[Senate Report 104-23]
[From the U.S. Government Publishing Office]
104th Congress 1st SENATE S. Rpt.
Session
104-23
_______________________________________________________________________
Calendar No. 45
TELECOMMUNICATIONS COMPETITION
AND DEREGULATION ACT OF 1995
__________
R E P O R T
of the
COMMITTEE ON COMMERCE, SCIENCE, AND
TRANSPORTATION
on
S. 652
March 30 (legislative day, March 27), 1995.--Ordered to be printed
SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED FOURTH CONGRESS
FIRST SESSION
LARRY PRESSLER, South Dakota,
Chairman
BOB PACKWOOD, Oregon
TED STEVENS, Alaska
JOHN McCAIN, Arizona
CONRAD BURNS, Montana
SLADE GORTON, Washington
TRENT LOTT, Mississippi
KAY BAILEY HUTCHISON, Texas
OLYMPIA SNOWE, Maine
ERNEST F. HOLLINGS, South Carolina JOHN ASHCROFT, Missouri
DANIEL K. INOUYE, Hawaii
WENDELL H. FORD, Kentucky
J. JAMES EXON, Nebraska
JOHN D. ROCKEFELLER IV, West Virginia
JOHN F. KERRY, Massachusetts
JOHN B. BREAUX, Louisiana
RICHARD H. BRYAN, Nevada
BYRON L. DORGAN, North Dakota
Patric G. Link, Chief of Staff
Kevin G. Curtin, Democratic Chief
Counsel and Staff Director
Calendar No. 45
104th Congress Report
SENATE
1st Session 104-23
_______________________________________________________________________
TELECOMMUNICATIONS COMPETITION AND DEREGULATION ACT OF 1995
_______
March 30 (legislative day, March 27), 1995.--Ordered to be printed
_______________________________________________________________________
Mr. Pressler, from the Committee on Commerce, Science, and
Transportation, submitted the following original bill; which was read
twice and placed on the calendar
R E P O R T
together with
ADDITIONAL AND MINORITY VIEWS
[To accompany S. 652]
The Committee on Commerce, Science, and Transportation
reports favorably an original bill to provide for a pro-
competitive, deregulatory national policy framework designed to
accelerate rapidly private sector deployment of advanced
telecommunications and information technologies and service to
all Americans by opening all telecommunications markets to
competition, and for other purposes, and recommends that the
bill do pass.
The Committee on Commerce, Science, and Transportation, to
foster the further development of the Nation's
telecommunications infrastructure through competition and
deregulation, and for other purposes, considered an original
bill, the Telecommunications Competition and Deregulation Act
of 1995, reports favorably thereon and recommends that the bill
as amended do pass.
Purpose of the Bill
The purposes of the bill are to revise the Communications
Act of 1934 (the 1934 Act) to provide for a pro-competitive,
de-regulatory national policy framework designed to accelerate
rapidly private sector deployment of advanced
telecommunications and information technologies and services to
all Americans by opening all telecommunications markets to
competition, and for other purposes.
Among the major issues addressed by the bill are: (1) long
distance entry by the Bell Operating Companies (BOCs); (2)
telephone company entry into cable; (3) competition for local
telephone service; (4) entry of registered electric utilities
into telecommunications; (5) broadcasters' rights to provide
additional services; (6) protection and advancement of
universal telephone service; and many other issues.
Background and Needs
A. Historical Background
1. The Communication Act of 1934
At the time Congress passed the 1934 Act, AT&T held a
virtual monopoly over telephone service. AT&T was the sole
provider of long distance service, was the primary manufacturer
of communications equipment, and owned the Bell Operating
Companies, which provided most of the local telephone service
in the country. At the same time, AM radio was just beginning
to develop a mass audience. Yet the amount of available
spectrum for radio stations was limited, and radio stations
frequently interfered with each other's signals. Legislation
was necessary for two reasons: for telephone service,
legislation was necessary to prevent AT&T from abusing its
monopoly and for spectrum-based services, legislation was
necessary to prevent interference among competing users of the
spectrum and to prevent a few large entities from acquiring all
spectrum rights.
To address these needs, the Congress passed the 1934 Act,
modeled after the Interstate Commerce Act. Title I of the 1934
Act creates the FCC, title II establishes the regulations for
all ``common carriers'' (providers of telephone services), and
title III establishes the rules for broadcast services using
the radio spectrum. Titles IV and V deal with judicial review
and enforcement.
2. Changes in the telephone services market
Changes in technology and consumer preferences have made
the 1934 Act a historical anachronism. For instance, the 1934
Act presumes that telephone service is provided by monopoly
carriers and imposes strict regulatory requirements on all
common carriers whether they are monopolies or not. Since the
1970s, when competition first began to emerge in the markets
for telephone equipment, information services, and long
distance services, the FCC has struggled to adopt rules that
recognize a need to reduce regulatory burdens, especially on
new entrants.
3. Changes in the broadcast and cable markets
The broadcast markets have undergone similar changes. While
the 1934 Act successfully permitted the FCC to establish
regulations for the introduction of over-the-air television,
the Act was not prepared to handle the growth of cable
television. Cable television, first known as community antenna
television, or CATV, was not a common carrier (title II) or a
broadcaster (title III). Congress responded by passing the
Cable Communications Policy Act of 1984 (the 1984 Cable Act),
which created a new title VI of the 1934 Act and established
the FCC's regulatory authority over cable operators.
The 1984 Cable Act prohibited telephone companies from
providing video programming directly to subscribers in the same
region where they provide telephone service (the so-called
cable-telco prohibition), thereby preventing telephone
companies from competing with cable operators. As the cable
industry prospered through the late 1980s, it began to spend
greater resources on developing its own programming. Rather
than simply retransmitting broadcasting signals, the cable
industry now competes with broadcasters for audience shares and
advertising.
The growth of cable programming has raised questions about
the rules that govern broadcasters and telephone companies.
Although broadcasters provide their services for free to
consumers, they are currently restricted to providing one
channel of programming over their spectrum, while a cable
system can provide several channels. Broadcasters are seeking
the right to obtain additional revenue streams through the
provision of additional services over their spectrum.
Other changes raise questions about the cross-ownership
restrictions. Telephone companies are seeking the right to
provide cable service in competition with the cable companies.
Similarly, cable companies are seeking the right to provide
telephone service. Federal district courts have found that the
1984 cable-telco cross-ownership ban is unconstitutional under
the First Amendment.
4. Changes in global communications market
Section 310(b) of the 1934 Act establishes limits on the
grant of U.S. telecommunications licenses to foreign entities.
With an exploding worldwide demand for telecommunications
equipment and services, this limitation inhibits the ability of
U.S. firms to compete in a global market. Foreign countries
point to section 310(b) as a reason to deny U.S. companies
entry into their markets.
The bill creates a system of reciprocity for common
carriers.The FCC may grant a common carrier license to an
alien, or foreign corporation if the FCC finds that there are
equivalent market opportunities for U.S. companies in the
foreign country where the alien is a citizen or a corporation
is organized.
5. The Modification of Final Judgment (MFJ)
In 1982, the Department of Justice (DOJ) settled an
antitrust case against AT&T. Under the agreement, AT&T agreed
to spin off its local telephone companies in exchange for
maintaining its equipment and long distance businesses. AT&T
and DOJ agreed that the 22 Bell Operating Companies (BOCs)
would be combined into 7 Regional Bell Operating Companies.
(RBOCs). The decree took effect on January 1, 1984.
The MFJ also provided that the BOCs would be barred from
providing long distance (the ``interLATA'' restriction) or
information services and from manufacturing communications
equipment. These restrictions were imposed out of concern that
the BOCs would use their monopoly over local telephone service
to harm consumers and gain an unfair advantage over competitors
in the long distance, manufacturing, and information services
markets.
The ``line-of-business'' restrictions on the BOCs were not
intended to be permanent. In 1991, the District Court removed
the information services restriction entirely, but the
restrictions on manufacturing and long distance continue to
apply.
6. The Public Utility Holding Company Act of 1935
Unlike most electric utility companies, the Public Utility
Holding Company Act of 1935 (PUHCA) restricts the 10 registered
electric utility holding companies 1 and their operating
subsidiaries from making investments outside of the utility
business. Specifically, section 11 of PUHCA restricts
registered companies to businesses that are ``reasonably
incidental, or economically necessary or appropriate'' to the
operations of an integrated utility system and that are
``necessary or appropriate in the public interest.'' As
administered by the Securities and Exchange Commission (SEC),
these requirements mean that registered holding companies are
generally limited to investments that primarily involve their
core electric utility business. Thus, for example, while a
registered holding company is generally able to own an internal
telecommunications system necessary for control of power plants
and other utility uses, it and its subsidiaries are limited in
their ability to sell excess telecommunications capacity to
other parties.
\1\ Under PUHCA, registered holding companies are generally
those that operate multistate systems. The 10 registered electric
utility holding companies are: Central and South West Corp., the
Southern Co., Entergy Corp., American Electric Power Co., Inc., New
England Electric System, Allegheny Power System, Inc., General Public
Utilities Corp., Eastern Utilities Associates, Unitil Corp., and
Northeast Utilities. In addition, there are three gas registered
holding companies: Columbia Gas System, Consolidated Natural Gas Co.,
and National Fuel Gas Co. The changes made by section 302(b) of the
bill apply equally to all registered companies.
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PUHCA restricts registered holding companies from investing
in telecommunications infrastructure, specifically the
construction of fiber optic links and other facilities for
general service to the public. In addition, many end-use
applications that could provide the incentive for investment in
infrastructure construction may also exceed core utility
functions and thus impede the ability of a registered holding
company to invest. As a result, registered holding companies
may be precluded from competing in telecommunications and
information markets, thus potentially limiting consumer choice
and resulting in higher prices, unless current PUHCA
restrictions are loosened with respect to investment in
telecommunications infrastructure and applications. Entry by
utilities could significantly promote and accelerate
competition in telecommunications services and deployment of
advanced networks.
B. Need for the Legislation
1. Universal service and local competition
The need to protect and advance universal service is one of
the fundamental concerns of the Committee in approving the
Telecommunications Competition and Deregulation Act of 1995.
The bill addresses the universal service concerns in several
ways.
First, it makes explicit the FCC's current implicit
authority to require common carriers to provide universal
service. Second, the legislation provides a mechanism to
achieve greater consistency between Federal and State actions
to protect universal service.
The bill sets forth a Federal responsibility for
establishing universal service policies, but recognizes the
primary importance of the States in developing policies to
define, protect and advance universal service. It creates a
Federal-State Joint Board through which the FCC can obtain the
States' views with regard to appropriate universal service
mechanisms. The Joint Board after receiving the States'
recommendations may propose modifications of amendments to the
definition of and the adequacy of support for universal
service.
The bill directs the FCC and the Joint Board to base their
policies on several principles. Among others, these include:
providing quality services at just, reasonable, and affordable
rates; providing access to advanced telecommunications and
information services in all regions of the nation; and,
providing consumers in rural and high cost areas access to
services comparable to those provided in urban areas.
The legislation reforms the regulatory process to allow
competition for local telephone service by cable, wireless,
long distance, and satellite companies, and electric utilities,
as well as other entities.
The bill preempts almost all State and local barriers to
competing with the telephone companies upon enactment of the
bill. In addition, the measure requires telecommunications
carriers with market power over telephone exchange or exchange
access service to open and unbundle network features and
functions to allow any customer or carrier to interconnect with
the carrier's facilities. Several States (such as New York,
California, and Illinois) have taken steps to open the local
networks of telephone companies.
The bill gives the FCC greater regulatory flexibility by
permitting the FCC to forbear from regulating carriers when it
is in the public interest. This provision will allow the FCC to
reduce the regulatory burdens on new entrants. It will also
permit the FCC to reduce the regulatory burdens on the
telephone company when competition develops or when the FCC
determines that relaxed regulation is in the public interest.
2. Long distance relief for the BOCs
The bill establishes a process under which the BOCs may
apply to enter the interLATA market. It reasserts Congressional
authority over this issue.
Section 255 of the bill establishes a checklist of specific
actions BOCs must meet in order to fully open local telephone
service to competitors. The checklist requires the BOCs to make
specific facilities and services available on an unbundled
basis to other providers. Among other specific requirements,
the BOCs must provide access to poles, ducts and conduits;
offer emergency and directory assistance; and provide
transmission and switching services unbundled from other
communications services so other carriers can purchase these
services on an as-needed basis. By opening up local telephone
service and long distance to competition, the Committee
anticipates consumers will have a greater choice of services
and providers.
Upon an FCC finding that a BOC has complied with the
checklist and other measures, the BOC will be permitted to
offer long distance services.
3. Manufacturing authority for the BOCs
Section 222 of the bill removes BOC manufacturing
restrictions by tying entry into manufacturing to the
competitive checklist in new section 255(b) of the 1934 Act.
The bill provides certain authority immediately. At
enactment, BOCs may engage in research or design activities
related to the manufacture of telecommunications equipment or
customer premises equipment. Further, BOCs would be permitted
to enter into royalty agreements with other manufacturers.
BOCs are permitted to enter immediately into arrangements
with an unaffiliated manufacturer in developing a product
(either with funding or technical assistance) and would receive
royalties upon the manufacturer's sale of the product to third
parties.
When BOCs have been found by the FCC to be permitted into
long distance, they may also enter manufacturing. In conducting
their manufacturing activities, the BOCs must comply with the
following safeguards:
No Joint Manufacturing--To prevent collusion, the
BOCs cannot manufacture in conjunction with one
another. The bill requires that, if the BOCs decide to
manufacture, they will create independent manufacturing
entities that will compete with each other as well as
with existing manufacturers.
Separate Affiliates--The BOCs must conduct all their
manufacturing activities through separate affiliates.
The affiliate must keep books of account for its
manufacturing activities separate from the telephone
company and must file this information publicly.
No Self-dealing--(1) The BOC must make procurement
decisions and award all supply contracts using open,
competitive bidding procedures, must permit any person
to participate in establishing standards and certifying
equipment used in the network, may not restrict sales
or equipment to other local exchange carriers, and must
protect proprietary information concerning standards
and certification of equipment unless specifically
authorized.
No Cross-subsidization--The BOC is prohibited from
subsidizing its manufacturing operations with revenues
from its telephone services.
Protections for Small Telephone Companies--A BOC
manufacturing affiliate must make its equipment
available to other telephone companies without
discrimination or self-preference as to price delivery,
terms, or conditions.
Close Collaboration--Any BOC may engage in close
collaboration with any unaffiliated manufacturer.
4. Telephone company entry into cable
The bill permits telephone companies to enter cable and
cable to offer telephone services immediately upon enactment.
The bill does not require telephone companies to obtain a
local franchise as long as they employ a video dial-tone system
that is operated on a common carrier basis open to all
programmers. If a telephone company provides service over a
``cable system'' (that is, a system that is not open to all
other programmers), the telephone company will be treated as a
cable operator under title VI of the 1934 Act. Video providers
are required under section 214 of the 1934 Act to seek a
certificate from the FCC to construct facilities to provide
these services. The bill lifts this section 214 requirement
effective one year after enactment.
5. Entry by the registered electric utilities into communications
Allowing registered holding companies to become vigorous
competitors in the telecommunications industry is in the public
interest. Consumers are likely to benefit when more well-
capitalized and experienced providers of telecommunications
services actively compete. Competition to offer the same
services may result in lower prices for consumers. Moreover,
numerous competitors may offer consumers a wider choice of
services and options.
Under current law, holding companies that are not
registered may already compete to provide telecommunication
services to consumers. There does not appear to be sufficient
justification to preclude registered holding companies from
providing this same competition. Rather, there are compelling
reasons for allowing registered holding companies to compete in
the telecommunications market.
First, electric utilities in general have extensive
experience in telecommunications operations. Utilities operate
one of the Nation's largest telecommunications systems--much of
it using fiber optics. The existence of this system is an
outgrowth of the need for real time control, operation and
monitoring of electric generation, transmission and
distribution facilities for reliability purposes. Within the
utility world, registered holding companies are some of the
more prominent owners and operators of telecommunications
facilities. For example, one registered holding company, the
Southern Co., has approximately 1,700 miles of fiber optics
cables in use, with several hundred more miles planned.
Second, electric utilities are likely to provide
economically significant, near-term applications such as
automatic meter reading, remote turn on/turn off of lighting,
improved power distribution control, and most importantly,
conservation achieved through real-time pricing.
With real-time pricing, electric customers would be able to
reprogram major electricity consuming appliances in their homes
(such as refrigerators and dishwashers) to operate according to
price signals sent by the local utility over fiber optic
connections. Electricity costs the most during peak demand
periods. Since consumers tend to avoid higher than normal
prices, the result of real-time pricing would be significant
``peak shaving'' reduction in peak needs for electric
generation. Because electric generation is highly capital
intensive, reductions in demand can become a driving force for
basic infrastructure investment in local fiber optic
connections. Registered holding companies are leaders in the
development of real-time pricing technology.
Third, registered holding companies have sufficient size
and capital to be effective competitors. Collectively,
registered companies serve approximately 16 million customers--
nearly one in five customers served by investor-owned
utilities. Three registered companies who have been active in
the telecommunications field, Central and South West, Entergy,
and Southern Co., have contiguous service territories that
stretch from west Texas to South Carolina.
To ensure that PUHCA amendments which allow registered
holding companies to invest in telecommunications and related
businesses are in the public interest, section 102(h) and
section 206 of the reported bill contain consumer protection
provisions. The bill requires any registered holding company
that provides telecommunications services to provide that
service through a separate subsidiary. It shall conduct all
transactions with its subsidiary on an arm's length basis and
shall not discriminate in the provision or procurement of
goods, services, facilities and information between its
subsidiary and any other entity. The bill also prohibits cross-
subsidization and provides State commissions and the Federal
Energy Regulatory Commission (FERC) access to books and records
of communications entities associated with registered holding
companies. It allows independent audits by State commissions of
affiliate transactions.
6. Alarm services
The U.S. alarm industry today protects the life, safety,
and property of more than 17 million homes and businesses. The
industry is a full and vigorous competitive market with more
than 13,000 alarm companies employing approximately 130,000
workers.
The Committee believes the legitimate concerns of the alarm
industry have been addressed in sections 251 and 252 of the
bill. The interconnection requirements will open the local
exchange monopoly to competitors, thus providing the alarm
industry with alternative service providers. Further, section
252 ensures that any BOC entering the alarm industry will
create a separate subsidiary for the alarm entity, and the BOC
is prohibited from cross-subsidizing its alarm business.
The Committee bill allows the BOCs into the alarm business
after they have received approval to provide long distance.
When BOCs are permitted to provide these services, the bill
establishes an expedited complaint proceeding at the FCC in the
event of perceived anticompetitive practices by a BOC.
7. Spectrum flexibility for broadcasters
The bill permits broadcasters to use their spectrum for new
services so long as they continue to provide broadcast
programming that meets their public interest obligations.
As technology becomes more advanced, local broadcasters
have had to experiment with and inaugurate new services. The
conversions from black-and-white to color and from monaural to
stereo sound, and the increase in electronic remote news-
gathering, have all brought changes to the future viability of
local broadcasting. Other changes have come from the desire to
provide new services to underserved populations, e.g., closed
captioning for the hearing impaired and second language
channels. Some services, such as teletext, have failed. But in
every instance, technical advances have facilitated the
provision of new services that have been introduced by the
broadcast industry in its existing broadcast spectrum. While
the Government has played an important facilitating role,
setting broad technical and service standards, the ultimate
success of each innovation has been determined by the public
and the marketplace.
The bill acknowledges that the public has been well served
by this process. Despite the introduction of numerous costly
improvements in service, local broadcast service remains
universally available, reaching 98 percent of American homes, a
degree of coverage which exceeds even the percentage of homes
receiving telephone service. As a consequence, the leadership
of the local television broadcasting system in introducing new
services and technologies has benefited all citizens, not just
those who can afford subscription services and live in areas
where those services are available.
Advanced television, digital compression, and other
technological service innovations hold the potential to bring a
variety of new services to consumers. Broadcasters seek to
pursue these opportunities within existing broadcast radio
spectrum, without governmental financial support, in a manner
which will assure the continued availability of top quality
broadcast service to all Americans. Broadcasters who use the
spectrum for commercial services are required to pay fees for
the use of this spectrum.
8. Obscenity and other wrongful uses of telecommunications
During consideration of the bill in Executive Session, an
amendment was offered to address an increasing number of
published reports of inappropriate uses of telecommunications
technologies to transmit pornography, engage children in
inappropriate adult contact, terrorize computer network users
through ``electronic stalking,'' and seize personal
information.
The amendment, which was adopted by voice vote, modernizes
the protections in the 1934 Act against obscene, lewd,
indecent, and harassing use of a telephone. These protections
are brought into the digital age. The provisions increase the
penalties for obscene, harassing, and wrongful utilization of
telecommunications facilities; protect privacy; protect
families from uninvited cable programming which is unsuitable
for children; and give cable operators authority to refuse to
transmit programs or portions of programs on public or leased
access channels which contain obscenity, indecency, or nudity.
The measure specifically excludes from liability
telecommunications and information service providers and system
operators who are not themselves knowing participants in the
making or otherwise responsible for the content of the
prohibited communications.
9. Conclusion
There are several reasons for this legislation. The 1934
Act has not been rewritten since its original passage. Its
provisions are no longer adequate in a world of competition for
telephone services and increasing diversity of media. Further,
much of current communications policy is being set by a single
Federal district court enforcing the MFJ. Reducing regulation
of the telecommunications industry will spur the development of
new technologies and increase investment in these industries,
which will create jobs and greater choices for consumers. The
United States telecommunications industry is competitive
worldwide. By reducing regulation and barriers to competition,
the bill will help ensure the future growth of these industries
domestically and internationally.
Legislative History
During the 104th Congress, several legislative proposals
were introduced to address the need for telecommunications
reform. One of these bills, S. 1822, was introduced in February
1994 by Senator Hollings and Senator Danforth, Chairman and
Ranking Republican Member, respectively, of the Committee on
Commerce, Science and Transportation, among others. Altogether,
the Committee heard 31 hours of testimony from 86 witnesses
during 11 days of hearings. In open executive session on August
11, 1994, the Committee reported a substitute to S. 1822, the
Communications Act of 1994, by a vote of 18-2. The measure was
not considered by the full Senate before the end of the
Congress.
At the beginning of the 105th Congress, on January 31,
1995, a Republican draft entitled ``The Telecommunications
Competition and Deregulation Act of 1995'' was circulated by
Senator Pressler, Chairman of the Committee on Commerce,
Science and Transportation. A Democratic response entitled
``The Universal Service Telecommunications Act of 1995''
followed from Senator Hollings, Ranking Democratic Member of
the Committee on Commerce, Science and Transportation, on
February 14, 1994.
The full Committee on Commerce, Science and Transportation
held 3 days of hearings.
January 9, 1995 Hearing
The first full committee hearing was on January 9, 1995 and
dealt with telecommunications legislation in the 104th
Congress.
Witnesses were the Hon. Bob Dole (R-KS), Senate Majority
Leader Hon. Thomas Bliley (R-VA), Chairman, House Commerce
Committee Hon. Jack Fields (R-TX), Chairman, House Commerce
Committee Subcommittee on Telecommunications and Finance.
Senator Dole advocated quick passage of telecommunications
legislation. He noted that rural Americans are concerned about
telecommunications legislation, as it offers tremendous
opportunities for economic growth. He testified that
legislation should underscore competition and deregulation, not
reregulation.
Chairman Bliley stated that the goals of telecommunications
legislation should be to: (1) encourage a competitive
marketplace; (2) not grant special government privileges; (3)
return telecommunications policy to Congress; (4) create
incentives for telecommunications infrastructure investment,
including open competition for consumer hardware; and (5)
remove regulatory barriers to competition.
Chairman Fields stated that telecommunications reform is a
key component of the legislative agenda of the 104th Congress.
He chastised those who speculated that Congress will be unable
to pass telecommunications legislation this year. He asserted
that the telecommunications industry is in a critical stage of
development, and that Congress must provide guidance.
March 2, 1995 Hearing
The committee again held a hearing on March 2, 1995 dealing
with telecommunications policy reform.
Witnesses
Panel I
Hon. Anne K. Bingaman, Assistant Attorney General for
Antitrust, U.S. Department of Justice
Hon. Larry Irving, Assistant Secretary for Communications and
Information, National Telecommunications and
Information Administration
Hon. Kenneth Gordon, Chairman, Massachusetts Department of
Public Utilities, testifying on behalf of NARUC
Panel II
Peter Huber, Senior Fellow, Manhattan Institute
George Gilder, Senior Fellow, The Discovery Institute
Clay Whitehead, President, Clay Whitehead Associates
Henry Geller, Communications Fellow, Markle Foundation
John Mayo, Professor of Economics, University of Tennessee
Lee Selwyn, President, Economics and Technology, Inc.
Panel I
Anne Bingaman testified that the Administration favors
legislation that is comprehensive and national in scope, opens
the BOC local monopoly, and provides for interconnection at all
points. She claims that local loop competition will bring
consumers the same benefits that long distance competition
brought consumers when the Justice Department broke up AT&T.
Larry Irving agreed that opening telecommunications markets
will promote competition, lower prices, and increase consumer
choice. He stated that the government must maintain its
commitment to universal service. He stated the Administration's
concern that private negotiations may not be the best way to
open the local loop to competition. He also asserted that a
date certain for elimination of the MFJ restrictions will hurt
efforts to negotiate interconnection agreements with BOCs.
Kenneth Gordon stated that State regulators, including
those in Massachusetts, were once a barrier to competition, but
are now at the forefront of promoting competition. He said that
states must also retain control of universal service. He
advocated using the states as laboratories for determining how
best to regulate common carriers. States are moving away from
cost-based regulation, but do not yet know which form of
incentive-based regulation works best. He said that the bill
should not mandate price regulation.
Panel II
Peter Huber noted that a date certain for entry is
necessary because the FCC and the Department of Justice are
very slow to act. He advocated swift enactment of legislation
with a date certain for entry into restricted lines of
business.
George Gilder also advocated swift Congressional action,
and claimed that telecommunications deregulation could result
in a $2 trillion increase in the net worth of U.S. companies.
He said the U.S. needs an integrated broadband network with no
distinction between long haul, short haul, and local service.
Clay Whitehead said that Congress should not try and chart
the future of the telecommunications industry, but should try
to enable it. He also advocated a time certain for entry into
restricted lines of business.
Henry Geller agreed with the previous speakers that
Congress should act soon. He said that a time certain approach
will work for the ``letting in'' process (allowing competition
in the local loop) as well as the ``letting out'' process
(allowing BOCs to provide interLATA telecommunications). Geller
advocated that the FCC should allow all users of spectrum the
flexibility to provide any service, as long as it does not
interfere with other licensees. He also contended that the FCC
should expand auctions to include all commercial licenses,
including broadcast licenses.
John Mayo testified that the spread of competition in other
markets over the last decade supports opening the local loop.
He said that interLATA telecommunications competition has been
a success and Congress should follow the same model for local
exchange competition. He testified against a date certain
approach for BOC long distance entry.
Lee Selwyn asserted that there will be no true competition
in the local loop unless all participants are required to take
similar risks. Selwyn also testified that premature entry by
the BOCs into long distance could delay the growth of
competition for local service.
March 21, 1995 Hearing
The Committee held a final hearing on March 21, 1995
dealing with telecommunications policy reform, specifically in
the areas of cable rate deregulation, broadcast ownership, and
foreign ownership.
Witnesses
Panel I
Decker Anstrom, President & CEO, National Cable Association
Richard A. Cutler, President, Satellite Cable Services
Gerald L. Hassell, Senior Executive VP, The Bank of New York
Roy Neel, President & CEO, United States Telephone Association
Bradley C. Stillman, Telecommunications Policy Director,
Consumer Federation of America
Panel II
U. Bertram Ellis, Jr., President & CEO, Ellis Communications,
Inc.
Edward O. Fritts, President & CEO, National Association of
Broadcasters
Preston R. Padden, President Network Distribution, Fox
Broadcasting Company
Jim Waterbury, Chair, NBC Affiliates Association
Panel III
Scott Harris, Bureau Chief, International Bureau, Federal
Communications Commission
Eli Noam, Director, Columbia Institute for Tele-Information
Decker Anstrom testified that NCTA supports
telecommunications legislation because the cable industry is
ready to compete, and legislation must include rate regulation
relief for cable. He said that cable will be the competing wire
to the telephone industry, and cable's coaxial cable carries
900 times more information than telephone's twisted copper
pair. The problem, he said, is that cable does not have the
capital or, in some states, the authority to compete with the
local exchange carriers.
Roy Neel agreed with Anstrom that cable rate regulation
repeal would allow for investment incentives. He also noted
that price regulation for cable is much less burdensome than
telephone company regulation, and stated that
telecommunications deregulation must be addressed in the bill
in order to create a level playing field.
Richard Cutler testified that the 1992 Cable Act has had a
devastating effect on small cable operators. He said that small
operators thought that they would be protected under the Act,
but the FCC forgot about the needs of small cable systems
(those with less than 1,000 subscribers). He said that small
cable operators need fair pole attachment rates and non-
discrimination in programming rates. He also said that the
legislation should include the ability for joint ventures,
mergers, and buy outs.
Bradley Stillman said that the 1992 Cable Act resulted in
lower programming and equipment prices for consumers. He
asserted that cable has actually increased its subscribership
and revenues during this period of rate regulation, and he
opposed any rate deregulation.
Gerald Hassell stated that true competition will only
develop if both cable and telephone survive and flourish. He
said that cable is the most likely source of competition to the
telephone industry, but cable does not have the capital to
rebuild its systems. Under rate regulation, he continued, there
is no incentive to invest in infrastructure.
Panel II
Bertram Ellis testified that the local ownership
restrictions no longer serve the public interest. He said that
allowing local multiple ownership will permit new stations to
get on the air that would not otherwise be able to survive. He
also stated that local marketing agreements--joint venture
between broadcasters which allow for local economies of scale--
are very helpful and should be allowed to continue.
Eddie Fritts stated that the radio ownership rules should
be modified in light of the impending new digital satellite
radio service. Digital satellite radio will create 60 new
nationwide radio stations. He also said that broadcasters need
spectrum flexibility to compete with other multichannel video
providers. Finally, Fritts contended that telephone companies
should have a separate subsidiary for providing video to the
home.
Preston Padden advocated deregulation of the broadcast
industry. He noted that the draft bill would allow seven very
strong companies into the video marketplace, and that
broadcasters will need deregulation to compete.
Jim Waterbury stated that Congress should retain some
ownership rules, such as the cable/network cross ownership ban
and the network ownership cap. He said that there must be
checks and balances between the affiliates and networks. He
believes that eliminating the ownership rules could harm
localism.
Panel III
Scott Harris, testifying on behalf of himself and not the
FCC, stated that Section 310(b) is an impediment to U.S.
competition overseas, and should be revised. He said that a
revision of Section 310(b) should include: elimination of the
difference between investment in a holding company and direct
investment; a public interest test that includes analysis of
the home market of the petitioning company; the ability for the
FCC to take into account new developments in foreign
regulations; and a modification of the ban on foreign
government ownership of communications licenses to allow for
satellite news gathering.
Eli Noam claimed that the Europeans are resistant to
opening their telecommunications markets, but noted that the
U.S. market is not fully open. He said that the U.S. can either
open its market unilaterally, or open markets based on
reciprocity. He also noted that the FCC already has some
discretion, so Congress does not need to act to achieve the
desired result. He continued, however, that from an
international image perspective, it would benefit the U.S. to
pass a law revising Section 310(b). Noam generally agreed with
the provision in the draft bill, but suggested that the FCC,
not USTR should make the open market analysis.
March 23, 1995 Executive Session
In an open executive session of March 21, 1995, the
Committee reported ``The Telecommunications Competition and
Deregulation Act of 1995,'' by a vote of 17 to 2.
Regulatory Impact Statement
In accordance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee provides the
following evaluation of the regulatory impact of the
legislation, as reported.
The bill, as reported, contains FCC requirements and
statutory modifications to the 1934 Act, to update the
regulatory structure to reflect changes in the
telecommunications marketplace. The bill requires FCC
proceedings that are necessary to establish the rules for
greater competition in the local exchange telephone markets
that traditionally have been dominated by regulated monopolies.
The procompetitive rules that will be established by these
proceedings will reduce substantially the costs level of
regulation. In addition, the bill amends the 1934 Act to allow
the FCC to forbear from regulation under certain circumstances.
Also, the FCC and States are required to give carriers pricing
flexibility when they face competition. The States are
prohibited from using rate of return regulation but are given
maximum flexibility in providing alternative forms of
regulation during the transition to competition.
The bill also requires a biennial review of regulations,
beginning in 1997, that would require the FCC to determine and
eliminate any regulation no longer necessary in a competitive
marketplace. The Federal-State Joint Board shall review State
laws and notify the Governors of any States' regulations
determined to no longer be in the public interest.
Under this legislation, the FCC will establish the national
minimum standards for opening local telephone networks and
other competitive requirements. The States are then responsible
for administering, implementing and resolving disputes as
telecommunications carriers meet these obligations.
This legislation authorizes the BOCs to engage in the
manufacture of telecommunications equipment and customer
premises equipment, the provision of telecommunications
equipment, and the provision of long distance service under
certain conditions. The bill would replace the current
antitrust prohibition with regulatory safeguards designed to
prevent the BOCs from engaging in anticompetitive behavior.
With respect to the provision of long distance services and
manufacturing, the FCC is required to conduct proceedings to
authorize such services by the BOCs.
In addition, the BOCs and all telephone companies are
allowed to provide video programming services in their
telephone service areas in an effort to promote greater choice
and competition in the video marketplace. Once competition
emerges in the video marketplace, current rate regulations
imposed on the cable industry will become unnecessary and will
sunset, removing the burden of rate regulation from the FCC and
the industry. In addition, regulation of the upper tier cable
service is removed, subject to a bad actor standard, further
reducing FCC regulatory responsibilities.
The legislation requires the FCC to take actions regarding
universal service, public access, and public rights-of-way,
infrastructure sharing and network planning, State oversight of
rural markets, rates for pole attachments, and guidelines for
carriers of last resort.
The legislation pays special attention to the needs of
rural areas. The bill allows States to adopt regulations to
require competitors to obtain State approval before being
permitted to compete in areas served by rural telephone
companies and impose obligations on competitors to serve an
entire service area. The FCC, on the other hand, must modify
its rules on unbundling for rural telephone companies and may
waive the requirements for carriers serving up to 2 percent of
the Nation's access lines.
The bill also amends PUHCA to allow registered utilities to
provide telecommunications services under safeguards to protect
ratepayers and competitors from cross-subsidization and
discriminatory conduct.
The measure allows the FCC to adopt regulations to allow
broadcasters the right to use their broadcast spectrum for
``ancillary and supplementary'' services and the FCC may
require fees for such services.
The rulemakings required by the legislation will have to be
initiated and completed within a variety of timeframes. After
the FCC adopts its rules, the States and industry participants
must comply with them. The legislation is designed to remove as
many regulatory burdens as possible to allow for the
development of a fully competitive marketplace in all sectors
of the telecommunications industry.
number of persons covered
The bill's regulatory provisions cover a variety of
segments within the telecommunications industry. Most of the
provisions involving the BOCs and other telephone companies
affect activities which are already regulated by various State
commissions and the FCC. Thus, the regulatory provisions
concerning the telephone companies are unlikely to increase the
number of persons affected by regulation, and provisions
deregulating portions of cable service will reduce the number
of persons affected.
economic impact
The bill is likely to stimulate tremendous economic growth
and investment by the private sector. The potential to
stimulate jobs, investment, and export opportunities for the
American economy is immense. A competitive local telephone
exchange is likely to produce increased economic activity and
investment. In addition to boosting overall economic output and
productivity, these activities are likely to generate
significant tax revenues for local and State governments and
the Federal Government. Most of the regulatory provisions
impact companies that are already regulated and are unlikely to
impose much of an economic burden.
privacy
The bill will not have any adverse impact on the personal
privacy of individuals affected and will give greater control
over such information to the consumer.
paperwork
The bill requires the FCC to adopt rules to implement the
provisions of the bill. Reporting requirements on affected
industry participants should not increase.
Section-by-Section Analysis
SEC. 1. Short Title
Section 1 provides that the bill may be cited as the
``Telecommunications Competition and Deregulation Act of
1995.''
Sec. 2. Table of Contents
Section 2 provides a table of contents for the bill.
Sec. 3. Purpose
Section 3 establishes that the purpose for the bill is to
increase competition in all telecommunications markets and
provide for an orderly transition from regulated markets to
competitive and deregulated telecommunications markets
consistent with the public interest, convenience, and
necessity.
Sec. 4 Goals
Section 4 identifies the policy goals and objectives of the
bill. The bill is intended to establish a national policy
framework that will accelerate rapidly the private sector
deployment of new and advanced telecommunications and
information technologies and services to all Americans by
opening all telecommunications markets to competition.
Sec. 5. Findings
Section 5 includes the findings of Congress.
Sec. 6. Amendment of Communications Act of 1934
Section 6 provides that, except as noted, an amendment or
repeal described in the bill is an amendment or repeal of a
section or provision of the Communications Act of 1934 (47
U.S.C. 151 et seq.)
Sec. 7. Effect on other laws
Section 7(a) states that, except as provided in sections
7(b) and (c), nothing in the bill shall be construed to modify,
impair, or supersede the applicability of any antitrust law.
For example, the provisions of this bill shall not be construed
to grant immunity from any future antitrust action against any
entity referred to in the bill.
Section 7(b) states that the bill shall supersede the
applicability of the MFJ to the extent that it is inconsistent
with the bill. Provisions of the MFJ that are not directly
inconsistent with the provisions of this bill are not
superseded by this bill, except as provided by section 7(c).
Section 7(c) transfers administration of the GTE consent
decree and any provision of the MFJ not overriden or superseded
by the bill to the FCC and provides that the U.S. District
Court for the District of Columbia shall have no further
jurisdiction over any provision of the MFJ or the GTE consent
decree.
Sec. 8. Definitions
Section 8(a) includes definitions of the MFJ, the GTE
Consent Decree, and an ``integrated telecommunications service
provider.'' An ``integrated telecommunications service
provider'' means a person engaged in the provision of multiple
services, such as voice, data, image, graphics, and video
services, which make common use of all or part of the same
transmission facilities, switches, signaling, or control
devices.
Section 8(b) adds several definitions to section 3 of the
Communications Act of 1934 (47 U.S.C. 153) including
definitions for ``local exchange carrier,''
``telecommunications,'' ``telecommunications service,''
``telecommunications carrier,'' ``telecommunications number
portability,'' ``information service,'' ``rural telephone
company,'' and ``service area.''
New subsection (kk) defines ``Local exchange carrier'' to
mean a provider of telephone exchange service or exchange
access service. ``Telephone exchange service'' is already
defined in section 3 of the 1934 Act.
``Telecommunications'' is defined in new subsection (ll) to
mean the transmission, between or among points specified by the
user, of information of the user's choosing including voice,
data, image, graphics, and video, without change in the form or
content of the information, as sent and received, with or
without benefit of any closed transmission medium. This
definition excludes those services, such as interactive games
or shopping services and other services involving interaction
with stored information, that are defined as information
services. The underlying transport and switching capabilities
on which these interactive services are based, however, are
included in the definition of ``telecommunications services.''
The term ``telecommunications service'' defined in new
subsection (mm) of section 3 of the 1934 Act means the offering
of telecommunications for a fee directly to the public or to
such classes of users as to be effectively available to the
public, regardless of the facilities used to transmit the
telecommunications service. This definition is intended to
include commercial mobile services, competitive access
services, and alternative local telecommunications services to
the extent they are offered to the public or to such classes of
users as to be effectively available to the public.
``Telecommunications service'' does not include information
services, cable services, or ``wireless'' cable services, but
does include the transmission, without change in the form or
content, of such services.
Subsection (nn) defines ``telecommunications carrier'' to
mean any provider of telecommunications service, except that
the term does not include aggregators of telecommunications
services as defined in section 226 of the 1934 Act. The
definition amends the 1934 Act to explicitly provide that a
``telecommunications carrier'' shall be treated as a common
carrier for purposes of the Act, but only to the extent that it
is engaged in providing telecommunications services.
New subsection (oo) defines ``telecommunications number
portability'' to mean the ability of users of
telecommunications services to retain, at the same location,
existing telecommunications numbers without impairment of
quality, reliability, or convenience when switching from one
telecommunications carrier to another. Number portability
allows consumers remaining at the same location to retain their
existing telephone numbers when switching from one
telecommunications carrier to another.
New subsection (pp) defines ``information service'' similar
to the FCC definition of ``enhanced services.'' The Committee
intends that the FCC would have the continued flexibility to
modify its definition and rules pertaining to enhanced services
as technology changes.
Subsection (rr) adds a definition of ``rural telephone
company'' that includes companies that (i) do not serve areas
containing any part of an incorporated place of 10,000 or more
inhabitants, or any incorporated or unincorporated territory in
an urbanized area, or (ii) have fewer than 100,000 access lines
in a State.
New subsection (ss) adds to the 1934 Act a definition of
``service area.'' ``Service area'' means a geographic area
established by the FCC and the States for the purpose of
determining universal service obligations and support
mechanisms. The service area of a rural telephone company means
such company's study area until the FCC and States, based on a
recommendation of a Federal-State Joint Board, establish a
different definition.
title I--transition to competition
Sec. 101. Interconnection requirements
Section 101 adds a new section 251 entitled
``Interconnection'' to the 1934 Act. Subsection 251(a) imposes
a duty on local exchange carriers possessing market power in
the provision of telephone exchange service or exchange access
service in a particular local area to negotiate in good faith
and to provide interconnection with other telecommunications
carriers that have requested interconnection for the purpose of
providing telephone exchange service or exchange access
service. The obligations and procedures prescribed in this
section do not apply to interconnection arrangements between
local exchange carriers and telecommunications carriers under
section 201 of the 1934 Act for the purpose of providing
interexchange service, and nothing in this section is intended
to affect the FCC's access charge rules. Local exchange
carriers with market power are required to provide
interconnection at reasonable and nondiscriminatory rates.
The FCC will determine which local exchange carriers have
market power for purposes of this section. In determining
market power, the relevant market shall include all providers
of telephone exchange service or exchange access service in a
local service area, regardless of the technology used to
provide such service.
The obligation to negotiate interconnection shall apply to
a local exchange carrier or a class of local exchange carriers
that are determined by the Commission to have market power in
providing exchange services. The references to a ``class'' of
carriers are intended to relieve the Commission of the need to
make a separate market power determination for each individual
carrier. These references are not intended to require the local
exchange carriers to engage in negotiations as a class,
although subsection 251(a)(2) provides that multilateral
negotiations are permitted. However, a local exchange carrier
that chooses to participate in multilateral negotiations will
be subject to an individual obligation to negotiate in good
faith and will remain subject to the time limitations contained
in this and other provisions of section 251.
The Committee intends to encourage private negotiation of
interconnection agreements. At the same time, the Committee
recognizes that minimum requirements for interconnection are
necessary for opening the local exchange market to competition.
New Section 251 provides two alternative methods for
reaching interconnection agreements. The Committee intends that
the interconnection required under this section will be
implemented in a manner that is transparent to customers of the
local exchange carrier and the connecting telecommunications
carrier.
New subsection 251(b) provides a list of minimum standards
relating to types of interconnection the local exchange carrier
must agree to provide, if sought by the telecommunications
carrier requesting interconnection. The minimum standards
include unbundled access to the network functions and services
of the local exchange carrier's network, and unbundled access
to the local exchange carrier's telecommunications facilities
and information, including databases and signaling, that are
necessary for transmission and routing and the interoperability
of both carriers' networks. The negotiation process established
by this section is intended to resolve questions of economic
reasonableness with respect to the interconnection
requirements. That is, either the parties resolve the issue or
the State will impose conditions for interconnection consistent
with section 251 and the FCC rules.
The minimum standards also require interconnection to the
local exchange carrier's network that is at least equal in
type, quality, and price to the interconnection the carrier
provides to any other party, including itself or affiliated
companies. At a minimum, the Committee intends that any
technically feasible point would be any point at which the
local exchange carrier provides access to any other party,
including itself or any affiliated entry. Access to poles,
ducts, conduits, and rights-of-way owned or controlled by the
local exchange carrier is also a minimum standard.
Number portability and local dialing parity are included in
the minimum standards of subsection 251(b). If requested, a
local exchange carrier must take any action under its control
to provide interim or final number portability as soon as it is
technically feasible. Section 307 of the bill adds new section
261 of the Act which establishes a neutral telecommunications
numbering administration and defines interim and final number
portability. The FCC will determine when final number
portability is technically feasible. A similar requirement
applies to local dialing parity.
The minimum standards also cover resale or sharing of the
local exchange carrier's unbundled telecommunications services
and network functions. The carrier is not permitted to attach
unreasonable conditions to the resale or sharing of those
services or functions. Subsection 251(b) provides certain
circumstances where it would not be unreasonable for a State to
limit the resale of services included within the definition of
universal service.
Additional minimum standards relate to reciprocal
compensation arrangements, reasonable notice of changes in the
information necessary for transmission and routing of services
over the carrier's network, and schedules of itemized charges
and conditions. The Committee intends that reciprocal
compensation may include compensation arrangements, including
in-kind exchange of traffic or traffic balance measures such as
those included in the New York settlement agreement concerning
Rochester Telephone.
Consistent with the Committee's intent that carriers be
encouraged to negotiate and resolve interconnection issues,
subsection 251(c) makes clear that a local exchange carrier may
meet its section 251 interconnection obligations by negotiating
and entering into a binding agreement that does not reflect the
minimum standards listed in subsection 251(b). However, each
such negotiated interconnection agreement must include a
schedule of itemized charges for each service, facility, or
function included in the agreement, and must be submitted to a
State under subsection 251(e).
Subsection 251(d) provides procedures under which any party
negotiating an interconnection agreement may ask the State to
participate in the negotiations and to arbitrate any
differences arising in the negotiations. A State may be asked
to arbitrate at any point in the negotiations.
In addition to the possibility of arbitration by the State,
subsection 251(d) provides a more formal remedy under which any
party may petition the State to intervene in the negotiations.
If issues remain unresolved more than 135 days after the date
the local exchange carrier received the request to negotiate,
any party to the negotiations may petition the State to
intervene for the purpose of resolving any issues that remain
open in the negotiation. Requests to the State to intervene
must be made during the 25 day period that begins 135 days
after the local exchange carrier received the negotiation
request. The State is required to resolve any open issues and
conduct its review of the agreement under subsection 251(e) not
later than 10 months after the date on which the local exchange
carrier received the request to negotiate. In resolving any
open issues the solution imposed by a State must be consistent
with the FCC's rules to implement this section, the minimum
standards required under subsection 251(b) and the provisions
of paragraph 251(d)(6) with respect to any charges imposed.
Paragraph 251(d)(6) provides that any charge determined by the
State through arbitration or intervention shall be based on the
cost of that unbundled element and may include a reasonable
profit. The bill specifically provides that the State may not
use or require a rate of return or other rate based proceeding
to determine the cost of an unbundled element.
Subsection 251(e) requires that any interconnection
agreement under section 251 must be submitted to the State for
approval. The State must approve or reject the agreement and
make written findings as to any deficiencies in the agreement.
An agreement successfully negotiated under subsection (c) by
the parties without regard to the minimum standards set forth
in subsection 251(b) may only be rejected if the State finds
the agreement discriminates against a telecommunications
carrier that is not a party to the agreement. However, approval
of such an agreement does not relieve the parties of any
obligations that may be applicable under other provisions of
the 1934 Act.
The State may reject interconnection agreements negotiated
under subsection (d) if the State finds the agreement does not
meet the minimum standards set forth in subsection 251(b), or
if the State finds that implementation of the agreement is not
in the public interest. Subsection 251(e) also provides that no
State court has jurisdiction to review the State's approval or
rejection of an interconnection agreement.
New section 251(f) requires a State to make a copy of each
agreement approved by the State under subsection 251(e)
available for public inspection and copying within 10 days
after the agreement is approved. Subsection 251(f) allows a
State to charge a reasonable and nondiscriminatory fee to the
parties to an agreement to cover the State's costs of approving
and filing such an agreement.
New section 251(g) requires a local exchange carrier to
make available any service, facility, or function provided
under an interconnection agreement to which that local exchange
carrier is a party to any other telecommunications carrier that
requests such service, facility, or function on the same terms
and conditions as are provided in that agreement. The Committee
intends this requirement to help prevent discrimination among
carriers and to make interconnection more efficient by making
available to other carriers the individual elements of
agreements that have been previously negotiated.
Subsection 251(i) requires the FCC to promulgate rules to
implement section 251 within 6 months after enactment. If a
State fails to carry out its responsibilities under section 251
in accordance with the rules promulgated by the FCC, the
Committee intends that the FCC assume the responsibilities of
the State in the applicable proceeding or matter.
Subsection 251(i) also requires the FCC or a State to waive
or modify the requirements of the minimum standards of
subsection 251(b) in the case of a rural telephone company, and
allows the FCC or a State to waive or modify those requirements
in the case of a local exchange carrier with fewer than two
percent of the nation's subscriber lines installed in the
aggregate nationwide. In order to waive or modify the
requirements of subsection 251(b) for such companies or
carriers, the FCC or a State must determine that the
application of such requirements would result in unfair
competition, impose a significant adverse economic impact on
users of telecommunications services, be technically
infeasible, or otherwise not be in the public interest. The
Committee intends that the FCC or a State shall, consistent
with the protection of consumers and allowing for competition,
use this authority to provide a level playing field,
particularly when a company or carrier to which this subsection
applies faces competition from a telecommunications carrier
that is a large global or nationwide entity that has financial
or technological resources that are significantly greater than
the resources of the company or carrier.
New subsection 251(j) provides that nothing in section 251
precludes a State from imposing requirements on
telecommunications carriers with respect to intrastate services
that the State determines are necessary to further competition
in the provision of telephone exchange service or exchange
access service, so long as any such requirements are not
inconsistent with the FCC's rules to implement section 251.
New subsection 251(k) provides that nothing in section 251
is intended to change or modify the FCC's rules at 47 CFR 69 et
seq. regarding the charges that an interexchange carrier pays
to local exchange carriers for access to the local exchange
carrier's network. The Committee also does not intend that
section 251 should affect regulations implemented under section
201 with respect to interconnection between interexchange
carriers and local exchange carriers.
Sec. 102. Separate subsidiary and safeguard requirements
Section 102 of the bill amends the 1934 Act to add a new
section 252 to impose separate subsidiary and other safeguards
on certain activities of the Bell companies. Section 102
requires that to the extent a regional Bell operating company
engages in certain businesses, it must do so through an entity
that is separate from any entities that provide telephone
exchange service. Subsection 252(b) spells out the structural
and transactional requirements that apply to the separate
subsidiary, subsection 252(c) details the nondiscrimination
safeguards, subsection 252(d) iimposes restrictions on joint
marketing, and subsection 252(e) sets forth additional
requirements with respect to the provision of interLATA
services. Where consistent with the requirements of this
section, the activities required to be carried out through a
separate subsidiary under this section may be conducted through
a single entity that is separate and distinct from the entity
providing telephone exchange service.
The activities that must be separated from the entity
providing telephone exchange service include telecommunications
equipment manufacturing and interLATA telecommunications
services, except out-of-region and incidental services (not
including information services) and interLATA services that
have been authorized by the MFJ court. A Bell company also
would have to provide alarm monitoring services and certain
information services through a separate subsidiary, including
cable services and information services which the company was
not permitted to offer before July 24, 1991. In a related
provision, section 203 of the bill provides that a Bell company
need not use a separate affiliate to provide video programming
services over a common carrier video platform if it complies
with certain obligations.
The Committee believes that the ability to bundle
telecommunications, information, and cable services into a
single package to create ``one-stop-shopping'' will be a
significant competitive marketing tool. As a result, and to
provide for parity among competing industry sectors, the
Committee has included restrictions on joint marketing certain
services both in section 252(d) and in new section 255(b)(3).
Under subsection 252(d) of this section the Bell operating
company entity that provides telephone exchange service may not
jointly market the services required to be provided through a
separate subsidiary with telephone exchange service in an area
until that company is authorized to provide interLATA service
under new section 255. In addition, a separate subsidiary
required under this section may not jointly market its services
with the telephone exchange service provided by its affiliated
Bell operating company entity unless such entity allows other
unaffiliated entities that offer the same or similar services
to those that are offered by the separate subsidiary to also
market its telephone exchange services. In section 255(b)(3)
telecommunications carriers are not permitted to jointly market
interexchange service with local exchange service purchased
from the Bell operating company in any area in which that
company is not authorized to provide interLATA services.
Additional requirements for the provision of interLATA
services are included in new section 252(e). These provisions
are intended to reduce litigation by establishing in advance
the standard to which a Bell operating company entity that
provides telephone exchange service or exchange access service
must comply in providing interconnection to an unaffiliated
entity.
Subsection 252(f) of new section 252 establishes rules to
ensure that the Bell companies protect the confidentiality of
proprietary information they receive and to prohibit the
sharing of such information in aggregate form with any
subsidiary or affiliate unless that information is available to
all other persons on the same terms and conditions. In general,
a Bell company may not share with anyone customer-specific
proprietary information without the consent of the person to
whom it relates. Exceptions to this general rule permit
disclosure in response to a court order or to initiate, render,
bill and collect for telecommunications services.
New subsection 252(g) provides that the FCC may grant
exceptions to the requirements of section 252 upon a showing
that granting of such exception is necessary for the public
interest, convenience, and necessity. The Committee intends
this exception authority to be used whenever a requirement of
this section is not necessary to protect consumers or to
prevent anti-competitive behavior. However, the Committee does
not intend that the FCC would grant an exception to the basic
separate subsidiary requirements of this section for any
service prior to authorizing the provision of interLATA service
under section 255 by the Bell operating company seeking the
exception to a requirement of this section.
Public utility holding companies that engage in the
provision of telecommunications services are required to do so
through a separate subsidiary under new section 252(h). In
addition, a State may require a public utility company that
provides telecommunications services to do so through a
separate subsidiary. The separate subsidiary for public utility
holding companies is required to meet some, but not all, of the
structural separation and nondiscrimination safeguard
provisions that are applicable to Bell operating company
subsidiaries. New subsection 252(h) provides that a public
utility holding company shall be treated as a Bell operating
company for the purpose of those provisions of section 252 that
subsection (h) applies to those holding companies.
New subsection 252(i) provides that a company that is a
subsidiary of a holding company that also owns a Bell operating
company shall be considered to meet the separate subsidiary
requirements, so long as that subsidiary does not provide
telephone exchange service. The Committee included this
provision to allow for a subsidiary that is not a subsidiary of
the Bell operating company that provides telephone exchange
service to meet the requirements of section 252, so long as
both entities are owned and controlled by the same holding
company. However, this provision is not intended to lessen the
structural or nondiscrimination safeguards required by new
section 252.
Subsection (b) of section 102 requires the Commission to
promulgate any regulations necessary to implement new section
252 of the 1934 Act within nine months of the date of enactment
of this bill. The subsection also provides that any separate
subsidiary established or designated by a Bell operating
company for purposes of complying with new section 252(a) prior
to the issuance of the regulations shall be required to comply
with the regulations when they are issued.
Section 102(c) provides that the amendment to the 1934 Act
made by this section takes effect on the date of enactment of
this bill.
Sec. 103. Universal service
Section 103 of the bill establishes a Federal-State Joint
Board to review existing universal service support mechanisms
and make recommendations regarding steps necessary to preserve
and advance this fundamental communications goal. Section 103
also establishes a new section 253 of the 1934 Act to clearly
articulate the policy of Congress that universal service is a
cornerstone of the Nation's communications system. This new
section is intended to make explicit the current implicit
authority of the FCC and the States to require common carriers
to provide universal service. The clear statutory requirements
for universal service in new section 253 are intended to
provide continued consistency between Federal and State actions
to advance universal service, and for greater certainty and
competitive neutrality among competing telecommunications
providers than the existing implicit mechanisms do today. As
new section 253 explicitly provides, the Committee intends that
States shall continue to have the primary role in implementing
universal service for intrastate services, so long as the level
of universal service provided by each State meets the minimum
definition of universal service established under new section
253(b) and a State does not take any action inconsistent with
the obligation for all telecommunications carriers to
contribute to the preservation and advancement of universal
service under new section 253(c).
Section 103(a) of the bill requires the FCC to institute a
Federal-State Joint Board under section 410(c) of the 1934 Act
to recommend within 9 months of the date of enactment new rules
regarding implementation of universal service. Consistent with
all Joint Boards established under section 410(c), the
recommendations of the Joint Board are advisory in nature, and
the FCC is not required to adopt the recommendations. However,
the Committee intends that the FCC shall give substantial
weight to the Joint Board recommendations.
In making its initial recommendations to the FCC and the
States, the Committee intends that the Joint Board will
thoroughly review the existing universal service system,
including any definitions used by the different States and in
particular both Federal and State support mechanisms. The
language of the bill does not presume that any particular
existing mechanism for universal service support must be
maintained or discontinued; however, the Committee intends that
the universal service support mechanisms implemented under new
section 253 shall be, to the extent possible consistent with
the goal of ensuring universal service, transparent, explicit,
equitable and nondiscriminatory to all telecommunications
carriers. Because the existing universal service support system
relies to a significant extent on nontransparent internal cost-
shifting by monopoly providers, the Committee expects that the
Joint Board will recommend appropriate transition mechanisms
and timeframes for implementation of any new support mechanisms
for universal service. Based on testimony presented to the
Committee concerning the size and nature of existing implicit
universal service support mechanisms, the Committee expects
that the preservation and advancement of universal service,
including the evolving definition of universal service, can be
accomplished without any increase in the overall nationwide
level of universal service support that occurs today.
In addition, the Committee expects that the Joint Board
will make recommendations concerning all other matters related
to universal service, including the appropriate division of
responsibilities between the FCC and the States, the
appropriate size of service areas, guidelines for designation
and relinquishment of essential telecommunications carrier
status, and how support payments, if any, should be allocated
when an essential telecommunications carrier resells universal
service using the facilities of another carrier.
Section 103(a) also provides that at least once every four
years the FCC is required to institute a new Joint Board
proceeding to review the implementation of new section 253
regarding universal service, and to make recommendations
regarding any changes that are needed. The Committee expects
that each Joint Board periodically instituted under this
section shall review as necessary the extent of universal
service, the definition of universal service, the adequacy of
support mechanisms, if any, and whether and to what extent
further steps should be taken to adjust any such mechanisms to
meet the requirements of this section. The Committee expects
that competition and new technologies will greatly reduce the
actual cost of providing universal service over time, thus
reducing or eliminating the need for universal service support
mechanisms as actual costs drop to a level that is at or below
the affordable rate for such service in an area; however, the
Committee intends that any action to reduce or eliminate
support mechanisms shall only be done in a manner consistent
with the obligation to preserve and advance universal service
for all Americans.
Section 103(b) of the bill requires the FCC to complete any
proceeding to implement the recommendations of the initial
Joint Board within one year of the date of enactment of the
bill, and of any other Joint Board on universal service matters
within one year of receiving such recommendations.
Section 103(c) of the bill simply clarifies that the
amendments to the 1934 Act made by the bill do not necessarily
affect the FCC's existing separations rules for local exchange
or interexchange carriers. However, this subsection does not
prohibit or restrict the FCC's ability to change those
separations rules through an appropriate proceeding.
Section 103(d) establishes new section 253 in the 1934 Act.
New section 253(a) establishes seven principles on which the
Joint Board and the FCC shall base policies for the
preservation and advancement of universal service. The
Committee intends that the Joint Board and the FCC will take
into account each of these principles in making recommendations
and implementing new regulations to restructure the existing
universal service system. The term ``affordable'' is made in
reference to what consumers are able and willing to pay for a
particular service included in the definition of universal
service. The Committee intends that the States will have the
primary role in determining what is an affordable rate for any
particular area.
Subsection (b) of new section 253 provides that the FCC
shall define universal service, based on recommendations from
the public, Congress, and the Joint Board. The Committee
intends that the Joint Board and FCC will periodically update
the list of telecommunications services included in the
definition of universal service in order to ensure that all
Americans share in the benefits of new telecommunications
technologies. The Committee notes that universal service is
defined in new section 253(b) as an ``evolving level of
intrastate and interstate telecommunications services. . . .''
As defined under the 1934 Act (as amended by this bill),
``telecommunications services'' includes the transport of
information or cable services, but not the offering of those
services. This means that information or cable services are not
included in the definition of universal service; what is
included is that level of telecommunications services that the
FCC determines should be provided at an affordable rate to
allow all Americans access to information, cable, and advanced
telecommunications services that are an increasing part of
daily life in modern America.
Put another way, the Committee intends the definition of
universal service to ensure that the conduit, whether it is a
twisted pair wire, coaxial cable, fiber optic cable, wireless,
or satellite system, has sufficient capacity and technological
capability to enable consumers to use whatever consumer goods
that they have purchased, such as a telephone, personal
computer, video player, or television, to interconnect to
services that are available over the telecommunications
network. The Committee does not intend the definition of
universal service to include the purchase of equipment, such as
a computer or telephone, that is owned by the consumer and is
not integral to the telecommunications service itself.
To ensure that the definition of universal service evolves
over time to keep pace with modern life, the subsection
requires the FCC to include, at a minimum, any
telecommunications service that is subscribed to by a
substantial majority of residential customers. By this the
Committee intends that the definition of universal service
should include that level of telecommunications service that is
used by a substantial majority of residential consumers to
access advanced telecommunications services, information
services, and cable services. For example, touch tone telephone
service is widely available today and is used by a substantial
majority of residential customers to access services like voice
mail, telephone banking, and mail order shopping services.
These same services cannot be accessed using rotary party line
services that are still used in some areas today. As a result,
the Committee would not view rotary party line service as
sufficient to meet the minimum definition of universal service.
Similarly, in the year 2010, touch tone service might not
satisfy the evolving definition of universal service if the
substantial majority of residential consumers use two-way
interactive full motion video service as the primary means of
communicating.
Subsection (c) of new section 253 requires all
telecommunications carriers, including competitive access
providers and any other carrier that meets the definition of a
telecommunications carrier, to contribute on an equitable and
nondiscriminatory basis to the preservation and advancement of
universal service. This requirement includes carriers that
concentrate their marketing of services or network capacity to
particular market segments, such as high volume business users.
Requiring all telecommunications carriers to contribute to
universal service will spread the cost over all customers for
any telecommunications service and prevent distortion of
competitive forces.
The FCC or a State may require any other telecommunications
provider, such as private telecommunications providers, to
contribute to the preservation and advancement of universal
service, if the public interest so requires. The purpose of
this provision is to allow the FCC or a State to require
contributions, for instance, from those who bypass the public
switched telephone network through their own or leased
facilities. The Committee intends to preserve the FCC's
authority over all telecommunications providers. In the event
that the use of private telecommunications services or networks
becomes a significant means of bypassing networks operated by
telecommunications carriers, the bill retains the FCC's
authority to preserve and advance universal service by
requiring all telecommunications providers to contribute.
New section 253(c) does not require providers of
information services to contribute to universal service.
Information services providers do not ``provide''
telecommunications services; they are users of
telecommunications services. The definition of
telecommunications service specifically excludes the offering
of information services (as opposed to the transmission of such
services for a fee) precisely to avoid imposing common carrier
obligations on information service providers.
The total of any contributions required under this
subsection shall be no more than that reasonably necessary to
preserve and advance universal service as defined under section
253(b). The requirement to contribute to universal service is
based on the long history of the public interest, convenience,
and necessity that is inherent in the privilege granted by the
government to use public rights of way or spectrum to provide
telecommunications services. In a monopoly environment this
requirement took the form of an obligation to provide service
throughout an entire area; in the competitive environment of
the future it may not be necessary or desirable to meet the
requirement to provide universal service by imposing on all
telecommunications providers the obligation to provide service
throughout an entire area. Instead, the public interest may be
better served by having carriers contribute to a fund or other
support mechanisms which would be used to provide support
payments to one or more telecommunications carriers that agree
to undertake the service obligation that might otherwise be
imposed on all providers.
Subsection (d) of new section 253 provides that the FCC and
the States may impose or require various mechanisms to enforce
any contribution that may be required under subsection (c) to
preserve and advance universal service. Such mechanisms may
include service obligations, financial contributions,
discounted rates, or any other mechanisms that the FCC or a
State finds is appropriate. The Committee expects that the FCC
or a State will take into account the need to provide a
transition from the existing system of support mechanisms to
any new system that may be established. Any such new system
shall, where appropriate, be based on transparent, external
mechanisms which are applied to all telecommunications carriers
in an equitable manner.
Subsection (e) of new section 253 provides that a State may
adopt additional definitions, mechanisms, and standards to
preserve and advance universal service within such State,
provided that they are not inconsistent with the regulations of
the FCC. The Committee intends that the States will continue to
have a substantial role in the preservation and advancement of
universal service under new section 253. This subsection simply
clarifies that nothing in new section 253 is intended to
prohibit a State from imposing or requiring universal service
obligations that the State finds appropriate which are in
addition to the requirements contained in the bill, so long as
those requirements do not conflict with the measures contained
in new section 253. To the extent that a State adopts
requirements to preserve and advance universal service that are
in addition to those contained in new section 253, the
Committee intends that the State would be responsible for
establishing additional contribution mechanisms to provide for
such requirements.
Subsection (f) of new section 253 provides that only
telecommunications carriers which are designated as essential
telecommunications carriers under new section 214(d) shall be
eligible to receive support payments, if any, established by
the FCC or a State to preserve and advance universal service.
Any such support payments must accurately reflect the amount
reasonably necessary to preserve and advance universal service.
In some areas of the country, particularly areas that are
already subject to competition in the provision of services
included in the definition of universal service, the Committee
expects that support payments would not be needed in order to
provide universal service at just, reasonable, and affordable
rates. The Committee intends this requirement to provide the
flexibility for the FCC to reduce or eliminate support payments
to areas where they are no longer needed, while continuing or
even increasing support payments to areas that do need such
support. For example, some consumers in areas that do not
require support payments in general may need individual
assistance in order to procure universal services; in other
areas the cost of providing service may be unaffordable for
most consumers, so service throughout that area may require
support payments to ensure that universal service is provided.
Subsection (f) is not intended to prohibit support
mechanisms that directly help individuals afford universal
service. For instance, nothing in this section is intended to
limit or eliminate the Lifeline and Link-up America programs
currently enforced by the Commission and States, and other
similar programs.
Subsection (g) of new section 253 provides that the FCC and
the States shall base the amount of support payments, if any,
on the difference between the actual cost of providing
universal service and the revenues a carrier may obtain from
providing such service at an affordable rate. In determining
the ``actual cost'' the Committee intends for the Commission to
determine what costs are ``reasonably necessary,'' as required
by subsection (f). The Committee intends that the FCC and the
States shall make any universal service support payments
explicit and that the payments would be restricted to those
areas that are in need of such support. To the extent that an
essential telecommunications carrier receives support payments,
those payments shall be used only for the maintenance and
upgrading of facilities serving consumers in the area for which
such support is provided.
Subsection (h) of new section 253 simply incorporates in
the 1934 Act the existing practice of geographic rate averaging
and rate integration for interexchange, or long distance,
telecommunications rates to ensure that rural customers
continue to receive such service at rates that are comparable
to those charged to urban customers. This provision is not
intended to alter existing geographic rate averaging policies
as enforced by the FCC on the date of enactment, including the
FCC's proceeding entitled ``Integration of Rates and Services
for the Provision of Communications by Authorized Common
Carriers between the United States Mainland and the Offshore
Points of Hawaii, Alaska, and Puerto Rico/Virgin Islands'' (61
FCC2d 380 (1976)). As is the case today, States shall continue
to be responsible for enforcing this subsection with respect to
intrastate interexchange services, so long as the State rules
are not inconsistent with FCC rules and policies on rate
averaging. Maintaining affordable long distance service in high
cost remote areas as well as in lower cost metropolitan areas
benefits society as a whole by fostering a nationwide economic
marketplace. The Committee intends this provision to ensure
that competition in telecommunications services does not come
at the cost of higher rates for consumers in rural and remote
areas.
In establishing competitively neutral universal service
support mechanisms the Committee expects that, consistent with
the requirement to preserve and advance universal service, the
FCC and the Joint Board will consider mechanisms that make
implicit subsidies more explicit from access charges.
Subsection (i) of new section 253 prohibits
telecommunications carriers from subsidizing competitive
services with revenues from non-competitive services. The FCC
and the States are required to establish any necessary cost
allocation rules, accounting safeguards, and other guidelines
to ensure that universal service bears no more than a
reasonable share (and may bear less than a reasonable share) of
the joint and common costs of facilities used to provide both
competitive and noncompetitive services. For instance, this
provision, at a minimum, prevents any assignment of direct
costs associated with the provision of competitive
telecommunications services, information services, or video
programming services to telephone exchange service or exchange
access service, as long as such exchange or exchange access
service remains noncompetitive.
In general, joint and common costs should be allocated
based on the demand each service places on the network. The
share allocated to competitive services should thus be more
than the incremental costs that such services not included in
universal service impose on any jointly used facilities. In
fact, the Joint Board, the FCC and the States may decide that
competitive services not included in universal service shall
bear all of the fixed and nonincremental costs of facilities
jointly used to provide noncompetitive universal service and
competitive services, if such allocation is necessary as a
mechanism to preserve and advance universal service. However,
in implementing any such cost allocation mechanism, the FCC and
the Joint Board shall seek to ensure that such allocation is
explicit and applied in a competitively neutral manner.
Subsection (j) of new section 253 states that the
subsections that provide that all telecommunications carriers
shall contribute to universal service, preserve the States'
authority to adopt their own definitions and mechanisms,
establish eligibility for universal service support, and
control the level of universal service support shall take
effect one year after the date of enactment of this bill.
Sec. 104. Essential telecommunications carriers
Section 104 of the bill would amend section 214(d) of the
1934 Act by designating the existing text of section 214(d) as
paragraph (1) and by adding seven new paragraphs regarding
designation of essential telecommunications carriers. It is the
intent of the Committee that the authority of the FCC and the
States to designate essential telecommunications carriers
parallels their traditional certification authority. These
amendments are not intended to change the traditional
jurisdictional division between Federal and State authority
with respect to telecommunications. Thus the bill provides that
the FCC shall designate essential telecommunications carriers
for interstate services and the States shall designate such
carriers for intrastate services, which the Committee intends
should include intrastate interexchange services.
New paragraph (2) of section 214(d) makes explicit the
implicit authority of the FCC or a State to require a common
carrier to provide service to any community or portion of a
community that requests such service. In the event that more
than one common carrier provides service in an area, and none
of the carriers will provide service to a community or portion
thereof in that area which requests service, this paragraph
gives the FCC or a State the authority to decide which common
carrier is best suited to provide such service. If the FCC or a
State orders a carrier to provide service to a community or
portion thereof under this paragraph, it shall designate such
carrier an essential telecommunications carrier.
Paragraph (3) of new section 214(d) provides that the FCC
or a State may designate a common carrier as an essential
telecommunications carrier for a particular service area, thus
making that carrier eligible for support payments to preserve
and advance universal service, if any such payments are
established under new section 253 of the 1934 Act. Any carrier
designated as an essential telecommunications carrier must
provide universal service and any additional services specified
by the FCC or a State throughout the service area for which the
designation is made. In addition, these services must be
offered throughout that service area at nondiscriminatory rates
established by the FCC or a State, and the carrier must
advertise those rates using media of general distribution.
The Committee intends that essential telecommunications
carriers will only be designated in those areas where the
actual cost of providing universal service is greater than the
amount that the carrier providing those services may recover
based on the affordable rate for those services established by
the FCC or a State. For areas where carriers may provide
universal service for costs (including a reasonable profit)
that are at or below the affordable rate, no designation would
be needed.
New paragraph (4) of section 214(d) allows the FCC or a
State to designate more than one common carrier as an essential
telecommunications carrier for a particular service area. The
decision to make such an additional designation is at the
discretion of the FCC or a State. In addition, the bill permits
a State to require additional findings before designating more
than one common carrier as an essential telecommunications
carrier. The Committee intends that the same obligations and
risks would apply to each essential telecommunications carrier
designated for a particular service area.
To the extent that more than one common carrier is
designated as an essential telecommunications carrier, each
additional carrier so designated must meet the same
requirements with respect to service throughout the same
service area at nondiscriminatory rates established by the FCC
or a State, as well as the advertisement of those rates.
New paragraph (5) of section 214(d) requires the FCC and
the States to establish rules governing the use of resale by a
carrier to meet the requirements for designation as an
essential telecommunications carrier, as well as rules to
permit a carrier that has been designated as an essential
telecommunications carrier to relinquish that designation so
long as at least one other carrier has also been designated as
an essential telecommunications carrier for that area. The
Committee expects that these rules will be based on
recommendations from the Joint Board required under section
103(a) of the bill, and will ensure that a carrier using resale
has at least some facilities in the area being served and that
the carrier has adequate financial resources to fulfill its
commitment to provide universal service throughout that area.
The Committee notes that such commitment may require a carrier
to build or extend facilities in an area in order to provide
service, particularly if the carrier whose services are being
resold should choose to cease service in that area. To this end
new paragraph (5) also requires the FCC and the States to
provide appropriate rules to govern how quickly an essential
telecommunications carrier whose services are being resold may
cease service to an area, in order to provide other essential
telecommunications carriers adequate notice to extend their
facilities or to arrange for the purchase of replacement
facilities or services.
New paragraph (6) of section 214(d) sets forth the
penalties applicable to an essential telecommunications carrier
which refuses an FCC or State order to provide universal
service within a reasonable period of time. In determining what
constitutes a reasonable period of time, the bill provides that
the FCC or a State must consider the nature of the construction
required to provide such service, the time interval that
normally would attend such construction, and the time needed to
obtain regulatory or financial approval.
New paragraph (7) of section 214(d) of the Act requires the
FCC or a State to designate an essential telecommunications
carrier for interexchange services for any unserved community
or portion thereof that requests such service. An essential
telecommunications carrier designated under this paragraph must
provide service at nationwide geographically averaged rates, in
the case of interstate services, and geographically averaged
rates in the case of intrastate services. The Committee intends
that the requirement to provide nationwide geographically
averaged rates includes the rate integration provided for in
the FCC's proceeding entitled ``Integration of Rates and
Services for the Provision of Communications by Authorized
Common Carriers between the United States Mainland and the
Offshore Points of Hawaii, Alaska, and Puerto Rico/Virgin
Islands'' (61 FCC2d 380 (1976)). The FCC or a State may allow a
carrier designated under this paragraph to receive support
payments, if any, that may be provided under section 253. The
Committee intends that a carrier designated under this
paragraph would only be eligible for support payments if such
payments were necessary to compensate a carrier for services to
a community or portion thereof that such carrier was actually
ordered by the FCC to serve because no other carrier would do
so.
New paragraph (8) of section 214(d) grants the FCC
authority to promulgate guidelines for the States to implement
this section. The Committee intends that the FCC will use this
authority to delegate to the States authority that has
traditionally been exercised in this area by the States, and,
if necessary, to establish guidelines to provide for
consistency among the States in the implementation of these
amendments.
Sec. 105. Foreign investment and ownership reform
Section 105 adds a new subsection (f) to section 310 of the
1934 Act. Existing section 310(b) of the 1934 Act provides in
relevant part that an alien may not obtain a common carrier
license, and that an alien may not own more than 25% of any
corporation that directly or indirectly owns or controls any
corporation to which a common carrier license is granted.
New subsection (f) creates a system of reciprocity for
common carrier licenses. Paragraph (1) states that the FCC may
grant to an alien, foreign corporation, or foreign government a
common carrier license that would otherwise violate the
restrictions in section 310(b), if the FCC finds that there are
equivalent market opportunities for U.S. companies and citizens
in the foreign country where the alien is a citizen, in which
the foreign corporation is organized, or in which the foreign
government is in control. This determination will be made on a
market segment specific basis. The Committee believes that the
FCC has the requisite expertise to make this market segment
specific determination.
Foreign countries point to section 310(b) as a reason to
deny U.S. companies entry into their markets. By applying a
reciprocity rule, U.S. markets will be open to foreign
investment from that country, to the same extent that the
foreign markets are open to U.S. investment.
When the FCC makes its determination, the FCC may look
beyond where the corporation is organized if the corporation is
owned, in whole or in part, by individuals, corporations, or a
foreign government whose home is not where the corporation is
organized. This will prevent a foreign entity from organizing
in a country with a more open policy toward U.S. investment
than its home country, in order to circumvent the U.S.
reciprocity restrictions.
Paragraph (2) allows the FCC to take into account changing
circumstances through a ``snapback'' provision. If the FCC
determines that a foreign country for which the FCC has already
made a favorable determination under paragraph (1) changes its
policies and no longer meets the reciprocity required for such
a determination, the FCC will apply the restrictions of section
310(b) to aliens, corporations, and governments of that
country, and shall withdraw licenses granted that could not
otherwise be held under section 310(b). This will deter
countries from imposing stringent restrictions on U.S.
companies after entities from that country have been granted
U.S. common carrier licenses.
The FCC must enforce the provision on a market segment by
market segment basis. For instance, if a foreign company wishes
to acquire a common carrier license, the openness of the
foreign market to U.S. communications equipment manufacturers
is not the relevant market to examine. If a foreign company
wishes to acquire a common carrier license, the FCC should
examine the openness of the foreign country's common carrier
market to U.S. investment.
Sec. 106. Infrastructure sharing
Subsection (a) requires that within one year of the date of
enactment, the FCC shall prescribe rules requiring local
exchange carriers that were subject to Part 69 of the FCC's
rules on the date of enactment to share network facilities,
technology, and information with qualifying carriers. The
qualifying carrier may request such sharing for the purpose of
providing telecommunications services or access to information
services in areas where the carrier is designated as an
essential telecommunications carrier under new section 214(d).
The bill does not grant immunity from the antitrust laws for
activities undertaken pursuant to this section.
Subsection (b) establishes the terms and conditions of the
FCC's regulations. Such regulations shall:
(1) not require a local exchange carrier to take any
action that is economically unreasonable or contrary to
public interest;
(2) permit, but not require, joint ownership of
facilities among local exchange carriers and qualifying
carriers;
(3) ensure that the local exchange carrier not be
treated as a common carrier for hire with respect to
technology, information or facilities shared with the
qualifying carrier under this section;
(4) ensure that qualifying carriers benefit fully
from sharing;
(5) establish conditions to promote cooperation;
(6) not require a local exchange carrier to share in
areas where the local exchange carrier provides
telephone exchange service or exchange access service;
and
(7) require the local exchange carrier to file with
the FCC or State, any tariffs, contract or other
arrangement showing the rate, terms, and conditions
under which such local exchange carrier is complying
with the sharing requirements of this section.
Subsection (c) requires that local exchange carriers
sharing infrastructure must provide information to sharing
parties about deployment of services and equipment, including
software.
Subsection (d) defines those carriers eligible to request
infrastructure sharing under this section. Sharing is limited
to qualifying carriers. A qualifying carrier is defined as a
telecommunications carrier which lacks economies of scale and
is a common carrier providing telephone exchange service or
exchange access service, as well as any other service included
within the definition of universal service to all consumers in
the service area where the carrier has been designated as an
essential telecommunications carrier under new section 214(d).
TITLE II--REMOVAL OF RESTRICTIONS TO COMPETITION
Subtitle A--Removal of Restrictions
Sec. 201. Removal of entry barriers
Section 201 is intended to remove barriers to competition
in the provision of local telephone service. It adds a new
section 254 entitled ``Removal of Entry Barriers'' to the 1934
Act.
Subsection (a) of new section 254 preempts any state and
local statutes and regulations, or other state and local legal
requirements, that may prohibit or have the effect of
prohibiting any entity from providing interstate or intrastate
telecommunications services.
Subsection (b) of section 254 preserves a State's authority
to impose, on a competitively neutral basis and consistent with
the universal service provisions of new section 253,
requirements necessary to preserve and advance universal
service, protect the public safety and welfare, ensure the
continued quality of telecommunications services, and safeguard
the rights of consumers. States may not exercise this authority
in a way that has the effect of imposing entry barriers or
other prohibitions preempted by new section 254(a).
Subsection (c) of new section 254 provides that nothing in
new section 254 affects the authority of local governments to
manage the public rights-of-way or to require, on a
competitively neutral and nondiscriminatory basis, fair and
reasonable compensation for the use of public rights-of-way, on
a nondiscriminatory basis, provided any compensation required
is publicly disclosed.
New section 254(d) requires the FCC, after notice and an
opportunity for public comment, to preempt the enforcement of
any state or local statutes, regulations or legal requirements
that violate or are inconsistent with the prohibition on entry
barriers contained in subsection (a) or the other provisions of
section 254.
Subsection (e) of new section 254 simply clarifies that new
section 254 does not affect the application of section
332(c)(3) of the 1934 Act to commercial mobile service
providers.
Subsection 201(b) of the bill establishes the principles
applicable to the provision of telecommunications by a cable
operator. Paragraph (1) of this subsection adds a new paragraph
3(A) to section 621(b) of the 1934 Act, which sets forth the
jurisdiction of and limitations on franchising authorities over
cable operators engaged in the provision of telecommunications
services. Specifically, a cable operator or affiliate engaged
in the provision of telecommunications services is not required
to obtain a franchise under Title VI of the 1934 Act, nor do
the provisions of Title VI apply to a cable operator or
affiliate to the extent they are engaged in the provision of
telecommunications services. Franchising authorities are
prohibited from ordering a cable operator or affiliate to
discontinue the provision of telecommunications service,
requiring cable operators to obtain a franchise to provide
telecommunications services, or requiring a cable operator to
provide telecommunications services or facilities as a
condition of an initial grant of franchise, franchise renewal,
or transfer of a franchise. However, the Committee intends that
telecommunications services provided by a cable company shall
be subject to the authority of a local government to manage its
public rights of way in a non-discriminatory and competitively
neutral manner and to charge fair and reasonable fees for its
use. These changes do not affect existing federal or state
authority with respect to telecommunications services.
Paragraph 2 of subsection 201(b) amends Section 622(b) of
the 1934 Act by inserting the phrase ``to provide cable
services,'' in the franchise fee provision of the 1934 Act.
This change is intended to make clear that the franchise fee
provision is not intended to reach revenues that a cable
operator derives for providing new telecommunications services
over its system that are different from the cable-related
revenues operators have traditionally derived from their
systems.
Subsection (c) of section 201 of the reported bill
clarifies that this bill, and the 1934 Act as amended by this
bill, shall not be construed to modify, impair, or supersede,
or authorize the modification, impairment, or supersession of
any state or local law pertaining to taxation, provided such
taxation is consistent with the requirements of the
Constitution of the United States, this bill, the 1934 Act, or
any other applicable federal law.
Sec. 202. Limitation on State and local taxation of direct-to-home
satellite services
Section 202 of the reported bill authorizes States to
impose on direct-to-home service providers the responsibility
to collect and remit State and local sales taxes on direct-to-
home services provided to customers in the State or local
jurisdiction. In those States in which the local sales taxes
are administered by the State, the direct-to-home service
provider shall remit both State and local sales taxes to the
State. In those States in which local sales taxes are not
administered by the State, the direct-to-home service provider
shall, in most circumstances, be required to remit local sales
taxes directly to those local jurisdictions. The Committee
included this provision without taking any position on the
current law regarding constitutional standards for nexus.
Under Section 202, direct-to-home service providers are
granted an exemption from any other local taxes or fees imposed
on the provision of direct-to-home services if the service
providers do no more than (1) broadcast programming and
services via satellite to subscribers within the local
jurisdiction and bill for the service from outside of the
jurisdiction, and (2) solicit and place orders for the sale of
direct-to-home services on the site of retail outlets and
establishments that are unrelated to the direct-to-home service
provider, including consumer electronics retail outlets and
retailers of satellite antennas, which orders are filled and
billed for from a point outside of the local taxing
jurisdiction, regardless of where the subscriber makes an
initial payment for an initial subscription to the direct-to-
home service. The Committee intends this section to allow
direct-to-home service providers an exemption from any other
local taxes or fees imposed on direct-to-home services in any
local jurisdiction in which the direct-to-home service provider
engages only in the limited business activities that are
specified in this section. If the direct-to-home service
provider holds any interest in property or maintains an office
in the local jurisdiction, or engages in any business activity
in the local jurisdiction beyond those specifically mentioned,
it will not be exempt from any local tax imposed on direct-to-
home services.
Section 202 does not exempt direct-to-home service
providers from any State tax imposed on direct-to-home
services.
By establishing the conditions under which a State may
impose State and local sales taxes on direct-to-home service,
the Committee has clarified a potential area of contention
between this nascent industry and the State and local
governments. In addition, the Committee has preserved a source
of revenue for local governments while reducing the regulatory
burden on the service.
Sec. 203. Elimination of cable and telephone company cross-ownership
restriction
Subsection 203(a) of the bill amends section 613(b) of the
1934 Act. In general, the existing provisions of 613(b) of the
1934 Act bar telephone companies from providing video
programming directly to subscribers in their telephone service
areas, except in rural areas. However, several federal courts
recently have found this provision to be unconstitutional. New
subsection 203(a) repeals the existing telephone/cable cross-
ownership ban and permits local exchange carriers to provide
video programming directly to subscribers under certain
conditions.
Subsection 203(a) provides that, to the extent that the
carrier provides programming through a common carrier video
platform, neither it, nor any video programming provider making
use of such platform shall be deemed to be a cable operator
providing cable service. Under current law, a programmer who
uses a video dialtone network to deliver programming to
subscribers is not a cable operator.
To the extent that a carrier or its affiliate provides
video programming directly to subscribers through a cable
system, the carrier or its affiliate shall be deemed to be a
cable operator providing cable service and shall be subject to
the provisions of Title VI of the 1934 Act. This provision
promotes parity by ensuring that telephone companies are
regulated the same way as other service providers.
As amended by subsection 203(a), new subsection 613(b) of
the 1934 Act contains requirements for common carrier video
platforms and special provisions relating to Bell company
activities. Section 613(b) does not impose a separate
subsidiary requirement on a Bell company in connection with
programming provided over a common carrier video platform
(imposed by section 102 of the bill) if the company satisfies
certain requirements. Section 613(b) also reiterates the
separate subsidiary obligation for providing programming as a
cable operator under new section 252. Notwithstanding a
carrier's nondiscrimination obligations, subsection 613(b)(4)
establishes that local broadcast stations and public
educational and governmental entities may use common carrier
video platforms at the incremental cost-based rate. These
provisions recognize that local broadcast stations and local
public, educational and governmental (PEG) entities provide
unique services to the local community. Such access furthers
the Government's compelling interests in education, in
facilitating widespread public discourse among all citizens and
in improving democratic self-governance. The provision of lower
rates for broadcast stations and PEG entities is consistent
with the provisions of the 1984 Cable Act and the 1992 Cable
Act, which ensured that broadcast stations and PEG entities
receive access to cable systems.
In addition, a provider of video platform services must
provide local broadcast stations with access to the video
platform for transmission of television broadcast programming,
on the first tier of programming, and at rates no higher than
incremental-cost. Each of these new provisions relating to
video dialtone programming takes effect upon enactment.
Subsection 203(b) of the bill adds subsection 214(e) to the
1934 Act, effective one year after enactment. Subsection 214(e)
removes the requirement for a certificate under section 214 to
construct facilities to provide video programming services.
Subsection 203(c) of the bill requires the FCC to prescribe
regulations within one year of enactment of the Act that:
(1) require a telecommunications carrier that
provides video programming directly to subscribers to
ensure that they are offered the means to obtain access
to the signals of broadcast television stations as
readily as they are today;
(2) require such a carrier to display clearly and
prominently at the beginning of any program guide or
menu the identity of any signal of any television
broadcast station it carries;
(3) require such a carrier to ensure that viewers are
able to access the signal of any television broadcast
station it carries without first having to view
advertising or promotional material, or a navigational
device, guide, or menu that omits broadcasting services
as an available option;
(4) except as required by paragraphs (1) through (3),
prohibit such carrier and a multichannel video
programming distributor using the facilities of such
carrier from discriminating among video programming
providers with respect to material or information
provided by the carrier to subscribers for the purposes
of selecting programming, or in the way such material
or information is presented to subscribers;
(5) require such carrier and a multichannel video
programming distributor using the facilities of such
carrier to ensure that video programming providers and/
or copyright holders are able suitably and uniquely to
identify their programming services to subscribers;
(6) if such identification is transmitted as part of
the programming signal, require a telecommunications
carrier that provides video programming directly to
subscribers and a multichannel video programming
distributor using the facilities of such carrier to
transmit such identification without change or
alteration;
(7) consistent with other provisions of Title VI of
the Communications Act of 1934 (47 U.S.C. 521 et seq.)
prohibit such carrier from discriminating among video
programming providers with regard to carriage and
ensure that the rates, terms, and conditions for such
carriage are just, reasonable, and nondiscriminatory;
(8) extend to such carriers and multichannel video
programming distributors using the facilities of such
carrier the FCC's regulations concerning network
nonduplication and syndicated exclusivity; and
(9) extend to such carriers and multichannel video
programming distributors using the facilities of such
carrier the protections afforded to local broadcast
signals in sections 614(b)(3), 614(b)(4)(A), and
615(g)(1) and (2) of the 1934 Act.
Subsection 203(d) provides that any disputes must be
resolved by the FCC within 180 days after notice of the dispute
is submitted to the FCC. The FCC is authorized at that time, or
in a separate proceeding, to award damages or require carriage
to any person denied carriage, or award damages for any other
violation of this section. An aggrieved party may also seek
other remedy available at law.
Sec. 204. Cable Act Reform
Subsection (a) of section 204 of the bill limits the rate
regulation currently imposed by the Cable Television Consumer
Protection and Competition Act of 1992, Public Law 102-385.
Under existing section 623 of the 1934 Act, rates for the basic
(broadcast) tier of service, as well as the expanded (cable
programming services) tier of service have been regulated by
the FCC.
Rate regulation for the basic tier is justified where the
cable operator retains its monopoly because, for many
consumers, the basic cable tier is their best, and sometimes,
only access to over-the-air broadcast stations. The Committee
feels strongly that this tier should remain affordable for all
those consumers who need to use cable television as an antenna
service to receive broadcast signals.
Cable operators argue that rate regulation for the expanded
tier, however, does not fall under the same principle. While
the expanded tier of service does provide a variety of
satellite-delivered programming, some maintain that it is not a
consumer necessity. Therefore, rates should only be regulated
for those operators that take advantage of their monopoly
position to raise rates beyond acceptable levels.
Cable operators argue that cable rate regulation, as
implemented by the FCC, has hurt cable's access to capital and
the financial markets. Cable is the most logical competitor to
telephone companies for residential services. Without access to
capital, cable operators believe that they will not be able to
spend the necessary funds to rebuild and upgrade their systems
to compete with telephone companies for telephone customers,
and thus, give consumers greater choices.
On the other hand, consumer groups allege that the cable
rate regulations are essential to protecting consumers from
unjustified rate increases. Consumer groups note that cable
operators borrowed more money in 1994 than they borrowed in
1993, and they note that the major cable companies recently
spent millions of dollars in the auctions for new Personal
Communications Services (PCS). Consumers also point out that
the vast majority of consumers subscribe to expanded tiers of
cable service in addition to the basic tier.
The bill adopted by the Committee adopts a compromise on
cable rate regulation. Paragraph (1) amends the rate regulation
provisions of section 623 of the 1934 Act for the expanded
tier. First, it eliminates the ability of a single subscriber
to initiate a rate complaint proceeding at the FCC. Franchising
authorities and other relevant State and local government
entities still retain the ability to initiate a rate
proceeding. Second, rates for cable programming services will
only be considered unreasonable, and subject to regulation, if
the rates substantially exceed the national average rates for
comparable cable programming services. This means that the
``bad actors'' will be rate-regulated, while the ``good
actors'' will not be subject to Commission-imposed rates.
Paragraph (2) amends section 623(l)(1). Section 623(l)(1)
provides cable operators subject to effective competition are
not subject to rate regulation, including regulation of the
basic tier. The amendment to the definition of effective
competition contained in the bill allows the provision of video
services by a local exchange carrier, either through a common
carrier video platform, or as a cable operator, in an
unaffiliated cable operator's franchise area to satisfy the
effective competition test. In other words, under the bill, if
a telephone company offers video services in a cable operator's
franchise area, the cable operator's basic and expanded tiers
of service will not be regulated.
Subsection (b) of section 204 of the bill amends section
628(c)(2)(B)(iii) of the 1934 Act by eliminating ``other direct
legitimate economic benefit'' from the permissible reasons for
discrimination in the price charged for the distribution of
video programming to cable operators and other multichannel
video carriers.
Subsection (c) of section 204 provides that the provisions
of this section take effect on the date of enactment.
Sec. 205. Pole attachments
Section 205 of the reported bill amends section 224 of the
1934 Act, the pole attachment provisions. Section 224., which
was added to the 1934 Act in 1978, requires the FCC to ensure
that the rates, terms, and conditions for attachments by cable
television systems to poles, ducts, conduits, and rights-of-way
owned or controlled by utilities, including telephone
companies, are just and reasonable.
Section 205 modifies section 224 of the 1934 Act to require
that access to utility poles be granted to cable operators,
whether the attachment is used to provide cable services or
telecommunications services.
Section 205 requires the FCC to prescribe regulations,
within 1 year of the date of enactment, to ensure that
utilities charge just, reasonable, and nondiscriminatory rates
for attachments used to provide telecommunication services,
including attachments used to provide cable services.
Sec. 206. Entry by utility companies
This section explicitly permits electric, gas, water and
steam utilities (other than a public utility holding company
which is an associate company of a registered holding company)
to provide telecommunications services, information services,
any other services subject to the jurisdiction of the FCC, and
any products or service incidental to those services.
Subsection (a) preempts any other laws to the contrary,
including the Public Utility Holding Company Act of 1935
(PUHCA). The Securities and Exchange Commission is also
specifically excluded from enforcing PUHCA with respect to
these telecommunications activities, and may not review any
such activity.
Subsection (b) permits the Federal Energy Regulatory
Commission and State commissions to prohibit cross-
subsidization of any kind by a public utility holding company
which is an associate company of a registered holding company.
Subsection (c) requires any subsidiary company, affiliate,
or associate company that is an associated company of a
registered holding company to maintain separate books, records
and accounts, and provide access to such records, books, and
accounts to State commissions and the Federal Energy Regulatory
Commission.
Subsection (d) specifically allows States to request an
annual, independent audit of a public utility company that is
an associated company of a registered holding company and is
providing telecommunications services, to review transactions
between the public utility company, and the subsidiary,
affiliate, or associate company engaged in such activity. The
company must bear the costs of the audit, and the auditor's
report must be sent to the State commission within 6 months of
the request for such an audit.
Subsection (e) defines all terms in this section defined
under PUHCA as having the same meaning. Subsection (f) states
that this section is effective upon enactment.
Sec. 207. Broadcast reform
If the FCC, by rule, permits a licensee to provide advanced
television services, subsection (a) of section 207 of the bill
requires the FCC to adopt rules to permit broadcasters
flexibility to use the advanced television spectrum for
ancillary or supplementary services. The broadcaster must
provide at least one free, over-the-air advanced television
broadcast service on that spectrum. Similar rules for current
broadcast spectrum must also be adopted.
Paragraph (2) requires that if the licensee offers
ancillary or supplementary service for which payment of a
subscription fee is required, or is compensated for
transmitting material furnished by a third party, then the FCC
will collect an annual fee from the licensee. The fee shall be
based, in part, on the licensee's total amount of spectrum, and
the amount of spectrum used and the amount of time the spectrum
is used for those ancillary and supplementary services. The
fee, however, cannot exceed the amount, on an annualized basis,
paid by licensees providing competing services on spectrum
subject to auction.
Paragraph (3) states that licensees are not relieved of
their public interest requirements. Paragraph (4) defines
``advanced television services'' as a television service using
digital or other advanced technology to enhance audio quality
and visual resolution. The paragraph also defines ``existing''
spectrum as that spectrum used for television broadcast
purposes as of the date of enactment.
Subsection (b) requires the FCC to change its rules
regarding the amount of national audience a single broadcast
licensee may reach. The current cap is 25% of the nation's
television households. The amendment will raise that to 35%.
The FCC is also required to review its ownership rules
biennially, as part of its overall regulatory review required
by new section 259 of the 1934 Act. This provision is effective
upon enactment.
Subsection (c) amends section 307(c) of the 1934 Act to
increase the term of license renewal for television licenses
from five to ten years and for radio licenses from seven to ten
years.
Subsection (d) amends the broadcast license renewal
procedures. Under current law, at the time a broadcast license
is up for renewal, anyone can file a competing application for
the broadcaster's license. This subsection amends section 309
of the 1934 Act by adding a new subsection (k) which gives the
incumbent broadcaster the ability to apply for its license
renewal without competing applications. A broadcaster would
apply for its renewal, and the FCC would grant such a renewal,
if, during the preceding term of its license the station has
served the public interest, convenience, and necessity, has not
made any serious violations of the 1934 Act or of the FCC's
rules, and has not, through other violations, shown a pattern
of abuse.
The FCC may not consider whether the granting of a license
to a person other than the renewal applicant might serve the
public interest, convenience, and necessity prior to its
decision to approve or deny the renewal application. Under this
section, the FCC has discretion to consider what is a serious
violation of the 1934 Act. If a licensee does not meet those
criteria, the FCC may either deny the renewal, or impose
conditions on the renewal. Once the FCC, after conducting a
hearing on the record, denies an application for renewal, it is
then able to accept applications for a construction permit for
the channel or facilities of the former licensee.
Subtitle B--Termination of Modification of Final Judgment
Sec. 221. Removal of long distance restrictions
Section 221(a) of the bill adds a new section 255 to the
1934 Act entitled ``Interexchange Telecommunications
Services.'' This section establishes the criteria that will be
used by the Commission to determine when a Bell operating
company may provide interLATA services in the region in which
it is the dominant provider of wireline telephone exchange
service or exchange access service. In addition, this section
allows a Bell operating company to immediately provide
interLATA services outside the region in which that company is
the dominant provider of wireline telephone exchange service or
exchange access service, as well as interLATA services within
that region which are incidental to the provision of specific
services, subject to certain requirements.
Subsection (a) of new section 255 establishes the general
requirements for the three different categories of service: in
region interLATA; out of region interLATA; and incidental
services. Each of these categories is addressed in more detail
in the following subsections of section 255.
New section 255(b) establishes specific interLATA
interconnection requirements that must be fully implemented in
order for the FCC to provide authorization for a Bell operating
company to provide in region interLATA services. The FCC is
specifically prohibited from limiting or extending the terms of
the ``competitive checklist'' contained in subsection (b)(2).
The Committee does not intend the competitive checklist to be a
limitation on the interconnection requirements contained in
section 251. Rather, the Committee intends the competitive
checklist to set forth what must, at a minimum, be provided by
a Bell operating company in any interconnection agreement
approved under section 251 to which that company is a party
(assuming the other party or parties to that agreement have
requested the items included in the checklist) before the FCC
may authorize the Bell operating company to provide in region
interLATA services.
Finally, section 255(b) includes a restriction on the
ability of telecommunications carriers to jointly market local
exchange service purchased from a Bell operating company and
interexchange service offered by the telecommunications carrier
until such time as the Bell operating company is authorized to
provide interLATA services in that telephone exchange area.
This restriction is similar to one imposed on the Bell
operating companies in new section 252, and the Committee
intends it to provide parity between the Bell operating
companies and other telecommunications carriers in their
ability to offer ``one stop shopping'' for telecommunications
services.
New subsection 255(c) provides the process for application
by a Bell operating company to provide in region interLATA
services, as well as the process for approval or rejection of
that application by the FCC and for review by the courts. The
application by the Bell operating company must state with
particularity the nature and scope of the activity and each
product market or service market, as well as the geographic
market for which in region interLATA authorization is sought.
Within 90 days of receiving an application, the FCC must issue
a written determination, after notice and opportunity for a
hearing on the record, granting or denying the application in
whole or in part. The FCC is required to consult with the
Attorney General regarding the application during that 90 day
period. The Attorney General may analyze a Bell operating
company application under any legal standard (including the
Clayton Act, Sherman Act, other antitrust laws, section VIII(c)
of the MFJ, Robinson-Patman Act or any other standard).
The FCC may only grant an application, or any part of an
application, if the FCC finds that the petitioning Bell
operating company has fully implemented the competitive
checklist in new section 255(b)(2), that the interLATA services
will be provided through a separate subsidiary that meets the
requirements of new section 252, and that the provision of the
requested interLATA services is consistent with the public
interest, convenience, and necessity. As noted earlier the FCC
is specifically prohibited from limiting or extending the terms
used in the competitive checklist, and the Committee intends
that the determination of whether the checklist has been fully
implemented should be a straightforward analysis based on
ascertainable facts. Likewise, the Committee believes that the
FCC should be able to readily determine if the requested
services will or will not be provided through a separate
subsidiary that meets all of the requirements of section 252.
Finally, the Committee notes that the FCC's determination of
whether the provision of the requested interLATA services is
consistent with the public interest, convenience, and necessity
must be based on substantial evidence on the record as a whole.
The Committee believes that the application of heightened
judicial scrutiny of the substantial evidence standard to the
public interest determination, as opposed to the lesser
arbitrary and capricious standard, promotes competition and
prevents anti-competitive behavior. The public interest,
convenience, and necessity standard is the bedrock of the 1934
Act, and the Committee does not change that underlying premise
through the amendments contained in this bill. However, in
order to prevent abuse of that standard, the Committee has
required the application of greater scrutiny to the FCC's
decision to invoke that standard as a basis for approving or
denying an application by a Bell operating company to provide
interLATA services. In addition, the Committee believes that
the use of the substantial evidence standard is in the best
interests of the parties and the public, in that it should
reduce litigation and intervention by the courts by requiring
the FCC to clearly articulate the evidence underlying any
decision to grant or deny an application.
Subsection (c) also requires a Bell operating company which
is authorized to provide interLATA services under this
subsection to provide intraLATA toll dialing parity throughout
the market in which that company is authorized to provide
interLATA service. In the event that the FCC finds that the
Bell operating company has not provided the required intraLATA
toll dialing parity, or fails to continue to provide that
parity (except for inadvertent interruptions that are beyond
the control of the Bell operating company), then the FCC shall
suspend the authorization to provide interLATA services in that
market until that company provides or restores the required
intraLATA toll dialing parity. Lastly, subsection (c) provides
that a State may not order a Bell operating company to provide
intraLATA toll dialing parity before the company is authorized
to provide interLATA services in that area.
Bell operating companies (including any subsidiary or
affiliate) are permitted under new section 255(d) to provide
interLATA telecommunications services immediately upon the date
of enactment of the bill if those services originate in any
area in which that Bell operating company is not the dominant
provider of wireline telephone exchange service or exchange
access service.
New subsection 255(e) establishes the rules for the
provision by a Bell operating company of in region interLATA
services that are incidental to the provision of specific
services listed in paragraph (1) of subsection (e). This list
of specific services is intended to be narrowly construed by
the FCC. A Bell operating company must first obtain
authorization under new section 255(c) before it may provide
any in region interLATA services not listed in subsection
(e)(1). In addition, the Bell operating company may only
provide the services specified in subparagraphs (C) and (D) of
subsection (e)(1), which in general are commercial mobile
services and information storage and retrieval services,
through the use of telecommunications facilities that are
leased from an unaffiliated provider of those services until
the Bell operating company receives authority to provide
interLATA services under subsection (c). Finally, subsection
(e) requires that the provision of incidental services by the
Bell operating company shall not adversely affect telephone
exchange ratepayers or competition in any telecommunications
market. The Committee intends that the FCC will ensure that
these requirements are met.
The terms ``interLATA'', ``audio programming services'',
``video programming services'', and "other programming
services" are defined in new section 255(f).
Subsection (b) of section 221 of the bill removes the equal
access requirements imposed by the MFJ on the provision of
commercial mobile services by Bell operating companies or their
subsidiaries or affiliates. This section applies only to the
restriction imposed by the MFJ, and is not intended to waive or
modify any requirement imposed by the FCC under the 1934 Act.
This subsection also prohibits a Bell operating company or any
subsidiary or affiliate from blocking access by subscribers to
the interexchange carrier of their choice through an access
code.
Sec. 222. Removal of manufacturing restrictions
Section 222 of the bill adds a new section 256 to the 1934
Act entitled ``Regulation of Manufacturing by Bell Operating
Companies''. Based in large part on S. 173, introduced by
Senator Hollings and others in the 102d Congress and approved
by the Senate on June 3, 1991, this new section removes the
restrictions on manufacturing imposed by the MFJ on the Bell
operating companies under certain conditions, and allows those
companies to engage in manufacturing subject to certain
safeguards.
New section 256(a) permits a Bell operating company,
through a separate subsidiary that meets the requirements of
new section 252, to engage in the manufacture and provision of
telecommunications equipment and the manufacture of customer
premises equipment (CPE) as soon as that company receives
authorization to provide in region interLATA services under new
section 255(c). This linkage promotes competition and economic
efficiency by providing incentives for the Bell operating
company to meet the requirements of section 255 while providing
greater certainty to the Bell company with respect to when it
can enter the restricted lines of business.
Subsection (b) of new section 256 requires that a Bell
operating company engaged in manufacturing may only do so
through a separate subsidiary that meets the requirements of
new section 252.
New section 256(c) is intended to ensure that a Bell
operating company continues to make available to local exchange
carriers telecommunications equipment and any software integral
to that equipment that is manufactured by the Bell operating
company's subsidiary as long as there is demand for that
equipment. In addition, subsection (c) prohibits a Bell
operating company from discriminating among local exchange
carriers with respect to bids for services or equipment,
establishing standards or certifying equipment, or the sale of
telecommunications equipment and software. A Bell operating
company and any entity that the company owns or controls also
is required to protect any proprietary information submitted to
it with contract bids or with respect to establishing standards
or certifying equipment, and may not release that information
to anyone unless specifically authorized to do so by the owner
of the proprietary information.
The Committee intends that the manufacturing subsidiary's
obligation to sell telecommunications equipment to an
unaffiliated local telephone exchange carrier is a reciprocal
one. This obligation may only be enforced on the manufacturing
subsidiary if the local telephone company either does not
manufacture equipment (by itself or through an affiliated
entity), or it agrees to make available to the Bell operating
company any telecommunications equipment (including software
integral to such equipment) that the local telephone company
manufactures (by itself or through an affiliated entity)
without discrimination or self-preference as to price,
delivery, terms, or conditions.
New section 256(d) permits a Bell operating company or its
subsidiaries or affiliates to engage in close collaboration
with any manufacturer of customer premises equipment or
telecommunications equipment not affiliated with the Bell
operating company during the design and development of
hardware, software, or combinations thereof related to customer
premises equipment or telecommunications equipment. This
section is not intended to provide a waiver of applicable
antitrust laws; rather it is intended to make clear that such
close collaboration is necessary to permit the interconnection
of networks and the interoperability of equipment, and should
not in and of itself be considered an anticompetitive activity.
Subsection (e) of new section 256 simply authorizes the FCC
to prescribe such additional rules and regulations as the FCC
determines necessary to carry out the provisions and purposes
of section 256.
Administration and enforcement of new section 256 are
provided for in subsection (f) of that section. Paragraph (1)
of new subsection 256(f) makes clear that the FCC has the same
authority, power, and functions with respect to the Bell
operating company as it has with respect to enforcement or
administration of title II for any other common carrier subject
to the 1934 Act. Paragraph (2) allows any local exchange
carrier injured by an act or omission of the Bell operating
company or its manufacturing subsidiary which violates the
requirements of new section 256 to bring a civil action in any
U.S. District Court to recover the full amount of any damages
and to obtain any appropriate court order to remedy the
violation. In the alternative, the local exchange carrier may
seek relief from the FCC pursuant to sections 206 through 209
of the 1934 Act.
New section 256(g) makes clear that nothing in new section
256 is intended to change the status of Bell Communications
Research (Bellcore). Bellcore was created by the MFJ and is
owned jointly and equally by the seven Regional Bell operating
companies. It provides a centralized organization for the
provision of engineering, administrative, and other services.
One such service is providing a single point of contact for
coordination of the Bell operating companies to meet national
security and emergency preparedness requirements. The Committee
does not intend to disrupt Bellcore's current activities.
New section 256 also does not authorize Bellcore to do
anything more than it is authorized to do today. Subsection (g)
specifically states that nothing in this section permits
Bellcore or any successor entity that is jointly owned by any
of the Bell operating companies, to manufacture or provide
telecommunications equipment or manufacture CPE. Accordingly,
the Committee intends that Bellcore will continue to be barred
from engaging in any activities which fall within the scope of
the MFJ manufacturing prohibition, as it has been construed by
the courts (i.e. product design and development, as well as the
fabrication of telecommunications equipment and CPE).
Finally, subsection (h) of new section 256 provides
definitions of ``customer premises equipment'',
``manufacturing'', and ``telecommunications equipment''.
Subsection (b) of section 222 of the bill permits the Bell
operating companies to continue to engage in activities in
which they were authorized to engage prior to the date of
enactment of the bill. The District Court has granted waivers
permitting the Bell operating companies and their affiliates to
manufacture and provide telecommunications equipment and CPE
outside the United States. Neither section 222 of the bill nor
new section 256 of the 1934 Act is intended to alter or void
such authority.
Sec. 223. Existing activities
Section 223 provides that nothing in this bill is intended
to prohibit a Bell company from engaging in any activity
authorized by an order pursuant to section VII or VIII(c) of
the MFJ entered on or before the date of enactment.
Sec. 224. Enforcement
Section 224 of the bill adds new section 257 to the 1934
Act. New section 257 provides specific penalties for violations
of new sections 251, 252, and 255. These penalties are in
addition to any other penalties that may be applicable under
the 1934 Act or other law.
Subsection (a) of new section 257 establishes civil penalty
of up to $1 million dollars per day for a telecommunications
carrier that fails to implement any applicable requirements of
new sections 251 or 255. This penalty is also applicable to any
failure by a telecommunications carrier to comply with the
terms of an interconnection agreement approved under section
251. The Committee expects that the FCC or a State will
consider the gravity of the offense and the size of the
telecommunications carrier involved in establishing the
appropriate penalty; however, the Committee expects carriers to
faithfully execute their obligations under these sections in
order to promote competition, and intends that intentional
violations should be severely punished.
New section 257(b) establishes two additional penalties
that are applicable only to a Bell operating company that
repeatedly, knowingly, and without cause fails to (i) implement
an interconnection agreement approved under section 251, (ii)
comply with the requirements of that agreement, (iii) comply
any applicable separate subsidiary requirements, or (iv) meet
its obligations under section 255 for the provision of
interLATA services. For repeated intentional violations of the
interconnection or separate subsidiary requirements a Bell
operating company may be fined up to $500,000,000 by a United
States district court of competent jurisdiction. In the case of
repeated intentional failure to meet the obligations imposed
under section 255 for the provision of interLATA services by a
Bell operating company, the FCC may suspend the authorization
to provide those services. The Committee intends that these
penalties should be used to correct serious anticompetitive
behavior by a Bell operating company. The standard of
repeatedly, knowingly, and without reasonable cause is not
intended to be or to invoke a criminal standard; however, it is
intended to be a standard that requires a pattern of action
that could not have occurred by mistake or unintentional
omission.
New section 257(c) establishes a private right of action in
United States district court for any person who is injured in
its business or property by violations of this section. The
court is permitted to award simple interest on the amount of
actual damages from the date that an injured party files its
claim with the court.
Subsection (b) of section 224 of the bill amends existing
law to permit radio and television advertisements by gambling
institutions in any state in which such advertisements or the
activity of gambling is not otherwise prohibited.
Sec. 225. Alarm monitoring services
Section 225 amends Part II of Title II of the
Communications Act of 1934 (47 U.S.C. 251 et seq.) by adding
Section 258 entitled ``Regulation of Entry Into Alarm
Monitoring,'' which authorizes a Bell operating company to
provide alarm monitoring services three years after the date of
enactment if the Bell operating company has been authorized by
the FCC to provide in-region interLATA service and requires the
FCC to establish rules governing the provision of alarm
services by a Bell operating company.
The one exception to this general rule is contained in
subsection 258(f). It provides that the limitations of
subsections (a) and (b) do not apply to any alarm monitoring
services provided by a Bell company that was in that business
as of December 31, 1994, as long as certain conditions
specified in that subsection are met.
TITLE III--AN END TO REGULATION
Sec. 301. Transition to competitive pricing
Subsection (a) sets forth provisions relating to price
flexibility, the elimination of rate-of-return regulation and
consumer protection. Paragraph 301(a)(1) directs the FCC and
States to provide telecommunications carriers with pricing
flexibility for their rates within a year of enactment. It
permits the FCC or the States to establish rates for services
included in the definition of universal service and the
contribution, if any, all carriers must make to the
preservation and advancement of universal service.
Subparagraph 301(a)(2) requires the FCC and States to
ensure that residential rates remain just, reasonable, and
affordable as competition in the provision of telephone
exchange service and exchange access service grows. If there is
only one carrier providing a service in a market, this section
permits the FCC or a State to set the rate for such service if
that is required to protect consumers. Under this subsection, a
regulation must cease when it is no longer needed to protect
consumers. The subsection also requires the FCC to establish
cost allocation guidelines for essential telecommunications
carriers for the allocation of costs of such carriers'
facilities where they are used for universal services and for
video programming services, if such allocations are needed to
protect consumers.
Subparagraph 301(a)(3) directs the FCC and the States to
adopt alternative forms of regulation for Tier 1 companies as
part of a plan that includes measures to protect consumers. It
specifically directs that such new forms shall not include
regulation of the rate of return of those carriers. The new
forms of regulation must promote any or all of a specific list
of goals. The FCC or the States may apply such alternative
forms of regulation to any other telecommunications carrier
subject to the 1934 Act. Any such alternative form of
regulation must be consistent with preserving and advancing the
goals of universal service and other purposes.
Subsection 301(b) provides that any rules adopted by the
FCC or a State for the distribution of universal support
payments must include a plan for the orderly transition from
the system in existence on the date of enactment to the one
adopted under this bill. The transition plan must phase in
pricing flexibility for essential telecommunications carriers
which are also rural telephone companies and require the FCC
and States, where permitted by law, to modify any regulatory
requirements (including repayments of loans and depreciation of
assets) applicable to essential telecommunications carriers to
more accurately reflect conditions in a competitive market.
Subsection 301(c) defines the term ``subscriber list
information'' and requires local exchange carriers to provide
subscriber list information on a timely and unbundled basis and
at nondiscriminatory and reasonable rates, terms and conditions
to anyone upon request.
Sec. 302. Biennial review of regulations
This provision adds a new section 259 entitled ``Regulatory
Reform'', to the 1934 Act.
New subsection 259(a) requires the FCC, with respect to its
regulations under the 1934 Act, and a Federal-State Joint Board
for State regulations, to review in odd-numbered years
beginning with 1997 all regulations issued under the 1934 Act
or State laws applicable to telecommunications services. It
directs further that they shall determine whether competition
has made those regulations unnecessary to protect the public
interest. Subsection 259(b) requires the FCC to repeal any
regulations under the 1934 Act that are found to be no longer
in the public interest and directs the Federal-State Joint
Board to notify the governor of any State of State regulations
it determines are not needed.
Sec. 303. Regulatory forbearance
This section amends the 1934 Act by inserting after section
259 a new section 260 entitled ``Competition in Provision of
Telecommunications Service.''.
New section 260(a) empowers the FCC to forbear from
applying any regulations or provision of the 1934 Act to a
telecommunications carrier or service, or to a class of
carriers or services in any or some geographic areas if the FCC
makes certain determinations. They include determinations that:
(1) enforcement is not needed to ensure the charges, practices,
classifications or regulations of the carrier or carriers are
just and reasonable and not unjustly or unreasonably
discriminatory; (2) enforcement is not needed to protect
consumers; and (3) forbearance is in the public interest.
New section 260(b) directs the FCC, in making its
determinations under subsection 260(a), to consider whether
forbearance will promote competitive market conditions--
including the extent it will enhance competition among
providers of telecommunications services. If the FCC determines
that forbearance will promote competition among carriers, that
finding may form the basis of a finding that forbearance is in
the public interest.
Subsection (c) of new section 260 provides that the FCC may
not waive the requirements of new section 251(b) or 255(b)(2)
until after it determines that those requirements have been
fully implemented.
Sec. 304. Advanced telecommunications incentives
Section 304 of the bill is intended to ensure that one of
the primary objectives of the bill--to accelerate deployment of
advanced telecommunications capability--is achieved. Section 4
of the bill states clearly that this bill is intended to
establish a national policy framework designed to accelerate
rapidly the private sector deployment of advanced
telecommunications. More specifically, the bill's goal is ``to
promote and encourage advanced telecommunications networks,
capable of enabling users to originate and receive affordable,
high-quality voice, data, image, graphics, and video
telecommunications services.''
Section 304 ensures that advanced telecommunications
capability is promptly deployed by requiring the FCC to
initiate and complete regular inquiries, at least every few
years (beginning two years after the date of enactment), to
determine whether advanced telecommunications capability
(particularly to schools and classrooms) is being deployed in a
``reasonable and timely fashion.'' Such determinations shall
include an assessment by the FCC of the availability, at
reasonable cost, of equipment needed to deliver advanced
broadband capability. If the FCC makes a negative
determination, it is required to take immediate action to
accelerate deployment. Measures to be used include: price cap
regulation, regulatory forbearance, and other methods that
remove barriers and provide the proper incentives for
infrastructure investment. The FCC may pre-empt State
commissions if they fail to act to ensure reasonable and timely
access.
The Committee recognizes that advanced telecommunications
capability and networking in the classroom currently is not
available to the vast majority of American elementary and
secondary school students. For example, a recent study by the
U.S. Department of Education indicates that only three percent
of U.S. classrooms have Internet access. Section 304 of the
bill encourages States and the FCC to utilize regulatory
incentives--and in particular, alternative regulation
proceedings--as a means to promote the deployment of broadband
capability to elementary and secondary schools.
The Committee believes that this provision is a necessary
fail-safe to ensure that the bill achieves its intended
infrastructure objective. The goal is to accelerate deployment
of an advanced capability that will enable subscribers in all
parts of the United States to send and receive information in
all its forms--voice, data, graphics, and video--over a high-
speed switched, interactive, broadband, transmission
capability.
Sec. 305. Regulatory parity
This provision sets forth several requirements for the FCC
to perform within 3 years of enactment and periodically
thereafter. Subsection 305(1) directs the FCC to modify or
terminate regulations under Titles II, III or VI of the 1934
Act necessary to implement the changes contemplated by this
bill.
Subsection 305(2) similarly directs the FCC, for integrated
telecommunications service providers, to take into account any
disparate and unique histories and relative market power of
such providers in making modifications and adjustments in
regulations as appropriate to enhance competition between such
providers. In subsection 305(3), the FCC is directed to
periodically reconsider any modifications or terminations it
has made in order to move to a time when the same set of
regulations will apply to the services provided by integrated
telecommunications service providers.
Sec. 306. Automated ship distress and safety systems
Section 306 provides that notwithstanding any other
provision of the 1934 Act, any ship documented under the laws
of the United States operating in accordance with the Global
Maritime Distress and Safety System provisions of the Safety of
Life at Sea Convention is not required to be equipped with a
radio telegraphy station operated by one or more radio officers
or operators.
Sec. 307. Telecommunications numbering administration
Section 307 adds a new section 261 to the 1934 Act. New
section 261 requires local exchange carriers to provide for
number portability and also requires the neutral administration
of a nationwide telephone numbering system.
Subsection 261(a) requires that, as of the date of
enactment, interconnection agreements reached under section 251
must, if requested, provide for interim number portability.
Interim number portability may require that calls to or
from the subscriber be routed through the local exchange
carrier's switch. Some method of call forwarding or similar
arrangement could be used to satisfy this requirement. The
method of providing interim number portability and the amount
of compensation, if any, for providing such service is subject
to the negotiated interconnection agreement, pursuant to
section 251.
Subsection 261(b) provides that final number portability
shall be made available, upon request, when the FCC determines
that final telecommunications portability is technically
feasible. Subsection 261(d) states that the cost of such number
portability shall be borne by all providers on a competitively
neutral basis.
Congress believes that the implementation of final number
portability is an important element in the introduction of
local competition. It will require that local exchange
carriers, parties seeking interconnection, and manufacturers
cooperate in seeking a solution.
Subsection 261(c) of new section 261 requires that all
providers of telephone exchange service or exchange access
service comply with the guidelines, rules, or plans, of the
entity or entities responsible for administering a nationwide
neutral number system. This provision is not intended to affect
the Commission's ongoing proceeding on numbering
administration.
Subsection 261(c)(2) requires that all telecommunications
carriers which provide local exchange or exchange access
service in the same telephone service area be assigned the same
numbering plan area code. This effectively eliminates an
overlay of one area code on top of another. This requirement
will ensure competitive neutrality so that new entrants in the
market will not have to require their subscribers to dial more
digits than dialed by subscribers of the incumbent carrier.
Sec. 308. Access by persons with disabilities
Section 308(a) adds a new section 262 to the 1934 Act
entitled ``Access by Persons with Disabilities.'' Section 262
requires that manufacturers of telecommunications equipment and
customer premises equipment ensure that equipment is designed,
developed, and fabricated to be accessible and usable by
individuals with disabilities, if readily achievable.
Similarly, providers of telecommunications services must
ensure that telecommunications services are accessible to and
usable by individuals with disabilities, if readily achievable.
In addition, the Commission is required to undertake a study of
closed captioning and to promulgate rules to implement section
262. Section 308(b) adds a FCC study of video description.
The Committee recognizes the importance of access to
communications for all Americans. The Committee hopes that this
requirement will foster the design, development, and inclusion
of new features in communications technologies that permit more
ready accessibility of communications technology by individuals
with disabilities. The Committee also regards this new section
as preparation for the future given that a growing number of
Americans have disabilities.
Section 262(a) of this new section defines the terms
``disability'' and ``readily achievable.'' Both definitions are
taken from the Americans with Disabilities Act of 1990
(``ADA'') (P.L. 101-336). The Committee intends the definition
of disability to principally cover individuals with functional
limitations of hearing, vision, movement, manipulation, speech,
or interpretation of information. The term ``readily
achievable'' means ``easily accomplishable and able to be
carried out without much difficulty or expense.''
New section 262(b) requires manufacturers of
telecommunications and customer premises equipment to ensure
that such equipment is designed, developed, and fabricated to
be accessible to and usable by individuals with disabilities,
if readily achievable. The Committee intends this requirement
to apply prospectively to such new equipment manufactured after
the date for promulgation of regulations by the Commission.
New section 262(c) requires providers of telecommunications
service to ensure that such service be accessible to and usable
by individuals with disabilities, if readily achievable. The
Committee intends this requirement to apply prospectively to
such new services provided after the date for promulgation of
regulations by the Commission.
New section 262(d) requires that whenever the provisions of
subsections (b) and (c) are not readily achievable, the
manufacturer of telecommunications and customer premises
equipment, or the provider of telecommunications service, shall
ensure that such equipment or service is compatible with
existing peripheral devices or specialized customer premises
equipment commonly used by individuals with disabilities to
achieve access, if readily achievable.
New section 262(e) requires the Architectural and
Transportation Barriers Compliance Board (``Board'') to develop
guidelines for accessibility of telecommunications and customer
premises equipment and telecommunication service, as lead
agency in consultation with the National Telecommunications and
Information Administration and the National Institute of
Standards and Technology, within 1 year of enactment of this
Act. The Board shall periodically review and update such
guidelines. The Committee expects that manufacturers of
equipment and providers of service will be fully included in
this process. The Committee has elsewhere assigned
responsibility for promulgating regulations for this new
section to the Commission. The Committee envisions that the
guidelines developed by the Board will serve as the starting
point for regulatory action by the Commission, much as, for
example, the Board prepares minimum guidelines on accessibility
under section 504 of ADA that serve as the basis for rulemaking
by the U.S. Department of Justice.
New section 262(f) requires the Commission to ensure that
video programming is accessible through closed captions and
that video programming providers or owners maximize the
accessibility of video programming previously published or
exhibited through the provision of closed captions. This
subsection further provides the Commission with authority to
exempt various program and providers of video programs from
this requirement. In addition, a provider of video programming
or program owner may petition the Commission for an exemption
from the requirements of this subsection.
This subsection also requires the Commission to undertake a
study of the current extent of closed captioning of video
programming and of previously published video programming;
providers of video programming; the cost and market for closed
captioning; strategies to improve competition and innovation in
the provision of closed captioning; and such other matters as
the Commission considers relevant.
New section 262(g) requires the Commission to prescribe
regulations to implement all provisions of this new section,
not later than eighteen (18) months after the date of enactment
of this Act. As noted above, such regulations shall be
consistent with the standards developed by the Board in
accordance with section 262(e) of this new section.
New section 262(h) authorizes the Commission to enforce
this new section. The Commission shall resolve, by final order,
a complaint alleging a violation of this section within 180
days after the date such complaint is filed.
Subsection (b) of section 308 requires that the Commission
undertake within 6 months of enactment of this Act a study of
the feasibility of requiring the use of video descriptions on
video programming in order to ensure the accessibility of video
programming to individuals with visual impairments. ``Video
description'' is defined as the insertion of audio narrative
descriptions of a television program's key visual elements into
natural pauses between the program's dialogue.
Sec. 309. Rural markets
Section 309 adds to the 1934 Act a new section 263 entitled
``Rural Markets.''
Subsection (a) of section 263 provides that except as
provided in new section 251(i)(3) a State may not waive or
modify the interconnection requirements of new section 251 of
the 1934 Act. A State may adopt statutes or regulations that
are no more restrictive than:
(1) to require a commitment by each competing carrier
to offer universal service comparable to that available
from the rural telephone company for that area and to
make service available to all consumers in the area
within 24 months of approval, either using the
applicant's facilities or through its facilities and
resale of another carrier's facilities, and subject to
the same terms and conditions and rate structure
applicable to the rural telephone company currently
providing universal service;
(2) to require approval of an application by a
competing telecommunications carrier based on
sufficient written public findings and conditions that
demonstrate that the approval is in the public interest
and will not have a significant adverse impact on users
of telecommunications services or on the provision of
universal service;
(3) to encourage development and deployment of
advanced telecommunications and information
infrastructure and services in rural areas; or
(4) to protect the public safety and welfare, ensure
the continued quality of telecommunications and
information services, or safeguard the rights of
consumers.
New section 263(b) of the 1934 Act authorizes the FCC to
preempt any State statute or regulation that is inconsistent
with the FCC's regulations implementing this section, or that
arbitrarily or unreasonably discriminates in the application of
the statute or regulation. The FCC must act upon a petition
filed for preemption within 180 days after receipt. Pending its
decision, the FCC may suspend or modify the application of any
applicable State statute or regulation.
Sec. 310. Telecommunications services for health care providers for
rural areas, educational providers, and libraries
Section 310 of the bill amends the 1934 Act by adding a new
section 264 entitled ``Telecommunications Services for Certain
Providers.'' This section is intended to ensure that health
care providers for rural areas, elementary and secondary
schools, and libraries are able effectively utilize modern
telecommunications services in the provision of medical and
educational services to all parts of the Nation.
New section 264(a) requires that a telecommunications
carrier that is designated as an essential telecommunications
carrier under new section 214(d) shall provide
telecommunications services necessary for the provision of
health care services to any health care provider serving
persons who reside in rural areas at rates that are reasonably
comparable to rates charged for such services in urban areas.
Subsection (a) also requires that any telecommunications
carrier shall provide those services included in the definition
of universal service to elementary and secondary schools and
libraries at rates that are affordable and not higher than the
incremental cost to the carrier of such services. In most cases
the Committee expects that the incremental cost of such
services will be less than the affordable rate established for
universal service in that area. However, in those cases in
which the incremental rate is greater than the affordable rate
for such services, then the Committee intends that support
payments, if any, may be used to offset the costs to the
carrier of providing such service.
Subsection (b) of new section 264 provides that, if the FCC
adopts rules for the distribution of support payments for
universal service, then the FCC shall include the amount of
support payments reasonably necessary to provide universal
service (including any costs related the provision of
comparable rates under subsection (a)(1)) to public
institutional telecommunications users in any support
mechanisms the FCC may establish under new section 253. Public
institutional telecommunications users are defined under
subsection (d) of new section 264 to mean elementary and
secondary schools, libraries, and health care providers (as
those entities are defined under subsection (d)).
New section 264(c) requires the FCC to establish rules to
enhance, to the extent technically feasible and economically
reasonable, the availability of advanced telecommunications and
information services to elementary and secondary schools,
health care providers, and libraries. In addition, the FCC is
required to establish rules to ensure that appropriate
requirements and standards are established for
telecommunications carriers that connect public institutional
telecommunications users to the public switched network, and to
determine under what circumstances a telecommunications carrier
may be required to connect those users to that network.
Subsection (d) of new section 264 provides definitions of
``elementary and secondary schools'', ``universal service'',
``health care provider'', and ``public institutional
telecommunications user''. The definition of universal service
gives the FCC the authority to establish a separate definition
of universal service under new section 253(b) for application
only to public institutional telecommunications users.
Sec. 311. Provision of pay phone service and telemessaging service
Section 311 of the bill adds a new section 265 to the 1934
Act, to address certain practices of the Bell operating
companies with regard to telemessaging and pay phone services.
This section is designed to prohibit cross-subsidization
between a Bell operating company's telephone exchange or
exchange access services and its pay phone and telemessaging
services. Existing joint-cost rules are not adequate to prevent
such activities.
This section prohibits a Bell operating company from
discriminating between affiliated and nonaffiliated pay phone
and telemessaging services, under rules set forth by the FCC.
These provisions are necessary to ensure the continued
participation of small businesses in telemessaging services.
The Committee is hopeful that these safeguards will preserve
such a competitive environment. If, however, the FCC finds that
these safeguards are insufficient, the FCC may require the Bell
operating companies to provide telemessaging services through a
separate subsidiary.
New section 265 directs the FCC to complete, within 18
months after the date of enactment of the bill, a rulemaking
proceeding to prescribe regulations to carry out this new
section. The FCC also is directed to determine whether, in
order to enforce the requirements of section 265, it is
appropriate to require the Bell operating companies to provide
pay phone service or telemessaging services through a separate
subsidiary that meets the requirements of new section 252, as
added to the 1934 Act by section 102 of the bill.
The FCC's rules could include, for example, a prohibition
on a Bell operating company's joint marketing of telemessaging
and telephone exchange services, unless such a marketing
opportunity were also made available to nonaffiliated
telemessaging providers on equivalent terms. Prohibited
discrimination could also include providing preferential access
to customer proprietary network information or network
technical information to its own pay phone or telemessaging
subsidiary. The rules could also require a Bell operating
company to provide the same opportunities for involvement in
network planning, design, and implementation to affiliated and
nonaffiliated telemessaging providers.
Pay phone services are defined to include the provision of
telecommunications service through public or semipublic pay
telephones, and includes the provision of inmate phone service
in correctional institutions.
Public pay phones are a regulatory anomaly. Public pay
phone competition did not emerge until after the AT&T
divestiture. By then, the FCC had completed the broad outlines
of the framework for regulating the Bell operating company's
telecommunications offerings that are competitive with services
offered by independent providers. As a result, the regulatory
status of public pay phones has been inadequately addressed.
At divestiture, the Bell System public pay phones were
assigned to the Bell operating companies. Public pay phones
were simply treated as a part of local exchange service because
only the local telephone companies provided this service.
Similarly, at the time of the FCC's Computer II 2
decisions, Bell operating companies' public pay phones were
technologically dependent on central office switch
functionality for monitoring and control of all aspects of coin
calling (a dependence which largely persists today, but
primarily because of Bell operating company choice rather than
technological imperative). Public pay phones were, therefore,
treated as a ``basic service'' offering. The Bell operating
companies were allowed to bundle both the network access line
and the pay station terminal equipment; the Bell operating
companies were not required to unbundle the pay station from
the central office functionality and network support service,
as was done with all other customer premises equipment.
Similarly, unlike other customer premises equipment, pay
telephone terminal equipment was not deregulated and was not
removed from regulated accounts. See Tonka Tools, Inc., FCC 85-
269, 58 RR2d 903 (1985).
\2\ Amendment of Section 64.702 of the Commission's Rules and
Regulations, (``Second Computer Inquiry''), Final Decision, 77 FCC 2d
384 (``Computer II Final Decision''), recon., 84 FCC 2d 50 (1980)
(``Computer II Reconsideration''), further recon., 88 FCC 2d 512
(1981), aff'd sub nom. Computer and Communications Indus. Ass'n v. FCC,
693 F.2d 198 (D.C. Cir. 1982), cert. denied, 461 U.S. 938 (1983),
second further recon., FCC 84-190 (released May 4, 1984).
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Shortly after divestiture, technological constraints that
had dictated the FCC's treatment of public pay phones in
Computer II and the MFJ's assignment of pay phones to the Bell
operating companies were overcome. Independent public pay phone
providers developed the technology to use onboard
microprocessors to replicate in the telephone terminal itself
most of the control and supervision functions performed by the
central office for Bell operating company public pay phones.
The FCC recognized the right of independent public pay phone
providers to interconnect these ``instrument-implemented''
devices to the interstate network. Registration of Coin
Operated Telephone, FCC 84-270, 57 RR2d 133 (1984). The FCC
left to the States the authority to regulate intrastate rates
and other terms of interconnection. Universal Pay Phone
Company, FCC 85-222, 58 RR2d 76 (1986). The States have
regulated the rates charged to end users by independent public
pay phones providers and the rates charged by Bell operating
companies to independent public pay phones providers for the
local exchange services the independent public pay phone
providers use in offering service to the public.
Independent public pay phone providers have emerged to
provide some competition to local exchange company public
telephones. But neither Federal nor State legislators or
regulators have gone back to reexamine the anomalous ``dual
regulatory'' regime under which pay phone competition has
grown. On the one hand, independent public pay phone providers
offer their pay phones as deregulated customer premises
equipment and purchase local exchange facilities from the
telephone company on a tariffed, arm's-length basis. On the
other hand, telephone companies offer their public pay phone
services as a bundled offering of network services and premises
equipment that are totally integrated into local exchange
operations. There is thus the incentive and the potential for
all the forms of discrimination, cross-subsidy, and leveraging
of bottleneck facilities that both the divestiture and the
FCC's regulatory regime for competitive Bell operating company
offerings are supposed to prevent.
Semipublic pay phones are also included within the
definition of pay phone services. Although the cost of
maintaining a semipublic pay phone is paid for by the location
owner, whereas the cost of a public pay phone is borne by the
pay phone provider, semipublic pay phones are similar to public
pay phones in that both services are offered by the Bell
operating companies on a bundled basis and are integrated into
local exchange operations. Therefore, semipublic pay phones
also are included in new section 265's definition of pay phone
service. Section 265 also includes inmate phone systems within
the definition of pay phone service.
New section 265 is intended to promote a more evenhanded
competitive environment. In order to address the competitive
imbalance, the Bell operating companies are prohibited from
cross-subsidizing and from preferring or discriminating in
favor of their own pay phone operations. The FCC should
consider applying to pay phone services the same guidelines
designed to prevent cross-subsidy and discrimination in the
Bell operating company's offering of other customer premises
equipment.3 Bell operating companies should provide the
same treatment to their own and competitors' pay phones with
respect to rates, terms, and conditions of interconnection to
network facilities and other carrier services on which pay
phone operations depend. The FCC is directed to conduct
rulemaking proceedings to implement new section 265.
\3\ See e.g., In the Matter of Separation of Costs of Regulated
Telephone Service From Costs of Nonregulated Activities: Amendment of
Part 31, the Uniform System of Accounts for Class A and Class B
Telephone Companies, to Provide for Nonregulated Activities and to
Provide for Transactions between Telephone Companies and their
Affiliated, 104 FCC2d 59 (1986).
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Nothing in Section 265 is intended to limit the authority
of the FCC to address these structural issues, or other pay
phone related issues, under the existing provisions of the 1934
Act. The Committee believes the FCC already has authority to
address these issues. Indeed, a petition requesting the FCC to
address these issues has been pending for almost 7 years.4
Section 265 is intended to ensure that these longstanding
problems are addressed.
\4\ In the Matter of the Public Telephone Council, Petition for
Declaratory Ruling that Bell Operating Company Pay Telephones are
Customer Premises Equipment for Regulatory Purposes, filed July 18,
1988.
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There may be special issues to be addressed regarding pay
phone services. For instance, there may be situations where it
is desirable to have public pay phones placed in certain areas
where the volume of traffic would not otherwise justify a pay
phone. Examples might include some public schools, certain
sections of some cities, certain rural areas. Nothing in this
section is intended to remove the current authority of the FCC
or the States to address these issues, or to prevent the FCC or
the States from regulating pay phone service, including the
regulation of rates to end users charged by all public phone
providers, both independent companies and the Bell operating
companies.
TITLE IV--OBSCENE, HARASSING, AND WRONGFUL UTILIZATION OF
TELECOMMUNICATIONS FACILITIES
Sec. 401. Short title
Section 401 provides that Title IV of the bill may be cited
as the ``Communications Decency Act of 1995.''
The information superhighway should be safe for families
and children. The Committee has been troubled by an increasing
number of published reports of inappropriate uses of
telecommunications technologies to transmit pornography, engage
children in inappropriate adult contact, terrorize computer
network users through ``electronic stalking'' and seize
personal information.
Consistent with the Constitution, the provisions of the
Communications Decency Act modernize the existing protections
against obscene, lewd, indecent or harassing uses of a
telephone. These protections are brought into the digital age.
The decency provisions increase the penalties for obscene,
indecent, harassing or other wrongful uses of
telecommunications facilities; protect privacy; protect
families from uninvited and unwanted cable programming which is
unsuitable for children and give cable operators authority to
refuse to transmit programs or portions of programs on public
or leased access channels which contain obscenity, indecency,
or nudity.
The Communications Decency Act applies to those who
knowingly and intentionally create and send prohibited messages
or use telecommunications devices to harass an individual. The
provisions specifically exclude from liability
telecommunications and information service providers and
systems operators who are not themselves knowing participants
in the making of or otherwise responsible for the content of
the prohibited communications.
The provisions seek to encourage telecommunications and
information service providers to deploy new technologies and
policies which would allow users to control access to
prohibited communications. The incorporation of such technology
where reasonable and appropriate would be a defense against
liability under section 223 for the provision of a
telecommunications facility used for a prohibited activity. In
addition, telecommunications and information service providers
may not be sued for their good faith actions taken to prevent
the use of their systems or services for prohibited purposes.
Sec. 402. Obscene or harassing use of telecommunications facilities
under the Communications Act of 1934
Section 401 of the bill replaces ``telephone'' references
in section 223 of the 1934 Act to ``telecommunications device''
and the term ``communication'' is added to current law
references to ``conversation.'' The terms ``telecommunications
device'' and ``communication'' as well as other additions to
section 223 are intended to be flexible enough to provide
individuals and children protection against obscene, lewd,
lascivious, filthy, indecent or harassing, uses of
telecommunications devices. For the purposes of this amendment,
the terms ``obscene'' and ``indecent'' are separate and
distinct standards.
The revisions are intended to accommodate changing
technologies. In addition, penalties for section 223 violations
are increased from a maximum $50,000 fine and/or six months
imprisonment to a maximum $100,000 fine and/or two years
imprisonment.
By providing a new defense to liability under Sec. 223 (b),
for those services for which a prohibited activity is not a
predominant element, the revisions avoid liability to providers
of computer services who do not expressly intend to disseminate
or display prohibited communications. Nothing in this or other
defenses to Sec. 223 are intended to narrow the application of
the existing dial-a-porn law or to provide a defense for the
person who created and sent the prohibited communication.
Sec. 403. Obscene programming on cable television
Section 403 of the bill amends section 639 of the 1934 Act
to increase the maximum fine for transmitting obscene
programming on cable television from $10,000 to $100,000.
Sec. 404. Broadcasting obscene language on radio
Section 404 amends existing law to increase the maximum
fine for broadcasting obscene language on radio from $10,000 to
$100,000.
Sec. 405. Interception and disclosure of electronic communications
Section 405 amends existing law to clarify that all
communication including ``digital'' communication are protected
from unauthorized interception. Nothing in this section limits
the ability of law enforcement to execute properly authorized
wire tap warrants.
Sec. 406. Additional prohibition on billing for toll-free telephone
calls
Section 406 of the bill amends section 228(c)(6) of the
1934 Act to add protection against the use of toll free
telephone numbers to connect an individual to a ``pay-per-
call'' service. Published reports have indicated that toll free
numbers have been used to defeat the blocking of ``pay-per-
call'' numbers by connecting a caller to a ``pay-per-call''
service after a toll free connection has been made. Households,
businesses and other institutions have been billed for ``pay-
per-call'' charges even though ``pay-per-call'' blocking
techniques were used. This provision is intended to stop that
practice.
Sec. 407. Scrambling of cable channels for nonsubscribers
Section 407 of the bill adds a new section 640 to the 1934
Act entitled ``Scrambling of Cable Channels for
Nonsubscribers.'' This section requires cable television
operators to fully scramble or otherwise block upon subscriber
request and at no charge to the subscriber, the audio and video
portions of programming unsuitable for children.
Sec. 408. Cable operator refusal to carry certain programs
Section 408 amends Title VI of the 1934 Act to give cable
operators the authority to refuse to transmit any public access
or leased access program or portion of a public access program
which contains obscenity, indecency or nudity.
ADDITIONAL VIEWS OF SENATOR BURNS
introduction
The bill as reported by the Committee represents an
affirmative step forward. Congress plainly needs to quickly
resolve the fundamental competitive and technology issues which
are affecting the U.S. telecommunications field. This is a
critical sector. Policy should not continue to be made by
regulators and the Federal courts. It is our responsibility.
Through sound legislation, we have the opportunity to foster
substantial new investment and domestic jobs creation, while
expanding the competitive choices available to all Americans,
including rural and small town residents. I am pleased that
Chairman Pressler has been willing to move forward with
comprehensive telecommunications reform. I believe that this
bill is a positive first step.
I do have several concerns with the bill as it now stands,
however. First, I share many of the concerns raised by Senators
Packwood and McCain, and other colleagues, that the
procompetitive changes this bill mandates are too incremental,
and too dependent upon subsequent administrative
decisionmaking. When it comes to encouraging marketplace
competition, greater investment and domestic jobs creation by
the private sector, Congress could--and should--do more.
Second, I am concerned about the amendment proposed by
Senators Snowe and Rockefeller and adopted by the Committee,
which potentially creates a whole new class of preferential
telecommunications service entitlements for a diversity of
groups, ranging from migrant health centers to hospitals, to
potentially, highly controversial community health service
clinics. The Snowe/Rockefeller amendment also creates some
ambiguity as to its treatment of private education facilities
such as religious based schools as well as home schooling,
which has grown in popularity in my home state of Montana.
Third, I am concerned about the Kerrey Amendment, which
also was adopted by the Committee and endeavors to create
special rates and privileges for certain select customers of
video channel service.
Fourth, I am uncomfortable with the cable rate regulation
language that was contained in the Chairman's mark. In 1992, at
a time when we should have encouraged cable companies to
enhance their networks and provide additional, new programming,
Congress chose instead to tie cable's hands behind its back by
rolling back rates and providing regulatory uncertainty. The
actions of this Committee provided only limited rate relief for
our larger cable operators and virtually no relief for small
cable operators.
Fifth, if we are to truly open the telecommunications
market to increased competition, we can no longer afford to
hold back such participants as the broadcasters by continuing
to impose ownership restrictions across the industry. In
particular, I believe that we need to eliminate radio's
national and local ownership restrictions.
competition needed now
As Senators McCain and Packwood have noted, the bill
conditions Bell company entry into long-distance and other
competitive endeavors on those firms complying with a
``competitive checklist'' of nonstructural and other
safeguards. I have no quarrel with the need for such
safeguards. It is axiomatic that the strength conferred by
protected local telephone service markets should not be
available to gain unfair advantage in competitive endeavors.
But this bill, by its own terms, removes any protections
from local telephone service markets. That having been done--
within one year, under this measure--and Bell companies having
satisfied the ``competitive checklist,'' they should be allowed
to compete then, not at some indefinite future time. Their
ability to compete should also not be subject to an ill-defined
``public interest'' finding by the Federal Communications
Commission (FCC). Some FCC approval may be warranted. But the
scope of the agency's discretion needs to be limited in the
bill or accompanying legislative history. Unless that is done,
the opportunity will be created for Bell company rivals to game
the regulatory system, in an effort to stave off indefinitely
the arrival of genuine competition.
Allowing Bell Companies to compete soon is especially
important to residents of rural, less well-populated, and small
town America. In these markets, competitive options are few to
begin with. The major firms, understandably, prefer to focus on
large urban customers, not rural America. If rural America is
to benefit from the same competitive options that are routinely
available to urban subscribers, that competition will have to
come in major part from the telecommunications companies which
are already committed to serving these areas.
the rockefeller amendment
Under this amendment, any communications company designated
as an ``essential carrier'' would be obliged to provide
``universal service''--presumably at preferential rates--to a
number of specified health care institutions. These include
medical schools, not-for-profit hospitals, and community health
centers. Given the recent announcement by Planned Parenthood,
the largest provider of birth control and abortion services in
the country, that it would seek to establish a nationwide
network of nonprofit neighborhood health facilities, with this
one amendment I am afraid the Senate is being inadvertently
drawn into an area of high controversy which I, for one,
believe we should avoid.
In addition, I am troubled by the potential disparate
treatment that this provision may impose on our educational
system. I believe the mandate on businesses to provide
universal service to schools either fails to consider those
educated at private institutions or home schools, or, in the
alternative, raises serious questions about the appropriate
role of government in mandating such provisions.
I have no disagreement with my colleagues regarding the
contribution which advanced telecommunications can make in
society. Where I do part company, however, is the proposal to
establish, in effect, an off-budget entitlement program--a
system that buries much of the cost of providing
telecommunications service to our health and educational
systems, in the telephone rates all Americans pay.
I believe that the concerns of my colleagues have been
adequately addressed through language in the bill on advanced
telecommunications incentives without imposing unnecessary and
burdensome mandates on business. The marketplace is already
moving in the right direction. Technological progress through
competition and deregulation in the marketplace is the
appropriate approach to ensuring that our health and education
providers share in the National Information Infrastructure.
the kerrey amendment
Additionally, I am concerned about the Kerrey amendment
that was adopted during Committee consideration of this bill.
As initially drafted, section 203 of the bill would have
amended Sec. 613(b) of the 1984 Cable Act (47 U.S.C. Sec.
533(b)) to oblige telephone company-affiliate providers of
``video platform services'' to grant local broadcast stations
system access ``at rates no higher than the incremental-cost-
based rates of providing such access.'' In effect, the bill
would mandate minimal-cost ``must carry'' for local stations.
Given the fact that local broadcast stations are licensed to
serve all of their community, and the fact that cable
television systems are already under a general ``must carry''
obligation, this is an appropriate requirement, in my judgment.
Under the Kerrey Amendment, however, entitlement to
``incremental-cost-based rates'' would be broadened, to include
all educational, charitable, and government users. Telephone-
affiliated cable systems, in other words, would be required to
offer these three additional groups very low-cost channel
access. Significantly, this access would not necessarily be
conditioned on the programming which these favored groups
choose to offer. There is nothing in the Amendment, nor in the
underlying law, to prevent a charitable institution from
obtaining cheap channels and then using those channels for
expanded fund-raising, for example, or to distribute the
services of a for-profit affiliate of the charity.
I appreciate the sentiment which motivated this amendment.
But Congress simply must place some dietary curb on its
continued appetite for free lunches. If cable channel capacity
is offered at low rates to charities, schools, government
agencies, etc., both direct and opportunity costs are incurred.
That is, the cable system must expend some money to make the
channel capacity available. And because channel capacity is
used for such purposes, it obviously is not available to be
used for others.
The cable television industry already is saddled with
extensive--and expensive--``PEG-channel'' obligations (public,
educational, and government). But those obligations figured, of
course, in the original franchise bids that cable companies
submitted to local franchising authorities. PEG-channels, in
short, were part of the winning cable company's initial
business case. Here, however, we are simply imposing a similar
obligation on telephone-affiliated video service providers--
without regard to the demand for such special channels, much
less the costs involved.
I do not dispute the possibility that some support, some
subsidization of these presumably worthy undertakings might
conceivably be warranted. We have no record sufficient to
enable us to estimate the need for such support, however. Nor
does the Committee hearing record from this year--or last's--
provide us with any firm basis for estimating the total
magnitude of the costs we are imposing, much less a firm
understanding of the specific services we are ostensibly
promoting.
Absent such information, I am reluctant to support this
amendment which, in effect, nationalizes a fraction of
privately capitalized video services facilities and dedicates
them to a purpose which is not yet clear.
cable rate deregulation
I am no stranger to the debate on cable rate regulation. In
1992, I was a very vocal opponent of the rate regulation
provisions in the Cable Act. I thought it was bad policy then
and I think it's still bad policy today, perhaps even more so
in the face of increased competition for telecommunications
services.
I was pleased to see that the elimination of the cable rate
regulation provisions of the 1992 Cable Act were included in
the Chairman's discussion draft as late as 24 hours before the
markup. I was obviously displeased to see that the provisions
had been modified substantially when finally presented to the
full Committee.
While still proceeding in the right direction by removing
the rate regulation of the upper tier of services, the bill
does not go far enough in removing the unnecessary regulations
that will hinder cable from competing to its full extent in a
much more competitive marketplace. In addition, the ``bad
actor'' provision is just another opportunity for an
additional and burdensome bureaucratic process.
Further, I am concerned about the continued rate regulation
of the basic tier. Continued rate regulation of the basic tier
does not afford the small cable operator relief from the heavy
hand of government. In Montana, many of the small cable
operators only provide a basic tier of services. As a result,
without relief, Montana's small cable operators will not see
any significant change.
silencing the voice of broadcasters
In the broadcast marketplace, broadcasters are operating
under archaic rules that better suited the 1950's than the
1990's. As we quickly approach the 21st century, it is time
that we reevaluate regulations that so strictly govern the
broadcast industry. Whether it be cable/television cross-
ownership, national ownership limits for radio and TV or the
newspaper/broadcast cross-ownership restrictions, yesterday's
regulations may not be appropriate for tomorrow's broadcasting
marketplace.
It is clear that the broadcast environment today is the
most competitive it's ever been and every indication is that
this trend will continue. Nothing could be truer than in the
radio broadcast arena. Radio must be evaluated in its own light
because its characteristics are different than television.
Therefore, whatever agreement that may be reached on television
should not automatically include the radio broadcast industry.
I firmly believe that we should eliminate radio's national
and local ownership restrictions. These limitations hamper the
ability of radio broadcasters to provide the best possible
service to listeners.
In 1992, the FCC eased the ownership limits somewhat and
the modest change has resulted in stronger, more valuable
stations. The number of stations ``going dark'' appears to be
leveling off.
In addition, with more than 11,000 radio stations across
the country and an average of 25 different radio options to
choose from in each market, the objective of increased
competition and diversity has been achieved.
In the near future, new competitors will be competing with
traditional radio in the audio marketplace. For example,
digital satellite will beam 60 or more new audio signals into
each market. Thirty audio channels are currently offered by
cable programmers.
Radio operators are ready to go the next step and operate
without stifling ownership rules. They need total deregulation
to allow them to compete in the new digital marketplace.
Finally, I am concerned that the bill as now drafted erects
all too many procedural and other obstacles to full and fair
competition. In my judgment, once the ``competitive checklist''
established by this bill is satisfied, local exchange telephone
companies should be fully free to compete in any and all
fields. Holding the commencement of full competition hostage to
administrative decision-making and an ill-defined ``public
interest'' finding by the FCC has serious implications, and
those problems need to be speedily resolved.
Companies which undertake to provide high-quality service
on a universal access basis should not, in effect, be penalized
by Congress in terms of the competitive market opportunities
management is free to seek. If local exchange carriers are so
penalized, they will have an incentive to abandon the field, to
under-invest--in short, to engage in a variety of actions and
decision-making that may not further the interest of local
telephone subscribers. Congress should seek to foster, not
discourage, domestic investment by Bell and other local
exchange companies. I am not sure that the complicated,
regulatory procedures which this bill contemplates are
consistent with that.
Important to realize, moreover, is the fact that many
residents in less well-populated parts of the country today
have far fewer competitive alternatives. For several years
following the Bell System breakup in 1984, for example, only
one long-distance carrier (AT&T) chose to write business in the
state of Montana. All carriers could terminate calls in the
state. But the Montana resident interested in subscribing to
MCI, for example, was out of luck.
Fortunately, the market has evolved. But a simple check of
``Yellow Pages'' listings will show that it has not fully
evolved to the point where all Americans have the same broad
range of competitive choices. The Washington ``Yellow Pages''
lists virtually dozens of competing equipment and service
providers. Those listings for small town America typically
indicate only one provider, the local telephone company. If
that local phone company is unable to offer new services, the
likelihood is small that other companies will rush to the
market to satisfy demand.
Rural and small town Americans are just as entitled to the
full benefits of competition in communications as anyone else.
Providing them with those full benefits depends in large
measure on our allowing the local telephone companies greater
flexibility to compete. While this bill makes positive steps in
some regards, by relaxing restrictions on cable television
service competition in smaller communities, it could do more.
ADDITIONAL VIEWS OF SENATOR HOLLINGS
The bill that the Committee has approved achieves several
important objectives. It ensures that universal telephone
service is available and affordable, it promotes competition in
telecommunications markets, and it restores regulatory
authority over the communications industry to the Federal
Communications Commission (FCC). The basic thrust of the bill
is clear: competition is the best regulator of the marketplace,
but until that competition exists, monopoly providers of
services must not be able to exploit their monopoly power to
the consumer's disadvantage. Competitors are ready and willing
to enter new markets, as soon as they are opened.
Competition is spurred by the bill's provisions specifying
the criteria for entry into various markets. For example, on a
broad scale, cable companies soon will provide telephony, and
telephone companies will offer video services; consumers will
purchase local telephone service from several competitors, and
vice versa; electric utility companies will offer
telecommunications services; and the Regional Bell Operating
Companies (RBOCs) will engage in manufacturing activities, all
fostering competition to each other and creating jobs along the
way. We should not attempt to micromanage the marketplace;
rather, we must set the rules in a way that neutralizes any
party's inherent market power, so that robust and fair
competition can ensue. This is Congress' responsibility, and so
the bill transfers jurisdiction over the Modified Final
Judgment (MFJ) from the courts to the FCC.
universal service
The need to protect and advance universal service is
addressed by the bill's requirements that all
telecommunications carriers must contribute to a universal
service fund. A Federal-State Joint Board will define universal
service, and this definition will evolve over time as
technologies change so that consumers have access to the best
possible services. Special provisions in the legislation
address universal service in rural areas, to guarantee that
harm to universal service is avoided there. Universal service
must be guaranteed; the world's best telephone system must
continue to grow and develop, and we must attempt to ensure the
widest availability of telephone service.
rboc entry into long distance
Earlier draft versions of the bill set a ``date certain''
for entry by the RBOCs into the long distance market. Under
this nonsensical approach, the calendar rules. This does not
take into account the competitive circumstances in the
marketplace. The bill approved by the Committee specifies that
the FCC may approve any application to provide long distance if
it finds that (1) the RBOC has fully implemented the unbundling
features specified in the competitive checklist found in new
section 255 of the Communications Act of 1934; (2) the RBOC
will provide long distance using a separate subsidiary; and (3)
the application is consistent with the public interest,
convenience and necessity. The public interest test is
fundamental to my support for the legislation. In making its
public interest evaluation, the FCC is instructed to consult
with the Department of Justice (DOJ), which may furnish the FCC
with advice on the application using whatever standard it finds
appropriate (including antitrust analysis under the Clayton and
Sherman Acts, or section VIII(C) of the MFJ).
This is a great leap from the ``actual and demonstrable
competition'' test originally proposed in the last Congress.
While I myself would have preferred a more active DOJ role and
an explicit reference to the VIII(C) test, I can support this
regime because the FCC will have the benefit of DOJ's views
prior to making any decision. The DOJ may well decide to base
its decision on whether there is a substantial possibility that
the RBOC will impede competition through use of its monopoly
power. In addition, the bill requires that an RBOC must provide
long distance using a subsidiary separate from itself, to avoid
any cross-subsidization between local and long distance rates.
These and other safeguards in the bill should prevent against
RBOC abuses.
cable rate deregulation
The Committee-approved bill includes some deregulation of
rates for cable television; the Democratic proposal did not
suggest any such deregulation. From 1986 until 1992, cable
rates rose three times faster than the rate of inflation. In
response to enormous numbers of consumer complaints about
excessive rates and poor service, the Congress in 1992 imposed
rate regulation and new service standards on cable operators.
Since the 1992 Act was adopted, the cable industry has
experienced significant growth: subscribership is up, stock
values of cable operators have risen dramatically, and debt
financing by the cable industry rose in 1994 by almost $4
billion over 1993 levels. Yet some in the industry maintain
that cable regulation produces uncertainty in financial
markets, and that cable operators face increased competition
and will need to be able to respond to new competitors through
additional revenues.
The bill approved by the Committee changes the standard of
regulation for the upper tiers of cable programming and makes
no change in the regulation of the basic tier. Under the bill,
a rate for the upper tier cannot be found to be unreasonable
unless it ``substantially exceeds the national average rate for
comparable'' cable programming. This standard will allow cable
operators greater regulatory flexibility for the upper tiers.
The bill retains the FCC's authority to regulate the most
egregious rates charged for the upper tiers.
In addition, the bill changes the definition of ``effective
competition'' in the 1992 Act to allow cable rates to be
deregulated as soon as a telephone company begins to offer
competing cable service in a franchise area. Once consumers
have a choice among cable offerors, the need for regulation
diminishes.
broadcast issues
Earlier drafts of the legislation suggested by the Chairman
and other Republican members would have eliminated many FCC
regulatory limits on the broadcast industry. By contrast, the
Democratic proposal mandated that the FCC conduct a proceeding
to review the desirability of changing these rules.
The bill as approved by the Committee increases the ability
of any entity, including television networks, to own more
broadcast stations. The FCC currently allows an entity to own
broadcast stations that reach no more than 25 percent of the
Nation's population; the bill would increase that level to 35
percent. In addition, the bill repeals the prohibition on cable
broadcast cross-ownership. The legislation makes no change in
the other broadcast cross-ownership rules (such as the duopoly
rule and the one-to-a-market rule); rather, than FCC is
instructed to review these rules every two years.
Any modification in the national ownership cap is important
because of localism concerns. Local television stations provide
vitally important services in our communities. Because local
programming informs our citizens about natural disasters,
brings news of local events, and provides other community-
building benefits, we cannot afford to undermine this valuable
local resource.
pole attachments
The bill also makes significant changes in the laws
affecting the rates charged for the use of telephone and
utility poles. The current law sets the rates charged to cable
companies for using these poles. The new language in the bill
expands the scope of the provisions to include other providers
of telecommunications services. The purpose of the provisions
is to ensure that all users pay the same amount. The bill
language also changes the formula for determining the amount of
payment. The utilities and the telephone companies continue to
express concern that the revised formula will not compensate
them adequately for their costs of building and maintaining the
poles. I understand and appreciate these concerns. It is my
hope that the various parties interested in this provision are
able to agree on some common language on this issue before the
bill reaches the floor of the Senate.
conclusion
This comprehensive bill strikes a balance between
competition and regulation. New markets will be opened,
competitors will begin to offer services, and consumers will be
better served by having choices among providers of services.
While I would go further in several areas covered by the
legislation, I believe that this is an equitable approach to
most of the major issues in the bill.
MINORITY VIEWS OF SENATORS PACKWOOD AND McCAIN
Congress has a golden opportunity to open the door to a
proliferation of new and improved information technology and
services. To open the door, Congress must create free and open
markets. The proposed ``Telecommunications Deregulation and
Competition Act of 1995'' heads in the right direction, but
does not go far enough.
benefits of deregulation
Deregulation has a clear and consistent track record. In
virtually every case, consumers have benefited from lower
prices, better services and increased choices. For example,
deregulation of the airlines in 1978 has made air travel
affordable for millions of Americans. Deregulation of the
trucking industry in 1980 has saved consumers billions of
dollars in freight costs. Deregulation saved the rail industry
from bankruptcy in 1980.
Deregulation benefits big and small competitors alike.
Experience shows that a deregulated market is not long
dominated by a few giants, but rather that competitors come
along and devise ways to run circles around the giants. The
giants are forced to become quicker and more agile if they wish
to survive.
telecommunications deregulation and competition act of 1995
First, the bill adopted by the Committee will force the
federal government to churn out more regulations and hire more
bureaucrats. As the following chart shows, the bill mandates 87
new regulatory proceedings.
Second, the bill does not guarantee free and open markets.
The goal of Congress should be to ensure that every segment of
the communications industry, whether it be long distance, cable
or local telephone, will be subject to competition in its own
market and free to compete in other markets. Under this bill,
the long distance and manufacturing markets will not be fully
open until the Federal Communications Commission decides that
it is in the ``public interest, convenience and necessity'' to
allow the Regional Bell Operating Companies to provide long
distance and manufacturing. This standard gives the Federal
Communications Commission broad authority to keep a bell
company out of the long distance and manufacturing markets even
if the Bell company has complied with all of the other
requirements contained in the bill (i.e. interconnection,
unbundling, number portability and separate subsidiary).
We support a calendar deadline by which all markets must be
open to any competitor. Without a ``date certain'' there is no
guarantee markets will be opened. Anything less than a date
certain will allow any competitor who benefits from artificial
entry barriers to game the regulatory process. Whether or not
open markets are in the ``public interest, convenience and
necessity'' can be argued endlessly at the Federal
Communications Commission and in the courts. Such a delay may
benefit competitors, but not consumers.
Delay will hinder job creation. In fact, a recent study by
WEFA Associates (formerly Wharton Econometric Forecasting
Associates) predicts that if Congress were to pass legislation
that simultaneously opened all communications markets to
competition on January 1, 1996, we would create 2.1 million new
jobs by the year 2000. The study also found that delaying full
competition by three years could cost 1.5 million new jobs by
the year 2000.
There was a time when Congress could create, through
regulation, orderly and predictable markets in which all
competitors succeeded. That time has passed. Today and in the
future, rapidly changing technology will determine the relative
strength and weakness of various competitors. As Peter Huber,
Senior Fellow at the Manhattan Institute for Policy Research,
recently testified before the Committee, we are entering a
world where: ``Sooner or later, consumers will dial up video on
their telephones, place phone calls through their television,
and be entertained by their computers.'' Such developments will
provide endless opportunities for competitors. However, it
won't be easy to predict winners and losers. George Gilder,
Senior Fellow at the Discovery Institute, may have been right
when he recently wrote: ``All we know is that none of the
existing rivals is likely to survive in recognizable form.''
Third, the bill contains no guaranteed end to regulation.
In fact, not a single provision in the bill would ever
automatically ``sunset.'' Instead, Section 303 of the bill
would allow the Federal Communications Commission to eliminate
regulation only if it chooses.
Regulators are not the best judge of when regulation is no
longer needed. Congress has entrusted regulators before with
the task of deregulating: Years ago Congress gave the
Interstate Commerce Commission authority to eliminate
regulation. So disappointing were the results that Congress was
forced to intervene, as it will likely do again later this
year.
Fourth, the bill gives the Federal Communications
Commission virtually unlimited authority to mandate subsidies
for telecommunication services. We support the goals of
affordability and universality for necessary telecommunications
services. However, it is unwise to grant any agency such an
open-ended mandate.
Fifth, the bill fails to eliminate cable rate regulation.
Section 204 of the bill would require the Federal
Communications Commission to regulate cable rates which
substantially exceed the national average. This is essentially
an open invitation for the Federal Communications Commission to
continue business as usual.
Congress made a terrible mistake in 1992 when it
reregulated the cable industry. According to the Economics
Resource Group, investments in cable companies have
significantly declined as a result of reregulation. Investment
from venture capital sources has declined from $712 million in
1992 to $89 million in 1994. Investment from stock offerings
has declined from $640 million in 1992 to $163 million in 1994.
Investment is critical if cable companies are to upgrade and
improve the quality of programming. Cable companies could
deliver 500 or more channels to each home if cable companies
have the resources to invest in new technologies.
conclusion
The proposed ``Telecommunications Deregulation and
Competition Act of 1995'' is a positive first step. Congress
can and should improve the bill. Specifically, Congress should:
(1) reduce the number of new regulatory proceedings the bill
will require, (2) establish a deadline for fully opening all
communications markets, (3) guarantee an end to regulation, (4)
establish guidelines for subsidized services, and (5) eliminate
cable rate regulation.
New Regulations in the Pressler Telecommunications ``Reform'' Bill--At
Least 135 Rulemaking Actions in as Many as 87 Proceedings
local competition
1. Minimum standards for interconnection: unbundle network
functions, unbundle network facilities, interconnection at any
point, equal access to interconnection, access to poles,
conduits and rights of way, number portability, local dialing
parity, resale of local service, and compensation arrangements.
2. Collocation requirements.
3. Cost allocation regulations.
4. Rules to implement interconnection requirements.
5. State process for approval of interconnection
agreements.
6. State proceedings to consider petitions to intervene.
7. State requirements to further competition.
8. State regulatory action to settle unresolved
interconnection issues.
9. ICC rules for State arbitration/intervention.
10. Institution of fines for willful failure to comply with
interconnection requirements.
11. FCC/State consideration of waivers for small companies.
12. FCC preemption of states on: interconnection; rural
regulation; removal of local barriers to entry.
13. State regulation in rural areas: common carrier
obligation for new entrants; public interest determination for
new competition.
14. FCC guidelines on neutral administration of numbering
plans.
15. Rules on carriers providing subscriber lists to
competitors.
separate subsidiary requirements and other safeguards
16. Definition of covered services.
17. Structural and transactional requirements: separate
officers, directors, employees, books, records, and accounts;
nonrecourse credit; arms length affiliate transactions.
18. Nondiscrimination safeguards: procurement policies;
terms and conditions of sales and contracts; accounting
requirements.
19. Determine exceptions to separate subsidiary
requirements.
20. Rules prohibiting joint marketing.
21. Rules on use of proprietary information.
22. Rules to implement separate subsidiary requirements.
23. States determine whether public utilities have to
comply.
24. Special rules for BOC provision of pay phone and
telemessaging services.
universal service
25. Joint Board proceeding to recommend rules for revising
Universal Service (USvc) policies.
26. Review of USvc policies every four years.
27. FCC implements new USvc policies, definition of
universal service, who contributes to USvc support, type of
USvc contribution, and eligibility to receive USvc support.
28. Rules to ensure geographic toll rate averaging.
29 FCC/State rules to prevent cross-subsidization: cost
allocation; accounting safeguards; joint and common cost
assignments.
30. FCC/State proceedings to identify essential
telecommunications carriers (ECs): service and rate
requirements imposed on ECs; process for designating more than
one EC per area; rules for customer switching ECs; rules for
resale of USvc to ensure compensation; rules to permit ECs to
relinquish responsibilities; penalties and fines for not
providing timely USvc.
31. FCC identifies EC for interexchange service:
geographically averaged toll rates; penalties and fines for not
providing service.
32. FCC rules to guide State implementation.
33. State regulation to further universal service policies.
34. FCC/State transition plans for distribution of USvc
support payments.
35. FCC inquiry into availability of advanced services.
36. Rules requiring provision of USvc to public and non-
profit entities: elementary and secondary schools; post-
secondary educational institutions; libraries; community health
centers; local health departments or agencies; community mental
health centers; non-profit hospitals; rural health clinics; and
health consortia.
37. Rules to enhance availability of advanced services to
public and non-profit entities: interoperability standards;
requirements for carriers to connect to entities.
infrastructure sharing
38. Rules for sharing infrastructure with qualifying
carriers: terms and conditions of sharing arrangements;
guidelines on reasonable availability of infrastructure;
limitations on use of shared infrastructure; filing of sharing
arrangements with FCC and state.
39. Rules for providing information on planned
infrastructure deployment.
40. Certification of qualifying carriers.
public access
41. Rules to ensure equipment and services are accessible
to the disabled and compatible with special equipment for
disabled use.
42. Standards for accessibility.
43. Requirement for closed captioning of video programming.
44. FCC study of availability of closed captioning.
45. Rules to implement public accessibility.
46. Enforcement procedures to resolve complaints.
47. FCC study on requiring use of audio descriptions on
video programming.
48. FCC regulation to prohibit obscene, harassing, and
wrongful utilization of telecommunications facilities.
Cable/Telco
49. Rules governing common carrier provision of video
programming services and facilities.
50. Rules on terms of access and rates for local
broadcasters, public, educational, and government entities on
telco video platforms.
51. Safeguards for telco provision of video programming:
ensure subscriber access to broadcast TV stations;
nondiscrimination among video programming providers; copyright
protection of programming; reasonable rates for carriage;
extension of network nonduplication and syndicated exclusivity
rules; and application of rules to cable broadband system.
52. Ensure nondiscriminatory access to poles, conduits, or
rights of way controlled by utilities.
53. Ensure utilities charge just and reasonable rates for
pole attachments.
54. FCC dispute resolution procedures for telco video
programming.
55. Standards for unreasonable cable rates.
56. Rules on nondiscriminatory cable programming rates.
electric utility telecommunications
57. FERC and state regulation to prohibit cross-
subsidization.
58. FERC and state rules to require separate books and
accounting.
59. States request independent audits of utility
communications affiliate transactions.
manufacturing
60. Determination of what constitutes research and design
activities.
61. Rules on engaging in R&D and participating in royalty
agreements.
62. Regulations requiring BOC manufacturing entities to
make equipment available to other LECs: nondiscrimination terms
and conditions; reciprocal arrangements.
63. Rules to ensure that all BOC procurement and contract
awards are made on open competitive basis.
64. Ensure nondiscriminatory standards setting.
65. Rules governing continued supply of equipment,
including software and upgrades, to other LECs.
66. Ensure that BOCs protect all proprietary information
revealed in bids or contracts.
67. Rules to implement BOC collaboration with other
manufactures.
68. Other regulations necessary to govern BOC
manufacturing.
69. FCC administration and enforcement of manufacturing
regulations.
70. Proceeding to clarify Bellcore permitted activities.
interLATA long distance
71. Approval process for in-region relief based on
interconnection agreement meeting 14-point competitive
checklist: nondiscriminatory, unbundled access; capability to
exchange customers between carriers; access to poles, ducts,
conduits, and rights-of-way; unbundled local loop transmission;
unbundled local transport; unbundled local switching; access to
emergency, directory assistance, and operator services; access
to white page directory listings; access to telephone numbers
for reassignment; access to databases and signing functions;
number portability; local dialing parity; and unbanded network
functions.
72. Regulations governing BOC provision of incidental
interLATA services: commercial mobile; information services;
audio programming; and video programming.
73. Ensure provision of incidental interLATA service does
not adversely affect local ratepayers or competition in any
telecom service market.
74. Regulations governing BOC provision of out-of-region
long distance: determine areas in which BOC is not dominant
provider.
75. Certification process to determine whether BOC has met
interconnection requirements.
76. Develop process and criteria for making application for
interLATA authority.
77. Develop process for reaching determination on BOC
applications that allows for full public participation and
makes findings on: public interest; interconnection
requirements; separate subsidiary requirements.
78. Determine whether intraLATA toll dialing parity has
been implemented by BOC:
monitor provision of intraLATA toll dialing parity;
and
action taken if parity not maintained.
79. Regulations governing provision of BOC in-region
interLATA services.
80. Rules for nondiscrimination in BOC provision of access
services.
81. Rules for long distance access for commercial mobile
services.
alarm monitoring
82. Determine permitted alarm monitoring services.
83. Determine whether BOC provision of alarm monitoring
services is in public interest.
84. Requirements, limitations or conditions on providing
alarm monitoring services.
85. Adopt procedures for receipt and expedited review of
complaints.
86. Institute remedies to terminate and punish violations.
87. Regulations to enforce requirements on provision of
alarm monitoring service.
Estimated Costs
In accordance with paragraph 11(a) of rule XXVI of the
Standing Rules of the Senate and section 403 of the
Congressional Budget Act of 1994, the Committee finds it
impracticable to comply with the requirements of such paragraph
in order to expedite the business of the Senate.
Regulatory Impact Statement
In accordance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee provides the
following evaluation of the regulatory impact of the
legislation, as reported.
Rollcall Votes in Committee
In accordance with paragraph 7(c) of rule XXVI of the
Standing Rules of the Senate, the Committee provides the
following description of the record votes during its
consideration of S. --:
Senator Snowe (for herself, Mr. Rockefeller, Mr. Exon, and
Mr. Kerry) offered an amendment to provide universal service to
certain healthcare providers, educational institutions, and
libraries. By rollcall vote of 10 yeas and 8 nays as follows,
the amendment was adopted:
YEAS--10 NAYS--8
Ms. Snowe Mr. Pressler
Mr. Hollings Mr. Stevens \1\
Mr. Inouye \1\ Mr. McCain \1\
Mr. Ford Mr. Burns
Mr. Exon \1\ Mr. Gorton
Mr. Rockefeller Mr. Lott
Mr. Kerry Mrs. Hutchison
Mr. Breaux Mr. Ashcroft
Mr. Bryan \1\
Mr. Dorgan \1\
\1\ By proxy
At the close of debate on S.--, the Chairman announced a
rollcall vote on the bill. On a rollcall vote of 17 yeas and 2
nays as follows, the bill was ordered reported:
YEAS--17 NAYS--2
Mr. Stevens Mr. Packwood
Mr. Burns Mr. McCain \1\
Mr. Gorton
Mr. Lott
Mrs. Hutchison
Ms. Snowe
Mr. Ashcroft
Mr. Hollings
Mr. Inouye
Mr. Ford
Mr. Exon \1\
Mr. Rockefeller
Mr. Kerry
Mr. Breaux
Mr. Bryan
Mr. Dorgan
Mr. Pressler
\1\ By proxy
Changes in Existing Law
In compliance with paragraph 12 of rule XXVI of the Standing
Rules of the Senate, changes in existing law made by the bill,
as reported, are shown as follows (existing law proposed to be
omitted is enclosed in black brackets, new material is printed
in italic, existing law in which no change is proposed is shown
in roman):
COMMUNICATIONS ACT OF 1934
Title I--General Provisions
Part I--General Provisions
SEC. 2. APPLICATION OF ACT.
(a) The provisions of this act shall apply to all interstate
and foreign communication by wire or radio and all interstate
and foreign transmission of energy by radio, which originates
and/or is received within the United States, and to all persons
engaged within the United States in such communication or such
transmission of energy by radio, and to the licensing and
regulating of all radio stations as hereinafter provided; but
it shall not apply to persons engaged in wire or radio
communication or transmission in the Canal Zone, or to wire or
radio communication or transmission wholly within the Canal
Zone. The provisions of this Act shall apply with respect to
cable service, to all persons engaged within the United States
in providing such service, and to the facilities of cable
operators which relate to such service, as provided in title
VI.
(b) Except as provided in [sections 223 through 227,
inclusive, and section 332,] section 214(d), sections 223
through 227, part II of title II, and section 332, and subject
to the provisions of section 301 and title VI, nothing in this
Act shall be construed to apply or to give the Commission
jurisdiction with respect to (1) charges, classifications,
practices, services, facilities, or regulations for or in
connection with intrastate communication service by wire or
radio of any carrier, or (2) any carrier engaged in interstate
or foreign communication solely through physical connection
with the facilities of another carrier not directly or
indirectly controlling or controlled by, or under direct or
indirect common control with such carrier, or (3) any carrier
engaged in interstate or foreign communication solely through
connection by radio, or by wire and radio, with facilities,
located in an adjoining State or in Canada or Mexico (where
they adjoin the State in which the carrier is doing business),
of another carrier not directly or indirectly controlling or
controlled by, or under direct or indirect common control with
such carrier, or (4) any carrier to which clause (2) or clause
(3) would be applicable except for furnishing interstate mobile
radio communication service or radio communication service to
mobile stations on land vehicles in Canada or Mexico; except
that sections 201 through 205 of this Act, both inclusive,
shall, except as otherwise provided therein, apply to carriers
described in clauses (2), (3), and (4).
SEC. 3. DEFINITIONS.
For the purposes of this Act, unless the context otherwise
requires--
(gg) ``Modification of Final Judgment'' means the decree
entered on August 24, 1982, in United States v. Western
Electric Civil Action No. 82-0192 (United States District
Court, District of Columbia), and includes any judgment or
order with respect to such action entered on or after August
24, 1982, and before the date of enactment of the
Telecommunications Competition and Deregulation Act of 1995.
(hh) ``Bell operating company'' means those companies listed
in appendix A of the Modification of Final Judgment, and
includes any successor or assign of any such company, but does
not include any affiliate of such company.
(ii) ``Affiliate'' means a person that (directly or
indirectly) owns or controls, is owned or controlled by, or is
under common ownership or control with, another person. For
purposes of this paragraph, the term ``own'' means to own an
equity interest (or the equivalent thereof) of more than 10
percent.
(jj) ``Telecommunications Act of 1995'' means the
Telecommunications Competition and Deregulation Act of 1995.
(kk) ``Local exchange carrier'' means a provider of telephone
exchange service or exchange access service.
(ll) ``Telecommunications'' means the transmission, between
or among points specified by the user, of information of the
user's choosing, including voice, data, image, graphics, and
video, without change in the form or content of the
information, as sent and received, with or without benefit of
any closed transmission medium.
(mm) ``Telecommunications service'' means the offering of
telecommunications for a fee directly to the public, or to such
classes of users as to be effectively available to the public,
regardless of the facilities used to transmit the
telecommunications service. The term includes the transmission,
without change in the form or content, of information services
and cable services, but does not include the offering of those
services.
(nn) ``Telecommunications carrier'' means any provider of
telecommunications services, except that such term does not
include hotels, motels, hospitals, and other aggregators of
telecommunications services (as defined in section 226). A
telecommunications carrier shall be treated as a common carrier
under this Act to the extent that it is engaged in providing
telecommunications services.
(oo) ``Telecommunications number portability'' means the
ability of users of telecommunications services to retain, at
the same location, existing telecommunications numbers without
impairment of quality, reliability, or convenience when
switching from one telecommunications carrier to another.
(pp) ``Information service'' means the offering of services
that--
(1) employ computer processing applications that act
on the format, content, code, protocol, or similar
aspects of the subscriber's transmitted information;
(2) provide the subscriber additional, different, or
restructured information; or
(3) involve subscriber interaction with stored
information.
(qq) ``Cable service'' means cable service as defined in
section 602.
(rr) ``Rural telephone company'' means a telecommunications
carrier operating entity to the extent that such entity
provides telephone exchange service, including access service
subject to part 69 of the Commission's rules (47 C.F.R. 69.1 et
seq.), to--
(1) any service area that does not include either--
(A) any incorporated place of 10,000
inhabitants or more, or any part thereof, based
on the most recent population statistics of the
Bureau of the Census; or
(B) any territory, incorporated or
unincorporated, included in an urbanized area,
as defined by the Bureau of the Census as of
January 1, 1995; or
(2) fewer than 100,000 access lines within a State.
(ss) ``Service area'' means a geographic area established by
the Commission and the States for the purpose of determining
universal service obligations and support mechanisms. In the
case of an area served by a rural telephone company, ``service
area'' means such company's ``study area'' unless and until the
Commission and the States, after taking into account
recommendations of a Federal-State Joint Board instituted under
section 410(c), establish a different definition of service
area for such company.
SEC. 214. EXTENSION OF [LINES.] LINES; ESSENTIAL TELECOMMUNICATIONS
CARRIERS.
(d) In general.--The Commission may, after full opportunity
for hearing, in a proceeding upon complaint or upon its own
initiative without complaint, authorize or require by order any
carrier, party to such proceeding, to provide itself with
adequate facilities for the expeditious and efficient
performance of its service as a common carrier and to extend
its line or to establish a public office; but no such
authorization or order shall be made unless the Commission
finds, as to such provision of facilities, as to such
establishment of public offices, or as to such extension, that
it is reasonably required in the interest of public convenience
and necessity, or as to such extension or facilities that the
expense involved therein will not impair the ability of the
carrier to perform its duty to the public. Any carrier which
refuses or neglects to comply with any order of the Commission
made in pursuance of this paragraph shall forfeit to the United
States $1,200 for each day during which such refusal or neglect
continues.
(2) Designation of essential carrier.--If one or more common
carriers provide telecommunications service to a geographic
area, and no common carrier will provide universal service to
an unserved community or any portion thereof that requests such
service within such area, then the Commission, with respect to
interstate services, or a State, with respect to intrastate
services, shall determine which common carrier serving that
area is best able to provide universal service to the
requesting unserved community or portion thereof, and shall
designate that common carrier as an essential
telecommunications carrier for that unserved community or
portion thereof.
(3) Essential carrier obligations.--A common carrier may be
designated by the Commission, or by a State, as appropriate, as
an essential telecommunications carrier for a specific service
area and become eligible to receive any universal support
payments the Commission may allow under section 253. A carrier
designated as an essential telecommunications carrier shall--
(A) provide through its own facilities or through a
combination of its own facilities and resale of
services using another carrier's facilities, universal
service and any additional service (such as 911
service) required by the Commission or the State, to
any community or portion thereof which requests such
service;
(B) offer such services at nondiscriminatory rates
established by the Commission, for interstate services,
and the State, for intrastate services, throughout the
service area; and
(C) advertise throughout the service area the
availability of such services and the rates for such
services using media of general distribution.
(4) Multiple essential carriers.--If the Commission, with
respect to interstate services, or a State, with respect to
intrastate services, designates more than one common carrier as
an essential telecommunications carrier for a specific service
area, such carrier shall meet the service, rate, and
advertising requirements imposed by the Commission or State on
any other essential telecommunications carrier for that service
area. A State may require that, before designating an
additional essential telecommunications carrier, the State
agency authorized to make the designation shall find that--
(A) the designation of an additional essential
telecommunications carrier is in the public interest
and that there will not be a significant adverse impact
on users of telecommunications services or on the
provision of universal service;
(B) the designation encourages the development and
deployment of advanced telecommunications
infrastructure and services in rural areas; and
(C) the designation protects the public safety and
welfare, ensures the continued quality of
telecommunications services, or safeguards the rights
of consumers.
(5) Resale of universal service.--The Commission, for
interstate services, and the States, for intrastate services,
shall establish rules to govern the resale of universal service
to allocate any support received for the provision of such
service in a manner that ensures that the carrier whose
facilities are being resold is adequately compensated for their
use, taking into account the impact of the resale on that
carrier's ability to maintain and deploy its network as a
whole. The Commission shall also establish, based on the
recommendations of the Federal-State Joint Board instituted to
implement this section, rules to permit a carrier designated as
an essential telecommunications carrier to relinquish that
designation for a specific service area if another
telecommunications carrier is also designated as an essential
telecommunications carrier for that area. The rules--
(A) shall ensure that all customers served by the
relinquishing carrier continue to be served, and shall
require sufficient notice to permit the purchase or
construction of adequate facilities by any remaining
essential telecommunications carrier if such remaining
carrier provided universal service through resale of
the facilities of the relinquishing carrier; and
(B) shall establish criteria for determining when a
carrier which intends to utilize resale to meet the
requirements for designation under this subsection has
adequate resources to purchase, construct, or otherwise
obtain the facilities necessary to meet its obligation
if the reselling carrier is no longer able or obligated
to resell the service.
(6) Enforcement.--A common carrier designated by the
Commission or a State as an essential telecommunications
carrier that refuses to provide universal service within a
reasonable period to an unserved community or portion thereof
which requests such service shall forfeit to the United States,
in the case of interstate services, or the State, in the case
of intrastate services, a fine of up to $10,000 for each day
that such carrier refuses to provide such service. In
establishing a reasonable period the Commission or the State,
as appropriate, shall consider the nature of any construction
required to serve such requesting unserved community or portion
thereof, as well as the construction intervals normally
attending such construction, and shall allow adequate time for
regulatory approvals and acquisition of necessary financing.
(7) Interexchange services.--The Commission, for interstate
services, or a State, for intrastate services, shall designate
an essential telecommunications carrier for interexchange
services for any unserved community or portion thereof
requesting such services. Any common carrier designated as an
essential telecommunications carrier for interexchange services
under this paragraph shall provide interexchange services
included in universal service to any unserved community or
portion thereof which requests such service. The service shall
be provided at nationwide geographically averaged rates for
interstate interexchange services and at geographically
averaged rates for intrastate interexchange services, and shall
be just and reasonable and not unjustly or unreasonably
discriminatory. A common carrier designated as an essential
telecommunications carrier for interexchange services under
this paragraph that refuses to provide interexchange service in
accordance with this paragraph to an unserved community or
portion thereof that requests such service within 180 days of
such request shall forfeit to the United States a fine of
$50,000 for each day that such carrier refuses to provide such
service. The Commission, or a State, as appropriate, may extend
the 180-day period for providing interexchange service upon a
showing by the common carrier of good faith efforts to comply
within such period.
(8) Implementation.--The Commission may, by regulation,
establish guidelines by which States may implement the
provisions of this section.
(e) Special Rule.--No certificate is required under this
section for a carrier to construct facilities to provide video
programming services.
[SEC. 223. OBSCENE OR HARASSING TELEPHONE CALLS IN THE DISTRICT OF
COLUMBIA OR IN INTERSTATE OR FOREIGN
COMMUNICATIONS.]
SEC. 223. OBSCENE OR HARASSING UTILIZATION OF TELECOMMUNICATIONS
DEVICES AND FACILITIES IN THE DISTRICT OF COLUMBIA
OR IN INTERSTATE OR FOREIGN COMMUNICATIONS.
(a) Whoever--
(1) in the District of Columbia or in interstate or
foreign communications by means of [telephone--]
telecommunications device--
[(A) makes any comment, request, suggestion
or proposal which is obscene, lewd, lascivious,
filthy, or indecent;]
[(B) makes a telephone call, whether or not
conversation ensues, without disclosing his
identity and with intent to annoy, abuse,
threaten, or harass any person at the called
number;]
(A) knowingly--
(i) makes, creates, or solicits, and
(ii) initiates the transmission of,
any comment, request, suggestion, proposal,
image, or other communication which is obscene,
lewd, lascivious, filthy, or indecent;
(B) makes a telephone call or utilizes a
telecommunications device, whether or not
conversation or communications ensues, without
disclosing his identity and with intent to
annoy, abuse, threaten, or harass any person at
the called number or who receives the
communication;
(C) makes or causes the telephone of another
repeatedly or continuously to ring, with intent
to harass any person at the called number; or
[(D) makes repeated telephone calls, during
which conversation ensues, solely to harass any
person at the called number; or]
(D) makes repeated telephone calls or
repeatedly initiates communication with a
telecommunications device, during which
conversation or communication ensues, solely to
harass any person at the called number or who
receives the communication; or
(2) knowingly permits any [telephone]
telecommunications facility under his control to be
used for any purpose prohibited by this [section,]
subsection,
shall be fined not more than $100,000 or imprisoned not more
than 2 years, or both.
(b)(1) Whoever knowingly--
[(A) within the United States, by means of telephone,
makes (directly or by recording device) any obscene
communication for commercial purposes to any person,
regardless of whether the maker of such communication
placed the call; or]
(A) within the United States, by means of
telecommunications device--
(i) makes, creates, or solicits, and
(ii) purposefully makes available,
any obscene communication for commercial purposes to
any person, regardless of whether the maker of such
communication placed the call or initiated the
communication; or
(B) permits any [telephone facility]
telecommunications facility under such person's control
to be used for an activity prohibited by subparagraph
(A),
shall be fined in accordance with title 18, United States Code,
or imprisoned not more than two years, or both.
(2) Whoever knowingly--
[(A) within the United States, by means of telephone,
makes (directly or by recording device) any indecent
communication for commercial purposes which is
available to any person under 18 years of age or to any
other person without that person's consent, regardless
of whether the maker of such communication placed the
call; or]
(A) within the United States, by means of telephone
or telecommunications device,
(i) makes, creates, or solicits, and
(ii) purposefully makes available (directly
or by recording device),
any indecent communication for commercial purposes
which is available to any person under 18 years of age
or to any other person without that person's consent,
regardless of whether the maker of such communication
placed the call; or
(B) permits any [telephone facility]
telecommunications facility under such person's control
to be used for an activity prohibited by subparagraph
(A), shall be fined not more than $100,000 or
imprisoned not more than 2 years, or both.
(3) It is a defense to prosecution under paragraph (2) of
this subsection that the defendant restricted access to the
prohibited communication to persons 18 years of age or older in
accordance with subsection (c) of this section and with such
procedures as the Commission may prescribe by regulation.
(4) In addition to the penalties under paragraph (1),
whoever, within the United States, intentionally violates
paragraph (1) or (2) shall be subject to a fine of not more
than $100,000 for each violation. For purposes of this
paragraph, each day of violation shall constitute a separate
violation.
(5)(A) In addition to the penalties under paragraphs (1),
(2), and (5), whoever, within the United States, violates
paragraph (1) or (2) shall be subject to a civil fine of not
more than $100,000 for each violation. For purposes of this
paragraph, each day of violation shall constitute a separate
violation.
(B) A fine under this paragraph may be assessed either--
(i) by a court, pursuant to civil action by the
Commission or any attorney employed by the Commission
who is designated by the Commission for such purposes,
or
(ii) by the Commission after appropriate
administrative proceedings.
(6) The Attorney General may bring a suit in the appropriate
district court of the United States to enjoin any act or
practice which violates paragraph (1) or (2). An injunction may
be granted in accordance with the Federal Rules of Civil
Procedure.
(c)(1) A common carrier within the District of Columbia or
within any State, or in interstate or foreign commerce, shall
not, to the extent technically feasible, provide access to a
communication specified in subsection (b) from the [telephone]
telecommunications device of any subscriber who has not
previously requested in writing the carrier to provide access
to such communication if the carrier collects from subscribers
an identifiable charge for such communication that the carrier
remits, in whole or in part, to the provider of such
communication.
(2) Except as provided in paragraph (3), no cause of action
may be brought in any court or administrative agency against
any common carrier, or any of its affiliates, including their
officers, directors, employees, agents, or authorized
representatives on account of--
(A) any action which the carrier demonstrates was
taken in good faith to restrict access pursuant to
paragraph (1) of this subsection; or
(B) any access permitted--
(i) in good faith reliance upon the lack of
any representation by a provider of
communciations that communications provided by
that provider are communications specified in
subsection (b), or
(ii) because a specific representation by the
provider did not allow the carrier, acting in
good faith, a sufficient period to restrict
access to communications described in
subsection (b).
(3) Notwithstanding paragraph (2) of this subsection, a
provider of communications services to which subscribers are
denied access pursuant to paragraph (1) of this subsection may
bring an action for a declaratory judgment or similar action in
a court. Any such action shall be limited to the question of
whether the communications which the provider seeks to provide
fall within the category of communications to which the carrier
will provide access only to subscribers who have previously
requested such access.
(d) Additional Defenses; Restrictions on Access; Judicial
Remedies Respecting Restrictions.--
(1) No person shall be held to have violated this
section with respect to any action by that person or a
system under his control that is limited solely to the
provision of access, including transmission,
downloading, intermediate storage, navigational tools,
and related capabilities not involving the creation or
alteration of the content of the communications, for
another person's communications to or from a service,
facility, system, or network not under that person's
control.
(2) It is a defense to prosecution under subsections
(a)(2), (b)(1)(B), and (b)(2)(B) that a defendant
lacked editorial control over the communication
specified in this section.
(3) It is a defense to prosecution under subsections
(a)(2), (b)(1)(B), and (b)(2)(B) that a defendant has
taken good faith, reasonable steps, as appropriate--
(A) to provide users with the means to
restrict access to communications described in
this section;
(B) provide users with warnings concerning
the potential for access to such
communications;
(C) to respond to complaints from those who
are subjected to such communications;
(D) to provide mechanisms to enforce a
provider's terms of service governing such
communications; or
(E) to implement such other measures as the
Commission may prescribe to carry out the
purposes of this paragraph. Nothing in this
section in and of itself shall be construed to
treat enhanced information services as common
carriage.
(4) In addition to other defenses authorized under
this section, it shall be a defense to prosecution
under subsection (b) that a defendant is not engaged in
a commercial activity that has as a predominant purpose
an activity specified in that subsection.
(5) No cause of action may be brought in any court or
administrative agency against any person on account of
any action which the person has taken in good faith to
implement a defense authorized under this section or
otherwise to restrict or prevent the transmission of,
or access to, a communication specified in this
section. The preceding sentence shall not apply where
the good faith defenses under subsection (c)(2) apply.
(6) No State or local government may impose any
liability in connection with a violation described in
subsection (a)(2), (b)(1)(B), (b)(2)(B) that is
inconsistent with the treatment of those violations
under this section provided, however, that nothing
herein shall preclude any State or local government
from enacting and enforcing complementary oversight,
liability, and regulatory systems, procedures, and
requirements, so long as such systems, procedures, and
requirements govern only intrastate services and do not
result in the imposition of inconsistent obligations on
the provision of interstate services.
(e) Knowingly Defined.--For purposes of subsections (a) and
(b), the term ``knowingly'' means an intentional act with
actual knowledge of the specific content of the communication
specified in this section to another person.
SEC. 224. REGULATION OF POLE ATTACHMENTS.
(a) As used in this section:
(1) The term ``utility'' means any person whose rates
or charges are regulated by the Federal Government or a
State and who owns or controls poles, ducts, conduits,
or rights-of-way used, in whole or in part, for wire
communication. Such term does not include any railroad,
any person who is cooperatively organized, or any
person owned by the Federal Government or any State.
(2) The term ``Federal Government'' means the
Government of the United States or any agency or
instrumentality thereof.
(3) The term ``State'' means any State, territory, or
possession of the United States, the District of
Columbia, or any political subdivision, agency, or
instrumentality thereof.
(4) The term ``pole attachment'' means any attachment
by a cable television system to a pole, duct, conduit,
or right-of-way owned or controlled by a [utility]
utility, which attachment may be used by that cable
television system to provide cable service or any other
telecommunications service.
(b)(1) A utility shall provide a cable television system with
nondiscriminatory access to any pole, duct, conduit, or right-
of-way owned or controlled by it.
(2) For purposes of paragraph (1), the Commission shall, not
later than 1 year after the date of enactment of the
Telecommunications Act of 1995, prescribe regulations for
ensuring that utilities charge just, reasonable, and
nondiscriminatory rates for pole attachments provided to all
telecommunications carriers and cable operators, including such
attachments used by cable television systems to provide
telecommunications services. The regulations--
(A) shall recognize that the entire pole, duct,
conduit, or right-of-way other than the usable space is
of equal benefit to all attachments of entities that
hold an ownership interest in the pole, duct, conduit,
or right-of-way and therefore apportion the cost of the
space other than the usable space equally among all
such attachments; and
(B) shall recognize that an entity that obtains an
attachment through a license or other similar
arrangement benefits from the entire pole, duct,
conduit, or right-of-way other than the usable space in
the same proportion as it benefits from the usable
space and therefore apportion to such entity a portion
of the cost of the space other than the usable space in
the same manner as the cost of usable space is
apportioned to such entity.
[(b)(1)] (c)(1) Subject to the provisions of subsection [(c)]
(d) of this section, the Commission shall regulate the rates,
terms, and conditions for pole attachments to provide that such
rates, terms, and conditions are just and reasonable, and shall
adopt procedures necessary and appropriate to hear and resolve
complaints concerning such rates, terms, and conditions. For
purposes of enforcing any determinations resulting from
complaint procedures established pursuant to this subsection,
the Commission shall take such action as it deems appropriate
and necessary, including issuing cease and desist orders, as
authorized by section 312(b) of title III of the Communications
Act of 1934, as amended.
(2) The Commission shall prescribe by rule regulations to
carry out the provisions of this section.
[(c)(1)] (d)(1) Nothing in this section shall be construed to
apply to, or to give the Commission jurisdiction with respect
to rates, terms, and conditions for pole attachments in any
case where such matters are regulated by a State.
(2) Each State which regulates the rates, terms, and
conditions for pole attachments shall certify to the Commission
that--
(A) it regulates such rates, terms, and conditions;
and
(B) in so regulating such rates, terms, and
conditions, the State has the authority to consider and
does consider the interests of the subscribers of cable
television services, as well as the interests of the
consumers of the utility services.
(3) For purposes of this subsection, a State shall not be
considered to regulate the rates, terms, and conditions for
pole attachments--
(A) unless the State has issued and made effective
rules and regulations implementing the State's
regulatory authority over pole attachments; and
(B) with respect to any individual matter, unless the
State takes final action on a complaint regarding such
matter--
(i) within 180 days after the complaint is
filed with the State, or
(ii) within the applicable period prescribed
for such final action in such rules and
regulations of the State, if the prescribed
period does not extend beyond 360 days after
the filing of such complaint.
[(d)(1)] (e)(1) For purposes of subsection [(b)] (c) of this
section, a rate is just and reasonable if it assures a utility
the recovery of not less than the additional costs of providing
pole attachments, nor more than an amount determined by
multiplying the percentage of the total usable space, or the
percentage of the total duct or conduit capacity, which is
occupied by the pole attachment by the sum of the operating
expenses and actual capital costs of the utility attributable
to the entire pole, duct, conduit, or right-of-way.
(2) As used in this subsection, the term ``usable space''
means the space above the minimum grade level which can be used
for the attachment of wires, cables, and associated equipment.
SEC. 228. REGULATION OF CARRIER OFFERING OF PAY-PER-CALL SERVICES.
(c) Common Carrier Obligations.--Within 270 days after the
date of enactment of this section, the Commission shall, by
regulation, establish the following requirements for common
carriers:
(7) Billing for 800 calls.--A common carrier shall
prohibit by tariff or contract the use of any 800
telephone number, or other telephone number advertised
or widely understood to be toll free, in a manner that
would result in--
(A) the calling party being assessed, by
virtue of completing the call, a charge for the
call;
(B) the calling party being connected to a
pay-per-call service;
(C) the calling party being charged for
information conveyed during the call unless the
calling party has a preexisting agreement to be
charged for the information or discloses a
credit or charge card number during the call;
[or]
(D) the calling party being called back
collect for the provision of audio information
services or simultaneous voice conversation
[services.] services; or
(E) the calling party being assessed, by
virtue of being asked to connect or otherwise
transfer to a pay-per-call service, a charge
for the call.
Part II--Competition in Telecommunications
SEC. 251. INTERCONNECTION.
(a) Duty to Provide Interconnection--
(1) In general.--A local exchange carrier, or class
of local exchange carriers, determined by the
Commission to have market power in providing telephone
exchange service or exchange access service has a duty
under this Act, upon request--
(A) to enter into good faith negotiations
with any telecommunications carrier requesting
interconnection between the facilities and
equipment of the requesting telecommunications
carrier and the carrier, or class of carriers,
of which the request was made for the purpose
of permitting the telecommunications carrier to
provide telephone exchange or exchange access
service; and
(B) to provide such interconnection, at rates
that are reasonable and nondiscriminatory,
according to the terms of the agreement and in
accordance with the requirements of this
section.
(2) Initiation.--A local exchange carrier, or class
of carriers, described in paragraph (1) shall commence
good faith negotiations to conclude an agreement,
whether through negotiation under subsection (c) or
arbitration or intervention under subsection (d),
within 15 days after receiving a request from any
telecommunications carrier seeking to provide telephone
exchange or exchange access service. Nothing in this
Act shall prohibit multilateral negotiations between or
among a local exchange carrier or class of carriers and
a telecommunications carrier or class of carriers
seeking interconnection under subsection (c) or
subsection (d). At the request of any of the parties to
a negotiation, a State may participate in the
negotiation of any portion of an agreement under
subsection (c).
(3) Market power.--For the purpose of determining
whether a carrier has market power under paragraph (1),
the relevant market shall include all providers of
telephone exchange or exchange access services in a
local area, regardless of the technology used by any
such provider.
(b) Minimum Standards.--An interconnection agreement entered
into under this section shall, if requested by a
telecommunications carrier requesting interconnection, provide
for--
(1) nondiscriminatory access on an unbundled basis to
the network functions and services of the local
exchange carrier's telecommunications network
(including switching software);
(2) nondiscriminatory access on an unbundled basis to
any of the local exchange carrier's telecommunications
facilities and information, including databases and
signaling, necessary to the transmission and routing of
any telephone exchange service or exchange access
service and the interoperability of both carriers'
networks;
(3) interconnection to the local exchange carrier's
telecommunications facilities and services at any
technically feasible point within the carrier's
network;
(4) interconnection that is at least equal in type,
quality, and price (on a per unit basis or otherwise)
to that provided by the local exchange carrier to
itself or to any subsidiary, affiliate, or any other
party to which the carrier provides interconnection;
(5) nondiscriminatory access to the poles, ducts,
conduits, and rights-of-way owned or controlled by the
local exchange carrier;
(6) the local exchange carrier to take whatever
action under its control is necessary, as soon as is
technically feasible, to provide telecommunications
number portability and local dialing parity in a manner
that--
(A) permits consumers to be able to dial the
same number of digits when using any
telecommunications carrier providing telephone
exchange service or exchange access service in
the market served by the local exchange
carrier;
(B) permits all such carriers to have
nondiscriminatory access to telephone numbers,
operator services, directory assistance, and
directory listing with no unreasonable dialing
delays; and
(C) provides for a reasonable allocation of
costs among the parties to the agreement;
(7) telecommunications services and network functions
of the local exchange carrier to be available to the
telecommunications carrier on an unbundled basis
without any unreasonable conditions on the resale or
sharing of those services or functions, including the
origination, transport, and termination of such
telecommunications services, other than reasonable
conditions required by a State; and for purposes of
this paragraph, it is not an unreasonable condition for
a State to limit the resale--
(A) of services included in the definition of
universal service to a telecommunications
carrier who resells that service to a category
of customers different from the category of
customers being offered that universal service
by such carrier if the State orders a carrier
to provide the same service to different
categories of customers at different prices
necessary to promote universal service; or
(B) of subsidized universal service in a
manner that allows companies to charge another
carrier rates which reflect the actual cost of
such services, exclusive of any universal
service support received for providing such
services;
(8) reciprocal compensation arrangements for the
origination and termination of telecommunications;
(9) reasonable public notice of changes in the
information necessary for the transmission and routing
of services using that local exchange carrier's
facilities or networks, as well as of any other changes
that would affect the interoperability of those
facilities and networks; and
(10) a schedule of itemized charges and conditions
for each service, facility, or function provided under
the agreement.
(c) Agreements Arrived at Through Negotiation.--Upon
receiving a request for interconnection, a local exchange
carrier may meet its interconnection obligations under this
section by negotiating and entering into a binding agreement
with the telecommunications carrier seeking interconnection
without regard to the standards set forth in subsection (b).
The agreement shall include a schedule of itemized charges for
each service, facility, or function included in the agreement.
The agreement, including any interconnection agreement
negotiated before the date of enactment of the
Telecommunications Act of 1995, shall be submitted to the State
under subsection (e).
(d) Agreements Arrived at Through Arbitration or
Intervention.--
(1) In general.--Any party negotiating an
interconnection agreement under this section may, at
any point in the negotiation, ask a State to
participate in the negotiation and to arbitrate any
differences arising in the course of the negotiation.
The refusal of any other party to the negotiation to
participate further in the negotiations, to cooperate
with the State in carrying out its function as a
arbitrator, or to continue to negotiate in good faith
in the presence, or with the assistance, of the State
shall be considered a failure to negotiate in good
faith.
(2) Intervention.--If any issues remain open in a
negotiation commenced under this section more than 135
days after the date upon which the local exchange
carrier received the request for such negotiation, then
the carrier or any other party to the negotiation may
petition a State to intervene in the negotiations for
purposes of resolving any such remaining open issues.
Any such request must be made during the 25-day period
that begins 135 days after the carrier receives the
request for such negotiation and ends 160 days after
that date.
(3) Duty of petitioner.--
(A) A party that petitions a State under
paragraph (2) shall, within 15 days after the
State receives the petition, provide the State
all relevant documentation concerning the
negotiations necessary to understand--
(i) the unresolved issues;
(ii) the position of each of the
parties with respect to those issues;
and
(iii) any other issue discussed and
resolved by the parties.
(B) A party petitioning a State under
paragraph (2) shall notify the other party of
its petition not later than the day on which
the State receives the petition.
(4) Opportunity to respond.--A party to a negotiation
under this section with respect to which the other
party has petitioned a State under paragraph (2) may
respond to the other party's petition and provide such
additional information as it wishes within 25 days
after the State receives the petition.
(5) Action by state.--
(A) A State proceeding to consider a petition
under this subsection shall be conducted in
accordance with the rules promulgated by the
Commission under subsection (i). The State
shall limit its consideration of any petition
under paragraph (2) (and any response thereto)
to the issues set forth in the petition and in
the response, if any, filed under paragraph
(4).
(B) The State may require the petitioning
party and the responding party to provide such
information as may be necessary for the State
to reach a decision on the unresolved issues.
If either party refuses or fails unreasonably
to respond on a timely basis to any reasonable
request from the State, then the State may
proceed on the basis of the best information
available to it from whatever source derived.
(C) The State shall resolve each issue set
forth in the petition and the response, if any,
by imposing appropriate conditions upon the
parties to the agreement, and shall conduct the
review of the agreement (including the issues
resolved by the State) not later than 10 months
after the date on which the local exchange
carrier received the request for
interconnection under this section.
(D) In resolving any open issues and imposing
conditions upon the parties to the agreement, a
State shall ensure that the requirements of
this section are met by the solution imposed by
the State and are consistent with the
Commission's rules defining minimum standards.
(6) Charges.--If the amount charged by a local
exchange carrier, or class of local exchange carriers,
for an unbundled element of the interconnection
provided under subsection (b) is determined by
arbitration or intervention under this subsection, then
the charge--
(A) shall be
(i) based on the cost (determined
without reference to a rate-of-return
or other rate-based proceeding) of
providing the unbundled element,
(ii) nondiscriminatory, and
(iii) individually priced to the
smallest element that is technically
and economically reasonable to provide;
and
(B) may include a reasonable profit.
(e) Approval by State.--Any interconnection agreement under
this section shall be submitted for approval to the State. A
State to which an agreement is submitted shall approve or
reject the agreement, with written findings as to any
deficiencies. The State may only reject--
(1) an agreement under subsection (c) if it finds
that the agreement discriminates against a
telecommunications carrier not a party to the
agreement; and
(2) an agreement under subsection (d) if it finds
that--
(A) the agreement does not meet the standards
set forth in subsection (b), or
(B) the implementation of the agreement is
not in the public interest.
If the State does not act to approve or reject the agreement
within 90 days after receiving the agreement, or 30 days in the
case of an agreement negotiated under subsection (c), the
agreement shall be deemed approved. No State court shall have
jurisdiction to review the action of a State in approving or
rejecting an agreement under this section.
(f) Filing Required.--A State shall make a copy of each
agreement approved under subsection (e) available for public
inspection and copying within 10 days after the agreement is
approved. The State may charge a reasonable and
nondiscriminatory fee to the parties to the agreement to cover
the costs of approving and filing such agreement.
(g) Availability to Other Telecommunications Carriers.--A
local exchange carrier shall make available any service,
facility, or function provided under an interconnection
agreement to which it is a party to any other
telecommunications carrier that requests such interconnection
upon the same terms and conditions as those provided in the
agreement.
(h) Collocation.--A State may require telecommunications
carriers to provide for actual collocation of equipment
necessary for interconnection at the premises of the carrier at
reasonable charges, if the State finds actual collocation to be
in the public interest.
(i) Implementation.--
(1) Rules and standards.--The Commission shall
promulgate rules to implement the requirements of this
section within 6 months after the date of enactment of
the Telecommunications Act of 1995. In establishing the
standards for determining what facilities and
information are necessary for purposes of subsection
(b)(2), the Commission shall consider, at a minimum,
whether--
(A) access to such facilities and information
that are proprietary in nature is necessary;
and
(B) the failure to provide access to such
facilities and information would impair the
ability of the telecommunications carrier
seeking interconnection to provide the services
that it seeks to offer.
(2) Commission to act if state will not act.--If a
State, through action or inaction, fails to carry out
its responsibility under this section in accordance
with the rules prescribed by the Commission under
paragraph (1) in any proceeding or other matter under
this section, then the Commission shall issue an order
preempting the State's jurisdiction of that proceeding
or matter within 90 days after being notified (or
taking notice) of such failure, and shall assume the
responsibility of the State under this section with
respect to the proceeding or matter and act for the
State.
(3) Waivers and modifications for rural carriers.--
The Commission or a State shall, upon petition or on
its own initiative, waive or modify the requirements of
subsection (b) for a rural telephone company or
companies, and may waive or modify the requirements of
subsection (b) for local exchange carriers with fewer
than 2 percent of the Nation's subscriber lines
installed in the aggregate nationwide, to the extent
that the Commission or a State determines that such
requirements would result in unfair competition, impose
a significant adverse economic impact on users of
telecommunications services, be technically infeasible,
or otherwise not be in the public interest. The
Commission or a State shall act upon any petition filed
under this paragraph within 180 days of receiving such
petition. Pending such action, the Commission or a
State may suspend enforcement of the requirement or
requirements to which the petition applies with respect
to the petitioning carrier or carriers.
(j) State Requirements.--Nothing in this section precludes a
State from imposing requirements on a telecommunications
carrier for intrastate services that are necessary to further
competition in the provision of telephone exchange service or
exchange access service, as long as the State's requirements
are not inconsistent with the Commission's regulations to
implement this section.
(k) Access Charge Rules.--Nothing in this section shall
affect the Commission's interexchange-to-local exchange access
charge rules for local exchange carriers or interexchange
carriers in effect on the date of enactment of the
Telecommunications Act of 1995.
(d) The Commission may, after full opportunity for hearing,
in a proceeding upon complaint or upon its own initiative
without complaint, authorize or require by order any carrier,
party to such proceeding, to provide itself with adequate
facilities for the expeditious and efficient performance of its
service as a common carrier and to extend its line or to
establish a public office; but no such authorization or order
shall be made unless the Commission finds, as to such provision
of facilities, as to such establishment of public offices, or
as to such extension, that it is reasonably required in the
interest of public convenience and necessity, or as to such
extension or facilities that the expense involved therein will
not impair the ability of the carrier to perform its duty to
the public. Any carrier which refuses or neglects to comply
with any order of the Commission made in pursuance of this
paragraph shall forfeit to the United States $1,200 for each
day during which such refusal or neglect continues.
SEC. 253. UNIVERSAL SERVICE.
(a) Universal Service Principles.--The Joint Board and the
Commission shall base policies for the preservation and
advancement of universal service on the following principles:
(1) Quality services are to be provided at just,
reasonable, and affordable rates.
(2) Access to advanced telecommunications and
information services should be provided in all regions
of the Nation.
(3) Consumers in rural and high cost areas should
have access to telecommunications and information
services, including interexchange services, reasonably
comparable to those services provided in urban areas.
(4) Consumers in rural and high cost areas should
have access to telecommunications and information
services at rates that are reasonably comparable to
rates charged for similar services in urban areas.
(5) Citizens in rural and high cost areas should have
access to the benefits of advanced telecommunications
and information services for health care, education,
economic development, and other public purposes.
(6) There should be a coordinated Federal-State
universal service system to preserve and advance
universal service using specific and predictable
Federal and State mechanisms administered by
independent, non-governmental entities.
(7) Elementary and secondary schools and classrooms
should have access to advanced telecommunications
services.
(b) Definition.--Universal service is an evolving level of
intrastate and interstate telecommunications services that the
Commission, based on recommendations from the public, Congress,
and the Federal-State Joint Board periodically convened under
section 103 of the Telecommunications Act of 1995, and taking
into account advances in telecommunications and information
technologies and services, determines should be provided at
just, reasonable, and affordable rates to all Americans,
including those in rural and high-cost areas and those with
disabilities, to enable them to participate effectively in the
economic, academic, medical, and democratic processes of the
Nation. At a minimum, universal service shall include any
telecommunications services that the Commission determines
have, through the operation of market choices by customers,
been subscribed to by a substantial majority of residential
customers.
(c) All Telecommunications Providers Contribute.--Every
telecommunications carrier engaged in intrastate, interstate,
or foreign communication shall contribute on an equitable and
nondiscriminatory basis, in a manner that is reasonably
necessary to preserve and advance universal service. Any other
provider of telecommunications may be required to contribute to
the preservation and advancement of universal service, if the
public interest so requires.
(d) Enforcement.--In adopting rules to enforce subsection
(c), the Commission and the States may impose or require
service obligations, financial or other forms of contributions,
sharing of equipment and services, discounted rates, or other
mechanisms.
(e) State Authority.--A State may adopt regulations to
implement this section, or to provide for additional
definitions, mechanisms, and standards to preserve and advance
universal service within that State, to the extent that such
regulations do not conflict with the Commission's rules to
implement this section.
(f) Eligibility for Universal Service Support.--If the
Commission adopts rules for the distribution of support
payments for the preservation and advancement of universal
service, only telecommunications carriers which are designated
as essential telecommunications carriers under section 214(d)
shall be eligible to receive those support payments. The
support payments shall accurately reflect the amount reasonably
necessary to preserve and advance universal service.
(g) Amount of Universal Service Support.--The Commission and
the States shall base the amount of support payments, if any,
on the difference between the actual costs of providing
universal service and the revenues from providing that service.
The Commission and the States shall have as their goal the need
to make any universal support explicit and targeted to those
carriers that serve areas for which support is necessary. A
carrier that receives any such support shall use that support
only for the maintenance and upgrading of facilities and
services for which the support is intended.
(h) Interexchange Service.--The rates charged by providers of
interexchange telecommunications service to consumers in rural
and high cost areas shall be maintained at levels no higher
than those charged by each such provider to its consumers in
urban areas.
(i) Subsidy of Competitive Services Prohibited.--
Telecommunications carriers may not subsidize competitive
services with revenues from services that are not competitive.
The Commission, with respect to interstate services, and the
States, with respect to intrastate services, shall establish
any necessary cost allocation rules, accounting safeguards, and
guidelines to ensure that services included in universal
service bear no more than a reasonable share (and may, in the
public interest, bear less than a reasonable share or no share)
of the joint and common costs of facilities used to provide
those services.
(j) Effective Date.--This section takes effect on the date of
enactment of the Telecommunications Act of 1995, except for
subsections (c), (e), (f), and (g), which take effect one year
after the date of enactment of that Act.
SEC. 254. REMOVAL OF BARRIERS TO ENTRY.
(a) In General.--No State or local statute or regulation, or
other State or local legal requirement, may prohibit or have
the effect of prohibiting the ability of any entity to provide
any interstate or intrastate telecommunications services.
(b) State Regulatory Authority.--Nothing in this section
shall affect the ability of a State to impose, on a
competitively neutral basis and consistent with section 253,
requirements necessary to preserve and advance universal
service, protect the public safety and welfare, ensure the
continued quality of telecommunications services, and safeguard
the rights of consumers.
(c) Local Government Authority.--Nothing in this section
affects the authority of a local government to manage the
public rights-of-way or to require fair and reasonable
compensation from telecommunications providers, on a
competitively neutral and nondiscriminatory basis, for use of
public rights-of-way on a nondiscriminatory basis, if the
compensation required is publicly disclosed by such government.
(d) Preemption.--If, after notice and an opportunity for
public comment, the Commission determines that a State or local
government has permitted or imposed any statute, regulation, or
legal requirement that violates or is inconsistent with this
section, the Commission shall immediately preempt the
enforcement of such statute, regulation, or legal requirement
to the extent necessary to correct such violation or
inconsistency.
(e) Commercial Mobile Services Providers.--Nothing in this
section shall affect the application of section 332(c)(3) to
commercial mobile services providers.
(b) Provision of Telecommunications Services by a Cable
Operator._
(1) Jurisdiction of franchising authority._Section
621(b) (47 U.S.C. 541(b)) is amended by adding at the
end thereof the following new paragraph:
(3)(A) To the extent that a cable operator or
affiliate thereof is engaged in the provision of
telecommunications services--
(i) such cable operator or affiliate shall
not be required to obtain a franchise under
this title; and
(ii) the provisions of this title shall not
apply to such cable operator or affiliate.
(B) A franchising authority may not order a cable
operator or affiliate thereof to discontinue the
provision of a telecommunications service.
(C) A franchising authority may not require a cable
operator to provide any telecommunications service or
facilities as a condition of the initial grant of a
franchise, franchise renewal, or transfer of a
franchise.
(D) Nothing in this paragraph affects existing
Federal or State authority with respect to
telecommunications services.
SEC. 255. INTEREXCHANGE TELECOMMUNICATIONS SERVICES.
(a) In General.--Notwithstanding any restriction or
obligation imposed before the date of enactment of the
Telecommunications Act of 1995 under section II(D) of the
Modification of Final Judgment, a Bell operating company, or
any subsidiary or affiliate of a Bell operating company, that
meets the requirements of this section may provide--
(1) interLATA telecommunications services originating
in any region in which it is the dominant provider of
wireline telephone exchange service or exchange access
service after the Commission determines that it has
fully implemented the competitive checklist found in
subsection (b)(2) in the area in which it seeks to
provide interLATA telecommunications services, in
accordance with the provisions of subsection (c);
(2) interLATA telecommunications services originating
in any area where that company is not the dominant
provider of wireline telephone exchange service or
exchange access service in accordance with the
provisions of subsection (d); and
(3) interLATA services that are incidental services
in accordance with the provisions of subsection (e).
(b) Specific InterLATA Interconnection Requirements.--
(1) In general.--A Bell operating company may provide
interLATA services in accordance with this section only
if that company has reached an interconnection
agreement under section 251 and that agreement
provides, at a minimum, for interconnection that meets
the competitive checklist requirements of paragraph
(2).
(2) Competitive checklist.--Interconnection provided
by a Bell operating company to other telecommunications
carriers under section 251 shall include:
(A) Nondiscriminatory access on an unbundled
basis to the network functions and services of
the Bell operating company's telecommunications
network that is at least equal in type,
quality, and price to the access the Bell
operating company affords to itself or any
other entity.
(B) The capability to exchange
telecommunications between customers of the
Bell operating company and the
telecommunications carrier seeking
interconnection.
(C) Nondiscriminatory access to the poles,
ducts, conduits, and rights-of-way owned or
controlled by the Bell operating company where
it has the legal authority to permit such
access.
(D) Local loop transmission from the central
office to the customer's premises, unbundled
from local switching or other services.
(E) Local transport from the trunk side of a
wireline local exchange carrier switch
unbundled from switching or other services.
(F) Local switching unbundled from transport,
local loop transmission, or other services.
(G) Nondiscriminatory access to--
(i) 911 and E911 services;
(ii) directory assistance services to
allow the other carrier's customers to
obtain telephone numbers; and
(iii) operator call completion
services.
(H) White pages directory listings for
customers of the other carrier's telephone
exchange service.
(I) Until the date by which neutral telephone
number administration guidelines, plan, or
rules are established, nondiscriminatory access
to telephone numbers for assignment to the
other carrier's telephone exchange service
customers. After that date, compliance with
such guidelines, plan, or rules.
(J) Nondiscriminatory access to databases and
associated signaling, including signaling
links, signaling service control points, and
signaling service transfer points, necessary
for call routing and completion.
(K) Until the date by which the Commission
determines that final telecommunications number
portability is technically feasible and must be
made available, interim telecommunications
number portability through remote call
forwarding, direct inward dialing trunks, or
other comparable arrangements, with as little
impairment of functioning, quality,
reliability, and convenience as possible. After
that date, full compliance with final
telecommunications number portability.
(L) Nondiscriminatory access to whatever
services or information may be necessary to
allow the requesting carrier to implement local
dialing parity in a manner that permits
consumers to be able to dial the same number of
digits when using any telecommunications
carrier providing telephone exchange service or
exchange access service.
(M) Reciprocal compensation arrangements on a
nondiscriminatory basis for the origination and
termination of telecommunications.
(N) Telecommunications services and network
functions provided on an unbundled basis
without any conditions or restrictions on the
resale or sharing of those services or
functions, including both origination and
termination of telecommunications services,
other than reasonable conditions required by
the Commission or a State. For purposes of this
subparagraph, it is not an unreasonable
condition for the Commission or a State to
limit the resale--
(i) of services included in the
definition of universal service to a
telecommunications carrier who intends
to resell that service to a category of
customers different from the category
of customers being offered that
universal service by such carrier if
the Commission or State orders a
carrier to provide the same service to
different categories of customers at
different prices necessary to promote
universal service; or
(ii) of subsidized universal service
in a manner that allows companies to
charge another carrier rates which
reflect the actual cost of such
services, exclusive of any universal
service support received for providing
such services.
(3) Joint marketing of local and long distance
services.--Until a Bell operating company is authorized
to provide interLATA services in a telephone exchange
area, a telecommunications carrier may not jointly
market telephone exchange service or exchange access
service purchased from such company with interexchange
services offered by that telecommunications carrier.
(4) Commission may not expand competitive
checklist.--The Commission may not, by rule or
otherwise, limit or extend the terms used in the
competitive checklist.
(c) In-Region Services.--
(1) Application.--Upon the enactment of the
Telecommunications Act of 1995, a Bell operating
company or its subsidiary or affiliate may apply to the
Commission for authorization notwithstanding the
Modification of Final Judgment to provide interLATA
telecommunications service originating in any area
where such Bell operating company is the dominant
provider of wireline telephone exchange service or
exchange access service. The application shall describe
with particularity the nature and scope of the activity
and of each product market or service market, and each
geographic market for which authorization is sought.
(2) Determination by commission.--
(A) Determination.--Not later than 90 days
after receiving an application under paragraph
(1), the Commission shall issue a written
determination, on the record after a hearing
and opportunity for comment, granting or
denying the application in whole or in part.
Before making any determination under this
subparagraph, the Commission shall consult with
the Attorney General regarding the application.
In consulting with the Commission under this
subparagraph, the Attorney General may apply
any appropriate standard.
(B) Approval.--The Commission may only
approve the authorization requested in an
application submitted under paragraph (1) if it
finds that--
(i) the petitioning Bell operating
company has fully implemented the
competitive checklist found in
subsection (b)(2); and
(ii) the requested authority will be
carried out in accordance with the
requirements of section 252,
and if the Commission determines that the
requested authorization is consistent with the
public interest, convenience, and necessity. If
the Commission does not approve an application
under this subparagraph, it shall state the
basis for its denial of the application.
(3) Publication.--Not later than 10 days after
issuing a determination under paragraph (2), the
Commission shall publish in the Federal Register a
brief description of the determination.
(4) Judicial review.--
(A) Commencement of action.--Not later than
45 days after a determination by the Commission
is published under paragraph (3), the Bell
operating company or its subsidiary or
affiliate that applied to the Commission under
paragraph (1), or any person who would be
threatened with loss or damage as a result of
the determination regarding such company's
engaging in the activity described in its
application, may commence an action in any
United States Court of Appeals against the
Commission for judicial review of the
determination regarding the application.
(B) Judgment.--
(i) The Court shall enter a judgment
after reviewing the determination in
accordance with section 706 of title 5
of the United State Code.
(ii) A judgment--
(I) affirming any part of the
determination that approves
granting all or part of the
requested authorization, or
(II) reversing any part of
the determination that denies
all or part of the requested
authorization,
shall describe with particularity the
nature and scope of the activity, and
of each product market or service
market, and each geographic market, to
which the affirmance or reversal
applies.
(5) Requirements relating to separate subsidiary;
safeguards; and intraLATA toll dialing parity.--
(A) Separate subsidiary; safeguards.--Other
than interLATA services authorized by an order
entered by the United States District Court for
the District of Columbia pursuant to the
Modification of Final Judgment before the date
of enactment of the Telecommunications Act of
1995, a Bell operating company, or any
subsidiary or affiliate of such a company,
providing interLATA services authorized under
this subsection may provide such interLATA
services in that market only in accordance with
the requirements of section 252.
(B) IntraLATA toll dialing parity.--
(i) A Bell operating company granted
authority to provide interLATA services
under this subsection shall provide
intraLATA toll dialing parity
throughout that market coincident with
its exercise of that authority. If the
Commission finds that such a Bell
operating company has provided
interLATA service authorized under this
clause before its implementation of
intraLATA toll dialing parity
throughout that market, or fails to
maintain intraLATA toll dialing parity
throughout that market, the Commission,
except in cases of inadvertent
interruptions or other events beyond
the control of the Bell operating
company, shall suspend the authority to
provide interLATA service for that
market until the Commission determines
that intraLATA toll dialing parity is
implemented or reinstated.
(ii) A State may not order the
implementation of toll dialing parity
in an intraLATA area before a Bell
operating company has been granted
authority under this subsection to
provide interLATA services in that
area.
(d) Out-of-Region Services.--A Bell operating company or its
subsidiary or affiliate may provide interLATA
telecommunications services originating in any area where such
company is not the dominant provider of wireline telephone
exchange service or exchange access service upon the date of
enactment of the Telecommunications Act of 1995.
(e) Incidental Services.--
(1) In general.--A Bell operating company may provide
interLATA services that are incidental to the purposes
of--
(A)(i) providing audio programming, video
programming, or other programming services to
subscribers of such company,
(ii) providing the capability for interaction
by such subscribers to select or respond to
such audio programming, video programming, or
other programming services, to order, or
control transmission of the programming,
polling or balloting, and ordering other goods
or services, or
(iii) providing to distributors audio
programming or video programming that such
company owns, controls, or is licensed by the
copyright owner of such programming, or by an
assignee of such owner, to distribute,
(B) providing a telecommunications service,
using the transmission facilities of a cable
system that is an affiliate of such company,
between LATAs within a cable system franchise
area in which such company is not, on the date
of enactment of the Telecommunications Act of
1995, a provider of wireline telephone exchange
service,
(C) providing a commercial mobile service
except where such service is a replacement for
land line telephone exchange service for a
substantial portion of the land line telephone
exchange service in a State in accordance with
section 332(c) of this Act and with the
regulations prescribed by the Commission,
(D) providing a service that permits a
customer that is located in one LATA to
retrieve stored information from, or file
information for storage in, information storage
facilities of such company that are located in
another LATA area, so long as the customer acts
affirmatively to initiate the storage or
retrieval of information, except that--
(i) such service shall not cover any
service that establishes a direct
connection between end users or any
real-time voice and data transmission,
(ii) such service shall not include
voice, data, or facsimile distribution
services in which the Bell operating
company or affiliate forwards customer-
supplied information to customer- or
carrier-selected recipients;
(iii) such service shall not include
any service in which the Bell operating
company or affiliate searches for and
connects with the intended recipient of
information, or any service in which
the Bell operating company or affiliate
automatically forwards stored voicemail
or other information to the intended
recipient; and
(iv) customers of such service shall
not be billed a separate charge for the
interLATA telecommunications furnished
in conjunction with the provision of
such service;
(E) providing signaling information used in
connection with the provision of telephone
exchange service or exchange access service to
another local exchange carrier; or
(F) providing network control signaling
information to, and receiving such signaling
information from, interexchange carriers at any
location within the area in which such company
provides telephone exchange service or exchange
access service.
(2) Limitations.--The provisions of paragraph (1) are
intended to be narrowly construed. The transmission
facilities used by a Bell operating company or
affiliate thereof to provide interLATA
telecommunications under subparagraphs (C) and (D) of
paragraph (1) shall be leased by that company from
unaffiliated entities on terms and conditions
(including price) no more favorable than those
available to the competitors of that company until that
Bell operating company receives authority to provide
interLATA services under subsection (c). The interLATA
services provided under paragraph (1)(A) are limited to
those interLATA transmissions incidental to the
provision by a Bell operating company or its affiliate
of video, audio, and other programming services that
the company or its affiliate is engaged in providing to
the public. A Bell operating company may not provide
telecommunications services not described in paragraph
(1) without receiving the approvals required by
subsection (c). The provision of services authorized
under this subsection by a Bell operating company or
its affiliate shall not adversely affect telephone
exchange ratepayers or competition in any
telecommunications market.
(f) Definitions.--As used in this section--
(1) LATA.--The term ``LATA'' means a local access and
transport area as defined in United States v. Western
Electric Co., 569 F. Supp. 990 (United States District
Court, District of Columbia) and subsequent judicial
orders relating thereto.
(2) Audio programming services.--The term ``audio
programming services'' means programming provided by,
or generally considered to be comparable to programming
provided by, a radio broadcast station.
(3) Video programming services; other programming
services.--The terms ``video programming service'' and
``other programming services'' have the same meanings
as such terms have under section 602 of this Act.
SEC. 256. REGULATION OF MANUFACTURING BY BELL OPERATING COMPANIES.
(a) Authorization.--
(1) In general.--Notwithstanding any restriction or
obligation imposed before the date of enactment of the
Telecommunications Act of 1995 pursuant to the
Modification of Final Judgment on the lines of business
in which a Bell operating company may engage, if the
Commission authorizes a Bell operating company to
provide interLATA services under section 255, then that
company may be authorized by the Commission to
manufacture and provide telecommunications equipment,
and to manufacture customer premises equipment, at any
time after that determination is made, subject to the
requirements of this section and the regulations
prescribed thereunder.
(2) Certain research and design arrangements; royalty
agreements.--Upon the enactment of the
Telecommunications Act of 1995, a Bell operating
company may--
(A) engage in research and design activities
related to manufacturing, and
(B) enter into royalty agreements with
manufacturers of telecommunications equipment.
(b) Separate Subsidiary; Safeguards.--Any manufacturing or
provision of equipment authorized under subsection (a) shall be
conducted in accordance with the requirements of section 252.
(c) Protection of Small Telephone Company Interests.--
(1) Equipment to be made available to others.--A
manufacturing subsidiary of a Bell operating company
shall make available, without discrimination or self-
preference as to price, delivery, terms, or conditions,
to all local exchange carriers, for use with the public
telecommunications network, any telecommunications
equipment, including software integral to such
telecommunications equipment, including upgrades,
manufactured by such subsidiary if each such purchasing
carrier--
(A) does not manufacture telecommunications
equipment or have a subsidiary which
manufactures telecommunications equipment; or
(B) agrees to make available, to the Bell
operating company that is the parent of the
manufacturing subsidiary or any of the local
exchange carrier affiliates of such Bell
company, any telecommunications equipment,
including software integral to such
telecommunications equipment, including
upgrades, manufactured for use with the public
telecommunications network by such purchasing
carrier or by any entity or organization with
which such purchasing carrier is affiliated.
(2) Sales to other local exchange carriers.--
(A) A Bell operating company and any entity
acting on its behalf shall make procurement
decisions and award all supply contracts for
equipment, services, and software on the basis
of open, competitive bidding, and an objective
assessment of price, quality, delivery, and
other commercial factors.
(B) A Bell operating company and any entity
it owns or otherwise controls shall permit any
person to participate fully on a non-
discriminatory basis in the process of
establishing standards and certifying equipment
used in or interconnected to the public
telecommunications network.
(C) A manufacturing subsidiary of a Bell
operating company may not restrict sales to any
local exchange carrier of telecommunications
equipment, including software integral to the
operation of such equipment and related
upgrades.
(D) A Bell operating company and any entity
it owns or otherwise controls shall protect the
proprietary information submitted with contract
bids and in the standards and certification
processes from release not specifically
authorized by the owner of such information.
(d) Collaboration with Other Manufacturers.--A Bell
operating company and its subsidiaries or affiliates may engage
in close collaboration with any manufacturer of customer
premises equipment or telecommunications equipment not
affiliated with a Bell operating company during the design and
development of hardware, software, or combinations thereof
relating to such equipment.
(e) Additional Rules and Regulations.--The Commission may
prescribe such additional rules and regulations as the
Commission determines are necessary to carry out the provisions
of this section.
(f) Administration and Enforcement.--
(1) Commission authority.--For the purposes of
administering and enforcing the provisions of this
section and the regulations prescribed under this
section, the Commission shall have the same authority,
power, and functions with respect to any Bell operating
company as the Commission has in administering and
enforcing the provisions of this title with respect to
any common carrier subject to this Act.
(2) Civil actions by injured carriers.--Any local
exchange carrier injured by an act or omission of a
Bell operating company or its manufacturing subsidiary
or affiliate which violates the requirements of
paragraph (1) or (2) of subsection (c), or the
Commission's regulations implementing such paragraphs,
may initiate an action in a district court of the
United States to recover the full amount of damages
sustained in consequence of any such violation and
obtain such orders from the court as are necessary to
terminate existing violations and to prevent future
violations; or such local exchange carrier may seek
relief from the Commission pursuant to sections 206
through 209.
(g) Application to Bell Communications Research.--Nothing
in this section--
(1) provides any authority for Bell Communications
Research, or any successor entity, to manufacture or
provide telecommunications equipment or to manufacture
customer premises equipment; or
(2) prohibits Bell Communications Research, or any
successor entity, from engaging in any activity in
which it is lawfully engaged on the date of enactment
of the Telecommunications Act of 1995, including
providing a centralized organization for the provision
of engineering, administrative, and other services
(including serving as a single point of contact for
coordination of the Bell operating companies to meet
national security and emergency preparedness
requirements).
(h) Definitions.--As used in this section--
(1) The term ``customer premises equipment'' means
equipment employed on the premises of a person (other
than a carrier) to originate, route, or terminate
telecommunications.
(2) The term ``manufacturing'' has the same meaning
as such term has in the Modification of Final Judgment.
(3) The term ``telecommunications equipment'' means
equipment, other than customer premises equipment, used
by a carrier to provide telecommunications services.
SEC. 257. ENFORCEMENT.
(a) In General.--In addition to any penalty, fine, or other
enforcement remedy under this Act, the failure by a
telecommunications carrier to implement the requirements of
section 251 or 255, including a failure to comply with the
terms of an interconnection agreement approved under section
251, is punishable by a civil penalty of not to exceed
$1,000,000 per offense. Each day of a continuing offense shall
be treated as a separate violation for purposes of levying any
penalty under this subsection.
(b) Noncompliance with Interconnection or Separate
Subsidiary Requirements.--
(1) A Bell operating company that repeatedly,
knowingly, and without reasonable cause fails to
implement an interconnection agreement approved under
section 251, to comply with the requirements of such
agreement after implementing them, or to comply with
the separate subsidiary requirements of this part may
be fined up to $500,000,000 by a district court of the
United States of competent jurisdiction.
(2) A Bell operating company that repeatedly,
knowingly, and without reasonable cause fails to meet
its obligations under section 255 for the provision of
interLATA service may have its authority to provide any
service the right to provide which is conditioned upon
meeting such obligations suspended.
(c) Enforcement by Private Right of Action.--
(1) Damages.--Any person who is injured in its
business or property by reason of a violation of this
section may bring a civil action in any district court
of the United States in the district in which the
defendant resides or is found or has an agent, without
respect to the amount in controversy.
(2) Interest.--The court may award under this
section, pursuant to a motion by such person promptly
made, simple interest on actual damages for the period
beginning on the date of service of such person's
pleading setting forth a claim under this title and
ending on the date of judgment, or for any shorter
period therein, if the court finds that the award of
such interest for such period is just in the
circumstances.
SEC. 258. REGULATION OF ENTRY INTO ALARM MONITORING SERVICES.
(a) In General.--Except as provided in this section, a Bell
operating company, or any subsidiary or affiliate of that
company, may not provide alarm monitoring services for the
protection of life, safety, or property. A Bell operating
company may transport alarm monitoring service signals on a
common carrier basis only.
(b) Authority To Provide Alarm Monitoring Services.--
Beginning 3 years after the date of enactment of the
Telecommunications Act of 1995, a Bell operating company may
provide alarm monitoring services for the protection of life,
safety, or property if it has been authorized to provide
interLATA services under section 255 unless the Commission
finds that the provision of alarm monitoring services by such
company is not in the public interest. The Commission may not
find that provision of alarm monitoring services by a Bell
operating company is in the public interest until it finds that
it has the capability effectively to enforce any requirements,
limitations, or conditions that may be placed upon a Bell
operating company in the provision of alarm monitoring
services, including the regulations prescribed under subsection
(c).
(c) Regulations Required.--
(1) Not later than 1 year after the date of enactment
of the Telecommunications Act of 1995, the Commission
shall prescribe regulations--
(A) to establish such requirements,
limitations, or conditions as are--
(i) necessary and appropriate in the
public interest with respect to the
provision of alarm monitoring services
by Bell operating companies and their
subsidiaries and affiliates, and
(ii) effective at such time as a Bell
operating company or any of its
subsidiaries or affiliates is
authorized to provide alarm monitoring
services; and
(B) to establish procedures for the receipt
and review of complaints concerning violations
by such companies of such regulations, or of
any other provision of this Act or the
regulations thereunder, that result in material
financial harm to a provider of alarm
monitoring services.
(2) A Bell operating company, its subsidiaries and
affiliates, and any local exchange carrier are
prohibited from recording or using in any fashion the
occurrence or contents of calls received by providers
of alarm monitoring services for the purposes of
marketing such services on behalf of the Bell operating
company, any of its subsidiaries or affiliates, the
local exchange carrier, or any other entity. Any
regulations necessary to enforce this paragraph shall
be issued initially within 6 months after the date of
enactment of the Telecommunications Act of 1995.
(d) Expedited Consideration of Complaints.--The procedures
established under subsection (c) shall ensure that the
Commission will make a final determination with respect to any
complaint described in such subsection within 120 days after
receipt of the complaint. If the complaint contains an
appropriate showing that the alleged violation occurred, as
determined by the Commission in accordance with such
regulations, the Commission shall, within 60 days after receipt
of the complaint, issue a cease and desist order to prevent the
Bell operating company and its subsidiaries and affiliates from
continuing to engage in such violation pending such final
determination.
(e) Remedies.--The Commission may use any remedy available
under title V of this Act to terminate and punish violations
described in subsection (c). Such remedies may include, if the
Commission determines that such violation was willful or
repeated, ordering the Bell operating company or its subsidiary
or affiliate to cease offering alarm monitoring services.
(f) Savings Provision.--Subsections (a) and (b) do not
prohibit or limit the provision of alarm monitoring services by
a Bell operating company that was engaged in providing those
services as of December 31, 1994, to the extent that such
company--
(1) continues to provide those services through the
subsidiary or affiliate through which it was providing
them on that date; and
(2) does not acquire, directly or indirectly, an
equity interest in another entity engaged in providing
alarm monitoring services, and does not acquire, or
enter into an agreement to provide, the alarm
monitoring service activities of another entity.
(g) Alarm Monitoring Services Defined.--As used in this
section, the term ``alarm monitoring services'' means services
that detect threats to life, safety, or property by burglary,
fire, vandalism, bodily injury, or other emergency through the
use of devices that transmit signals to a central point in a
customer's residence, place of business, or other fixed
premises which--
(1) retransmits such signals to a remote monitoring
center by means of telecommunications facilities of the
Bell operating company and any subsidiary or affiliate;
and
(2) serves to alert persons at the monitoring center
of the need to inform customers, other persons, or
police, fire, rescue, or other security or public
safety personnel of the threat at such premises.
Such term does not include medical monitoring devices attached
to individuals for the automatic surveillance of ongoing
medical conditions.
SEC. 259. REGULATORY REFORM.
(a) Biennial Review of Regulations.--In every odd-numbered
year (beginning with 1997), the Commission, with respect to its
regulations under this Act, and a Federal-State Joint Board
established under section 410, for State regulations--
(1) shall review all regulations issued under this
Act, or under State law, in effect at the time of the
review that apply to operations or activities of
providers of any telecommunications services; and
(2) shall determine whether any such regulation is no
longer necessary in the public interest as the result
of meaningful economic competition between the
providers of such service.
(b) Effect of Determination.--The Commission shall repeal
any regulation it determines to be no longer necessary in the
public interest. The Joint Board shall notify the Governor of
any State of any State regulation it determines to be no longer
necessary in the public interest.
SEC. 260. COMPETITION IN PROVISION OF TELECOMMUNICATIONS SERVICE.
(a) Regulatory Flexibility.--The Commission may forbear
from applying any regulation or any provision of this Act to a
telecommunications carrier or service, or class of carriers or
services, in any or some of its or their geographic markets if
the Commission determines that--
(1) enforcement of such regulation or provision is
not necessary to ensure that the charges, practices,
classifications, or regulations by, for, or in
connection with that carrier or service are just and
reasonable and are not unjustly or unreasonably
discriminatory;
(2) enforcement of such regulation or provision is
not necessary for the protection of consumers; and
(3) forbearance from applying such regulation or
provision is consistent with the public interest.
(b) Competitive Effect To Be Weighed.--In making the
determination under subsection (a)(3), the Commission shall
consider whether forbearance from enforcing the regulation or
provision will promote competitive market conditions, including
the extent to which such forbearance will enhance competition
among providers of telecommunications services. If the
Commission determines that such forbearance will promote
competition among providers of telecommunications services,
that determination may be the basis for a Commission finding
that forbearance is in the public interest.
(c) Limitation.--Except as provided in section 251(i)(3),
the Commission may not waive the unbundling requirements of
section 251(b) or 255(b)(2) under subsection (a) until it
determines that those requirements have been fully implemented.
SEC. 261. TELECOMMUNICATIONS NUMBERING ADMINISTRATION.
(a) Interim Number Portability.--In connection with any
interconnection agreement reached under section 251 of this
Act, a local exchange carrier shall make available interim
telecommunications number portability, upon request, beginning
on the date of enactment of the Telecommunications Act of 1995.
(b) Final Number Portability.--In connection with any
interconnection agreement reached under section 251 of this
Act, a local exchange carrier shall make available final
telecommunications number portability, upon request, when the
Commission determines that final telecommunications number
portability is technically feasible.
(c) Neutral Administration of Numbering Plans.--
(1) Nationwide neutral number system compliance.-- A
telecommunications carrier providing telephone exchange
service shall comply with the guidelines, plan, or
rules established by an impartial entity designated by
the Commission for the administration of a nationwide
neutral number system.
(2) Overlay of area codes not permitted.--All
telecommunications carriers providing telephone
exchange service in the same telephone service area
shall be assigned the same numbering plan area code
under such guideline, plan, or rules.
(d) Costs.--The cost of establishing neutral number
administration arrangements and number portability shall be
borne by all telecommunications carriers on a competitively
neutral basis.
SEC. 262. ACCESS BY PERSONS WITH DISABILITIES.
(a) Definitions.--As used in this section--
(1) Disability.--The term ``disability'' has the
meaning given to it by section 3(2)(A) of the Americans
with Disabilities Act of 1990 (42 U.S.C. 12102(2)(A)).
(2) Readily achievable.--The term ``readily
achievable'' has the meaning given to it by section
301(9) of that Act (42 U.S.C. 12181(9)).
(b) Manufacturing.--A manufacturer of telecommunications
equipment and customer premises equipment shall ensure that the
equipment is designed, developed, and fabricated to be
accessible to and usable by individuals with disabilities, if
readily achievable.
(c) Telecommunications Services.--A provider of
telecommunications service shall ensure that the service is
accessible to and usable by individuals with disabilities, if
readily achievable.
(d) Compatibility.--Whenever the requirements of
subsections (b) and (c) are not readily achievable, such a
manufacturer or provider shall ensure that the equipment or
service is compatible with existing peripheral devices or
specialized customer premises equipment commonly used by
individuals with disabilities to achieve access, if readily
achievable.
(e) Standards.--Within 1 year after the date of enactment
of the Telecommunications Act of 1995, the Architectural and
Transportation Barriers Compliance Board described in section
504 of the Americans with Disabilities Act of 1990 (42 U.S.C.
12204) shall develop standards for accessibility of
telecommunications equipment, customer premises equipment, and
telecommunications services, in conjunction with the National
Telecommunications and Information Administration and the
National Institute of Standards and Technology. The Board shall
review and update the standards periodically.
(f) Closed Captioning.--
(1) In general.--The Commission shall ensure that--
(A) video programming is accessible through
closed captions, if readily achievable, except
as provided in paragraph (2); and
(B) video programming providers or owners
maximize the accessibility of video programming
previously published or exhibited through the
provision of closed captions, if readily
achievable, except as provided in paragraph
(2).
(2) Exemptions.--Notwithstanding paragraph (1)--
(A) the Commission may exempt programs,
classes of programs, locally produced programs,
providers, classes of providers, or services
for which the Commission has determined that
the provision of closed captioning would not be
readily achievable to the provider or owner of
such programming;
(B) a provider of video programming or the
owner of any program carried by the provider
shall not be obligated to supply closed
captions if such action would be inconsistent
with a binding contract in effect on the date
of enactment of the Telecommunications Act of
1995 for the remaining term of that contract
(determined without regard to any extension of
such term), except that nothing in this
subparagraph relieves a video programming
provider of its obligation to provide services
otherwise required by Federal law; and
(C) a provider of video programming or a
program owner may petition the Commission for
an exemption from the requirements of this
section, and the Commission may grant such a
petition upon a showing that the requirements
contained in this section would not be readily
achievable.
(3) Studies.--The Commission shall undertake studies
of the current extent (as of the date of enactment of
the Telecommunications Act of 1995) of--
(A) closed captioning of video programming
and of previously published video programming;
(B) providers of video programming;
(C) the cost and market for closed
captioning;
(D) strategies to improve competition and
innovation in the provision of closed
captioning; and
(E) such other matters as the Commission
considers relevant.
(g) Regulations.--The Commission shall, not later than 18
months after the date of enactment of the Telecommunications
Act of 1995, prescribe regulations to implement this section.
The regulations shall be consistent with the standards
developed by the Architectural and Transportation Barriers
Compliance Board in accordance with subsection (e).
(h) Enforcement.--The Commission shall enforce this
section. The Commission shall resolve, by final order, a
complaint alleging a violation of this section within 180 days
after the date on which the complaint is filed with the
Commission.
SEC. 263. RURAL MARKETS.
(a) State Authority in Rural Markets.--Except as provided
in section 251(i)(3), a State may not waive or modify any
requirements of section 251, but may adopt statutes or
regulations that are no more restrictive than--
(1) to require an enforceable commitment by each
competing provider of telecommunications service to
offer universal service comparable to that offered by
the rural telephone company currently providing service
in that service area, and to make such service
available within 24 months of the approval date to all
consumers throughout that service area on a common
carrier basis, either using the applicant's facilities
or through its own facilities and resale of services
using another carrier's facilities (including the
facilities of the rural telephone company), and subject
to the same terms, conditions, and rate structure
requirements as those applicable to the rural telephone
company currently providing universal service;
(2) to require that the State must approve an
application by a competing telecommunications carrier
to provide services in a market served by a rural
telephone company and that approval be based on
sufficient written public findings and conclusions to
demonstrate that such approval is in the public
interest and that there will not be a significant
adverse impact on users of telecommunications services
or on the provision of universal service;
(3) to encourage the development and deployment of
advanced telecommunications and information
infrastructure and services in rural areas; or
(4) to protect the public safety and welfare, ensure
the continued quality of telecommunications and
information services, or safeguard the rights of
consumers.
(b) Preemption.--Upon a proper showing, the Commission may
preempt any State statute or regulation that the Commission
finds to be inconsistent with the Commission's regulations
implementing this section, or an arbitrary or unreasonably
discriminatory application of such statute or regulation. The
Commission shall act upon any bona fide petition filed under
this subsection within 180 days of receiving such petition.
Pending such action, the Commission may, in the public
interest, suspend or modify application of any statute or
regulation to which the petition applies.
SEC. 264. TELECOMMUNICATIONS SERVICES FOR CERTAIN PROVIDERS.
(a) In General.--
(1) Health care providers for rural areas.--A
telecommunications carrier designated as an essential
telecommunications carrier under section 214(d) shall,
upon receiving a bona fide request, provide
telecommunications services which are necessary for the
provisoin of health service, including instruction
relating to such service, at rates that are reasonably
comparable to rates charged for similar services in
urban areas to any public or nonprofit health care
provider that provides services to persons who reside
in rural areas.
(2) Educational providers and libraries.--Any
telecommunications carrier shall, upon receiving a bona
fide request, provide universal service (as defined
under section 253) at rates that are affordable and not
higher than the incremental cost thereof to elementary
schools, secondary schools, and libraries for
telecommunications services that permit such schools
and libraries to provide or receive educational
services.
(b) Support Payments.--If the Commission adopts rules for
the distribution of support payments for the preservation and
advancement of universal service, the Commission shall include
the amount of the support payments reasonably necessary to
provide universal service (including any costs related to the
provision of comparable rates under subsection (a)(1)) to
public institutional telecommunications users in any universal
service support mechanism it may establish under section 253.
(c) Advanced Services.--The Commission shall establish
rules--
(1) to enhance, to the extent technically feasible
and economically reasonable, the availability of
advanced telecommunications and information services to
all public and nonprofit elementary and secondary
school classrooms, health care providers, and
libraries;
(2) to ensure that appropriate functional
requirements or performance standards, or both,
including interoperability standards, are established
for telecommunications carriers that connect such
public institutional telecommunications users with the
public switched network;
(3) to define the circumstances under which a
telecommunications carrier may be required to connect
its network to such public institutional
telecommunications users; and
(4) to address other matters as the Commission may
determine.
(d) Definitions.--
(1) Elementary and secondary schools.--The term
``elementary and secondary schools'' means elementary
schools and secondary schools, as defined in paragraphs
(14) and (25), respectively, of section 14101 of the
Elementary and Secondary Education Act of 1965 (20
U.S.C. 8801).
(2) Universal service.--The Commission may in the
public interest provide a separate definition of
universal service under section 253(b) for application
only to public institutional telecommunications users.
(3) Health care provider.--The term ``health care
provider'' means--
(A) Post-secondary educational institutions,
teaching hospitals, and medical schools.
(B) Community health centers or health
centers providing health care to migrants.
(C) Local health departments or agencies.
(D) Community mental health centers.
(E) Not-for-profit hospitals.
(F) Rural health clinics.
(G) Consortia of health care providers
consisting of one or more entities described in
subparagraphs (A) through (F).
(4) Public institutional telecommunications user.--
The term ``public institutional telecommunications
user'' means an elementary or secondary school, a
library, or a health care provider, as those terms are
defined in this section.
SEC. 265. PROVISION OF PAYPHONE SERVICE AND TELEMESSAGING SERVICE.
(a) Nondiscrimination Safeguards.--Any Bell operating
company that provides payphone service or telemessaging
service--
(1) shall not subsidize its payphone service or
telemessaging service directly or indirectly with
revenue from its telephone exchange service or its
exchange access service; and
(2) shall not prefer or discriminate in favor of its
payphone service or telemessaging service.
(b) Definitions.--As used in this section--
(1) The term ``payphone service'' means the provision
of telecommunications service through public or semi-
public pay telephones, and includes the provision of
service to inmates in correctional institutions.
(2) The term ``telemessaging service'' means voice
mail and voice storage and retrieval services, any live
operator services used to record, transcribe, or relay
messages (other than telecommunications relay
services), and any ancillary services offered in
combination with these services.
(c) Regulations.--Not later than 18 months after the date
of enactment of the Telecommunications Act of 1995, the
Commission shall complete a rulemaking proceeding to prescribe
regulations to carry out this section. In that rulemaking
proceeding, the Commission shall determine whether, in order to
enforce the requirements of this section, it is appropriate to
require the Bell operating companies to provide payphone
service or telemessaging service through a separate subsidiary
that meets the requirements of section 252.
SEC. 310. LIMITATION ON HOLDING AND TRANSFER OF LICENSES.
(a) The station license required under this Act shall not
be granted to or held by any foreign government or the
representative thereof.
(b) No broadcast or common carrier or aeronautical en route
or aeronautical fixed radio station license shall be granted to
or held by--
(1) any alien or the representative of any alien;
(2) any corporation organized under the laws of any
foreign government;
(3) any corporation of which any officer or director
is an alien or of which more than one-fifth of the
capital stock is owned of record or voted by aliens or
their representatives or by a foreign government or
representative thereof or by any corporation organized
under the laws of a foreign country;
(4) any corporation directly or indirectly controlled
by any other corporation of which any officer or more
than one-fourth of the directors are aliens, or of
which more than one-fourth of the capital stock is
owned of record or voted by aliens, their
representatives, or by a foreign government or
representative thereof, or by any corporation organized
under the laws of a foreign country, if the Commission
finds that the public interest will be served by the
refusal or revocation of such license.
(f) Termination of Foreign Ownership Restrictions.--
(1) Restriction not to apply where reciprocity
found.--Subsection (b) shall not apply to any common
carrier license held, or for which application is made,
after the date of enactment of the Telecommunications
Act of 1995 with respect to any alien (or
representative thereof), corporation, or foreign
government (or representative thereof) if the
Commission determines that the foreign country of which
such alien is a citizen, in which such corporation is
organized, or in which such foreign government is in
control provides equivalent market opportunities for
common carriers to citizens of the United States (or
their representatives), corporations organized in the
United States, and the United States Government (or its
representative). The determination of whether market
opportunities are equivalent shall be made on a market
segment specific basis.
(2) Snapback for Reciprocity Failure.--If the
Commission determines that any foreign country with
respect to which it has made a determination under
paragraph (1) ceases to meet the requirements for that
determination, then--
(A) subsection (b) shall apply with respect
to such aliens, corporations, and government
(or their representatives) on the date on which
the Commission publishes notice of its
determination under this paragraph, and
(B) any license held, or application filed,
which could not be held or granted under
subsection (b) shall be withdrawn, or denied,
as the case may be, by the Commission under the
provisions of subsection (b).
SEC. 332. MOBILE SERVICES.
(c) Regulatory Treatment of Mobile Service.--
(6) Foreign ownership.--The Commission, upon a
petition for waiver filed within 6 months after the
date of enactment of the Omnibus Budget Reconciliation
Act of 1993, may waive the application of section
310(b) to any foreign ownership that lawfully existed
before May 24, 1993, of any provider of a private land
mobile service that will be treated as a common carrier
as a result of the enactment of the Omnibus Budget
Reconciliation Act of 1993, but only upon the following
conditions:
(A) The extent of foreign ownership interest
shall not be increased above the extent which
existed on May 24, 1993.
(B) Such waiver shall not permit the
subsequent transfer of ownership to any other
person in violation of section 310(b).
This paragraph does not apply to any foreign ownership
interest or transfer of ownership to which section
310(b) does not apply because of section 310(f).
SEC. 307. ALLOCATION OF FACILITIES; TERM OF LICENSES.
(c) [No license granted for the operation of a television
broadcasting station shall be for a longer term than five years
and no license so granted for any other class of station (other
than a radio broadcasting station) shall be for a longer term
than ten years, and any license granted may be revoked as
hereinafter provided. Each license granted for the operation of
a radio broadcasting station shall be for a term of not to
exceed seven years. The term of any license for the operation
of any auxiliary broadcast station or equipment which can be
used only in conjunction with a primary radio, television, or
translator station shall be concurrent with the term of the
license for such primary radio, television, or translator
station. Upon the expiration of any license, upon application
therefor, a renewal of such license may be granted from time to
time for a term of not to exceed five years in the case of
television broadcasting licenses, for a term of not to exceed
seven years in the case of radio broadcasting station licenses,
and for a term of not to exceed ten years in the case of other
licenses, if the Commission finds that public interest,
convenience, and necessity would be served thereby.] No license
shall be granted for a term longer than 10 years. Upon
application, a renewal of such license may be granted from time
to time for a term of not to exceed 10 years, if the Commission
finds that the public interest, convenience, and necessity
would be served thereby. In order to expedite action on
applications for renewal of broadcasting station licenses and
in order to avoid needless expense to applicants for such
renewals, the Commission shall not require any such applicant
to file any information which previously has been furnished to
the Commission or which is not directly material to the
considerations that affect the granting or denial of such
application, but the Commission may require any new or
additional facts it deems necessary to make its findings.
Pending any hearing and final decision on such an application
and the disposition of any petition for rehearing pursuant to
section 405, the Commission shall continue such license in
effect. Consistently with the foregoing provisions of this
subsection, the Commission may by rule prescribe the period or
periods for which licenses shall be granted and renewed for
particular classes of stations, but the Commission may not
adopt or follow any rule which would preclude it, in any case
involving a station of a particular class, from granting or
renewing a license for a shorter period than that prescribed
for stations of such class if, in its judgment, public
interest, convenience, or necessity would be served by such
action.
SEC. 309. ACTION UPON APPLICATIONS; FORM OF AND CONDITIONS ATTACHED TO
LICENSES.
(d)(1) Any party in interest may file with the Commission a
petition to deny any application (whether as originally filed
or as amended) to which subsection (b) of this section applies
at any time prior to the day of Commission grant thereof
without hearing or the day of formal designation thereof for
hearing; except that with respect to any classification of
applications, the Commission from time to time by rule may
specify a shorter period (no less than thirty days following
the issuance of public notice by the Commission of the
acceptance for filing of such application or of any substantial
amendment thereof), which shorter period shall be reasonably
related to the time when the applications would normally be
reached for processing. The petitioner shall serve a copy of
such petition on the applicant. The petition shall contain
specific allegations of fact sufficient to show that the
petitioner is a party in interest and that a grant of the
application would be prima facie inconsistent with subsection
[(a).] (a) (or subsection (k) in the case of renewal of any
broadcast station license). Such allegations of fact shall,
except for those of which official notice may be taken, be
supported by affidavit of a person or persons with personal
knowledge thereof. The applicant shall be given the opportunity
to file a reply in which allegations of fact or denials thereof
shall similarly be supported by affidavit.
(2) If the Commission finds on the basis of the application,
the pleadings filed, or other matters which it may officially
notice that there are no substantial and material questions of
fact and that a grant of the application would be consistent
with subsection [(a),] (a) (or subsection (k) in the case of
renewal of any broadcast station license), it shall make the
grant, deny the petition, and issue a concise statement of the
reasons for denying the petition, which statement shall dispose
of all substantial issues raised by the petition. If a
substantial and material question of fact is presented or if
the Commission for any reason is unable to find that grant of
the application would be consistent with subsection [(a),] (a)
(or subsection (k) in the case of renewal of any broadcast
station license), it shall proceed as provided in subsection
(e).
(k)(1)(A) Notwithstanding subsections (c) and (d), if the
licensee of a broadcast station submits an application to the
Commission for renewal of such license, the Commission shall
grant the application if it finds, after notice and opportunity
for comment (and a hearing on the record if it finds that there
are credible allegations of serious violations by the licensee
of this Act or the Commission's rules or regulations), with
respect to that station during the preceding term of its
license, that--
(i) the station has served the public interest,
convenience, and necessity;
(ii) there have been no serious violations by the
licensee of this Act or the rules and regulations of
the Commission; and
(iii) there have been no other violations by the
licensee of this Act or the rules and regulations of
the Commission which, taken together, would constitute
a pattern of abuse.
(B) If any licensee of a broadcast station fails to meet the
requirements of this subsection, the Commission may deny the
application for renewal in accordance with paragraph (2), or
grant such application on appropriate terms and conditions,
including renewal for a term less than the maximum otherwise
permitted.
(2) If the Commission determines that a licensee has failed
to meet the requirements specified in paragraph (1)(A) and that
no mitigating factors justify the imposition of lesser
sanctions, the Commission shall--
(A) issue an order denying the renewal application
filed by such licensee under section 308; and
(B) only thereafter accept and consider such
applications for a construction permit as may be filed
under section 308 specifying the channel or
broadcasting facilities of the former licensee.
(3) In making the determinations specified in paragraphs (1)
or (2)(A), the Commission shall not consider whether the public
interest, convenience, and necessity might be served by the
grant of a license to a person other than the renewal
applicant.
Part II--Use of Cable Channels and Cable Ownership Restrictions
SEC. 611. CABLE CHANNELS FOR PUBLIC, EDUCATIONAL, OR GOVERNMENTAL USE.
(e) Subject to section 624(d), a cable operator shall not
exercise any editorial control over any public, educational, or
governmental use of channel capacity provided pursuant to this
[section.] section, except a cable operator may refuse to
transmit any public access program or portion of a public
access program which contains obscenity, indecency, or nudity.
SEC. 612. CABLE CHANNELS FOR COMMERCIAL USE.
(c)(1) If a person unaffiliated with the cable operator seeks
to use channel capacity designated pursuant to subsection (b)
for commercial use, the cable operator shall establish,
consistent with the purpose of this section and with rules
prescribed by the Commission under paragraph (4), the price,
terms, and conditions of such use which are at least sufficient
to assure that such use will not adversely affect the
operation, financial condition, or market development of the
cable system.
(2) A cable operator shall not exercise any editorial control
over any video programming provided pursuant to this section,
or in any other way consider the content of such programming,
except that [an operator] a cable operator may refuse to
transmit any leased access program or portion or a leased
access program which contains obscenity, indecency, or nudity
may consider such content to the minimum extent necessary to
establish a reasonable price for the commercial use of
designated channel capacity by an unaffiliated person.
SEC. 613. OWNERSHIP RESTRICTIONS.
[(a)(1) It shall be unlawful for any person to be a cable
operator if such person, directly or through 1 or more
affiliates, owns or controls, the licensee of a television
broadcast station and the predicted grade B contour of such
station covers any portion of the community served by such
operator's cable system.
[(2) It shall be unlawful for a cable operator to hold a
license for multichannel multipoint distribution service, or to
offer satellite master antenna television service separate and
apart from any franchised cable service, in any portion of the
franchise area served by that cable operator's cable system.
The Commission--
[(A) shall waive the requirements of this paragraph
for all existing multichannel multipoint distribution
services and satellite master antenna television
services which are owned by a cable operator on the
date of enactment of this paragraph; and
[(B) may waive the requirements of this paragraph to
the extent the Commission determines is necessary to
ensure that all significant portions of a franchise
area are able to obtain video programming.]
(a) The Commission shall review its ownership rules
biennially as part of its regulatory reform review under
section 259.
[(b)(1) It shall be unlawful for any common carrier, subject
in whole or in part to title II of this Act, to provide video
programming directly to subscribers in its telephone service
area, either directly or indirectly through an affiliate owned
by, operated by, controlled by, or under common control with
the common carrier.
[(2) It shall be unlawful for any common carrier, subject in
whole or in part to title II of this Act, to provide channels
of communications or pole, line, conduit space, or other rental
arrangements, to any entity which is directly or indirectly
owned by, operated by, controlled by, or under common control
with such common carrier, if such facilities or arrangements
are to be used for, or in connection with, the provision of
video programming directly to subscribers in the telephone
service area of the common carrier.
[(3) This subsection shall not apply to any common carrier to
the extent such carrier provides telephone exchange service in
any rural area (as defined by the Commission).
[(4) In those areas where the provision of video programming
directly to subscribers through a cable system demonstrably
could not exist except through a cable system owned by,
operated by, controlled by, or affiliated with the common
carrier involved, or upon other showing of good cause, the
Commission may, on petition for waiver, waive the applicability
of paragraphs (1) and (2) of this subsection. Any such waiver
shall be made in accordance with section 63.56 of title 47,
Code of Federal Regulations (as in effect September 20, 1984)
and shall be granted by the Commission upon a finding that the
issuance of such waiver is justified by the particlar
circumstances demonstrated by the petitioner, taking into
account the policy of this subsection.]
(b) Video Programming and Cable Services.--
(1) Distinction between video platform and cable
service.--To the extent that any telecommunications
carrier carries video programming provided by others,
or provides video programming directly to subscribers,
through a common carrier video platform, neither the
telecommunications carrier nor any video programming
provider making use of such platform shall be deemed to
be a cable operator providing cable service. To the
extent that any telecommunications carrier provides
video programming directly to subscribers through a
cable system, the carrier shall be deemed to be a cable
operator providing cable service.
(2) Bell operating company activities.--
(A) Notwithstanding the provisions of section
252, to the extent that a Bell operating
company carries or provides video programming
over a common carrier video platform, it need
not use a separate subsidiary if--
(i) the carrier provides facilities,
services, or information to all
programmers on the same terms and
conditions as it provides such
facilities, services, or information to
its own video programming operations,
and
(ii) the carrier does not subsidize
its provision of video programming with
revenues from its telecommunications
services.
(B) To the extent that a Bell operating
company provides cable service as a cable
operator, it shall provide such service through
a subsidiary that meets the requirements of
section 252, and shall meet the requirements of
clauses (i) and (ii) of subparagraph (A).
(C) Upon a finding by the Commission that the
requirement of a separate subsidiary under the
preceding subparagraph is no longer necessary
to protect consumers, competition, or the
public interest, the Commission shall exempt a
Bell operating company from that requirement.
(3) Common carrier video platform.--Nothing in this
Act precludes a telecommunications carrier from
carrying video programming provided by others directly
to subscribers over a common carrier video platform.
(4) Rates; access.--Notwithstanding paragraph
(2)(A)(i), a provider of common carrier video platform
services shall provide local broadcast stations, and to
those public, educational, and governmental entities
required by local franchise authorities to be given
access to cable systems operating in the same market as
the video platform, with access to the video platform
for the transmission of television broadcast
programming at rates no higher than the incremental-
cost-based rates of providing such access. Local
broadcast stations shall be entitled to obtain access
on the first tier of programming on the video platform.
(5) Competitive neutrality.--A provider of video
programming may be required to pay fees in lieu of
franchise fees (as defined in section 622(g)(1)) if the
fees--
(A) are competitively neutral; and
(B) are separately identified in consumer
billing.
Part III_Franchising and Regulation
SEC. 621. GENERAL FRANCHISE REQUIREMENTS.
(b)(1) Except to the extent provided in paragraph (2) and
subsection (f), a cable operator may not provide cable service
without a franchise.
(2) Paragraph (1) shall not require any person lawfully
providing cable service without a franchise on July 1, 1984, to
obtain a franchise unless the franchising authority so
requires.
(3)(A) To the extent that a cable operator or
affiliate thereof is engaged in the provision of
telecommunications services--
(i) such cable operator or affiliate shall
not be required to obtain a franchise under
this title; and
(ii) the provisions of this title shall not
apply to such cable operator or affiliate.
(B) A franchising authority may not order a cable
operator or affiliate thereof to discontinue the
provision of a telecommunications service.
(C) A franchising authority may not require a cable
operator to provide any telecommunications service or
facilities as a condition of the initial grant of a
franchise, franchise renewal, or transfer of a
franchise.
(D) Nothing in this paragraph affects existing
Federal or State authority with respect to
telecommunications services.
SEC. 622. FRANCHISE FEES.
(a) Subject to the limitation of subsection (b), any cable
operator may be required under the terms of any franchise to
pay a franchise fee.
(b) For any twelve-month period, the franchise fees paid by a
cable operator with respect to any cable system shall not
exceed 5 percent of such cable operator's gross revenues
derived in such period from the operation of the cable
[system.] system to provide cable services. For purposes of
this section, the 12-month period shall be the 12-month period
applicable under the franchise for accounting purposes. Nothing
in this subsection shall prohibit a franchising authority and a
cable operator from agreeing that franchise fees which lawfully
could be collected for any such 12-month period shall be paid
on a prepaid or deferred basis; except that the sum of the fees
paid during the term of the franchise may not exceed the
amount, including the time value of money, which would have
lawfully been collected if such fees had been paid per annum.
SEC. 623. REGULATION OF RATES.
(c) Regulation of Unreasonable Rates.--
(1) Commission regulations.--Within 180 days after
the date of enactment of the Cable Television Consumer
Protection and Competition Act of 1992, the Commission
shall, by regulation, establish the following:
(A) criteria prescribed in accordance with
paragraph (2) for identifying, in individual
cases, rates for cable programming services
that are unreasonable;
(B) fair and expeditious procedures for the
receipt, consideration, and resolution of
complaints from any [subscriber,] franchising
[authority,] authority or other relevant State
or local government entity alleging that a rate
for cable programming services charged by a
cable operator violates the criteria prescribed
under subparagraph (A), which procedures shall
include the minimum showing that shall be
required for a complaint to obtain Commission
consideration and resolution of whether the
rate in question is unreasonable; and
(C) the procedures to be used to reduce rates
for cable programming services that are
determined by the Commission to be unreasonable
and to refund such portion of the rates or
charges that were paid by subscribers after the
filing of such complaint and that are
determined to be unreasonable.
[(2) Factors to be considered.--In establishing the
criteria for determining in individual cases whether
rates for cable programming services are unreasonable
under paragraph (1)(A), the Commission shall consider,
among other factors--
[(A) the rates for similarly situated cable
systems offering comparable cable programming
services, taking into account similarities in
facilities, regulatory and governmental costs,
the number of subscribers, and other relevant
factors;
[(B) the rates for cable systems, if any,
that are subject to effective competition;
[(C) the history of the rates for cable
programming services of the system, including
the relationship of such rates to changes in
general consumer prices;
[(D) the rates, as a whole, for all the cable
programming, cable equipment, and cable
services provided by the system, other than
programming provided on a per channel or per
program basis;
[(E) capital and operating costs of the cable
system, including the quality and costs of the
customer service provided by the cable system;
and
[(F) the revenues (if any) received by a
cable operator from advertising from
programming that is carried as part of the
service for which a rate is being established,
and changes in such revenues, or from other
consideration obtained in connection with the
cable programming services concerned.]
(2) Standard for unreasonable rates.--The Commission
may only consider a rate for cable programming services
to be unreasonable if it substantially exceeds the
national average rate for comparable cable programming
services.
(l) Definitions.--As used in this section--
(1) The term ``effective competition'' means that--
(A) fewer than 30 percent of the households
in the franchise area subscribe to the cable
service of a cable system;
(B) the franchise area is--
(i) served by at least two
unaffiliated multichannel video
programming distributors each of which
offers comparable video programming to
at least 50 percent of the households
in the franchise area; and
(ii) the number of households
subscribing to programming services
offered by multichannel video
programming distributors other than the
largest multichannel video programming
distributor exceeds 15 percent of the
households in the franchise [area; or]
area;
(C) a multichannel video programming
distributor operated by the franchising
authority for that franchise area offers video
programming to at least 50 percent of the
households in that franchise [area.] area; or
(D) a local exchange carrier offers video
programming services directly to subscribers,
either over a common carrier video platform or
as a cable operator, in the franchise area of
an unaffiliated cable operator which is
providing cable service in that franchise area.
SEC. 628. DEVELOPMENT OF COMPETITION AND DIVERSITY IN VIDEO PROGRAMMING
DISTRIBUTION.
(c) Regulations Required.--
(1) Proceeding required.--Within 180 days after the
date of enactment of this section, the Commission
shall, in order to promote the public interest,
convenience, and necessity by increasing competition
and diversity in the multichannel video programming
market and the continuing development of communications
technologies, prescribe regulations to specify
particular conduct that is prohibited by subsection
(b).
(2) Minimum contents of regulations.--The regulations
to be promulgated under this section shall--
(A) establish effective safeguards to prevent
a cable operator which has an attributable
interest in a satellite cable programming
vendor or a satellite broadcast programming
vendor from unduly or improperly influencing
the decision of such vendor to sell, or the
prices, terms, and conditions of sale of,
satellite cable programming or satellite
broadcast programming to any unaffiliated
multichannel video programming distributor;
(B) prohibit discrimination by a satellite
cable programming vendor in which a cable
operator has an attributable interest or by a
satellite broadcast programming vendor in the
prices, terms, and conditions of sale or
delivery of satellite cable programming or
satellite broadcast programming among or
between cable systems, cable operators, or
other multichannel video programming
distributors, or their agents or buying groups;
except that such a satellite cable programming
vendor in which a cable operator has an
attributable interest or such a satellite
broadcast programming vendor shall not be
prohibited from--
(i) imposing reasonable requirements
for creditworthiness, offering of
service, and financial stability and
standards regarding character and
technical quality;
(ii) establishing different prices,
terms, and conditions to take into
account actual and reasonable
differences in the cost of creation,
sale, delivery, or transmission of
satellite cable programming or
satellite broadcast programming;
(iii) establishing different prices,
terms, and conditions which take into
account economies of [scale, cost
savings, or other direct and legitimate
economic benefits] scale or cost
savings reasonably attributable to the
number of subscribers served by the
distributor; or
(iv) entering into an exclusive
contract that is permitted under
subparagraph (D);
(C) prohibit practices, understandings,
arrangements, and activities, including
exclusive contracts for satellite cable
programming or satellite broadcast programming
between a cable operator and a satellite cable
programming vendor or satellite broadcast
programming vendor, that prevent a multichannel
video programming distributor from obtaining
such programming from any satellite cable
programming vendor in which a cable operator
has an attributable interest or any satellite
broadcast programming vendor in which a cable
operator has an attributable interest for
distribution to persons in areas not served by
a cable operator as of the date of enactment of
this section; and
(D) with respect to distribution to persons
in areas served by a cable operator, prohibit
exclusive contracts for satellite cable
programming or satellite broadcast programming
between a cable operator and a satellite cable
programming vendor in which a cable operator
has an attributable interest or a satellite
broadcast programming vendor in which a cable
operator has an attributable interest, unless
the Commission determines (in accordance with
paragraph (4)) that such contract is in the
public interest.
SEC. 639. OBSCENE PROGRAMMING.
Whoever transmits over any cable system any matter which is
obscene or otherwise unprotected by the Constitution of the
United States shall be fined not more than [$10,000] $100,000
or imprisoned not more than 2 years, or both.
SEC. 640. SCRAMBLING OF CABLE CHANNELS FOR NONSUBSCRIBERS.
(a) Requirement.--In providing video programming unsuitable
for children to any subscriber through a cable system, a cable
operator shall fully scramble or otherwise fully block the
video and audio portion of each channel carrying such
programming upon subscriber request and without any charge so
that one not a subscriber does not receive it.
(b) Definition.--As used in this section, the term
``scramble'' means to rearrange the content of the signal of
the programming so that the programming cannot be received by
persons unauthorized to receive the programming.
TITLE 18, UNITED STATES CODE
Sec. 1307. Exceptions relating to certain advertisements and other
information and to State-conducted lotteries
(a) The provisions of sections 1301, 1302, 1303, and 1304
shall not apply to--
(2) an advertisement, list of prizes, or other
information concerning a lottery conducted by a State
acting under the authority of State law which is--
(A) conducted by a not-for-profit
organization or a governmental organization;
[or]
(B) conducted as a promotional activity by a
commercial organization and is clearly
occasional and ancillary to the primary
business of that [organization.] organization;
or
(C) conducted by a commercial organization
and is contained in a publication published in
a State in which such activities or the
publication of such activities are authorized
or not otherwise prohibited, or broadcast by a
radio or television station licensed in a State
in which such activities or the broadcast of
such activities are authorized or not otherwise
prohibited.
Sec. 1464. Broadcasting obscene language
Whoever utters any obscene, indecent, or profane language by
means of radio communication shall be fined not more than
[$10,000] $100,000 or imprisoned not more than two years, or
both.
Sec. 2511. Interception and disclosure of wire, oral, or electronic
communications prohibited
(1) Except as otherwise specifically provided in this
chapter, any person who--
(a) intentionally intercepts, endeavors to intercept,
or procures any other person to intercept or endeavor
to intercept, any [wire, oral, or electronic
communication;] wire, oral, electronic, or digital
communication;
(b) intentionally uses, endeavors to use, or procures
any other person to use or endeavor to use any
electronic, mechanical, or other device to intercept
any [oral communication] communication when--
(i) such device is affixed to, or otherwise
transmits a signal through, a wire, cable, or
other like connection used in wire
communication; or
(ii) such device transmits communications by
radio, or interferes with the transmission of
such communication; or
(iii) such person knows, or has reason to
know, that such device or any component thereof
has been sent through the mail or transported
in interstate or foreign commerce; or
(iv) such use or endeavor to use (A) takes
place on the premises of any business or other
commercial establishment the operations of
which affect interstate or foreign commerce; or
(B) obtains or is for the purpose of obtaining
information relating to the operations of any
business or other commercial establishment the
operations of which affect interstate or
foreign commerce; or
(v) such person acts in the District of
Columbia, the Commonwealth of Puerto Rico, or
any territory or possession of the United
States;
(c) intentionally discloses, or endeavors to
disclose, to any other person the contents of any
[wire, oral, or electronic communication] wire, oral,
electronic, or digital communication in violation of
this subsection; or
(d) intentionally uses, or endeavors to use, the
contents of any [wire, oral, or electronic
communication,] wire, oral, electronic, or digital
communication, knowing or having reason to know that
the information was obtained through the interception
of a [wire, oral, or electronic communication,] wire,
oral, electronic, or digital communication, in
violation of this subsection;
shall be punished as provided in subsection (4) or shall be
subject to suit as provided in subsection (5).
(2)(a)(i)It shall not be unlawful under this chapter for an
operator of a switchboard, or an officer, employee, or agent or
a provider of [wire or electronic communication service,] wire,
electronic, or digital communication service, whose facilities
are used in the transmission of a wire communication, to
intercept, disclose, or use that communication in the normal
course of his employment while engaged in any activity which is
a necessary incident to the rendition of his service or to the
protection of the rights or property of the provider of that
service, except that a provider of wire communication service
to the public shall not utilize service observing or random
monitoring except for mechanical or service quality control
checks.
(ii) Notwithstanding any other law, providers of wire or
electronic communication service, their officers, employees,
and agents, landlords, custodians, or other persons, are
authorized to provide information, facilities, or technical
assistance to persons authorized by law to intercept wire,
oral, or electronic communications or to conduct electronic
surveillance, as defined in section 101 of the Foreign
Intelligence Surveillance Act of 1978 if such provider, its
officers, employees, or agents, landlord, custodian, or other
specified person, has been provided with--
(A) a court order directing such assistance signed by
the authorizing judge, or
(B) a certification in writing by a person specified
in section 2581(7) of this title or the Attorney
General of the United States that no warrant or court
order is required by law, that all statutory
requirements have been met, and that the specified
assistance is required, setting forth the period of
time during which the provision of the information,
facilities, or technical assistance is authorized and
specifying the information, facilities, or technical
assistance required. No provider of [wire or electronic
communication service,] wire, electronic, or digital
communication service, officer, employee, or agent
thereof, or landlord, custodian, or other specified
person shall disclose the existence of any interception
or surveillance or the device used to accomplish the
interception or surveillance with respect to which the
person has been furnished an order or certification
under this subparagraph, except as may otherwise be
required by legal process and then only after prior
notification to the Attorney General or to the
principal prosecuting attorney of a State or any
political subdivision of a State, as may be
appropriate. Any such disclosure, shall render such
person liable for the civil damages provided for in
section 2520. No cause of action shall lie in any court
against any provider of [wire or electronic
communication service,] wire, electronic, or digital
communication service, its officers, employees, or
agents, landlord, custodian, or other specified person
for providing information, facilities, or assistance in
accordance with the terms of a court order or
certification under this chapter.