Congress again considers telecom reform

By Juan Antonio Osuna
CRA Staff

As debate over sweeping telecommunications reform continues, industry parties and lawmakers draw closer to resolution. A Republican-sponsored bill was reported out of full committee in late March with changes designed to win over local phone companies.

Sponsored by Sen. Larry Pressler (R-SD), chair of the Senate Commerce, Science and Transportation Committee, the bill no longer forces the regional Bell operating companies (RBOCs) to wait three years before entering into long-distance and manufacturing markets.

Instead, the bill bestows upon the Federal Communications Commission authority to give the go-ahead, based on a complex checklist of criteria outlined in the bill. Once the FCC determines that a local telephone company faces competition for local markets and no longer enjoys monopoly status, it will allow the company to sell long-distance service and manufacture telecommunications equipment.

Other portions of the bill affect the cable industry, online services, long-distance companies and wireless communications providers. The goal of the bill is to spur competition through deregulation that allows these industries to enter each other's markets. Perhaps the most sensitive issue involves the local telephone markets, where the RBOCs now hold monopolies in most areas.

The Alliance for Competitive Communications, a consortium of RBOCs, welcomed most changes over earlier drafts distributed by Pressler and over last year's bill sponsored by Sen. Ernest F. Hollings (D-SC). However, the consortium did have a few criticisms.

"The latest draft of telecommunications reform legislation released by Sen. Pressler represents a substantial improvement," an alliance statement said.

However, the statement also said, "The checklist RBOCs must meet for entering long distance needs to be less complex and more objective. The bill gives the Federal Communications Commission broad discretion to delay Bell entry into the long-distance market."

Some of these concerns were shared by Sens. Bob Packwood (R-OR) and John McCain (R-AZ), the only two of 19 senators on the committee who voted March 30 against reporting the bill.

In a Senate report, the two senators said: "Under this bill, the long-distance and manufacturing markets will not be fully open until the [FCC] decides that it is in the 'public interest, convenience and necessity' to allow the [RBOCs] to provide long distance and manufacturing.

"Whether or not open markets are in the 'public interest, convenience and necessity' can be argued endlessly at the [FCC] and in the courts. Such a delay may benefit competitors, but not consumers," they countered.

The two senators also argued against provisions that give the FCC authority to mandate subsidies for universal telecommunications services. The bill's "universal service" provision requires telecommunications providers to make minimal, affordable service available to everyone.

"We support the goals of affordability and universality for necessary telecommunications services," Packwood and McCain said. "However, it is unwise to grant any agency such an open-ended mandate."

The most controversial aspect of the universal service provision was a section requiring telecommunications companies to provide service at "incremental cost" to schools, health care providers and libraries. This provision was incorporated as an amendment, sponsored by Sens. Jay Rockefeller (D-WV), James Exon (D-NE) and John Kerry (D-MA).

As for this amendment, Sen. Conrad Burns (R-MT) took aim at Planned Parenthood, the country's largest provider of birth control and abortion services. Alluding to the potential eligibility of Planned Parenthood to receive preferential rates for telecommunications services, Burns said, "I am afraid the Senate is being inadvertently drawn into an area of high controversy which I, for one, believe we should avoid."

Burns also criticized the notion of preferential rates, saying such a system "buries much of the cost of providing telecommunications service to our health and educational systems in the telephone rates all Americans pay."

Although the current universal service provisions are narrower than those in last year's bill, sources said Pressler's bill may still encounter hurdles on the Senate floor. The bill may not reach the floor until June.

One section of the bill that encountered no controversy within the full committee markup was Sen. James Exon's (D-NE) amendment to clean up obscenity on the Internet. However, this addition has enraged civil liberties groups and many Internet users, who have called for a full-scale war to stop what they see as an attack on First Amendment rights. (See Page 1.)