Lifting Restrictions On The Bells p.

By: Debra Gersh Hernandez

Two bills introduced in Congress would end competitive restrictions on the regional Bell operating companies sp.

AS CONGRESS PREPARED for adjournment, two long-awaited bills that would lift a number of competitive restrictions on the regional Bell operating companies, including a ban on electronic publishing, were introduced in the House of Representatives.
The Senate Commerce, Science and Transportation Committee's Communications Subcommittee earlier this year held two hearings on S. 1086, the Telecommunications Infrastructure Act of 1993, which addresses a variety of telco issues.
One of the House bills, H.R. 3626, addresses both the 1982 Modification of Final Judgment and the Communications Act of 1934. The bill's first title section is known as the Antitrust Reform Act of 1993, while the second is called the Communications Reform Act of 1993.
H.R. 3626 is co-sponsored by Rep. Jack Brooks (D-Texas), chairman of the Judiciary Committee, and Rep. John Dingell (D-Mich.), chairman of the Energy and Commerce Committee.
The Brooks-Dingell bill, months in the making, had been awaited eagerly in the days leading to Thanksgiving, when, according to rumors, it would be introduced.
The bill is the result of lengthy negotiations among interested parties, including the newspaper industry and the RBOCs, in which the parties tried to draft legislation that each could accept.
It was introduced a week after the U.S. Supreme Court upheld a lower court decision allowing the RBOCs to expand into electronic publishing.
The Newspaper Association of America was among those that originally argued against allowing the RBOCs to expand at all. But as rulings and legislation began to show that expansion would be allowed, the NAA worked on negotiating regulatory safeguards against monopolistic behavior by the Bells.
Hearst Corp. chairman and CEO Frank Bennack Jr., a member of the NAA negotiating team that met with RBOC representatives, said provisions in the Brooks-Dingell bill "level the playing field as much as newspapers and other electronic publishers using the Bells' local telephone exchange services could hope."
Bennack noted that the bill offers "important safeguards to assure that the regional Bell operating companies will not have an anticompetitive advantage because of their local telephone exchange monopolies."
The RBOCs, while recognizing the need for legislation, worry that the Brooks-Dingell bill may go too far.
"We are concerned . . . that H.R. 3626 mandates more intensive regulation of the Bell companies than is currently the case, which we believe is counterproductive in an increasingly competitive environment," said R.L. Mickey McGuire, chairman of the MFJ Task Force, an ad hoc committee of the seven RBOCs.
"While we strongly disagree with the delays the bill builds into the process, introduction of this bill is certainly a step in the right direction," McGuire's statement added.
A number of newspaper companies already have begun joint ventures with telephone providers in their markets. Under the Brooks-Dingell bill, the NAA explained, such ventures are permissible as long as the RBOC interest does not exceed 50%.
The bill does include exceptions, under which the Bell companies can increase their share to 80% to allow smaller publishers with limited means to participate.
Safeguards in the Brooks-Dingell bill include mandatory equal access to local networks, with non-discriminatory pricing; the requirement that the RBOCs operate electronic publishing businesses as separate ventures; a prohibition on the Bells using resources from their telephone networks to give an unfair advantage to their electronic publishing businesses; and a requirement that the Bells undergo an independent audit every year.
The Brooks-Dingell bill also includes a "sunset clause," whereby the regulations would be lifted as of June 30, 2000.
The National Newspaper Association also supported the Brooks-Dingell safeguards, but chairman Sam Griffin Jr., publisher of the Bainbridge, Ga., Post-Searchlight, warned that safeguards alone are not enough to protect community papers.
The NNA has proposed language that would guarantee that local information providers have the same access, rates and competition that larger, multinational information providers have. Such provisions, considered key by the NNA, have been put forward by Sen. Conrad Burns (R-Mont.).
The other House bill, announced earlier the same day, focuses more on RBOC competition in local markets.
Introduced by Rep. Edward Markey (D-Mass.), the National Communications Competition and Information Infrastructure Act of 1993, H.R. 3636, would among other things allow telephone companies to purchase cable systems outside their service areas, create a joint federal-state board to ensure universal access to services, open up local telephone service to competition, and set up digital, or open platform, service at affordable rates.
At a press conference to announce the introduction of the bill, Markey, chairman of the House Committee on Energy and Commerce's Subcommittee on Telecommunications and Finance, noted that the bill is not the Magna Carta and likely will be changed as the subcommittee works toward a final version.
He added, however, that the bill's sponsors would like to have a final version ready for President Clinton's signature before the Congress adjourns this time next year.
The bill has received bipartisan support in the House telecommunications subcommittee. Its co-sponsors include Rep. Jack Fields (R-Texas), the subcommittee's ranking minority member, and Reps. Rick Boucher (D-Va.) and Mi-
chael Oxley (R-Ohio), both panel members. Boucher and Oxley had sponsored earlier telco legislation.
Praising the bill's promotion of local competition, NAA president and CEO Cathleen Black noted that the Mar-key-Fields and Brooks-Dingell bills "form a terrific foundation for achieving both of our goals."
Those goals, she explained, "are to seek adequate safeguards against the potential for monopoly abuses in the short term and to encourage local telephone competition in the longer term.
"Passage of the Markey-Fields bill would be a giant step toward the latter goal of breaking the Bell monopoly in local distribution," Black added, noting that "true local loop competition is the best way to ensure that the widest selection of electronic information services will be available to the public and at affordable prices."
NNA president Tonda Rush pointed out that the Markey-Fields bill's unbundling of service would help prevent the RBOCs from setting up services in a way that only large companies could buy them.
"The thrust of the ARC [access, rates and competition] provisions is to guarantee that a local publisher should not have to rent a larger piece of the highway than he needs," Rush said.
"His larger competitor may be driving a Mack truck, but the local publisher may be in a subcompact. They may be headed the same direction, but the local publisher doesn't need as much space to get where he wants to go. Chairman Markey acknowledges that problem would basically require the BOC to offer a smaller and less costly piece of real estate to the subcompact," Rush continued. "Without such a requirement, we can pretty much guarantee the Mack truck won't have to worry about rolling over the little guy because the little guy won't get on the highway in the first place."
Both the Consumer Federation of America and the United States Telephone Association raised concerns about the Markey-Fields bill.
The CFA's concerns focused on what it saw as the lack of adequate protections for consumers.
The USTA welcomed H.R. 3636 "with reservations" and called for "significant changes" in the language of the bill.