Larry Pressler

Mr. PRESSLER

Mr. PRESSLER. Mr. President, I ask unanimous consent that the Finance Committee have until 6 p.m. on Friday, June 9, to file a report to accompany H.R. 4, the welfare reform bill.

Mr. PRESSLER

Mr. PRESSLER. Mr. President, I send a second-degree amendment to the amendment proposed by the Senator from Alaska to the desk and ask for its immediate consideration.

Mr. PRESSLER. Mr. President, I rise to begin Senate floor consideration of S. 652--the comprehensive communications bill which the Committee on Commerce, Science, and Transportation overwhelmingly approved late last month on a vote of 17 to 2--The Telecommunications Competition and Deregulation Act of 1995. The future of America's economy and society is inextricably linked to the universe of telecomunications and computer technology. Telecommunications and computer technology is a potent force for progress and freedom, more powerful than Gutenberg's invention of the printing press five centuries ago, or Bell's telephone and Marconi's radio in the last century. This force has helped us reach today's historic turning point in America. The telecommunications and computer technology of 21st-Century America will be hair-thin strands of glass and fiber below; the magical crackling of stratospheric spectrum above; and the orbit of satellites 23,000 miles beyond. With personal computers interconnected, telephones untethered, televisions and radios reinvented, and other devices yet to be invented bringing digitized information to life, the telecommunications and computer technology unleashed by S. 652 will forever change our economy and society. At stake is our ability to compete and win in an international information marketplace estimated to be over $3 trillion by the close of the decade. The information industry already constitutes one-seventh of our economy, and is growing. As chairman of the Committee on Commerce, Science and Transportation, the core of my agenda is to promote creativity in telecommunications and computer technology by rolling back the cost and reach of government. Costly big-government laws designed for another era restrain telecommunications and computer technology from realizing its full potential. My top priority this year is to modernize and liberalize communications law through passage of the bill before us today, S. 652: Telecommunications Competition and Deregulation Act of 1995. A. The Advent of Telecommunicatons Regulations Most telecommunications policy and regulation in America is based upon the New Deal era Communications Act of 1934. The 1934 Act incorporated the premise that telephone services were a natural monopoly, whereby only a single firm could provide better services at a lower cost than a number of competing suppliers. Tight government control over spectrum based services was justified on a scarcity theory. Neither theory for big government regulation holds true today, if it ever did. The 1934 Act was intended to ensure that AT&T and other monopoly telephone companies did not abuse their monopoly power. However, regulatory protection from competition also ensured that AT&T would remain a government-sanctioned monopoly. In exchange for this government-sanctioned monopoly, AT&T was to provide universal service. AT&T retained its government-sanctioned monopoly until antitrust enforcement broke up the Bell System and transferred the monopoly over local services to the Bell Operating Companies. The Communications Act has become the cornerstone of communications law in the United States. The 1934 Act established the Federal Communications Commission, and granted it regulatory power over communications by wire, radio, telephone, and cable within the United States. The Act also charged the Federal Communications Commission with the responsibility of maintaining, for all the people of the United States, a rapid, efficient, Nationwide and worldwide wire and radio communications service with adequate facilities and reasonable charges. Prior to 1934, communications regulation had come under the jurisdiction of three separate Federal agencies. Radio stations were licensed and regulated by the Federal Radio Commission; the Interstate Commerce Commission had jurisdiction over telephone, telegraph, and wireless common carriers; and the Postmaster General had certain jurisdiction over the companies that provided these services. As the number of communications providers in the United States grew, Congress determined that a commission with unified jurisdiction would serve the American people more effectively. The 1934 Communications Act combined the powers that the Interstate Commerce Commission and the Federal Radio Commission then exercised over communications under a single, independent Federal agency. The Communications Act of 1934 was based, in part, on the Interstate Commerce Act of 1888. For example, the requirement for approval of construction or extension of lines for railroads was taken directly from the ICC Act. Prior to 1934, wire communications were regulated by the same set of laws that regulated the railroads. Radio communications were regulated under the 1927 Federal Radio Act. In 1934, the Federal Communications Commission was created to oversee both the wireline communications and radio communications. [[Page S7882]] The telecommunications industry today is a dynamic and innovative industry, with new technology being introduced on daily basis. The telecommunications industry, however, is regulated under a set of laws that are antiquated and never designed to handle the challenges of today's industry. Telecommunications laws and regulations are not able to adequately take into account the advent of telecommunications competition, and, indeed, have slowed the introduction of competition into many segments of the industry. These laws did not contemplate the development of fiber optics, the microchip, digital compression, and the explosion of wireless services. It is time to revise and amend the 1934 act to fit the new and future competitive telecommunications industry. B. The Modification of Final Judgment Since 1984, the Bell operating companies have been restricted from entering various lines of businesses as a result of the consent decree entered in the antitrust case, United States versus Western Electric. The consent decree, commonly referred to as the modification of final judgment, or the MFJ, places the U.S. District Court for the District of Columbia and Judge Harold Greene as the administrator of the decree, and establishes a procedure by which the Bell operating companies can obtain waivers from the decree's restrictions. Recent years have seen a proliferation of legislative and judicial action to change the provisions of the original consent decree that divested American Telephone and Telegraph of its local exchange service and created the regional Bell operating companies. Currently prohibited from providing long distance service, manufacturing telecommunications equipment, and, up until July 1991, providing information services, the Bell operating companies and others have long advocated open entry into these new lines of business, contending that such action would invigorate the telecommunications marketplace. In opposition, certain consumer organizations, electronic publishers, long distance carriers, the Justice Department, and other industry groups over the past few years have opposed entry on the grounds that the courts should administer an antitrust consent decree and that so long as the Bell operating companies face little or no competition in their core business of providing local telephone service, they should not be permitted to enter competitive lines of business. During the past 10 years a number of waivers have been granted, but the process has slowed in recent years. More fundamentally, the judicial process is necessarily limited; the district courts constitutional role is simply to apply the law and administer the decree, and not make informed policy decisions about how communications law and the communications and computer industry should develop. Moreover, given the vulnerability of the telephone industry to selective, cherry-picking competition, it is likely that the limited nature of today's competition will have a significant effect on the industry's revenues in general, and on local telephone rates in particular. Consequently, although the consent decree served a useful purpose initially, it no longer serves the public interest at this dynamic time in the evaluation of the communications and information industry. In place of a process that subjects the communications industry to the terms of a consent decree entered 12 years ago and administered by a single district court, the Congress will reassert its proper policy role and administer a new Federal policy designed to promote competition, innovation, and protect consumers. Prior to the implementation of the MFJ in 1984, as noted previously, AT&T was the monopoly telecommunications provider in the United States. AT&T's Long Lines Department provided long distance telephone service to virtually everyone in the country. AT&T maintained owership of the 22 Bell operating companies, which provided local telephone service on a monopoly basis to approximately 85 percent of the population. In addition, AT&T owned Western Electric, which manufactured almost all the equipment needed for the operation of the telephone network. AT&T also owned Bell Telephone Laboratories, Bell Labs, which conducted the most extensive research involving high technologies and telecommunications of any industrial research center in the world. The roots of the MFJ go back over 100 years. In 1882, Bell Telephone, the predecessor of AT&T, designated Western Electric Co. as the exclusive manufacturer of its patented telecommunications equipment. During the early 1900's Bell Telephone maintained a majority interest in Western Electric; by 1925 it had 100 percent owership of the company. By that same year, Bell Telephone established Bell Telephone Laboratories to conduct its research and development. The Bell system's rapid expansion triggered interest from the Department of Justice and the Interstate Commerce Commission--which then had jurisdiction over interstate telephone service--for possible antitrust violations. Following other antitrust action, in 1974, the Department of Justice filed an antitrust suit against AT&T. The suit claimed that AT&T misused its Bell system monopoly of the local exchange network to restrict competition in the manufacturing of telecommunications equipment, and in the market for interchange service through refusal to provide competitors with interconnection to the local networks and, therefore, access to end customers. After years of litigation, the case was settled in 1982 with entry of a modification of final judgment by Judge Harold Greene, which was negotiated by AT&T and the Justice Department. The debate about the proper role of the Bell operating companies in the communications industry has often overshadowed the larger question of which government bodies should be establishing national telecommunications policy. Courts make rulings, as they should, solely on the narrow questions confronting them. Consequently, courts do not and cannot ensure that broader concerns about sound economic goals are fully considered. As a result of these concerns, which have been fueled by a period of globalization and intense international competition in the telecommunications industry, I believe, and the committee believes that we in Congress as the expert in the oversight of the telecommunications industry, should have authority to manage these issues in order to develop telecommunications and information policy in a coordinated manner. At this juncture in the evolution of the communications industry the Congress should be the locus of authority on questions involving telecommunications competition, deregulation and consumer protection. We have the ability to see a more complete spectrum of issues, as compared to the narrow view of discrete issues which a court and the Department to Justice necessarily takes in the context of litigation. Moreover, we can consider broad policy goals in establishing and administering telecommunications policy. C. Regulatory Lag While America is still the world's leader in information technology, we are no longer in the position of being unchallenged. Historically we were an economic and technological Gulliver standing astride a world of competitive Lilliputians. But that's just not true any longer. America--especially we in the American legislative and regulatory system--must respond and respond now. At a minimum, government should try to avoid doing harm. Unfortunately, government and regulators have a rather sorry history of slowing the introduction of new technologies and competition. The examples of this regulatory lag are numerous and all too common. Regulatory lag means we don't get investment stimulus that competition and new entry spur and, more importantly, the public is denied new service and product options. 1. Competition in customer premises equipment: Competition and open entry first came to telecommunications with respect to customer premises equipment (CPE). This competition, however, was initially resisted by the FCC. For many years, AT&T prohibited customers or anyone else from connecting any equipment to its telephone network or to telephones themselves that AT&T did not supply. Bell tariffs forbade all foreign attachments--meaning equipment endorsed this anti-competitive practice for almost 70 years. Through prodding from the Federal courts, the commission eventually allowed devices deemed not injurious to the telephone network to be connected to the network. This was only after the courts conferred on subscribers the right to use their telephones in a way that had private benefits without being publicly detrimental It took the Commission more than a decade to extend the new law to include equipment that was connected electronically, not just physically, to the network. The Commission limited restrictions on interconnection to protecting the network from harm. The details of equipment interconnection were not fully implemented until the commission adopted part 68 of its rules in 1975, nearly 20 years after the original court determination so that carriers themselves would be free to compete on equal terms in the open market. 2. Competition in long distance services: The commission was equally slow in authorizing interexchange--or long distance--competition. In the 1940s, long distance service was provided exclusively over wires, and the same basic economics that seemed to preclude competition in local service applied equally to long distance service. The development of microwave and satellite technologies radically changed that picture, making competition both practical and inevitable. The first few, faltering steps in the direction of a competitive marketplace, were taken by the commission in 1959 but it wasn't until 1980 that the commission formally adopted an open entry policy for all interstate services. Competition in the interexchange market developed slowly as the commission gradually and incrementally responded to changes in market pressures, technology, and consumer demand for new and varied long distance services. Microwave relay technology, developed by Bell Laboratories during World War II, prompted the beginning of IXC competition by offering a viable, less expensive alternative to AT&Ts existing wireline facilities for transmitting long distance communications. The commission first permitted entry of non-AT&T services for provision of private services. In 1959, the FCC, finding a need for private services and foreseeing no risk of harm to established services, authorized certain private companies to provide microwave services and to establish private microwave networks for their own internal use. Although described as a narrow, limited decision, the Above 890 decision prompted a flood of applications from private organizations seeking authorization to establish private microwave long-distance networks. It also brought pressure for entry into other fields. MCI applied to the FCC for authority to provide private, non-switched communications service between St. Louis and Chicago. This service still did not involve interconnection with AT&T's public network. In 1969, the commission approved MCI's limited point-to-point system, saying it was designed to meet the interoffice and interplant communications needs of small businesses. Again, however, the decision was narrow. The commission was concerned about permitting unregulated carriers to engage in creamskimming, and it generally still adhered strongly to the philosophy that the public network should remain a regulated monopoly. Nonetheless, it prompted a deluge of applications seeking authorization of similar microwave facilities, reflecting a public demand for competitive alternatives. A few years later, the commission formalized a policy of allowing entry of new carriers into the private line, or Specialized Common Carrier (SCC), field to provide alternatives to certain interstate transmission services traditionally offered only by the telephone company. The commission did not, however, define the scope of services it was opening up to competition, a matter that would prove troublesome as pressures for increased competition rose. Although each time emphasizing the limited nature of its decision, the commission had, over the course of 2 decades, continued to approve the entry of new providers of telephone services, albiet at times reluctantly and with prodding by the courts, and only in provision of private line services. When it came to permitting direct competition with AT&Ts public switched long distance service, the Commission's reluctance hardened. MCI had eventually obtained approval for its private line offerings, but when it later proposed new switched service in direct competition with AT&T's MTS services, the FCC refused approval. In doing so, the Commission reiterated that its Specialized Common Carrier decision was meant to allow entry only into private line service and not into direct competition with the public network. The Court of Appeals, however, reversed the commission's failure to approve MCI's proposed offering, rejecting the commission's argument that its Specialized Common Carrier decision authorized only private line services. After Execunet I, the commission still refused to order AT&T to interconnect with MCI. The Court of Appeals, in Execunet II, then explicitly mandated interconnect, emphasizing that Specialized Common Carrier was a broad decision to permit competition in the long distance market and that such competition necessarily required AT&T to provide physical interconnection to the public network. The Execunet decisions opened virtually all interstate IXC markets to competition. In response to this new judicially imposed reality, the FCC lowered entry barriers, eliminated rules prohibiting sharing of heavy use, bulk rate circuits, and directed AT&T to permit the resale and sharing of these circuits by competitors. During this same era, the commission approved interstate packet- switched communications network offerings that introduced value-added networks which resold data processing functions through basic private line circuits, and unlimited resale and shared use of private line services and facilities. Tariff restrictions against the resale and shared use of public switched long distance services were removed in 1980. Since this time, the FCC has strongly supported the growth of competition. The resulting competition has had well documented public benefits of great scale and scope. 3. Enhanced Services: The MFJ Consent Decree's information services restriction required the Bell Companies to seek waivers for the provision of voice answering services, electronic mail, videotext, electronic versions of Yellow Pages directories, E911 emergency service, and directory assistance services provided to customers of nonassociated independent telephone companies. The restriction on the provision of voice mail services was lifted in the late 1980's. In the first 2 years of RBOC participation, the voice mail equipment market grew threefold and prices declined dramatically. Between 1988 (when the RBOCs were permitted entry) and 1989, the market for voice mail services grew by 40 percent, with total revenues rising from $452 million to $635 million. Prices have also fallen. For example, telephone companies today charges as little as $5 per month for its residential voice messaging service. Similar services in 1987 cost 2 to 10 times more. Output has risen. The U.S. market for voice mail and voice response equipment increased from $300 million in 1988 to over $900 million in 1989. The number of voice message mailboxes increased from 5.3 million in 1987 to 7.7 million in 1988 to 11.6 million in 1989. 4. Spectrum Allocation: The introduction of both FM radio and television was significantly delayed by years of FCC equivocation over which bands would be assigned to which uses. Equally egregious delays preceded the introduction of cellular telephone service. FM Radio. FM radio technology was invented in 1933, but did not receive widespread use until the 1960s. Lack of FCC support contributed to FM's lack of popularity. One glaring example occurred in 1945. By 1945, 500,000 FM receivers had been built, but were all rendered useless when the FCC decided to [[Page S7884]] move FM channels to a different spectrum band. FM languished for so long that the inventor of FM eventually committed suicide in despair. TV. The modern television was developed in the 1930s and exhibited by RCA in 1939, but the FCC took 2 more years to adopt initial standards. It was then discovered that channel allocation was inadequate, and the FCC froze all applications for TV licenses for 4 years, until 1952. In the year after the freeze alone, the number of stations tripled. It took another 10 years before regulations for UHF/VHF frequencies were finalized. Cellular. In 1947 Bell Labs developed the concept of cellular communications and by 1962, AT&T had developed an experimental cellular system. It took another 15 years for regulation to catch up with the new technology; in 1977 the FCC finally granted Illinois Bell's application to construct a developmental celluar system in Chicago. The FCC took 8 years to finalize the boundaries of cellular service areas. The delay cost the cellular industry an estimated $86 billion. 5. Out of Region Competition by Bell Companies: The Department of Justice, with the concurrence of Judge Greene, originally held that the MFJ consent decree forbade the RBOCs from providing services outside their own regions. The D.C. Circuit however overruled them both and found that the BOCs are not restricted to providing service only within their home territories; they are free to offer intraLATA services anywhere in the country. The RBOCs now compete heavily against one another in cellular service. The provision of other local services, however, is impeded by the interexchange restriction, which the Department and the decree court have so far refused to lift even outside the service areas of the individual RBOCs. 6. Bell Company Manufacturing: In June 1991, outages in 5 states and the District of Columbia forced Bell Atlantic and other Bell companies to work closely with a switch manufacturer to determine the cause of the outages and prevent their recurrence. The Department of Justice told Bell Atlantic that, notwithstanding the emergency, Bell Atlantic could not work with the manufacturer without a waiver of the decree's manufacturing restriction. On July 9, 1991, Judge Greene ordered a hearing with Bell Atlantic, the Department of Justice, AT&T, and MCI and granted the waiver on July 10, 1991. 7. Cable Networks: The FCC--at the behest of broadcasters--crippled and almost killed cable television, by means of a number of regulatory restrictions such anti-siphoning rules. The commission's stated justification for restricting cable was that it did not want to jeopardize the basic structure of over-the-air television. 8. Video Dialtone: By defining video dialtone service as common carriage, not broadcast, the FCC has successfully preempted a raft of State cable regulation and franchise fees. It has also subjected these services to a raft of regulations. Telephone companies have been invited to provide a basic platform that delivers video programming and basic adjunct services to end users, under Federal, common-carrier tariff. Video dialtone providers must offer sufficient capacity to serve multiple video programmers; they must make provision for increased programmer demand for transmission services over time; and they must offer their basic platform services on a nondiscriminatory basis. The dial tone moniker is misleading; the video connections are strictly between the telco central office and customers. But the number of programs offered from a video dialtone server can be expanded indefinitely. The commission has attempted to maintain strict separation between the provision of video dialtone conduit, and provision of the programming itself. Video dialtone as defined by the commission is plainly more like telephone carriage than like cable or broadcasting. 9. Direct Broadcast Satellite: When the FCC first considered licensing Direct Broadcast Satellite service (DBS) in the early 1980s, the National Associate of Broadcasters raised the specter of siphoning. DBS would result in the loss of service to minorities, rural areas, and special audiences by siphoning programming, fragmenting audiences, and reducing advertising support. It would rob free local television service of advertising revenues. UHF stations would be especially threatened. The cable television industry joined in the assault on DBS by denying access to programming. The service has only recently become available. 10. Computer and Software: AT&T--which invented the transistor and in the 1960s and 1970s developed some of the most powerful computers--was barred for years (by the 1956 antitrust consent decree) from competing in the computer market against IBM. The upshot was that IBM completely dominated computing for many years. AT&T had also developed the Unix operating system around which the Internet was built--it couldn't commercialize that aggressively either. Now Microsoft is being accused of monopolizing the industry with the MS-DOS and Windows alternatives. 11. Delay in RBOCC Information and Inter-LATA Services Relief: In 1987, the Justice Department recommended the removal of the information services restriction on the RBOCs. This was not opposed by AT&T. In September of 1987, Judge Greene permitted the RBOCs to enter non-telecommunications businesses without obtaining a waiver, but did not lift the information services ban. On April 3, 1990, the U.S. Court of Appeals for the District of Columbia remanded Judge Greene's decision to continue the ban on RBOC information services. Eventually, on July 25, 1991, Judge Greene relented and permitted RBOCs to provide information services. RBOCs were finally granted the right to provide information services more than 4 years after the Justice Department recommended that the restriction be removed. There have been numerous examples of egregious delays in granting even non-controversial decree waivers. For example, Bell Atlantic sought a waiver in 1985 to allow it to serve Cecil County, Maryland as part of its Philadelphia cellular system. Bell Atlantic submitted another waiver to provide cellular service to 3 New Jersey counties through its Philadelphia-Wilmington system on October 24, 1986. These waivers were necessary to the provision of uninterrupted cellular service between Washington and New York. Judge Greene finally granted the second waiver on February 2, 1989, almost two-and-a-half years after it was filed and the Cecil County waiver was not approved until 1991, nearly 5 years after it was first sought. RBOCs have filed more than 200 MFJ waivers that Judge Greene has ruled on. These waiver requests first go to the Department of Justice, and then move to Judge Greene. Unfortunately, the waiver process is also very time consuming. The average age of an RBOC waiver request pending before the Department of Justice is about 2\1/2\ years old. Once the Justice Department passes the waiver on to Judge Greene, it takes approximately 2 years before Judge Greene rules on it. This has made the average waiver process more than 4\1/2\ years to work its way through the system. D. The New Competitive Landscape The competitive landscape is changing, and, if Congress does not act to overhaul the telecommunications legal landscape, consumers will once again be denied benefits of competition and new technology. Wireless services have exploded since the Bell System breakup. Wireless counted less than 100,000 customers at that time. Today, there are more than 25 million cellular subscribers. Additionally, companies just spent more than $7.7 billion for the major trading area PCS licenses. There is obviously a market for more wireless communications. Cable has more than doubled its subscriber base since the MFJ. For local telephone services, States such as New York, Illinois, and California, have been leading the way in opening the local market to competition. Competitive access providers did not even exist at the time of the MFJ. Today, CAP's are in 72 cities, and have built 133 competing networks. Rapid changes in technology have broken down the natural monopoly Congress based the 1934 act on. Competition is still slow to fully develop in some areas, and in some markets. [[Page S7885]] History teaches us that, under existing law, the FCC and the courts have not been able to respond to market and technology changes in an expeditious manner. This delay prevents the consumer from gaining the benefits of competition, such as lower rates, better services, and deployment of new and better technologies. The courts, FCC and Justice Department have been micro-managing the growth of competition in the telecommunications industry. That is why the committee believes it is incumbent upon Congress to exercise its rightful authority in this area, and pass legislation that will open the entire telecommunications industry to full competition. Without legislation, it may be years, or decades, before America sees the benefits of a truly open and competitive telecommunications industry. Meanwhile our foreign competitors are moving ahead aggressively. In Great Britain, cable-telco competition is growing rapidly. The major cable players in the UK are, in fact, American telco and cable companies. Prices for telephony provided over cable lines are 10 to 15 percent lower than that provided over British Telecoms network. Here in the United States by contrast, the combination of the 1984 cable-telco prohibition and entry barriers into the local telephone market prevent such competition from developing. In Japan the government is providing interest free loans to cover 30 percent of the investment for Japan's broadband optical fiber network. Also planned are favorable tax measures for optical fiber and related investments. Meanwhile in the United States when American companies say they'll invest their own money in new networks, the government at both the Federal and State level visits endless regulatory hassle on the proponents. e. importance of telecommunications to economic growth At the heart our actions in the 104th Congress is private sector economic growth and private sector jobs through less Government regulation. To achieve our goal, we need increased capital investment. Telecommunications is an especially important sector to spur investment because it provides a big multiplier effect. The Japanese Government has estimated that for each dollar--or yen--invested in telecommunications, you get 3 dollars' worth of economic growth--a real telecom kicker. America's edge has always been our grasp of technology. Today, telecommunications and computers are at the cutting edge. Americans today have the broadest choice and best prices for these information economy products and services in the world. For instance, 98 percent of American homes have television and radio, 94 percent a telephone. Close to 80 percent have a VCR, while 65 percent subscribe to cable TV--96 percent have the option. We are rapidly approaching 40 percent of homes with PC's and 36 percent with video games. Multimedia and CD-ROM sales are flourishing. The Internet and computer on-line services are reaching millions of Americans. DBS has been successfully launched with 150 channels of digital video and audio programming services. A vibrant new wireless communications industry is growing with cellular--25 million subscribers--and paging--20 million users--soon to be joined by Enhanced Specialized Mobile Radio, Global Satellite Systems, and Personal Communications Services. First. Digitization and industry convergence meet--Regulatory apartheid: Telecommunications policy in America, under the 1934 Communications Act, has long been based on the now faulty premise that information transmitted over wires could be easily distinguished from information transmitted over the air. Different regulatory regimes were erected around these different information media. This scheme might best be described as ``regulatory apartheid''--each technology had its own native homeland. These once neat separations and distinctions between the media no longer make sense. The explanation for the rapid convergence of previously distinct media lies with digitization. Digitization allows all media to become tanslatable into each other. As Congress' Office of Technology Assessment stated in a recent study: ``A movie, phone call, letter, or magazine article may be sent digitally via phone line, coaxial cable, fiber-optic cable, microwave, satellite, the broadcast air, or a physical storage medium such as tape or disk.'' The same technological phenomenon to sweep the computer industry during the 1980's is now sweeping the telecommunications industry--we can learn valuable lessons from the experience in the computer industry. Second. Computers and phones: By the early 1980's, AT&T and IBM were two of the largest and more powerful companies in the world. On January 8, 1982, the Federal Government chose two different destinies for the mammoth companies. The Government agreed to dismiss its case against IBM; by contrast, AT&T would be divested, freed from all antitrust quarantines and so permitted to enter the computer business. At the time, 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 impact of unfettered competition has devastated IBM. The only thriving parts of its hardware business today are at the bottom end, where Big Blue's small beige machines have been open, standardized, and widely copied from the day they were introduced. Between 1985 and 1992, IBM shed 100,000 employees. IBM's stock, worth $176 a share in 1987, collapsed to $52 by year's end 1992. In 1992, the New York Times would announce ``The End of I.B.M.'s Overshadowing Role.'' ``IBM's problems,'' the Times noted, ``are due to its failure to realize that its core business, mainframe computers, had been supplanted by cheap, networked PC's and faster networked workstations.'' In a desperate scramble for survival, IBM is breaking itself into autonomous units and spinning off some of its more successful divisions. IBM itself is only one of many first-tier vendors of PC's today, with a market share of 8 percent. The impact on the computer industry, however, has been intense competition spawning rapid technological advancement. A $5,000 PC in 1990--featuring Intel's 80486 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 Intel's 486DX2-66 chip--are available for under $1,500, and Intel runs advertisements encouraging owners of these chips to upgrade to newer ones. Systems with more than twice the processing power of that system--featuring Intel's 120 MHz Pentium chip--are now available, most for under $5,000. Intel is currently promising faster and faster iterations of its Pentium chips--running at 133 and 150 MHz--before it releases commercial versions of its next-generation P6, which promises to move the price-performance curve astonishingly farther out than today. The computer industry is still firmly in the grip of Moore's Law, which holds that the number of transistors that can be placed on a microchip--a rough estimator of the power of the chip--doubles every 18 months. The upshot is that consumers can purchase systems with four times the power of the 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, long-distance 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 $5, 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 call would cost less than 3 cents. Alternatively, a 10 minute call from New York to Japan--cost roughly $17 in 1984 and $14 today. Had long-distance [[Page S7886]] service advanced as rapidly as the personal computer industry, that call would cost less than 9 cents. Third. Lessons learned: Yet as the United States stands at this critical crossroads--the dawn of a new era in high technology, entertainment, information and telecommunications--America continues to operate under an antiquated regulatory regime. Our current regulatory scheme in America simply does not take many dramatic technological changes into account. Progress is being stymied by a morass of regulatory barriers which balkanize the telecommunications industry into protective enclaves. We need to devise a new national policy framework--a new regulatory paradigm for telecommunications--which accommodates and accelerates technological change and innovation. The very same digitization phenomenon supports the prospect of competition by telephone companies and against telephone companies, by cable companies and against cable companies, by long distance companies and against long distance companies. Incumbents on opposite sides of the traditional regulatory apartheid scheme have quite different views about which kind of competition should come first. If Congress cannot come to grips with digitization and convergence, the private sector cannot be expected to wait. Indeed, the multifaceted deals and alliances of the last several years indicates that industry is not waiting. Look at a short list of some of these deals: US West/Time Warner. The world's largest entertainment company, and second ranking cable company, teaming up with the RBOC for the western United States. AT&T/McCaw. The biggest long distance and equipment maker joining with the biggest cellular carrier. That came on the heels of AT&T acquiring one of the biggest computer companies--NCR. Sprint/Cable Alliance. The third largest long distance company--and only company with local, long distance and wireless capability--joining cable's TCI, Comcast, Cox, and Continental to form an alliance to provide a nationwide wireless communications service--and the prospect for joining Sprint's broadband long distance lines with cable's high capacity local facilities. Microsoft. There has been an almost endless series of strategic alliances being struck between Microsoft, the world's largest computer software company, and companies in numerous information and telecommunications businesses for the purpose of delivering interactive services. HDTV Grand Alliance. The companies teaming up to bring HDTV to America include AT&T--the largest telecom equipment maker--General Instrument--the largest cable TV equipment maker--and Phillips--the world's largest TV set maker. In addition, layered on top of these and many other deals and alliances is the globalization phenomenon--a breakdown of geographic barriers: all the RBOC's have foreign investments; British Telecom and MCI in partnership; Sprint planning the same with France Telecom and Deutsche Telecom; AT&T also working with Singapore Telecom, Cable & Wireless's Hong Kong Telephone, and the Netherlands Telecom. We can no longer keep trying to fit everything into the old traditional regulatory boxes--unless we want to incur unacceptable economic costs, competitiveness losses, and deny American consumers access to the latest products and services. Since becoming chairman of the committee I have been actively working with leaders in the telecommunications and information industry to reform this outmoded and antiquated, regulatory apartheid system in order to make exciting new information, telecommunications and entertainment services available for America. It is time for American policymakers to meet this new challenge much the way an earlier generation responded when the Russians launched Sputnik. The response must be rooted in the American tradition of free enterprise, de-regulation, competition, and open markets--to let technology follow or create new markets, rather than Government micromanaging and stunting developments in telecommunications and information technology. By reforming U.S. telecommunications policy we in Congress have an unparalleled opportunity to unleash a digital, multimedia technology revolution in America. By freeing American technological know-how, we can provide Americans with immediate access to and manipulation of a bounty of entertainment, informational, educational, and health care applications and services. Passing S. 652, The Telecommunications Competition and Deregulation Act of 1995, will have profound implications for America's economic and social welfare well into the 21st Century. Fourth. Universal service: An additional, but often overlooked, reason for immediately moving forward with S. 652 and telecommunications regulatory reform concerns the problems affecting the centerpiece of American communications policy--maintaining universal voice telephone service at reasonable and affordable prices. The explicit subsidies--those of known magnitude and direction--can and should be maintained. These are the ``Universal Service Fund,'' the ``Link-Up America'' program, and others the FCC made part of the overall access charge system. The implicit--or hidden--subsidies are much more at risk. The present scheme cannot be maintained when new technology is changing so rapidly and customers are provided with an ever-increasing buffet of choices. This implicit subsidy scheme must be reformed and fixed. We cannot afford to wait any longer to start that reform process. f. what s. 652 does: chief reform features First. Universal telephone service: The need to preserve widely available and reasonably priced telephone service is one of the fundamental concerns addressed in The Telecommunications Competition and Deregulation Act of 1995. The legislation as reported requires all telecommunications carriers to contribute to the support of universal service. Only telecommunications carriers designated by the FCC or a State as ``essential telecommunications carriers'' are eligible to receive support payments. The bill directs the FCC to institute and refer to a Federal-State joint board a proceeding to recommend rules to implement universal service and to establish a minimum definition of universal service. A State may add to the definition for its local needs. Second. Local telephone competition: The Telecommunications Competition and Deregulation Act of 1995 reforms the regulatory process to allow competition for local telephone service by cable companies, long distance companies, electric companies, and other entities. Upon enactment the legislation preempts all State and local barriers to competing with the telephone companies. In addition it requires local exchange carriers [LEC's] having market power to negotiate, in good faith, interconnection agreements for access to unbundled network features and functions at reasonable and nondiscriminatory rates. This would allow other parties to provide competitive local telephone service through interconnection with the LEC's facilities. The bill establishes minimum standards relating to types of interconnection that a LEC with market power must agree to provide if requested, including: unbundled access to network functions and services, unbundled access to facilities and information, necessary for transmission, routing, and interoperability of both carriers' networks, interconnection at any technologically feasible point, access to poles, ducts, conduits and rights-of-way, telephone number portability, and local dialing parity. As an assurance that the parties negotiate in good faith, either party may ask the State to arbitrate any differences, and the State must review and approve any interconnection agreement. The bill requires that a Bell company use a separate subsidiary to provide certain information services, equipment manufacturing, in- region interLATA services authorized by the FCC, and alarm monitoring. In addition a Bell company may not market a subsidiary's service until the Bell company is authorized by the FCC to provide in-region interLATA services. [[Page S7887]] S. 652 also ensures that regulations applicable to the telecommunications industry remain current and necessary in light of changes in the industry. First, the legislation permits the FCC to forbear from regulating carriers when forbearance is in the public interest. This will allow the FCC to reduce the regulatory burdens on a carrier when competition develops, or when the FCC determines that relaxed regulation is in the public interest. Second, the bill requires a Federal-State joint board to periodically review the universal service policies. Third, the FCC, with respect to its regulations under the 1934 act, and a Federal-State joint board with respect to State regulations, are required in odd-numbered years beginning in 1997 to review all regulations issued under the act or State laws applicable to telecommunications services. The FCC and joint board are to determine whether any such regulation is no longer in the public interest as a result of competition. The bill modifies the foreign ownership restrictions of section 310 of the 1934 act, if the FCC determines that the applicable foreign government provides equivalent market opportunities to U.S. citizens and entities. The bill also requires that equipment manufacturers and telecommunications service providers ensure that telecommunications equipment and services are accessible and usable by individuals with disabilities, if readily achievable, a standard found in the Americans with Disabilities Act. Third. Long distance relief for the Bell companies: The Telecommunications Competition and Deregulation Act of 1995 establishes a process under which the regional Bell companies may apply to the FCC to enter the long distance or interLATA market. Since the 1984 breakup of AT&T, the Bell companies have been prohibited from providing services between geographical areas known as LATAs, [Local Access and Transport Areas]. The legislation reasserts congressional authority over Bell company provision of long distance and restores the FCC authority to set communications policy over these issues. The Attorney General has a consulting role. The reported bill requires Bell local companies and other LEC's having market power to open and unbundle their local networks, to increase the likelihood that competition will develop for local telephone service. It also sets forth a competitive checklist of unbundling and interconnection requirements. If a Bell company satisfies the competitive checklist, the FCC is authorized to permit the Bell company to provide interLATA services originating in areas where it provides wireline local telephone service, if the FCC also finds that Bell company provision of such interLATA service is in the public interest. Out-of-region interLATA services may be provided by Bell companies upon enactment. S. 652 allows the Bell companies to provide interLATA services in connection with the provision of certain other services immediately, with safeguards to ensure that the Bell companies do not use this authority to provide otherwise prohibited interLATA services. For example the reported bill requires a Bell company to lease facilities from existing long distance companies if it uses interLATA service in the provision of wireless services and certain information services. Finally, the bill requires a Bell company providing in-region interLATA service authorized by the FCC to use a separate subsidiary for such services. Fourth. Manufacturing authority for the Bell companies: The judicial consent decree that governed the breakup of AT&T in 1984, the MFJ, also prohibited the Bell companies from manufacturing telephones and telephone equipment. The AT&T breakup itself, the globalization of the communications equipment market, the concentration of equipment suppliers, the increasing foreign penetration of the U.S. market, and the continued dispersal of equipment consumption have greatly diminished any potential market power of the Bell companies over the equipment market. The bill permits a Bell company to engage in manufacturing of telecommunications equipment once the FCC authorizes the Bell company to provide interLATA services. A Bell company can engage in equipment research and design activities upon enactment. In conducting its manufacturing activities, a Bell company must comply with the following safeguards: A separate manufacturing affiliate. Requirements for establishing standards and certifying equipment. Protections for small telephone companies--a Bell manufacturing affiliate must make its equipment available to other telephone companies without discrimination or self-preference as to price delivery, terms, or conditions. Fifth. Cable competition, video dialtone and direct-to-home satellite services: The bill permits telephone companies to compete against local cable companies upon enactment, although until 1 year after enactment the FCC would be required to approve Bell company plans to construct facilities for common carrier video dialtone operations. The bill also removes at enactment all State or local barriers to cable companies providing telecommunications services, without additional franchise requirements. The reported bill does not require telephone companies to obtain a local franchise for video services as long as they employ a video dialtone system that is operated on a common carrier basis, that is, open to all programmers. If a telephone company provides service over a cable system--that is, a system not open to all programmers--the telephone company will be treated as a cable operator under title VI of the 1934 act. Whether a telephone company uses a video dialtone network or a cable system, it must comply with the same must-carry requirements for local broadcast stations that currently apply to cable companies. A separate subsidiary is not required for a Bell company carrying or providing video programming over a common carrier platform if the company provides nondiscriminatory access and does not cross-subsidize its video operations. The bill maintains rate regulation for the basic tier of programming where the cable operator does not face effective competition--defined as the provision of video services by a local telephone company or 15 percent penetration by another multichannel video provider. The bill minimizes regulation of expanded tier services. Specifically the bill eliminates the ability of a single subscriber to initiate at the FCC a rate complaint proceeding concerning expanded tier services. In addition, the FCC may only find rates for expanded tier service unreasonable, and subject to regulation, if the rates substantially exceed the national average rates for comparable cable programming services. States may impose sales taxes on direct-to-home satellite services that provide services to subscribers in the State. The right of State and local authorities to impose other taxes on direct-to-home satellite services is limited by the bill. Sixth. Entry by registered utilities into telecommunications: Under current law, gas and electric utility holding companies that are not registered may provide telecommunication services to consumers. There does not appear to be sufficient justification to continue to preclude registered utility holding companies from providing this same competition. The bill provides that affiliates of registered public utility holding companies may engage in the provision of telecommunications services, notwithstanding the Public Utility Holding Company Act of 1935. The affiliate engaged in providing telecommunications must keep separate books and records, and the States are authorized to require independent audits on an annual basis. Seventh. Alarm services: The bill prohibits a Bell company from providing alarm monitoring services. Beginning 3 years after enactment, a Bell company may provide such services if it has received authorization from the FCC to provide in-region interLATA service. The bill requires the FCC to establish rules governing Bell company provision of alarm monitoring services. A Bell company that was in the alarm service business as of December 31, 1994 is allowed to continue providing that service, as long as certain conditions are met. [[Page S7888]] Eighth: Spectrum flexibility and regulatory reform for broadcasters: If the FCC permits a broadcast television licensee to provide advanced television services, the bill requires the FCC to adopt rules to permit such broadcasters flexibility to use the advanced television spectrum for ancillary and supplementary services, if the licensee provides to the public at least one free advanced television program service. The FCC is authorized to collect an annual fee from the broadcaster if the broadcaster offers ancillary or supplementary services for a fee to subscribers. A single broadcast licensee is permitted to reach 35 percent of the national audience, up from the current 25 percent. Moreover, the FCC is required to review all of its ownership rules biennially. Broadcast license terms are lengthened for television licenses from 5 to 10 years and for radio licenses from 7 to 10 years. Finally, new broadcast license renewal procedures are established. Ninth. Obscenity and other wrongful uses of telecommunications: The decency provisions in the reported bill modernize the protections in the 1934 act against obscene, lewd, indecent, and harassing use of a telephone. The decency provisions increase the penalties for obscene, harassing, and wrongful utilization of telecommunications facilities, 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 bill provides defenses to companies that merely provide transmission services, navigational tools for the Internet, or intermediate storage for customers moving material from one location to another. It also allows an on-line service to defend itself in court by showing a good-faith effort to lock out adult material and to provide warnings about adult material before it is downloaded. G. The Deregulatory Nature of S. 652 Ronald Reagan once joked--in the midst of a debate over the budget-- that the only reason Our Lord was able to create the World in 6 days was that he didn't have to contend with the embedded base. I have been wrestling with the communications issues since I came to Congress. We all have. This has become the congressional equivalent of Chairman Mao's famous ``Long March.'' Nothing in the field is easy. We are dealing with basic services-- telephone, TV, and cable TV--that touch virtually every American family. We are dealing with massive investment--more than half a trillion dollars. We are dealing with industries which provide almost two million American jobs. We are dealing with high-tech enterprises that are critical to the future of the American economy, and our global competitiveness. The stakes are high for everyone. And it is the sheer number of issues and concerns that accounts for the complexity of any legislation. First. A major step forward: But let me talk briefly about some of the major steps forward which are envisioned in this bill. When the former head of the National Telecommunications & Information Administration testified before the Senate, he commented that, ``Everything in the world is compared to what.'' Well, virtually all of the bills which the Senate or the House has dealt with over the past generation took the concept of regulated monopoly as a given. Whether we are talking about Congressman Lionel Van Deerlin's bill, H.R. 1315 in the House in the 1970's; or Senator Packwood's effort back in 1981--S. 898: All of these bills assumed that monopoly, like the poor, would always be with us. Second. A paradigm shift: My bill changes that. Instead of conceding that concern, this bill: Removes virtually all legal barriers to competition in all communications markets--local exchange, long distance, wireless, cable, and manufacturing. It establishes a process that will require continuing justification for rules and regulations each 2 years. Every 2 years, in other words, all the rules and regulations will be on the table. If they don't make sense, there is a process established to terminate them. It restores full responsibility to Congress and the FCC for regulating communications. Under the bill that the House passed last spring, for example, you would have still had a substantial, continuing involvement in communications policy on the part of the Justice Department and the Federal courts. This bill brings the troops home. Third. Genuinely deregulatory: I understand the concerns that some of my colleagues have raised. Senator McCain has raised the question of whether this bill is deregulatory enough. Senator Packwood has asked if we could not speed up the transition to full, unregulated competition. These are valid concerns. But let me highlight some of the deregulatory steps which this bill makes possible now. First, it will make it possible for the FCC immediately to forebear from economically regulating each and every competitive long-distance operator. The Federal courts have ruled that the FCC cannot deregulate. This bill solves that problem and makes deregulation legal and desirable. Second, this bill envisions removing a whole chunk of unnecessary cable television price controls now. We leave the power to control basic service charges, until local video markets are more competitive. But the authority to regulate the nonbasic services, the expanded tiers, is peeled back. That represents a major step toward deregulation and more reliance on competitive markets. Third, this bill contains a competitive checklist for determining Bell Co. entry into currently prohibited markets like long distance and manufacturing. After Bell companies satisfy all the requirements, the FCC must, in effect, certify compliance by making a public interest determination. This is not--contrary to some allegations--more regulation. At least one of the Bell companies--NYNEX--can probably fulfill all the checklist's requirements very soon, because State regulators have already required that company to make the most of the necessary changes in the way it does business. The bill also explicitly says that the competitive checklist cannot be expanded. So, if you read all the provisions in the bill in context, you will see that there simply is no broad grant of discretion to the Federal or State regulators here. We have essentially spelled out the recipe for competition, and it is incumbent on them to follow it. Fourth.--Future orientation: Let me mention another critical aspect of this bill, it is future oriented. Too many of the earlier measures were focused on the status quo. What they basically did was rearrange existing markets and services. The 1984 and 1992 Cable Television Acts, for instance, did not take steps to encourage competition, it kept in place all the restrictions on telephone company and broadcast competition. Moreover, the 1984 Cable Act also maintained exclusive franchising for cable television. This bill essentially seeks to change that focus. We assumed that cable television might become an effective competitor to local phone companies, for instance, so we sought to get rid of any regulations that would block that. We also assumed that local phone companies might be effective cable competitors, so we tried to get rid of restrictions on that kind of competition. In the case of broadcasting, we recognized that this important industry is going to need much more flexibility to compete effectively in tomorrow's multichannel world. So, we will allow broadcasters to offer more than just pictures and sound as well as multiple channels of pictures and sound, if they so choose. Under this bill, they will have the flexibility they need to compete in evolving markets. Fifth. Safeguarding core values: This bill is aggressively deregulatory. It seeks to achieve genuine, long-term reductions in the level and intensity of Federal, State and local governmental involvement in telecommunications. But this bill is also responsibly deregulatory. When it comes to maintaining universal access to telecommunications services, for instance, it does that, It establishes a process that will make sure that rural and [[Page S7889]] small-town America doesn't get left in the lurch. This bill also maintains significant Federal oversight. Telecommunications, remember, isn't like trucking, or railroads, or airline transportation. The services we are talking about here are marketed and consumed directly by the public. This bill seeks to advance core values. I know that the Exon Amendment--which places limits on obscene and indecent computer communications--has sparked controversy. All that amendment actually does is apply to computer communications the same guidelines and limitations which already apply to telephone communications. Sixth. Further responsibility: This bill also recognizes the fact that deregulation is always a gradual, transitional process--and that Congress has the responsibility to stay involved. All of us know that good legislation is only one facet of the overall deregulatory process. Other requirements are careful scrutiny of budgets, of appointments to the FCC and other agencies, and effective Congressional oversight. No one should try to fool themselves into believing that we can get away on the cheap. We can't. If we are serious about deregulating this marketplace and--more importantly--expanding the range of competitive choices available to the American public, Congress is going to have to stay a central player. Seventh. Summary of affirmative aspects: Let me summarize, then, what I see as very positive, affirmative aspects of this bill: First, it dispenses with the old government-sanctioned monopoly model and replaces it with a process of open access which will lead to more competition across-the-board, in every part of the communications business. It flattens all regulatory barriers to market entry in all telecommunications markets. The more open access takes hold, the less other government intervention is needed to protect competition. Open access is the principle establishing a fair method to move local phone monopolies and the oligopolistic long distance industry into full competition with one another. Completion of the steps on the pro- competitive checklist will give both the long distance firms and the local telephone companies confidence that neither side is gaming the system. Second, it eliminates a number of unnecessary rules and regulations now--by giving the FCC the discretion to forebear from regulating competitive communications services, by removing unneeded, high-tier, cable price controls. Third, it establishes a process for continuing attic-to-basement review of all regulations on a 2 year cycle. Fourth, it seeks to create an environment that is more conducive to more new services and more competitors--by allowing broadcasters and cable operators, for instance, greater competitive flexibility, and giving local and long distance phone companies more chances to compete as well. Fifth, it terminates the involvement of the Justice Department and the Federal courts in the making of national telecommunications policy. Sixth, the bill emphasizes effective competition while also safeguarding core values, such as universal service access and limitations on indecency; and, Finally, it maintains the responsibility of Congress to continue to work through the budget, oversight, and confirmation processes to move this critical sector toward full competition and deregulation. h. benefits of s. 652 In General. Competition and deregulation in telecommunications as a result of the Pressler Bill means: Lower prices for local, cellular, and long distance phone service, and lower cable television prices, too. More and less costly business and consumer electronics to make U.S. business more competitive and American citizens better informed. Expanded customer options, as business is spurred to bring new technology to the marketplace faster. In addition to more choices for long distance, cellular, broadcast, and other services where competition already exists, competition and choice in local phone and cable services will be introduced. High technology jobs with a future for more Americans, economic growth, and continued U.S. leadership in this critical field. The President's Council of Economic Advisors estimates that deregulating telecommunications laws will create 1.4 million new jobs in the services sector of the economy alone by the year 2003. In a Bell Company funded study, WEFA concluded that telecommunications deregulation would cause the U.S. economy to grow 0.5 percent faster on average over the next 10 years, creating 3.4 million new jobs by the year 2005, and generating a cumulative increase of $1.8 trillion in real GDP. Finally, George Gilder has estimated $2 trillion in additional economic activity with the Pressler Bill. More exports of high-value products, and greater success on the part of U.S.-based telecommunications equipment $10.25 billion, and services $3.3 billion, companies as well as computer equipment $29.2 billion, companies as they leverage their domestic gains to make more sales overseas. In Media. Competition and deregulation in electronic media including broadcasting, cable, and satellite services means: More Networks and Channels. In the early 1970s, there were three national TV networks and virtually no cable systems. Today, there are 6 national TV networks, plus 10,000 cable TV systems serving 65 percent of American homes--96% have the cable option--with DBS now offering digital service to millions more. The average American family now has access to some 30 video channel choices. Much more is on the way if the Pressler Bill is enacted into law. More News and Public Affairs. Cable deregulation--spurred by satellite communications deregulation--made more news and public affairs programming available. CNN, C-SPAN, and ESPN are prime examples. Local all news channels and local C-SPAN-oriented programming is on its way if deregulation occurs. More Jobs. Relaxing broadcast rules and regulations--spurred by the growth of cable TV--made it possible for some 300 new TV and 2,000 new radio outlets to emerge. This created 10,000 new jobs in broadcasting. Small town and rural America parity. Satellites and cable TV service means small town and rural Americans command nearly the same media choices only big city residents once enjoyed. This democratization has spurred public awareness of national and international events--as well as encouraged fuller participation in the political process. Political shift. Satellites, cable, talk radio, and C-SPAN, which were a specific result of deregulation and competition in communications, were prime ingredients to last year's landmark national political shift. Further decentralization of media control through deregulation will accelerate this democratization phenomenon. In telephone service. Competition and deregulation in the telephone business means: Lower prices. Deregulation of phone equipment resulting in faster deployment of advanced equipment has made it possible to reduce local phone rates by $4 billion since 1987. More long distance competition has meant nearly $20 billion in price cuts since 1987. Virtually all Americans now have far more choices in phone equipment and long distance service--and with the Pressler Bill will see choices in local phone services. New options. Sixty million American families now have cordless phones. Twenty-five million now have cellular phones. Fifty million have answering machines. Twenty million have pagers. Deregulation has allowed technology to evolve to meet the demands of an increasingly mobile society. Special benefits. Cellular phones have helped millions of American women feel safer and more secure. They have made it possible to drive safely under even the most severe weather conditions, because now help can be called. Computer services. Competition and deregulation in telecommunications will speed the deployment of the so-called information superhighway. Currently, 40 percent of American homes have a personal computer. Computers are ubiquitous for American business. There is one school computer for every nine students. Competition and deregulation will mean new communications [[Page S7890]] facilities that will magnify the power of these computers. International competitiveness. Telecommunications is a prime leverage technology. Competition and deregulation expands business access to this new technology. That makes American business more competitive globally. Deregulation also spurs U.S. production and export of high value-added products like computers, advanced telephone switches, mobile radios, and fiber optics. Each dollar invested in telecommunications results in $3 of economic growth. For agriculture. For agriculture, competition and deregulation in communications means: Efficiency. Farms today are the most technology-intensive small businesses. American farmers will be able to harness computer, communications, and satellite technology to stay the world's most efficient lowest cost food producers. Integration with the national community. Communications advances help integrate the farm community with Americans nationwide. Farm families will have the same news, public affairs, and entertainment choices nearly any American does. Distance learning/telemedicine. Schools in small town and rural areas will be able to offer the same schooling options as those in the suburbs and major cities. Telemedicine systems will improve the quality of health care available in small town and rural America, especially for the home bound elderly in our society. More jobs. Deregulation means more modern communications systems as costs drop for small town and rural areas which, in turn, help these areas attract and retain businesses and jobs. Communications deregulation in Nebraska meant thousands of new jobs for the State. Deregulation in North Dakota did the same--one of the country's biggest travel agencies now operate out of Linder and employs several hundred local people. For Government. For Government agencies, competition and deregulation in telecommunications means: Better service. With voice mail, smart phone services--for example, to renew your library book, press 1, facsimile, and electronic mail, Federal, State and local agencies will be able to provide the public better service. Reduced cost. Technology through deregulation and competition also helps Government curb costs. Taxpayers thus get better service without having to pay more. The right-sizing of Government agencies is made possible. Responsiveness. Using all the latest communications technologies, Government offices will be able to greatly expand their constituent services, including here on Capitol Hill. For business. For business, competition and deregulation in telecommunications means: No geographical disadvantage. The ability to locate businesses away from center cities, and to allow many workers, especially working mothers, to telecommute thus reducing urban traffic congestion, pollution problems, and easing child care problems. Expanding markets. Fax, 800-numbers, United Parcel, and Federal Express have made it possible for even the smallest companies today to compete on a state-wide, regional, national, and even international scale. Working smarter. Satellite networks, computerized point-of-sale terminals--cash registers--and computerized inventory systems often linked directly to suppliers make it possible for U.S. retailers and other businesses to stay very competitive without being overstocked or understocked. Technology which will be made more available through deregulation has also allowed stores to operate in once remote areas. Wal-Mart has become America largest retailer, despite its largely rural origins, chiefly because the company was able to harness the best in contemporary communications. For educators. For educators, competition and deregulation in telecommunications means: Greater parity. Students in small town and rural America, and in inner cities, will be able to access the same information and instructional resources only wealthy suburban districts have. Advanced math, science, and foreign language courses that many schools could not offer previously are available through telecommunications. This reduces the pressures to close or consolidate small town and rural schools and other institutions, which helps communities maintain their unique local character. Lower costs. Competition lowers the cost of telecommunications equipment and services. This makes it possible for schools to adopt communications techniques without needing to expand budgets and local taxes. For law enforcement. For law enforcement, competition and deregulation in telecommunications means: Efficiencies. Communications equipment prices will continue to fall. Police will be able to afford to buy on board computers, advanced radiocommunications, and other high-tech systems. This magnifies the effectiveness of law enforcement budgets. Better coordination. Advanced communications and computer systems will result in far better coordination among Federal, State, and local law enforcement agencies. Nationwide criminal records, drunk driving, stolen car, and other checks can be undertaken quickly and cheaply. This means law breakers will face a higher risk of apprehension, which means a stronger deterrent against crime. Personal security. Advanced computer and communications technology place home security systems within reach of more and more American families. Easier access to cellular phones will help Americans stay safer and feel more secure. At the same time, these telecommunications and information technologies help police, fire department and emergency medical services drastically reduce response times. In the case of emergency medical services far better on-the-spot service will be provided. For South Dakota and other small city and rural areas: The bill is designed to rapidly accelerate private sector development of advanced telecommunications and information technologies and services to all Americans by opening all telecommunications markets to competition. Recent series of television commercials have shown people sending faxes from the beach, having meetings via computer with people in a foreign country, using their computer to search for theater tickets and a host of other services that soon will be available. My bill would make those services available even sooner by removing restrictive regulations. A person living in Brandon could work at a job in Minneapolis or Chicago, students in Lemmon would be able to take classes from teachers in Omaha, and doctors in Freeman could consult with specialists at the Mayo Clinic. Telecommunications can bring new economic growth, education, health care and other opportunities to South Dakota. Competition in the information and communications industries means more choices for people in South Dakota. It will also mean lower costs and a greater array of services and technologies. For instance, competing for customers will compel companies to offer more advanced services like caller ID or local connections to on-line services such as Prodigy and America On-Line. It hasn't been that long since Ma Bell was everyone's source for local phone service, long-distance service, and phone equipment. Now there are over 400 long-distance companies and people can buy phone equipment at any department or discount store. Under my bill, eventually people would be able to choose from more than one local phone service or cable television operator. This new competition also should lead to economic development opportunities in South Dakota. People will be able to locate businesses in towns like Groton and Humboldt and serve customers in Hong Kong or New York City. We are entering an exciting era. I want to spur growth and bring new opportunities to South Dakota and everywhere in America. j. conclusion S. 652 is legislation providing for the most comprehensive deregulation in the history of the telecommunications industry. Enacting this bill means ending regulatory apartheid. Under the Communications Act of 1934 and the Federal judiciary's Modification of Final Judgment, sectors of the communications industry are forcibly separated and [[Page S7891]] segregated. This created Government- imposed and sanctioned monopoly models for the telecommunications sector. S. 652 tears down all the segregation barriers to competition and ends the monopoly model for telecommunications. It opens up unprecedented new freedom for access, affordability, flexibility, and creativity in telecommunications and information products and services. Passing S. 652 will hasten the arrival of a powerful network of two- way broadband communications links for homes, schools, and small and large businesses. For my home State of South Dakota, and other States away from the big population centers, this reform bill will make the Internet and other computer communications more easily accessible and affordable. Local phone companies, long-distance phone companies, cable TV systems, broadcasters, wireless and satellite communications entities, and electric utility companies all will gain freedom to compete with one another in the communications business. S. 652 is not only a deregulation bill, it is a procompetitive bill. There is an important distinction. The 1984 Cable Act; for instance, deregulated rates for the cable industry but explicitly kept intact the barriers keeping telephone, electric companies, broadcasters, and others from competing for cable TV service. Keeping the monopoly model in place while lifting the lid on prices led directly to a backlash and reregulation in the Cable Act of 1992. This reform law will open the door for billions of dollars of new investment and growth. The United States is the world leader in telecommunications products, software, and services. Still, we labor under self-defeating limits on our ability to grow at home and compete abroad. Most foreign countries retaliate for the strict U.S. limits on foreign investment. This keeps us out of markets where we would have the natural competitive advantage and leaves them open to our competitors. Telecommunications innovation and productivity is flourishing in such countries as the United Kingdom, which has eliminated many barriers to foreign investment. The new legislation will lift limits on foreign investment in U.S. common carrier enterprises on a fair, reciprocal basis. To maintain our world leadership position we need new legislation. S. 652 will improve international competitiveness markedly by expanding exports. In 1994, according to the Department of Commerce, telecommunications services--local exchange, long distance, international, cellular and mobile radio, satellite, and data communications--accounted for $3.3 billion in exports. Telecommunications equipment--switching and transmission equipment; telephones; facsimile machines; radio and TV broadcasting equipment, fixed and mobile radio systems; cellular radio telephones; radio transmitters, transceivers and receivers; fiber optics equipment; satellite communications systems; closed-circuit and cable TV equipment--accounted for $10.25 billion in exports. Finally, computer equipment accounted for $29.2 billion in exports. With this new legislation, telecommunications and computer equipment and services will be America's No. 1 export sector. S. 652 will spur economic growth, create new jobs, and substantially increase productivity. As noted earlier, each dollar invested in telecommunications results in 3 dollars' worth of economic growth. The Clinton/Gore administration estimates that with telecommunications deregulation the telecommunications and information sector of the economy would double its share of the GDP by 2003 and employment would rise from 3.6 million today to 5 million by 2003. The WEFA Group, in a Bell Company funded study, stated that with telecommunications deregulation 3.4 million jobs would be created in the next 10 years. In addition, the GDP would be approximately $300 billion higher, and consumers would save approximately $550 billion. Finally, George Gilder recently testified before the Senate Commerce Committee that if telecommunications deregulation like that contemplated in S. 652 does not take place, America will lose up to $2 trillion in new economic activity in the 1990s. S. 652 will also assist in delivering better quality of life through more efficient provision of educational, health care and other social services. Distance learning and telemedicine applications are especially important in rural and small city areas of America. With the advent of digital wireless technologies the cost of providing service will be lowered tenfold thus closing the gap between the costs of serving urban and rural areas. If we in Congress do our job right, by passing this legislation, we have the potential to be America's new high-tech pioneers--an opportunity to explore the new American frontier of high-tech telecommunications and computers that will be unleashed through bold free enterprise, de-regulatory, procompetitive, open entry policies. By taking a balanced approach which doesn't favor any industry segment over any other, we will First, stimulate economic growth, jobs, and capital investment; second, help American competitiveness; third, minimize transitional inequities and dislocations; and fourth, actually do something very good for universal service goals. Mr. President, on March 28, the Committee on Commerce, Science, and Transportation voted 17 to 2 to report S. 652, the Telecommunications Competition and Deregulation Act of 1995. Telecommunications policy usually rates attention on the business pages, not as a front-page story. Still, for the average American family, legislation to reform regulations of our telephone, cable, and broadcasting industries is surely one of the most important matters the 104th Congress will consider. open, deliberate process Mr. President, this reform legislation was years in the making. It is the handiwork of numerous Senators from both parties, who have shared a common recognition that our laws are outdated and anticompetitive. The recent hearing process which informed the Commerce Committee and led to development of S. 652 began in February 1994. During 1994 and 1995 the Commerce Committee held 14 days of hearings on telecommunications reform. The committee heard testimony from 109 witnesses during this process. The overwhelming message we received was that Americans want urgent action to open up our Nation's telecommunications markets. At the beginning of the 104th Congress, on January 31 of this year, I circulated a discussion draft of a telecommunications deregulation bill which reflected ideas from all the Republican members of the Commerce Committee. I invited the comments of ranking Democratic member Hollings and other Democratic members. In just 2 weeks time, Senator Hollings presented a comprehensive response. He has been a tremendous ally in this effort, as have many of my colleagues on the committee. Senator Hollings and I and Democratic and Republican members of the committee, together with the majority and minority leaders, then engaged in an open, deliberate, productive process of discussion and negotiation. Mr. President, it is accurate to say that staff from both parties have worked night after night, weekend after weekend, with scarcely any respite, since before Christmas on this bill. Mr. President, just as it won overwhelming bipartisan support in committee, S. 652 deserves passage by a strong bipartisan vote here on the floor of the Senate. When I travel around my State of South Dakota and see the craving for distance learning, for telemedicine, for better access to the Internet and the other networks taking shape to improve our productivity and quality of life, it helps me understand the need for this legislation, the need to work and fight for this reform. Mr. President, the obstacles for progress in telecommunications are not technical. They are political. We have it in our power to tear those obstacles down. S. 652 does a substantial part of the job of tearing them all down. restoring congressional responsibility S. 652 returns responsibility for communications policy to Congress after years of micromanagement by the courts. This bill will terminate judicial control of telecommunications policy, in particular, Federal Judge Harold [[Page S7892]] Greene's ``Modification of Final Judgment'' regime which has governed the telephone business since the breakup of AT&T in 1984. When the courts control policy, they are restricted to narrow considerations. Congress, on the other hand, takes into account a whole range of economic and social implications in establishing a national policy framework. S. 652 provides such an approach to telecommunications reform. Piecemeal policymaking by the courts severely delays productive economic activity. The average waiver process before the Department of Justice and the court takes an average of 4\1/2\ to 5 years to complete. Such delays cause uncertainty in markets and significantly reduce investment in telecommunications, an increasingly vital sector of our economy. profoundly pro-consumer Our electronic media are in a creative tumult known as the digital revolution. New technology is erasing old distinctions between cable TV, telephone service, broadcasting, audio and video recording, and interactive personal computers. In many instances, the only thing standing in the way of consumers and businesses enjoying cheaper and more flexible telecommunications services are outdated laws and regulations. Mr. President, S. 652 is profoundly proconsumer. The bill breaks up monopolies--that's proconsumer. The bill sweeps away burdensome regulations. This will lower consumer costs--that's proconsumer. The bill opens up world investment markets for the U.S. telecommunications business. The impact will be more jobs, new services, lower costs--that's proconsumer. Mr. President, American consumers and businesses want to enjoy the full benefits of the digital revolution. They want more communicating power, more services, more openings, and lower prices. They want wide- open competition. It is possible for Americans to have all of these. The obstacles in their way are not technical. We have the most powerful economy, the most advanced technological base in the world. The obstacles are political. The information industry already constitutes one-seventh of the U.S. economy. Worldwide, the information marketplace is projected to exceed $3 trillion by the close of the decade. Today's Federal laws prevent different media from competing in one another's markets, although they have the technical ability to do so. The regional Bell operating companies are protected with monopoly status in the local residential phone service markets. But they are barred from manufacturing phone equipment, offering long-distance service, or competing in a cable video market. Cable companies, though technically capable, are forbidden to offer competing phone service. The status quo preserves monopolies and keeps American consumers from access to an array of products and service options. The existing system of law, regulation, and court decrees, holds back the American telecommunications industry from its full potential to compete in world markets. S. 652 would change all this. It would bring about the most fundamental overhaul of communications policy in more than 60 years. It will break up the monopolies and increase competition. S. 652 immediately lifts regulations barring local telephone companies' entry into cable service and cable's entry into the local phone business. It allows electric utilities to offer service in both the phone and cable markets, and provides fair, effective, and rapid means to make certain that local Bell companies abandon all vestiges of monopoly. Then it allows those companies into the long-distance and phone equipment manufacturing markets. This bill ends decades of protectionism in the telephone investment markets. This will help assure access to capital to build the Nation's next generation informational networking. On a reciprocal basis, it will give Americans more freedom to profit by making major investments in the telecommunications projects of growing markets abroad. For households and business in my home State of South Dakota and all around the Nation, S. 652 means lower prices for local, cellular, and long-distance phone service and lower cable television prices, too. The new competition also will spur companies to bring new technology and services to the marketplace faster. Phone customers would be assured the same number of digits and the same listing in directory assistance and the white pages, whether they choose the local Bell company or a new competitor. What is more, phone numbers will be portable. A customer will keep the same number even if he or she moves among phone companies to get better prices. S. 652 promotes competition in cable markets while protecting consumers from surges in rates. The outcome, I fully expect for consumers, perhaps as soon as a year from enactment of the bill, is plentiful competition and low rates without Federal controls. Freeing business from overregulation is creative and it is proconsumer. There was heavy skepticism 15 years ago about deregulating natural gas prices, but look at the results. I remember I was in the House of Representatives in those days and everybody said if we deregulate natural gas, prices are going to soar. They did not. They went down. Natural gas prices are lower than ever. Now consider how dramatic the difference in proconsumer advances have been between an unregulated part of the information sector--personal computers--compared with the heavily-regulated telephone sector. The personal computer success story is especially important in my State of South Dakota. Because a firm that was a tiny start-up in South Dakota a few years ago, Gateway 2000, is now a major player in personal computer markets. It is one of the quality leaders in home computing products. Computer industry entrepreneurs were free to gamble on the personal computer. No Federal or State regulator told them what they could and could not build, what specifications they had to meet, what markets to target. Market competition was fierce. Technological progress was breathtaking. By 1990, the upstart personal computer industry was selling for $5,000 a computer with as much processing power as a $250,000 minicomputer of the mid-1980's, more than that of a million-dollar mainframe of the 1970's. Now personal computers with more than twice the processing power are available for $1,500. The upshot, in terms of price and power, is that today's computer systems have over 200 times the value of systems in 1994. Even with the historic breakup of the AT&T long-distance monopoly, the telephone business has remained heavily regulated, and consumers have gained value. In 1984, a 10-minute call from New York to Los Angeles cost $5. Today it cost $2.50. It should cost less, and will cost less. If competition and technological advances have developed in the long- distance market, as they had in the computer market over the same period, that same phone call would cost less than 3 cents today, rather than $2.50. Three cents. The regulatory status quo needs shaking up. That is what S. 652 would do. It would do less for big existing companies than for the businesses and services that are still waiting to be created, and many of those will be small businesses. Most important, it would help bring about an explosion of new job opportunities and services for the American people. Let me take just a moment to describe in detail the key reforms in S. 652. First, universal telephone service, the need to preserve widely available and reasonably priced services is a fundamental concern addressed in S. 652. The bill preserves universal service, improves it, and makes it cost less. It requires all telecommunications carriers to contribute to the support of universal service. Only telecommunication carriers designated by the FCC or a State as ``essential telecommunication carriers'' are eligible to receive support payments. The bill directs the FCC to institute and refer to a Federal-State joint board, a proceeding to recommend rules to implement universal service and to establish a minimum definition of universal service. A State may add to the definition for its local needs. Mr. President, to smaller cities and rural communities and others who depend upon universal service nothing is [[Page S7893]] changed. They continue to enjoy affordable access to phone service as before. The most important impact of S. 652 is structural and management reform in universal service that will save the American taxpayers $3 billion over the next 5 years. I think that is important to say. The universal service of this will cost less in these years. For local telephone competition, S. 652 gives a green light to local telephone competition. The bill breaks up the old monopoly system for local phone service. All Federal barriers to competition will be removed, and all State and local barriers will be preempted. Cable companies, long-distance companies, electric companies and other entities will gain a chance to offer lower prices and better service for local phone service. Upon enactment, the legislation preempts all State and local barriers to competing with the telephone companies. In addition, it requires local exchange carriers having market powers to negotiate, in good faith, interconnection agreements for access to unbundled network features and functions that reasonable and nondiscriminatory rates. This allows other parties to provide competitive service through interconnection with the LEC's facilities. The bill establishes minimum standards relating to types of interconnection that an LEC with market power must agree to provide if requested, including the following: Unbundled access to network functions and services; unbundled access to facilities and information; necessary for transmission, routing, and interoperability of both carriers' networks; interconnection at any technological feasible point; access of polls, ducts, conduits, and rights of way; telephone number portability; and local dialing parity. As an assurance that the parties negotiate in good faith, either party may ask the State to arbitrate any differences, and the State must review and approve any interconnection agreement. There is long distance and manufacturing relief for the Bell companies. The Telecommunications Competition and Deregulation Act of 1995 establishes a process under which the regional Bell companies may apply to the FCC to enter the long-distance market. Since the 1984 breakup of AT&T, the Bell companies have been prohibited from providing long-distance service. S. 652 reasserts congressional authority over Bell company provision of long distance and restores the FCC authority to set communication policy over those issues. The Attorney General has a consulting role. The bill requires Bell local companies and other LEC's with marketing power to open and unbundle their local networks to increase the likelihood that competition will develop for local telephone service. It sets forth a competitive checklist of unbundling and interconnection requirements. If a Bell company satisfies the checklist, the FCC is authorized to permit the Bell company to long- distance service if this is found to be in the public interest. Once a Bell company has met the checklist requirements, it also will be allowed to enter the markets for manufacturing phone equipment. In conducting its manufacturing activities, a Bell company must comply with the following safeguards: A separate manufacturing affiliate; Requirements for establishing standards and certifying equipment; Protections for small telephone companies. A Bell manufacturing affiliate must make its equipment available to other telephone companies without discrimination or self-preference as to price delivery, terms, or conditions. This bill also opens international investment markets. S. 652 lifts limits on foreign ownership of U.S. common carriers. The bill establishes a reciprocity formula whereby a foreign national or foreign-owned company would be able to invest more than the current 25 percent limit in a U.S. telephone company if American citizens or firms enjoyed comparable opportunities. This would allow increased investment in and by the U.S. telecommunications industry, which enjoys worldwide comparative advantage. Finally, in the area of cable competition, the bill permits telephone companies to compete against local cable companies upon enactment, although until 1 year after enactment the FCC would be required to approve Bell company plans to construct facilities for common carrier ``video dialtone'' operations. The bill also removes at enactment all State or local barriers to cable companies providing telecommunications services, without additional franchise requirements. The bill maintains rate regulation for the basic tier of programming where the cable operator does not face ``effective competition,'' defined as the provision of video services by a local telephone company or 15 percent penetration by another multichannel video provider. The bill minimizes regulation of expanded tier services. Specifically the bill eliminates the ability of a single subscriber to initiate at the FCC a rate complaint proceeding concerning expanded tier services. In addition, the FCC may only find rates for expanded tier service unreasonable, and subject to regulation, if the rates substantially exceed the national average rates for comparable cable programming services. In the area of spectrum flexibility and regulatory reform for broadcasters, if the FCC permits a broadcast television licensee to provide advanced television services, the bill requires the FCC to adopt rules to permit such broadcasters flexibility to use the advanced television spectrum for ancillary and supplementary services, if the licensee provides to the public at least one free advanced television program service. The FCC is authorized to collect an annual fee from the broadcaster if the broadcaster offers ancillary or supplementary services for a fee to subscribers. A single broadcast licensee is permitted to reach 35 percent of the national audience, up from the current 25 percent. Moreover, the FCC is required to review all of its ownership rules biennially. Broadcast license terms are lengthened for television licenses from 5 to 10 years and for radio licenses from 7 to 10 years. Finally, new broadcast license renewal procedures are established. Entry by registered utilities into telecommunications is allowed. Under current law, gas and electric utility holding companies that are not registered may provide telecommunication services to consumers. There does not appear to be sufficient justification to continue to preclude registered utility holding companies from providing this same competition. The bill provides that affiliates of registered public utility holding companies may engage in the provision of telecommunications services, notwithstanding the Public Utility Holding Company Act of 1935. The affiliate engaged in providing telecommunications must keep separate books and records, and the States are authorized to require independent audits on an annual basis. alarm services Beginning 3 years after enactment, a Bell company may provide such services if it has received authorization from the FCC to provide in- region interLATA service. The bill requires the FCC to establish rules governing Bell company provision of alarm monitoring services. A Bell company that was in the alarm service business as of December 31, 1994 is allowed to continue providing that service, as long as certain conditions are met. Finally, continuous review and reduction of regulation. The bill also ensures that regulations applicable to the telecommunications industry remain current and necessary in light of changes in the industry. First, the legislation permits the FCC to forbear from regulating carriers when forbearance is in the public interest. This will allow the FCC to reduce the regulatory burdens on a carrier when competition develops, or when the FCC determines that relaxed regulation is in the public interest. Second, the bill requires a Federal-State Joint Board to periodically review the universal service policies. Third, the FCC, with respect to its regulations under the 1934 act, and a Federal-State Joint Board with respect to State regulations, are required in odd-numbered years beginning in 1997 to review all regulations issued under the act or State laws applicable to telecommunications services. The FCC and Joint Board are to determine whether any such regulation is no longer in the [[Page S7894]] public interest as a result of competition. In short, Mr. President, this bill promotes deregulation as far as it logically should go. It provides a kind of ``sunset'' process for all regulations which the bill does not abolish immediately. I welcome the coming debate and vote on S. 652. I urge my colleagues to reassert congressional responsibility for telecommunications policy. Let me say, in summary and in conclusion, Mr. President, what we are trying to do here is to get everyone into everyone else's business. The economic apartheid that has been a part of telecommunications since the act of 1934 should be brought to an end. I believe the passage of this bill would be like the Oklahoma land rush, the going off of the gun, because presently a lot of investment in the United States is paralyzed because we do not have a roadmap for the next 5, 10, or 15 years until we get into the wireless age. What is happening is that many of our companies are investing in Europe or abroad because they are prohibited from manufacturing or doing something here. As a result, American jobs are being lost. This particular bill, if we can pass it, will provide a roadmap which businessmen and investors will be able to invest in and make an explosion of new devices, an explosion of new jobs, and will help our country a great deal. I think it will help consumers by lowering prices and providing more devices, and it will also help labor by providing more jobs of the type that we need in our country. I wish to pay tribute again to Senator Hollings and his staff and all the Senators on the committee who have worked so hard--and Senators in this Chamber. I have spoken to all 100 Senators at some point on this bill and it has been a long time getting it up. I hope we can proceed through today and tomorrow.

Mr. PRESSLER. I thought we had this agreed to this afternoon, but I guess the minority leader has something he would like to add or change. But I would like to inquire of the majority leader if we cannot get agreement tonight. Shall we make this one of the votes at 8:30 or 9 o'clock in the morning?

Mr. PRESSLER. I suggest the absence of a quorum.

Mr. PRESSLER. I am asking unanimous consent to adopt the managers' amendments, which I have sent to the desk, and which have been cleared on both sides of the aisle.

Mr. PRESSLER. I want to commend my friend from New Jersey, Senator Lautenberg. I know he is an experienced businessman, and I know there is some controversy about Bellcore. It is my belief that if Bellcore is sold and out there competing, it should be able to compete without restriction. That is based on the information I have at this moment. I know there is a great controversy about manufacturing, because about 99 percent of manufacturing many new devises is research. It seems to me that the Senator has raised a very good point. As I understand it, in the managers' amendment, we have taken this section out so we will be able to entertain a colloquy, or indeed an amendment. I have begged several Senators to come tonight to offer amendments. We have all these strong feelings and we would like to get a vote on something tomorrow morning at 9 o'clock. As I gaze about, I do not see any amendments cropping forth. We welcome amendments. I want to thank the Senator from New Jersey for raising this, because based on the information I have, I tend to agree with what I think his position is. I think he has raised a good point. If we could still adopt the managers' amendment, that is not, as I understand it, in there. We have taken out anything that there is controversy about.

Mr. PRESSLER. I thank the Senator from Mississippi for his terrific contribution. Chip Pickering has been in every step of the way. This would not be happening without your great leadership. I personally thank you very, very much. Mr. President, I am sending to the desk a managers' amendment which I am cosponsoring with Senator Hollings. This amendment, which has been cleared on both sides of the aisle, makes a number of technical and minor changes in the bill that have been worked out since the bill was reported by the Commerce Committee. I ask unanimous consent that when adopted, the text be treated as original text for purposes of further amendment. At this point I would like to send the managers' amendment to the desk.

Mr. PRESSLER. Mr. President, I move to reconsider the vote by which the amendment was agreed to.

Mr. PRESSLER. I urge the adoption of the amendment.

Mr. PRESSLER. Mr. President, we could go into a quorum call or yield to our colleague from Montana who has been waiting to speak. Mr. BURNS addressed the Chair.

Mr. PRESSLER. Mr. President, this second-degree amendment would add a new subsection to the underlying amendment. The new subsection would direct the FCC to allocate a 50 megahertz block of spectrum in the 4 gigahertz band for use by broadcast auxiliary services within 1 year of the enactment of the bill. In addition, this amendment would require that all broadcast auxiliary service licensees currently using a 50 megahertz block of spectrum in the 2 gigahertz band relocate their activities to the 4 gigahertz band within 7 years of the date this bill is enacted. Finally, this amendment requires the FCC to auction the vacated spectrum in the 2 gigahertz band for use by commercial mobile services like cellular PCS within 5 years of the date of enactment. By moving broadcast auxiliary service licensees, who do not pay the spectrum they are using, to another less valuable frequency, we will make available some very valuable spectrum for auction. The Congressional Budget Office estimates that the auction of the 50 megahertz block of 2 gigahertz spectrum will bring at least $3.8 billion to the Federal Treasury. Combined with the underlying amendment by the Senator from Alaska, this would raise more than $7.1 billion that is needed to offset the universal services provisions of this bill. As the Senator from Alaska last pointed out--I commend him--this is a technical budget problem. The universal service provisions in this bill actually saves $3 billion over what would be paid if the existing system is left unchanged. However, with these amendments we meet the letter of the Budget Act. I urge my colleagues to support the adoption of my amendment and the underlying amendment by the Senator from Alaska. If it is appropriate, I would urge the adoption----

Mr. PRESSLER. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with.

Mr. PRESSLER. I thank the Senator from Nebraska for his statement. In national program of State legislators and they asked, in terms of a model of a State to deregulate, what might it be. And I suggested the work of Bob Kerrey of Nebraska when he was Governor. I observed his work in deregulating telecommunications in that State, and I certainly look forward to his insights. We have worked on a bipartisan basis on this bill. In fact, all the Democrats on the Commerce Committee voted for the bill. Senator Hollings did a good job. I visited with and delivered a copy of the original draft bill to each of the Democrats on the Commerce Committee. Two Republicans on the committee voted against the bill. Eight Republicans on the committee voted for it. This is a bipartisan bill. All the Democrats on the committee voted for it. I think that is a very important point. the public utility holding company act provisions

Mr. PRESSLER. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with.

Mr. PRESSLER

Mr. PRESSLER. I thank my friend from Utah for clarifying this point. Having put my jurisdictional concern to rest, I join in supporting the amendment and urge my colleagues to support it. American citizens traveling on foreign carriers should have the same level of protection they have when traveling on U.S. passenger carriers. Moreover, U.S. passenger carriers should not be put at a competitive disadvantage vis- a-vis foreign competitors whose relaxed security standards are less expensive.

Mr. PRESSLER. Mr. President, I would note the pending amendment concerns a matter, airline security, that is within the jurisdiction of the Senate Committee on Commerce, Science, and Transportation. I see the distinguished chairman of the Committee on the Judiciary is on the floor. Would the chairman be willing to enter into a short colloquy on this issue?

Mr. PRESSLER. I thank my colleague. Although I support the proposed amendment requiring a uniform security standard for passenger airlines, as chairman of the Commerce Committee I want the record to be clear on the point that the Committee on Commerce, Science, and Transportation retains jurisdiction over matters concerning airline safety and security. Further, I want the record to be clear that simply by not objecting to this amendment on jurisdictional grounds, the Committee on Commerce, Science, and Transportation will not be deemed to have waived its jurisdiction over the very important issue of air carrier security programs. [[Page S7776]] I would ask whether the chairman agrees with my assessment of the jurisdictional situation and whether he would be willing to stipulate as much for the record?

Mr. PRESSLER

Mr. PRESSLER. Mr. President, I rise to explain the false ID amendment I have proposed to S. 735, the Comprehensive Terrorism Prevention Act. According to several national news sources, Timothy McVeigh, the primary suspect in the Oklahoma City bombing, allegedly used a false South Dakota driver's license to rent the Ryder truck which exploded outside the Alfred P. Murrah Federal building on April 19 of this year. Again, the driver's license used by McVeigh was a fake. Timothy McVeigh is not a resident of South Dakota, nor do I believe he ever has been a resident of my State. My understanding is the fake license contained his picture, but a different name. To add insult to injury, the birthdate listed on the license was April 19, the same date as the bombing. This example illustrates how easily a terrorist can obtain an authentic-looking driver's license, and operate in our society under an assumed name. It is not clear at this point exactly how McVeigh obtained the false South Dakota driver's license. However, the sad fact is, false identification documents [ID's] are easy and cheap to obtain given the advanced state of computer technology today. Counterfeiting a driver's license is child's play for sophisticated computer users. Modern color printers can produce stunningly accurate reproductions of driver's licenses, Social Security cards, and other ID's. Even anticounterfeiting measures, such as holographic images and magnetic strips, are being duplicated with relative ease. A vast underground industry has emerged to meet the growing demand for false ID's from underage drinkers. Just last week, two young men who were students at George Washington University here in Washington, DC, plead guilty to operating a sophisticated fake driver's license operation. They sold the fake licenses to college students for $65 each. They even gave a discount for ordering 10 or more fake ID's. I ask that a news article describing that operation be printed in the Record at the conclusion of my remarks.

Mr. PRESSLER. Most States have laws against the use of false ID's to purchase alcohol, but those laws only target the underage drinker. Nothing prohibits anyone from mailing false ID's from another State. Tough Federal action is needed to really make a difference. Congress needs to crack down on the suppliers--those in the industry of producing and distributing false ID's. Last year, and again this year, I introduced legislation designed to deal with this situation. The amendment I have offered today is similar to this legislation. It seeks to target and punish those in the business of producing and distributing false identification documents nationally. Anyone convicted of distributing false ID's under this provision would face a prison sentence of up to 1 year, a fine, or both. The amendment also would reduce from five to three the number of false ID's that must be in a person's possession to trigger penalties under Federal law. These two changes are needed if we are to make a dent in the volume of false ID's being offered and sold throughout our country. I urge my colleagues to support the amendment. Exhibit 1 [From the Washington Post, June 2, 1995] Two Plead Guilty to Selling Fake Driver's Licenses (By Toni Locy) A student and a former student at George Washington University pleaded guilty in U.S. District Court yesterday to running a sophisticated fake driver's license operation, using computers to make nearly perfect copies to sell to underage students in several states so they could buy liquor. Prosecutor Joseph B. Valder described Ronald Stewart Johnson, 20, as the mastermind of the scheme and Said C. Kiwan, 19, as the legman who drummed up business and They sold the licenses for $65 each or at a discount of $55 each for 10, making about $8,000 in less than six months. Valder said Johnson, as a high school student in Durham, N.C., discovered the wonders of computers and learned how to alter valid driver's licenses. He said Johnson used scanning equipment to enter a driver's license into a computer and shading and texture devices to make changes. In 1994, Kiwan and Johnson, who were friends when their families lived in Rio de Janeiro when they were both 10, became reacquainted and began selling the licenses to make money, Valder said. Though the prosecutor and defense attorneys lauded their cooperation with authorities after they were caught, U.S. District Judge Ricardo Urbina rejected a request by Kiwan's attorney to forgo the normal procedures and sentence him immediately. Attorney Thomas Abbenante said GWU officials will decide next week whether to expel Kiwan, as they have done with Johnson. If Kiwan's case is resolved, Abbenante said, he has a chance to remain in school. But Urbina refused to give Kiwan such a consideration. ``This is an episode in his life that carries the potential of two years of incarceration. I would not want to send you the wrong message by having you walk in here, plead guilty . . . and walk out with probation that you may not deserve,'' the judge told Kiwan, who is a citizen of England and Lebanon. ``You are a privileged young man with lots of education, lots of advantages in life, with no need for money, and yet you engaged in this enterprise, which probably resulted in a lot of young people getting booze and possibly driving under the influence,'' Urbina said. ``If ill consequences develop because of it, then that is your problem. You are here because you committed a crime, and you have to deal with the consequences, whatever they are.'' Kiwan pleaded guilty to two misdemeanor counts for sending fake driver's licenses to a student at Vanderbilt University, in Nashville, and to a high school student in Durham. Johnson, who was born in Brazil but is a U.S. citizen, pleaded guilty to a felony charge of unlawful production of false identification. He faces up to five years in prison.

Mr. PRESSLER. Mr. President, I am proud to offer this amendment along with my South Dakota colleague, Senator Daschle, to S. 735, the Comprehensive Terrorism Prevention Act, to designate the child development center at Ellsworth Air Force Base in South Dakota as the Cartney Koch McRaven Child Development Center. It was just slightly more than a month ago that terrorist thugs bombed the Alfred P. Murrah Federal Building in Oklahoma City. Among the victims inside was Cartney Koch McRaven. Stationed at Tinker Air Force Base and having just been married the previous weekend, Cartney was in the Murrah Federal Building to register her new married name on Federal documents. Tragically, her life was cut short by the savagery of domestic terrorism. It is only fitting that we honor Cartney at Ellsworth Air Force Base. Spearfish was her home. And she chose to begin her adult life by joining the Air Force and serving her country. And serve she did, with honor, with devotion, with dignity. It is even more fitting that her name appear on the child development center at Ellsworth. A1c Cartney Koch McRaven served in Haiti, where the stark poverty had an enormous impact on her. Cartney's heart went out to the children of Haiti. She devoted her time in Haiti to an orphanage, offering a warm smile and a kind, loving word to young faces. The mission of our Armed Forces in Haiti was to ensure peace and offer hope to the people of Haiti--young and old. Cartney took her mission to heart. Even her family honored Cartney's commitment to young people by urging that donations be made in Cartney's memory to the orphanage in Haiti. But we do more than honor a person. We honor the values she personified and practiced in her daily life. The values of service, of duty, of compassion and caring for the underprivileged young--values that are at the core of South Dakota and of America. [[Page S7668]] It is my hope that by passing this amendment and the underlying bill, Cartney Koch McRaven forever will be remembered as a symbol of these core values and an inspiration to the young people in South Dakota and America to honor and serve their family, community, and country. I urge my colleagues to support the amendment.

Mr. PRESSLER

Mr. PRESSLER. Mr. President, I am proud to introduce legislation today along with my South Dakota colleague, Senator Daschle to designate the child development center at Ellsworth Air Force Base in South Dakota as the Cartney Koch McRaven Child Development Center. It was just slightly more than a month ago that terrorist thugs bombed the Alfred P. Murrah Federal Building in Oklahoma City. Among the victims inside was Cartney Koch McRaven. Stationed at Tinker Air Force Base and having just been married the previous weekend, Cartney was in the Murrah Federal Building to register her new married name on Federal documents. Tragically, her life was cut short by the savagery of domestic terrorism. It is only fitting that we honor Cartney at Ellsworth Air Force Base. Spearfish was her home. And she chose to begin her adult life by joining the Air Force and serving her country. And serve she did, with honor, with devotion, with dignity. It is even more fitting that her name appear on the child development center at Ellsworth. Airman First Class Cartney Koch McRaven served in Haiti, where the stark poverty had an enormous impact on her. Cartney's heart went out to the children of Haiti. She devoted her time in Haiti to an orphanage, offering a warm smile and a kind, loving word to young faces. The mission of our Armed Forces in Haiti was to ensure peace and offer hope to the people of Haiti--young and old. Cartney took her mission to heart. Even her family honored Cartney's commitment to young people by urging that donations be made in Cartney's memory to the orphanage in Haiti. But we do more than honor a person. We honor the values she personified and practiced in her daily life. The values of service, of duty, of compassion and caring for the underprivileged young--values that are at the core of South Dakota and of America. It is my hope that by passing this legislation, Cartney Koch McRaven forever will be remembered as a symbol of these core values and an inspiration to the young people in South Dakota and America to honor and serve their family, community, and country. Mr. President, I ask unanimous consent that the text of this legislation introduced today by myself and Senator Daschle appear in the appropriate place in the Record.

Mr. PRESSLER

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

Mr. PRESSLER

Mr. PRESSLER. Mr. President, I have just returned from my State of South Dakota, where I listened to the farmers, small businessmen, students, wives, and citizens of South Dakota for 9 days. I found many were thanking me for voting for the balanced budget resolution, the Domenici-Dole budget that passed the U.S. Senate about 2 weeks ago. The people of our country want change. They want us to do something about the huge deficit that has been built up and they feel we have taken the first step. The message I heard loud and clear was, ``Please take the second and third steps now.'' For the first time since I have been in the Senate, this body passed a real budget that will move us toward a balanced budget in the year 2002. But even with a balanced budget in 2002, we will still have a huge deficit. In some of my high school graduation speeches, I predicted they will have to pay a tax surcharge on their income taxes for most of their lives to help pay down the Federal deficit, or at least pay interest on it. I know the dullest story in the world probably is the Federal deficit, but cattlemen are aware that our budget that we passed here, if we stick to it, will result in lower interest rates. It will also result in a stable dollar so that there can be international trade. Senior citizens understand that the cuts in Medicare are merely a cut in the rate of increase. Medicare has been increasing at a 10-percent increase. This budget allows about a 7-percent increase, and it provides for streamlining, doing away with fraud and abuse, and other steps within Medicare and Medicaid so they can still provide solid service. Even the Democrats' study predicted that Medicare would go bankrupt by the year 2000 unless something is done. I find it very strange that many are criticizing the Domenici-Dole budget but they did not provide an alternative here on the Senate floor. There was the alternative of President Clinton which every Member of this Chamber voted against. I do not mean to be partisan, but I would say I am very proud and I have found my constituents thankful that Congress has finally started to address the budgetary deficit problem. There is also a strong feeling among senior citizens that to keep our currency solvent, our dollar stable, and to avoid inflation is worth a great deal to them. This budget will start to do that if we stick to it. [[Page S7654]] So the message I got from my constituents was, ``Thank you for the vote on the balanced budget that went through the Senate.'' But they are a little nervous about us. They say, ``You are on second base. Keep going.'' So that is the message I bring back from my constituents. I think it is an important one to our Nation, because it is our No. 1 domestic problem, the unbalanced budget. Mr. President, I yield the floor. I suggest the absence of a quorum.

Mr. PRESSLER

Mr. PRESSLER. Mr. President, today I am introducing a bill to stop the proposed transfer of Federal land in South Dakota to the Standing Rock Sioux Tribe. The bill is simple: It removes any authority for the U.S. Army Corps of Engineers to transfer lands in South Dakota acquired by the U.S. for construction and operation of reservoirs on the mainstem of the Missouri River and transfer them pursuant to Public Law 93-599, or any other law. background This issue is not new to the Senate and to the people of South Dakota. In October 1992, Congress passed the Three Affiliated Tribes and Standing Rock Sioux Tribe Equitable Compensation Act. This law called for the transfer of approximately 15,000 acres along Lake Oahe and the Missouri River in South Dakota from the corps to the Standing Rock Sioux Tribe. However, it soon became clear that this proposed transfer was a mistake. The transfer had significant public opposition, beginning with the Governor of South Dakota. It also was learned that the costs to the Federal Government to transfer these lands was significantly more than the actual value of the land itself. As a result Mr. President, on February 9, 1994, the Senate voted to repeal the proposed land transfer. However, the Senate repeal was amended by the House and the final version signed into bill contained language directing the corps to proceed with the transfer. The House language directed the Corps to pursue these land transfers pursuant to Public Law 93-599--a 1975 Federal law that deals with the disposal of surplus government lands. Mr. President, I remind my colleagues that the Senate last year rejected the land transfer language due to the costs involved. Even under the best scenario, the costs of the transfer was more than double than value of the land. Some costs estimates were more than five times the estimated land value. Hardly a wise use of taxpayers' dollars. legislation is needed for the transfer of lands Mr. President, I have been very hesitant to support Federal land transfers since they were first suggested in 1992. I also am quite troubled with the process being used by the U.S. Army Corps of Engineers. The corps appears to be intent in doing all it can to transfer the land, regardless of what is in the best interests of all South Dakotans. In fact, I believe the corps lacks the statutory authority to transfer the large tract of land near Lake Oahe. This is most troubling since the corps has regulations pending to transfer these lands. As I stated earlier, Public Law 93-599 deals with the disposal of excess government lands. The corps previously conducted an assessment of excess lands along Lake Oahe and determined that only 386 acres could be deemed excess. Yet, the corps intends to transfer 15,000 acres. Mr. President, when I learned of the proposed transfer in March of this year I wrote to the Secretary of the Army questioning the legal authority of the corps to transfer Federal land beyond what it deemed to be excess. I asked the Secretary to provide me with a justification of the corps' legal authority to carry out the transfer, prior to the issuance of any regulations. I was surprised to learn that the corps issued the land transfer regulations on April 10, 1995. It was more than a month after that, on May 17, that I received response to my inquiry to the Secretary of the Army. The response is very troubling. Essentially, the corps' intends to redefine the regulations to expand what is deemed excess in order for the corps to carry out the transfer. In short, rather than alter the transfer to make it consistent with the law, the corps intends to twist the law so that it is consistent with the transfer. Mr. President, that is unacceptable. The Army clearly is intent on an ill-advised and illegal transfer of Federal land. The lands under consideration are neither excess land nor conditionally excess lands within the meaning of the law as currently defined. Given this fact, and the clear will of Congress to restrict the corps' land transfer authority, this land transfer must be decided by legislation--not regulation. strong public opposition Mr. President, plain and simple the proposed land transfer is not in the best interest of South Dakota. As disturbed as I am that the corps is acting beyond its legal authority, I am equally astounded that the corps would take this action without hearing from the State of South Dakota and its citizens. Their concerns must be heard. What are these concerns? First, South Dakotans are concerned about future access to the land. Sportsmen in the State are concerned that hunting and fishing could be restricted. Others are concerned with possible restrictions on the use of shorelines for recreational activities, such as swimming, boating and picnicking. Those supporting the transfer state that access will be secured. How can they be so sure? Nothing has been proposed to ensure continued access. The interests of all South Dakotans are not being considered. In addition, the Governor of South Dakota also has serious concerns with the transfer. In fact, both the Governor and attorney general of South Dakota support the legislation I am introducing today. Wildlife management is a major concern should corps lands be transferred. That is why the South Dakota Wildlife Federation opposed the transfer. As a recent editorial in the Yankton Press and Dakotan opposing the transfer said ``* * * the real public concern is the environment. Environmental management along the Missouri already is damaged by dozens of jurisdictions with different agendas. Imagine the difficulty if the corps needed a few acres back for a bird breeding bank.'' The editorial concluded the corps ownership of the land offers a systems management concept for the river. This would be lost if the lands were transferred. In addition, the issue of jurisdiction over land and water in the affected areas needs to be addressed. Jurisdiction on power generation facilities must be spelled out.