[House Report 106-978]
[From the U.S. Government Publishing Office]
106th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 106-978
======================================================================
TRUTH IN TELEPHONE BILLING ACT OF 2000
_______
October 12, 2000.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Bliley, from the Committee on Commerce, submitted the following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany H.R. 3011]
[Including cost estimate of the Congressional Budget Office]
The Committee on Commerce, to whom was referred the bill
(H.R. 3011) to amend the Communications Act of 1934 to improve
the disclosure of information concerning telephone charges, and
for other purposes, having considered the same, report
favorably thereon with an amendment and recommend that the bill
as amended do pass.
CONTENTS
Page
Amendment........................................................ 2
Purpose and Summary.............................................. 2
Background and Need for Legislation.............................. 3
Hearings......................................................... 4
Committee Consideration.......................................... 4
Committee Votes.................................................. 4
Committee Oversight Findings..................................... 4
Committee on Government Reform Oversight Findings................ 4
New Budget Authority, Entitlement Authority, and Tax Expenditures 4
Committee Cost Estimate.......................................... 5
Congressional Budget Office Estimate............................. 5
Federal Mandates Statement....................................... 6
Advisory Committee Statement..................................... 7
Constitutional Authority Statement............................... 7
Applicability to Legislative Branch.............................. 7
Section-by-Section Analysis of the Legislation................... 7
Changes in Existing Law Made by the Bill, as Reported............ 8
Additional Views................................................. 10
Amendment
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Truth in Telephone Billing Act of
2000''.
SEC. 2. TELEPHONE BILLING PRACTICES.
(a) Amendment.--Section 258 of the Communications Act of 1934 (47
U.S.C. 258) is amended by adding at the end the following new
subsections:
``(c) Truth-in-Billing.--A telecommunications carrier that is
required to contribute to, or that is otherwise assessed for, any
support mechanism under section 254, or any other governmental
mechanism, fund, tax, or program, shall identify on each subscriber's
bill, in simple, plain language (of no more than one line of text per
dollar amount)--
``(1) the identity of the governmental mechanism, fund, tax,
or program to which the contribution or assessment is made, and
the identity of the governmental authority whose rules require
or authorize the contribution or assessment;
``(2) the basis for the contribution or assessment (such as
per subscriber, per line, or percentage of some or all charges
or revenues); and
``(3) as a separate line-item, the dollar amount that is
being attributed to and collected from such subscriber for such
governmental mechanism, fund, tax, or program.
``(d) Prohibition of Excess Charges.--If any telecommunications
carrier that is subject to subsection (c) discloses to its subscribers
under paragraph (3) of such subsection a total dollar amount for any
billing period that exceeds the total dollar amount such carrier
contributes to or is assessed for the applicable governmental
mechanism, fund, tax, or program for such billing period, such carrier
shall be liable for a forfeiture penalty equal to the amount of such
excess, in addition to any other penalties for which the carrier may be
liable under title V. The Commission may, by rule, provide for the
distribution of any forfeiture penalties collected under this
subsection to the affected subscribers.''.
(b) Conforming Amendment.--Section 258 is further amended by striking
the designation and heading of such section and inserting the
following:
``SEC. 258. BILLING PRACTICES.''.
SEC. 3. STUDY REQUIRED.
(a) Study of Subsidy System Required.--The Comptroller General shall
conduct a study of the implicit and explicit subsidies from the
government, taxpayers, and consumers to providers and consumers of
telecommunications services, including subsidies in support of
universal service required by section 254 of the Communications Act of
1934 (47 U.S.C. 254), the systems for the collection and distribution
of support for rural and high cost areas, lifeline services,
connections of schools and libraries to the Internet, and rural health
care services.
(b) Report.--Within one year after the date of enactment of this Act,
the Comptroller General shall submit to the Congress a report on the
results of the study conducted under subsection (a).
Purpose and Summary
The purpose of H.R. 3011 is to provide some accountability
to governmental entities that impose mechanisms, taxes, funds,
fees or charges on telecommunications industry as a way to pay
for related and unrelated programs. The cost for these programs
is often passed on to the consumer in one form or another.
Today, the average consumer's telephone bill is loaded with
these governmental added-on taxes and fees. However, given the
governmental restrictions or unwillingness to explain to
consumers what is included in their telephone bills, consumers
have no idea what additional programs they are paying for and
which government entity imposed the charge.
H.R. 3011 will change this situation. The bill will give
consumers valuable information including which government
entity is sponsoring the tax or fee, what is the governmental
authority for collecting such a tax or fee, and how are
companies collecting the fee or tax from consumers. This
information will be provided on consumers' telephone bills for
open inspection and review by consumers.
Background and Need for Legislation
When measured by total revenue, the telecommunications
services industry has realized exponential growth in recent
decades. The Federal Communications Commission (FCC) recently
reported in its Statistics of Communications Common Carriers
that total telecommunications revenue grew from $153.4 billion
in 1992 to $246.4 billion in 1998. While industry growth has
lead to substantial job creation and technological innovation,
it has also attracted the attention of legislators and
regulators at all levels of government. Policymakers--
particularly those at the State and local level--increasingly
view consumers' telecommunications services as a means of
funding a variety of government programs.
Some taxes are historical and already appear on consumers'
phone bills, such as the three percent Federal excise tax that
was originally enacted in 1897 to fund the Spanish-American
War. But many taxes and assessments are fairly recent and, in
some cases, remain hidden from consumers because carriers
``blend'' the tax into consumers' rates (as opposed to
explicitly itemizing the tax). For example, at the Federal
level, the FCC imposed an ``e-rate'' tax, which the FCC
assesses principally on long distance and wireless carriers'
revenues. These carriers, in turn, recover the tax from
consumers by raising rates by an average of $12 per line, per
year--and in many cases, fail to disclose the tax to consumers.
Meanwhile, telephone taxes abound at the State and local
level. While these taxes vary among localities, many State and
local governments impose their own excise taxes, franchise
fees, rights-of- way charges, gross receipts taxes, license
fees, 911 fees, public utility taxes, infrastructure
maintenance fees, and access line taxes. Moreover, State and
local government taxation is often discriminatory; that is,
State and local governments will typically tax wireless
services differently than wireline services, and will tax
competitive local exchange carriers (CLECs) differently than
incumbent local exchange carriers (ILECs).
The consumer impact of State and local taxation on
telecommunications services is significant. According to a
recent analysis by the Progress and Freedom Foundation (PFF),
State and local governments level approximately 37 different
types of taxes on telecommunications services--many of which
(once again) are passed on to and hidden from consumers. The
PFF found that, on average, 16 percent of consumers' local
monthly service goes towards State and local taxes, and that in
some markets, the total amount of local monthly service that is
attributable to State and local taxes is as high as 35 percent.
It is clear that there exists a lack of information
available to consumer about their telephone bills, especially
relating to the imposition of fees and taxes for governmental
programs. Consumers will benefit from the additional
information and knowledge gained through the passage of H.R.
3011.
Hearings
The Subcommittee on Telecommunications, Trade, and Consumer
Protection held a hearing on H.R. 3011 on March 9, 2000. The
Subcommittee received testimony from: Mr. Kevin Breen, Vice
President of Consumer Operations and Billing, AT&T; Mr. Jeff
Eisenach, President, Progress and Freedom Foundation (PFF); Ms.
Kathy Hotka, Vice President for Information Technology,
National Retail Federation; Mr. Kent Lassman, Deputy Director
of Technology and Communications, Citizens for a Sound Economy
(CSE); Mr. Brian Moir, Partner, Moir & Hardman (on behalf of
the International Communications Association (ICA)); and Mr.
Grover Norquist, President, Americans for Tax Reform (ATR).
Committee Consideration
On September 13, 2000, the Subcommittee on
Telecommunications, Trade, and Consumer Protection met in open
markup session and approved H.R. 3011 for Full Committee
consideration, as amended, by a voice vote. The Full Committee
met in open markup session on October 5, 2000, and ordered H.R.
3011 reported to the House, with an amendment, by a voice vote,
a quorum being present.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto.
There were no record votes taken in connection with ordering
H.R. 3011 reported. A motion by Mr. Bliley to order H.R. 3011
reported to the House, with an amendment, was agreed to by a
voice vote.
The following amendment was agreed to by a voice vote:
An amendment by Mr. Dingell, No. 1, imposing
forfeiture penalties on telecommunications carriers
that disclose to its subscribers amounts higher than
what carriers has been assessed or required to
contribute pursuant to a governmental mechanism, fund,
tax, or program.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee held a legislative
hearing and made findings that are reflected in this report.
Committee on Government Reform Oversight Findings
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, no oversight findings have been
submitted to the Committee by the Committee on Government
Reform.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee finds that H.R.
3011, the Truth in Billing Act of 1999, would result in an
insignificant increase in budget authority, entitlement
authority, or tax expenditures or revenues.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, October 11, 2000.
Hon. Tom Bliley,
Chairman, Committee on Commerce,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3011, the Truth in
Telephone Billing Act of 1999.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Ken Johnson
(for federal costs), Shelley Finlayson (for the impact on state
and local governments), and Paige Piper/Bach (for the impact on
the private sector).
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
H.R. 3011--Truth in Telephone Billing Act of 1999
H.R. 3011 would require telecommunications carriers to
itemize on subscribers' billing statements certain information
about each governmental tax, fee, or payment that is levied by
federal, state, or local governments. The bill also would
require the General Accounting Office (GAO) to complete a study
within one year on the subsidies to providers and consumers of
telecommunications services. In addition, H.R. 3011 would
punish with forfeiture penalties any telecommunications carrier
that pays less in governmental taxes, fees, or payments during
a billing period than it collects from subscribers for these
purposes. The bill also would allow the Federal Communications
Commission (FCC) to redistribute these collections to the
affected subscribers.
Based on information from GAO, CBO estimates that
implementing H.R. 301 would cost GAO about $1 million in 2001,
subject to the availability of appropriated funds, to complete
the required study. Because the bill would create new
forfeiture penalties and direct spending, pay-as-you-go
procedures would apply.
Based on information from the FCC and private-sector
sources. CBO estimates that the additional forfeiture penalties
collected under H.R. 3011 would amount to less than $500,000 a
year. Thus, the provision allowing the FCC to redistribute the
forfeiture penalties back to affected subscribers would cause
an insignificant increase in direct spending.
H.R. 3011 contains intergovernmental mandates as defined in
the Unfunded Mandates Reform Act (UMRA). The bill would require
telecommunications carriers, including those owned by state and
municipal governments, to include certain information on
government assessments on all consumer telephone bills.
According to informal estimates by industry groups, there are
fewer than 10 state or municipally owned telecommunications
carriers. Based on the relatively small number of publicly
owned telecommunications carriers, CBO estimates that the costs
to state and local governments would not be significant and
would not exceed the threshold established by UMRA ($55 million
in 2000, adjusted annually for inflation).
H.R. 3011 also contain private-sector mandates as defined
in UMRA. CBO estimates that the total direct costs of mandates
in the bill would not exceed the threshold for private-sector
mandates established by UMRA ($109 million in 2000, adjusted
annually for inflation).
H.R. 3011 would impose two mandates on telecommunications
carriers. First, the bill would require telecommunications
carriers to include certain information on government
assessments on all consumer telephone bills. The bulk of the
costs to comply with those mandates would be programming time
to include the required information on telephone bills.
According to the FCC statistics, an estimated 1,300 companies
provide local telephone services and 700 companies provide
long-distance telephone services. Each of those companies would
need to modify their computer programs to provide the
additional disclosures on telephone bills. According to some
industry estimates, the cost to make those changes would be in
the range of $15,000 to $20,000 per company. Additional minimal
costs would be required to accommodate the maintenance and
operational costs of administering the changes in the billing
process.
Second, the bill would prohibit telecommunication carriers
from collecting excess charges as government assessments. Any
carrier found in violation would be liable for a penalty in the
amount of the excess and any additional penalties applicable in
current law. Because the systems are already in place to
collect the government assessments, CBO expects the additional
cost to administer the system with such a prohibition would be
small.
The CBO staff contacts for this estimate are Ken Johnson
(for federal costs), Shelley Finlayson (for the impact on state
and local governments), and Paige Piper/Bach (for the impact on
the private sector). This estimate was approved by Peter H.
Fontaine, Deputy Assistant Director for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
Constitutional authority for this legislation is provided in
Article I, section 8, clause 3, which grants Congress the power
to regulate commerce with foreign nations, among the several
States, and with the Indian tribes.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Section-by-Section Analysis of the Legislation
Section 1. Short title
Section 1 provides the short title of the bill, the ``Truth
in Billing Act of 1999.''
Section 2. Telephone billing practices
Section 2(a) adds a new section 258(c) and (d) to the
Communications Act of 1934 (47 U.S.C. Sec. 151 et seq). New
subsection (c) requires each telecommunications carrier to
identify on each subscriber's monthly statement: (1) the
government program for which the carrier is being taxed, and
the government entity imposing the tax; (2) the form in which
the tax is assessed (e.g., per subscriber, per line, percentage
of revenues); and (3) a separate line-item that identifies the
dollar amount of the subscriber's bill that is being used by
the carrier to pay for the government program. Under new
subsection (c), the identification on each subscribers' bill is
required to be in plain language of no more than one line of
text per dollar amount.
New subsection (d) imposes forfeiture penalties on
telecommunications carriers that disclose to its subscribers
pursuant to subsection (a) amounts higher than what carriers
has been assessed or required to contribute pursuant to a
governmental mechanism, fund, tax, or program. This is intended
to prevent carriers from collecting more than they are required
to pay in such mechanisms, fund, tax, or program. The
Commission may, by rule, distribute any forfeiture monies
received to the affected subscribers.
The Committee expects that, in some instances,
telecommunications carriers may be justified in disclosing to
individual subscribers an amount for the assessment of
government-imposed fees that is greater than the specific
assessment by a governmental entity. For example, a carrier may
disclose, and thus collect, a percentage of billed revenues
equal to 8.6 percent for its contribution to the Universal
Service Fund when the actual government assessment for this
purpose is 5.6 percent. This discrepancy is permissible under
new subsection (d), so long as the aggregate amount actually
disclosed to the carrier's subscriber base does not exceed the
aggregate amount actually paid to the governmental entity. For
example, a telecommunications carrier may need to increase the
charge to its customers in order to recover government
assessments that are actually uncollectible from a portion of
its subscribers. Further, a carrier may need to impose a higher
rate if the FCC or the Universal Service Administrative Company
bases its assessment on a carrier's prior year's revenues, and
those revenues are higher than the carrier's actual experience
in the current year. Subsection (d) permits such higher
disclosures so long as it does not exceed the aggregate funds
paid by the carrier to the government for the stated purpose of
any particular governmental program, tax, fee, etc.
Subsection (b) changes the title of section 258 of the
Communications Act of 1934 from ``Illegal Changes in Subscriber
Carrier Selections'' to ``Billing Practices.''
Section 3. Study required
Section (3)(a) requires the General Accounting Office (GAO)
to conduct an in-depth analysis and examination of the implicit
and explicit subsidy mechanisms from government, taxpayers, and
consumers to providers and consumers of telecommunications
services. As part of this study, GAO is required to examine
differing programs contained in the universal service support
mechanisms as required by section 254 of the Communications
Act.
Subsection (b) requires GAO report its findings pursuant to
the study conducted under subsection (a) not later than one
year from date of enactment of H.R. 3011.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, 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
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
SECTION 258 OF THE COMMUNICATIONS ACT OF 1934
[SEC. 258. ILLEGAL CHANGES IN SUBSCRIBER CARRIER SELECTIONS.]
SEC. 258. BILLING PRACTICES.
(a) * * *
* * * * * * *
(c) Truth-in-Billing.--A telecommunications carrier that is
required to contribute to, or that is otherwise assessed for,
any support mechanism under section 254, or any other
governmental mechanism, fund, tax, or program, shall identify
on each subscriber's bill, in simple, plain language (of no
more than one line of text per dollar amount)--
(1) the identity of the governmental mechanism, fund,
tax, or program to which the contribution or assessment
is made, and the identity of the governmental authority
whose rules require or authorize the contribution or
assessment;
(2) the basis for the contribution or assessment
(such as per subscriber, per line, or percentage of
some or all charges or revenues); and
(3) as a separate line-item, the dollar amount that
is being attributed to and collected from such
subscriber for such governmental mechanism, fund, tax,
or program.
(d) Prohibition of Excess Charges.--If any telecommunications
carrier that is subject to subsection (c) discloses to its
subscribers under paragraph (3) of such subsection a total
dollar amount for any billing period that exceeds the total
dollar amount such carrier contributes to or is assessed for
the applicable governmental mechanism, fund, tax, or program
for such billing period, such carrier shall be liable for a
forfeiture penalty equal to the amount of such excess, in
addition to any other penalties for which the carrier may be
liable under title V. The Commission may, by rule, provide for
the distribution of any forfeiture penalties collected under
this subsection to the affected subscribers.
ADDITIONAL VIEWS
We support the goal of H.R. 3011, which is intended to
ensure that consumers know when and how much they are paying to
support government-mandated programs. We are concerned though
that the Dingell amendment, which was added to the bill during
its consideration by the full Commerce Committee, overlooks two
very important factors that impact the way in which
telecommunications carriers seek to recover the cost of their
contributions to the universal service fund. The first of these
factors can, and should be addressed by the Federal
Communications Commission; the second, however, requires that
the Dingell amendment be redrafted or dropped from the
legislation.
The first problem with the Dingell amendment is that it
fails to recognize that the Federal Communications Commission's
current rules and regulations regarding universal service
assessments create a competitive imbalance because they assess
carriers on the basis of the prior year's end-user revenues
from the provision of certain types of telecommunications. This
backward-looking assessment has an adverse impact on any
carrier that may be losing market share as new competitors
enter the market and win customers. Because the present
universal service fund collection regime is based on prior year
revenues, a new or expanding carrier may have no revenues, or
at least a smaller base of revenues, on which the present year
fee is assessed. At the same time, that new or expanding
carrier or provider has an expanding base of customers over
which they can spread the cost of that assessment. In contrast,
a carrier with declining market share is assessed based on the
larger prior year revenues, yet has a smaller present base of
customers over which to spread the cost. This problem could be
exacerbated as the regional Bell operating companies inevitably
gain the approvals necessary to enter the interexchange market,
and unless the FCC acts to correct the problem caused by the
current rules, the unfortunate result will be a competitive
imbalance.
Rather than continuing with the Federal Communications
Commission's current rules and regulations regarding universal
service assessments, the Commission should consider assessing
carriers on the basis of its prior six month calendar year's
revenues.
The second problem with the Dingell amendment is that it
fails to recognize that carriers which must contribute to the
universal service fund incur costs as a result of collecting
the revenues that ultimately are contributed to the fund.
Carriers already bear the burden of collecting revenues to
support the universal service fund; they should not also have
to bear the administrative cost of collecting those revenues.
To ask them to do so would be equivalent of an unfunded
mandate. During the 104th Congress, we wisely voted to avoid
imposing unfunded mandates on state and local governments; we
should endeavor to follow a similar course with respect to
businesses. For this reason, the Dingell amendment should be
redrafted or deleted from H.R. 3011.
Steve Largent.
Michael G. Oxley.