[House Report 107-83]
[From the U.S. Government Publishing Office]



107th Congress                                             Rept. 107-83
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

======================================================================



 
         INTERNET FREEDOM AND BROADBAND DEPLOYMENT ACT OF 2001

                                _______
                                

                  May 24, 2001.--Ordered to be printed

                                _______
                                

 Mr. Tauzin, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 1542]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 1542) to deregulate the Internet and high speed 
data services, 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..............................................     7
Background and Need for Legislation..............................     7
Hearings.........................................................    10
Committee Consideration..........................................    10
Committee Votes..................................................    10
Committee Oversight Findings.....................................    16
Statement of General Performance Goals and Objectives............    16
New Budget Authority, Entitlement Authority, and Tax Expenditures    16
Committee Cost Estimate..........................................    16
Congressional Budget Office Estimate.............................    16
Federal Mandates Statement.......................................    20
Advisory Committee Statement.....................................    20
Constitutional Authority Statement...............................    20
Applicability to Legislative Branch..............................    21
Section-by-Section Analysis of the Legislation...................    21
Changes in Existing Law Made by the Bill, as Reported............    27
Minority and Additional Views....................................    40

                               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 ``Internet Freedom and Broadband 
Deployment Act of 2001''.

 SEC. 2. FINDINGS AND PURPOSE.

  (a) Findings.--Congress finds the following:
          (1) Internet access services are inherently interstate and 
        international in nature, and should therefore not be subject to 
        regulation by the States.
          (2) The imposition of regulations by the Federal 
        Communications Commission and the States has impeded the rapid 
        delivery of high speed Internet access services and Internet 
        backbone services to the public, thereby reducing consumer 
        choice and welfare.
          (3) The Telecommunications Act of 1996 represented a careful 
        balance between the need to open up local telecommunications 
        markets to competition and the need to increase competition in 
        the provision of interLATA voice telecommunications services.
          (4) In enacting the prohibition on Bell operating company 
        provision of interLATA services, Congress recognized that 
        certain telecommunications services have characteristics that 
        render them incompatible with the prohibition on Bell operating 
        company provision of interLATA services, and exempted such 
        services from the interLATA prohibition.
          (5) High speed data services and Internet backbone services 
        constitute unique markets that are likewise incompatible with 
        the prohibition on Bell operating company provision of 
        interLATA services.
          (6) Since the enactment of the Telecommunications Act of 
        1996, the Federal Communications Commission has construed the 
        prohibition on Bell operating company provision of interLATA 
        services in a manner that has impeded the development of 
        advanced telecommunications services, thereby limiting consumer 
        choice and welfare.
          (7) Internet users should have choice among competing 
        Internet service providers.
          (8) Internet service providers should have the right to 
        interconnect with high speed data networks in order to provide 
        service to Internet users.
  (b) Purposes.--It is therefore the purpose of this Act to provide 
market incentives for the rapid delivery of advanced telecommunications 
services--
          (1) by deregulating high speed data services, Internet 
        backbone services, and Internet access services;
          (2) by clarifying that the prohibition on Bell operating 
        company provision of interLATA services does not extend to the 
        provision of high speed data services and Internet backbone 
        services;
          (3) by ensuring that consumers can choose among competing 
        Internet service providers; and
          (4) by ensuring that Internet service providers can 
        interconnect with competitive high speed data networks in order 
        to provide Internet access service to the public.

 SEC. 3. DEFINITIONS.

  (a) Amendments.--Section 3 of the Communications Act of 1934 (47 
U.S.C. 153) is amended--
          (1) by redesignating paragraph (20) as paragraph (21);
          (2) by redesignating paragraphs (21) through (52) as 
        paragraphs (26) through (57), respectively;
          (3) by inserting after paragraph (19) the following new 
        paragraph:
          ``(20) High speed data service.--The term `high speed data 
        service' means any service that consists of or includes the 
        offering of a capability to transmit, using a packet-switched 
        or successor technology, information at a rate that is 
        generally not less than 384 kilobits per second in at least one 
        direction. Such term does not include special access service 
        offered through dedicated transport links between a customer's 
        premises and an interexchange carrier's switch or point of 
        presence.'';
          (4) by inserting after paragraph (21) the following new 
        paragraphs:
          ``(22) Internet.--The term `Internet' means collectively the 
        myriad of computer and telecommunications facilities, including 
        equipment and operating software, which comprise the 
        interconnected world-wide network of networks that employ the 
        Transmission Control Protocol/Internet Protocol, or any 
        predecessor or successor protocols to such protocol, to 
        communicate information of all kinds by wire or radio.
          ``(23) Internet access service.--The term `Internet access 
        service' means a service that combines computer processing, 
        information storage, protocol conversion, and routing with 
        transmission to enable users to access Internet content and 
        services.
          ``(24) Internet backbone.--The term `Internet backbone' means 
        a network that carries Internet traffic over high-capacity 
        long-haul transmission facilities and that is interconnected 
        with other such networks via private peering relationships.
          ``(25) Internet backbone service.--The term `Internet 
        backbone service' means any interLATA service that consists of 
        or includes the transmission by means of an Internet backbone 
        of any packets, and shall include related local 
        connectivity.''.
  (b) Conforming Amendments.--
          (1) Section 230(f) of the Communications Act of 1934 (47 
        U.S.C. 230(f)) is amended--
                  (A) by striking paragraph (1); and
                  (B) by redesignating paragraphs (2) through (4) as 
                paragraphs (1) through (3), respectively.
          (2) Section 223(h)(2) of such Act (47 U.S.C. 223(h)(2)) is 
        amended by striking ``230(f)(2)'' and inserting ``230(f)(1)''.

 SEC. 4. LIMITATION ON AUTHORITY TO REGULATE HIGH SPEED DATA SERVICES.

  (a) In General.--Part I of title II of the Communications Act of 1934 
(47 U.S.C. 201 et seq.) is amended by adding at the end the following 
new section:

``SEC. 232. PROVISION OF HIGH SPEED DATA SERVICES.

  ``(a) Freedom From Regulation.--Except to the extent that high speed 
data service, Internet backbone service, and Internet access service 
are expressly referred to in this Act, neither the Commission, nor any 
State, shall have authority to regulate the rates, charges, terms, or 
conditions for, or entry into the provision of, any high speed data 
service, Internet backbone service, or Internet access service, or to 
regulate any network element to the extent it is used in the provision 
of any such service; nor shall the Commission impose or require the 
collection of any fees, taxes, charges, or tariffs upon such service.
  ``(b) Savings Provision.--Nothing in this section shall be construed 
to limit or affect the authority of any State to regulate circuit-
switched telephone exchange services, nor affect the rights of cable 
franchise authorities to establish requirements that are otherwise 
consistent with this Act.
  ``(c) Continued Enforcement of ESP Exemption, Universal Service Rules 
Permitted.--Nothing in this section shall affect the ability of the 
Commission to retain or modify--
          ``(1) the exemption from interstate access charges for 
        enhanced service providers under Part 69 of the Commission's 
        regulations, and the requirements of the MTS/WATS Market 
        Structure Order (97 FCC 2d 682, 715 (1983)); or
          ``(2) rules issued pursuant to section 254.''.
  (b) Conforming Amendment.--Section 251 of the Communications Act of 
1934 (47 U.S.C. 251) is amended by adding at the end thereof the 
following new subsection:
  ``(j) Exemption.--
          ``(1) Access to network elements for high speed data 
        service.--
                  ``(A) Limitation.--Subject to subparagraphs (B), (C), 
                and (D) of this paragraph, neither the Commission nor 
                any State shall require an incumbent local exchange 
                carrier to provide unbundled access to any network 
                element for the provision of any high speed data 
                service.
                  ``(B) Preservation of regulations and line sharing 
                order.--Notwithstanding subparagraph (A), the 
                Commission shall, to the extent consistent with 
                subsections (c)(3) and (d)(2), require the provision of 
                unbundled access to those network elements described in 
                section 51.319 of the Commission's regulations (47 
                C.F.R. 51.319), as--
                          ``(i) in effect on January 1, 1999; and
                          ``(ii) subject to subparagraphs (C) and (D), 
                        as modified by the Commission's Line Sharing 
                        Order.
                  ``(C) Exceptions to preservation of line sharing 
                order.--
                          ``(i) Unbundled access to remote terminal not 
                        required.--An incumbent local exchange carrier 
                        shall not be required to provide unbundled 
                        access to the high frequency portion of the 
                        loop at a remote terminal.
                          ``(ii) Charges for access to high frequency 
                        portion.--The Commission and the States shall 
                        permit an incumbent local exchange carrier to 
                        charge requesting carriers for the high 
                        frequency portion of a loop an amount equal to 
                        which such incumbent local exchange carrier 
                        imputes to its own high speed data service.
                  ``(D) Limitations on reinterpretation of line sharing 
                order.--Neither the Commission nor any State Commission 
                shall construe, interpret, or reinterpret the 
                Commission's Line Sharing Order in such manner as would 
                expand an incumbent local exchange carrier's obligation 
                to provide access to any network element for the 
                purpose of line sharing.
                  ``(E) Authority to reduce elements subject to 
                requirement.--This paragraph shall not prohibit the 
                Commission from modifying the regulation referred to in 
                subparagraph (B) to reduce the number of network 
                elements subject to the unbundling requirement, or to 
                forbear from enforcing any portion of that regulation 
                in accordance with the Commission's authority under 
                section 706 of the Telecommunications Act of 1996, 
                notwithstanding any limitation on that authority in 
                section 10 of this Act.
                  ``(F) Prohibition on discriminatory subsidies.--Any 
                network element used in the provision of high speed 
                data service that is not subject to the requirements of 
                subsection (c) shall not be entitled to any subsidy, 
                including any subsidy pursuant to section 254, that is 
                not provided on a nondiscriminatory basis to all 
                providers of high speed data service and Internet 
                access service. This prohibition on discriminatory 
                subsidies shall not be interpreted to authorize or 
                require the extension of any subsidy to any provider of 
                high speed data service or Internet access service.
          ``(2) Resale.--For a period of three years after the 
        enactment of this subsection, an incumbent local exchange 
        carrier that provides high speed data service shall have a duty 
        to offer for resale any such service at wholesale rates in 
        accordance with subsection (c)(4). After such three-year 
        period, such carrier shall offer such services for resale 
        pursuant to subsection (b)(1).
          ``(3) Definitions.--For purposes of this subsection--
                  ``(A) the `Commission's Line Sharing Order' means the 
                Third Report and Order in CC Docket No. 98-147 and the 
                Fourth Report and Order in CC Docket 96-98 (FCC 99-
                355), as adopted November 18, 1999, and without regard 
                to any clarification or interpretation in the further 
                notice of proposed rulemaking in such Dockets adopted 
                January 19, 2001 (FCC 01-26); and
                  ``(B) the term `remote terminal' means an accessible 
                terminal located outside of the central office to which 
                analog signals are carried from customer premises, in 
                which such signals are converted to digital, and from 
                which such signals are carried, generally over fiber, 
                to the central office.''.
  (c) Preservation of Existing Interconnection Agreements.--Nothing in 
the amendments made by this section--
          (1) shall be construed to permit or require the abrogation or 
        modification of any interconnection agreement in effect on the 
        date of enactment of this section during the term of such 
        agreement, except that this paragraph shall not apply to any 
        interconnection agreement beyond the expiration date of the 
        existing current term contained in such agreement on the date 
        of enactment of this section, without regard to any extension 
        or renewal of such agreement; or
          (2) affects the implementation of any change of law provision 
        in any such agreement.

SEC. 5. INTERNET CONSUMERS FREEDOM OF CHOICE.

  Part I of title II of the Communications Act of 1934, as amended by 
section 4, is amended by adding at the end the following new section:

``SEC. 233. INTERNET CONSUMERS FREEDOM OF CHOICE.

  ``(a) Purpose.--It is the purpose of this section to ensure that 
Internet users have freedom of choice of Internet service provider.
  ``(b) Obligations of Incumbent Local Exchange Carriers.--Each 
incumbent local exchange carrier has the duty to provide--
          ``(1) Internet users with the ability to subscribe to and 
        have access to any Internet service provider that interconnects 
        with such carrier's high speed data service;
          ``(2) any Internet service provider with the right to acquire 
        the facilities and services necessary to interconnect with such 
        carrier's high speed data service for the provision of Internet 
        access service;
          ``(3) any Internet service provider with the ability to 
        collocate equipment in accordance with the provisions of 
        section 251, to the extent necessary to achieve the objectives 
        of paragraphs (1) and (2) of this subsection; and
          ``(4) any provider of high speed data services, Internet 
        backbone service, or Internet access service with special 
        access for the provision of Internet access service within a 
        period no longer than the period in which such incumbent local 
        exchange carrier provides special access to itself or any 
        affiliate for the provision of such service.
  ``(c) Definitions.--As used in this section--
          ``(1) Internet service provider.--The term `Internet service 
        provider' means any provider of Internet access service.
          ``(2) Incumbent local exchange carrier.--The term `incumbent 
        local exchange carrier' has the same meaning as provided in 
        section 251(h).
          ``(3) Special access service.--The term `special access 
        service' means the provision of dedicated transport links 
        between a customer's premises and the switch or point of 
        presence of a high speed data service provider, Internet 
        backbone service provider, or Internet service provider.''.

SEC. 6. INCIDENTAL INTERLATA PROVISION OF HIGH SPEED DATA AND INTERNET 
                    BACKBONE SERVICES.

  (a) Incidental InterLATA Service Permitted.--Section 271(g) of the 
Communications Act of 1934 (47 U.S.C. 271(g)) is amended--
          (1) by striking ``or'' at the end of paragraph (5);
          (2) by striking the period at the end of paragraph (6) and 
        inserting ``; or''; and
          (3) by adding at the end thereof the following new paragraph:
          ``(7) of high speed data service or Internet backbone 
        service.''.
  (b) Prohibition on Provision of Voice Telephone Services.--Section 
271 of such Act is amended by adding at the end thereof the following 
new subsection:
  ``(k) Prohibition on Provision of Voice Telephone Services.--Until 
the date on which a Bell operating company is authorized to offer 
interLATA services originating in an in-region State in accordance with 
the provisions of this section, such Bell operating company offering 
any high speed data service or Internet backbone service pursuant to 
the provisions of paragraph (7) of subsection (g) may not, in such in-
region State provide interLATA voice telecommunications service, 
regardless of whether there is a charge for such service, by means of 
the high speed data service or Internet backbone service provided by 
such company.''.
  (c) Conforming Amendments.--
          (1) Section 272(a)(2)(B)(i) of such Act is amended to read as 
        follows:
                          ``(i) incidental interLATA services described 
                        in paragraphs (1), (2), (3), (5), (6), and (7) 
                        of section 271(g);''.
          (2) Section 272(a)(2)(C) of such Act is repealed.

SEC. 7. DEPLOYMENT OF BROADBAND SERVICES.

  Part III of title II of the Communications Act of 1934 is amended by 
inserting after section 276 (47 U.S.C. 276) the following new section:

``SEC. 277. DEPLOYMENT OF BROADBAND SERVICES.

  ``(a) Deployment Required.--Each Bell operating company and its 
affiliates shall deploy high speed data services in each State in which 
such company or affiliate is an incumbent local exchange carrier (as 
such term is defined in section 251(h)) in accordance with the 
requirements of this section.
  ``(b) Deployment Requirements.--
          ``(1) Mileposts for deployment.--A Bell operating company or 
        its affiliate shall deploy high speed data services by 
        attaining high speed data capability in its central offices in 
        each State to which subsection (a) applies. Such company or 
        affiliate shall attain such capability in accordance with the 
        following schedule:
                  ``(A) Within one year after the date of enactment of 
                this section, such company or affiliate shall attain 
                high speed data capability in not less than 20 percent 
                of such central offices in such State.
                  ``(B) Within 2 years after the date of enactment of 
                this section, such company or affiliate shall attain 
                high speed data capability in not less than 40 percent 
                of such central offices in such State.
                  ``(C) Within 3 years after the date of enactment of 
                this section, such company or affiliate shall attain 
                high speed data capability in not less than 70 percent 
                of such central offices in such State.
                  ``(D) Within 5 years after the date of enactment of 
                this section, such company or affiliate shall attain 
                high speed data capability in not less than 100 percent 
                of such central offices in such State.
          ``(2) High speed data capability.--For purposes of paragraph 
        (1), a central office shall be considered to have attained high 
        speed capability if--
                  ``(A)(i) such central office is equipped with high 
                speed data multiplexing capability; and
                  ``(ii) each upgradeable customer loop that originates 
                or terminates in such central office is upgraded 
                promptly upon receipt of a customer request for such 
                upgrading, as necessary to permit transmission of high 
                speed data service (including any conditioning of the 
                loop);
                  ``(B) each customer served by such central office 
                (without regard to the upgradeability or length of the 
                customer's loop) is able to obtain the provision of 
                high speed data service from such Bell operating 
                company or its affiliate by means of an alternative 
                technology that does not involve the use of the 
                customer's loop; or
                  ``(C) each such customer is able to obtain the 
                provision of high speed data service by one or the 
                other of the means described in subparagraphs (A) and 
                (B).
          ``(3) Upgradeable loops.--For purposes of paragraph (2), a 
        customer loop is upgradeable if--
                  ``(A) such loop is less than 15,000 feet in length 
                (from the central office to the customer's premises 
                along the line); and
                  ``(B) such loop can, with or without conditioning, 
                transmit high speed data services without such 
                transmission on such loop causing significant 
                degradation of voice service.
  ``(c) Availability of Remedies.--
          ``(1) Forfeiture penalties.--A Bell operating company or its 
        affiliate that fails to comply with this section shall be 
        subject to the penalties provided in section 503(b)(2). In 
        determining whether to impose a forfeiture penalty, and in 
        determining the amount of any forfeiture penalty under section 
        503(b)(2)(D), the Commission shall take into consideration the 
        extent to which the requirements of this section are 
        technically infeasible.
          ``(2) Jurisdiction.--The Commission shall have exclusive 
        jurisdiction to enforce the requirements of this section, 
        except that any State commission may file a complaint with the 
        Commission seeking the imposition of penalties as provided in 
        paragraph (1).
  ``(d) Annual Report on Deployment.--
          ``(1) Analysis required.--The Commission shall include in 
        each of its annual reports submitted no more than 18 months 
        after the date of enactment of this section an analysis of the 
        deployment of high speed data service to underserved areas. 
        Such report shall include--
                  ``(A) a statistical analysis of the extent to which 
                high speed data service has been deployed to central 
                offices and customer loops, or is available using 
                different technologies, as compared with the extent of 
                such deployment and availability prior to such date and 
                in prior reports under this subsection;
                  ``(B) a breakdown of the delivery of high speed data 
                service by type of technology and class or category of 
                provider;
                  ``(C) an identification of impediments to such 
                deployment and availability, and developments in 
                overcoming such impediments during the intervening 
                period between such reports; and
                  ``(D) recommendations of the Commission, after 
                consultation with the National Telecommunications and 
                Information Administration, for further extending such 
                deployment and availability and overcoming such 
                impediments.
          ``(2) Definition of underserved area.--For purposes of 
        paragraph (1), the term `underserved areas' means areas that--
                  ``(A) are high cost areas that are eligible for 
                services under subpart D of part 54 of the Commission's 
                regulations (47 C.F.R. 54.301 et seq.); or
                  ``(B) are within or comprised of any census tract--
                          ``(i) the poverty level of which is at least 
                        30 percent (based on the most recent census 
                        data); or
                          ``(ii) the median family income of which does 
                        not exceed--
                                  ``(I) in the case of a census tract 
                                located in a metropolitan statistical 
                                area, 70 percent of the greater of the 
                                metropolitan area median family income 
                                or the statewide median family income; 
                                and
                                  ``(II) in the case of a census tract 
                                located in a nonmetropolitan 
                                statistical area, 70 percent of the 
                                nonmetropolitan statewide median family 
                                income.
          ``(3) Designation of census tracts.--The Commission shall, 
        not later than 90 days after the date of the enactment of this 
        section, designate and publish those census tracts meeting the 
        criteria described in paragraph (2)(B).''.

SEC. 8. COMMISSION AUTHORIZED TO PRESCRIBE JUST AND REASONABLE CHARGES.

  The Federal Communications Commission may impose penalties under 
section 503 of the Communications Act of 1934 not to exceed $1,000,000 
for any violation of provisions contained in, or amended by, section 5, 
6, or 7 (or any combination thereof) of this Act. Each distinct 
violation shall be a separate offense, and in the case of a continuing 
violation, each day shall be deemed a separate offense, except that the 
amount assessed for any continuing violation shall not exceed a total 
of $10,000,000 for any single act or failure to act described in 
section 5, 6, or 7 (or any combination thereof) of this Act.

                          Purpose and Summary

    The purpose of H.R. 1542, the Internet Freedom and 
Broadband Deployment Act of 2001, is to deregulate the 
provision of high speed data, Internet backbone, and Internet 
access services, while ensuring that the regulation of 
telephone exchange services is not disturbed. The Internet has 
drastically changed the dynamics of the communications industry 
and created new markets that can be entered by any company 
willing to make the investment and take the risk necessary to 
thrive.
    H.R. 1542 ensures that these new markets will not be 
subject to the types of regulations imposed upon markets in 
which entry is much more difficult. New markets thrive in the 
absence of regulation, and H.R. 1542 will make the markets for 
high speed data, Internet backbone, and Internet access 
services vibrant and competitive. The bill will facilitate that 
competition by implementing a deregulatory framework for the 
provision of high speed data, Internet backbone, and Internet 
access services, and by ensuring that all providers of such 
services are allowed to compete on an equal footing, regardless 
of the technology or platform they use to provide such 
services.
    H.R. 1542 has three main components. First, the bill 
broadly preempts, with certain narrow exceptions, State and 
federal regulation of high speed data service, Internet 
backbone service, and Internet access service. Second, the bill 
clarifies that Internet backbone and high speed data services 
are not subject to the interLATA restriction in section 271 of 
the Telecommunications Act of 1996. Third, the bill ensures 
freedom of choice to Internet users by requiring each incumbent 
local exchange carrier (ILEC) to allow Internet service 
providers to interconnect with the ILEC's high speed data 
service for the provision of Internet access service.

                  Background and Need for Legislation

    Until five years ago, telephone exchange service in the 
United States was largely a regulated monopoly governed by the 
antitrust laws. In each local service area, a single telephone 
company (the ILEC) was the dominant, if not the sole, provider 
of service. State regulators treated that company as a public 
utility--requiring it, for example, to provide basic local 
service to residential customers at relatively low rates. This 
system resulted in ILECs providing the overwhelming share of 
telephone exchange service in each local service area. Due to 
concerns relating to the potential for discrimination by these 
providers of local service, the largest of them--the Bell 
operating companies (``BOCs'') that had been divested from AT&T 
in 1984 pursuant to the Modification of Final Judgment (MFJ)--
were precluded from, among other things, providing most 
interLATA services.
    The Telecommunications Act of 1996 (47 U.S.C. 151 et seq.) 
dramatically changed this regulation-by-antitrust paradigm. 
Congress replaced it with a pro-competitive, deregulatory 
framework for the provision of local and long-distance 
telephone service. The overriding premise of the 1996 Act was 
that competition, not regulation under antitrust law, was best 
suited to ensure low prices and improved services. The 1996 Act 
thus preempted all state and local barriers to the provision of 
telephone exchange service, including exclusive franchises, and 
allowed new entrants to compete with incumbents in the local 
exchange. At the same time, however, Congress recognized that 
local voice competition would not arise overnight, and that 
competitors might initially need to obtain some facilities and 
capabilities from the incumbent carriers. To spur competition, 
Congress imposed certain affirmative duties on ILECs to assist 
new entrants in the local voice market. These duties included, 
among others, the right to lease, on an ``unbundled'' basis, 
discrete network elements that are necessary to provide 
telephone exchange service.
    The Telecommunications Act thus sought to foster 
facilities-based competition for voice and video services among 
the carriers that dominated their respective markets, as well 
as permit new carriers to enter these markets. The 
Telecommunications Act took telecommunications policy out of 
the Federal courts and the MFJ, and put telecommunications 
policy back where it belonged: in the marketplace, or, to 
enforce the rules of engagement, at the Federal Communications 
Commission (Commission) and State commissions. In doing so, 
however, Congress was careful not to infringe on the antitrust 
laws themselves. Current section 601(b)(1) of the 
Telecommunications Act (47 U.S.C. 152 nt) expressly maintained 
the applicability of the antitrust laws, which the courts have 
clearly recognized. See, e.g., Goldwasser v. Ameritech Corp., 
222 F.3d 390, 394 (7th Cir. 2000).
    The Telecommunications Act's major shortcoming is in its 
pardonable failure to anticipate the impact of the Internet and 
the commercialization of technology that would enable millions 
of consumers to obtain fast, seamless access to information 
from around the world. The Internet was in its infancy when the 
Telecommunications Act was debated and initially passed by the 
House and the Senate in 1995, as well as in February of 1996, 
when the legislation was signed into law. H.R. 1542 is a direct 
response to the advent of the Internet.
    H.R. 1542 expands the deregulatory principles underlying 
the Telecommunications Act to the Internet and the provision of 
Internet-related services. Like any new medium or service, the 
Internet cannot thrive if it is stifled. Applying legacy 
telephone regulations to the Internet and the provision of 
Internet services will prevent consumers from realizing the 
true potential of the Internet. The legislation, by contrast, 
ensures that the Internet is permitted to flourish free from 
the types of regulations that apply to telephone services and 
equipment. As a result, consumers will reap the benefits that 
flow when the market, rather than government, dictates the 
rules of competition.
    The Commission has interpreted the Telecommunications Act 
in a way that stifles competition and innovation. First, the 
Commission has interpreted section 251 of the 1996 Act--which 
sets out the affirmative steps ILECs must take to assist new 
entrants to enter the local exchange market--to apply not just 
to local voice service, but to high-speed data services as 
well. Second, the Commission has interpreted the 1996 Act's 
restriction of BOC-provision of interLATA services to apply not 
just to interLATA voice services, but to high-speed data and 
Internet backbone services as well. Both of these actions are 
flatly inconsistent with the pro-competitive, deregulatory 
scheme that Congress intended would govern new communications 
markets.
    The pace of the deployment of high speed data services is 
inextricably linked with the manner in which such services are 
regulated. High speed data service providers are regulated 
differently. High-speed cable-modem services, offered by cable 
companies, are not subject to regulation by the Commission. 
However, as mentioned above, high speed data services offered 
by ILECs are regulated in the same manner as telephone services 
offered by such carriers. These regulations require ILECs to 
provide competitive local exchange carriers (CLECs) access to 
their networks on a piece-by-piece basis, including access to 
new facilities not essential to basic telephone service. These 
regulations also require ILECs to resell their services to 
competitors at wholesale rates, and prevent the Bell companies 
from offering long-distance data services.
    The regulations imposed upon ILECs were designed to 
facilitate competition for local telephone service. These rules 
were necessary because of the difficulty in reconstructing a 
national telephone network, but the characteristics of the high 
speed data service market are much different than those of the 
local telephone market. High speed data is a nascent market, 
largely because of the outdated rules that apply to its 
deployment.
    The unnecessary application of these legacy telephone rules 
to high speed data and Internet backbone services provided by 
ILECs has stifled the deployment of such services. Indeed, 
cable companies control 75 percent of the high speed data 
market in the United States, with the ILECs controlling less 
than 25 percent, hardly a level that justifies the application 
of telephone regulations designed for dominant carriers. ILECs 
have less of an incentive to deploy new facilities because they 
have to share such facilities with CLECs, while their cable 
competitors do not. In addition, because current rules prevent 
a Bell company from offering long-distance high speed data and 
Internet backbone services in an in-region State before the FCC 
approves an application to provide interLATA services in 
accordance with Section 271 of the Communications Act, the 
Bells cannot gain the efficiencies associated with the ability 
to offer end-to-end services.
    Cable companies have used their unregulated status in the 
high speed data market to garner three-quarters of the 
subscribers. If ILECs were able to offer high speed data 
services in the same unregulated framework as cable companies, 
ILECs would maximize their ability to recover their costs as 
quickly as possible, which would provide the ILECs with a 
stronger incentive to deploy high speed data and Internet 
backbone services, even in areas in which costs can be spread 
over fewer customers. As a result, deregulating high speed 
data, Internet backbone, and Internet access services offered 
by ILECs will speed the deployment of these services and level 
the playing field among providers of these services.
    While the Telecommunications Act was a landmark legislative 
achievement, it failed to provide a framework in which new 
services and new facilities offered over the nation's telephone 
networks would be regulated differently than basic telephone 
service. The blistering growth in usage of the Internet 
demonstrated the Telecommunications Act's shortcoming within 
just a few years of its enactment. H.R. 1542 is not a wholesale 
change of the Telecommunications Act. H.R. 1542 merely ensures 
that new services and facilities will not be saddled with rules 
that apply to a one-hundred-year-old telephone network. H.R. 
1542 takes the deregulatory goal of the Telecommunications Act 
and ensures the same goal is applied to new communications 
markets.
    At the same time, consistent with the underlying 
Telecommunications Act, the legislation does nothing to 
diminish the force and effect of the antitrust laws. The 
legislation does not diminish or amend the savings clause set 
forth in current section 601(b) of the Telecommunications Act, 
nor does it otherwise, directly or even indirectly, amend the 
antitrust laws. RBOCs engaged in the deployment of high speed 
data services will remain subject to all applicable antitrust 
laws.

                                Hearings

    The full Energy and Commerce Committee held a legislative 
hearing on H.R. 1542 on April 25, 2001. The Committee received 
testimony from: Douglas Ashton, Managing Director of Bear 
Stearns, Inc.; James Cicconi, General Counsel of ATT; Joseph 
Gregori, CEO of InfoHighway Communications; James Henry, 
Managing General Partner of Greenfield Hill Capital LLP; Gordon 
Hill, Executive Director of Economic Opportunity Program of 
Elmira, New York; Paul Mancini, Vice President and Assistant 
General Counsel of SBC Communications; Clark McLeod, Chairman 
of McLeod USA; Charles McMinn, Chairman of Covad 
Communications; Peter Pitsch, Director of Communications Policy 
for Intel, Inc.; Tim Regan, Senior Vice President of Corning, 
Inc.; and Tom Tauke, Senior Vice President of Verizon 
Communications.

                        Committee Consideration

    On Thursday, April 26, 2001, the Subcommittee on 
Telecommunications and the Internet met in open markup session 
and approved H.R. 1542, as amended, by a roll call vote of 19 
yeas and 14 nays for Full Committee consideration, a quorum 
being present. On Wednesday, May 9, 2001, the Full Committee 
met in open markup session and ordered H.R. 1542 favorably 
reported to the House, as amended, by a roll call vote of 32 to 
23, a quorum being present.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House requires 
the Committee to list the recorded votes on the motion to 
report legislation and amendments thereto. The following are 
the recorded votes on the motion to report H.R. 1542 and on 
amendments offered to the measure, including the names of those 
Members voting for and against.

            COMMITTEE ON ENERGY AND COMMERCE--107TH CONGRESS


                            rollcall vote 1

    Bill: H.R. 1542, Internet Freedom and Broadband Deployment 
Act of 2001.
    Amendment: An amendment to the amendment in the nature of a 
substitute offered by Mr. Stupak, No. 1b, (1) to require Bell 
operating companies to meet certain milestones regarding 
broadband deployment; (2) would require Bell operating 
companies to install digital switches in central offices and 
service any customer with a loop of 150,00 feet or less within 
statutorily-defined time frames; and (3) would impose penalties 
for a failure to meet the deployment milestones, and the FCC 
would have had the authority to suspend the deregulation 
provided by the Internet Freedom and Broadband Deployment Act 
if the milestones were not met.
    Disposition: Not Agreed to, by a rollcall vote of 17 yeas 
to 37 nays.

----------------------------------------------------------------------------------------------------------------
             Representative                Yeas      Nays             Representative            Yeas      Nays
----------------------------------------------------------------------------------------------------------------
Mr. Tauzin.............................  ........        X   Mr. Dingell....................  ........        X
Mr. Bilirakis..........................  ........        X   Mr. Waxman.....................        X   ........
Mr. Barton.............................  ........        X   Mr. Markey.....................        X   ........
Mr. Upton..............................  ........        X   Mr. Hall.......................  ........        X
Mr. Stearns............................  ........        X   Mr. Boucher....................  ........        X
Mr. Gillmor............................  ........  ........  Mr. Towns......................  ........        X
Mr. Greenwood..........................  ........        X   Mr. Pallone....................        X   ........
Mr. Cox................................  ........        X   Mr. Brown......................        X   ........
Mr. Deal...............................  ........        X   Mr. Gordon.....................  ........        X
Mr. Largent............................        X   ........  Mr. Deutsch....................  ........        X
Mr. Burr...............................  ........        X   Mr. Rush.......................  ........        X
Mr. Whitfield..........................  ........        X   Ms. Eshoo......................        X   ........
Mr. Ganske.............................  ........        X   Mr. Stupak.....................        X   ........
Mr. Norwood............................  ........        X   Mr. Engel......................  ........        X
Mrs. Cubin.............................  ........  ........  Mr. Sawyer.....................  ........        X
Mr. Shimkus............................  ........        X   Mr. Wynn.......................  ........        X
Mrs. Wilson............................  ........        X   Mr. Green......................  ........        X
Mr. Shadegg............................  ........        X   Ms. McCarthy...................        X   ........
Mr. Pickering..........................        X   ........  Mr. Strickland.................        X   ........
Mr. Fossella...........................  ........        X   Ms. DeGette....................        X   ........
Mr. Blunt..............................  ........        X   Mr. Barrett....................        X   ........
Mr. Davis..............................        X   ........  Mr. Luther.....................        X   ........
Mr. Bryant.............................  ........        X   Mrs. Capps.....................        X   ........
Mr. Ehrlich............................  ........        X   Mr. Doyle......................        X   ........
Mr. Buyer..............................  ........  ........  Mr. John.......................  ........        X
Mr. Radanovich.........................  ........        X   Ms. Harman.....................  ........        X
Mr. Bass...............................  ........        X   ...............................  ........  ........
Mr. Pitts..............................        X   ........  ...............................  ........  ........
Mrs. Bono..............................  ........        X   ...............................  ........  ........
Mr. Walden.............................  ........        X   ...............................  ........  ........
Mr. Terry..............................  ........        X
----------------------------------------------------------------------------------------------------------------

                            rollcall vote 2

    Bill: H.R. 1542, Internet Freedom and Broadband Deployment 
Act of 2001.
    Amendment: An amendment to the amendment in the nature of a 
substitute offered by Mr. Davis, No. 1d, to change the 
definition of high speed data service so that such service only 
includes services that are transmitted at a rate not less than 
1.5 megabits per second downstream to the subscriber and not 
less than 128 kilobits per second upstream to the provider.
    Disposition: Not agreed to, by a rollcall vote of 18 yeas 
to 36 nays.

----------------------------------------------------------------------------------------------------------------
             Representative                Yeas      Nays             Representative            Yeas      Nays
----------------------------------------------------------------------------------------------------------------
Mr. Tauzin.............................  ........        X   Mr. Dingell....................  ........        X
Mr. Bilirakis..........................  ........        X   Mr. Waxman.....................        X   ........
Mr. Barton.............................  ........        X   Mr. Markey.....................        X   ........
Mr. Upton..............................  ........        X   Mr. Hall.......................  ........        X
Mr. Stearns............................  ........        X   Mr. Boucher....................  ........        X
Mr. Gillmor............................        X   ........  Mr. Towns......................  ........        X
Mr. Greenwood..........................  ........        X   Mr. Pallone....................        X   ........
Mr. Cox................................  ........        X   Mr. Brown......................        X   ........
Mr. Deal...............................  ........        X   Mr. Gordon.....................        X   ........
Mr. Largent............................        X   ........  Mr. Deutsch....................  ........        X
Mr. Burr...............................        X   ........  Mr. Rush.......................  ........        X
Mr. Whitfield..........................  ........        X   Ms. Eshoo......................        X   ........
Mr. Ganske.............................  ........        X   Mr. Stupak.....................        X   ........
Mr. Norwood............................  ........        X   Mr. Engel......................  ........        X
Mrs. Cubin.............................  ........  ........  Mr. Sawyer.....................  ........        X
Mr. Shimkus............................  ........        X   Mr. Wynn.......................  ........        X
Mrs. Wilson............................        X   ........  Mr. Green......................  ........        X
Mr. Shadegg............................  ........        X   Ms. McCarthy...................  ........  ........
Mr. Pickering..........................        X   ........  Mr. Strickland.................        X   ........
Mr. Fossella...........................  ........        X   Ms. DeGette....................        X   ........
Mr. Blunt..............................  ........        X   Mr. Barrett....................  ........        X
Mr. Davis..............................        X   ........  Mr. Luther.....................        X   ........
Mr. Bryant.............................  ........        X   Mrs. Capps.....................        X   ........
Mr. Ehrlich............................        X   ........  Mr. Doyle......................  ........        X
Mr. Buyer..............................  ........  ........  Mr. John.......................  ........        X
Mr. Radanovich.........................  ........        X   Ms. Harman.....................        X   ........
Mr. Bass...............................  ........        X   ...............................  ........  ........
Mr. Pitts..............................  ........        X   ...............................  ........  ........
Mrs. Bono..............................  ........        X   ...............................  ........  ........
Mr. Walden.............................  ........        X   ...............................  ........  ........
Mr. Terry..............................  ........        X
----------------------------------------------------------------------------------------------------------------

                            ROLLCALL VOTE 3

    Bill: H.R. 1542, Internet Freedom and Broadband Deployment 
Act of 2001.
    Amendment: An amendment to the amendment in the nature of a 
substitute offered by Ms. Eshoo, No. 1h, to prevent the FCC 
from forbearing from requiring any carrier engaged in the 
provision of high speed data or Internet access services to 
file certain service quality reporting information unless that 
carrier provided local exchange service to fewer than 60 
percent of the access lines in a region.
    Disposition: Not agreed to, by a rollcall vote of 18 yeas 
to 28 nays.

----------------------------------------------------------------------------------------------------------------
             Representative                Yeas      Nays             Representative            Yeas      Nays
----------------------------------------------------------------------------------------------------------------
Mr. Tauzin.............................  ........        X   Mr. Dingell....................  ........        X
Mr. Bilirakis..........................  ........        X   Mr. Waxman.....................  ........  ........
Mr. Barton.............................  ........        X   Mr. Markey.....................  ........  ........
Mr. Upton..............................  ........        X   Mr. Hall.......................  ........  ........
Mr. Stearns............................  ........        X   Mr. Boucher....................  ........        X
Mr. Gillmor............................  ........        X   Mr. Towns......................        X   ........
Mr. Greenwood..........................  ........        X   Mr. Pallone....................  ........  ........
Mr. Cox................................  ........        X   Mr. Brown......................        X   ........
Mr. Deal...............................  ........        X   Mr. Gordon.....................        X   ........
Mr. Largent............................  ........  ........  Mr. Deutsch....................  ........        X
Mr. Burr...............................  ........        X   Mr. Rush.......................  ........  ........
Mr. Whitfield..........................  ........        X   Ms. Eshoo......................        X   ........
Mr. Ganske.............................  ........  ........  Mr. Stupak.....................        X   ........
Mr. Norwood............................  ........  ........  Mr. Engel......................        X   ........
Mrs. Cubin.............................  ........  ........  Mr. Sawyer.....................        X   ........
Mr. Shimkus............................  ........        X   Mr. Wynn.......................        X   ........
Mrs. Wilson............................        X   ........  Mr. Green......................  ........        X
Mr. Shadegg............................  ........        X   Ms. McCarthy...................        X   ........
Mr. Pickering..........................  ........        X   Mr. Strickland.................        X   ........
Mr. Fossella...........................  ........        X   Ms. DeGette....................        X   ........
Mr. Blunt..............................  ........        X   Mr. Barrett....................        X   ........
Mr. Davis..............................        X   ........  Mr. Luther.....................        X   ........
Mr. Bryant.............................  ........        X   Mrs. Capps.....................        X   ........
Mr. Ehrlich............................  ........        X   Mr. Doyle......................        X   ........
Mr. Buyer..............................  ........  ........  Mr. John.......................  ........        X
Mr. Radanovich.........................  ........        X   Ms. Harman.....................        X   ........
Mr. Bass...............................  ........        X
Mr. Pitts..............................  ........        X
Mrs. Bono..............................  ........        X
Mr. Walden.............................  ........  ........
Mr. Terry..............................  ........        X
----------------------------------------------------------------------------------------------------------------

                            ROLLCALL VOTE 4

    Bill: H.R. 1542, Internet Freedom and Broadband Deployment 
Act of 2001.
    Amendment: An amendment to the amendment in the nature of a 
substitute offered by Mr. Luther, No. 1i, to enable the FCC and 
the States to require ILECs to provide unbundled access to any 
network element (current or future), notwithstanding the bill's 
design to prevent the FCC and the States from regulating the 
provision of high speed data services or network elements to 
the extent that those elements are used in the provision of 
high speed data services.
    Disposition: Not agreed to, by a rollcall vote of 27 yeas 
to 27 nays.

----------------------------------------------------------------------------------------------------------------
             Representative                Yeas      Nays             Representative            Yeas      Nays
----------------------------------------------------------------------------------------------------------------
Mr. Tauzin.............................  ........        X   Mr. Dingell....................  ........        X
Mr. Bilirakis..........................  ........        X   Mr. Waxman.....................        X   ........
Mr. Barton.............................  ........        X   Mr. Markey.....................        X   ........
Mr. Upton..............................  ........        X   Mr. Hall.......................        X   ........
Mr. Stearns............................  ........        X   Mr. Boucher....................  ........        X
Mr. Gillmor............................  ........        X   Mr. Towns......................        X   ........
Mr. Greenwood..........................  ........        X   Mr. Pallone....................        X   ........
Mr. Cox................................        X   ........  Mr. Brown......................        X   ........
Mr. Deal...............................  ........        X   Mr. Gordon.....................        X   ........
Mr. Largent............................        X   ........  Mr. Deutsch....................        X   ........
Mr. Burr...............................  ........        X   Mr. Rush.......................  ........        X
Mr. Whitfield..........................  ........        X   Ms. Eshoo......................        X   ........
Mr. Ganske.............................  ........        X   Mr. Stupak.....................        X   ........
Mr. Norwood............................        X   ........  Mr. Engel......................  ........        X
Mrs. Cubin.............................  ........  ........  Mr. Sawyer.....................  ........        X
Mr. Shimkus............................  ........        X   Mr. Wynn.......................  ........        X
Mrs. Wilson............................        X   ........  Mr. Green......................  ........        X
Mr. Shadegg............................        X   ........  Ms. McCarthy...................        X   ........
Mr. Pickering..........................        X   ........  Mr. Strickland.................        X   ........
Mr. Fossella...........................  ........        X   Ms. DeGette....................        X   ........
Mr. Blunt..............................  ........        X   Mr. Barrett....................        X   ........
Mr. Davis..............................        X   ........  Mr. Luther.....................        X   ........
Mr. Bryant.............................  ........        X   Mrs. Capps.....................        X   ........
Mr. Ehrlich............................        X   ........  Mr. Doyle......................        X   ........
Mr. Buyer..............................  ........  ........  Mr. John.......................  ........        X
Mr. Radanovich.........................  ........        X   Ms. Harman.....................        X   ........
Mr. Bass...............................  ........        X
Mr. Pitts..............................        X   ........
Mrs. Bono..............................  ........        X
Mr. Walden.............................  ........  ........
Mr. Terry..............................  ........        X
----------------------------------------------------------------------------------------------------------------

                            ROLLCALL VOTE 5

    Bill: H.R. 1542, Internet Freedom and Broadband Deployment 
Act of 2001.
    Motion: Motion by Mr. Tauzin to order H.R. 1542 reported to 
the House, amended.
    Disposition: Agreed to, by a roll call vote of 32 yeas to 
23 nays.

----------------------------------------------------------------------------------------------------------------
             Representative                Yeas      Nays             Representative            Yeas      Nays
----------------------------------------------------------------------------------------------------------------
Mr. Tauzin.............................        X   ........  Mr. Dingell....................        X   ........
Mr. Bilirakis..........................        X   ........  Mr. Waxman.....................  ........        X
Mr. Barton.............................        X   ........  Mr. Markey.....................  ........        X
Mr. Upton..............................        X   ........  Mr. Hall.......................        X   ........
Mr. Stearns............................        X   ........  Mr. Boucher....................        X   ........
Mr. Gillmor............................        X   ........  Mr. Towns......................        X   ........
Mr. Greenwood..........................        X   ........  Mr. Pallone....................  ........        X
Mr. Cox................................  ........        X   Mr. Brown......................  ........        X
Mr. Deal...............................        X   ........  Mr. Gordon.....................        X   ........
Mr. Largent............................  ........        X   Mr. Deutsch....................  ........        X
Mr. Burr...............................        X   ........  Mr. Rush.......................        X   ........
Mr. Whitfield..........................        X   ........  Ms. Eshoo......................  ........        X
Mr. Ganske.............................        X   ........  Mr. Stupak.....................  ........        X
Mr. Norwood............................        X   ........  Mr. Engel......................        X   ........
Mrs. Cubin.............................  ........  ........  Mr. Sawyer.....................        X   ........
Mr. Shimkus............................        X   ........  Mr. Wynn.......................        X   ........
Mrs. Wilson............................  ........        X   Mr. Green......................        X   ........
Mr. Shadegg............................  ........        X   Ms. McCarthy...................  ........        X
Mr. Pickering..........................  ........        X   Mr. Strickland.................  ........        X
Mr. Fossella...........................        X   ........  Ms. DeGette....................  ........        X
Mr. Blunt..............................        X   ........  Mr. Barrett....................  ........        X
Mr. Davis..............................  ........        X   Mr. Luther.....................  ........        X
Mr. Bryant.............................        X   ........  Mrs. Capps.....................  ........        X
Mr. Ehrlich............................  ........        X   Mr. Doyle......................  ........        X
Mr. Buyer..............................  ........  ........  Mr. John.......................        X   ........
Mr. Radanovich.........................        X   ........  Ms. Harman.....................  ........        X
Mr. Bass...............................        X   ........
Mr. Pitts..............................  ........        X
Mrs. Bono..............................        X   ........
Mr. Walden.............................        X   ........
Mr. Terry..............................        X   ........
----------------------------------------------------------------------------------------------------------------

                              VOICE VOTES

    Bill: H.R. 1542, Internet Freedom and Broadband Deployment 
Act of 2001.
    Amendment: An amendment in the nature of a substitute 
offered by Mr. Tauzin, No. 1, (1) creating a new definition for 
Internet Backbone Service so that such service is not included 
in the definition of Internet Access Service, but is still 
deregulated; (2) clarifying that the prohibition on federal and 
state regulation of network elements only applies to the extent 
that those elements are used in the provision of high speed 
data services, Internet backbone services, or Internet access 
services; (3) reinstating the FCC's line-sharing order that 
requires ILECs to provide the high frequency portion of a 
copper loop on a unbundled basis to requesting carriers, with 
two exceptions; (4) preventing the FCC and the States from 
expanding the line-sharing obligation; and (5) requiring ILECs 
to resell high speed data services at wholesale rates to 
competitors for three years, after which the ILEC still has a 
duty to resell such services to competitors, but only on a 
reasonable and nondiscriminatory basis.
    Disposition: Agreed to by a voice vote.
    Amendment: An amendment to the amendment in the nature of a 
substitute offered by Mr. Stearns, No. 1a, to prevent the 
abrogation or modification of existing interconnection 
agreements, although the amendment would not affect any change 
of law provisions in such agreements, nor permit an agreement 
to remain in effect longer than its existing term.
    Disposition: Agreed to by a voice vote.
    Amendment: An amendment to the amendment in the nature of a 
substitute offered by Mr. Sawyer, No. 1c, requiring the Bell 
operating companies to meet the following broadband deployment 
milestones: 20 percent of a company's central offices in a 
State will have to be high speed data capable within the first 
year after enactment; 40 percent will have to be high speed 
data capable within two years; 70 percent within three years; 
and 100 percent within five years. High speed data capability 
is defined as (1) a central office being equipped with high 
speed data multiplexing capability and (2) each customer being 
able to obtain high speed data service over an upgradeable loop 
or through the use of an alternative technology. An upgradeable 
loop is defined as a loop that is less than 15,000 feet from a 
central office over which high speed data service can be 
provided without causing a degradation of voice service. The 
amendment also requires the FCC to conduct a study and report 
to Congress regarding the deployment of high speed data 
services to underserved areas. Penalties may be imposed if the 
deployment milestones are not met.
    Disposition: Agreed to by a voice vote.
    Amendment: An amendment to the amendment in the nature of a 
substitute offered by Mr. Stearns, No. 1e, to change the 
definition of high speed data service so that the definition 
did not include any service that consists of or includes the 
offering of a capability to transmit information between or 
among switching offices.
    Disposition: Withdrawn.
    Amendment: An amendment to the amendment in the nature of a 
substitute offered by Mr. Boucher, No. 1f, to ensure that an 
ISP could purchase facilities and services for the provision of 
Internet access service from ILECs on nondiscriminatory rates, 
terms, and conditions.
    Disposition: Withdrawn.
    Amendment: An en bloc amendment to the amendment in the 
nature of a substitute offered by Mr. Davis, No. 1g, to require 
the FCC to promulgate rules for new ILEC reporting requirements 
on provisioning issues and for performance standards for 
nondiscriminatory provisioning, and impose penalties on all 
ILECs for violations of new sections 232 and 233 of the 
Communications Act, and different, more onerous penalties on 
Bell operating companies for violations of new sections 232, 
233, and 271k of the Communications Act.
    Disposition: Not agreed to by a voice vote.
    Amendment: An amendment to the amendment in the nature of a 
substitute offered by Mr. Davis, No. 1j, to require an ILEC to 
provide special access to any provider of high speed data, 
Internet backbone, or Internet access services within the same 
period of time that an ILEC provided special access to itself 
or an affiliate.
    Disposition: Withdrawn.
    Amendment: An amendment to the amendment in the nature of a 
substitute offered by Mrs. Wilson, No. 1k, to provide a 
compensation methodology for rights-of-way granted by a 
Federal, State, or local government agency based upon the 
actual costs incurred in managing the rights-of-way and the 
amount of public rights-of-way actually used by a particular 
telecommunications carrier.
    Disposition: Withdrawn.
    Amendment: An amendment to the amendment in the nature of a 
substitute offered by Mr. Largent, No. 1l, to prevent any 
modification of interconnection agreement provisions related to 
the rates, terms, and conditions for access to network 
elements.
    Disposition: Ruled as non-germane.
    Amendment: An amendment to the amendment in the nature of a 
substitute offered by Mr. Davis, No. 1m, to require an ILEC to 
provide special access for the provision of Internet access 
service to any provider of high speed data, Internet backbone, 
or Internet access services within the same period of time that 
an ILEC provided special access to itself or an affiliate for 
the provision of Internet access service.
    Disposition: Agreed to by a voice vote.

                      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.

         Statement of General Performance Goals and Objectives

    The goal of H.R. 1542 is to accelerate the deployment of 
high speed data services.

   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. 
1542, the Internet Freedom and Broadband Deployment Act, would 
result in no new or increased 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, May 24, 2001.
Hon. W.J. ``Billy'' Tauzin,
Chairman, Committee on Energy and Commerce, House of Representatives, 
        Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1542, the Internet 
Freedom and Broadband Deployment Act of 2001.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Ken Johnson 
(for federal spending), Erin Whitaker (for revenues), Shelley 
Finlayson (for the state and local impact), and Philip Webre 
(for the private-sector impact).
            Sincerely,
                                        Steven M. Lieberman
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 1542--Internet Freedom and Broadband Deployment Act of 2001

    Summary: H.R. 1542 would prohibit the Federal 
Communications Commission (FCC) and state governments from 
regulating the provision of Internet access or high-speed data 
services, with certain exceptions. H.R. 1542 also would allow 
the FCC to impose penalties for violations of certain 
provisions of the bill, including requirements that certain 
telecommunications carriers give consumers the freedom to 
choose their Internet service providers. Under the bill, the 
FCC also could assess penalties against Bell telephone 
companies that offer voice telecommunication services using 
telephone lines for data transmission without the agency's 
permission.
    CBO estimates that implementing H.R. 1542 would have a 
negligible net impact on spending by the FCC. The increase in 
gross spending would be about $1 million in 2002, subject to 
the availability of appropriated funds. Any such increase would 
be offset by fees collected by the FCC.
    Pay-as-you-go procedures would apply to this bill, for two 
reasons. First, the bill would create new penalties, which are 
accounted for in the budget as governmental receipts 
(revenues). CBO estimates that the bill's provisions would 
increase collection of FCC penalties by less than $500,000 a 
year. Also, enacting H.R. 1542 could affect the cash flows of 
the Universal Service Fund (USF). The USF seeks to provide 
universal access to telecommunications services through various 
charges to some telephone companies (which are accounted for in 
the budget as revenues) and payments to others (which may be 
spent without further appropriation). CBO cannot estimate the 
bill's gross impact on the revenues and spending associated 
with the USF; however, the net impact would be negligible in 
each year.
    H.R. 1542 contains an intergovernmental mandate as defined 
in the Unfunded Mandates Reform Act (UMRA) because it would 
preempt the ability of states to regulate high-speed data 
services. While data are very limited, CBO estimates that the 
costs of complying with this mandate would not exceed the 
threshold established by the Act ($56 million in 2001, adjusted 
annually for inflation).
    The bill would impose private-sector mandates as defined by 
UMRA on the Bell operating companies and other incumbent local 
exchange companies providing broadband service. The bill also 
would benefit the Bell operating companies by relaxing 
restrictions that currently preclude them from entering long-
distance data services and by relaxing some of the obligations 
placed on them to share their network facilities with their 
competitors. CBO estimates that a strict interpretation of the 
mandates would result in a total mandate cost (even with 
offsets from savings in the bill) that would exceed the annual 
threshold established in UMRA ($113 million in 2001, adjusted 
annually for inflation) in at least one of the first five years 
that the mandates are in effect.
    Estimated cost to the Federal Government: Based on 
information from the FCC, CBO estimates that implementing H.R. 
1542 would cost $1 million in 2002, assuming the appropriation 
of the necessary amounts. These funds would pay for additional 
staff to develop new regulations necessary to implement the 
bill's provisions. Under current law, the FCC is authorized to 
collect fees from the telecommunications industry sufficient to 
offset the cost of its regulatory programs. CBO assumes that 
the additional costs of implementing H.R. 1542 would be offset 
by an increase in collections credited to the FCC's annual 
appropriations. Therefore, H.R. 1542 would not have a 
significant net impact on the cost of the FCC's operations.
    H.R. 1542 would authorize the FCC to impose penalties for 
violations of certain provisions in H.R. 1542. These provisions 
include requirements that incumbent telephone carriers give 
consumers the freedom to choose Internet service providers, and 
provisions that would prevent the Bell telephone companies from 
offering voice telecommunication services using telephone data 
lines unless authorized to do so by the FCC. Violations would 
be subject to a maximum penalty of $1 million per incident, or 
$10 million for a continuing violation. H.R. 1542 also would 
allow the FCC to impose penalties on the Bell telephone 
companies for failure to provide customer access to high-speed 
data services on a schedule specified in the bill. Based on 
information from the FCC and telecommunications firms, CBO 
estimates that enacting the bill would increase collections of 
such penalties by less than $500,000 a year.
    Finally, H.R. 1542 could affect the size of the USF, which 
was established by the Telecommunications Act of 1996 to 
provide universal access to telecommunications service 
throughout the nation. The fund assesses charges against 
telecommunications services and distributes the amounts 
collected to high-cost areas, low-income consumers, schools and 
libraries, and others to defray some of the costs of telephone 
and Internet service. Because H.R. 1542 could affect the 
telecommunications market in non-rural, high-cost areas of the 
country, enacting the bill may cause the FCC to change the 
amount of money that would be provided from the USF to 
companies that serve those areas. USF outlays are mandatory and 
occur without further appropriation. Any change in the level of 
payments from the USF would cause a commensurate change in the 
amount of money collected by the USF, which is considered a 
revenue in the budget. CBO cannot estimate the magnitude or the 
direction of these changes in revenues and direct spending; 
however, their net effect would be negligible.
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. CBO 
estimates that enacting H.R. 1542 would affect penalties 
(receipts) by an insignificant amount each year. The bill could 
also affect receipts and spending associated with the Universal 
Service Fund, however, CBO cannot estimate the magnitude or 
direction of any change. Any change to USF receipts and 
spending would result in a negligible net impact in each year.
    Estimated impact on state, local, and tribal governments: 
H.R. 1542 contains an intergovernmental mandate as defined in 
UMRA because it would preempt the ability of states to regulate 
high-speed data services. While data are very limited, CBO 
estimates that the costs of complying with this mandate would 
not exceed the threshold established by the Act ($56 million in 
2001, adjusted annually for inflation).
    Estimated impact on the private sector: H.R. 1542 would 
impose private-sector mandates on local telephone companies, 
primarily those companies that were part of the pre-1982 
telephone service monopoly--the so-called Bell operating 
companies--but also on other telephone companies that enjoyed a 
monopoly position in local telephone service--referred to as 
non-Bell incumbent local exchange carriers. At the same time, 
the bill would benefit the Bell operating companies by relaxing 
restrictions that currently preclude them from entering long-
distance data services. The bill also would benefit the Bell 
operating companies by relaxing some of the obligations placed 
on them under current law to share their network facilities 
with competing telecommunications companies. CBO estimates that 
the total direct costs of those mandates (offset by savings 
from the bill) would exceed the annual threshold established in 
UMRA ($113 million in 2001, adjusted annually for inflation), 
assuming a strict interpretation of those mandates. If the FCC 
and the courts adopt a loser interpretation of the 
requirements, the total direct costs would not exceed the 
threshold.
    Section 5 of H.R. 1542 would require all incumbent local 
exchange providers to provide their customers the ability to 
subscribe to the Internet service providers of their choice. 
This would be a new requirement for the non-Bell incumbent 
local exchange carriers, although it is currently a requirement 
for the Bell operating companies. Current industry practice is 
such that nearly all of the carriers specified in the bill 
already comply with this requirement. Consequently, CBO 
estimates that the incremental cost to the industry to comply 
with this mandate would be small.
    Section 8 would require the Bell operating companies to 
deploy high-speed data services--or broadband services as they 
are often called--in each state in which the company or one of 
its affiliates is an incumbent local exchange carrier. The bill 
defines high-speed data service as the capability to transmit 
information (using certain technology) at a rate greater than 
or equal to 384 kilobits per second in at least one direction. 
The bill also specifies targets for accomplishing this goal 
over five years. The bill would require the Bell operating 
companies to upgrade 20 percent of their central offices to 
have high-speed data capabilities within one year of enactment, 
40 percent within two years, 70 percent within three years, and 
100 percent within five years.
    Under the bill, a Bell operating company could meet the 
deployment requirements in either of two ways. First, the Bell 
operating company could upgrade both the equipment in a central 
office and the access lines of customers who request such 
upgrades, provided their access line is less than 15,000 feet 
long. Based on engineering and industry reports, CBO estimates 
that the cost of upgrading is between $175,000 and $230,000 per 
office, and that the bill's mandate would require the Bell 
operating companies to upgrade between 3,300 and 5,000 central 
offices that would not be upgraded absent that mandate. 
Alternatively, the bill provides that a Bell operating company 
could meet the deployment requirements by providing access to 
high-speed data services by alternative means, for example 
through a cable television line, a satellite link, or a 
terrestrial wireless connection.
    The total cost of the mandate to deploy high-speed data 
services would certainly exceed the UMRA threshold if the Bell 
operating companies conformed to the mandate by upgrading their 
central offices. Alternative means could prove less expensive, 
and by CBO's estimate would fall below the UMRA threshold. But, 
because none of the alternatives is currently capable of 
reaching each and every customer, as a strict interpretation of 
the bill's language requires, it is not clear that meeting the 
deployment requirements by these means would fulfill the 
obligation of the Bell operating companies under the mandate--
even if those companies were to choose a technical alternative 
to upgrading their telephone service. Nevertheless, either the 
courts or the Federal Communications Commission might adopt a 
less strict interpretation of the mandate that would likely 
require the private sector to incur costs less than the UMRA 
threshold.
    Estimate prepared by: Federal Costs: Ken Johnson. Revenue 
Impacts: Erin Whitaker. Impact on State, Local, and Tribal 
Governments: Shelley Finlayson. Impact on the Private Sector: 
Philip Webre.
    Estimate 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 establishes the short title of the bill, the 
``Internet Freedom and Broadband Deployment Act of 2001.''

Section 2. Findings and purpose

    Section 2 makes certain Congressional findings and 
describes the purposes of the bill.

Section 3. Definitions

    Section 3 defines the term ``high speed data service'' as 
any service that consists of or includes the offering of a 
capability to transmit, using a packet-switched or successor 
technology, information at a rate that is generally not less 
than 384 kilobits per second in at least one direction. Such 
term does not include special access service offered through 
dedicated transport links between a customer's premises and an 
interexchange carrier's switch or point of presence.
    Section 3 defines the term ``Internet'' as collectively the 
myriad of computer and telecommunications facilities, including 
equipment and operating software, which comprise the 
interconnected world-wide network of networks that employ the 
Transmission Control Protocol/Internet Protocol, or any 
predecessor or successor protocols to such protocol, to 
communicate information of all kinds by wire or radio.
    Section 3 defines the term ``Internet access service'' as a 
service that combines computer processing, information storage, 
protocol conversion, and routing with transmission to enable 
users to access Internet content and services. These end users 
may include residential consumers, businesses, content 
providers, or application providers. Internet access service is 
typically provided by entities known as Internet service 
providers (ISPs).
    Section 3 defines the term ``Internet backbone'' as a 
network that carries Internet traffic over high-capacity long-
haul transmission facilities and that is interconnected with 
other such networks via private peering relationships. These 
private peering relationships are relationships worked out 
between and among the various Internet backbone providers to 
ensure the flow of Internet content and services.
    Section 3 defines the term ``Internet backbone service'' as 
any interLATA service that consists of or includes the 
transmission of packets by means of an Internet backbone, and 
shall include the local connectivity portion of such interLATA 
service. The phrase ``local connectivity'' is intended to 
include links between ISPs and network access points (NAPs). 
However, the phrase ``local connectivity'' is only included in 
the definition of the term ``Internet backbone service'' to the 
extent that such local connectivity is part of an interLATA 
service. The deregulation of the local connectivity component 
of an Internet backbone service has no affect on the 
preservation of the regulation of circuit-switched telephone 
exchange services.

Section 4. Limitation on authority to regulate high speed data services

    Section 4 of the bill adds a new Section 232 to the 
Communications Act of 1934 (47 U.S.C. Sec. 151 et seq.) that 
prevents the Commission and the States from applying rules 
designed for legacy telephone services and facilities to high 
speed data services, Internet backbone services, Internet 
access services, and network elements to the extent that these 
elements are used in the provision of these services. Section 4 
is intended to provide an incentive to offer new services and 
deploy new facilities and equipment by deregulating high speed 
data, Internet backbone, and Internet access services and the 
use of network elements in the provision of these services. 
Section 4 does not, however, remove circuit-switched voice 
telephone exchange services from their current regulatory 
framework. Nothing in Section 4 reduces the authority of the 
Commission and the States to regulate basic telephone services 
and the facilities used to provide such services.
    New Section 232 provides that the Commission and the States 
do not have the authority to regulate the rates, terms, 
charges, terms, or conditions for, or entry into the provision 
of any high speed data service, Internet backbone service, or 
Internet access service, except to the extent that such 
services are expressly referred to in the Communications Act. 
New Section 232 also prohibits the Commission and the States 
from regulating any network element to the extent that such 
element is used in the provision of high speed data service, 
Internet backbone service, or Internet access service.
    New Section 232 prevents the Commission from imposing or 
requiring the collection of any fees, taxes, charges or tariffs 
upon a high speed data service, Internet backbone service, or 
Internet access service. However, it is the intent of the 
Committee that this provision shall not be construed to limit 
the amount of universal service support available under Section 
254 of the Communications Act.
    New Section 232 provides that the deregulation of high 
speed data service, Internet backbone service, Internet access 
service, and network elements, to the extent that such elements 
are used in the provision of such services, does not affect the 
authority of the States to regulate circuit-switched telephone 
exchange services, nor the rights of cable franchise 
authorities to establish requirements otherwise consistent with 
the Communications Act.
    New Section 232 also preserves the Commission's authority 
to retain or modify the exemption from interstate access 
charges for enhanced service providers under Part 69 of the 
Commission's regulations, and the requirements of the MTS/WATS 
Market Structure Order that enable enhanced service providers 
to obtain business lines from ILECs. The Committee intends that 
new Section 232 will not prevent the FCC from requiring local 
exchange carriers to unbundle circuit-switched basic services 
from circuit-switched enhanced services so that entities such 
as Internet Service Providers can obtain such basic services on 
the same terms and conditions as a local exchange carrier 
provides to itself or an affiliate for the provision of such 
enhanced services. New Section 232 also preserves the 
Commission's rules issued pursuant to Section 254 of the 
Communications Act regarding universal service.
    Section 4 also adds a new subsection (j) to Section 251 of 
the Communications Act. New subsection 251(j) restricts the 
authority of the Commission and the States to require an ILEC 
to provide unbundled access to a network element for the 
provision of any high speed data service. However, subsection 
251(j)(1)(A) requires an ILEC to provide unbundled access, even 
for the provision of high speed data services, to those network 
elements described in section 51.319 of the Commission's 
regulations (47 C.F.R. 51.319) as in effect on January 1, 1999, 
as long as any such requirement is consistent with subsections 
(c)(3) and (d)(2).
    New subsection 251(j)(1)(A) recognizes that, with limited 
exceptions, the facilities used in the provision of high speed 
data services are not essential facilities to which competitors 
require access. They are competitive facilities, and it will 
promote competition and innovation if providers are free to 
invest in such facilities without being subject to the sort of 
unbundling requirements applicable to ILEC facilities used for 
providing circuit-switched voice services. At the same time 
that subsection (j)(1)(A) removes unbundling obligations from 
facilities to the extent that they are used in the provision of 
high speed data services, subject to subparagraphs (B), (C), 
and (D), new subsection 251(j)(1)(A) does not in any way change 
the existing obligations of ILECs with respect to providing 
unbundled access to network elements for the provision of 
circuit-switched voice services.
    New subsection 251(j) also preserves, with two exceptions, 
the Commissions Line Sharing Order (Third Report and Order in 
CC Docket No. 98-147 and the Fourth Report and Order in CC 
Docket 96-98 (FCC 99-355)) (together, the Line Sharing Order), 
as adopted November 18, 1999, without regard to any subsequent 
clarification, interpretation, or reinterpretation by the 
Commission or any State that would expand an ILEC's obligation 
to provide access to any network element for the purpose of 
line sharing. This provision is intended to ensure that the 
grandfathering of network elements in subsection 251(j)(1)(B) 
is strictly and narrowly construed. The ILEC's requirement to 
provide line sharing on a copper loop does not include a 
requirement to provide, on an unbundled basis, any element of 
packet switching. A requesting carrier that wishes to line 
share by using the high frequency portion of a cooper loop must 
add its own packetizing technology on both ends of that loop.
    The first exception to the preservation of the Line Sharing 
Order provides that an ILEC shall not be required to provide 
unbundled access to the high frequency portion of the loop ``at 
a remote terminal.'' The Committee intends that, consistent 
with prior Commission interpretations, the term ``at a remote 
terminal'' means ``inside a remote terminal.'' Requiring an 
ILEC to provide a CLEC with access to the copper loop inside a 
remote terminal jeopardizes the operation and security of an 
ILEC's remote terminal and the ILEC's equipment housed therein. 
This exception does not, however, remove the obligation of an 
ILEC to provide access to the high frequency portion of a 
copper loop at an accessible point, other than inside a remote 
terminal, on the copper loop between a remote terminal and a 
customer's premises. A remote terminal is defined as an 
accessible terminal located outside of the central office to 
which analog signals are carried from a customer's premises, in 
which such signals are converted to digital, and from which 
such signals are carried, generally over fiber, to the central 
office.
    The second exception to the preservation of the Line 
Sharing Order provides that the Commission and the States shall 
permit an ILEC to charge requesting carriers for the high 
frequency portion of a loop an amount equal to which such ILEC 
imputes to its own high speed data service. The Commission and 
the States shall allow ILECs to readjust the amounts that they 
are currently imputing.
    Nothing in H.R. 1542 eliminates or modifies paragraph 
251(f)(1) of the Communications Act, which exempts a rural 
telephone company, as defined by the Communications Act, from 
subsection 251(c) until (1) such company has received a bona 
fide request for interconnection, services, or network 
elements, and (2) the State commission determines, in 
accordance with subparagraph 251(f)(1)(B), that such request is 
not unduly economically burdensome, is technically feasible, 
and is consistent with section 254 (other than subsections 
(b)(7) and (c)(1)(D) thereof). Nothing in H.R. 1542 eliminates 
or modifies paragraph 251(f)(2) of the Communications Act which 
enables a local exchange carrier with fewer than 2 percent of 
the Nation's subscriber lines installed in the aggregate 
nationwide to petition a State commission for a suspension or 
modification of the applications of a requirement or 
requirements of subsections 251(b) or 251(c) to telephone 
exchange service facilities specified in such petition.
    New subsection 251(j) does not prohibit the Commission from 
reducing the number of network elements subject to the 
unbundling requirement, or to forbear from enforcing any 
portion of the unbundling requirement, in accordance with the 
Commission's authority under section 706 of the 
Telecommunications Act of 1996, notwithstanding any limitation 
on that authority imposed by section 10 of the Communications 
Act. Thus, although the list of network elements grandfathered 
by subparagraph (B) may not be expanded, it may be diminished 
by the Commission in accordance with its statutory 
responsibilities. For example, as of January 1, 1999, incumbent 
LECs were required to unbundle operator services and directory 
assistance. The Commission subsequently determined, however, 
that these elements should not be unbundled under section 
251(c)(3). Section 251(j) should not be read to interfere with 
that determination in any respect.
    New subsection 251(j) provides that any network element 
used in the provision of high speed data service that does not 
have to be unbundled in accordance with subsection (c) shall 
not be entitled to any subsidy, including any subsidy pursuant 
to section 254, if that subsidy is not provided on a 
nondiscriminatory basis to all providers of high speed data 
service and Internet access service. The Committee intends 
that, to the extent that any network element is used in the 
provision of circuit-switched telephone exchange service, 
universal service support shall continue to be made available 
to further the objectives of Section 254 of the Communications 
Act.
    New subsection 251(j) requires an ILEC that provides high 
speed data service to offer for resale any such service at 
wholesale rates in accordance with subsection (c)(4) for three 
years. After such three-year period, such ILEC is required to 
offer high speed data services for resale pursuant to 
subsection (b)(1). The requirement to offer for resale high 
speed data services in accordance with subsections (c)(4) and 
(b)(2) only applies to any such service that the carrier 
provides at retail to subscribers who are not 
telecommunications carriers or Internet service providers.
    New subsection 251(j) provides that nothing in the 
subsection permits or requires the abrogation or modification 
of any interconnection agreement in effect on the date of 
enactment during the term of such agreement. However, this 
provision does not apply to any interconnection agreement 
beyond the expiration date of the agreement's existing term on 
the date of enactment of this section. In addition, this 
provision does not affect any change of law provision in an 
interconnection agreement.

Section 5. Internet consumers freedom of choice

    Section 5 imposes obligations on ILECs to ensure that 
Internet users have the freedom to choose among Internet 
service providers. Section 5 adds a new section 233 to the 
Communications Act, the purpose of which is to ensure that 
ILECs permit unaffiliated Internet service providers to offer 
Internet access service to customers over an ILEC's facilities.
    New Section 233 requires an ILEC to provide Internet users 
with the ability to subscribe to, and have access to, any 
Internet service provider that interconnects with an ILEC's 
high speed data service. This requirement prohibits an ILEC 
from requiring a customer to purchase the Internet access 
service of the ILEC or its affiliate in order for the customer 
to obtain the service of the customer's preferred ISP. New 
Section 233 also requires an ILEC to make available to an ISP 
the facilities and services necessary to interconnect with an 
ILEC's high speed data service for the provision of Internet 
access service. New Section 233 also requires an ILEC to permit 
an ISP to collocate equipment in an ILEC's central office 
necessary for interconnection with an ILEC's high speed data 
service. In addition, new Section 233 requires an ILEC to 
provide special access service for the provision of Internet 
access service to any provider of high speed data services, 
Internet backbone services, or Internet access service within 
the same time period in which the ILEC provides itself or any 
affiliate with special access for the provision of Internet 
access service.

Section 6. Incidental InterLATA provision of high speed data and 
        internet backbone services

    Section 6 amends section 271(g) of the Communications Act 
by clarifying that high speed data service and Internet 
backbone service are incidental interLATA services. When 
subsection 271(g) was originally added to the Communications 
Act as part of the Telecommunications Act of 1996, high speed 
data service and Internet backbone service were barely in their 
infancy and were not available on a widespread commercial 
basis. As a result, the Telecommunications Act did not 
contemplate the relationship between interLATA 
telecommunications services subject to section 271(b)(1) and 
high speed data and Internet backbone services.
    Since 1996, the Committee, in its exercise of jurisdiction 
over interstate communications, has devoted an enormous amount 
of time studying the growth of the Internet and its relation to 
traditional telecommunications services. The Committee finds 
that, as a matter of telecommunications policy, the provision 
of high speed data and Internet backbone services is incidental 
to the provision of Internet-related communications services. 
Therefore, high speed data and Internet backbone services are 
not subject to section 271(b)(1) because, consistent with the 
deregulatory thrust of H.R. 1542 and the Telecommunications 
Act, they should be classified as incidental services under 
section 271(g). However, H.R. 1542 does not otherwise alter the 
role of the Commission, the Department of Justice, or the State 
commissions in the process through which a Bell operating 
company obtains approval to provide in-region interLATA 
services in accordance with section 271(b)(1).
    Section 6 also adds a new subsection 271(k) which prohibits 
a Bell operating company from providing an interLATA voice 
telecommunications service originating in an in-region State, 
except in accordance with Section 271(b)(1), regardless of 
whether there is a charge for such service. This prohibition 
applies to an interLATA voice telecommunications service that 
is included in a Bell operating company's high speed data or 
Internet backbone service offering.

Section 7. Deployment of broadband services

    Section 7 creates a new Section 277 of the Communications 
Act that requires Bell operating companies and their affiliates 
to deploy high speed data services in each State in which such 
company or its affiliates qualify as an ILEC in accordance with 
the Communications Act. A Bell operating company (or its 
affiliate) must attain high speed data capability in its 
central offices in qualifying States based on a specific 
deployment schedule. The Bell operating company must achieve 
high speed data capability in 20 percent of its central offices 
in a State within one year, 40 percent of its central offices 
in such State within two years, 70 percent of its central 
offices in such State within three years, and 100 percent of 
the central offices in such State within five years.
    New section 277 defines ``high speed data capability'' as 
existing where a central office has been equipped with high 
speed data multiplexing capability, and where each upgradeable 
customer loop served by that central office is upgraded 
promptly upon receipt of a customer's bona fide request for 
high speed data service. New section 277 also defines ``high 
speed data capability'' as the ability of every customer served 
by a central office to obtain high speed data service from a 
Bell operating company or its affiliate by means of an 
alternative technology that does not involve the use of a 
customer's loop. A Bell operating company can meet the 
requirement that a central office achieve high speed data 
capability by either option.
    New section 277 defines ``upgradeable loops'' as a copper 
loop that is less than 15,000 feet in length from a central 
office to a customer's premises, and can, with or without loop 
conditioning, transmit high speed data services on such loop 
without causing significant degradation of voice service.
    New section 277 also provides for forfeiture penalties in 
accordance with section 503(b)(2) of the Communications Act if 
a Bell operating company fails to comply with the section's 
deployment schedule. In determining whether to impose a 
forfeiture penalty and the amount of any such penalty, the 
Commission must take into consideration the extent to which the 
deployment schedule and means of achieving such schedule 
outlined in the section are technically feasible. The 
Commission shall have exclusive jurisdiction to enforce the 
deployment schedule, although a State commission may file a 
complaint with the Commission seeking the imposition of 
penalties for a Bell operating company's failure to adhere to 
the deployment schedule.
    New section 277 also requires the Commission to provide an 
analysis of the deployment of high speed data service to under 
served areas in each of its annual reports submitted no more 
than 18 months after the date of enactment. Such report must 
include a statistical analysis comparing the extent of 
deployment after the enactment of the Internet Freedom and 
Broadband Deployment Act with such deployment prior to 
enactment. Such report must also include an analysis of the 
delivery of high speed data service by type of technology and 
class or category of provider. The report must also identify 
impediments to such deployment and any developments in 
overcoming such impediments that might have occurred subsequent 
to the filing of the most recent report. In addition, the 
report must include recommendations, subsequent to 
consultations with the National Telecommunications and 
Information Administration, for further extending deployment 
and overcoming any impediments to deployment.

Section 8. Commission authorized to prescribe just and reasonable 
        charges

    Section 8 permits the Commission to impose penalties in 
accordance with Section 503 of the Communications Act not to 
exceed $1,000,000 for any violation of sections 5, 6, or 7 of 
the Internet Freedom and Broadband Deployment Act. Each 
distinct violation shall be a separate offense, and, in the 
case of a continuing violation, each day shall be considered a 
separate offense. The amount assessed for any continuing 
violation shall not exceed $10,000,000 for any single act or 
failure to act described in section 5, 6 or 7.

         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):

                      COMMUNICATIONS ACT OF 1934

           *       *       *       *       *       *       *



                      TITLE I--GENERAL PROVISIONS

           *       *       *       *       *       *       *


SEC. 3. DEFINITIONS.

  For the purposes of this Act, unless the context otherwise 
requires--
          (1)  * * *

           *       *       *       *       *       *       *

          (20) High speed data service.--The term ``high speed 
        data service'' means any service that consists of or 
        includes the offering of a capability to transmit, 
        using a packet-switched or successor technology, 
        information at a rate that is generally not less than 
        384 kilobits per second in at least one direction. Such 
        term does not include special access service offered 
        through dedicated transport links between a customer's 
        premises and an interexchange carrier's switch or point 
        of presence.
          [(20)] (21) Information service.--The term 
        ``information service'' means the offering of a 
        capability for generating, acquiring, storing, 
        transforming, processing, retrieving, utilizing, or 
        making available information via telecommunications, 
        and includes electronic publishing, but does not 
        include any use of any such capability for the 
        management, control, or operation of a 
        telecommunications system or the management of a 
        telecommunications service.
          (22) Internet.--The term ``Internet'' means 
        collectively the myriad of computer and 
        telecommunications facilities, including equipment and 
        operating software, which comprise the interconnected 
        world-wide network of networks that employ the 
        Transmission Control Protocol/Internet Protocol, or any 
        predecessor or successor protocols to such protocol, to 
        communicate information of all kinds by wire or radio.
          (23) Internet access service.--The term ``Internet 
        access service'' means a service that combines computer 
        processing, information storage, protocol conversion, 
        and routing with transmission to enable users to access 
        Internet content and services.
          (24) Internet backbone.--The term ``Internet 
        backbone'' means a network that carries Internet 
        traffic over high-capacity long-haul transmission 
        facilities and that is interconnected with other such 
        networks via private peering relationships.
          (25) Internet backbone service.--The term ``Internet 
        backbone service'' means any interLATA service that 
        consists of or includes the transmission by means of an 
        Internet backbone of any packets, and shall include 
        related local connectivity.
          [(21)] (26) Interlata service.--The term ``interLATA 
        service'' means telecommunications between a point 
        located in a local access and transport area and a 
        point located outside such area.
          [(22)] (27) Interstate communication.--The term 
        ``interstate communication'' or ``interstate 
        transmission'' means communication or transmission (A) 
        from any State, Territory, or possession of the United 
        States (other than the Canal Zone), or the District of 
        Columbia, to any other State, Territory, or possession 
        of the United States (other than the Canal Zone), or 
        the District of Columbia, (B) from or to the United 
        States to or from the Canal Zone, insofar as such 
        communication or transmission takes place within the 
        United States, or (C) between points within the United 
        States but through a foreign country; but shall not, 
        with respect to the provisions of title II of this Act 
        (other than section 223 thereof), include wire or radio 
        communication between points in the same State, 
        Territory, or possession of the United States, or the 
        District of Columbia, through any place outside 
        thereof, if such communication is regulated by a State 
        commission.
          [(23)] (28) Land station.--The term ``land station'' 
        means a station, other than a mobile station, used for 
        radio communication with mobile stations.
          [(24)] (29) Licensee.--The term ``licensee'' means 
        the holder of a radio station license granted or 
        continued in force under authority of this Act.
          [(25)] (30) Local access and transport area.--The 
        term ``local access and transport area'' or ``LATA'' 
        means a contiguous geographic area--
                  (A)  * * *

           *       *       *       *       *       *       *

          [(26)] (31) Local exchange carrier.--The term ``local 
        exchange carrier'' means any person that is engaged in 
        the provision of telephone exchange service or exchange 
        access. Such term does not include a person insofar as 
        such person is engaged in the provision of a commercial 
        mobile service under section 332(c), except to the 
        extent that the Commission finds that such service 
        should be included in the definition of such term.
          [(27)] (32) Mobile service.--The term ``mobile 
        service'' means a radio communication service carried 
        on between mobile stations or receivers and land 
        stations, and by mobile stations communicating among 
        themselves, and includes (A) both one-way and two-way 
        radio communication services, (B) a mobile service 
        which provides a regularly interacting group of base, 
        mobile, portable, and associated control and relay 
        stations (whether licensed on an individual, 
        cooperative, or multiple basis) for private one-way or 
        two-way land mobile radio communications by eligible 
        users over designated areas of operation, and (C) any 
        service for which a license is required in a personal 
        communications service established pursuant to the 
        proceeding entitled ``Amendment to the Commission's 
        Rules to Establish New Personal Communications 
        Services'' (GEN Docket No. 90-314; ET Docket No. 92-
        100), or any successor proceeding.
          [(28)] (33) Mobile station.--The term ``mobile 
        station'' means a radio-communication station capable 
        of being moved and which ordinarily does move.
          [(29)] (34) Network element.--The term ``network 
        element'' means a facility or equipment used in the 
        provision of a telecommunications service. Such term 
        also includes features, functions, and capabilities 
        that are provided by means of such facility or 
        equipment, including subscriber numbers, databases, 
        signaling systems, and information sufficient for 
        billing and collection or used in the transmission, 
        routing, or other provision of a telecommunications 
        service.
          [(30)] (35) Number portability.--The term ``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.
          [(31)] (36)(A) Operator.--The term ``operator'' on a 
        ship of the United States means, for the purpose of 
        parts II and III of title III of this Act, a person 
        holding a radio operator's license of the proper class 
        as prescribed and issued by the Commission.

           *       *       *       *       *       *       *

          [(32)] (37) Person.--The term ``person'' includes an 
        individual, partnership, association, joint-stock 
        company, trust, or corporation.
          [(33)] (38) Radio communication.--The term ``radio 
        communication'' or ``communication by radio'' means the 
        transmission by radio of writing, signs, signals, 
        pictures, and sounds of all kinds, including all 
        instrumentalities, facilities, apparatus, and services 
        (among other things, the receipt, forwarding, and 
        delivery of communications) incidental to such 
        transmission.
          [(34)] (39)(A) Radio officer.--The term ``radio 
        officer'' on a ship of the United States means, for the 
        purpose of part II of title III of this Act, a person 
        holding at least a first or second class radiotelegraph 
        operator's license as prescribed and issued by the 
        Commission. When such person is employed to operate a 
        radiotelegraph station aboard a ship of the United 
        States, he is also required to be licensed as a ``radio 
        officer'' in accordance with the Act of May 12, 1948 
        (46 U.S.C. 229a-h).

           *       *       *       *       *       *       *

          [(35)] (40) Radio station.--The term ``radio 
        station'' or ``station'' means a station equipped to 
        engage in radio communication or radio transmission of 
        energy.
          [(36)[ (41) Radiotelegraph auto alarm.--The term 
        ``radiotelegraph auto alarm'' on a ship of the United 
        States subject to the provisions of part II of title 
        III of this Act means an automatic alarm receiving 
        apparatus which responds to the radiotelegraph alarm 
        signal and has been approved by the Commission. 
        ``Radiotelegraph auto alarm'' on a foreign ship means 
        an automatic alarm receiving apparatus which responds 
        to the radiotelegraph alarm signal and has been 
        approved by the government of the country in which the 
        ship is registered: Provided, That the United States 
        and the country in which the ship is registered are 
        parties to the same treaty, convention, or agreement 
        prescribing the requirements for such apparatus. 
        Nothing in this Act or in any other provision of law 
        shall be construed to require the recognition of a 
        radiotelegraph auto alarm as complying with part II of 
        title III of this Act, on a foreign ship subject to 
        such part, where the country in which the ship is 
        registered and the United States are not parties to the 
        same treaty, convention, or agreements prescribing the 
        requirements for such apparatus.
          [(37)] (42) Rural telephone company.--The term 
        ``rural telephone company'' means a local exchange 
        carrier operating entity to the extent that such 
        entity--
                  (A)  * * *

           *       *       *       *       *       *       *

          [(38)] (43) Safety convention.--The term ``safety 
        convention'' means the International Convention for the 
        Safety of Life at Sea in force and the regulations 
        referred to therein.
          [(39)] (44)(A) Ship.--The term ``ship'' or ``vessel'' 
        includes every description of watercraft or other 
        artificial contrivance, except aircraft, used or 
        capable of being used as a means of transportation on 
        water, whether or not it is actually afloat.

           *       *       *       *       *       *       *

          [(40)] (45) State.--The term ``State'' includes the 
        District of Columbia and the Territories and 
        possessions.
          [(41)] (46) State commission.--The term ``State 
        commission'' means the commission, board, or official 
        (by whatever name designated) which under the laws of 
        any State has regulatory jurisdiction with respect to 
        intrastate operations of carriers.
          [(42)] (47) Station license.--The term ``station 
        license,'' ``radio station license,'' or ``license'' 
        means that instrument of authorization required by this 
        Act or the rules and regulations of the Commission made 
        pursuant to this Act, for the use or operation of 
        apparatus for transmission of energy, or 
        communications, or signals by radio by whatever name 
        the instrument may be designated by the Commission.
          [(43)] (48) Telecommunications.--The term 
        ``telecommunications'' means the transmission, between 
        or among points specified by the user, of information 
        of the user's choosing, without change in the form or 
        content of the information as sent and received.
          [(44)] (49) Telecommunications carrier.--The term 
        ``telecommunications carrier'' means any provider of 
        telecommunications services, except that such term does 
        not include aggregators of telecommunications services 
        (as defined in section 226). A telecommunications 
        carrier shall be treated as a common carrier under this 
        Act only to the extent that it is engaged in providing 
        telecommunications services, except that the Commission 
        shall determine whether the provision of fixed and 
        mobile satellite service shall be treated as common 
        carriage.
          [(45)] (50) Telecommunications equipment.--The term 
        ``telecommunications equipment'' means equipment, other 
        than customer premises equipment, used by a carrier to 
        provide telecommunications services, and includes 
        software integral to such equipment (including 
        upgrades).
          [(46)] (51) Telecommunications service.--The term 
        ``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 
        directly to the public, regardless of the facilities 
        used.
          [(47)] (52) Telephone exchange service.--The term 
        ``telephone exchange service'' means (A) service within 
        a telephone exchange, or within a connected system of 
        telephone exchanges within the same exchange area 
        operated to furnish to subscribers intercommunicating 
        service of the character ordinarily furnished by a 
        single exchange, and which is covered by the exchange 
        service charge, or (B) comparable service provided 
        through a system of switches, transmission equipment, 
        or other facilities (or combination thereof) by which a 
        subscriber can originate and terminate a 
        telecommunications service.
          [(48)] (53) Telephone toll service.--The term 
        ``telephone toll service'' means telephone service 
        between stations in different exchange areas for which 
        there is made a separate charge not included in 
        contracts with subscribers for exchange service.
          [(49)] (54) Television service.--
                  (A)  * * *

           *       *       *       *       *       *       *

          [(50)] (55) Transmission of energy by radio.--The 
        term ``transmission of energy by radio'' or ``radio 
        transmission of energy'' includes both such 
        transmission and all instrumentalities, facilities, and 
        services incidental to such transmission.
          [(51)] (56) United states.--The term ``United 
        States'' means the several States and Territories, the 
        District of Columbia, and the possessions of the United 
        States, but does not include the Canal Zone.
          [(52)] (57) Wire communication.--The term ``wire 
        communication'' or ``communication by wire'' means the 
        transmission of writing, signs, signals, pictures, and 
        sounds of all kinds by aid of wire, cable, or other 
        like connection between the points of origin and 
        reception of such transmission, including all 
        instrumentalities, facilities, apparatus, and services 
        (among other things, the receipt, forwarding, and 
        delivery of communications) incidental to such 
        transmission.

           *       *       *       *       *       *       *


                       TITLE II--COMMON CARRIERS

                   PART I--COMMON CARRIER REGULATION

           *       *       *       *       *       *       *


SEC. 223. OBSCENE OR HARASSING TELEPHONE CALLS IN THE DISTRICT OF 
                    COLUMBIA OR IN INTERSTATE OR FOREIGN 
                    COMMUNICATIONS.

  (a)  * * *

           *       *       *       *       *       *       *

  (h) For purposes of this section--
          (1)  * * *
          (2) The term ``interactive computer service'' has the 
        meaning provided in section [230(f)(2)] 230(f)(1).

           *       *       *       *       *       *       *


SEC. 230. PROTECTION FOR PRIVATE BLOCKING AND SCREENING OF OFFENSIVE 
                    MATERIAL.

  (a)  * * *

           *       *       *       *       *       *       *

  (f) Definitions.--As used in this section:
          [(1) Internet.--The term ``Internet'' means the 
        international computer network of both Federal and non-
        Federal interoperable packet switched data networks.]
          [(2)] (1) Interactive computer service.--The term 
        ``interactive computer service'' means any information 
        service, system, or access software provider that 
        provides or enables computer access by multiple users 
        to a computer server, including specifically a service 
        or system that provides access to the Internet and such 
        systems operated or services offered by libraries or 
        educational institutions.
          [(3)] (2) Information content provider.--The term 
        ``information content provider'' means any person or 
        entity that is responsible, in whole or in part, for 
        the creation or development of information provided 
        through the Internet or any other interactive computer 
        service.
          [(4)] (3) Access software provider.--The term 
        ``access software provider'' means a provider of 
        software (including client or server software), or 
        enabling tools that do any one or more of the 
        following:
                  (A)  * * *

           *       *       *       *       *       *       *


SEC. 232. PROVISION OF HIGH SPEED DATA SERVICES.

  (a) Freedom From Regulation.--Except to the extent that high 
speed data service, Internet backbone service, and Internet 
access service are expressly referred to in this Act, neither 
the Commission, nor any State, shall have authority to regulate 
the rates, charges, terms, or conditions for, or entry into the 
provision of, any high speed data service, Internet backbone 
service, or Internet access service, or to regulate any network 
element to the extent it is used in the provision of any such 
service; nor shall the Commission impose or require the 
collection of any fees, taxes, charges, or tariffs upon such 
service.
  (b) Savings Provision.--Nothing in this section shall be 
construed to limit or affect the authority of any State to 
regulate circuit-switched telephone exchange services, nor 
affect the rights of cable franchise authorities to establish 
requirements that are otherwise consistent with this Act.
  (c) Continued Enforcement of ESP Exemption, Universal Service 
Rules Permitted.--Nothing in this section shall affect the 
ability of the Commission to retain or modify--
          (1) the exemption from interstate access charges for 
        enhanced service providers under Part 69 of the 
        Commission's regulations, and the requirements of the 
        MTS/WATS Market Structure Order (97 FCC 2d 682, 715 
        (1983)); or
          (2) rules issued pursuant to section 254.

SEC. 233. INTERNET CONSUMERS FREEDOM OF CHOICE.

  (a) Purpose.--It is the purpose of this section to ensure 
that Internet users have freedom of choice of Internet service 
provider.
  (b) Obligations of Incumbent Local Exchange Carriers.--Each 
incumbent local exchange carrier has the duty to provide--
          (1) Internet users with the ability to subscribe to 
        and have access to any Internet service provider that 
        interconnects with such carrier's high speed data 
        service;
          (2) any Internet service provider with the right to 
        acquire the facilities and services necessary to 
        interconnect with such carrier's high speed data 
        service for the provision of Internet access service;
          (3) any Internet service provider with the ability to 
        collocate equipment in accordance with the provisions 
        of section 251, to the extent necessary to achieve the 
        objectives of paragraphs (1) and (2) of this 
        subsection; and
          (4) any provider of high speed data services, 
        Internet backbone service, or Internet access service 
        with special access for the provision of Internet 
        access service within a period no longer than the 
        period in which such incumbent local exchange carrier 
        provides special access to itself or any affiliate for 
        the provision of such service.
  (c) Definitions.--As used in this section--
          (1) Internet service provider.--The term ``Internet 
        service provider'' means any provider of Internet 
        access service.
          (2) Incumbent local exchange carrier.--The term 
        ``incumbent local exchange carrier'' has the same 
        meaning as provided in section 251(h).
          (3) Special access service.--The term ``special 
        access service'' means the provision of dedicated 
        transport links between a customer's premises and the 
        switch or point of presence of a high speed data 
        service provider, Internet backbone service provider, 
        or Internet service provider.

              PART II--DEVELOPMENT OF COMPETITIVE MARKETS

SEC. 251. INTERCONNECTION.

  (a)  * * *

           *       *       *       *       *       *       *

  (j) Exemption.--
          (1) Access to network elements for high speed data 
        service.--
                  (A) Limitation.--Subject to subparagraphs 
                (B), (C), and (D) of this paragraph, neither 
                the Commission nor any State shall require an 
                incumbent local exchange carrier to provide 
                unbundled access to any network element for the 
                provision of any high speed data service.
                  (B) Preservation of regulations and line 
                sharing order.--Notwithstanding subparagraph 
                (A), the Commission shall, to the extent 
                consistent with subsections (c)(3) and (d)(2), 
                require the provision of unbundled access to 
                those network elements described in section 
                51.319 of the Commission's regulations (47 
                C.F.R. 51.319), as--
                          (i) in effect on January 1, 1999; and
                          (ii) subject to subparagraphs (C) and 
                        (D), as modified by the Commission's 
                        Line Sharing Order.
                  (C) Exceptions to preservation of line 
                sharing order.--
                          (i) Unbundled access to remote 
                        terminal not required.--An incumbent 
                        local exchange carrier shall not be 
                        required to provide unbundled access to 
                        the high frequency portion of the loop 
                        at a remote terminal.
                          (ii) Charges for access to high 
                        frequency portion.--The Commission and 
                        the States shall permit an incumbent 
                        local exchange carrier to charge 
                        requesting carriers for the high 
                        frequency portion of a loop an amount 
                        equal to which such incumbent local 
                        exchange carrier imputes to its own 
                        high speed data service.
                  (D) Limitations on reinterpretation of line 
                sharing order.--Neither the Commission nor any 
                State Commission shall construe, interpret, or 
                reinterpret the Commission's Line Sharing Order 
                in such manner as would expand an incumbent 
                local exchange carrier's obligation to provide 
                access to any network element for the purpose 
                of line sharing.
                  (E) Authority to reduce elements subject to 
                requirement.--This paragraph shall not prohibit 
                the Commission from modifying the regulation 
                referred to in subparagraph (B) to reduce the 
                number of network elements subject to the 
                unbundling requirement, or to forbear from 
                enforcing any portion of that regulation in 
                accordance with the Commission's authority 
                under section 706 of the Telecommunications Act 
                of 1996, notwithstanding any limitation on that 
                authority in section 10 of this Act.
                  (F) Prohibition on discriminatory 
                subsidies.--Any network element used in the 
                provision of high speed data service that is 
                not subject to the requirements of subsection 
                (c) shall not be entitled to any subsidy, 
                including any subsidy pursuant to section 254, 
                that is not provided on a nondiscriminatory 
                basis to all providers of high speed data 
                service and Internet access service. This 
                prohibition on discriminatory subsidies shall 
                not be interpreted to authorize or require the 
                extension of any subsidy to any provider of 
                high speed data service or Internet access 
                service.
          (2) Resale.--For a period of three years after the 
        enactment of this subsection, an incumbent local 
        exchange carrier that provides high speed data service 
        shall have a duty to offer for resale any such service 
        at wholesale rates in accordance with subsection 
        (c)(4). After such three-year period, such carrier 
        shall offer such services for resale pursuant to 
        subsection (b)(1).
          (3) Definitions.--For purposes of this subsection--
                  (A) the ``Commission's Line Sharing Order'' 
                means the Third Report and Order in CC Docket 
                No. 98-147 and the Fourth Report and Order in 
                CC Docket 96-98 (FCC 99-355), as adopted 
                November 18, 1999, and without regard to any 
                clarification or interpretation in the further 
                notice of proposed rulemaking in such Dockets 
                adopted January 19, 2001 (FCC 01-26); and
                  (B) the term ``remote terminal'' means an 
                accessible terminal located outside of the 
                central office to which analog signals are 
                carried from customer premises, in which such 
                signals are converted to digital, and from 
                which such signals are carried, generally over 
                fiber, to the central office.

    PART III--SPECIAL PROVISIONS CONCERNING BELL OPERATING COMPANIES

SEC. 271. BELL OPERATING COMPANY ENTRY INTO INTERLATA SERVICES.

  (a)  * * *

           *       *       *       *       *       *       *

  (g) Definition of Incidental InterLATA Services.--For 
purposes of this section, the term ``incidental interLATA 
services'' means the interLATA provision by a Bell operating 
company or its affiliate--
          (1)  * * *

           *       *       *       *       *       *       *

          (5) of signaling information used in connection with 
        the provision of telephone exchange services or 
        exchange access by a local exchange carrier; [or]
          (6) of network control signaling information to, and 
        receipt of such signaling information from, common 
        carriers offering interLATA services at any location 
        within the area in which such Bell operating company 
        provides telephone exchange services or exchange 
        access[.]; or
          (7) of high speed data service or Internet backbone 
        service.

           *       *       *       *       *       *       *

  (k) Prohibition on Provision of Voice Telephone Services.--
Until the date on which a Bell operating company is authorized 
to offer interLATA services originating in an in-region State 
in accordance with the provisions of this section, such Bell 
operating company offering any high speed data service or 
Internet backbone service pursuant to the provisions of 
paragraph (7) of subsection (g) may not, in such in-region 
State provide interLATA voice telecommunications service, 
regardless of whether there is a charge for such service, by 
means of the high speed data service or Internet backbone 
service provided by such company.

SEC. 272. SEPARATE AFFILIATE; SAFEGUARDS.

  (a) Separate Affiliate Required for Competitive Activities.--
          (1)  * * *
          (2) Services for which a separate affiliate is 
        required.--The services for which a separate affiliate 
        is required by paragraph (1) are:
                  (A)  * * *
                  (B) Origination of interLATA 
                telecommunications services, other than--
                          [(i) incidental interLATA services 
                        described in paragraphs (1), (2), (3), 
                        (5), and (6) of section 271(g);]
                          (i) incidental interLATA services 
                        described in paragraphs (1), (2), (3), 
                        (5), (6), and (7) of section 271(g);

           *       *       *       *       *       *       *

                  [(C) InterLATA information services, other 
                than electronic publishing (as defined in 
                section 274(h)) and alarm monitoring services 
                (as defined in section 275(e)).]

           *       *       *       *       *       *       *


SEC. 277. DEPLOYMENT OF BROADBAND SERVICES.

  (a) Deployment Required.--Each Bell operating company and its 
affiliates shall deploy high speed data services in each State 
in which such company or affiliate is an incumbent local 
exchange carrier (as such term is defined in section 251(h)) in 
accordance with the requirements of this section.
  (b) Deployment Requirements.--
          (1) Mileposts for deployment.--A Bell operating 
        company or its affiliate shall deploy high speed data 
        services by attaining high speed data capability in its 
        central offices in each State to which subsection (a) 
        applies. Such company or affiliate shall attain such 
        capability in accordance with the following schedule:
                  (A) Within one year after the date of 
                enactment of this section, such company or 
                affiliate shall attain high speed data 
                capability in not less than 20 percent of such 
                central offices in such State.
                  (B) Within 2 years after the date of 
                enactment of this section, such company or 
                affiliate shall attain high speed data 
                capability in not less than 40 percent of such 
                central offices in such State.
                  (C) Within 3 years after the date of 
                enactment of this section, such company or 
                affiliate shall attain high speed data 
                capability in not less than 70 percent of such 
                central offices in such State.
                  (D) Within 5 years after the date of 
                enactment of this section, such company or 
                affiliate shall attain high speed data 
                capability in not less than 100 percent of such 
                central offices in such State.
          (2) High speed data capability.--For purposes of 
        paragraph (1), a central office shall be considered to 
        have attained high speed capability if--
                  (A)(i) such central office is equipped with 
                high speed data multiplexing capability; and
                  (ii) each upgradeable customer loop that 
                originates or terminates in such central office 
                is upgraded promptly upon receipt of a customer 
                request for such upgrading, as necessary to 
                permit transmission of high speed data service 
                (including any conditioning of the loop);
                  (B) each customer served by such central 
                office (without regard to the upgradeability or 
                length of the customer's loop) is able to 
                obtain the provision of high speed data service 
                from such Bell operating company or its 
                affiliate by means of an alternative technology 
                that does not involve the use of the customer's 
                loop; or
                  (C) each such customer is able to obtain the 
                provision of high speed data service by one or 
                the other of the means described in 
                subparagraphs (A) and (B).
          (3) Upgradeable loops.--For purposes of paragraph 
        (2), a customer loop is upgradeable if--
                  (A) such loop is less than 15,000 feet in 
                length (from the central office to the 
                customer's premises along the line); and
                  (B) such loop can, with or without 
                conditioning, transmit high speed data services 
                without such transmission on such loop causing 
                significant degradation of voice service.
  (c) Availability of Remedies.--
          (1) Forfeiture penalties.--A Bell operating company 
        or its affiliate that fails to comply with this section 
        shall be subject to the penalties provided in section 
        503(b)(2). In determining whether to impose a 
        forfeiture penalty, and in determining the amount of 
        any forfeiture penalty under section 503(b)(2)(D), the 
        Commission shall take into consideration the extent to 
        which the requirements of this section are technically 
        infeasible.
          (2) Jurisdiction.--The Commission shall have 
        exclusive jurisdiction to enforce the requirements of 
        this section, except that any State commission may file 
        a complaint with the Commission seeking the imposition 
        of penalties as provided in paragraph (1).
  (d) Annual Report on Deployment.--
          (1) Analysis required.--The Commission shall include 
        in each of its annual reports submitted no more than 18 
        months after the date of enactment of this section an 
        analysis of the deployment of high speed data service 
        to underserved areas. Such report shall include--
                  (A) a statistical analysis of the extent to 
                which high speed data service has been deployed 
                to central offices and customer loops, or is 
                available using different technologies, as 
                compared with the extent of such deployment and 
                availability prior to such date and in prior 
                reports under this subsection;
                  (B) a breakdown of the delivery of high speed 
                data service by type of technology and class or 
                category of provider;
                  (C) an identification of impediments to such 
                deployment and availability, and developments 
                in overcoming such impediments during the 
                intervening period between such reports; and
                  (D) recommendations of the Commission, after 
                consultation with the National 
                Telecommunications and Information 
                Administration, for further extending such 
                deployment and availability and overcoming such 
                impediments.
          (2) Definition of underserved area.--For purposes of 
        paragraph (1), the term ``underserved areas'' means 
        areas that--
                  (A) are high cost areas that are eligible for 
                services under subpart D of part 54 of the 
                Commission's regulations (47 C.F.R. 54.301 et 
                seq.); or
                  (B) are within or comprised of any census 
                tract--
                          (i) the poverty level of which is at 
                        least 30 percent (based on the most 
                        recent census data); or
                          (ii) the median family income of 
                        which does not exceed--
                                  (I) in the case of a census 
                                tract located in a metropolitan 
                                statistical area, 70 percent of 
                                the greater of the metropolitan 
                                area median family income or 
                                the statewide median family 
                                income; and
                                  (II) in the case of a census 
                                tract located in a 
                                nonmetropolitan statistical 
                                area, 70 percent of the 
                                nonmetropolitan statewide 
                                median family income.
          (3) Designation of census tracts.--The Commission 
        shall, not later than 90 days after the date of the 
        enactment of this section, designate and publish those 
        census tracts meeting the criteria described in 
        paragraph (2)(B).

           *       *       *       *       *       *       *


             DISSENTING VIEWS OF MR. LUTHER AND MR. LARGENT

    While we share the dissenting views of Mr. Markey, et al, 
we respectfully submit this separate, dissenting viewpoint in 
order to specifically address the issue of ``line-sharing''. 
Indeed, at full committee we (along with Mrs. Wilson, Mr. 
Shadegg, and Mr. Ehrlich) introduced a controversial line 
sharing amendment that failed to pass on a 27 to 27 tie vote. 
Much of the debate on our amendment was of a technical nature, 
generating a lot of unfortunate confusion, and even 
speculation, on the actual intent and effects of our amendment. 
Though a vast majority of the members on the full committee 
agreed that line sharing was an obligation worth preserving 
(and that the original, underlying bill was flawed in this 
regard) the Committee was deadlocked over what actually 
constitutes meaningful line sharing. During debate, confusion 
reigned as members and counsel proffered technical and arcane 
arguments based upon FCC Orders and legislative nuance. We 
believe that our amendment failed largely because of this 
confusion.
    Despite this confusion, our amendment was narrow: we wished 
to preserve the FCC's UNE Remand Order, its subsequent Line 
Sharing Order, and any subsequent Commission orders that 
implement or clarify these two orders. Under current law as 
reflected in the UNE Remand and Line Sharing Orders, a Bell 
company must line-share its entire loop with competitors for 
the delivery of high-speed data services; and both orders are 
crucial in preserving this line sharing status quo. H.R. 1542 
destroys any meaningful notion of line sharing by only 
superficially inserting narrow, line sharing legislative 
language while concomitantly eliminating the full requirements 
of the UNE Remand and Line Sharing Orders. Worse, by so doing, 
proponents of the bill claim that they are in fact preserving 
line sharing. However, in eliminating the mandates of the UNE 
Remand and Line Sharing Orders, H.R. 1542 preserves the line-
sharing obligation only for simple loops and sub-loops that 
consist of copper and copper only; the bill substantively 
obliterates this obligation for loops that consist of copper, 
fiber and remote terminals. Our amendment simply attempted to 
restore the status quo by restoring both FCC orders and 
consequently preserve line sharing for all loops regardless of 
their architecture.
    The importance of line sharing cannot be understated. We 
believe that line sharing is a crucial component of a pro-
competition regulatory structure that promotes meaningful 
consumer choice. Without such an obligation, we fear that 
natural monopoly power will dominate the market for DSL 
services, particularly in the residential sector. Because line 
sharing is a particularly important means of empowering 
residential consumers with a plethora of different high speed 
data services from which to choose, we felt that our amendment 
was one of the most important amendments on which the committee 
deliberated.
    Proponents of H.R. 1542 construct a very formal definition 
of ``line sharing'' relegating the obligation to a loop or to a 
portion of the loop that consists only of copper. They posit 
that the status quo of line sharing is this and nothing more. 
In contrast, our definition of line sharing is more realistic, 
capturing a rapidly changing technical environment, and based 
upon the status quo as articulated by the FCC. In order to 
understand this status quo and how it is affected, we provide 
background on the subject.

                               background

    In November of 1999, the Minnesota Public Utilities 
Commission promulgated a new rule requiring an incumbent local 
exchange carrier (``ILEC'') to share the high frequency portion 
of its loop with a competitor for the purpose of delivering 
Digital Subscriber Line (``DSL'') services. That is, if a 
consumer wished to subscribe to a DSL service from a 
competitive local exchange carrier (``CLEC''), he or she could 
use the Bell's existing twisted, copper wire-line leading from 
the Bell's central office to the customer's premises. As such, 
the CLEC would not have to build or lease a separate line to 
the customer. Line sharing was born. Minnesota's logic was 
simple, but powerful: when subscribing to a CLEC for DSL 
services, why force the customer to pay for another separate 
line when a perfectly functioning line already exists? Without 
such a requirement, CLECs offering competitive DSL services 
simply would not be able to compete.
    Most loops currently consist of twisted copper wire that 
leads from the central office to the customer's premises. 
However, this basic loop architecture is quickly changing. 
Because telecom companies can only deliver DSL services over a 
limited distance through copper wire, some Bell Companies have 
upgraded their loops by installing fiber and remote terminals. 
That is, many loops now consist of fiber connecting the central 
office to a remote terminal; and from that remote terminal 
(where DSL delivery equipment known as DSLAMs are located) 
copper wire extends to the customer's premises. SBC's highly 
touted ``Project Pronto'' is the most prominent example of such 
a loop upgrade. 35% of the nation's loops now consist of this 
combination of fiber, remote terminals, and copper wire--and 
this percentage is rapidly growing. But the basic point is 
this: a ``loop'' is the entire delivery line that extends from 
a central office to a customer's premises; and that loop can be 
either twisted copper wire or a combination of copper wire, 
fiber, and remote terminals.
    In the same November of 1999, the FCC promulgated 
regulations that effectuated the concept of line sharing for 
the entire nation. First, the commission released the so-called 
UNE Remand Order. Under Sec. 251 of the Communications Act, as 
amended by the 1996 Telecommunications Act, an ILEC must grant 
CLECs access to certain unbundled network elements (``UNEs'')--
such a requirement is crucial to promote competition against 
the Bells and its vast, naturally monopolistic, and entrenched 
infrastructure. In 1996, the FCC promulgated its first UNE 
Order that listed all of the network elements an ILEC must make 
available to a CLEC on an unbundled basis--but this first Order 
was vacated and remanded by the U.S. Supreme Court (thus, the 
origins of the UNE Remand Order.) Under the subsequent UNE 
Remand Order, the FCC re-listed most of the UNEs under the 
first Order, but added the following regulations: (1) dark 
fiber (i.e., unused, unlit fiber) must be made available to a 
CLEC as a UNE; (2) a CLEC must be able to either co-locate its 
own DSLAMs or line cards in the ILEC's remote terminal or share 
the ILEC's remote terminal and DSLAMs as UNEs; and (3) the ILEC 
must unbundle the subloops (from the loop) and lease them 
separately to a CLEC.
    A month later, the Commission promulgated its Line Sharing 
Order based upon its logic and findings in the UNE Remand 
Order. Indeed, were it not for an inability to iron out 
technical difficulties, line sharing would have simply been 
another network element requirement under the UNE Remand Order. 
In its Line Sharing Order, the FCC required an ILEC to share 
the high frequency portion of its copper loop with a CLEC for 
the delivery of DSL services. Furthermore, in its regulatory 
clarification known as the Line Sharing Recon Order, the FCC 
emphasized that an ILEC must share its entire loop regardless 
of the architecture of that loop. That is, line sharing no 
longer simply involved the copper wire: an ILEC has the 
obligation to allow a competing LEC to line share its entire 
loop and provide DSL service from the central office all the 
way to the customer's premises--even if that pathway from the 
central office includes fiber and remote terminals.

                       the problem with h.r. 1542

    From the above background, it should be obvious that the 
current status quo for line sharing consists of the entire 
loop--viz., an ILEC must share its copper, fiber, and remote 
terminals with a CLEC in order to promote competition in the 
DSL market. The problem with H.R. 1542 is that it purports to 
preserve line sharing, but only preserves one piece of the 
regulatory puzzle.
    Section 4(b) of the bill eliminates any UNE requirement in 
effect after January 1, 1999. Because the UNE Remand and Line 
Sharing Orders were promulgated after that date, they are 
effectively eliminated. However, section 4(b) of the bill 
narrowly restores a very formal definition of line sharing by 
inserting language that allows access only to the high 
frequency portion of the copper loop. It is this inserted 
language that serves as the basis for our opponents' claim that 
H.R. 1542 retains line sharing. However, this inserted language 
does little if anything, for CLECs that wish to offer DSL 
services to customers over loops with fiber and remote 
terminals. That is, section 4(b) of the bill restores the 
narrow Line Sharing Order, but restricts the purview of that 
Order by explicitly eliminating access to copper at remote 
terminals. Moreover, section 4(b) eliminates any clarifying FCC 
orders--which includes the FCC's Line Sharing Recon Order that 
defines line sharing as an obligation involving the entire 
loop. In the end, because the UNE Remand Order is eliminated, 
the ILEC has no responsibility to share its fiber or to allow 
collocation at remote terminals. Furthermore, because the full 
breadth of the Line Sharing and Line Sharing Recon Orders are 
eliminated (in favor of inserted statutory language), the line 
sharing status quo changes from a broad obligation to share the 
entire loop to a minor obligation to share only antiquated 
copper wire. Consequently, H.R. 1542 effectively changes the 
definition of line sharing and eliminates the UNE obligation 
for any high tech loop that consists of fiber, remote terminals 
and copper. Given that the Bells are rapidly upgrading their 
loops in such a fashion, line sharing will soon be reduced to 
an obligatory anomaly.
    It is important to note the inseparability of the UNE 
Remand Order and the Line Sharing Orders, and thus the fallacy 
in H.R. 1542's separation of the two. First, the UNE Remand 
Order establishes the definition of the ``loop.'' Second and 
just as important, the Order clarifies the processes, testing, 
and operation support systems that must be in place in order to 
access the loop--which obviously is indispensable in 
effectuating the line sharing obligation. That is, without the 
loop rule and the rule on operations support systems, as set 
forth in the UNE Remand Order, the means by which CLECs obtain 
line sharing cannot be ascertained--consequently, line sharing 
cannot be implemented. For example, the UNE Remand Order 
establishes the rules by which a carrier may access an ILEC's 
Operations Support Systems to obtain ``loop qualification'' 
information. (This is the information necessary to determine 
what services can be deployed on a particular loop; and whether 
or not the customer and neighborhood are eligible for DSL-based 
services or line sharing.) Furthermore, the UNE Remand Order 
requires the ILEC to provide a CLEC with nondiscriminatory 
access to the same detailed loop information available to the 
ILEC itself. Without the UNE Remand Order, all of these 
obligations disappear making it impossible for a CLEC to get 
the loop information necessary for providing DSL services 
through line sharing. The salient point is this: the Line 
Sharing Orders grew out of the more general loop unbundling 
obligations in the UNE Remand Order. Indeed, it would be 
difficult to speculate what a line sharing order would look 
like without the loop provisions in the UNE Remand Order.
    Without line sharing, we fear that CLECs offering DSL 
services to consumers will vanish and that tens of thousands of 
American consumers will be disconnected. Already, many CLECs 
are on financial life support teetering on insolvency. To be 
sure, much of this financial misery is based upon a general 
macroeconomic malaise; but just as important, the uncertainty 
of the current regulatory environment and the persistence of 
market barriers have greatly contributed to the collapse of the 
CLEC industry. While the capital markets have gone dry, these 
small competitors remain the life-blood of competition; and we 
fear that without their presence, the Bell companies will 
naturally gravitate towards solidifying their monopolies in 
both the voice and high-speed data markets. Consumers must be 
able to choose from an array of telecommunications carriers, 
whether they are CLECs offering only DSL services, CLECs 
offering both DSL and traditional voice services, or the Bells 
themselves. By preserving the line sharing status quo, our 
amendment ensures that competitors will have a fighting chance 
against the natural monopolistic power of the Bells.
    Moreover, we believe that the line sharing status quo is 
particularly critical given the central thrust of H.R. 1542. 
Were the bill to become law, the Bell companies would be free 
to offer high-speed data services unfettered by the inter-LATA 
restrictions dating back to the original break-up of AT&T. H.R. 
1542 deregulates the Bells' ability to deliver DSL services on 
a long-distance basis, circumventing the original conditions 
imposed by the '96 Act; viz., that the Bells may enter into the 
long-distance market if and only if they first open their local 
markets to competition. In our opinion, if we are going to 
alter the conditions of the '96 Act in such a manner, it is 
supremely reasonable to preserve the ability of competing 
companies to lease crucial network elements for the delivery of 
high speed data services.
    Opponents of our amendment make several claims. First, they 
claim that H.R. 1542 already preserves the obligation of line 
sharing. At the risk of redundancy, we believe that opponents 
of our amendment define line sharing in an exceedingly formal 
and technical manner. Unfortunately, during the full committee 
markup, confusion arose from this very debate whereby opponents 
and proponents of our amendment had differing views of the line 
sharing status quo. However, as is apparent from the genesis of 
line sharing (explained above), we believe that our notions of 
``line sharing'' are more realistic and clearly reflect current 
line sharing obligations. Line sharing involves the entire 
loop, be that loop composed of copper or a combination of 
fiber, remote terminals and copper. Thus, in order to preserve 
the line sharing status quo, H.R. 1542 must be amended to 
preserve not only the sharing of copper wire, but the sharing 
of fiber and remote terminals as well. Because a great deal of 
confusion arose over the definition of line sharing during the 
mark-up, we cannot emphasize this point enough.
    Second, opponents claim that our amendment will create 
disincentives for the Bells to upgrade their loops with fiber 
and remote terminals. They rightfully claim that upgrading 
their loops in such a fashion costs the Bells billions of 
dollars; but they further argue that the Bells will no longer 
be willing to make such capital expenditures were CLEC's able 
to lease the fiber and collocate at remote terminals on an 
unbundled basis.
    To this, we have several responses. First, loop upgrades 
such as Project Pronto were, in fact, made in the midst of the 
current regulatory structure. As such, we see no reason why the 
Bell companies will cease improving their networks with the 
passage of our amendment, which (again) would simply preserve 
the status quo. Second, it is not as if CLEC's are allowed to 
use the Bells' fiber and remote terminals for free. Under 
current law, CLECs are required to pay the Bells for the costs 
of building and maintaining that loop upgrade. In addition, 
current law requires those payments to include a reasonable 
profit for the Bells. In essence, the CLECs are de facto 
customers of the Bell companies. Lastly, such loop upgrades 
will serve to greatly benefit the Bell companies themselves--
with hybrid fiber and copper loops, ILECs will further 
strengthen their own ability to deliver DSL services. Under 
such a regulatory scenario, it is hard to see how the Bells 
would be discouraged from improving their networks in such a 
fashion.
    The third argument our opponents make is that CLECs will 
have a disincentive to build their own facilities. That is, if 
they allowed to continue to lease newly constructed fiber and 
remote terminals, CLECs will have no incentive to similarly 
embark on such capital ventures. In our opinion, this may be 
the most credible argument our opponents make.
    However, consider this: the Bells have vast financial power 
based upon their collective legacy as natural monopolies. The 
Bell companies and only the Bell companies have the financial 
wherewithal to invest in such technologies. A vast majority of 
the CLEC industry is simply not in any capital condition to 
make such investments. As such, we believe that line sharing is 
a point where competition begins, not where it ends. It is a 
means by which small telecommunications companies scratch and 
claw to get a foot in the door and vie for customers heretofore 
beholden to one entrenched, wire-line telecommunications 
network of overwhelming proportions. Line sharing offers 
consumers a real choice between many telecommunications 
companies battling each other for their businesses. We are sure 
that once true competition takes root, CLECs and ILECs alike 
will strive to build their own facilities that will reap large 
profits. Indeed, some of the few remaining profitable CLECs 
have already invested large amounts of capital in their own 
facilities. Unfortunately, we believe that most small companies 
will never reach that point if they are unable to survive in an 
uncertain and unfavorable regulatory environment that 
effectively kills competition.

                               conclusion

    We believe that our amendment, which narrowly failed to 
pass full committee by virtue of a tie vote, offered a 
reasonable, common-sense change to H.R. 1542. By preserving 
both the UNE Remand and Line Sharing Orders, our amendment 
would have preserved the line sharing status quo so that 
consumers do not have to pay for an extra line when subscribing 
to a DSL service. It did nothing else. Notwithstanding its 
proponents' assertions otherwise, we believe that H.R. 1542 
inadequately preserves line sharing, because it confines the 
obligation to only the cooper portion of a loop. In fact, line 
sharing as articulated by current law, constitutes an ILEC 
obligation to share the entire loop with a competitor 
regardless of the architecture of that loop. In order for line 
sharing to be substantively meaningful, both the UNE Remand and 
Line Sharing Orders must remain intact, and our amendment would 
have ensured as such. Simply put, ILECs must continue to lease 
their fiber and remote terminals to smaller CLECs on a cost and 
reasonable profit basis. This is particularly true given that 
loops are rapidly changing from simple copper wires to a 
combination of fiber, remote terminals and copper. Moreover, 
given that the passage of this bill will grant the Bells a 
waiver from the competitive mandates of the '96 Act with regard 
to broadband services, we believe it only makes sense that 
small DSL carriers retain a fighting chance to compete--and 
line sharing is a crucial ingredient in that endeavor. We do 
not believe our amendment would have discouraged future 
investments in loop upgrades. Under the current line sharing 
status quo, such capital investments have and will continue to 
take place. This is largely because the Bells stand to greatly 
benefit from such upgrades themselves and are further 
compensated for cost and profit when they lease their network 
elements to CLECs.
    It has only been five short years since the passage of the 
landmark Telecommunications Act of 1996. Line sharing was born 
from a legislative vision bent on competition. Because we still 
firmly believe in that competitive spirit, we respectfully 
submit that our amendment was a crucial and deliberate way of 
preserving line sharing and all of the pro-competition benefits 
therefrom. We regret that it failed to pass committee on the 
most narrow of votes.

                                   Bill Luther.
                                   Steve Largent.

DISSENTING VIEWS OF MR. MARKEY, MR. LARGENT, MR. WAXMAN, MR. PICKERING, 
  MS. ESHOO, MR. STUPAK, MS. McCARTHY, MS. DeGETTE, MR. LUTHER, MRS. 
  CAPPS AND MR. DOYLE ON H.R. 1542

    Congress has taken action on a number of occasions in 
recent years to update antiquated communications laws. The 
challenge for policymakers has been to reform such rules in a 
way that substitutes a sound competitive policy framework, 
consistent with the public interest, for hitherto monopoly 
provided services and the rules by which such monopolies were 
regulated and safeguarded from competition. We believe a 
competition-based policy is preferable because it maximizes 
consumer choice, job creation, technological innovation, 
service quality and price reductions. In addition, the economic 
interests of the United States are most advanced in the global 
marketplace by fully establishing competition in our domestic 
telecommunications markets.
    The legislation that most broadly addressed this challenge 
was the landmark Telecommunications Act of 1996 (P.L. 104-104). 
We believe that the Telecommunications Act of 1996 (the '96 
Act) contains the essential blueprint to encourage the 
deployment of advanced communications technologies by injecting 
competition into the market for local telecommunications 
services. The competition unleashed by the Telecommunications 
Act has spurred technological advances and innovation, and has 
helped to promote the deployment of digital services, at lower 
prices, to ever more American homes and businesses. We strongly 
endorse retention of this competitive model for our 
telecommunications marketplace.
    However pending telecommunications legislation, H.R. 1542, 
fundamentally departs from the competitive model upon which we 
have sought to reform our laws and, over time, to eliminate 
unnecessary regulations. This legislation eliminates key market 
opening provisions of the Telecommunications Act and allows the 
Bell companies into long distance for so-called ``high speed 
data'' services. This highly controversial bill was approved by 
the Telecommunications and the Internet Subcommittee on a 19-14 
vote, and recently passed the Full Energy and Commerce 
Committee on a 32-23 vote.
    We oppose H.R. 1542 because it is highly flawed. In short, 
we believe it is unnecessary, ``un-digital,'' and unfair. It 
favors monopolies more than it breaks them down and encourages 
communications consolidation more than it creates new economic 
opportunities for small businesses and entrepreneurs. It 
benefits the 4 regional Bell companies yet vastly diminishes 
the economic prospects for hundreds of other high tech 
companies and their employees. And in legislation that affects 
multibillion dollar issues and every American who owns a 
telephone or a computer, it is woefully deficient in protecting 
consumers from potential monopoly abuses, or empowering them 
with new technology.

                           bipartisan concern

    The pro-competitive framework embodied in the '96 Act, as 
well as it's subsequent implementation by the Federal 
Communications Commission (FCC), was not the product of one 
party. On the contrary, both liberals and conservatives, 
Republicans and Democrats, have insisted on such rules and 
developed them in bipartisan fashion over a number of years.
    In fact, all of the decisions implementing the key market-
opening provisions of the '96 Act at the FCC were unanimous, 
garnering votes from both Republican and Democratic 
commissioners alike. Moreover, the nature of the votes at the 
markups in both the Telecommunications and the Internet 
Subcommittee as well as in the Energy and Commerce Committee 
make evident that opposition to this bill is broad and 
bipartisan.
    We turn now to an examination of the provisions of H.R. 
1542 and the apologia of our opposition.

                            it's unnecessary

    This bill is unnecessary. Prior to proposing myriad 
``solutions'' to a problem, it is useful to identify clearly 
and convincingly the problem legislation purports to remedy. As 
the sole hearing this Committee held on the proposed 
legislation this session indicated, and what the close votes in 
the Subcommittee and the full Committee markups also amply 
demonstrated, is that there is little consensus on what, if 
any, problem needs fixing, or if statutory revisions are 
required to effectuate any needed change in policy.
    The fact is that the Bells don't need legislation in order 
to provide high speed data services. They can and do offer DSL 
services today. The Bells don't need legislation to offer 
Internet access. Again, they offer such services today.
    Moreover, the Telecommunications Act allows the Bells into 
long distance after they've met the requirements of a 
competitive checklist in a State. They've done this in 5 
States. In other words, the key to entering the long distance 
market is in their own hands.
    So what is the problem? Is there insufficient competition? 
If that's the problem, this bill's remedy is to empty a six-
shooter into the heart of new economy companies. This bill 
doesn't help to create more competition, it serves to shield 
the Bells from effective competition from competitive local 
exchange companies (CLECs). It's a competition-killer.
    In addition, the bill doesn't give the green light to Wall 
Street to invest again in innovation. It sends the capital 
community the opposite message. As Mr. James Henry, managing 
general partner of Greenfield Hill Capital, testified before 
the committee at the legislative hearing on H.R. 1542: ``It is 
my observation as an industry analyst that the investment 
community's willingness to fund telecomm companies in general 
and CLECs in particular is adversely impacted by legislative 
and regulatory uncertainty. The proposed [bill] is illustrative 
of the kind of legislative uncertainty that will cause 
investors to move to the sidelines and withhold capital from 
the emerging local competitors.''
    The legislation makes such uncertainty in the marketplace a 
chronic condition, because even if the bill becomes law it will 
unleash new rounds of litigation. We've already been through 
that.
    Even as the bill makes it harder for competitors to serve 
consumers, it solidifies the position of incumbent monopolists 
and then deregulates them. There's only one thing worse for 
consumers than a regulated monopoly and that's an unregulated 
monopoly.

                            It's Un-Digital

    This bill is also ``un-digital.'' Section 6 of H.R. 1542 
creates an exception for ``high speed data services'' to the 
existing ``carrot-and-stick'' approach to opening the local 
telecommunications market to competition. (The ``carrot-and-
stick'' approach compels the Bells, in a State-by-State 
application process for long distance entry, to meet the 
market-opening standards established in Section 271--a 
provision enacted as part of the Telecommunications Act of 
1996.) The legislation then adds a limitation to this ``data'' 
exception stipulating that, notwithstanding their ability to 
offer long distance ``data'' services, the Bells still could 
not provide long distance ``voice'' service.
    This is a highly ``un-digital'' provision. It attempts to 
justify acceding to Bell company pressure to enter the long 
distance market prematurely by creating a legislative work of 
science fiction. Going digital means converting all information 
into a series of zeros and ones. With digital technology, there 
is no distinction between voice and data transmissions. It 
helps to create a ``technological Esperanto''--where videos, 
photos, email, faxes, music, everything can universally be 
expressed in the language of zeros and ones.
    H.R. 1542 takes this harmonious universal language and 
introduces a Congressional cacophony. It doesn't embrace 
convergence. It does the opposite. Ripping certain bits out of 
a network to be treated by regulators differently is not 
consistent with the technological convergence we are witnessing 
throughout our telecommunications markets. As a result, this 
legislation turns back the clock--it's ``regulatory 
retrogression.'' It presents once again the problem of trying 
to force certain services into particular regulatory boxes even 
as digital technology renders such classification antiquated or 
meaningless.
    It is clear that the vast majority of telecommunications 
traffic traveling over most networks today is data traffic, not 
voice. Moreover, many experts predict that this data traffic 
will continue to grow in years to come and that voice bits will 
actually represent a miniscule percentage of the overall bits 
travelling through our nation's telecommunications 
infrastructure. As Mr. Clark McLeod, Chairman of McLeod USA, a 
facilities-based CLEC, testified before the Committee: ``It is 
almost impossible to divide the ``carrot'' as a practical 
matter. There is no meaningful distinction between voice and 
data. Whether you are watching voice or data, when they are 
digitized and transmitted over a fiber optic cable they are 
both just flashes of light . . . Furthermore, as voice over the 
Internet technology continues to develop, the problem grows.''
    Concern has repeatedly been raised that the Bell companies 
may have little incentive to demonstrate the opening of their 
local networks if they are given the ability to provide long 
distance high speed data services. Again, as Mr. Clark McLeod, 
Chairman of McLeod USA, testified: ``If we allow the Mega-Bells 
to provide long distance service for the Internet, then when 
voice communication over the Internet becomes widespread, the 
``carrot'' will be gone and there will be no incentive to ease 
the stranglehold on the last mile local loop . . . If you do 
not find the pace of local competition acceptable, the solution 
is to increase the ``carrot'' or add a ``stick,'' rather than 
to reduce the carrot. Data services constitute the high-growth, 
high-revenue segment of the intercity long-distance market. It 
makes up the largest portion of the ``carrot.'' If it is lost, 
there will be almost no remaining economic incentive to comply 
with the 14-point checklist in Section 271 and provide quality 
access to the last mile local loop.'' Moreover, since the bill 
eliminates any FCC or State authority over Bell provision of 
high speed data services, the legislation's bid to limit Bell 
long distance authority to ``data'' transmissions is of dubious 
enforceability.
    Under the Telecommunications Act's Section 271 process, 
fully opening networks to competition in the local exchange 
market is insisted upon as a prerequisite for Bell companies to 
enter the long distance market. Once a Bell company obtains 
such Section 271 approval in a State, the Bell company may 
offer long distance service in that State for both voice and 
data services. This construct is consistent with the convergent 
nature of digital technologies.

                              It's Unfair

    H.R. 1542 is also unfair. In the aftermath of the enactment 
of the Telecommunications Act of 1996, several new commercial 
enterprises were launched and they poured over $60 billion 
dollars into new infrastructure. They delivered on the promise 
of the '96 Act by deploying new digital services, prompting the 
incumbents to finally offer such services themselves. Mr. 
Charles McMinn, Chairman and co-founder of Covad 
Communications, testified to the Committee that, ``Your 
decision in 1996 to open local telecommunications markets to 
competition allowed consumers a choice in broadband services 
from a variety of competitive providers. The bill you are 
considering today will take that choice away.''
    In essence, this bill tells those dozens of new companies--
and the hundreds of companies that supply them: ``Thanks, but 
no thanks. We don't need you. We're sorry you borrowed millions 
of dollars to invest in your business based upon the Telecomm 
Act, but now we're changing the rules. We're going to rely on 
the Bell utility phone company to serve consumers. We're going 
to rely on the Bell utility companies to innovate. We're going 
to rely on unregulated Bell utility companies to lower 
prices.''
    We believe that's a policy that seeks our economic future 
by looking through a rear-view mirror. The Bells do not have a 
track record of innovation or rapid deployment of new services. 
We point to an editorial from Business Week that appeared in 
the April 18, 2001 issue: ``The Bells are not known for their 
competitive vigor or their willingness to roll out broadband 
quickly. Indeed, it was only competition from new companies 
that spurred them to start.''
    Far from fostering the kind of facilities-based competition 
that served to prod the Bells into deploying their own 
services, this legislation thwarts the growth of facilities-
based competition. Only the Bell companies began life after 
enactment of the '96 Act with a full network and connections to 
every home--a vast and valuable network paid for, we might add, 
over and over again by captive ratepayers. This is a tremendous 
advantage. The Bells would like to make building such a network 
a prerequisite for any competitor. Congress wisely looked to 
the record of building long distance competition in the 80's 
and early 90s as a model for building ever more competition for 
local telecommunications services.
    The '96 Act certainly permits full bore facilities-based 
competition. Yet it often takes time, as well as a significant 
amount of capital and customers, to reach that level of 
infrastructure deployment. For this reason, the 
Telecommunications Act encouraged competitive entry through 
resale opportunities, as well as through evolving facilities-
based competition. In the latter scenario, companies could buy 
the piece-part elements of the network they needed (so-called 
``unbundled network elements,'' or ``UNEs'') and use them in 
conjunction perhaps with facilities they owned and deployed.
    H.R. 1542 abandons the policy of encouraging, through 
multiple means, competitive entry into the local 
telecommunications services market. Under the bill, certain 
types of competitive entry will now be explicitly discouraged. 
First, H.R. 1542 reverses the pro-competitive thrust of the 
1996 Act by rolling back the FCC's unbundling rules.
    Much debate in the Committee markup centered around the 
preservation of these pro-competitive policies generally and, 
in particular, the importance of preserving the Bell companies' 
obligation to provide competing carriers with unbundled access 
to the high frequency portion of the loop. This is the policy 
known as ``line-sharing.'' Advocates of H.R. 1542 allege that 
the current rules require only access to copper loops and they 
articulate a policy whereby competitors could solely access the 
copper loops. We dispute both the allegation that this is all 
that current rules require and the policy choice favored by 
advocates of the legislation.
    The consequence of the provisions in the bill would be to 
effectively deprive new entrants to the local exchange market 
of access to the facilities they need to compete. Limiting line 
sharing to copper plant would effectively reverse critical FCC 
clarifications of its line sharing and unbundling rules. As the 
Bells deploy more fiber, competitors would lose the ability to 
line share. The bill would also have the effect of forcing 
certain competitive carriers to abandon serving residential 
consumers because it takes away important unbundling rights and 
makes ``line-sharing'' meaningless. Mr. Charles McMinn, 
Chairman of Covad Communications, testified to this point: 
``The sad fact is that competition in local telecom markets, 
especially in residential broadband services, would be 
virtually eliminated by this bill.'' It makes no sense to us to 
change current rules in a way that lessens the likelihood that 
residential consumers would receive competitive broadband 
services.
    A key problem is that H.R. 1542 eliminates the Bells' 
obligation to provide unbundled access to the high frequency 
portion of the loop at the ``remote terminal'' that resides 
between the consumer's home and the central office of the local 
network. In cases where a Bell company locates its DSL 
equipment in the remote terminal, competitors cannot use the 
line sharing equipment they've installed in the central office. 
In such situations, the only way for a competitive carrier to 
reach consumers served by this remote terminal to offer high-
speed data services is to locate its own equipment at the 
remote terminal and interconnect there. H.R. 1542 prohibits 
this. Multimillion dollar investments made by competitive 
companies in high tech equipment located at the Bell companies' 
central offices could be rendered useless by this reversal of 
current rules.
    This policy reversal also has the effect of bolstering the 
competitive position of the incumbent Bell companies. If 
competitors are functionally prohibited from serving 
residential consumers through ``line-sharing,'' consumers 
seeking a bundled service of both high speed data and voice 
service over a single line to the home will be compelled to 
turn to one carrier for such bundled service, the Bell company. 
That's why these provisions are a win-win for the Bells--they 
not only significantly reduce the likelihood of competition, 
but perpetuate for the foreseeable future Bell hegemony over 
local telecommunications services.
    These provisions represent a powerful toxin to competition 
and in our view should be removed from the bill. Both the 
Largent Amendment, which deleted Section 4 from the bill, as 
well as the Luther-Wilson amendment, which was designed to 
restore rules that make ``line-sharing'' useful to competitors, 
would have represented important improvements to the bill. The 
debate on the Luther-Wilson amendment ended in a 27-27 tie 
vote, indicating again, the great uneasiness that the Committee 
has with ending the preference for competition embodied in the 
Telecommunications Act.

                          regulatory quagmire

    H.R. 1542 sets up a new regulatory regime for 
telecommunications in the United States. In Section 4 of the 
bill, new Section 232(a) states that neither the FCC nor any 
State shall have any ``authority to regulate the rates, 
charges, terms or conditions for, or entry into the provision 
of, any high speed data service, Internet backbone service, or 
Internet access service, or to regulate any network element to 
the extent it is used in the provision of any such service . . 
.''. This provision is ostensibly included to prohibit 
regulation of the new, so-called ``data'' services.
    The legislation, however, in new Section 232(b) states that 
States will retain authority under the bill to ``regulate 
circuit-switched telephone exchange service.'' Presumably, this 
would be authority over circuit-switched-based 
telecommunications services irrespective of whether they are 
so-called ``voice'' or ``data'' services. Moreover, the 
legislation in Section 232(c) includes a provision stating that 
nothing in this new section ``shall affect the ability of the 
Commission to retain or modify . . . rules pursuant to section 
254.'' Section 254 of the Communications Act deals with 
universal service issues.
    To recap: (1) the FCC and the States have no authority over 
certain services, namely, the broadly-defined services called 
``high speed data service,'' ``Internet access service,'' and 
``Internet backbone service''; (2) the States retain authority 
over the newly-named, yet undefined, ``circuit-switched 
telephone exchange service;'' and (3) none of the preceding 
affects the ability of the FCC to modify universal service 
rules.
    This is a regulatory quagmire. It sets up a convoluted new 
regulatory regime that Rube Goldberg would be impressed with, 
only Harry Houdini could untangle, and only a monopolist with a 
well-financed litigation team could love.

                        technological neutrality

    The Congress has tried over many years to deal with digital 
convergence by striving to treat like services in like ways 
from a regulatory standpoint. The law should address the 
service offered to consumers, not the particular medium used to 
deliver that service or the historical antecedents of the 
company offering the service. Instead of dealing with the 
marketplace from the standpoint of technological neutrality, 
H.R. 1542 articulates a new policy of ``technological 
favoritism.'' By picking technological favorites, the 
government distorts the marketplace and encourages companies to 
engage in ``technological arbitrage.'' For example, if a 
company provides telephone exchange service, but simply uses 
something other than a circuit-switched technology, that 
company's offering is deregulated. This is true even if its 
offering is indistinguishable from that of a company utilizing 
circuit-switched technology. That's unfair, unnecessary, and 
un-digital all in one.
    This bill compounds the problem of discerning between voice 
and data on packet-switched networks. It does so by asserting 
that States can't regulate the service--they can only address 
consumer welfare if it's delivered a certain way, namely, 
utilizing a ``circuit-switched'' technology. This sweeping 
evisceration of FCC and State authority raises several 
questions about what rules and regulations may no longer apply. 
Under the preemption language in the legislation, embodied in 
the new Section 232, unless ``high speed data service,'' 
``Internet access service,'' or ``Internet backbone service,'' 
are ``expressly referred to'' in the Communications Act, the 
FCC and States have no authority over rates, charges, terms or 
conditions, for such services. This means that many important 
rules, including consumer protection rules, may be 
inadvertently swept away.
    For example, such preemption language raises the question 
as to whether the provisions of Section 222, addressing 
subscriber privacy apply to such services. Likewise, Section 
310(a) of the Act, addressing foreign government ownership of 
telecommunications facilities. In addition, FCC and State 
utility commission ``slamming'' and ``cramming'' rules would 
not apply to such services. Further, the following additional 
provisions would not apply to these services: Section 223 of 
the Communications Act, relating to obscene or harassing 
telephone calls; section 225, relating to telecommunications 
services for hearing-impaired and speech-impaired individuals; 
section 228, dealing with pay-per-call services; section 229, 
relating to compliance with the Communications Assistance for 
Law Enforcement Act; section 231, relating to access by minors 
to harmful material; or section 255, addressing access to 
persons with disabilities.
    Without question, the rise of Internet-based services may 
require adjustment of many existing rules and regulations. And 
the elimination of many other rules will be warranted if 
innovation flourishes, competition fully takes root, and the 
rules no longer serve a useful purpose. In the area of 
broadband policy, policymakers may decide that many of the 
above rules should apply to non-circuit-switched services, many 
perhaps should not--and some may be deemed necessary but only 
in a modified form.
    The point is that the Committee has not fully analyzed or 
debated the nature and extent of the preemption in the bill, 
the full implications of the new statutory definitions for 
services, nor the new regulatory regime erected by the bill. 
Such abrupt and ill-considered changes--with profound 
implications for competition and consumer protection--should 
not be rushed through the House.

                           back to the future

    It is important to recognize that if the legislation 
proceeds as currently crafted, this flawed framework will 
require major and multiple policy adjustments to protect 
consumer welfare and ensure timely deployment of services. 
While we prefer a competition-based policy to induce the 
marketplace paranoia in corporation mindsets that promotes 
deployment of new services, increases service quality, and 
lowers prices, H.R. 1542 fails to advance such a policy. 
Unfortunately, the absence of a competition-based policy will 
require policymakers to return to the regulatory model of a 
previous era, when dominant providers had to comply with 
government mandates for service deployment.
    Since the bill severely limits the ability of competitors 
to reach consumers, it is clear that the government would have 
to set benchmarks and timetables for deployment of services to 
the inner city and to rural areas. The Stupak-Largent-
Strickland amendment was crafted to ensure reasonable and 
timely deployment of services to such consumers. It was a pro-
consumer amendment that would have meant that millions of 
consumers would gain access to services from the Bell 
companies, particularly in areas where, in the absence of a 
competitive threat, the Bell companies are unlikely to deploy. 
Although this amendment was defeated, we continue to believe 
that if the bill is to proceed it must be amended to ensure 
timely deployment of service, especially to rural areas of the 
country, with serious repercussions for a Bell company's 
failure to deploy.

                               conclusion

    Instead of preserving and strengthening the principles of 
competition and consumer choice, this bill undermines them. We 
believe its provisions are anti-competitive, anti-consumer and 
contrary to the public interest. Instead of looking to the 
future, these provisions return us to the policies and 
practices of the past.
    It is our hope that this bill undergo major legislative 
surgery so that its monopoly-enhancing provisions can be 
removed, its vague new statutory definitions eliminated, and 
its ``un-digital'' regulatory regime scrapped. In their place, 
if Congress chooses to legislate at all, pro-consumer and pro-
competitive provisions could be added to ensure greater 
consumer choice, robust entrepreneurial access to markets, and 
more vigorous enforcement of existing rules and laws.

                                   Ed Markey.
                                   Henry A. Waxman.
                                   Steve Largent.
                                   Chip Pickering.
                                   Bart Stupak.
                                   Karen McCarthy.
                                   Diana DeGette.
                                   Anna Eshoo.
                                   Lois Capps.
                                   Bill Luther.
                                   Mike Doyle.

      DISSENTING VIEWS OF MR. WILSON, MR. LUTHER, AND MR. EHRLICH

    H.R. 1542 would eliminate any meaningful opportunity for 
competitive carriers to gain access to and use of an 
incumbents' local loops to provide their own high speed data 
services. While the bill's sponsors say that it preserves the 
FCC's current line sharing rules in the 1999 Line sharing 
Order,\1\ in fact it preserves only the illusion of line 
sharing by selectively eliminating other rules that are crucial 
to competitors' ability to offer high-speed services over the 
incumbents' lines.
---------------------------------------------------------------------------
    \1\ Deployment of Wireline Services Offering Advanced 
Telecommunications Capability and Implementation of the Local 
Competition Provisions of the Telecommunications Act of 1996, Third 
Report and Order in CC Docket NO. 98-147, Fourth Report and Order in CC 
Docket No. 96-98, 14 FCC Rcd 20912 (1999) (``Line Sharing Order'').
---------------------------------------------------------------------------
    We offered an amendment at full Committee markup that would 
have restored meaning to the line sharing requirement by 
ensuring the continued effectiveness of all of the FCC's 
current rules relevant to line sharing. In particular, this 
includes the expanded list of unbundled network elements 
(``UNEs'') that the FCC adopted in the UNE Remand Order.\2\ In 
relevant part, the UNE Remand Order ensured competitors' 
ability to gain access to certain features of incumbents' local 
loops that are critical to the delivery of high-speed services 
via line sharing. Among other things, the UNE Remand Order 
explicitly gave the competitors unfettered access to ``high-
capacity'' lines, which enabled competitors to deliver-high-
speed services over incumbent loops,\3\ and so-called 
``attached electronics,'' which enabled the competitor to 
access its customers' traffic at the central office.\4\
---------------------------------------------------------------------------
    \2\ Implementation of the Local Competition Provisions of the Local 
Competition Provisions of the Telecommunications Act of 1996, CC Docket 
No. 96-98, Third Report and Order, 15 FCC Rcd 3696 (1999) (``UNE Remand 
Order'').
    \3\ Id. at 3777para.para. 176-177.
    \4\ Id. at 3776para. 175.
---------------------------------------------------------------------------
    The UNE Remand Order also provided competitors with the 
right to access certain operational support information, such 
as crticial data that identifies which incumbent can carry-
high-speed services. In addition, the UNE Remand Order provided 
competitors with the flexibility to interconnect with the 
incumbents' lines at any accessible intermediary point, and 
take only a portion of the incumbents' line (or subloop).\5\ 
Finally, the UNE Remand Order provided competitiors with the 
ability to provide high-speed services in other ways (e.g., by 
accessing available, but unused ``dark fiber'' or ``dedicated 
transport'') at very high speeds.\6\
---------------------------------------------------------------------------
    \5\ Id. at 3789-90 para.para. 206-207.
    \6\ Id. at 3776para.175,3785para.196 (''[w]e agree with commenters 
that argue that, because dark fiber provides high transmission 
capabilities are relatively low cost, unbundling fiber is essential for 
competition in the provision of advanced services'').
---------------------------------------------------------------------------
    As the FCC has recognized, line sharing is crticial to 
promoting local competition, including facilities-based 
competition. Without an effective line sharing requirement, 
competitors will not be able to offer conumers the choice in 
high speed services contemplated in the 1996 Act. While the 
proponents of H.R. 1542 claim that it preserves competitors' 
ability to provide high-speed services, this ability is 
rendered hollow by the bill's selective preservation of some 
existing rules but not others. Preserving the existing line 
sharing policy is essential and without it, the bill represents 
a retreat from the competitive vision that Congress created in 
the 1996 Telecommunications Act.

                                   Heather Wilson.
                                   Bill Luther.
                                   Robert L. Ehrlich, Jr.

              DISSENTING VIEWS OF MR. LARGENT ON H.R. 1542

    U.S. telecommunications policy is subject to intricate and 
occasionally confusing tripartite authority. Section 2(b) (47 
U.S.C. 152(b)) of the Communications Act reserves to the States 
the regulation of intrastate telecommunications. Regulation of 
interstate services is overseen by the Federal Communications 
Commission. And finally, all companies offering 
telecommunications services are subject to antitrust laws.
    H.R. 1542 offends this delicate, long-standing, and 
important balance by preempting state regulation of intrastate 
services that are offered over facilities that would be 
deregulated under Section 4 of the legislation. This federal 
usurpation of authority might possibly be justified as Congress 
contemplates how to rationalize the confluence of 
telecommunications policy and Internet technology. In my view, 
however, the proponents of preemption have failed to make their 
case. For this reason, as well as because of my belief that 
enactment of H.R. 1542 would retard the development of local 
exchange competition, I voted against reporting H.R. 1542. I 
believe the record built at the April 25, 2001 hearing provides 
a sufficient discussion of the bill's deficiencies with regard 
to local competition because the impact of the legislation on 
states' rights has not been adequately aired, I focus my 
comments here on that issue.
    At the outset, the Committee has been asked by the sponsors 
of H.R. 1542 to bless such a broad preemption of state 
authority is indeed ironic, given that the bill's sponsors are 
among those who have been the most aggressive champions--going 
so far as to file an amicus brief with the U.S. Supreme Court 
in Iowa Utilities Board v. Federal Communications Commission--
of the notion that the states, rather than the F.C.C., should 
exercise primary authority over the interconnection and 
unbundling provisions of Section 251. H.R. 1542 proposes to 
amend in such a way that would deny this same authority to the 
states.
    The rapid pace at which the Energy and Commerce Committee 
was compelled to consider this legislation did not lend itself 
to a measured, thoughtful debate over this very critical policy 
consideration. There was little, if any, debate over whether it 
makes sense to modify, implicitly or explicitly, Section 2(b) 
of the Communications Act. The Committee was denied a 
reasonable opportunity to engage in this debate when the 
decision was made to exclude representatives of state public 
utility commissions from the sole legislative hearing held on 
the bill during the 107th Congress. Nonetheless, it is clear 
that state public utility commission objections to H.R. 1542 
are numerous.
    Many state commissions have filed written objections to 
H.R. 1542. Virtually every commission that has opined on the 
legislation in letters to Members has noted that it is likely 
to threaten local exchange competition by reducing the Bell 
companies' incentives to open their respective local exchange 
facilities to competition. Similarly, they have noted that 
nothing in current law prevents the Bells from deploying 
broadband facilities and services to consumers today. These 
objections are significant, but they are not the most serious 
of the state commissions' objections to the bill. The most 
disturbing of the criticisms levied against the bill, raised by 
almost every state commission that has weighed in on the 
legislation, is that it is so overly broad in its scope that it 
will impinge on the ability of the states to regulate the rates 
for and quality of basic telephone service. This last point has 
been echoed by business user and consumer advocacy 
organizations which also have written to Members to offer their 
views on H.R. 1542.
    Members may be able to assume divergent views on the first 
two points as a matter of honest disagreement, but it is 
irresponsible for us to engage in an effort so ill-considered 
that it might deny consumers the most basic of rate and service 
quality protections and threaten the continued viability of the 
universal service system. In the Committee's haste to report 
H.R. 1542, we may be producing a bill with far-reaching 
negative implications for the very rural and underserved 
consumers that proponents of the legislation claim it will 
help.
    I urge that every effort be made to remedy this deficiency 
when the bill is considered by the full House of 
Representatives.

                                                     Steve Largent.

                 DISSENTING VIEWS OF MR. CHIP PICKERING

    Congress enacted the Telecommunications Act of 1996 to 
promote competition in all telecommunications markets and spur 
the development of a competitive local exchange market 
specifically. The most important market-opening tool we created 
was the obligation for he Bell companies to share their 
networks with competitors. Under this provision, new 
competitors to the Bell companies could obtain access to the 
incumbent's network in three ways: (1) by purchasing local 
telephone services at wholesale rates and reselling them to end 
users; (2) by leasing specific pieces of the incumbent's 
network on an unbundled basis; and (3) by building its own 
facilities and interconnecting them with the incumbent's 
network.
    No one thought the transition to a competitive local 
exchange market would be easy. We all know that it would 
require hard work, substantial resources, and patience. I 
believe Congress was right when it passed the 1996 Act, and so 
I voted against H.R. 1542 because it fundamentally undermines 
the market-opening mechanisms established by the 1996 Act 
before they have been given an adequate chance to work. H.R. 
1542 would make it almost impossible for competitors, even 
facilities-based competitors, to enter the local exchange 
market.
    I also oppose H.R. 1542 because attempts to justify 
granting incumbents authority to provide interLATA data 
services relies upon a false distinction between voice and data 
transmissions. With the digitization of telecommunications, 
there is no longer a readily identifiable distinction between 
voice and data services or any effective method of determining 
whether the Bell companies are transmitting only data services 
over their interLATA facilities. The ``data exception'' in the 
bill therefore would basically remove any incentive for the 
incumbents to open their local networks to CLECs.
    If Congress really wants to address the lack of competition 
in the local exchange market, the answer is not to abandon the 
1996 Act. Instead, Congress should ensure that incumbents 
satisfy their existing obligations under the Act by 
strengthening the FCC's enforcement authority, as Chairman 
Powell suggested. Let me expand upon each of these concerns in 
turn.

       eliminating the market-opening initiatives in the 1996 act

    First, H.R. 1542 reverses the pro-competitive thrust of the 
1996 Act by rolling back the FCC's unbundling rules to January 
1, 1999. This effectively deprives new entrants to the local 
exchange market of access to the facilities they need to 
compete. Even facilities-based competitors do not spring to 
life full-blown, able to service an entire region or state with 
their own networks. Like the early MCI and Spring, which 
evolved into full facilities-based carriers, new entrants in 
the local marketplace need to lease elements of the incumbents' 
networks in order to provide service throughout any geographic 
area.
    The sponsors of the bill claim that it preserves incumbent 
local exchange carriers' current obligation to provide 
competing carriers with unbundled access to the high-frequency 
portion of the loop, commonly known as ``line sharing.'' They 
state that the current rules as requiring only access to copper 
loops. In fact, the FCC's 2001 clarification of the line 
sharing requirement makes clear that this requirement ``applies 
to the entire loop, even where the incumbent has deployed fiber 
in the loop.''\1\ Limiting line sharing to copper would 
severely undercut, if not eliminate, competitors' ability to 
provide high-speed services to consumers. The Luther-Wilson 
amendment, which I supported, would have eliminated any 
ambiguity on this critical point.
---------------------------------------------------------------------------
    \1\ Deployment of Wireline Services Offering Advanced 
Telecommunications Capability and Implementation of the Local 
Competition Provisions of the Telecommunications Act of 1996, Third 
Report and Order on Reconsideration in CC Docket No. 98-147, Fourth 
Report and Order on Reconsideration in CC Docket No. 96-98, para. 10.
---------------------------------------------------------------------------
    The 2001 clarification was necessary because incumbent 
telephone companies took the position in line sharing 
negotiations with competitive carriers that they were not under 
an obligation to unbundle fiber portions of the loop when those 
portions were used to provide high-speed services. Limiting 
line sharing to copper plant would effectively reverse this 
clarification. As incumbents deploy more fiber,\2\ competitors 
would lose the ability to line share.
---------------------------------------------------------------------------
    \2\ Id. para. 13 (``[a]ll indications are that fiber deployment by 
incumbent LECs is increasing'').
---------------------------------------------------------------------------
    Far from preserving existing line sharing requirements, the 
bill is a giant step backward that undermines the prospects for 
facilities-based competition. As the FCC recognized, lack of 
effective access to the high-frequency portion of the loop.

          materially diminishes the ability of competit[ors] to 
        provide certain types of advanced services to 
        residential and small business users, delays broad 
        facilities-based market entry, and materially limits 
        the scope and quality of competitor service 
        offerings.\3\
---------------------------------------------------------------------------
    \3\ Id. para. 5 (emphasis added).

    The bill also retreats from existing law by eliminating the 
incumbents' obligation to provide unbundled access to the high 
frequency portion of the loop at the ``remote terminal'' that 
lies between the customer's premises and the central office. In 
the Line Sharing Reconsideration Order, the Commission 
determined that an incumbent had an obligation to provide line 
sharing to a requesting carrier at either the remote terminal 
or at the central office, but not both.\4\ The bill would 
deprive competitors of this choice.
---------------------------------------------------------------------------
    \4\ Id. para.para. 10-11.
---------------------------------------------------------------------------
    This change in current law could effectively render 
competitors' investments in line sharing equipment located at 
the incumbents' central office useless. When an incumbent local 
exchange carrier puts DSL equipment in the remote terminal, 
competitors cannot use the line sharing equipment they've 
installed in the central office. In this situation, the only 
way for a competitive carrier to reach those customers served 
by the remote terminal to offer high-speed data services would 
be to interconnect its equipment at the remote terminal.--but 
the bill precludes this.
    Supporters of H.R. 1542 claim that the bill will enhance 
both the deployment of and competition in high-speed data 
services. Quite the opposite is true. Countless competitors 
will be prevented from providing high-speed services to 
customers that are served by a local loop that contains fiber 
facilities. And the fact remains that loops containing a fiber 
component are being deployed aggressively by the incumbents.
    Finally, as competitive carriers find that they can no 
longer provide high-speed services to its customers, they will 
be unable to meet increasing consumer demand for both high-
speed data services and voice services over a single line. 
Customers seeking these bundled services will have but one 
carrier to turn to, the incumbent. Thus this bill not only 
allows incumbents to preclude competition in high speed 
services, it also enables them to perpetuate their dominance of 
the local voice markets.

                The Illusory ``Voice-Data'' Distinction

    Second, the bill relies upon an illusory distinction 
between voice and data services to justify the provision of 
interLATA ``data'' services by the incumbents. Under the 1996 
Act's carrot and stick approach to promoting competition in the 
local exchange market, the Act permitted the Bell companies to 
enter the long distance market only after they opened their 
markets to competition. As we heard at the Committee hearing on 
this bill, the vast majority of traffic traveling over 
interLATA networks today is data traffic, not voice, and 
analysts predict that data traffic will make up 90 percent of 
all traffic within four years. If the Bell companies are given 
the ability to provide high speed data services across LATA 
boundaries without having to satisfy the elements of the 
competitive checklist, they will have little incentive to 
comply with the checklist in order to provide interLATA voice 
services. Moreover, the bill's attempt to ``limit'' interLATA 
relief to data transmissions is unenforceable. With the 
increased digitization of telecommunications, there is no way 
to clearly distinguish between ``voice'' and ``data'' 
transmissions, as was repeatedly acknowledged by the authors of 
the legislation.

          Destabilizing a Shaky Telecommunications Marketplace

    By fundamentally altering critical elements of the 1996 
Act, H.R. 1542 will destabilize the already shaky competitive 
local exchange industry. When Chairman Powell recently appeared 
before the Subcommittee on Telecommunications and the Internet, 
I asked him specifically whether Congress should reopen the 
1996 Act at this time. His response was telling:

          MR. POWELL: I think my advice, such that it's worth 
        anything, is that . . . any sort of wholesale 
        rewriting, in my mind, is ill-advised, unless you're 
        very clear as to what it is you think you're going to 
        replace it with. The legal environment, which includes 
        the statute and the regulatory environment, are 
        critical components of the stabilization of evolving 
        markets. And we are as much a contributor to risk and 
        capital risk as anyone else. And I believe that it has 
        taken us a long time to get where we are, longer than 
        any of us wanted.

    He then expanded upon his point about the destabilization 
of markets, saying:

          [the capital markets] will handicap anything you do 
        and make judgments about who they think are the winners 
        and losers. And depending on how they receive it, you 
        could certainly tip the balance, at least for the time 
        being, in one favor or the other or in ways that might 
        have unintended consequences.

    There can be no doubt that the changes to the 1996 Act made 
by this bill amounts to the kind of ``wholesale rewriting'' 
that Chairman Powell warned against. My concerns are borne out 
by much of the testimony we heard from the financial community 
and the competitive carriers during our hearing on the bill. I 
must strongly dissent to such a course.

                          Stronger Enforcement

    There is a better course for fulfilling the promise of the 
1996 Act and promoting competition in the local 
telecommunications marketplace. Strengthening the penalties for 
violations of the Act and giving the FCC better tools to 
enforce the law would go a long way toward opening markets to 
competitors and giving consumers the choices we foresaw in 
1996.
    Again, Chairman Powell made the same point in his 
appearance before the Subcommittee on Telecommunications and 
the Internet: ``Enforcement becomes more critical than it has 
ever been in our period. It is simply a necessity, not an 
ideology.'' Unfortunately, as Chairman Powell also explained, 
``the enforcement tools made available to [the FCC] are 
inadequate with billion dollar industries. Our fines are 
trivial. They're the cost of doing business to many of these 
companies.'' Even a $10 million fine is trivial to companies of 
the size and scope of the largest incumbent LECs. For Verizon, 
with $63 billion in annual revenue, such a fine amounts to the 
revenue earned in less than 90 minutes. It is the equivalent of 
a parking ticket. The Commission's current enforcement 
authority must be strengthened to ensure that Congress' goal of 
competitive local exchange markets is realized.

                               Conclusion

    H.R. 1452 is a fundamentally flawed approach to 
communications policy. Far from promoting broadband deployment, 
it will deter competitors, entrench the incumbents, and deny 
consumers the benefits of competition intended by the 1996 
Telecommunications Act. In the current fragile financial 
markets, its sweeping and premature deregulation of the 
incumbents will further reduce access to capital for 
competitors. I cannot support such a measure.
    If this Committee desires to find common ground on 
increasing deployment and addressing some of the lessons we 
have learned since the passage of the Telecommunications Act of 
1996, then I believe we could construct a framework that is 
workable. However, at this point this legislation should be 
opposed.

                                     Charles W. ``Chip'' Pickering.

                                  
