for estimating the total 
magnitude of the costs we are imposing, much less a firm 
understanding of the specific services we are ostensibly 
promoting.
    Absent such information, I am reluctant to support this 
amendment which, in effect, nationalizes a fraction of 
privately capitalized video services facilities and dedicates 
them to a purpose which is not yet clear.

                        cable rate deregulation

    I am no stranger to the debate on cable rate regulation. In 
1992, I was a very vocal opponent of the rate regulation 
provisions in the Cable Act. I thought it was bad policy then 
and I think it's still bad policy today, perhaps even more so 
in the face of increased competition for telecommunications 
services.
    I was pleased to see that the elimination of the cable rate 
regulation provisions of the 1992 Cable Act were included in 
the Chairman's discussion draft as late as 24 hours before the 
markup. I was obviously displeased to see that the provisions 
had been modified substantially when finally presented to the 
full Committee.
    While still proceeding in the right direction by removing 
the rate regulation of the upper tier of services, the bill 
does not go far enough in removing the unnecessary regulations 
that will hinder cable from competing to its full extent in a 
much more competitive marketplace. In addition, the ``bad 
actor'' provision is just another opportunity  for  an  
additional  and  burdensome  bureaucratic process.
    Further, I am concerned about the continued rate regulation 
of the basic tier. Continued rate regulation of the basic tier 
does not afford the small cable operator relief from the heavy 
hand of government. In Montana, many of the small cable 
operators only provide a basic tier of services. As a result, 
without relief, Montana's small cable operators will not see 
any significant change.

                  silencing the voice of broadcasters

    In the broadcast marketplace, broadcasters are operating 
under archaic rules that better suited the 1950's than the 
1990's. As we quickly approach the 21st century, it is time 
that we reevaluate regulations that so strictly govern the 
broadcast industry. Whether it be cable/television cross-
ownership, national ownership limits for radio and TV or the 
newspaper/broadcast cross-ownership restrictions, yesterday's 
regulations may not be appropriate for tomorrow's broadcasting 
marketplace.
    It is clear that the broadcast environment today is the 
most competitive it's ever been and every indication is that 
this trend will continue. Nothing could be truer than in the 
radio broadcast arena. Radio must be evaluated in its own light 
because its characteristics are different than television. 
Therefore, whatever agreement that may be reached on television 
should not automatically include the radio broadcast industry.
    I firmly believe that we should eliminate radio's national 
and local ownership restrictions. These limitations hamper the 
ability of radio broadcasters to provide the best possible 
service to listeners.
    In 1992, the FCC eased the ownership limits somewhat and 
the modest change has resulted in stronger, more valuable 
stations. The number of stations ``going dark'' appears to be 
leveling off.
    In addition, with more than 11,000 radio stations across 
the country and an average of 25 different radio options to 
choose from in each market, the objective of increased 
competition and diversity has been achieved.
    In the near future, new competitors will be competing with 
traditional radio in the audio marketplace. For example, 
digital satellite will beam 60 or more new audio signals into 
each market. Thirty audio channels are currently offered by 
cable programmers.
    Radio operators are ready to go the next step and operate 
without stifling ownership rules. They need total deregulation 
to allow them to compete in the new digital marketplace.
    Finally, I am concerned that the bill as now drafted erects 
all too many procedural and other obstacles to full and fair 
competition. In my judgment, once the ``competitive checklist'' 
established by this bill is satisfied, local exchange telephone 
companies should be fully free to compete in any and all 
fields. Holding the commencement of full competition hostage to 
administrative decision-making and an ill-defined ``public 
interest'' finding by the FCC has serious implications, and 
those problems need to be speedily resolved.
    Companies which undertake to provide high-quality service 
on a universal access basis should not, in effect, be penalized 
by Congress in terms of the competitive market opportunities 
management is free to seek. If local exchange carriers are so 
penalized, they will have an incentive to abandon the field, to 
under-invest--in short, to engage in a variety of actions and 
decision-making that may not further the interest of local 
telephone subscribers. Congress should seek to foster, not 
discourage, domestic investment by Bell and other local 
exchange companies. I am not sure that the complicated, 
regulatory procedures which this bill contemplates are 
consistent with that.
    Important to realize, moreover, is the fact that many 
residents in less well-populated parts of the country today 
have far fewer competitive alternatives. For several years 
following the Bell System breakup in 1984, for example, only 
one long-distance carrier (AT&T) chose to write business in the 
state of Montana. All carriers could terminate calls in the 
state. But the Montana resident interested in subscribing to 
MCI, for example, was out of luck.
    Fortunately, the market has evolved. But a simple check of 
``Yellow Pages'' listings will show that it has not fully 
evolved to the point where all Americans have the same broad 
range of competitive choices. The Washington ``Yellow Pages'' 
lists virtually dozens of competing equipment and service 
providers. Those listings for small town America typically 
indicate only one provider, the local telephone company. If 
that local phone company is unable to offer new services, the 
likelihood is small that other companies will rush to the 
market to satisfy demand.
    Rural and small town Americans are just as entitled to the 
full benefits of competition in communications as anyone else. 
Providing them with those full benefits depends in large 
measure on our allowing the local telephone companies greater 
flexibility to compete. While this bill makes positive steps in 
some regards, by relaxing restrictions on cable television 
service competition in smaller communities, it could do more.
                  ADDITIONAL VIEWS OF SENATOR HOLLINGS

    The bill that the Committee has approved achieves several 
important objectives. It ensures that universal telephone 
service is available and affordable, it promotes competition in 
telecommunications markets, and it restores regulatory 
authority over the communications industry to the Federal 
Communications Commission (FCC). The basic thrust of the bill 
is clear: competition is the best regulator of the marketplace, 
but until that competition exists, monopoly providers of 
services must not be able to exploit their monopoly power to 
the consumer's disadvantage. Competitors are ready and willing 
to enter new markets, as soon as they are opened.
    Competition is spurred by the bill's provisions specifying 
the criteria for entry into various markets. For example, on a 
broad scale, cable companies soon will provide telephony, and 
telephone companies will offer video services; consumers will 
purchase local telephone service from several competitors, and 
vice versa; electric utility companies will offer 
telecommunications services; and the Regional Bell Operating 
Companies (RBOCs) will engage in manufacturing activities, all 
fostering competition to each other and creating jobs along the 
way. We should not attempt to micromanage the marketplace; 
rather, we must set the rules in a way that neutralizes any 
party's inherent market power, so that robust and fair 
competition can ensue. This is Congress' responsibility, and so 
the bill transfers jurisdiction over the Modified Final 
Judgment (MFJ) from the courts to the FCC.

                           universal service

    The need to protect and advance universal service is 
addressed by the bill's requirements that all 
telecommunications carriers must contribute to a universal 
service fund. A Federal-State Joint Board will define universal 
service, and this definition will evolve over time as 
technologies change so that consumers have access to the best 
possible services. Special provisions in the legislation 
address universal service in rural areas, to guarantee that 
harm to universal service is avoided there. Universal service 
must be guaranteed; the world's best telephone system must 
continue to grow and develop, and we must attempt to ensure the 
widest availability of telephone service.

                     rboc entry into long distance

    Earlier draft versions of the bill set a ``date certain'' 
for entry by the RBOCs into the long distance market. Under 
this nonsensical approach, the calendar rules. This does not 
take into account the competitive circumstances in the 
marketplace. The bill approved by the Committee specifies that 
the FCC may approve any application to provide long distance if 
it finds that (1) the RBOC has fully implemented the unbundling 
features specified in the competitive checklist found in new 
section 255 of the Communications Act of 1934; (2) the RBOC 
will provide long distance using a separate subsidiary; and (3) 
the application is consistent with the public interest, 
convenience and necessity. The public interest test is 
fundamental to my support for the legislation. In making its 
public interest evaluation, the FCC is instructed to consult 
with the Department of Justice (DOJ), which may furnish the FCC 
with advice on the application using whatever standard it finds 
appropriate (including antitrust analysis under the Clayton and 
Sherman Acts, or section VIII(C) of the MFJ).
    This is a great leap from the ``actual and demonstrable 
competition'' test originally proposed in the last Congress. 
While I myself would have preferred a more active DOJ role and 
an explicit reference to the VIII(C) test, I can support this 
regime because the FCC will have the benefit of DOJ's views 
prior to making any decision. The DOJ may well decide to base 
its decision on whether there is a substantial possibility that 
the RBOC will impede competition through use of its monopoly 
power. In addition, the bill requires that an RBOC must provide 
long distance using a subsidiary separate from itself, to avoid 
any cross-subsidization between local and long distance rates. 
These and other safeguards in the bill should prevent against 
RBOC abuses.
                        cable rate deregulation

    The Committee-approved bill includes some deregulation of 
rates for cable television; the Democratic proposal did not 
suggest any such deregulation. From 1986 until 1992, cable 
rates rose three times faster than the rate of inflation. In 
response to enormous numbers of consumer complaints about 
excessive rates and poor service, the Congress in 1992 imposed 
rate regulation and new service standards on cable operators. 
Since the 1992 Act was adopted, the cable industry has 
experienced significant growth: subscribership is up, stock 
values of cable operators have risen dramatically, and debt 
financing by the cable industry rose in 1994 by almost $4 
billion over 1993 levels. Yet some in the industry maintain 
that cable regulation produces uncertainty in financial 
markets, and that cable operators face increased competition 
and will need to be able to respond to new competitors through 
additional revenues.
    The bill approved by the Committee changes the standard of 
regulation for the upper tiers of cable programming and makes 
no change in the regulation of the basic tier. Under the bill, 
a rate for the upper tier cannot be found to be unreasonable 
unless it ``substantially exceeds the national average rate for 
comparable'' cable programming. This standard will allow cable 
operators greater regulatory flexibility for the upper tiers. 
The bill retains the FCC's authority to regulate the most 
egregious rates charged for the upper tiers.
    In addition, the bill changes the definition of ``effective 
competition'' in the 1992 Act to allow cable rates to be 
deregulated as soon as a telephone company begins to offer 
competing cable service in a franchise area. Once consumers 
have a choice among cable offerors, the need for regulation 
diminishes.

                            broadcast issues

    Earlier drafts of the legislation suggested by the Chairman 
and other Republican members would have eliminated many FCC 
regulatory limits on the broadcast industry. By contrast, the 
Democratic proposal mandated that the FCC conduct a proceeding 
to review the desirability of changing these rules.
    The bill as approved by the Committee increases the ability 
of any entity, including television networks, to own more 
broadcast stations. The FCC currently allows an entity to own 
broadcast stations that reach no more than 25 percent of the 
Nation's population; the bill would increase that level to 35 
percent. In addition, the bill repeals the prohibition on cable 
broadcast cross-ownership. The legislation makes no change in 
the other broadcast cross-ownership rules (such as the duopoly 
rule and the one-to-a-market rule); rather, than FCC is 
instructed to review these rules every two years.
    Any modification in the national ownership cap is important 
because of localism concerns. Local television stations provide 
vitally important services in our communities. Because local 
programming informs our citizens about natural disasters, 
brings news of local events, and provides other community-
building benefits, we cannot afford to undermine this valuable 
local resource.

                            pole attachments

    The bill also makes significant changes in the laws 
affecting the rates charged for the use of telephone and 
utility poles. The current law sets the rates charged to cable 
companies for using these poles. The new language in the bill 
expands the scope of the provisions to include other providers 
of telecommunications services. The purpose of the provisions 
is to ensure that all users pay the same amount. The bill 
language also changes the formula for determining the amount of 
payment. The utilities and the telephone companies continue to 
express concern that the revised formula will not compensate 
them adequately for their costs of building and maintaining the 
poles. I understand and appreciate these concerns. It is my 
hope that the various parties interested in this provision are 
able to agree on some common language on this issue before the 
bill reaches the floor of the Senate.

                               conclusion

    This comprehensive bill strikes a balance between 
competition and regulation. New markets will be opened, 
competitors will begin to offer services, and consumers will be 
better served by having choices among providers of services. 
While I would go further in several areas covered by the 
legislation, I believe that this is an equitable approach to 
most of the major issues in the bill.
             MINORITY VIEWS OF SENATORS PACKWOOD AND McCAIN

    Congress has a golden opportunity to open the door to a 
proliferation of new and improved information technology and 
services. To open the door, Congress must create free and open 
markets. The proposed ``Telecommunications Deregulation and 
Competition Act of 1995'' heads in the right direction, but 
does not go far enough.

                        benefits of deregulation

    Deregulation has a clear and consistent track record. In 
virtually every case, consumers have benefited from lower 
prices, better services and increased choices. For example, 
deregulation of the airlines in 1978 has made air travel 
affordable for millions of Americans. Deregulation of the 
trucking industry in 1980 has saved consumers billions of 
dollars in freight costs. Deregulation saved the rail industry 
from bankruptcy in 1980.
    Deregulation benefits big and small competitors alike. 
Experience shows that a deregulated market is not long 
dominated by a few giants, but rather that competitors come 
along and devise ways to run circles around the giants. The 
giants are forced to become quicker and more agile if they wish 
to survive.

      telecommunications deregulation and competition act of 1995

    First, the bill adopted by the Committee will force the 
federal government to churn out more regulations and hire more 
bureaucrats. As the following chart shows, the bill mandates 87 
new regulatory proceedings.
    Second, the bill does not guarantee free and open markets. 
The goal of Congress should be to ensure that every segment of 
the communications industry, whether it be long distance, cable 
or local telephone, will be subject to competition in its own 
market and free to compete in other markets. Under this bill, 
the long distance and manufacturing markets will not be fully 
open until the Federal Communications Commission decides that 
it is in the ``public interest, convenience and necessity'' to 
allow the Regional Bell Operating Companies to provide long 
distance and manufacturing. This standard gives the Federal 
Communications Commission broad authority to keep a bell 
company out of the long distance and manufacturing markets even 
if the Bell company has complied with all of the other 
requirements contained in the bill (i.e. interconnection, 
unbundling, number portability and separate subsidiary).
    We support a calendar deadline by which all markets must be 
open to any competitor. Without a ``date certain'' there is no 
guarantee markets will be opened. Anything less than a date 
certain will allow any competitor who benefits from artificial 
entry barriers to game the regulatory process. Whether or not 
open markets are in the ``public interest, convenience and 
necessity'' can be argued endlessly at the Federal 
Communications Commission and in the courts. Such a delay may 
benefit competitors, but not consumers.
    Delay will hinder job creation. In fact, a recent study by 
WEFA Associates (formerly Wharton Econometric Forecasting 
Associates) predicts that if Congress were to pass legislation 
that simultaneously opened all communications markets to 
competition on January 1, 1996, we would create 2.1 million new 
jobs by the year 2000. The study also found that delaying full 
competition by three years could cost 1.5 million new jobs by 
the year 2000.
    There was a time when Congress could create, through 
regulation, orderly and predictable markets in which all 
competitors succeeded. That time has passed. Today and in the 
future, rapidly changing technology will determine the relative 
strength and weakness of various competitors. As Peter Huber, 
Senior Fellow at the Manhattan Institute for Policy Research, 
recently testified before the Committee, we are entering a 
world where: ``Sooner or later, consumers will dial up video on 
their telephones, place phone calls through their television, 
and be entertained by their computers.'' Such developments will 
provide endless opportunities for competitors. However, it 
won't be easy to predict winners and losers. George Gilder, 
Senior Fellow at the Discovery Institute, may have been right 
when he recently wrote: ``All we know is that none of the 
existing rivals is likely to survive in recognizable form.''
    Third, the bill contains no guaranteed end to regulation. 
In fact, not a single provision in the bill would ever 
automatically ``sunset.'' Instead, Section 303 of the bill 
would allow the Federal Communications Commission to eliminate 
regulation only if it chooses.
    Regulators are not the best judge of when regulation is no 
longer needed. Congress has entrusted regulators before with 
the task of deregulating: Years ago Congress gave the 
Interstate Commerce Commission authority to eliminate 
regulation. So disappointing were the results that Congress was 
forced to intervene, as it will likely do again later this 
year.
    Fourth, the bill gives the Federal Communications 
Commission virtually unlimited authority to mandate subsidies 
for telecommunication services. We support the goals of 
affordability and universality for necessary telecommunications 
services. However, it is unwise to grant any agency such an 
open-ended mandate.
    Fifth, the bill fails to eliminate cable rate regulation. 
Section 204 of the bill would require the Federal 
Communications Commission to regulate cable rates which 
substantially exceed the national average. This is essentially 
an open invitation for the Federal Communications Commission to 
continue business as usual.
    Congress made a terrible mistake in 1992 when it 
reregulated the cable industry. According to the Economics 
Resource Group, investments in cable companies have 
significantly declined as a result of reregulation. Investment 
from venture capital sources has declined from $712 million in 
1992 to $89 million in 1994. Investment from stock offerings 
has declined from $640 million in 1992 to $163 million in 1994. 
Investment is critical if cable companies are to upgrade and 
improve the quality of programming. Cable companies could 
deliver 500 or more channels to each home if cable companies 
have the resources to invest in new technologies.

                               conclusion

    The proposed ``Telecommunications Deregulation and 
Competition Act of 1995'' is a positive first step. Congress 
can and should improve the bill. Specifically, Congress should: 
(1) reduce the number of new regulatory proceedings the bill 
will require, (2) establish a deadline for fully opening all 
communications markets, (3) guarantee an end to regulation, (4) 
establish guidelines for subsidized services, and (5) eliminate 
cable rate regulation.
New Regulations in the Pressler Telecommunications ``Reform'' Bill--At 
       Least 135 Rulemaking Actions in as Many as 87 Proceedings

                           local competition

    1. Minimum standards for interconnection: unbundle network 
functions, unbundle network facilities, interconnection at any 
point, equal access to interconnection, access to poles, 
conduits and rights of way, number portability, local dialing 
parity, resale of local service, and compensation arrangements.
    2. Collocation requirements.
    3. Cost allocation regulations.
    4. Rules to implement interconnection requirements.
    5. State process for approval of interconnection 
agreements.
    6. State proceedings to consider petitions to intervene.
    7. State requirements to further competition.
    8. State regulatory action to settle unresolved 
interconnection issues.
    9. ICC rules for State arbitration/intervention.
    10. Institution of fines for willful failure to comply with 
interconnection requirements.
    11. FCC/State consideration of waivers for small companies.
    12. FCC preemption of states on: interconnection; rural 
regulation; removal of local barriers to entry.
    13. State regulation in rural areas: common carrier 
obligation for new entrants; public interest determination for 
new competition.
    14. FCC guidelines on neutral administration of numbering 
plans.
    15. Rules on carriers providing subscriber lists to 
competitors.

         separate subsidiary requirements and other safeguards

    16. Definition of covered services.
    17. Structural and transactional requirements: separate 
officers, directors, employees, books, records, and accounts; 
nonrecourse credit; arms length affiliate transactions.
    18. Nondiscrimination safeguards: procurement policies; 
terms and conditions of sales and contracts; accounting 
requirements.
    19. Determine exceptions to separate subsidiary 
requirements.
    20. Rules prohibiting joint marketing.
    21. Rules on use of proprietary information.
    22. Rules to implement separate subsidiary requirements.
    23. States determine whether public utilities have to 
comply.
    24. Special rules for BOC provision of pay phone and 
telemessaging services.

                           universal service

    25. Joint Board proceeding to recommend rules for revising 
Universal Service (USvc) policies.
    26. Review of USvc policies every four years.
    27. FCC implements new USvc policies, definition of 
universal service, who contributes to USvc support, type of 
USvc contribution, and eligibility to receive USvc support.
    28. Rules to ensure geographic toll rate averaging.
    29 FCC/State rules to prevent cross-subsidization: cost 
allocation; accounting safeguards; joint and common cost 
assignments.
    30. FCC/State proceedings to identify essential 
telecommunications carriers (ECs): service and rate 
requirements imposed on ECs; process for designating more than 
one EC per area; rules for customer switching ECs; rules for 
resale of USvc to ensure compensation; rules to permit ECs to 
relinquish responsibilities; penalties and fines for not 
providing timely USvc.
    31. FCC identifies EC for interexchange service: 
geographically averaged toll rates; penalties and fines for not 
providing service.
    32. FCC rules to guide State implementation.
    33. State regulation to further universal service policies.
    34. FCC/State transition plans for distribution of USvc 
support payments.
    35. FCC inquiry into availability of advanced services.
    36. Rules requiring provision of USvc to public and non-
profit entities: elementary and secondary schools; post-
secondary educational institutions; libraries; community health 
centers; local health departments or agencies; community mental 
health centers; non-profit hospitals; rural health clinics; and 
health consortia.
    37. Rules to enhance availability of advanced services to 
public and non-profit entities: interoperability standards; 
requirements for carriers to connect to entities.

                         infrastructure sharing

    38. Rules for sharing infrastructure with qualifying 
carriers: terms and conditions of sharing arrangements; 
guidelines on reasonable availability of infrastructure; 
limitations on use of shared infrastructure; filing of sharing 
arrangements with FCC and state.
    39. Rules for providing information on planned 
infrastructure deployment.
    40. Certification of qualifying carriers.

                             public access

    41. Rules to ensure equipment and services are accessible 
to the disabled and compatible with special equipment for 
disabled use.
    42. Standards for accessibility.
    43. Requirement for closed captioning of video programming.
    44. FCC study of availability of closed captioning.
    45. Rules to implement public accessibility.
    46. Enforcement procedures to resolve complaints.
    47. FCC study on requiring use of audio descriptions on 
video programming.
    48. FCC regulation to prohibit obscene, harassing, and 
wrongful utilization of telecommunications facilities.
                              Cable/Telco

    49. Rules governing common carrier provision of video 
programming services and facilities.
    50. Rules on terms of access and rates for local 
broadcasters, public, educational, and government entities on 
telco video platforms.
    51. Safeguards for telco provision of video programming: 
ensure subscriber access to broadcast TV stations; 
nondiscrimination among video programming providers; copyright 
protection of programming; reasonable rates for carriage; 
extension of network nonduplication and syndicated exclusivity 
rules; and application of rules to cable broadband system.
    52. Ensure nondiscriminatory access to poles, conduits, or 
rights of way controlled by utilities.
    53. Ensure utilities charge just and reasonable rates for 
pole attachments.
    54. FCC dispute resolution procedures for telco video 
programming.
    55. Standards for unreasonable cable rates.
    56. Rules on nondiscriminatory cable programming rates.

                  electric utility telecommunications

    57. FERC and state regulation to prohibit cross-
subsidization.
    58. FERC and state rules to require separate books and 
accounting.
    59. States request independent audits of utility 
communications affiliate transactions.

                             manufacturing

    60. Determination of what constitutes research and design 
activities.
    61. Rules on engaging in R&D and participating in royalty 
agreements.
    62. Regulations requiring BOC manufacturing entities to 
make equipment available to other LECs: nondiscrimination terms 
and conditions; reciprocal arrangements.
    63. Rules to ensure that all BOC procurement and contract 
awards are made on open competitive basis.
    64. Ensure nondiscriminatory standards setting.
    65. Rules governing continued supply of equipment, 
including software and upgrades, to other LECs.
    66. Ensure that BOCs protect all proprietary information 
revealed in bids or contracts.
    67. Rules to implement BOC collaboration with other 
manufactures.
    68. Other regulations necessary to govern BOC 
manufacturing.
    69. FCC administration and enforcement of manufacturing 
regulations.
    70. Proceeding to clarify Bellcore permitted activities.

                        interLATA long distance

    71. Approval process for in-region relief based on 
interconnection agreement meeting 14-point competitive 
checklist: nondiscriminatory, unbundled access; capability to 
exchange customers between carriers; access to poles, ducts, 
conduits, and rights-of-way; unbundled local loop transmission; 
unbundled local transport; unbundled local switching; access to 
emergency, directory assistance, and operator services; access 
to white page directory listings; access to telephone numbers 
for reassignment; access to databases and signing functions; 
number portability; local dialing parity; and unbanded network 
functions.
    72. Regulations governing BOC provision of incidental 
interLATA services: commercial mobile; information services; 
audio programming; and video programming.
    73. Ensure provision of incidental interLATA service does 
not adversely affect local ratepayers or competition in any 
telecom service market.
    74. Regulations governing BOC provision of out-of-region 
long distance: determine areas in which BOC is not dominant 
provider.
    75. Certification process to determine whether BOC has met 
interconnection requirements.
    76. Develop process and criteria for making application for 
interLATA authority.
    77. Develop process for reaching determination on BOC 
applications that allows for full public participation and 
makes findings on: public interest; interconnection 
requirements; separate subsidiary requirements.
    78. Determine whether intraLATA toll dialing parity has 
been implemented by BOC:
          monitor provision of intraLATA toll dialing parity; 
        and
          action taken if parity not maintained.
    79. Regulations governing provision of BOC in-region 
interLATA services.
    80. Rules for nondiscrimination in BOC provision of access 
services.
    81. Rules for long distance access for commercial mobile 
services.

                            alarm monitoring

    82. Determine permitted alarm monitoring services.
    83. Determine whether BOC provision of alarm monitoring 
services is in public interest.
    84. Requirements, limitations or conditions on providing 
alarm monitoring services.
    85. Adopt procedures for receipt and expedited review of 
complaints.
    86. Institute remedies to terminate and punish violations.
    87. Regulations to enforce requirements on provision of 
alarm monitoring service.
                            Estimated Costs

    In accordance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate and section 403 of the 
Congressional Budget Act of 1994, the Committee finds it 
impracticable to comply with the requirements of such paragraph 
in order to expedite the business of the Senate.

                      Regulatory Impact Statement

    In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following evaluation of the regulatory impact of the 
legislation, as reported.

                      Rollcall Votes in Committee

    In accordance with paragraph 7(c) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following description of the record votes during its 
consideration of S. --:
    Senator Snowe (for herself, Mr. Rockefeller, Mr. Exon, and 
Mr. Kerry) offered an amendment to provide universal service to 
certain healthcare providers, educational institutions, and 
libraries. By rollcall vote of 10 yeas and 8 nays as follows, 
the amendment was adopted:
        YEAS--10                      NAYS--8
Ms. Snowe                           Mr. Pressler
Mr. Hollings                        Mr. Stevens \1\
Mr. Inouye \1\                      Mr. McCain \1\
Mr. Ford                            Mr. Burns
Mr. Exon \1\                        Mr. Gorton
Mr. Rockefeller                     Mr. Lott
Mr. Kerry                           Mrs. Hutchison
Mr. Breaux                          Mr. Ashcroft
Mr. Bryan \1\
Mr. Dorgan \1\

    \1\ By proxy

    At the close of debate on S.--, the Chairman announced a 
rollcall vote on the bill. On a rollcall vote of 17 yeas and 2 
nays as follows, the bill was ordered reported:
        YEAS--17                      NAYS--2
Mr. Stevens                         Mr. Packwood
Mr. Burns                           Mr. McCain \1\
Mr. Gorton
Mr. Lott
Mrs. Hutchison
Ms. Snowe
Mr. Ashcroft
Mr. Hollings
Mr. Inouye
Mr. Ford
Mr. Exon \1\
Mr. Rockefeller
Mr. Kerry
Mr. Breaux
Mr. Bryan
Mr. Dorgan
Mr. Pressler

    \1\ By proxy
                        Changes in Existing Law

  In compliance with paragraph 12 of rule XXVI of the Standing 
Rules of the Senate, changes in existing law made by the bill, 
as reported, are shown as follows (existing law proposed to be 
omitted is enclosed in black brackets, new material is printed 
in italic, existing law in which no change is proposed is shown 
in roman):

                       COMMUNICATIONS ACT OF 1934

                      Title I--General Provisions

                       Part I--General Provisions

SEC. 2. APPLICATION OF ACT.

  (a) The provisions of this act shall apply to all interstate 
and foreign communication by wire or radio and all interstate 
and foreign transmission of energy by radio, which originates 
and/or is received within the United States, and to all persons 
engaged within the United States in such communication or such 
transmission of energy by radio, and to the licensing and 
regulating of all radio stations as hereinafter provided; but 
it shall not apply to persons engaged in wire or radio 
communication or transmission in the Canal Zone, or to wire or 
radio communication or transmission wholly within the Canal 
Zone. The provisions of this Act shall apply with respect to 
cable service, to all persons engaged within the United States 
in providing such service, and to the facilities of cable 
operators which relate to such service, as provided in title 
VI.
  (b) Except as provided in [sections 223 through 227, 
inclusive, and section 332,] section 214(d), sections 223 
through 227, part II of title II, and section 332, and subject 
to the provisions of section 301 and title VI, nothing in this 
Act shall be construed to apply or to give the Commission 
jurisdiction with respect to (1) charges, classifications, 
practices, services, facilities, or regulations for or in 
connection with intrastate communication service by wire or 
radio of any carrier, or (2) any carrier engaged in interstate 
or foreign communication solely through physical connection 
with the facilities of another carrier not directly or 
indirectly controlling or controlled by, or under direct or 
indirect common control with such carrier, or (3) any carrier 
engaged in interstate or foreign communication solely through 
connection by radio, or by wire and radio, with facilities, 
located in an adjoining State or in Canada or Mexico (where 
they adjoin the State in which the carrier is doing business), 
of another carrier not directly or indirectly controlling or 
controlled by, or under direct or indirect common control with 
such carrier, or (4) any carrier to which clause (2) or clause 
(3) would be applicable except for furnishing interstate mobile 
radio communication service or radio communication service to 
mobile stations on land vehicles in Canada or Mexico; except 
that sections 201 through 205 of this Act, both inclusive, 
shall, except as otherwise provided therein, apply to carriers 
described in clauses (2), (3), and (4).

SEC. 3. DEFINITIONS.

  For the purposes of this Act, unless the context otherwise 
requires--
    (gg) ``Modification of Final Judgment'' means the decree 
entered on August 24, 1982, in United States v. Western 
Electric Civil Action No. 82-0192 (United States District 
Court, District of Columbia), and includes any judgment or 
order with respect to such action entered on or after August 
24, 1982, and before the date of enactment of the 
Telecommunications Competition and Deregulation Act of 1995.
  (hh) ``Bell operating company'' means those companies listed 
in appendix A of the Modification of Final Judgment, and 
includes any successor or assign of any such company, but does 
not include any affiliate of such company.
  (ii) ``Affiliate'' means a person that (directly or 
indirectly) owns or controls, is owned or controlled by, or is 
under common ownership or control with, another person. For 
purposes of this paragraph, the term ``own'' means to own an 
equity interest (or the equivalent thereof) of more than 10 
percent.
  (jj) ``Telecommunications Act of 1995'' means the 
Telecommunications Competition and Deregulation Act of 1995.
  (kk) ``Local exchange carrier'' means a provider of telephone 
exchange service or exchange access service.
  (ll) ``Telecommunications'' means the transmission, between 
or among points specified by the user, of information of the 
user's choosing, including voice, data, image, graphics, and 
video, without change in the form or content of the 
information, as sent and received, with or without benefit of 
any closed transmission medium.
  (mm) ``Telecommunications service'' means the offering of 
telecommunications for a fee directly to the public, or to such 
classes of users as to be effectively available to the public, 
regardless of the facilities used to transmit the 
telecommunications service. The term includes the transmission, 
without change in the form or content, of information services 
and cable services, but does not include the offering of those 
services.
  (nn) ``Telecommunications carrier'' means any provider of 
telecommunications services, except that such term does not 
include hotels, motels, hospitals, and other aggregators of 
telecommunications services (as defined in section 226). A 
telecommunications carrier shall be treated as a common carrier 
under this Act to the extent that it is engaged in providing 
telecommunications services.
  (oo) ``Telecommunications number portability'' means the 
ability of users of telecommunications services to retain, at 
the same location, existing telecommunications numbers without 
impairment of quality, reliability, or convenience when 
switching from one telecommunications carrier to another.
  (pp) ``Information service'' means the offering of services 
that--
          (1) employ computer processing applications that act 
        on the format, content, code, protocol, or similar 
        aspects of the subscriber's transmitted information;
          (2) provide the subscriber additional, different, or 
        restructured information; or
          (3) involve subscriber interaction with stored 
        information.
  (qq) ``Cable service'' means cable service as defined in 
section 602.
  (rr) ``Rural telephone company'' means a telecommunications 
carrier operating entity to the extent that such entity 
provides telephone exchange service, including access service 
subject to part 69 of the Commission's rules (47 C.F.R. 69.1 et 
seq.), to--
          (1) any service area that does not include either--
                  (A) any incorporated place of 10,000 
                inhabitants or more, or any part thereof, based 
                on the most recent population statistics of the 
                Bureau of the Census; or
                  (B) any territory, incorporated or 
                unincorporated, included in an urbanized area, 
                as defined by the Bureau of the Census as of 
                January 1, 1995; or
          (2) fewer than 100,000 access lines within a State.
  (ss) ``Service area'' means a geographic area established by 
the Commission and the States for the purpose of determining 
universal service obligations and support mechanisms. In the 
case of an area served by a rural telephone company, ``service 
area'' means such company's ``study area'' unless and until the 
Commission and the States, after taking into account 
recommendations of a Federal-State Joint Board instituted under 
section 410(c), establish a different definition of service 
area for such company.
SEC. 214. EXTENSION OF [LINES.] LINES; ESSENTIAL TELECOMMUNICATIONS 
                    CARRIERS.
  (d) In general.--The Commission may, after full opportunity 
for hearing, in a proceeding upon complaint or upon its own 
initiative without complaint, authorize or require by order any 
carrier, party to such proceeding, to provide itself with 
adequate facilities for the expeditious and efficient 
performance of its service as a common carrier and to extend 
its line or to establish a public office; but no such 
authorization or order shall be made unless the Commission 
finds, as to such provision of facilities, as to such 
establishment of public offices, or as to such extension, that 
it is reasonably required in the interest of public convenience 
and necessity, or as to such extension or facilities that the 
expense involved therein will not impair the ability of the 
carrier to perform its duty to the public. Any carrier which 
refuses or neglects to comply with any order of the Commission 
made in pursuance of this paragraph shall forfeit to the United 
States $1,200 for each day during which such refusal or neglect 
continues.
  (2) Designation of essential carrier.--If one or more common 
carriers provide telecommunications service to a geographic 
area, and no common carrier will provide universal service to 
an unserved community or any portion thereof that requests such 
service within such area, then the Commission, with respect to 
interstate services, or a State, with respect to intrastate 
services, shall determine which common carrier serving that 
area is best able to provide universal service to the 
requesting unserved community or portion thereof, and shall 
designate that common carrier as an essential 
telecommunications carrier for that unserved community or 
portion thereof.
  (3) Essential carrier obligations.--A common carrier may be 
designated by the Commission, or by a State, as appropriate, as 
an essential telecommunications carrier for a specific service 
area and become eligible to receive any universal support 
payments the Commission may allow under section 253. A carrier 
designated as an essential telecommunications carrier shall--
          (A) provide through its own facilities or through a 
        combination of its own facilities and resale of 
        services using another carrier's facilities, universal 
        service and any additional service (such as 911 
        service) required by the Commission or the State, to 
        any community or portion thereof which requests such 
        service;
          (B) offer such services at nondiscriminatory rates 
        established by the Commission, for interstate services, 
        and the State, for intrastate services, throughout the 
        service area; and
          (C) advertise throughout the service area the 
        availability of such services and the rates for such 
        services using media of general distribution.
  (4) Multiple essential carriers.--If the Commission, with 
respect to interstate services, or a State, with respect to 
intrastate services, designates more than one common carrier as 
an essential telecommunications carrier for a specific service 
area, such carrier shall meet the service, rate, and 
advertising requirements imposed by the Commission or State on 
any other essential telecommunications carrier for that service 
area. A State may require that, before designating an 
additional essential telecommunications carrier, the State 
agency authorized to make the designation shall find that--
          (A) the designation of an additional essential 
        telecommunications carrier is in the public interest 
        and that there will not be a significant adverse impact 
        on users of telecommunications services or on the 
        provision of universal service;
          (B) the designation encourages the development and 
        deployment of advanced telecommunications 
        infrastructure and services in rural areas; and
          (C) the designation protects the public safety and 
        welfare, ensures the continued quality of 
        telecommunications services, or safeguards the rights 
        of consumers.
  (5) Resale of universal service.--The Commission, for 
interstate services, and the States, for intrastate services, 
shall establish rules to govern the resale of universal service 
to allocate any support received for the provision of such 
service in a manner that ensures that the carrier whose 
facilities are being resold is adequately compensated for their 
use, taking into account the impact of the resale on that 
carrier's ability to maintain and deploy its network as a 
whole. The Commission shall also establish, based on the 
recommendations of the Federal-State Joint Board instituted to 
implement this section, rules to permit a carrier designated as 
an essential telecommunications carrier to relinquish that 
designation for a specific service area if another 
telecommunications carrier is also designated as an essential 
telecommunications carrier for that area. The rules--
          (A) shall ensure that all customers served by the 
        relinquishing carrier continue to be served, and shall 
        require sufficient notice to permit the purchase or 
        construction of adequate facilities by any remaining 
        essential telecommunications carrier if such remaining 
        carrier provided universal service through resale of 
        the facilities of the relinquishing carrier; and
          (B) shall establish criteria for determining when a 
        carrier which intends to utilize resale to meet the 
        requirements for designation under this subsection has 
        adequate resources to purchase, construct, or otherwise 
        obtain the facilities necessary to meet its obligation 
        if the reselling carrier is no longer able or obligated 
        to resell the service.
  (6) Enforcement.--A common carrier designated by the 
Commission or a State as an essential telecommunications 
carrier that refuses to provide universal service within a 
reasonable period to an unserved community or portion thereof 
which requests such service shall forfeit to the United States, 
in the case of interstate services, or the State, in the case 
of intrastate services, a fine of up to $10,000 for each day 
that such carrier refuses to provide such service. In 
establishing a reasonable period the Commission or the State, 
as appropriate, shall consider the nature of any construction 
required to serve such requesting unserved community or portion 
thereof, as well as the construction intervals normally 
attending such construction, and shall allow adequate time for 
regulatory approvals and acquisition of necessary financing.
  (7) Interexchange services.--The Commission, for interstate 
services, or a State, for intrastate services, shall designate 
an essential telecommunications carrier for interexchange 
services for any unserved community or portion thereof 
requesting such services. Any common carrier designated as an 
essential telecommunications carrier for interexchange services 
under this paragraph shall provide interexchange services 
included in universal service to any unserved community or 
portion thereof which requests such service. The service shall 
be provided at nationwide geographically averaged rates for 
interstate interexchange services and at geographically 
averaged rates for intrastate interexchange services, and shall 
be just and reasonable and not unjustly or unreasonably 
discriminatory. A common carrier designated as an essential 
telecommunications carrier for interexchange services under 
this paragraph that refuses to provide interexchange service in 
accordance with this paragraph to an unserved community or 
portion thereof that requests such service within 180 days of 
such request shall forfeit to the United States a fine of 
$50,000 for each day that such carrier refuses to provide such 
service. The Commission, or a State, as appropriate, may extend 
the 180-day period for providing interexchange service upon a 
showing by the common carrier of good faith efforts to comply 
within such period.
  (8) Implementation.--The Commission may, by regulation, 
establish guidelines by which States may implement the 
provisions of this section.
  (e) Special Rule.--No certificate is required under this 
section for a carrier to construct facilities to provide video 
programming services.
[SEC. 223. OBSCENE OR HARASSING TELEPHONE CALLS IN THE DISTRICT OF 
                    COLUMBIA OR IN INTERSTATE OR FOREIGN 
                    COMMUNICATIONS.]
SEC. 223. OBSCENE OR HARASSING UTILIZATION OF TELECOMMUNICATIONS 
                    DEVICES AND FACILITIES IN THE DISTRICT OF COLUMBIA 
                    OR IN INTERSTATE OR FOREIGN COMMUNICATIONS.
  (a) Whoever--
          (1) in the District of Columbia or in interstate or 
        foreign communications by means of [telephone--] 
        telecommunications device--
                  [(A) makes any comment, request, suggestion 
                or proposal which is obscene, lewd, lascivious, 
                filthy, or indecent;]
                  [(B) makes a telephone call, whether or not 
                conversation ensues, without disclosing his 
                identity and with intent to annoy, abuse, 
                threaten, or harass any person at the called 
                number;]
                  (A) knowingly--
                          (i) makes, creates, or solicits, and
                          (ii) initiates the transmission of,
                  any comment, request, suggestion, proposal, 
                image, or other communication which is obscene, 
                lewd, lascivious, filthy, or indecent;
                  (B) makes a telephone call or utilizes a 
                telecommunications device, whether or not 
                conversation or communications ensues, without 
                disclosing his identity and with intent to 
                annoy, abuse, threaten, or harass any person at 
                the called number or who receives the 
                communication;
                  (C) makes or causes the telephone of another 
                repeatedly or continuously to ring, with intent 
                to harass any person at the called number; or
                  [(D) makes repeated telephone calls, during 
                which conversation ensues, solely to harass any 
                person at the called number; or]
                  (D) makes repeated telephone calls or 
                repeatedly initiates communication with a 
                telecommunications device, during which 
                conversation or communication ensues, solely to 
                harass any person at the called number or who 
                receives the communication; or
          (2) knowingly permits any [telephone] 
        telecommunications facility under his control to be 
        used for any purpose prohibited by this [section,] 
        subsection,
shall be fined not more than $100,000 or imprisoned not more 
than 2 years, or both.
  (b)(1) Whoever knowingly--
          [(A) within the United States, by means of telephone, 
        makes (directly or by recording device) any obscene 
        communication for commercial purposes to any person, 
        regardless of whether the maker of such communication 
        placed the call; or]
          (A) within the United States, by means of 
        telecommunications device--
                  (i) makes, creates, or solicits, and
                  (ii) purposefully makes available,
        any obscene communication for commercial purposes to 
        any person, regardless of whether the maker of such 
        communication placed the call or initiated the 
        communication; or
          (B) permits any [telephone facility] 
        telecommunications facility under such person's control 
        to be used for an activity prohibited by subparagraph 
        (A),
shall be fined in accordance with title 18, United States Code, 
or imprisoned not more than two years, or both.
  (2) Whoever knowingly--
          [(A) within the United States, by means of telephone, 
        makes (directly or by recording device) any indecent 
        communication for commercial purposes which is 
        available to any person under 18 years of age or to any 
        other person without that person's consent, regardless 
        of whether the maker of such communication placed the 
        call; or]
          (A) within the United States, by means of telephone 
        or telecommunications device,
                  (i) makes, creates, or solicits, and
                  (ii) purposefully makes available (directly 
                or by recording device),
        any indecent communication for commercial purposes 
        which is available to any person under 18 years of age 
        or to any other person without that person's consent, 
        regardless of whether the maker of such communication 
        placed the call; or
          (B) permits any [telephone facility] 
        telecommunications facility under such person's control 
        to be used for an activity prohibited by subparagraph 
        (A), shall be fined not more than $100,000 or 
        imprisoned not more than 2 years, or both.
  (3) It is a defense to prosecution under paragraph (2) of 
this subsection that the defendant restricted access to the 
prohibited communication to persons 18 years of age or older in 
accordance with subsection (c) of this section and with such 
procedures as the Commission may prescribe by regulation.
  (4) In addition to the penalties under paragraph (1), 
whoever, within the United States, intentionally violates 
paragraph (1) or (2) shall be subject to a fine of not more 
than $100,000 for each violation. For purposes of this 
paragraph, each day of violation shall constitute a separate 
violation.
  (5)(A) In addition to the penalties under paragraphs (1), 
(2), and (5), whoever, within the United States, violates 
paragraph (1) or (2) shall be subject to a civil fine of not 
more than $100,000 for each violation. For purposes of this 
paragraph, each day of violation shall constitute a separate 
violation.
  (B) A fine under this paragraph may be assessed either--
          (i) by a court, pursuant to civil action by the 
        Commission or any attorney employed by the Commission 
        who is designated by the Commission for such purposes, 
        or
          (ii) by the Commission after appropriate 
        administrative proceedings.
  (6) The Attorney General may bring a suit in the appropriate 
district court of the United States to enjoin any act or 
practice which violates paragraph (1) or (2). An injunction may 
be granted in accordance with the Federal Rules of Civil 
Procedure.
  (c)(1) A common carrier within the District of Columbia or 
within any State, or in interstate or foreign commerce, shall 
not, to the extent technically feasible, provide access to a 
communication specified in subsection (b) from the [telephone] 
telecommunications device of any subscriber who has not 
previously requested in writing the carrier to provide access 
to such communication if the carrier collects from subscribers 
an identifiable charge for such communication that the carrier 
remits, in whole or in part, to the provider of such 
communication.
  (2) Except as provided in paragraph (3), no cause of action 
may be brought in any court or administrative agency against 
any common carrier, or any of its affiliates, including their 
officers, directors, employees, agents, or authorized 
representatives on account of--
          (A) any action which the carrier demonstrates was 
        taken in good faith to restrict access pursuant to 
        paragraph (1) of this subsection; or
          (B) any access permitted--
                  (i) in good faith reliance upon the lack of 
                any representation by a provider of 
                communciations that communications provided by 
                that provider are communications specified in 
                subsection (b), or
                  (ii) because a specific representation by the 
                provider did not allow the carrier, acting in 
                good faith, a sufficient period to restrict 
                access to communications described in 
                subsection (b).
  (3) Notwithstanding paragraph (2) of this subsection, a 
provider of communications services to which subscribers are 
denied access pursuant to paragraph (1) of this subsection may 
bring an action for a declaratory judgment or similar action in 
a court. Any such action shall be limited to the question of 
whether the communications which the provider seeks to provide 
fall within the category of communications to which the carrier 
will provide access only to subscribers who have previously 
requested such access.
  (d) Additional Defenses; Restrictions on Access; Judicial 
Remedies Respecting Restrictions.--
          (1) No person shall be held to have violated this 
        section with respect to any action by that person or a 
        system under his control that is limited solely to the 
        provision of access, including transmission, 
        downloading, intermediate storage, navigational tools, 
        and related capabilities not involving the creation or 
        alteration of the content of the communications, for 
        another person's communications to or from a service, 
        facility, system, or network not under that person's 
        control.
          (2) It is a defense to prosecution under subsections 
        (a)(2), (b)(1)(B), and (b)(2)(B) that a defendant 
        lacked editorial control over the communication 
        specified in this section.
          (3) It is a defense to prosecution under subsections 
        (a)(2), (b)(1)(B), and (b)(2)(B) that a defendant has 
        taken good faith, reasonable steps, as appropriate--
                  (A) to provide users with the means to 
                restrict access to communications described in 
                this section;
                  (B) provide users with warnings concerning 
                the potential for access to such 
                communications;
                  (C) to respond to complaints from those who 
                are subjected to such communications;
                  (D) to provide mechanisms to enforce a 
                provider's terms of service governing such 
                communications; or
                  (E) to implement such other measures as the 
                Commission may prescribe to carry out the 
                purposes of this paragraph. Nothing in this 
                section in and of itself shall be construed to 
                treat enhanced information services as common 
                carriage.
          (4) In addition to other defenses authorized under 
        this section, it shall be a defense to prosecution 
        under subsection (b) that a defendant is not engaged in 
        a commercial activity that has as a predominant purpose 
        an activity specified in that subsection.
          (5) No cause of action may be brought in any court or 
        administrative agency against any person on account of 
        any action which the person has taken in good faith to 
        implement a defense authorized under this section or 
        otherwise to restrict or prevent the transmission of, 
        or access to, a communication specified in this 
        section. The preceding sentence shall not apply where 
        the good faith defenses under subsection (c)(2) apply.
          (6) No State or local government may impose any 
        liability in connection with a violation described in 
        subsection (a)(2), (b)(1)(B), (b)(2)(B) that is 
        inconsistent with the treatment of those violations 
        under this section provided, however, that nothing 
        herein shall preclude any State or local government 
        from enacting and enforcing complementary oversight, 
        liability, and regulatory systems, procedures, and 
        requirements, so long as such systems, procedures, and 
        requirements govern only intrastate services and do not 
        result in the imposition of inconsistent obligations on 
        the provision of interstate services.
  (e) Knowingly Defined.--For purposes of subsections (a) and 
(b), the term ``knowingly'' means an intentional act with 
actual knowledge of the specific content of the communication 
specified in this section to another person.
SEC. 224. REGULATION OF POLE ATTACHMENTS.

  (a) As used in this section:
          (1) The term ``utility'' means any person whose rates 
        or charges are regulated by the Federal Government or a 
        State and who owns or controls poles, ducts, conduits, 
        or rights-of-way used, in whole or in part, for wire 
        communication. Such term does not include any railroad, 
        any person who is cooperatively organized, or any 
        person owned by the Federal Government or any State.
          (2) The term ``Federal Government'' means the 
        Government of the United States or any agency or 
        instrumentality thereof.
          (3) The term ``State'' means any State, territory, or 
        possession of the United States, the District of 
        Columbia, or any political subdivision, agency, or 
        instrumentality thereof.
          (4) The term ``pole attachment'' means any attachment 
        by a cable television system to a pole, duct, conduit, 
        or right-of-way owned or controlled by a [utility] 
        utility, which attachment may be used by that cable 
        television system to provide cable service or any other 
        telecommunications service.
  (b)(1) A utility shall provide a cable television system with 
nondiscriminatory access to any pole, duct, conduit, or right-
of-way owned or controlled by it.
  (2) For purposes of paragraph (1), the Commission shall, not 
later than 1 year after the date of enactment of the 
Telecommunications Act of 1995, prescribe regulations for 
ensuring that utilities charge just, reasonable, and 
nondiscriminatory rates for pole attachments provided to all 
telecommunications carriers and cable operators, including such 
attachments used by cable television systems to provide 
telecommunications services. The regulations--
          (A) shall recognize that the entire pole, duct, 
        conduit, or right-of-way other than the usable space is 
        of equal benefit to all attachments of entities that 
        hold an ownership interest in the pole, duct, conduit, 
        or right-of-way and therefore apportion the cost of the 
        space other than the usable space equally among all 
        such attachments; and
          (B) shall recognize that an entity that obtains an 
        attachment through a license or other similar 
        arrangement benefits from the entire pole, duct, 
        conduit, or right-of-way other than the usable space in 
        the same proportion as it benefits from the usable 
        space and therefore apportion to such entity a portion 
        of the cost of the space other than the usable space in 
        the same manner as the cost of usable space is 
        apportioned to such entity.
  [(b)(1)] (c)(1) Subject to the provisions of subsection [(c)] 
(d) of this section, the Commission shall regulate the rates, 
terms, and conditions for pole attachments to provide that such 
rates, terms, and conditions are just and reasonable, and shall 
adopt procedures necessary and appropriate to hear and resolve 
complaints concerning such rates, terms, and conditions. For 
purposes of enforcing any determinations resulting from 
complaint procedures established pursuant to this subsection, 
the Commission shall take such action as it deems appropriate 
and necessary, including issuing cease and desist orders, as 
authorized by section 312(b) of title III of the Communications 
Act of 1934, as amended.
  (2) The Commission shall prescribe by rule regulations to 
carry out the provisions of this section.
  [(c)(1)] (d)(1) Nothing in this section shall be construed to 
apply to, or to give the Commission jurisdiction with respect 
to rates, terms, and conditions for pole attachments in any 
case where such matters are regulated by a State.
  (2) Each State which regulates the rates, terms, and 
conditions for pole attachments shall certify to the Commission 
that--
          (A) it regulates such rates, terms, and conditions; 
        and
          (B) in so regulating such rates, terms, and 
        conditions, the State has the authority to consider and 
        does consider the interests of the subscribers of cable 
        television services, as well as the interests of the 
        consumers of the utility services.
  (3) For purposes of this subsection, a State shall not be 
considered to regulate the rates, terms, and conditions for 
pole attachments--
          (A) unless the State has issued and made effective 
        rules and regulations implementing the State's 
        regulatory authority over pole attachments; and
          (B) with respect to any individual matter, unless the 
        State takes final action on a complaint regarding such 
        matter--
                  (i) within 180 days after the complaint is 
                filed with the State, or
                  (ii) within the applicable period prescribed 
                for such final action in such rules and 
                regulations of the State, if the prescribed 
                period does not extend beyond 360 days after 
                the filing of such complaint.
  [(d)(1)] (e)(1) For purposes of subsection [(b)] (c) of this 
section, a rate is just and reasonable if it assures a utility 
the recovery of not less than the additional costs of providing 
pole attachments, nor more than an amount determined by 
multiplying the percentage of the total usable space, or the 
percentage of the total duct or conduit capacity, which is 
occupied by the pole attachment by the sum of the operating 
expenses and actual capital costs of the utility attributable 
to the entire pole, duct, conduit, or right-of-way.
  (2) As used in this subsection, the term ``usable space'' 
means the space above the minimum grade level which can be used 
for the attachment of wires, cables, and associated equipment.

SEC. 228. REGULATION OF CARRIER OFFERING OF PAY-PER-CALL SERVICES.

  (c) Common Carrier Obligations.--Within 270 days after the 
date of enactment of this section, the Commission shall, by 
regulation, establish the following requirements for common 
carriers:
          (7) Billing for 800 calls.--A common carrier shall 
        prohibit by tariff or contract the use of any 800 
        telephone number, or other telephone number advertised 
        or widely understood to be toll free, in a manner that 
        would result in--
                  (A) the calling party being assessed, by 
                virtue of completing the call, a charge for the 
                call;
                  (B) the calling party being connected to a 
                pay-per-call service;
                  (C) the calling party being charged for 
                information conveyed during the call unless the 
                calling party has a preexisting agreement to be 
                charged for the information or discloses a 
                credit or charge card number during the call; 
                [or]
                  (D) the calling party being called back 
                collect for the provision of audio information 
                services or simultaneous voice conversation 
                [services.] services; or
                  (E) the calling party being assessed, by 
                virtue of being asked to connect or otherwise 
                transfer to a pay-per-call service, a charge 
                for the call.
               Part II--Competition in Telecommunications

SEC. 251. INTERCONNECTION.

  (a) Duty to Provide Interconnection--
          (1) In general.--A local exchange carrier, or class 
        of local exchange carriers, determined by the 
        Commission to have market power in providing telephone 
        exchange service or exchange access service has a duty 
        under this Act, upon request--
                  (A) to enter into good faith negotiations 
                with any telecommunications carrier requesting 
                interconnection between the facilities and 
                equipment of the requesting telecommunications 
                carrier and the carrier, or class of carriers, 
                of which the request was made for the purpose 
                of permitting the telecommunications carrier to 
                provide telephone exchange or exchange access 
                service; and
                  (B) to provide such interconnection, at rates 
                that are reasonable and nondiscriminatory, 
                according to the terms of the agreement and in 
                accordance with the requirements of this 
                section.
          (2) Initiation.--A local exchange carrier, or class 
        of carriers, described in paragraph (1) shall commence 
        good faith negotiations to conclude an agreement, 
        whether through negotiation under subsection (c) or 
        arbitration or intervention under subsection (d), 
        within 15 days after receiving a request from any 
        telecommunications carrier seeking to provide telephone 
        exchange or exchange access service. Nothing in this 
        Act shall prohibit multilateral negotiations between or 
        among a local exchange carrier or class of carriers and 
        a telecommunications carrier or class of carriers 
        seeking interconnection under subsection (c) or 
        subsection (d). At the request of any of the parties to 
        a negotiation, a State may participate in the 
        negotiation of any portion of an agreement under 
        subsection (c).
          (3) Market power.--For the purpose of determining 
        whether a carrier has market power under paragraph (1), 
        the relevant market shall include all providers of 
        telephone exchange or exchange access services in a 
        local area, regardless of the technology used by any 
        such provider.
  (b) Minimum Standards.--An interconnection agreement entered 
into under this section shall, if requested by a 
telecommunications carrier requesting interconnection, provide 
for--
          (1) nondiscriminatory access on an unbundled basis to 
        the network functions and services of the local 
        exchange carrier's telecommunications network 
        (including switching software);
          (2) nondiscriminatory access on an unbundled basis to 
        any of the local exchange carrier's telecommunications 
        facilities and information, including databases and 
        signaling, necessary to the transmission and routing of 
        any telephone exchange service or exchange access 
        service and the interoperability of both carriers' 
        networks;
          (3) interconnection to the local exchange carrier's 
        telecommunications facilities and services at any 
        technically feasible point within the carrier's 
        network;
          (4) interconnection that is at least equal in type, 
        quality, and price (on a per unit basis or otherwise) 
        to that provided by the local exchange carrier to 
        itself or to any subsidiary, affiliate, or any other 
        party to which the carrier provides interconnection;
          (5) nondiscriminatory access to the poles, ducts, 
        conduits, and rights-of-way owned or controlled by the 
        local exchange carrier;
          (6) the local exchange carrier to take whatever 
        action under its control is necessary, as soon as is 
        technically feasible, to provide telecommunications 
        number portability and local dialing parity in a manner 
        that--
                  (A) permits consumers to be able to dial the 
                same number of digits when using any 
                telecommunications carrier providing telephone 
                exchange service or exchange access service in 
                the market served by the local exchange 
                carrier;
                  (B) permits all such carriers to have 
                nondiscriminatory access to telephone numbers, 
                operator services, directory assistance, and 
                directory listing with no unreasonable dialing 
                delays; and
                  (C) provides for a reasonable allocation of 
                costs among the parties to the agreement;
          (7) telecommunications services and network functions 
        of the local exchange carrier to be available to the 
        telecommunications carrier on an unbundled basis 
        without any unreasonable conditions on the resale or 
        sharing of those services or functions, including the 
        origination, transport, and termination of such 
        telecommunications services, other than reasonable 
        conditions required by a State; and for purposes of 
        this paragraph, it is not an unreasonable condition for 
        a State to limit the resale--
                  (A) of services included in the definition of 
                universal service to a telecommunications 
                carrier who resells that service to a category 
                of customers different from the category of 
                customers being offered that universal service 
                by such carrier if the State orders a carrier 
                to provide the same service to different 
                categories of customers at different prices 
                necessary to promote universal service; or
                  (B) of subsidized universal service in a 
                manner that allows companies to charge another 
                carrier rates which reflect the actual cost of 
                such services, exclusive of any universal 
                service support received for providing such 
                services;
          (8) reciprocal compensation arrangements for the 
        origination and termination of telecommunications;
          (9) reasonable public notice of changes in the 
        information necessary for the transmission and routing 
        of services using that local exchange carrier's 
        facilities or networks, as well as of any other changes 
        that would affect the interoperability of those 
        facilities and networks; and
          (10) a schedule of itemized charges and conditions 
        for each service, facility, or function provided under 
        the agreement.
  (c) Agreements Arrived at Through Negotiation.--Upon 
receiving a request for interconnection, a local exchange 
carrier may meet its interconnection obligations under this 
section by negotiating and entering into a binding agreement 
with the telecommunications carrier seeking interconnection 
without regard to the standards set forth in subsection (b). 
The agreement shall include a schedule of itemized charges for 
each service, facility, or function included in the agreement. 
The agreement, including any interconnection agreement 
negotiated before the date of enactment of the 
Telecommunications Act of 1995, shall be submitted to the State 
under subsection (e).
  (d) Agreements Arrived at Through Arbitration or 
Intervention.--
          (1) In general.--Any party negotiating an 
        interconnection agreement under this section may, at 
        any point in the negotiation, ask a State to 
        participate in the negotiation and to arbitrate any 
        differences arising in the course of the negotiation. 
        The refusal of any other party to the negotiation to 
        participate further in the negotiations, to cooperate 
        with the State in carrying out its function as a 
        arbitrator, or to continue to negotiate in good faith 
        in the presence, or with the assistance, of the State 
        shall be considered a failure to negotiate in good 
        faith.
          (2) Intervention.--If any issues remain open in a 
        negotiation commenced under this section more than 135 
        days after the date upon which the local exchange 
        carrier received the request for such negotiation, then 
        the carrier or any other party to the negotiation may 
        petition a State to intervene in the negotiations for 
        purposes of resolving any such remaining open issues. 
        Any such request must be made during the 25-day period 
        that begins 135 days after the carrier receives the 
        request for such negotiation and ends 160 days after 
        that date.
          (3) Duty of petitioner.--
                  (A) A party that petitions a State under 
                paragraph (2) shall, within 15 days after the 
                State receives the petition, provide the State 
                all relevant documentation concerning the 
                negotiations necessary to understand--
                          (i) the unresolved issues;
                          (ii) the position of each of the 
                        parties with respect to those issues; 
                        and
                          (iii) any other issue discussed and 
                        resolved by the parties.
                  (B) A party petitioning a State under 
                paragraph (2) shall notify the other party of 
                its petition not later than the day on which 
                the State receives the petition.
          (4) Opportunity to respond.--A party to a negotiation 
        under this section with respect to which the other 
        party has petitioned a State under paragraph (2) may 
        respond to the other party's petition and provide such 
        additional information as it wishes within 25 days 
        after the State receives the petition.
          (5) Action by state.--
                  (A) A State proceeding to consider a petition 
                under this subsection shall be conducted in 
                accordance with the rules promulgated by the 
                Commission under subsection (i). The State 
                shall limit its consideration of any petition 
                under paragraph (2) (and any response thereto) 
                to the issues set forth in the petition and in 
                the response, if any, filed under paragraph 
                (4).
                  (B) The State may require the petitioning 
                party and the responding party to provide such 
                information as may be necessary for the State 
                to reach a decision on the unresolved issues. 
                If either party refuses or fails unreasonably 
                to respond on a timely basis to any reasonable 
                request from the State, then the State may 
                proceed on the basis of the best information 
                available to it from whatever source derived.
                  (C) The State shall resolve each issue set 
                forth in the petition and the response, if any, 
                by imposing appropriate conditions upon the 
                parties to the agreement, and shall conduct the 
                review of the agreement (including the issues 
                resolved by the State) not later than 10 months 
                after the date on which the local exchange 
                carrier received the request for 
                interconnection under this section.
                  (D) In resolving any open issues and imposing 
                conditions upon the parties to the agreement, a 
                State shall ensure that the requirements of 
                this section are met by the solution imposed by 
                the State and are consistent with the 
                Commission's rules defining minimum standards.
          (6) Charges.--If the amount charged by a local 
        exchange carrier, or class of local exchange carriers, 
        for an unbundled element of the interconnection 
        provided under subsection (b) is determined by 
        arbitration or intervention under this subsection, then 
        the charge--
                  (A) shall be
                          (i) based on the cost (determined 
                        without reference to a rate-of-return 
                        or other rate-based proceeding) of 
                        providing the unbundled element,
                          (ii) nondiscriminatory, and
                          (iii) individually priced to the 
                        smallest element that is technically 
                        and economically reasonable to provide; 
                        and
                  (B) may include a reasonable profit.
  (e) Approval by State.--Any interconnection agreement under 
this section shall be submitted for approval to the State. A 
State to which an agreement is submitted shall approve or 
reject the agreement, with written findings as to any 
deficiencies. The State may only reject--
          (1) an agreement under subsection (c) if it finds 
        that the agreement discriminates against a 
        telecommunications carrier not a party to the 
        agreement; and
          (2) an agreement under subsection (d) if it finds 
        that--
                  (A) the agreement does not meet the standards 
                set forth in subsection (b), or
                  (B) the implementation of the agreement is 
                not in the public interest.
If the State does not act to approve or reject the agreement 
within 90 days after receiving the agreement, or 30 days in the 
case of an agreement negotiated under subsection (c), the 
agreement shall be deemed approved. No State court shall have 
jurisdiction to review the action of a State in approving or 
rejecting an agreement under this section.
  (f) Filing Required.--A State shall make a copy of each 
agreement approved under subsection (e) available for public 
inspection and copying within 10 days after the agreement is 
approved. The State may charge a reasonable and 
nondiscriminatory fee to the parties to the agreement to cover 
the costs of approving and filing such agreement.
  (g) Availability to Other Telecommunications Carriers.--A 
local exchange carrier shall make available any service, 
facility, or function provided under an interconnection 
agreement to which it is a party to any other 
telecommunications carrier that requests such interconnection 
upon the same terms and conditions as those provided in the 
agreement.
  (h) Collocation.--A State may require telecommunications 
carriers to provide for actual collocation of equipment 
necessary for interconnection at the premises of the carrier at 
reasonable charges, if the State finds actual collocation to be 
in the public interest.
  (i) Implementation.--
          (1) Rules and standards.--The Commission shall 
        promulgate rules to implement the requirements of this 
        section within 6 months after the date of enactment of 
        the Telecommunications Act of 1995. In establishing the 
        standards for determining what facilities and 
        information are necessary for purposes of subsection 
        (b)(2), the Commission shall consider, at a minimum, 
        whether--
                  (A) access to such facilities and information 
                that are proprietary in nature is necessary; 
                and
                  (B) the failure to provide access to such 
                facilities and information would impair the 
                ability of the telecommunications carrier 
                seeking interconnection to provide the services 
                that it seeks to offer.
          (2) Commission to act if state will not act.--If a 
        State, through action or inaction, fails to carry out 
        its responsibility under this section in accordance 
        with the rules prescribed by the Commission under 
        paragraph (1) in any proceeding or other matter under 
        this section, then the Commission shall issue an order 
        preempting the State's jurisdiction of that proceeding 
        or matter within 90 days after being notified (or 
        taking notice) of such failure, and shall assume the 
        responsibility of the State under this section with 
        respect to the proceeding or matter and act for the 
        State.
          (3) Waivers and modifications for rural carriers.--
        The Commission or a State shall, upon petition or on 
        its own initiative, waive or modify the requirements of 
        subsection (b) for a rural telephone company or 
        companies, and may waive or modify the requirements of 
        subsection (b) for local exchange carriers with fewer 
        than 2 percent of the Nation's subscriber lines 
        installed in the aggregate nationwide, to the extent 
        that the Commission or a State determines that such 
        requirements would result in unfair competition, impose 
        a significant adverse economic impact on users of 
        telecommunications services, be technically infeasible, 
        or otherwise not be in the public interest. The 
        Commission or a State shall act upon any petition filed 
        under this paragraph within 180 days of receiving such 
        petition. Pending such action, the Commission or a 
        State may suspend enforcement of the requirement or 
        requirements to which the petition applies with respect 
        to the petitioning carrier or carriers.
  (j) State Requirements.--Nothing in this section precludes a 
State from imposing requirements on a telecommunications 
carrier for intrastate services that are necessary to further 
competition in the provision of telephone exchange service or 
exchange access service, as long as the State's requirements 
are not inconsistent with the Commission's regulations to 
implement this section.
  (k) Access Charge Rules.--Nothing in this section shall 
affect the Commission's interexchange-to-local exchange access 
charge rules for local exchange carriers or interexchange 
carriers in effect on the date of enactment of the 
Telecommunications Act of 1995.
  (d) The Commission may, after full opportunity for hearing, 
in a proceeding upon complaint or upon its own initiative 
without complaint, authorize or require by order any carrier, 
party to such proceeding, to provide itself with adequate 
facilities for the expeditious and efficient performance of its 
service as a common carrier and to extend its line or to 
establish a public office; but no such authorization or order 
shall be made unless the Commission finds, as to such provision 
of facilities, as to such establishment of public offices, or 
as to such extension, that it is reasonably required in the 
interest of public convenience and necessity, or as to such 
extension or facilities that the expense involved therein will 
not impair the ability of the carrier to perform its duty to 
the public. Any carrier which refuses or neglects to comply 
with any order of the Commission made in pursuance of this 
paragraph shall forfeit to the United States $1,200 for each 
day during which such refusal or neglect continues.
SEC. 253. UNIVERSAL SERVICE.

  (a) Universal Service Principles.--The Joint Board and the 
Commission shall base policies for the preservation and 
advancement of universal service on the following principles:
          (1) Quality services are to be provided at just, 
        reasonable, and affordable rates.
          (2) Access to advanced telecommunications and 
        information services should be provided in all regions 
        of the Nation.
          (3) Consumers in rural and high cost areas should 
        have access to telecommunications and information 
        services, including interexchange services, reasonably 
        comparable to those services provided in urban areas.
          (4) Consumers in rural and high cost areas should 
        have access to telecommunications and information 
        services at rates that are reasonably comparable to 
        rates charged for similar services in urban areas.
          (5) Citizens in rural and high cost areas should have 
        access to the benefits of advanced telecommunications 
        and information services for health care, education, 
        economic development, and other public purposes.
          (6) There should be a coordinated Federal-State 
        universal service system to preserve and advance 
        universal service using specific and predictable 
        Federal and State mechanisms administered by 
        independent, non-governmental entities.
          (7) Elementary and secondary schools and classrooms 
        should have access to advanced telecommunications 
        services.
  (b) Definition.--Universal service is an evolving level of 
intrastate and interstate telecommunications services that the 
Commission, based on recommendations from the public, Congress, 
and the Federal-State Joint Board periodically convened under 
section 103 of the Telecommunications Act of 1995, and taking 
into account advances in telecommunications and information 
technologies and services, determines should be provided at 
just, reasonable, and affordable rates to all Americans, 
including those in rural and high-cost areas and those with 
disabilities, to enable them to participate effectively in the 
economic, academic, medical, and democratic processes of the 
Nation. At a minimum, universal service shall include any 
telecommunications services that the Commission determines 
have, through the operation of market choices by customers, 
been subscribed to by a substantial majority of residential 
customers.
  (c) All Telecommunications Providers Contribute.--Every 
telecommunications carrier engaged in intrastate, interstate, 
or foreign communication shall contribute on an equitable and 
nondiscriminatory basis, in a manner that is reasonably 
necessary to preserve and advance universal service. Any other 
provider of telecommunications may be required to contribute to 
the preservation and advancement of universal service, if the 
public interest so requires.
  (d) Enforcement.--In adopting rules to enforce subsection 
(c), the Commission and the States may impose or require 
service obligations, financial or other forms of contributions, 
sharing of equipment and services, discounted rates, or other 
mechanisms.
  (e) State Authority.--A State may adopt regulations to 
implement this section, or to provide for additional 
definitions, mechanisms, and standards to preserve and advance 
universal service within that State, to the extent that such 
regulations do not conflict with the Commission's rules to 
implement this section.
  (f) Eligibility for Universal Service Support.--If the 
Commission adopts rules for the distribution of support 
payments for the preservation and advancement of universal 
service, only telecommunications carriers which are designated 
as essential telecommunications carriers under section 214(d) 
shall be eligible to receive those support payments. The 
support payments shall accurately reflect the amount reasonably 
necessary to preserve and advance universal service.
  (g) Amount of Universal Service Support.--The Commission and 
the States shall base the amount of support payments, if any, 
on the difference between the actual costs of providing 
universal service and the revenues from providing that service. 
The Commission and the States shall have as their goal the need 
to make any universal support explicit and targeted to those 
carriers that serve areas for which support is necessary. A 
carrier that receives any such support shall use that support 
only for the maintenance and upgrading of facilities and 
services for which the support is intended.
  (h) Interexchange Service.--The rates charged by providers of 
interexchange telecommunications service to consumers in rural 
and high cost areas shall be maintained at levels no higher 
than those charged by each such provider to its consumers in 
urban areas.
  (i) Subsidy of Competitive Services Prohibited.--
Telecommunications carriers may not subsidize competitive 
services with revenues from services that are not competitive. 
The Commission, with respect to interstate services, and the 
States, with respect to intrastate services, shall establish 
any necessary cost allocation rules, accounting safeguards, and 
guidelines to ensure that services included in universal 
service bear no more than a reasonable share (and may, in the 
public interest, bear less than a reasonable share or no share) 
of the joint and common costs of facilities used to provide 
those services.
  (j) Effective Date.--This section takes effect on the date of 
enactment of the Telecommunications Act of 1995, except for 
subsections (c), (e), (f), and (g), which take effect one year 
after the date of enactment of that Act.

SEC. 254. REMOVAL OF BARRIERS TO ENTRY.

  (a) In General.--No State or local statute or regulation, or 
other State or local legal requirement, may prohibit or have 
the effect of prohibiting the ability of any entity to provide 
any interstate or intrastate telecommunications services.
  (b) State Regulatory Authority.--Nothing in this section 
shall affect the ability of a State to impose, on a 
competitively neutral basis and consistent with section 253, 
requirements necessary to preserve and advance universal 
service, protect the public safety and welfare, ensure the 
continued quality of telecommunications services, and safeguard 
the rights of consumers.
  (c) Local Government Authority.--Nothing in this section 
affects the authority of a local government to manage the 
public rights-of-way or to require fair and reasonable 
compensation from telecommunications providers, on a 
competitively neutral and nondiscriminatory basis, for use of 
public rights-of-way on a nondiscriminatory basis, if the 
compensation required is publicly disclosed by such government.
  (d) Preemption.--If, after notice and an opportunity for 
public comment, the Commission determines that a State or local 
government has permitted or imposed any statute, regulation, or 
legal requirement that violates or is inconsistent with this 
section, the Commission shall immediately preempt the 
enforcement of such statute, regulation, or legal requirement 
to the extent necessary to correct such violation or 
inconsistency.
  (e) Commercial Mobile Services Providers.--Nothing in this 
section shall affect the application of section 332(c)(3) to 
commercial mobile services providers.
  (b) Provision of Telecommunications Services by a Cable 
Operator._
          (1) Jurisdiction of franchising authority._Section 
        621(b) (47 U.S.C. 541(b)) is amended by adding at the 
        end thereof the following new paragraph:
          (3)(A) To the extent that a cable operator or 
        affiliate thereof is engaged in the provision of 
        telecommunications services--
                  (i) such cable operator or affiliate shall 
                not be required to obtain a franchise under 
                this title; and
                  (ii) the provisions of this title shall not 
                apply to such cable operator or affiliate.
          (B) A franchising authority may not order a cable 
        operator or affiliate thereof to discontinue the 
        provision of a telecommunications service.
          (C) A franchising authority may not require a cable 
        operator to provide any telecommunications service or 
        facilities as a condition of the initial grant of a 
        franchise, franchise renewal, or transfer of a 
        franchise.
          (D) Nothing in this paragraph affects existing 
        Federal or State authority with respect to 
        telecommunications services.

SEC. 255. INTEREXCHANGE TELECOMMUNICATIONS SERVICES.

  (a) In General.--Notwithstanding any restriction or 
obligation imposed before the date of enactment of the 
Telecommunications Act of 1995 under section II(D) of the 
Modification of Final Judgment, a Bell operating company, or 
any subsidiary or affiliate of a Bell operating company, that 
meets the requirements of this section may provide--
          (1) interLATA telecommunications services originating 
        in any region in which it is the dominant provider of 
        wireline telephone exchange service or exchange access 
        service after the Commission determines that it has 
        fully implemented the competitive checklist found in 
        subsection (b)(2) in the area in which it seeks to 
        provide interLATA telecommunications services, in 
        accordance with the provisions of subsection (c);
          (2) interLATA telecommunications services originating 
        in any area where that company is not the dominant 
        provider of wireline telephone exchange service or 
        exchange access service in accordance with the 
        provisions of subsection (d); and
          (3) interLATA services that are incidental services 
        in accordance with the provisions of subsection (e).
  (b) Specific InterLATA Interconnection Requirements.--
          (1) In general.--A Bell operating company may provide 
        interLATA services in accordance with this section only 
        if that company has reached an interconnection 
        agreement under section 251 and that agreement 
        provides, at a minimum, for interconnection that meets 
        the competitive checklist requirements of paragraph 
        (2).
          (2) Competitive checklist.--Interconnection provided 
        by a Bell operating company to other telecommunications 
        carriers under section 251 shall include:
                  (A) Nondiscriminatory access on an unbundled 
                basis to the network functions and services of 
                the Bell operating company's telecommunications 
                network that is at least equal in type, 
                quality, and price to the access the Bell 
                operating company affords to itself or any 
                other entity.
                  (B) The capability to exchange 
                telecommunications between customers of the 
                Bell operating company and the 
                telecommunications carrier seeking 
                interconnection.
                  (C) Nondiscriminatory access to the poles, 
                ducts, conduits, and rights-of-way owned or 
                controlled by the Bell operating company where 
                it has the legal authority to permit such 
                access.
                  (D) Local loop transmission from the central 
                office to the customer's premises, unbundled 
                from local switching or other services.
                  (E) Local transport from the trunk side of a 
                wireline local exchange carrier switch 
                unbundled from switching or other services.
                  (F) Local switching unbundled from transport, 
                local loop transmission, or other services.
                  (G) Nondiscriminatory access to--
                          (i) 911 and E911 services;
                          (ii) directory assistance services to 
                        allow the other carrier's customers to 
                        obtain telephone numbers; and
                          (iii) operator call completion 
                        services.
                  (H) White pages directory listings for 
                customers of the other carrier's telephone 
                exchange service.
                  (I) Until the date by which neutral telephone 
                number administration guidelines, plan, or 
                rules are established, nondiscriminatory access 
                to telephone numbers for assignment to the 
                other carrier's telephone exchange service 
                customers. After that date, compliance with 
                such guidelines, plan, or rules.
                  (J) Nondiscriminatory access to databases and 
                associated signaling, including signaling 
                links, signaling service control points, and 
                signaling service transfer points, necessary 
                for call routing and completion.
                  (K) Until the date by which the Commission 
                determines that final telecommunications number 
                portability is technically feasible and must be 
                made available, interim telecommunications 
                number portability through remote call 
                forwarding, direct inward dialing trunks, or 
                other comparable arrangements, with as little 
                impairment of functioning, quality, 
                reliability, and convenience as possible. After 
                that date, full compliance with final 
                telecommunications number portability.
                  (L) Nondiscriminatory access to whatever 
                services or information may be necessary to 
                allow the requesting carrier to implement local 
                dialing parity in a manner that permits 
                consumers to be able to dial the same number of 
                digits when using any telecommunications 
                carrier providing telephone exchange service or 
                exchange access service.
                  (M) Reciprocal compensation arrangements on a 
                nondiscriminatory basis for the origination and 
                termination of telecommunications.
                  (N) Telecommunications services and network 
                functions provided on an unbundled basis 
                without any conditions or restrictions on the 
                resale or sharing of those services or 
                functions, including both origination and 
                termination of telecommunications services, 
                other than reasonable conditions required by 
                the Commission or a State. For purposes of this 
                subparagraph, it is not an unreasonable 
                condition for the Commission or a State to 
                limit the resale--
                          (i) of services included in the 
                        definition of universal service to a 
                        telecommunications carrier who intends 
                        to resell that service to a category of 
                        customers different from the category 
                        of customers being offered that 
                        universal service by such carrier if 
                        the Commission or State orders a 
                        carrier to provide the same service to 
                        different categories of customers at 
                        different prices necessary to promote 
                        universal service; or
                          (ii) of subsidized universal service 
                        in a manner that allows companies to 
                        charge another carrier rates which 
                        reflect the actual cost of such 
                        services, exclusive of any universal 
                        service support received for providing 
                        such services.
          (3) Joint marketing of local and long distance 
        services.--Until a Bell operating company is authorized 
        to provide interLATA services in a telephone exchange 
        area, a telecommunications carrier may not jointly 
        market telephone exchange service or exchange access 
        service purchased from such company with interexchange 
        services offered by that telecommunications carrier.
          (4) Commission may not expand competitive 
        checklist.--The Commission may not, by rule or 
        otherwise, limit or extend the terms used in the 
        competitive checklist.
  (c) In-Region Services.--
          (1) Application.--Upon the enactment of the 
        Telecommunications Act of 1995, a Bell operating 
        company or its subsidiary or affiliate may apply to the 
        Commission for authorization notwithstanding the 
        Modification of Final Judgment to provide interLATA 
        telecommunications service originating in any area 
        where such Bell operating company is the dominant 
        provider of wireline telephone exchange service or 
        exchange access service. The application shall describe 
        with particularity the nature and scope of the activity 
        and of each product market or service market, and each 
        geographic market for which authorization is sought.
          (2) Determination by commission.--
                  (A) Determination.--Not later than 90 days 
                after receiving an application under paragraph 
                (1), the Commission shall issue a written 
                determination, on the record after a hearing 
                and opportunity for comment, granting or 
                denying the application in whole or in part. 
                Before making any determination under this 
                subparagraph, the Commission shall consult with 
                the Attorney General regarding the application. 
                In consulting with the Commission under this 
                subparagraph, the Attorney General may apply 
                any appropriate standard.
                  (B) Approval.--The Commission may only 
                approve the authorization requested in an 
                application submitted under paragraph (1) if it 
                finds that--
                          (i) the petitioning Bell operating 
                        company has fully implemented the 
                        competitive checklist found in 
                        subsection (b)(2); and
                          (ii) the requested authority will be 
                        carried out in accordance with the 
                        requirements of section 252,
                and if the Commission determines that the 
                requested authorization is consistent with the 
                public interest, convenience, and necessity. If 
                the Commission does not approve an application 
                under this subparagraph, it shall state the 
                basis for its denial of the application.
          (3) Publication.--Not later than 10 days after 
        issuing a determination under paragraph (2), the 
        Commission shall publish in the Federal Register a 
        brief description of the determination.
          (4) Judicial review.--
                  (A) Commencement of action.--Not later than 
                45 days after a determination by the Commission 
                is published under paragraph (3), the Bell 
                operating company or its subsidiary or 
                affiliate that applied to the Commission under 
                paragraph (1), or any person who would be 
                threatened with loss or damage as a result of 
                the determination regarding such company's 
                engaging in the activity described in its 
                application, may commence an action in any 
                United States Court of Appeals against the 
                Commission for judicial review of the 
                determination regarding the application.
                  (B) Judgment.--
                          (i) The Court shall enter a judgment 
                        after reviewing the determination in 
                        accordance with section 706 of title 5 
                        of the United State Code.
                          (ii) A judgment--
                                  (I) affirming any part of the 
                                determination that approves 
                                granting all or part of the 
                                requested authorization, or
                                  (II) reversing any part of 
                                the determination that denies 
                                all or part of the requested 
                                authorization,
                        shall describe with particularity the 
                        nature and scope of the activity, and 
                        of each product market or service 
                        market, and each geographic market, to 
                        which the affirmance or reversal 
                        applies.
          (5) Requirements relating to separate subsidiary; 
        safeguards; and intraLATA toll dialing parity.--
                  (A) Separate subsidiary; safeguards.--Other 
                than interLATA services authorized by an order 
                entered by the United States District Court for 
                the District of Columbia pursuant to the 
                Modification of Final Judgment before the date 
                of enactment of the Telecommunications Act of 
                1995, a Bell operating company, or any 
                subsidiary or affiliate of such a company, 
                providing interLATA services authorized under 
                this subsection may provide such interLATA 
                services in that market only in accordance with 
                the requirements of section 252.
                  (B) IntraLATA toll dialing parity.--
                          (i) A Bell operating company granted 
                        authority to provide interLATA services 
                        under this subsection shall provide 
                        intraLATA toll dialing parity 
                        throughout that market coincident with 
                        its exercise of that authority. If the 
                        Commission finds that such a Bell 
                        operating company has provided 
                        interLATA service authorized under this 
                        clause before its implementation of 
                        intraLATA toll dialing parity 
                        throughout that market, or fails to 
                        maintain intraLATA toll dialing parity 
                        throughout that market, the Commission, 
                        except in cases of inadvertent 
                        interruptions or other events beyond 
                        the control of the Bell operating 
                        company, shall suspend the authority to 
                        provide interLATA service for that 
                        market until the Commission determines 
                        that intraLATA toll dialing parity is 
                        implemented or reinstated.
                          (ii) A State may not order the 
                        implementation of toll dialing parity 
                        in an intraLATA area before a Bell 
                        operating company has been granted 
                        authority under this subsection to 
                        provide interLATA services in that 
                        area.
  (d) Out-of-Region Services.--A Bell operating company or its 
subsidiary or affiliate may provide interLATA 
telecommunications services originating in any area where such 
company is not the dominant provider of wireline telephone 
exchange service or exchange access service upon the date of 
enactment of the Telecommunications Act of 1995.
  (e) Incidental Services.--
          (1) In general.--A Bell operating company may provide 
        interLATA services that are incidental to the purposes 
        of--
                  (A)(i) providing audio programming, video 
                programming, or other programming services to 
                subscribers of such company,
                  (ii) providing the capability for interaction 
                by such subscribers to select or respond to 
                such audio programming, video programming, or 
                other programming services, to order, or 
                control transmission of the programming, 
                polling or balloting, and ordering other goods 
                or services, or
                  (iii) providing to distributors audio 
                programming or video programming that such 
                company owns, controls, or is licensed by the 
                copyright owner of such programming, or by an 
                assignee of such owner, to distribute,
                  (B) providing a telecommunications service, 
                using the transmission facilities of a cable 
                system that is an affiliate of such company, 
                between LATAs within a cable system franchise 
                area in which such company is not, on the date 
                of enactment of the Telecommunications Act of 
                1995, a provider of wireline telephone exchange 
                service,
                  (C) providing a commercial mobile service 
                except where such service is a replacement for 
                land line telephone exchange service for a 
                substantial portion of the land line telephone 
                exchange service in a State in accordance with 
                section 332(c) of this Act and with the 
                regulations prescribed by the Commission,
                  (D) providing a service that permits a 
                customer that is located in one LATA to 
                retrieve stored information from, or file 
                information for storage in, information storage 
                facilities of such company that are located in 
                another LATA area, so long as the customer acts 
                affirmatively to initiate the storage or 
                retrieval of information, except that--
                          (i) such service shall not cover any 
                        service that establishes a direct 
                        connection between end users or any 
                        real-time voice and data transmission,
                          (ii) such service shall not include 
                        voice, data, or facsimile distribution 
                        services in which the Bell operating 
                        company or affiliate forwards customer-
                        supplied information to customer- or 
                        carrier-selected recipients;
                          (iii) such service shall not include 
                        any service in which the Bell operating 
                        company or affiliate searches for and 
                        connects with the intended recipient of 
                        information, or any service in which 
                        the Bell operating company or affiliate 
                        automatically forwards stored voicemail 
                        or other information to the intended 
                        recipient; and
                          (iv) customers of such service shall 
                        not be billed a separate charge for the 
                        interLATA telecommunications furnished 
                        in conjunction with the provision of 
                        such service;
                  (E) providing signaling information used in 
                connection with the provision of telephone 
                exchange service or exchange access service to 
                another local exchange carrier; or
                  (F) providing network control signaling 
                information to, and receiving such signaling 
                information from, interexchange carriers at any 
                location within the area in which such company 
                provides telephone exchange service or exchange 
                access service.
          (2) Limitations.--The provisions of paragraph (1) are 
        intended to be narrowly construed. The transmission 
        facilities used by a Bell operating company or 
        affiliate thereof to provide interLATA 
        telecommunications under subparagraphs (C) and (D) of 
        paragraph (1) shall be leased by that company from 
        unaffiliated entities on terms and conditions 
        (including price) no more favorable than those 
        available to the competitors of that company until that 
        Bell operating company receives authority to provide 
        interLATA services under subsection (c). The interLATA 
        services provided under paragraph (1)(A) are limited to 
        those interLATA transmissions incidental to the 
        provision by a Bell operating company or its affiliate 
        of video, audio, and other programming services that 
        the company or its affiliate is engaged in providing to 
        the public. A Bell operating company may not provide 
        telecommunications services not described in paragraph 
        (1) without receiving the approvals required by 
        subsection (c). The provision of services authorized 
        under this subsection by a Bell operating company or 
        its affiliate shall not adversely affect telephone 
        exchange ratepayers or competition in any 
        telecommunications market.
  (f) Definitions.--As used in this section--
          (1) LATA.--The term ``LATA'' means a local access and 
        transport area as defined in United States v. Western 
        Electric Co., 569 F. Supp. 990 (United States District 
        Court, District of Columbia) and subsequent judicial 
        orders relating thereto.
          (2) Audio programming services.--The term ``audio 
        programming services'' means programming provided by, 
        or generally considered to be comparable to programming 
        provided by, a radio broadcast station.
          (3) Video programming services; other programming 
        services.--The terms ``video programming service'' and 
        ``other programming services'' have the same meanings 
        as such terms have under section 602 of this Act.

SEC. 256. REGULATION OF MANUFACTURING BY BELL OPERATING COMPANIES.

  (a) Authorization.--
          (1) In general.--Notwithstanding any restriction or 
        obligation imposed before the date of enactment of the 
        Telecommunications Act of 1995 pursuant to the 
        Modification of Final Judgment on the lines of business 
        in which a Bell operating company may engage, if the 
        Commission authorizes a Bell operating company to 
        provide interLATA services under section 255, then that 
        company may be authorized by the Commission to 
        manufacture and provide telecommunications equipment, 
        and to manufacture customer premises equipment, at any 
        time after that determination is made, subject to the 
        requirements of this section and the regulations 
        prescribed thereunder.
          (2) Certain research and design arrangements; royalty 
        agreements.--Upon the enactment of the 
        Telecommunications Act of 1995, a Bell operating 
        company may--
                  (A) engage in research and design activities 
                related to manufacturing, and
                  (B) enter into royalty agreements with 
                manufacturers of telecommunications equipment.
    (b) Separate Subsidiary; Safeguards.--Any manufacturing or 
provision of equipment authorized under subsection (a) shall be 
conducted in accordance with the requirements of section 252.
    (c) Protection of Small Telephone Company Interests.--
          (1) Equipment to be made available to others.--A 
        manufacturing subsidiary of a Bell operating company 
        shall make available, without discrimination or self-
        preference as to price, delivery, terms, or conditions, 
        to all local exchange carriers, for use with the public 
        telecommunications network, any telecommunications 
        equipment, including software integral to such 
        telecommunications equipment, including upgrades, 
        manufactured by such subsidiary if each such purchasing 
        carrier--
                  (A) does not manufacture telecommunications 
                equipment or have a subsidiary which 
                manufactures telecommunications equipment; or
                  (B) agrees to make available, to the Bell 
                operating company that is the parent of the 
                manufacturing subsidiary or any of the local 
                exchange carrier affiliates of such Bell 
                company, any telecommunications equipment, 
                including software integral to such 
                telecommunications equipment, including 
                upgrades, manufactured for use with the public 
                telecommunications network by such purchasing 
                carrier or by any entity or organization with 
                which such purchasing carrier is affiliated.
          (2) Sales to other local exchange carriers.--
                  (A) A Bell operating company and any entity 
                acting on its behalf shall make procurement 
                decisions and award all supply contracts for 
                equipment, services, and software on the basis 
                of open, competitive bidding, and an objective 
                assessment of price, quality, delivery, and 
                other commercial factors.
                  (B) A Bell operating company and any entity 
                it owns or otherwise controls shall permit any 
                person to participate fully on a non-
                discriminatory basis in the process of 
                establishing standards and certifying equipment 
                used in or interconnected to the public 
                telecommunications network.
                  (C) A manufacturing subsidiary of a Bell 
                operating company may not restrict sales to any 
                local exchange carrier of telecommunications 
                equipment, including software integral to the 
                operation of such equipment and related 
                upgrades.
                  (D) A Bell operating company and any entity 
                it owns or otherwise controls shall protect the 
                proprietary information submitted with contract 
                bids and in the standards and certification 
                processes from release not specifically 
                authorized by the owner of such information.
    (d) Collaboration with Other Manufacturers.--A Bell 
operating company and its subsidiaries or affiliates may engage 
in close collaboration with any manufacturer of customer 
premises equipment or telecommunications equipment not 
affiliated with a Bell operating company during the design and 
development of hardware, software, or combinations thereof 
relating to such equipment.
    (e) Additional Rules and Regulations.--The Commission may 
prescribe such additional rules and regulations as the 
Commission determines are necessary to carry out the provisions 
of this section.
    (f) Administration and Enforcement.--
          (1) Commission authority.--For the purposes of 
        administering and enforcing the provisions of this 
        section and the regulations prescribed under this 
        section, the Commission shall have the same authority, 
        power, and functions with respect to any Bell operating 
        company as the Commission has in administering and 
        enforcing the provisions of this title with respect to 
        any common carrier subject to this Act.
          (2) Civil actions by injured carriers.--Any local 
        exchange carrier injured by an act or omission of a 
        Bell operating company or its manufacturing subsidiary 
        or affiliate which violates the requirements of 
        paragraph (1) or (2) of subsection (c), or the 
        Commission's regulations implementing such paragraphs, 
        may initiate an action in a district court of the 
        United States to recover the full amount of damages 
        sustained in consequence of any such violation and 
        obtain such orders from the court as are necessary to 
        terminate existing violations and to prevent future 
        violations; or such local exchange carrier may seek 
        relief from the Commission pursuant to sections 206 
        through 209.
    (g) Application to Bell Communications Research.--Nothing 
in this section--
          (1) provides any authority for Bell Communications 
        Research, or any successor entity, to manufacture or 
        provide telecommunications equipment or to manufacture 
        customer premises equipment; or
          (2) prohibits Bell Communications Research, or any 
        successor entity, from engaging in any activity in 
        which it is lawfully engaged on the date of enactment 
        of the Telecommunications Act of 1995, including 
        providing a centralized organization for the provision 
        of engineering, administrative, and other services 
        (including serving as a single point of contact for 
        coordination of the Bell operating companies to meet 
        national security and emergency preparedness 
        requirements).
    (h) Definitions.--As used in this section--
          (1) The term ``customer premises equipment'' means 
        equipment employed on the premises of a person (other 
        than a carrier) to originate, route, or terminate 
        telecommunications.
          (2) The term ``manufacturing'' has the same meaning 
        as such term has in the Modification of Final Judgment.
          (3) The term ``telecommunications equipment'' means 
        equipment, other than customer premises equipment, used 
        by a carrier to provide telecommunications services.

SEC. 257. ENFORCEMENT.

    (a) In General.--In addition to any penalty, fine, or other 
enforcement remedy under this Act, the failure by a 
telecommunications carrier to implement the requirements of 
section 251 or 255, including a failure to comply with the 
terms of an interconnection agreement approved under section 
251, is punishable by a civil penalty of not to exceed 
$1,000,000 per offense. Each day of a continuing offense shall 
be treated as a separate violation for purposes of levying any 
penalty under this subsection.
    (b) Noncompliance with Interconnection or Separate 
Subsidiary Requirements.--
          (1) A Bell operating company that repeatedly, 
        knowingly, and without reasonable cause fails to 
        implement an interconnection agreement approved under 
        section 251, to comply with the requirements of such 
        agreement after implementing them, or to comply with 
        the separate subsidiary requirements of this part may 
        be fined up to $500,000,000 by a district court of the 
        United States of competent jurisdiction.
          (2) A Bell operating company that repeatedly, 
        knowingly, and without reasonable cause fails to meet 
        its obligations under section 255 for the provision of 
        interLATA service may have its authority to provide any 
        service the right to provide which is conditioned upon 
        meeting such obligations suspended.
    (c) Enforcement by Private Right of Action.--
          (1) Damages.--Any person who is injured in its 
        business or property by reason of a violation of this 
        section may bring a civil action in any district court 
        of the United States in the district in which the 
        defendant resides or is found or has an agent, without 
        respect to the amount in controversy.
          (2) Interest.--The court may award under this 
        section, pursuant to a motion by such person promptly 
        made, simple interest on actual damages for the period 
        beginning on the date of service of such person's 
        pleading setting forth a claim under this title and 
        ending on the date of judgment, or for any shorter 
        period therein, if the court finds that the award of 
        such interest for such period is just in the 
        circumstances.

SEC. 258. REGULATION OF ENTRY INTO ALARM MONITORING SERVICES.

    (a) In General.--Except as provided in this section, a Bell 
operating company, or any subsidiary or affiliate of that 
company, may not provide alarm monitoring services for the 
protection of life, safety, or property. A Bell operating 
company may transport alarm monitoring service signals on a 
common carrier basis only.
    (b) Authority To Provide Alarm Monitoring Services.--
Beginning 3 years after the date of enactment of the 
Telecommunications Act of 1995, a Bell operating company may 
provide alarm monitoring services for the protection of life, 
safety, or property if it has been authorized to provide 
interLATA services under section 255 unless the Commission 
finds that the provision of alarm monitoring services by such 
company is not in the public interest. The Commission may not 
find that provision of alarm monitoring services by a Bell 
operating company is in the public interest until it finds that 
it has the capability effectively to enforce any requirements, 
limitations, or conditions that may be placed upon a Bell 
operating company in the provision of alarm monitoring 
services, including the regulations prescribed under subsection 
(c).
    (c) Regulations Required.--
          (1) Not later than 1 year after the date of enactment 
        of the Telecommunications Act of 1995, the Commission 
        shall prescribe regulations--
                  (A) to establish such requirements, 
                limitations, or conditions as are--
                          (i) necessary and appropriate in the 
                        public interest with respect to the 
                        provision of alarm monitoring services 
                        by Bell operating companies and their 
                        subsidiaries and affiliates, and
                          (ii) effective at such time as a Bell 
                        operating company or any of its 
                        subsidiaries or affiliates is 
                        authorized to provide alarm monitoring 
                        services; and
                  (B) to establish procedures for the receipt 
                and review of complaints concerning violations 
                by such companies of such regulations, or of 
                any other provision of this Act or the 
                regulations thereunder, that result in material 
                financial harm to a provider of alarm 
                monitoring services.
          (2) A Bell operating company, its subsidiaries and 
        affiliates, and any local exchange carrier are 
        prohibited from recording or using in any fashion the 
        occurrence or contents of calls received by providers 
        of alarm monitoring services for the purposes of 
        marketing such services on behalf of the Bell operating 
        company, any of its subsidiaries or affiliates, the 
        local exchange carrier, or any other entity. Any 
        regulations necessary to enforce this paragraph shall 
        be issued initially within 6 months after the date of 
        enactment of the Telecommunications Act of 1995.
    (d) Expedited Consideration of Complaints.--The procedures 
established under subsection (c) shall ensure that the 
Commission will make a final determination with respect to any 
complaint described in such subsection within 120 days after 
receipt of the complaint. If the complaint contains an 
appropriate showing that the alleged violation occurred, as 
determined by the Commission in accordance with such 
regulations, the Commission shall, within 60 days after receipt 
of the complaint, issue a cease and desist order to prevent the 
Bell operating company and its subsidiaries and affiliates from 
continuing to engage in such violation pending such final 
determination.
    (e) Remedies.--The Commission may use any remedy available 
under title V of this Act to terminate and punish violations 
described in subsection (c). Such remedies may include, if the 
Commission determines that such violation was willful or 
repeated, ordering the Bell operating company or its subsidiary 
or affiliate to cease offering alarm monitoring services.
    (f) Savings Provision.--Subsections (a) and (b) do not 
prohibit or limit the provision of alarm monitoring services by 
a Bell operating company that was engaged in providing those 
services as of December 31, 1994, to the extent that such 
company--
          (1) continues to provide those services through the 
        subsidiary or affiliate through which it was providing 
        them on that date; and
          (2) does not acquire, directly or indirectly, an 
        equity interest in another entity engaged in providing 
        alarm monitoring services, and does not acquire, or 
        enter into an agreement to provide, the alarm 
        monitoring service activities of another entity.
    (g) Alarm Monitoring Services Defined.--As used in this 
section, the term ``alarm monitoring services'' means services 
that detect threats to life, safety, or property by burglary, 
fire, vandalism, bodily injury, or other emergency through the 
use of devices that transmit signals to a central point in a 
customer's residence, place of business, or other fixed 
premises which--
          (1) retransmits such signals to a remote monitoring 
        center by means of telecommunications facilities of the 
        Bell operating company and any subsidiary or affiliate; 
        and
          (2) serves to alert persons at the monitoring center 
        of the need to inform customers, other persons, or 
        police, fire, rescue, or other security or public 
        safety personnel of the threat at such premises.
Such term does not include medical monitoring devices attached 
to individuals for the automatic surveillance of ongoing 
medical conditions.
SEC. 259. REGULATORY REFORM.

    (a) Biennial Review of Regulations.--In every odd-numbered 
year (beginning with 1997), the Commission, with respect to its 
regulations under this Act, and a Federal-State Joint Board 
established under section 410, for State regulations--
          (1) shall review all regulations issued under this 
        Act, or under State law, in effect at the time of the 
        review that apply to operations or activities of 
        providers of any telecommunications services; and
          (2) shall determine whether any such regulation is no 
        longer necessary in the public interest as the result 
        of meaningful economic competition between the 
        providers of such service.
    (b) Effect of Determination.--The Commission shall repeal 
any regulation it determines to be no longer necessary in the 
public interest. The Joint Board shall notify the Governor of 
any State of any State regulation it determines to be no longer 
necessary in the public interest.

SEC. 260. COMPETITION IN PROVISION OF TELECOMMUNICATIONS SERVICE.

    (a) Regulatory Flexibility.--The Commission may forbear 
from applying any regulation or any provision of this Act to a 
telecommunications carrier or service, or class of carriers or 
services, in any or some of its or their geographic markets if 
the Commission determines that--
          (1) enforcement of such regulation or provision is 
        not necessary to ensure that the charges, practices, 
        classifications, or regulations by, for, or in 
        connection with that carrier or service are just and 
        reasonable and are not unjustly or unreasonably 
        discriminatory;
          (2) enforcement of such regulation or provision is 
        not necessary for the protection of consumers; and
          (3) forbearance from applying such regulation or 
        provision is consistent with the public interest.
    (b) Competitive Effect To Be Weighed.--In making the 
determination under subsection (a)(3), the Commission shall 
consider whether forbearance from enforcing the regulation or 
provision will promote competitive market conditions, including 
the extent to which such forbearance will enhance competition 
among providers of telecommunications services. If the 
Commission determines that such forbearance will promote 
competition among providers of telecommunications services, 
that determination may be the basis for a Commission finding 
that forbearance is in the public interest.
    (c) Limitation.--Except as provided in section 251(i)(3), 
the Commission may not waive the unbundling requirements of 
section 251(b) or 255(b)(2) under subsection (a) until it 
determines that those requirements have been fully implemented.

SEC. 261. TELECOMMUNICATIONS NUMBERING ADMINISTRATION.

    (a) Interim Number Portability.--In connection with any 
interconnection agreement reached under section 251 of this 
Act, a local exchange carrier shall make available interim 
telecommunications number portability, upon request, beginning 
on the date of enactment of the Telecommunications Act of 1995.
    (b) Final Number Portability.--In connection with any 
interconnection agreement reached under section 251 of this 
Act, a local exchange carrier shall make available final 
telecommunications number portability, upon request, when the 
Commission determines that final telecommunications number 
portability is technically feasible.
    (c) Neutral Administration of Numbering Plans.--
          (1) Nationwide neutral number system compliance.-- A 
        telecommunications carrier providing telephone exchange 
        service shall comply with the guidelines, plan, or 
        rules established by an impartial entity designated by 
        the Commission for the administration of a nationwide 
        neutral number system.
          (2) Overlay of area codes not permitted.--All 
        telecommunications carriers providing telephone 
        exchange service in the same telephone service area 
        shall be assigned the same numbering plan area code 
        under such guideline, plan, or rules.
    (d) Costs.--The cost of establishing neutral number 
administration arrangements and number portability shall be 
borne by all telecommunications carriers on a competitively 
neutral basis.

SEC. 262. ACCESS BY PERSONS WITH DISABILITIES.

    (a) Definitions.--As used in this section--
          (1) Disability.--The term ``disability'' has the 
        meaning given to it by section 3(2)(A) of the Americans 
        with Disabilities Act of 1990 (42 U.S.C. 12102(2)(A)).
          (2) Readily achievable.--The term ``readily 
        achievable'' has the meaning given to it by section 
        301(9) of that Act (42 U.S.C. 12181(9)).
    (b) Manufacturing.--A manufacturer of telecommunications 
equipment and customer premises equipment shall ensure that the 
equipment is designed, developed, and fabricated to be 
accessible to and usable by individuals with disabilities, if 
readily achievable.
    (c) Telecommunications Services.--A provider of 
telecommunications service shall ensure that the service is 
accessible to and usable by individuals with disabilities, if 
readily achievable.
    (d) Compatibility.--Whenever the requirements of 
subsections (b) and (c) are not readily achievable, such a 
manufacturer or provider shall ensure that the equipment or 
service is compatible with existing peripheral devices or 
specialized customer premises equipment commonly used by 
individuals with disabilities to achieve access, if readily 
achievable.
    (e) Standards.--Within 1 year after the date of enactment 
of the Telecommunications Act of 1995, the Architectural and 
Transportation Barriers Compliance Board described in section 
504 of the Americans with Disabilities Act of 1990 (42 U.S.C. 
12204) shall develop standards for accessibility of 
telecommunications equipment, customer premises equipment, and 
telecommunications services, in conjunction with the National 
Telecommunications and Information Administration and the 
National Institute of Standards and Technology. The Board shall 
review and update the standards periodically.
    (f) Closed Captioning.--
          (1) In general.--The Commission shall ensure that--
                  (A) video programming is accessible through 
                closed captions, if readily achievable, except 
                as provided in paragraph (2); and
                  (B) video programming providers or owners 
                maximize the accessibility of video programming 
                previously published or exhibited through the 
                provision of closed captions, if readily 
                achievable, except as provided in paragraph 
                (2).
          (2) Exemptions.--Notwithstanding paragraph (1)--
                  (A) the Commission may exempt programs, 
                classes of programs, locally produced programs, 
                providers, classes of providers, or services 
                for which the Commission has determined that 
                the provision of closed captioning would not be 
                readily achievable to the provider or owner of 
                such programming;
                  (B) a provider of video programming or the 
                owner of any program carried by the provider 
                shall not be obligated to supply closed 
                captions if such action would be inconsistent 
                with a binding contract in effect on the date 
                of enactment of the Telecommunications Act of 
                1995 for the remaining term of that contract 
                (determined without regard to any extension of 
                such term), except that nothing in this 
                subparagraph relieves a video programming 
                provider of its obligation to provide services 
                otherwise required by Federal law; and
                  (C) a provider of video programming or a 
                program owner may petition the Commission for 
                an exemption from the requirements of this 
                section, and the Commission may grant such a 
                petition upon a showing that the requirements 
                contained in this section would not be readily 
                achievable.
          (3) Studies.--The Commission shall undertake studies 
        of the current extent (as of the date of enactment of 
        the Telecommunications Act of 1995) of--
                  (A) closed captioning of video programming 
                and of previously published video programming;
                  (B) providers of video programming;
                  (C) the cost and market for closed 
                captioning;
                  (D) strategies to improve competition and 
                innovation in the provision of closed 
                captioning; and
                  (E) such other matters as the Commission 
                considers relevant.
    (g) Regulations.--The Commission shall, not later than 18 
months after the date of enactment of the Telecommunications 
Act of 1995, prescribe regulations to implement this section. 
The regulations shall be consistent with the standards 
developed by the Architectural and Transportation Barriers 
Compliance Board in accordance with subsection (e).
    (h) Enforcement.--The Commission shall enforce this 
section. The Commission shall resolve, by final order, a 
complaint alleging a violation of this section within 180 days 
after the date on which the complaint is filed with the 
Commission.

SEC. 263. RURAL MARKETS.

    (a) State Authority in Rural Markets.--Except as provided 
in section 251(i)(3), a State may not waive or modify any 
requirements of section 251, but may adopt statutes or 
regulations that are no more restrictive than--
          (1) to require an enforceable commitment by each 
        competing provider of telecommunications service to 
        offer universal service comparable to that offered by 
        the rural telephone company currently providing service 
        in that service area, and to make such service 
        available within 24 months of the approval date to all 
        consumers throughout that service area on a common 
        carrier basis, either using the applicant's facilities 
        or through its own facilities and resale of services 
        using another carrier's facilities (including the 
        facilities of the rural telephone company), and subject 
        to the same terms, conditions, and rate structure 
        requirements as those applicable to the rural telephone 
        company currently providing universal service;
          (2) to require that the State must approve an 
        application by a competing telecommunications carrier 
        to provide services in a market served by a rural 
        telephone company and that approval be based on 
        sufficient written public findings and conclusions to 
        demonstrate that such approval is in the public 
        interest and that there will not be a significant 
        adverse impact on users of telecommunications services 
        or on the provision of universal service;
          (3) to encourage the development and deployment of 
        advanced telecommunications and information 
        infrastructure and services in rural areas; or
          (4) to protect the public safety and welfare, ensure 
        the continued quality of telecommunications and 
        information services, or safeguard the rights of 
        consumers.
    (b) Preemption.--Upon a proper showing, the Commission may 
preempt any State statute or regulation that the Commission 
finds to be inconsistent with the Commission's regulations 
implementing this section, or an arbitrary or unreasonably 
discriminatory application of such statute or regulation. The 
Commission shall act upon any bona fide petition filed under 
this subsection within 180 days of receiving such petition. 
Pending such action, the Commission may, in the public 
interest, suspend or modify application of any statute or 
regulation to which the petition applies.

SEC. 264. TELECOMMUNICATIONS SERVICES FOR CERTAIN PROVIDERS.

    (a) In General.--
          (1) Health care providers for rural areas.--A 
        telecommunications carrier designated as an essential 
        telecommunications carrier under section 214(d) shall, 
        upon receiving a bona fide request, provide 
        telecommunications services which are necessary for the 
        provisoin of health service, including instruction 
        relating to such service, at rates that are reasonably 
        comparable to rates charged for similar services in 
        urban areas to any public or nonprofit health care 
        provider that provides services to persons who reside 
        in rural areas.
          (2) Educational providers and libraries.--Any 
        telecommunications carrier shall, upon receiving a bona 
        fide request, provide universal service (as defined 
        under section 253) at rates that are affordable and not 
        higher than the incremental cost thereof to elementary 
        schools, secondary schools, and libraries for 
        telecommunications services that permit such schools 
        and libraries to provide or receive educational 
        services.
    (b) Support Payments.--If the Commission adopts rules for 
the distribution of support payments for the preservation and 
advancement of universal service, the Commission shall include 
the amount of the support payments reasonably necessary to 
provide universal service (including any costs related to the 
provision of comparable rates under subsection (a)(1)) to 
public institutional telecommunications users in any universal 
service support mechanism it may establish under section 253.
    (c) Advanced Services.--The Commission shall establish 
rules--
          (1) to enhance, to the extent technically feasible 
        and economically reasonable, the availability of 
        advanced telecommunications and information services to 
        all public and nonprofit elementary and secondary 
        school classrooms, health care providers, and 
        libraries;
          (2) to ensure that appropriate functional 
        requirements or performance standards, or both, 
        including interoperability standards, are established 
        for telecommunications carriers that connect such 
        public institutional telecommunications users with the 
        public switched network;
          (3) to define the circumstances under which a 
        telecommunications carrier may be required to connect 
        its network to such public institutional 
        telecommunications users; and
          (4) to address other matters as the Commission may 
        determine.
    (d) Definitions.--
          (1) Elementary and secondary schools.--The term 
        ``elementary and secondary schools'' means elementary 
        schools and secondary schools, as defined in paragraphs 
        (14) and (25), respectively, of section 14101 of the 
        Elementary and Secondary Education Act of 1965 (20 
        U.S.C. 8801).
          (2) Universal service.--The Commission may in the 
        public interest provide a separate definition of 
        universal service under section 253(b) for application 
        only to public institutional telecommunications users.
          (3) Health care provider.--The term ``health care 
        provider'' means--
                  (A) Post-secondary educational institutions, 
                teaching hospitals, and medical schools.
                  (B) Community health centers or health 
                centers providing health care to migrants.
                  (C) Local health departments or agencies.
                  (D) Community mental health centers.
                  (E) Not-for-profit hospitals.
                  (F) Rural health clinics.
                  (G) Consortia of health care providers 
                consisting of one or more entities described in 
                subparagraphs (A) through (F).
          (4) Public institutional telecommunications user.--
        The term ``public institutional telecommunications 
        user'' means an elementary or secondary school, a 
        library, or a health care provider, as those terms are 
        defined in this section.

SEC. 265. PROVISION OF PAYPHONE SERVICE AND TELEMESSAGING SERVICE.

    (a) Nondiscrimination Safeguards.--Any Bell operating 
company that provides payphone service or telemessaging 
service--
          (1) shall not subsidize its payphone service or 
        telemessaging service directly or indirectly with 
        revenue from its telephone exchange service or its 
        exchange access service; and
          (2) shall not prefer or discriminate in favor of its 
        payphone service or telemessaging service.
    (b) Definitions.--As used in this section--
          (1) The term ``payphone service'' means the provision 
        of telecommunications service through public or semi-
        public pay telephones, and includes the provision of 
        service to inmates in correctional institutions.
          (2) The term ``telemessaging service'' means voice 
        mail and voice storage and retrieval services, any live 
        operator services used to record, transcribe, or relay 
        messages (other than telecommunications relay 
        services), and any ancillary services offered in 
        combination with these services.
    (c) Regulations.--Not later than 18 months after the date 
of enactment of the Telecommunications Act of 1995, the 
Commission shall complete a rulemaking proceeding to prescribe 
regulations to carry out this section. In that rulemaking 
proceeding, the Commission shall determine whether, in order to 
enforce the requirements of this section, it is appropriate to 
require the Bell operating companies to provide payphone 
service or telemessaging service through a separate subsidiary 
that meets the requirements of section 252.
SEC. 310. LIMITATION ON HOLDING AND TRANSFER OF LICENSES.

    (a) The station license required under this Act shall not 
be granted to or held by any foreign government or the 
representative thereof.
    (b) No broadcast or common carrier or aeronautical en route 
or aeronautical fixed radio station license shall be granted to 
or held by--
          (1) any alien or the representative of any alien;
          (2) any corporation organized under the laws of any 
        foreign government;
          (3) any corporation of which any officer or director 
        is an alien or of which more than one-fifth of the 
        capital stock is owned of record or voted by aliens or 
        their representatives or by a foreign government or 
        representative thereof or by any corporation organized 
        under the laws of a foreign country;
          (4) any corporation directly or indirectly controlled 
        by any other corporation of which any officer or more 
        than one-fourth of the directors are aliens, or of 
        which more than one-fourth of the capital stock is 
        owned of record or voted by aliens, their 
        representatives, or by a foreign government or 
        representative thereof, or by any corporation organized 
        under the laws of a foreign country, if the Commission 
        finds that the public interest will be served by the 
        refusal or revocation of such license.
    (f) Termination of Foreign Ownership Restrictions.--
          (1) Restriction not to apply where reciprocity 
        found.--Subsection (b) shall not apply to any common 
        carrier license held, or for which application is made, 
        after the date of enactment of the Telecommunications 
        Act of 1995 with respect to any alien (or 
        representative thereof), corporation, or foreign 
        government (or representative thereof) if the 
        Commission determines that the foreign country of which 
        such alien is a citizen, in which such corporation is 
        organized, or in which such foreign government is in 
        control provides equivalent market opportunities for 
        common carriers to citizens of the United States (or 
        their representatives), corporations organized in the 
        United States, and the United States Government (or its 
        representative). The determination of whether market 
        opportunities are equivalent shall be made on a market 
        segment specific basis.
          (2) Snapback for Reciprocity Failure.--If the 
        Commission determines that any foreign country with 
        respect to which it has made a determination under 
        paragraph (1) ceases to meet the requirements for that 
        determination, then--
                  (A) subsection (b) shall apply with respect 
                to such aliens, corporations, and government 
                (or their representatives) on the date on which 
                the Commission publishes notice of its 
                determination under this paragraph, and
                  (B) any license held, or application filed, 
                which could not be held or granted under 
                subsection (b) shall be withdrawn, or denied, 
                as the case may be, by the Commission under the 
                provisions of subsection (b).
SEC. 332. MOBILE SERVICES.

    (c) Regulatory Treatment of Mobile Service.--
          (6) Foreign ownership.--The Commission, upon a 
        petition for waiver filed within 6 months after the 
        date of enactment of the Omnibus Budget Reconciliation 
        Act of 1993, may waive the application of section 
        310(b) to any foreign ownership that lawfully existed 
        before May 24, 1993, of any provider of a private land 
        mobile service that will be treated as a common carrier 
        as a result of the enactment of the Omnibus Budget 
        Reconciliation Act of 1993, but only upon the following 
        conditions:
                  (A) The extent of foreign ownership interest 
                shall not be increased above the extent which 
                existed on May 24, 1993.
                  (B) Such waiver shall not permit the 
                subsequent transfer of ownership to any other 
                person in violation of section 310(b).
        This paragraph does not apply to any foreign ownership 
        interest or transfer of ownership to which section 
        310(b) does not apply because of section 310(f).
SEC. 307. ALLOCATION OF FACILITIES; TERM OF LICENSES.

    (c) [No license granted for the operation of a television 
broadcasting station shall be for a longer term than five years 
and no license so granted for any other class of station (other 
than a radio broadcasting station) shall be for a longer term 
than ten years, and any license granted may be revoked as 
hereinafter provided. Each license granted for the operation of 
a radio broadcasting station shall be for a term of not to 
exceed seven years. The term of any license for the operation 
of any auxiliary broadcast station or equipment which can be 
used only in conjunction with a primary radio, television, or 
translator station shall be concurrent with the term of the 
license for such primary radio, television, or translator 
station. Upon the expiration of any license, upon application 
therefor, a renewal of such license may be granted from time to 
time for a term of not to exceed five years in the case of 
television broadcasting licenses, for a term of not to exceed 
seven years in the case of radio broadcasting station licenses, 
and for a term of not to exceed ten years in the case of other 
licenses, if the Commission finds that public interest, 
convenience, and necessity would be served thereby.] No license 
shall be granted for a term longer than 10 years. Upon 
application, a renewal of such license may be granted from time 
to time for a term of not to exceed 10 years, if the Commission 
finds that the public interest, convenience, and necessity 
would be served thereby. In order to expedite action on 
applications for renewal of broadcasting station licenses and 
in order to avoid needless expense to applicants for such 
renewals, the Commission shall not require any such applicant 
to file any information which previously has been furnished to 
the Commission or which is not directly material to the 
considerations that affect the granting or denial of such 
application, but the Commission may require any new or 
additional facts it deems necessary to make its findings. 
Pending any hearing and final decision on such an application 
and the disposition of any petition for rehearing pursuant to 
section 405, the Commission shall continue such license in 
effect. Consistently with the foregoing provisions of this 
subsection, the Commission may by rule prescribe the period or 
periods for which licenses shall be granted and renewed for 
particular classes of stations, but the Commission may not 
adopt or follow any rule which would preclude it, in any case 
involving a station of a particular class, from granting or 
renewing a license for a shorter period than that prescribed 
for stations of such class if, in its judgment, public 
interest, convenience, or necessity would be served by such 
action.

SEC. 309. ACTION UPON APPLICATIONS; FORM OF AND CONDITIONS ATTACHED TO 
                    LICENSES.

    (d)(1) Any party in interest may file with the Commission a 
petition to deny any application (whether as originally filed 
or as amended) to which subsection (b) of this section applies 
at any time prior to the day of Commission grant thereof 
without hearing or the day of formal designation thereof for 
hearing; except that with respect to any classification of 
applications, the Commission from time to time by rule may 
specify a shorter period (no less than thirty days following 
the issuance of public notice by the Commission of the 
acceptance for filing of such application or of any substantial 
amendment thereof), which shorter period shall be reasonably 
related to the time when the applications would normally be 
reached for processing. The petitioner shall serve a copy of 
such petition on the applicant. The petition shall contain 
specific allegations of fact sufficient to show that the 
petitioner is a party in interest and that a grant of the 
application would be prima facie inconsistent with subsection 
[(a).] (a) (or subsection (k) in the case of renewal of any 
broadcast station license). Such allegations of fact shall, 
except for those of which official notice may be taken, be 
supported by affidavit of a person or persons with personal 
knowledge thereof. The applicant shall be given the opportunity 
to file a reply in which allegations of fact or denials thereof 
shall similarly be supported by affidavit.
  (2) If the Commission finds on the basis of the application, 
the pleadings filed, or other matters which it may officially 
notice that there are no substantial and material questions of 
fact and that a grant of the application would be consistent 
with subsection [(a),] (a) (or subsection (k) in the case of 
renewal of any broadcast station license), it shall make the 
grant, deny the petition, and issue a concise statement of the 
reasons for denying the petition, which statement shall dispose 
of all substantial issues raised by the petition. If a 
substantial and material question of fact is presented or if 
the Commission for any reason is unable to find that grant of 
the application would be consistent with subsection [(a),] (a) 
(or subsection (k) in the case of renewal of any broadcast 
station license), it shall proceed as provided in subsection 
(e).
  (k)(1)(A) Notwithstanding subsections (c) and (d), if the 
licensee of a broadcast station submits an application to the 
Commission for renewal of such license, the Commission shall 
grant the application if it finds, after notice and opportunity 
for comment (and a hearing on the record if it finds that there 
are credible allegations of serious violations by the licensee 
of this Act or the Commission's rules or regulations), with 
respect to that station during the preceding term of its 
license, that--
          (i) the station has served the public interest, 
        convenience, and necessity;
          (ii) there have been no serious violations by the 
        licensee of this Act or the rules and regulations of 
        the Commission; and
          (iii) there have been no other violations by the 
        licensee of this Act or the rules and regulations of 
        the Commission which, taken together, would constitute 
        a pattern of abuse.
  (B) If any licensee of a broadcast station fails to meet the 
requirements of this subsection, the Commission may deny the 
application for renewal in accordance with paragraph (2), or 
grant such application on appropriate terms and conditions, 
including renewal for a term less than the maximum otherwise 
permitted.
  (2) If the Commission determines that a licensee has failed 
to meet the requirements specified in paragraph (1)(A) and that 
no mitigating factors justify the imposition of lesser 
sanctions, the Commission shall--
          (A) issue an order denying the renewal application 
        filed by such licensee under section 308; and
          (B) only thereafter accept and consider such 
        applications for a construction permit as may be filed 
        under section 308 specifying the channel or 
        broadcasting facilities of the former licensee.
  (3) In making the determinations specified in paragraphs (1) 
or (2)(A), the Commission shall not consider whether the public 
interest, convenience, and necessity might be served by the 
grant of a license to a person other than the renewal 
applicant.
    Part II--Use of Cable Channels and Cable Ownership Restrictions

SEC. 611. CABLE CHANNELS FOR PUBLIC, EDUCATIONAL, OR GOVERNMENTAL USE.

  (e) Subject to section 624(d), a cable operator shall not 
exercise any editorial control over any public, educational, or 
governmental use of channel capacity provided pursuant to this 
[section.] section, except a cable operator may refuse to 
transmit any public access program or portion of a public 
access program which contains obscenity, indecency, or nudity.

SEC. 612. CABLE CHANNELS FOR COMMERCIAL USE.

  (c)(1) If a person unaffiliated with the cable operator seeks 
to use channel capacity designated pursuant to subsection (b) 
for commercial use, the cable operator shall establish, 
consistent with the purpose of this section and with rules 
prescribed by the Commission under paragraph (4), the price, 
terms, and conditions of such use which are at least sufficient 
to assure that such use will not adversely affect the 
operation, financial condition, or market development of the 
cable system.
  (2) A cable operator shall not exercise any editorial control 
over any video programming provided pursuant to this section, 
or in any other way consider the content of such programming, 
except that [an operator] a cable operator may refuse to 
transmit any leased access program or portion or a leased 
access program which contains obscenity, indecency, or nudity 
may consider such content to the minimum extent necessary to 
establish a reasonable price for the commercial use of 
designated channel capacity by an unaffiliated person.

SEC. 613. OWNERSHIP RESTRICTIONS.

  [(a)(1) It shall be unlawful for any person to be a cable 
operator if such person, directly or through 1 or more 
affiliates, owns or controls, the licensee of a television 
broadcast station and the predicted grade B contour of such 
station covers any portion of the community served by such 
operator's cable system.
  [(2) It shall be unlawful for a cable operator to hold a 
license for multichannel multipoint distribution service, or to 
offer satellite master antenna television service separate and 
apart from any franchised cable service, in any portion of the 
franchise area served by that cable operator's cable system. 
The Commission--
          [(A) shall waive the requirements of this paragraph 
        for all existing multichannel multipoint distribution 
        services and satellite master antenna television 
        services which are owned by a cable operator on the 
        date of enactment of this paragraph; and
          [(B) may waive the requirements of this paragraph to 
        the extent the Commission determines is necessary to 
        ensure that all significant portions of a franchise 
        area are able to obtain video programming.]
  (a) The Commission shall review its ownership rules 
biennially as part of its regulatory reform review under 
section 259.
  [(b)(1) It shall be unlawful for any common carrier, subject 
in whole or in part to title II of this Act, to provide video 
programming directly to subscribers in its telephone service 
area, either directly or indirectly through an affiliate owned 
by, operated by, controlled by, or under common control with 
the common carrier.
  [(2) It shall be unlawful for any common carrier, subject in 
whole or in part to title II of this Act, to provide channels 
of communications or pole, line, conduit space, or other rental 
arrangements, to any entity which is directly or indirectly 
owned by, operated by, controlled by, or under common control 
with such common carrier, if such facilities or arrangements 
are to be used for, or in connection with, the provision of 
video programming directly to subscribers in the telephone 
service area of the common carrier.
  [(3) This subsection shall not apply to any common carrier to 
the extent such carrier provides telephone exchange service in 
any rural area (as defined by the Commission).
  [(4) In those areas where the provision of video programming 
directly to subscribers through a cable system demonstrably 
could not exist except through a cable system owned by, 
operated by, controlled by, or affiliated with the common 
carrier involved, or upon other showing of good cause, the 
Commission may, on petition for waiver, waive the applicability 
of paragraphs (1) and (2) of this subsection. Any such waiver 
shall be made in accordance with section 63.56 of title 47, 
Code of Federal Regulations (as in effect September 20, 1984) 
and shall be granted by the Commission upon a finding that the 
issuance of such waiver is justified by the particlar 
circumstances demonstrated by the petitioner, taking into 
account the policy of this subsection.]
  (b) Video Programming and Cable Services.--
          (1) Distinction between video platform and cable 
        service.--To the extent that any telecommunications 
        carrier carries video programming provided by others, 
        or provides video programming directly to subscribers, 
        through a common carrier video platform, neither the 
        telecommunications carrier nor any video programming 
        provider making use of such platform shall be deemed to 
        be a cable operator providing cable service. To the 
        extent that any telecommunications carrier provides 
        video programming directly to subscribers through a 
        cable system, the carrier shall be deemed to be a cable 
        operator providing cable service.
          (2) Bell operating company activities.--
                  (A) Notwithstanding the provisions of section 
                252, to the extent that a Bell operating 
                company carries or provides video programming 
                over a common carrier video platform, it need 
                not use a separate subsidiary if--
                          (i) the carrier provides facilities, 
                        services, or information to all 
                        programmers on the same terms and 
                        conditions as it provides such 
                        facilities, services, or information to 
                        its own video programming operations, 
                        and
                          (ii) the carrier does not subsidize 
                        its provision of video programming with 
                        revenues from its telecommunications 
                        services.
                  (B) To the extent that a Bell operating 
                company provides cable service as a cable 
                operator, it shall provide such service through 
                a subsidiary that meets the requirements of 
                section 252, and shall meet the requirements of 
                clauses (i) and (ii) of subparagraph (A).
                  (C) Upon a finding by the Commission that the 
                requirement of a separate subsidiary under the 
                preceding subparagraph is no longer necessary 
                to protect consumers, competition, or the 
                public interest, the Commission shall exempt a 
                Bell operating company from that requirement.
          (3) Common carrier video platform.--Nothing in this 
        Act precludes a telecommunications carrier from 
        carrying video programming provided by others directly 
        to subscribers over a common carrier video platform.
          (4) Rates; access.--Notwithstanding paragraph 
        (2)(A)(i), a provider of common carrier video platform 
        services shall provide local broadcast stations, and to 
        those public, educational, and governmental entities 
        required by local franchise authorities to be given 
        access to cable systems operating in the same market as 
        the video platform, with access to the video platform 
        for the transmission of television broadcast 
        programming at rates no higher than the incremental-
        cost-based rates of providing such access. Local 
        broadcast stations shall be entitled to obtain access 
        on the first tier of programming on the video platform.
          (5) Competitive neutrality.--A provider of video 
        programming may be required to pay fees in lieu of 
        franchise fees (as defined in section 622(g)(1)) if the 
        fees--
                  (A) are competitively neutral; and
                  (B) are separately identified in consumer 
                billing.
                  Part III_Franchising and Regulation

SEC. 621. GENERAL FRANCHISE REQUIREMENTS.

  (b)(1) Except to the extent provided in paragraph (2) and 
subsection (f), a cable operator may not provide cable service 
without a franchise.
  (2) Paragraph (1) shall not require any person lawfully 
providing cable service without a franchise on July 1, 1984, to 
obtain a franchise unless the franchising authority so 
requires.
          (3)(A) To the extent that a cable operator or 
        affiliate thereof is engaged in the provision of 
        telecommunications services--
                  (i) such cable operator or affiliate shall 
                not be required to obtain a franchise under 
                this title; and
                  (ii) the provisions of this title shall not 
                apply to such cable operator or affiliate.
          (B) A franchising authority may not order a cable 
        operator or affiliate thereof to discontinue the 
        provision of a telecommunications service.
          (C) A franchising authority may not require a cable 
        operator to provide any telecommunications service or 
        facilities as a condition of the initial grant of a 
        franchise, franchise renewal, or transfer of a 
        franchise.
          (D) Nothing in this paragraph affects existing 
        Federal or State authority with respect to 
        telecommunications services.

SEC. 622. FRANCHISE FEES.

  (a) Subject to the limitation of subsection (b), any cable 
operator may be required under the terms of any franchise to 
pay a franchise fee.
  (b) For any twelve-month period, the franchise fees paid by a 
cable operator with respect to any cable system shall not 
exceed 5 percent of such cable operator's gross revenues 
derived in such period from the operation of the cable 
[system.] system to provide cable services. For purposes of 
this section, the 12-month period shall be the 12-month period 
applicable under the franchise for accounting purposes. Nothing 
in this subsection shall prohibit a franchising authority and a 
cable operator from agreeing that franchise fees which lawfully 
could be collected for any such 12-month period shall be paid 
on a prepaid or deferred basis; except that the sum of the fees 
paid during the term of the franchise may not exceed the 
amount, including the time value of money, which would have 
lawfully been collected if such fees had been paid per annum.

SEC. 623. REGULATION OF RATES.

  (c) Regulation of Unreasonable Rates.--
          (1) Commission regulations.--Within 180 days after 
        the date of enactment of the Cable Television Consumer 
        Protection and Competition Act of 1992, the Commission 
        shall, by regulation, establish the following:
                  (A) criteria prescribed in accordance with 
                paragraph (2) for identifying, in individual 
                cases, rates for cable programming services 
                that are unreasonable;
                  (B) fair and expeditious procedures for the 
                receipt, consideration, and resolution of 
                complaints from any [subscriber,] franchising 
                [authority,] authority or other relevant State 
                or local government entity alleging that a rate 
                for cable programming services charged by a 
                cable operator violates the criteria prescribed 
                under subparagraph (A), which procedures shall 
                include the minimum showing that shall be 
                required for a complaint to obtain Commission 
                consideration and resolution of whether the 
                rate in question is unreasonable; and
                  (C) the procedures to be used to reduce rates 
                for cable programming services that are 
                determined by the Commission to be unreasonable 
                and to refund such portion of the rates or 
                charges that were paid by subscribers after the 
                filing of such complaint and that are 
                determined to be unreasonable.
          [(2) Factors to be considered.--In establishing the 
        criteria for determining in individual cases whether 
        rates for cable programming services are unreasonable 
        under paragraph (1)(A), the Commission shall consider, 
        among other factors--
                  [(A) the rates for similarly situated cable 
                systems offering comparable cable programming 
                services, taking into account similarities in 
                facilities, regulatory and governmental costs, 
                the number of subscribers, and other relevant 
                factors;
                  [(B) the rates for cable systems, if any, 
                that are subject to effective competition;
                  [(C) the history of the rates for cable 
                programming services of the system, including 
                the relationship of such rates to changes in 
                general consumer prices;
                  [(D) the rates, as a whole, for all the cable 
                programming, cable equipment, and cable 
                services provided by the system, other than 
                programming provided on a per channel or per 
                program basis;
                  [(E) capital and operating costs of the cable 
                system, including the quality and costs of the 
                customer service provided by the cable system; 
                and
                  [(F) the revenues (if any) received by a 
                cable operator from advertising from 
                programming that is carried as part of the 
                service for which a rate is being established, 
                and changes in such revenues, or from other 
                consideration obtained in connection with the 
                cable programming services concerned.]
          (2) Standard for unreasonable rates.--The Commission 
        may only consider a rate for cable programming services 
        to be unreasonable if it substantially exceeds the 
        national average rate for comparable cable programming 
        services.
  (l) Definitions.--As used in this section--
          (1) The term ``effective competition'' means that--
                  (A) fewer than 30 percent of the households 
                in the franchise area subscribe to the cable 
                service of a cable system;
                  (B) the franchise area is--
                          (i) served by at least two 
                        unaffiliated multichannel video 
                        programming distributors each of which 
                        offers comparable video programming to 
                        at least 50 percent of the households 
                        in the franchise area; and
                          (ii) the number of households 
                        subscribing to programming services 
                        offered by multichannel video 
                        programming distributors other than the 
                        largest multichannel video programming 
                        distributor exceeds 15 percent of the 
                        households in the franchise [area; or] 
                        area;
                  (C) a multichannel video programming 
                distributor operated by the franchising 
                authority for that franchise area offers video 
                programming to at least 50 percent of the 
                households in that franchise [area.] area; or
                  (D) a local exchange carrier offers video 
                programming services directly to subscribers, 
                either over a common carrier video platform or 
                as a cable operator, in the franchise area of 
                an unaffiliated cable operator which is 
                providing cable service in that franchise area.
SEC. 628. DEVELOPMENT OF COMPETITION AND DIVERSITY IN VIDEO PROGRAMMING 
                    DISTRIBUTION.

  (c) Regulations Required.--
          (1) Proceeding required.--Within 180 days after the 
        date of enactment of this section, the Commission 
        shall, in order to promote the public interest, 
        convenience, and necessity by increasing competition 
        and diversity in the multichannel video programming 
        market and the continuing development of communications 
        technologies, prescribe regulations to specify 
        particular conduct that is prohibited by subsection 
        (b).
          (2) Minimum contents of regulations.--The regulations 
        to be promulgated under this section shall--
                  (A) establish effective safeguards to prevent 
                a cable operator which has an attributable 
                interest in a satellite cable programming 
                vendor or a satellite broadcast programming 
                vendor from unduly or improperly influencing 
                the decision of such vendor to sell, or the 
                prices, terms, and conditions of sale of, 
                satellite cable programming or satellite 
                broadcast programming to any unaffiliated 
                multichannel video programming distributor;
                  (B) prohibit discrimination by a satellite 
                cable programming vendor in which a cable 
                operator has an attributable interest or by a 
                satellite broadcast programming vendor in the 
                prices, terms, and conditions of sale or 
                delivery of satellite cable programming or 
                satellite broadcast programming among or 
                between cable systems, cable operators, or 
                other multichannel video programming 
                distributors, or their agents or buying groups; 
                except that such a satellite cable programming 
                vendor in which a cable operator has an 
                attributable interest or such a satellite 
                broadcast programming vendor shall not be 
                prohibited from--
                          (i) imposing reasonable requirements 
                        for creditworthiness, offering of 
                        service, and financial stability and 
                        standards regarding character and 
                        technical quality;
                          (ii) establishing different prices, 
                        terms, and conditions to take into 
                        account actual and reasonable 
                        differences in the cost of creation, 
                        sale, delivery, or transmission of 
                        satellite cable programming or 
                        satellite broadcast programming;
                          (iii) establishing different prices, 
                        terms, and conditions which take into 
                        account economies of [scale, cost 
                        savings, or other direct and legitimate 
                        economic benefits] scale or cost 
                        savings reasonably attributable to the 
                        number of subscribers served by the 
                        distributor; or
                          (iv) entering into an exclusive 
                        contract that is permitted under 
                        subparagraph (D);
                  (C) prohibit practices, understandings, 
                arrangements, and activities, including 
                exclusive contracts for satellite cable 
                programming or satellite broadcast programming 
                between a cable operator and a satellite cable 
                programming vendor or satellite broadcast 
                programming vendor, that prevent a multichannel 
                video programming distributor from obtaining 
                such programming from any satellite cable 
                programming vendor in which a cable operator 
                has an attributable interest or any satellite 
                broadcast programming vendor in which a cable 
                operator has an attributable interest for 
                distribution to persons in areas not served by 
                a cable operator as of the date of enactment of 
                this section; and
                  (D) with respect to distribution to persons 
                in areas served by a cable operator, prohibit 
                exclusive contracts for satellite cable 
                programming or satellite broadcast programming 
                between a cable operator and a satellite cable 
                programming vendor in which a cable operator 
                has an attributable interest or a satellite 
                broadcast programming vendor in which a cable 
                operator has an attributable interest, unless 
                the Commission determines (in accordance with 
                paragraph (4)) that such contract is in the 
                public interest.

SEC. 639. OBSCENE PROGRAMMING.

  Whoever transmits over any cable system any matter which is 
obscene or otherwise unprotected by the Constitution of the 
United States shall be fined not more than [$10,000] $100,000 
or imprisoned not more than 2 years, or both.
  SEC. 640. SCRAMBLING OF CABLE CHANNELS FOR NONSUBSCRIBERS.

  (a) Requirement.--In providing video programming unsuitable 
for children to any subscriber through a cable system, a cable 
operator shall fully scramble or otherwise fully block the 
video and audio portion of each channel carrying such 
programming upon subscriber request and without any charge so 
that one not a subscriber does not receive it.
  (b) Definition.--As used in this section, the term 
``scramble'' means to rearrange the content of the signal of 
the programming so that the programming cannot be received by 
persons unauthorized to receive the programming.
                      TITLE 18, UNITED STATES CODE

Sec. 1307. Exceptions relating to certain advertisements and other 
                    information and to State-conducted lotteries

  (a) The provisions of sections 1301, 1302, 1303, and 1304 
shall not apply to--
          (2) an advertisement, list of prizes, or other 
        information concerning a lottery conducted by a State 
        acting under the authority of State law which is--
                  (A) conducted by a not-for-profit 
                organization or a governmental organization; 
                [or]
                  (B) conducted as a promotional activity by a 
                commercial organization and is clearly 
                occasional and ancillary to the primary 
                business of that [organization.] organization; 
                or
                  (C) conducted by a commercial organization 
                and is contained in a publication published in 
                a State in which such activities or the 
                publication of such activities are authorized 
                or not otherwise prohibited, or broadcast by a 
                radio or television station licensed in a State 
                in which such activities or the broadcast of 
                such activities are authorized or not otherwise 
                prohibited.

Sec. 1464. Broadcasting obscene language

  Whoever utters any obscene, indecent, or profane language by 
means of radio communication shall be fined not more than 
[$10,000] $100,000 or imprisoned not more than two years, or 
both.

Sec. 2511. Interception and disclosure of wire, oral, or electronic 
                    communications prohibited

  (1) Except as otherwise specifically provided in this 
chapter, any person who--
          (a) intentionally intercepts, endeavors to intercept, 
        or procures any other person to intercept or endeavor 
        to intercept, any [wire, oral, or electronic 
        communication;] wire, oral, electronic, or digital 
        communication;
          (b) intentionally uses, endeavors to use, or procures 
        any other person to use or endeavor to use any 
        electronic, mechanical, or other device to intercept 
        any [oral communication] communication when--
                  (i) such device is affixed to, or otherwise 
                transmits a signal through, a wire, cable, or 
                other like connection used in wire 
                communication; or
                  (ii) such device transmits communications by 
                radio, or interferes with the transmission of 
                such communication; or
                  (iii) such person knows, or has reason to 
                know, that such device or any component thereof 
                has been sent through the mail or transported 
                in interstate or foreign commerce; or
                  (iv) such use or endeavor to use (A) takes 
                place on the premises of any business or other 
                commercial establishment the operations of 
                which affect interstate or foreign commerce; or 
                (B) obtains or is for the purpose of obtaining 
                information relating to the operations of any 
                business or other commercial establishment the 
                operations of which affect interstate or 
                foreign commerce; or
                  (v) such person acts in the District of 
                Columbia, the Commonwealth of Puerto Rico, or 
                any territory or possession of the United 
                States;
          (c) intentionally discloses, or endeavors to 
        disclose, to any other person the contents of any 
        [wire, oral, or electronic communication] wire, oral, 
        electronic, or digital communication in violation of 
        this subsection; or
          (d) intentionally uses, or endeavors to use, the 
        contents of any [wire, oral, or electronic 
        communication,] wire, oral, electronic, or digital 
        communication, knowing or having reason to know that 
        the information was obtained through the interception 
        of a [wire, oral, or electronic communication,] wire, 
        oral, electronic, or digital communication, in 
        violation of this subsection;
shall be punished as provided in subsection (4) or shall be 
subject to suit as provided in subsection (5).
  (2)(a)(i)It shall not be unlawful under this chapter for an 
operator of a switchboard, or an officer, employee, or agent or 
a provider of [wire or electronic communication service,] wire, 
electronic, or digital communication service, whose facilities 
are used in the transmission of a wire communication, to 
intercept, disclose, or use that communication in the normal 
course of his employment while engaged in any activity which is 
a necessary incident to the rendition of his service or to the 
protection of the rights or property of the provider of that 
service, except that a provider of wire communication service 
to the public shall not utilize service observing or random 
monitoring except for mechanical or service quality control 
checks.
  (ii) Notwithstanding any other law, providers of wire or 
electronic communication service, their officers, employees, 
and agents, landlords, custodians, or other persons, are 
authorized to provide information, facilities, or technical 
assistance to persons authorized by law to intercept wire, 
oral, or electronic communications or to conduct electronic 
surveillance, as defined in section 101 of the Foreign 
Intelligence Surveillance Act of 1978 if such provider, its 
officers, employees, or agents, landlord, custodian, or other 
specified person, has been provided with--
          (A) a court order directing such assistance signed by 
        the authorizing judge, or
          (B) a certification in writing by a person specified 
        in section 2581(7) of this title or the Attorney 
        General of the United States that no warrant or court 
        order is required by law, that all statutory 
        requirements have been met, and that the specified 
        assistance is required, setting forth the period of 
        time during which the provision of the information, 
        facilities, or technical assistance is authorized and 
        specifying the information, facilities, or technical 
        assistance required. No provider of [wire or electronic 
        communication service,] wire, electronic, or digital 
        communication service, officer, employee, or agent 
        thereof, or landlord, custodian, or other specified 
        person shall disclose the existence of any interception 
        or surveillance or the device used to accomplish the 
        interception or surveillance with respect to which the 
        person has been furnished an order or certification 
        under this subparagraph, except as may otherwise be 
        required by legal process and then only after prior 
        notification to the Attorney General or to the 
        principal prosecuting attorney of a State or any 
        political subdivision of a State, as may be 
        appropriate. Any such disclosure, shall render such 
        person liable for the civil damages provided for in 
        section 2520. No cause of action shall lie in any court 
        against any provider of [wire or electronic 
        communication service,] wire, electronic, or digital 
        communication service, its officers, employees, or 
        agents, landlord, custodian, or other specified person 
        for providing information, facilities, or assistance in 
        accordance with the terms of a court order or 
        certification under this chapter.