Larry Pressler

Mr. PRESSLER

Mr. PRESSLER. Mr. President, for the information of my colleagues, this morning the Senate will immediately resume consideration of S. 652, the telecommunications bill. Amendments are pending to the bill. Therefore, Senators should be aware that rollcall votes are expected throughout the day today and possibly as early as 10 a.m.

Mr. PRESSLER

Mr. PRESSLER. Yes.

Mr. PRESSLER. Mr. President, I ask for the yeas and nays on the amendment before the Senate.

Mr. PRESSLER. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. PRESSLER. Mr. President, I believe there are no more speakers. I suggest the absence of a quorum.

Mr. PRESSLER. Mr. President, last night we had what I thought was a very stimulating debate on what makes technology move. And I pointed out that sometimes Government regulation is appropriate but in the computer industry there were no standards and there was no Government regulation and the computer industry moved forward very quickly. I am very stimulated by discussions of what makes technology move forward, what kind of research really results in things moving forward. competition in the computer and telephone industries: a comparison By the early 1980's, AT&T and IBM were two of the largest and most powerful companies in the world. Both had been embroiled in antitrust litigation with the Department of Justice for over a decade. Both the AT&T and IBM suits had focused on interconnection and bundling practices. The Government's complaint against IBM charged the company with ``[m]aintain[ing] pricing policies, including the quoting of a single price for hardware, software and related support,'' which ``discriminated among customers'' and ``limited the development and scope of activities of an independent software and computer support industry * * *.'' IBM was charged with monopolizing both the general marked for electronic digital computer systems, and the submarkets of peripherals and other computer add-ons. The company had allegedly ``[e]ngaged in various pricing and marketing practices'' in order ``to restrain its competitors from entering, remaining or expanding'' in the general computer market, and its submarkets. IBM had allegedly pursued policies that maintained a ``lease-oriented environment so as to raise the barriers to entry or expansion.'' IBM, in short, was allegedly refusing access to its closed, proprietary hardware systems, to stymie competition. The Government's initial complaint against AT&T alleged very similar practices, centering on discriminatory interconnection of other providers of equipment and services, policies that centered on leasing rather than outright sales, and obstruction of competitive equipment providers through maintenance of proprietary standards. AT&T, in short, was allegedly refusing access to its hardware and network, to stymie competition. The Government at first proposed similar remedies in the two cases. IBM was to offer and price separately its computer systems, peripheral equipment, and software and support services. The Government suggested a possible need for structural reorganization as well: it invited the court to grant further relief ``by way of divorcement, divestiture and reorganization with respect to the business and properties of the defendant [IBM] as the Court may consider necessary or appropriate * * *'' On January 8, 1982, the Federal Government resolved both cases--but in fundamentally different ways. The Government simply dismissed the case against IBM. It hoped to achieve its objectives in the computer industry through the consent decree that it signed with AT&T. AT&T was broken up, but was freed from the antitrust quarantines imposed upon it by a previous antitrust decree entered in 1956, and so permitted to enter the computer business to challenge IBM. emergence of competition: computers By the time the Government had decided not to pursue its case against IBM, Intel was already over a decade old. Apple was growing fast. And IBM had just introduced a brand-new machine, based on an Intel microprocessor. Big Blue's new machine--its ``personal computer''--was small and beige. Three weeks after the break-up of AT&T was complete, in January 1984, Steve Jobs stepped out on the podium at the annual stockholders' meeting of Apple Computer and unveiled the new Macintosh. The Government's decision to allow competition, not regulation to guide the computer market, paid off handsomely. As the Department of Commerce has noted, ``[c]ontinuously declining computer prices, steadily rising performance, and increasingly sophisticated uses have all stimulated domestic sales and exports.'' The Electronic Industries Association has reached a similar conclusion: Pushed by intense competition among PC suppliers, greater use of commodity-based mass marketing channels, and increased focus on the more price-sensitive buyers in homes, schools and small businesses, vendors continued to slash list prices, cut dealer margins, and introduce low-cost lines aimed at the consumer and home markets. The impact of this unfettered competition has had its effect on IBM. IBM's market share, measured against overall industry revenues, had fallen to 20 percent by 1993. It has, however, recovered from the initial shock and is now holding its own against other competitors. IBM's stock, which had dropped to $41 a share by mid-1993 is now back near $100. In an attempt to shift its focus from mainframes to the PC market, IBM has introduced its OS/2 Warp operating system, which is fighting against Microsoft's Windows operating system. It is important to note that while the industry moved from virtual monopoly to full competition, domestic manufacturers maintained their dominant position in the world market where they continue to account for some 75 percent of all computer hardware sales. United States based firms also dominate the world market for software. emergence of competition: telephony Long Distance: In contrast, the markets for products and services provided by the predivestiture AT&T have languished. After an initial postdivestiture drop, AT&T's share of the overall interexchange market is now holding steady at about 60 percent even though AT&T charges higher prices than its rivals for comparable service. The combined market share of AT&T, MCI, and Sprint remains at 94 percent, down only 5 percent since divestiture. [[Page S8073]] Price competition has also not maintained pace with the computer industry. MCI and Sprint have brought their prices up to AT&T's since divestiture, and the three major carriers' prices now move almost monolithically. Long-distance prices actually fell faster before divestiture, when access charges are considered. Equipment: AT&T has lost significant share in the market for telecommunications equipment. In the market for central office switching equipment, all market share lost by AT&T since divestiture has been gained by Canada's Northern Telecom. Foreign producers accounted for about one-fifth of U.S. switch sales in 1982, but they had more than half of the market 10 years later. Between them AT&T and Northern Telecom still controlled some 87 percent of sales in 1992, precisely the same combined share they held in 1982. In the market for CPE, the vacuum created by AT&T's breakup and the line-of-business restrictions was filled by large foreign manufacturers. The Commerce Department has determined that ``[t]here is very little U.S. production of commodity-type [CPE] products, such as telephone sets, telephone answering machines and facsimile machines'' and that the country's trade deficit in CPE was approximately $3 billion in 1992. comparative market performance Price: Nowhere is difference between the IBM and AT&T approaches more apparent than in improvements in price performance ratios. A $5,000 PC in 1990--featuring a 486 microprocessor running at 25 MHz--had the processing power of a $250,000 minicomputer in the mid 1980's, and a million-dollar mainframe of the 1970's. Five years later, that same $5,000 PC is two generations out of date--with a third new generation on the horizon. Systems with nearly twice the processing power of that 1990 system--using a 486DX2--66 chip--are available for under $1,500 and advertisements are run which encourage owners of these chips to upgrade to newer ones. Systems with more than twice the processing power of that system--featuring a 120 MHZ Pentium chip--are now available, most for under $5,000. The upshot is that consumers can purchase systems with four times the power of 1980's mainframes at one-fiftieth of the price. Put another way, systems today have over 200 times the value of systems in 1984. By contrast, longdistance calls today represent only twice the value of long-distance calls in 1984. Had price-performance gains of the same magnitude occurred in the long-distance market since 1984, the results would have been equally stunning. For example, in 1984, a 10-minute call at day rates between New York and Los Angeles cost a little less than $7, in 1994 dollars. Today it costs $2.50. Had competition and technological advances developed in the long distance market as it did in the computer market, that same would cost less than 5 cents. Alternatively, a 10-minute call from New York to Japan cost roughly $25 in 1984, again in 1994 dollars, and $14 today. Had long-distance service advanced as rapidly as the personal computer industry, that call would cost less than 13 cents. This same formula can be applied to all telecommunications markets. The price of a PBX, measured on a per-line basis and adjusted for inflation, has fallen by about half since 1984, from about $1,000 to a little over $500. Price and performance gains on par with the computer industry's would have brought that per-line price down to less than $4. Inflation adjusted per-line prices for central office switches went from $330 in 1984 to $165 today. Improvements in Central Office switch value comparable to that seen in PC's would have lowered that figure below $2. A typical telephone cost about $50 in 1985 and $25 today, but had CPE followed the trend in the PC industry, essentially the same functionality might cost under a dollar today. Open Networks: Central to the Government's case against both companies was their attempts to maintain closed systems. Yet in scarcely a decade after the Government dismissed its suit against IBM, 99 percent of all computing power migrated out of the mainframe and on to dispersed, desktop machines. Driven entirely by market forces, IBM has since extensively unbundled its products and services. IBM has spun off its printer and keyboard division, Lexmark, and has entered into numerous joint ventures with former rivals. ``The idea of open systems--that computers should easily share things and basically behave like friends--is what everyone is aiming for,'' IBM's advertising now declares. During that same time period, regulators and industry participants have been struggling to define the same types of interfaces. Jobs: One measure of relative market health is growth in the number of employees. In 1980 there were a little more than 300,000 Americans employed in the computer industry while more than a million were engaged in the provision of telephone products and services. By 1993 computer products and services accounted for more than 1.2 million, a four-fold increase. At the same time, the number of telephone employees had dropped to less than 900,000. conclusion In 1982, the Department of Justice was prosecuting two cases, one against AT&T and another against IBM. The theories of the two cases were virtually identical. The Government, however, chose to break up AT&T and prohibit its local companies from participating in the markets for long distance service and telecommunications equipment. At the same time, it chose to drop its suit against IBM and allow market forces to shape the computer industry. These two very different approaches have yielded very different results. Today AT&T remains dominant in the market for long distance services. In the market for telecommunications equipment, AT&T has seen erosion of its position, but almost all the new entry has been by foreign firms. IBM, by contrast, is now only the fourth largest personal computer manufacturer. The computer market is flourishing, domestic jobs are growing fast, and U.S. computers set the standard worldwide. These results confirm that in a rapidly developing market, competition will yield better results than will regulation and embargo. Mr. President, I would like to summarize my statement by saying that I think all of us here have worked together on a bipartisan basis. We have some disagreements on some amendments to come, but I am sure we will work them out. I very much respect everyone's point of view, and I respect the need to debate these. And I welcome Senators to come to the floor to make their statements and to offer their amendments, for that matter. It is my strongest feeling that the bill we worked out in the Commerce Committee--and we had input from a number of sources. Indeed, we have had meetings since January on this, and we invited other Senators who are not on the Commerce Committee to participate. I believe the very able staffer of my friend from Nebraska--and I wish to praise Carol Ann Bischoff. I had intended to praise her in my closing statement. It is not unusual to praise a staffer, but she did a great job. She was in many of the meetings, and we appreciate that very much. So what I am saying is a number of people have worked on this legislation. I am not criticizing anyone for raising questions here. We will continue to work on it. We did have meetings every night from about January on, including Saturdays and Sundays, for interested Senators, and we think that we have crafted a good bill. I want to praise Senator Hollings and Senator Inouye, all the Democrats and Republicans on the committee and off the committee who participated. But we worked out this delicate balance on this bill, which provides for an FCC review. It provides for a checklist. It also has the public interest, convenience and necessity standard. We feel that going on to a Justice Department review would be duplicative. But in any event, let me state the need to pass this bill. This bill will provide a road map for the next 15 years or 10 years or however long it takes to get into the wireless age. It will provide a basis for investment and for jobs, and it will be something like the Oklahoma land rush because right now our telecommunications sectors are an apartheid, an economic apartheid. They each have an economic sector. This bill is intended to get into everybody else's business, but also it takes off certain restrictions on our domestic companies that they spend their money in Europe. [[Page S8074]] So I hope we can pass it, and I wish to commend everybody for participating. We have tried to run as open a process as possible. Senator Hollings and I have invited everybody to meetings. His staff has done an outstanding job and our staff on the Commerce Committee has done an outstanding job. We welcome amendments. We welcome digesting this further. I thank everybody for their participation. I yield the floor. Mr. KERREY addressed the Chair.

Mr. PRESSLER. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. PRESSLER. Mr. President, I want to give a little legislative history on the majority leader and minority leader's package, if I may, and if any Senator has pending business that they want to interrupt me with, I will be glad to do so. I want to praise both Senator Dole and Senator Daschle for their leadership on the amendments we just passed which have been worked out and negotiated over a number of weeks and days and down to the last minute. The package of amendments that is the Dole-Daschle package is intended to modify a number of areas in the bill and thus improve the bill's deregulatory nature. It ensures that certain provisional intents usually apply the way they were meant to and provides exceptions where necessary. The amendments end all rate regulations on small and rural cable companies. These companies cannot economically exist under such rate controls and are unable to provide basic and upper-tier services. It also eliminates restrictions on the number of TV stations, 12 twelve, owned nationwide while maintaining the 35-percent national audience reach. It eliminates all ownership restrictions on radio, and the FCC is granted the authority to deny additional licenses if it thinks an entity is getting undue concentration. It gets rid of the GTE consent decree arising from GTE's purchase of Sprint. [[Page S8070]] GTE has sold Sprint. Therefore, the consent decree is no longer necessary. It eliminates unnecessary regulations and functions at the FCC. These items are noncontroversial, suggested by the FCC. The FCC will also be required to forbear from regulating when competition develops. Telecommunications carriers will gain a petition process to seek repeal of the FCC and State regulations. The amendment redefines universal service to narrow its definitions to essential services--not entertainment services and equipment. Finally, the amendment will require the FCC to complete a proceeding within 270 days, determining whether or not AT&T should continue to be regulated as a dominance carrier in the long distance market. Again, this amendment seeks to improve the bill's deregulatory nature by addressing overlooked items but maintaining the bill's fundamental structure. Mr. President, those are some comments on the Dole-Daschle package of amendments that we have just adopted, for purposes of legislative history. Mr. President, I would like to make some remarks about the upcoming Department of Justice amendment that is being offered by my colleague from North Dakota and, in general, the DOJ. I will proceed with these points on the DOJ and why I feel it is not appropriate to expand this bill to include a DOJ review. First, DOJ proposed the line-of-business restrictions on the BOC's, not the Court, AT&T or the Bell Companies. Second, DOJ and the Court both recognized that the line-of-business restrictions are anticompetitive due to the restriction on entry which actually reduces competition. Third, consequently, DOJ did not follow its own internal policy of proposing a 10-year sunset, but instead promised to conduct triennial reviews. Fourth, AT&T and the district court accepted the line-of-business restrictions on the basis that DOJ would conduct these triennial reviews and the BOC's could obtain waivers from the MFJ under section VIII(c)--the standard proposed in the Dorgan amendment. Fifth, DOJ has abandoned its promise to conduct triennial reviews. Sixth, DOJ fails to deal with waiver requests in a timely manner. Seventh, yet, nearly, all requests for waivers from the line-of- business restrictions are supported by DOJ and approved by the district court. Eighth, DOJ has announced new principles which must be met before it will support relief from the MFJ, thereby signaling its rejection of the section VIII(c) test. the united states doj has failed to fulfill its obligations under the modifications of final judgment First, DOJ proposed the line-of-business restrictions on the BOC's, not the Court, AT&T or the Bell companies. The DOJ was the principal proponent of the line-of-business restrictions.--United States v. Western Electric Co., 552 F. Supp. 131, 186 n.227 (D.D.C. 1982). AT&T did not want the line-of-business restrictions imposed upon the BOC's, but accepted them as part of the bargain to settle the antitrust case with DOJ. We do not want restrictions on those BOCs. That wasn't our idea. We understand the theory, we understand why that had to be part of the bargain, but it wasn't our idea. . . . The last thing in the world you want to do is to impose some further restrictions on their efficiencies, . . . [W]e should be getting rid of restrictions. . . . They weren't our idea.--Comments of Howard Trienens, AT&T General Counsel, FCC En Banc Meeting (March 24, 1982). I'm against restrictions. I'll be happy if nobody is restricted on anything. After this divestiture occurs, let [the BOCs] do what they want.--Comments of Howard Trienens, AT&T General Counsel, United States v. Western Electric Co., Civil Action No. 82-0192, Hearing Transcript at 25210-25211 (June 29, 1982). Second, DOJ and the Court both recognized that the line-of-business restrictions are anticompetitive due to the restrictions on entry which actually reduces competition. The line-of-business restrictions ``are generally anticompetitive and deserve the most careful scrutiny.''--Response Of The United States To Public Comments On Proposed Modification Of Final Judgment at 56, United States v. Western Electric Co., Civil Action No. 82-0192 (May 20, 1982). A number of comments also expressed concern regarding the absence of any time limit on the BOC line of business restrictions. Some have suggested that in the absence of limitations on the duration of the restrictions, as technology changes, the modification will have unintended anticompetitive consequences by needlessly restricting entry. The Department believes that these concerns are valid. Id. at 61-62. [S]uch restrictions deserve ``the most careful scrutiny'' to ensure both that they will have the desired effect and that they will not actually limit competition by unnecessarily barring a competitor from a market.--United States v. Western Electric Co., 552 F. Supp. 131, 186 (D.D.C. 1982). [T]he restrictions are, at least in one sense, directly anticompetitive because they prevent a potential competitor from entering the market. Id. If the restrictions were to continue in effect, their sole effect would be to limit competition by preventing the entry of a viable competitor. Id. at 195 n.264. Third, consequently, DOJ did not follow its own internal policy of proposing a 10-year sunset, but instead promised to conduct triennial reviews. It has been DOJ Antitrust Division policy since 1979, and remains so today, that antitrust consent decrees should have an automatic sunset of 10 years or less. Most antitrust consent decrees contain this 10 year sunset language. The MFJ does not, and is one of the few exceptions to this Department policy. The DOJ Antitrust Division Manual contains ``standard language'' to be contained in antitrust consent decrees, which states that the ``final judgment will expire on the tenth anniversary of its date of entry or, with respect to any particular provision, on any earlier date specified.''--U.S. Department of Justice, Antitrust Division Manual IV- 76 (2d ed. 1987). DOJ promised AT&T and the district court that it would examine the continuing need for the line-of-business restrictions on the third anniversary of its entry and every 3 years thereafter. [T]he Department intends to review carefully the continuing need for the restrictions. In order to ensure that the Court is fully apprised of development in this area, the Department will undertake to make a formal report to the Court on the continuing need for the restrictions on the third anniversary of the date of divestiture, and every third year thereafter so long as the restrictions remain in force.--Response Of The United States To Public Comments On Proposed Modification Of Final Judgment at 62, United States v. Western Electric Co., Civil Action No. 82-0192 (May 20, 1982). The Department recognizes that as technology changes, the restrictions on the BOCs may outlive their usefulness, and indeed, become anticompetitive in effect. The Department has, therefore, committed to a regular review of the need for the restrictions with the intention of petitioning the Court for their removal at the earliest possible date consistent with technological and competitive conditions.--Brief Of The United States In Response To The Court's Memorandum of May 25, 1982, at 31, United States v. Western Electric Co., Civil Action No. 82-0192 (June 14, 1982). Fourth, AT&T and the district court accepted the line-of-business restrictions on the basis that DOJ would conduct these triennial reviews and the BOC's could obtain waivers from the MFJ under section VIII(C)--the standard in the Dorgan amendment. AT&T's acceptance of the restrictions is based upon the Department's commitment to a periodic review of their reason-ableness . . ., and upon the BOC's ability--independent of the Department's periodic review--to seek the Court's removal of the restrictions (Decree, Sec. VII).--AT&T Brief In Response To The Court's Memorandum of May 25, 1982, United States v. Western Electric Co., Civil Action No. 82-0192 (June 14, 1982). The district court required that DOJ and AT&T agree to Section VIII(C) as a condition of its approval of the MFJ. It is probable that, over time, the Operating Companies will lose the ability to leverage their monopoly power into the competitive markets from which they must now be barred. This change could occur as a result of technological developments which eliminate the Operating Companies' local exchange monopoly or from changes in the structures of competitive markets. . . . the decree should therefore contain a mechanism by which they may be removed.--United States v. Western Electric Co., 552 F. Supp. 131, 194-195 (D.D.C. 1982). Recognizing this fact, the Department of Justice has undertaken to report to the Court every three years concerning the continuing need for the restrictions imposed by the decree. (Citation omitted.) In addition, both parties have agreed that the restrictions may be removed over the opposition of a party to the decree when the Court finds that ``the rationale for [the restriction] is outmoded by technical developments.'' Id. [[Page S8071]] Thus, a restriction will be removed upon a showing that there is no substantial possibility that an Operating Company could use its monopoly power to impede competition in the relevant market. [T]he Court will approve the proposed decree as in the public interest provided that the parties agree to the addition of the following new section: VIII Modifications. . . . Id. at 225. Fifth, DOJ has abandoned its promise to conduct triennial reviews. DOJ conducted the first triennial review in 1987 and recommended removal of the interexchange restriction on mobile services, the manufacturing restriction, the information services restriction, and the restriction against the provision of nontelecommuni-cations products and services.--Report and recommendations of the United States concerning the line of business restrictions imposed on the bell operating companies by the modification of final judgment at 56-57 (February 2, 1987); and response of the United States to comments on its report and recommendations concerning the line of business restrictions imposed on the bell operating companies by the modification of final judgment at 24, 60, 95, and 135 (April 27, 1987). In 1987, during the first triennial review, the district court only adopted DOJ's recommendation to remove the restriction against the provision of nontelecommunications products and services, and granted limited information services infrastructure components.--United States v. Western Electric Co., 673 F. Supp. 525 (D.D.C. 1987). The court of appeals reversed and remanded the decision of the district court to not remove the information services restriction.-- United States v. Western Electric Co., 900 F.2d 283 (D.C. Cir. 1990). The district court removed the information services restriction on remand.--United States v. Western Electric Co., slip op. (D.D.C. July 25, 1991). In 1989, while the appeal from the first triennial review decision by the district court was pending, DOJ advised the Court that it ``remains committed to a periodic review of the decree's line of business restrictions,'' but that it ``plans to defer the second general review of the decree restrictions until after the court of appeals decides the pending appeals.''--Memorandum of the United States Concerning the second review of the line-of-business restrictions at 3 (July 3, 1989). DOJ advised the district court that ``[f]ollowing the Court of Appeals' decision, the Department will suggest to this Court a schedule and procedures for the next general review consistent with that decision.'' Id. at 3-4. SBC, Bell Atlantic, and NYNEX sought a scheduling order which would require DOJ to submit a second triennial review report to the district court within 90 days after the Court of Appeals decision. In response to DOJ's announcement that it was going to postpone the second triennial review, the district court held that: [It] does not endorse the Department's recommendation that the triennial review be postponed until after the Court of Appeals decides on currently pending appeals. This Court has no intention of postponing any phases of its own responsibilities under the decree because appeals have been filed. [W]hile the Court does not affirmatively endorse the Department's plans, it does not impose any particular timing requirements of its own. [T]he Department has complete discretion on the question whether and when to file another report, and the Court will not attempt to interfere with the exercise of that discretion.--United States v. Western Electric Co., slip op. at 4-5 (July 17, 1989). DOJ has never conducted another triennial review. Sixth, DOJ fails to deal with waiver requests in a timely manner. Section VII of the MFJ contemplates that waivers may be filed directly with the District Court. Section VII provides, in part, that: Jurisdiction is retained by this Court for the purpose of enabling. . . a BOC to apply to this Court at any time for such further orders or directions as may be necessary or appropriate for the construction or carrying out of this Modification of Final Judgment, for the modification of any of the provisions thereof, . . . . However, in 1984, the district court announced that it would consider waiver requests for removal of the line-of-business restrictions only after review by DOJ.--United States v. Western Electric Co., 592 F. Supp. 846, 873-874 (D.D.C. 1984). This procedure of requiring the BOCs to obtain DOJ review of waiver requests before filing them with the district court has given DOJ the ability to, in effect, deny relief from the line-of-business restrictions through inordinate delays. In 1984, DOJ disposed of 23 waiver requests, with the average age of waivers pending at DOJ at the end of the year being approximately 2 months; In 1992, DOJ disposed of 9 waiver requests, with the average age of waivers pending at DOJ at the end of the year being approximately 30 months; In 1993, DOJ disposed of 7 waiver requests, with the average age of waivers pending at DOJ at the end of the year being approximately 36 months; In 1994, DOJ disposed of 10 waiver requests, with the average age of waivers pending at DOJ at the end of the year being approximately 30 months; On average, DOJ now takes almost as much time to consider a single waiver request as was intended to elapse between the comprehensive triennial reviews it promised, but has failed, to conduct. Seventh, yet, nearly all requests for waivers from the line-of- business restrictions are supported by DOJ and approved by the district court. DOJ has acted on 266 waiver requests and opposed relief in only 6 cases. In all others, DOJ supported relief either in whole or in part. Of the same 266 waiver requests, the district court has approved 249 in their entirety and 5 in part. Only 6 were denied and 6 were pending as of the end of 1993.--Affidavit of Paul H. Rubin at para.para.8 and 10, submitted in support of the Motion of Bell Atlantic Corp. BellSouth Corp. NYNEX Corp. and Southwestern Bell Corp. to vacate the decree, United States v. Western Electric Co., Civil Action No. 82-0192 (filed July 6, 1994). The district court has approved the vast majority--96 percent--of the waiver requests submitted to it. Eighth, DOJ has announced ``new principles''--as part of the Ameritech agreement--which must be met before it will support relief from the MFJ, Thereby signaling its rejection of the section VIII(C) test. Section VIII(C) of the MFJ provides that: the restrictions imposed upon the separated BOCs by virtue of section II(D) shall be removed upon a showing by the petitioning BOC that there is no substantial possibility that it could use its monopoly power to impede competition in the market it seeks to enter. Section VIII(C) assumes that a local exchange monopoly will continue to exist, but nevertheless provides the BOC's with a basis for relief. Under Section VIII(C), the only issue is whether there is a ``substantial possibility'' that a BOC can use its local exchange monopoly to ``impede competition''. [U]nless the entering BOC will have the ability to raise prices or restrict output in the market it seeks to enter, there can be no substantial possibility that it could use its monopoly power to ``impede competition''.--United States v. Western Electric Co., 900 F.2d 283, 295-296 (D.C. Cir. 1990). According to the court of appeals, . . . the importance of the word ``substantial'' should not be minimized. The ultimate burden under Section VIII(C) remains on the petitioning BOC, but the requirement that the possibility of using its monopoly power to impede competition be ``substantial'' relieves the BOC of the essentially impossible task of proving that there is absolutely no way for it to use its monopoly power to impede competition. Id. at 296. According to the DOJ, a BOC cannot impede competition in a given market unless it has market power--the ability to restrict output and/or raise prices. Id. Whatever it means to ``leverage'' one's monopoly power, the DOJ is surely correct that no damage to competition--through ``leverage'' or otherwise--can occur unless the BOCs can exercise market power. Id. Under Section VIII(C), the state of competition or lack thereof in the local exchange is irrelevant. And while there may be some complexities in defining precise boundaries of the relevant market, one thing that is clear from section VIII(C) is that it is the ``market [the BOC] seeks to enter'' that matters, and not the local exchange market. Id. On February 28, 1995, Assistant Attorney General Anne K. Bingaman gave an address to The National Press Club entitled ``Promoting Competition In Telecommunications'' (Bingaman Address) wherein she set forth new principles that would establish a basis for DOJ support for removal of the line-of-business restrictions. Until Congress enacts reform legislation, we are prepared to recommend to Judge Greene that the Court move forward under the MFJ when three basic principles are satisfied: First, steps to foster the emergency of local competition must be taken. Second, the effectiveness of these steps must be tested by actual marketplace facts--by the state of competition. Third, RBOC participation in other markets initially must be accompanied by appropriate safeguards.'' Bingaman Address at 12-13. On March 2, 1995, David Turetsky, Senior Counsel to AAG Bingaman, gave an interview to Charles Jayco of KMOX Radio in St. Louis, MO, wherein he indicated that DOJ would recommend relief from the long distance [interexchange] restriction in court if the states take steps to foster local competition and choice is really available to consumers. There is recognition that there is great need for competition, real competition in local telephone service and for that matter, cable television service, too. . . . The way we hope to get there, in the local market, is first of all, national legislation. . . . But this week we said that we have to do what we can with the tools we have in the Antitrust Division of the Department of Justice to try to foster local competition without national legislation. We can't wait. So really what we have done is announced that we're going to try to find a way to move forward. The first part of what we're trying to do is really up to the states. If they take steps to foster local competition and if we can test the steps they've taken to see that there are some actual marketplace facts that indicate that choice is really available for consumers, then what we'll do is we'll go to court, which we can do now, and recommend that local phone company be able to also compete in the long distance market, something they're not able to do today.--KMOX Newsmakers Broadcast Transcript at 2 (March 2, 1995). DOJ's adoption of this new and different standard for removal of the line-of-business restrictions is inconsistent with the section VIII(C) test and inconsistent with the court of appeals' articulation of what the BOC's must demonstrate under section VIII(C) to obtain relief from the line-of-business restrictions. In other words, DOJ has announced that it will not follow the law of the MFJ and apply the section VIII(C) test to BOC requests for relief from the line-of-business restrictions. Mr. President, I yield the floor.

Mr. PRESSLER. I ask unanimous consent that the order for the quorum call be rescinded.

Mr. PRESSLER

Mr. PRESSLER. Mr. President, I also ask unanimous consent to be added as a cosponsor.

Mr. PRESSLER

Mr. PRESSLER. Will my friend yield so I can get a question in?

Mr. PRESSLER. Mr. President, I would like to get into this colloquy.

Mr. PRESSLER

Mr. PRESSLER. Mr. President, I hope the Senator from North Dakota will bring his amendment forth. Mr. DORGAN addressed the Chair.

Mr. PRESSLER. I do not care to debate it.

Mr. PRESSLER. I do not see colleagues nor the Chamber filled with people listening to my words. But, in very good spirit, I say to my friend from Nebraska, I have worked with him on his interoperability amendment. In fact, we accepted it. But only after insisting that a private standard be set. My understanding is then the Senator's original proposal had a Government standard set.

Mr. PRESSLER. If the Senator will yield, it is not true that if we allow the FCC to set the standard for anything, a Government standard, there is very little room for innovation, for new inventions, for the type of things that have happened in the competitive world. There are some winners and some losers. But my point about computers is that every 18 months things become virtually obsolete because there is so much competition. There are so many things going on. The average consumer has benefited from all this competition. They can own a personal computer, and the prices are going down and capacity has gone up enormously. Had we had the Government standards we would not have seen that type of innovation. That is the point I am trying to make.

Mr. PRESSLER. Mr. President, if I may commend my friend from Nebraska because I think our discussion has stimulated at least me to think a bit about where we are historically as we conclude this debate this evening. First of all, it is stimulating in the sense to think if we can find a way to help people have more products available at a lower cost that are useful to them in their lives, we are doing more for them than if we were to give them Government aid. There is a proper role for Government in our society. But it is my strongest feeling that if we can find ways through competition in the free enterprise system that people can have products at a lower price in abundance and innovations we are actually doing more for them frequently than if we give them grants or aid. For example, let us talk about senior citizens. I am a champion of senior citizens. We deregulated natural gas prices in the 1970's, and I remember I was over in the House of Representatives, and we were struggling with that issue. And people said, if you deregulate natural gas the prices are going to skyrocket and companies are going to gouge everybody. In fact, the prices came down and they have stayed down. If you want to do a senior citizen a favor, you can help the cost of heating their home stay low. You can help the cost of their goods to be lower through competition. Usually we think of helping senior citizens by giving them more money or spending taxpayers' money, and in some cases that is accurate. But you can also help senior citizens by providing them low cost fuel and low cost natural gas. And that has been done through deregulated natural gas prices. And I also say that to a lot of people in the United States the innovations that have occurred in the computer industry--true, there have been some winners and losers among the companies, but the fact is that people have lower cost personal computers available today through competition. And we never could have achieved that through Government regulations or Government standards. Indeed, every 18 months there is a complete turnover. I also serve on the Finance Committee, and the people in the computer area in Silicon Valley would like an 18-month depreciation schedule because their products are obsolete after 18 months. That is because there is so much competition and there is not a Government standard holding them back. The American free enterprise system allows that type of innovation. Every 18 months the old computer is obsolete, and we are moving forward and people are able to buy personal computers at a low cost. That is a service to people much more so than if we had a huge Government agency regulating and setting standards. I would say that through this bill if we can increase competition and if through this bill we can bring innovation, we will see the same kind of explosion of new devices and investment and services for telecommunications at a lower cost to consumers, just as we have seen in other areas of competition. But we do not have that so long as we have the Justice Department and the FCC running things with Government regulation and Government standards. Now, also let me say what will happen if we do not pass this bill. It is tough to pass this bill because different groups have checkmates and the White House has been opposing this bill--though they will not say they will veto it. But I am very sad about this opposition, because if we do not pass this bill, we will be failing again as a Congress to do what we are supposed to do. Had Congress, before 1982, required AT&T to unbundle and interconnect so they could have competition in the local markets, we would not be here today. We would have had an explosion of new devices in telecommunications, more than we have had. We would have lower costs. There is no reason the cost of long distance calls needs to cost what they do. Consumers should be paying a fourth of what they are paying for local and long distance service, based on what has happened to prices in the computer area. We are trying to do what we were supposed to do in 1982 in this bill, and we are trying to get this thing together. Yet people come to the floor with more regulatory amendments. This amendment that is before us now to put on the Department of Justice another layer of regulation is going to delay, delay, delay. What if computers and innovation in computers had to go through the Department of Justice? It takes 3 to 5 years for them to respond even to petitions that are routine. Why do we want more regulations? If we do not pass this bill, we will be failing again. People say, ``Well, if we don't pass this bill, we'll get another bill.'' No, we will not. We are coming into a Presidential election, and it will be over to 1997 and that is 2 more years of innovation and lower prices for the American people lost. I say to the White House, I find it very odd that the White House is opposing this bill, because they will not say they will veto it. I went over three times to see Al Gore, to get him to lead this movement, because it is everything he says he believes in. It is reinventing, privatizing, all of those things; it is the information highway. I have been amazed that the White House has not supported this. They will not say they are going to veto it. Every Democrat on the Commerce Committee voted for this bill. The Democrats in the Senate have been at the forefront of helping us to deregulate and move forward in telecommunications. I know there have not been very many bipartisan bills that have passed this Senate, and I will not put this on a partisan basis. I would give as much credit to Senator Hollings as to some of the Republican people and Democratic people that have served for years. But here we have a chance to deregulate an industry, to get everybody into everybody else's business. If we slip and fail, this thing will go over to 1997, and then we will start again, I suppose, because we are not going to [[Page S8018]] have a major telecommunications reform bill in a Presidential election year. I have also said that I hope that this bill passes both Houses by the Fourth of July. I hoped it would be signed by the President by the Fourth of July. That was my original goal. The Senate has moved on a bipartisan basis in an amazingly coordinated way. We had meeting after meeting every night with Democrats and Republicans. We met Saturdays and Sundays, Democrats and Republicans, shoulder to shoulder, to finally get a telecommunications bill. We passed it through the Senate Commerce Committee when people said it could not be passed. It is on the Senate floor. This is early June. This is one of the most complicated bills here, and it will affect a third of the American economy. It affects every home in America. And I think it is time for the White House to join us. They are opposing this bill. I think it is time for the Consumer Federation of America to join us. I hope Newt Gingrich gives this bill an early slot over there because it is very important. It is a bipartisan bill that will create jobs, and it will create the kind of jobs we want in this country. Right now, a lot of our telecommunications industry is forced to invest overseas because they are prohibited from doing certain things here. Our regional Bells cannot manufacture, they cannot do this, and they cannot do that. So one of my friends in my life, Dick Callahan, for example, president of U.S. West International, is over in London. He is originally from Sioux Falls. He is not in Denver and Sioux Falls investing, he is over in London investing U.S. money in things that the telecommunications companies can do there that they cannot do here. I would rather have the Dick Callahans of this world creating jobs in the United States. Also, this bill is a modernizing bill. We are losing jobs in some of our aging industries, very frankly. We read every day about how a certain mature industry is laying off people. I recently toured the Caterpillar plants in Peoria, IL, and I saw the difference in the assembly line where the modernized part is, where they turn out 51 engines a day, versus the old part, where they turn out 13 engines a day. They make 51 engines with fewer people. But those people will need new jobs in new industries, and this bill does that. Everybody should understand that. This is a jobs bill, but it is not a jobs bill through Government, it is a jobs bill through free enterprise. If we are going to do something for people, we provide them more services at a cheaper level, just as with deregulating natural gas. We helped every senior citizen, probably more than we did with the COLA on Social Security, by providing them with a cheap form of fuel to heat their home. And that is what this bill is. I could go on at great length. But I would like to conclude the debate today by saying I think we have made good progress on this bill. This is a bill that some of the private newsletters said only had a 10 percent chance in January. They said it had a 30 percent chance in April. But I think we are right on the cusp. We have to make progress with this bill. If we do not, we will be failing the American people and we will be failing the creation of a lot of jobs, new kinds of jobs, and we will be having our brightest people going overseas investing our telecommunications capital, as is happening.

Mr. PRESSLER. I welcome it and pleased to accept it, and it demonstrates that we are working together. I have said about all I am going to say today, but I do have some remarks for the leader at the appropriate time.

Mr. PRESSLER. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. PRESSLER. If my colleague will yield again, I am talking not specifically about IBM. But I am talking about the direction the computer industry took. AT&T was a Government monopoly. But my argument is that if we had done what we are trying to do in this bill--that is, require them to unbundle and interconnect, to allow for local competition, allow people to have access locally as this bill does, the whole telephone communication industry might be much more innovative today than it is.

Mr. PRESSLER. I am talking about the computer.

Mr. PRESSLER. Personal computers cost much less in South Dakota than they would otherwise. You can argue this thing circuitously. You might have innovations. In the computer area there are so many innovations. We may have had telecommunications innovations that we have not had. You cannot argue this perfectly. But there is probably no part of American industry that has had more innovation and competition than the computer industry, and people in Rapid City, SD, can buy personal computers at a fraction of the cost, and they are much more advanced than they would have been had the Justice Department gone the other way.

Mr. PRESSLER. If my friend will yield, I am talking about the computer industry, the competitiveness that is in it. It has been far more innovative than the telecommunications areas. I know the two companies are different. I am not just talking about IBM. It has been replaced--there have been all those things that have happened; Intel, Apple, and all sorts of things. I could go through them. But a comparison of the two technologies, how they have progressed-- compare the computer area to telecommunications, you would find that today a telephone call would be only a few cents, if it had advanced as much as the reduction in cost of personal computers. My friend asked for an example. That is an example. But, in 1982, what the Congress should have been doing----

Mr. PRESSLER. I am not talking about IBM, I am talking about the computer industry. I am talking about the computer industry.

Mr. PRESSLER. Will my friend yield? This is a fascinating dialog for me. I am not in any way trying to one-up or anything. But in the early 1980's both AT&T and IBM were in the Justice Department with big lawsuits against them. And on the same day, January 8, 1982, the Federal Government chose two different destinies for those mammoth companies. It is my contention that, had we done with AT&T then what we are trying to do now, that is broken up the monopoly by requiring them to unbundle and interconnect and allow competition--in any event the computer industry went the other way. The computer industry--it is true there are winners and losers. It is true IBM has had problems and had spinoffs. But the computer industry, in terms of service to the American people, and dropping costs, moved forward much faster. In fact, there is a chart here that, had the telecommunications industry moved forward in competition as much as IBM in the computer area, the cost of telephones today would be about a fifth what they are, because the innovation and the competition, reduction in costs was much greater in the computer industry. So the Justice Department on the same day in 1982 sent the two industries on two different paths. They did that with AT&T because Congress had failed to act. We failed to do then what we are trying to do now, that is open up access, provide interconnection and unbundling to provide competition. And we would have had much more innovation in the telecommunications area, if you compare the two industries.