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Re: The planned Communications Act Re-write of the New(t) Congress
From: David Farber <farber () central cis upenn edu>
Date: Sun, 22 Jan 1995 20:16:48 -0500

Date: Sun, 22 Jan 1995 18:54:16 -0500 (EST)
From: Diana Jarvis <daj () panix com>
To: David Farber <farber () central cis upenn edu>
n Tue, 17 Jan 1995, David Farber wrote:

I have paraphrased a message from a source who claims that
this has been substantiated by at least two other sources.

PLEASE note that I can neither personally confirm or deny
this information at this time, so...

Since I have been following the legislation deregulating the Telcos, and 
since I have with me a copy of the new Senate Republicans' policy 
proposal for telecommunications legislation released this past week, I 
thought I'd check this repost against the Republicans' proposal, and tell 
you what I could personally confirm or deny. . . .

For what it's worth, my impeccable source in DC just called
to tell me how the Communications Act Re-write will appear
when a carefully orchestrated scenario runs its course.

By Feb 15th, the RBOCs expect their bill (yet to be
introduced) to pass both the House & Senate, with
accelerated Hearings. All the deals have all been made over
the holidays with the critical opposition that stopped last
year's bill: the IXCs, cable, etc. 

The date being bandied about for the telecom legislation is July 4, not 
anytime in February.  The seven Regional Bell Operating Companies (RBOCs) 
are generally credited with trashing last year's bill, S.1822, most of 
which has been resurrected in the Republican's policy proposal.

The bill will turn residential, small town, suburban, and
rural _local access_ into a permanent natural monopoly with
a single gateway for services TO the home. The BOCs don't
think there are any services FROM the home business worth
considering, other than voice and low-speed return data for
games. The RBOCs, have given up on medium to large
customers. They realize that they already lost that market
to AT&T and the niche players, MCI & Sprint. But by
controlling access to the home, they figure they can
control everything else, and have a chance at getting a few
large users by packaging the residences for them. This way
they might actually gain market share in the IXC business.
AT&T knows they can't fight this Congress without looking
like the spoiler, so they will take their chances on radio
access, manufacturing, and the more lucrative businesses.

The Clinton administration has always anticipated that there would be one 
large bundled fiber to each house.  Since everyone seems to think 
curbside-to-house is the most expensive leg of the NII, most commentators 
seem to agree with this.  It isn't in either S. 1822 or the Republican 
policy proposal, both of which allow competition in local phone service 
and which remove line-of-business restrictions against manufacturing and 
long distance service.  

The bill will have the right incentives for the major MSOs
to lease-back their coax for the LECs to run. Malone
already said so. 

Nothing in the legislation refers to such a lease-back.  It sounds like 
this comes from an interview with or press release by John Malone, the 

[The RBOCS] have come up with a legalistic strategy that empowers
the FCC to slow down any competitive forces using
alternative carriage [using radio]. This will take three steps:

1) Federal pre-emption of States' rights in ALL
communications fields -- wire, radio, switching, rates,
whatever. But State's rights are a Republica mantra. To
prevent this looking like more centralized government
(which it is):

2) An "ombuds panel" will be set up under the FCC, but with
extraordinary powers to bypass the Administrative
Procedures Act and expedite the CFRs without 11 months of
notice, etc., to settle all disputes between the States and
the Federal government on communications matters. This will
be presented as State oversight to protect universal,
vaguely defined, services and the like.

In telecommunications, as in most other areas of the law, the general 
trend has been towards federal preemption of state law.  This is going to 
be virtually guaranteed in the next telecom bill.

and to make sure none of this unravels too early:

3) the Justice Dept. will be cut out of all antitrust
matters related to communications.

S. 1822 required every entry into a previously forbidden market to be 
approved by both the FCC and the Attorney General; the FCC would approve 
each petition pursuant to its mandate to serve the "pbulic interest" and 
the Attorney General would examine each petition for antitrust concerns.  
The Republicans Policy Proposal makes no mention of these, and in fact 
contemplates a fundamental reorganization of the administrative agencies 
supervising all telecom providers.  This may be what the writer is 
referring to.

What can kill it is the State pre-emption clause. The
Governors of the five, so-called "seed" states in telecom
(FL, NY, CA, IL and CO) are going to want something big in
return for blessing pre-emption.

I've never heard of "seed" states in terms of telecom reform.  Anybody 
have any idea what this refers to?

However, the networks would love to drop
foreign ownership provisions and they might relent on data
over former video channels -- which they really don't
understand anyway -- for a chance to make better deals with
foreign entities.

All legislation provides for reform of current foreign ownership 
provisions.  I haven't looked at these sections closely, but I'm assuming 
that bans against foreign ownership will be relaxed pursuant to GATT and 
to reciprocal behavior by our trading partners.

The Republicans are counting on cable & telcos to behave
themselves and not raise rates until after the next
Presidential election.

Their rates -- referred to as "tarriffs" -- are set by the FCC.  This is 
why the telephone, cable, and broadcast industries are considered 
"regulated industries."

There is nothing to stop the steamroller now but if they
can't get the bill signed into law by Feb 15th, the deals
are all off, I am told.

This is really odd, given that there is no Feb. 15th deadline.
There is a House bill out there which I haven't seen, H. #411 (that bill 
number was specifically requested for it), but to my knowledge the 
Republicans' policy proposal hasn't even been reduced to a bill yet.

I'm not sure where the Republican policy proposal is on the Net.  The 
full title of it is "Senate Republicans' Proposal on Telecommunications 
Legislation:  Executive Summary, Outline, and Policy Framework Overview."
The subtitle is "Telecommunications Competition and Deregulation Act of 
1995:  A Pro-competitive, De-regulatory Policy Prescription."  It was 
released in early January.  The subtitle is misleading, since it is not 
yet a bill, but no doubt when it becomes one that will be the title.

If anyone knows where it is on the Net, please post!

Diana Jarvis <daj () panix com>

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