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Gore speech on Information Superhighway & Whithous


? Area: Whitehou ?????????????????????????????????????????????????????????????
Msg#: 99 Date: 01-14-94 03:54
From: In*touch Read: Yes Replied: No
To: All Mark:
Subj: 1.0: Background on Teleco
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THE WHITE HOUSE

Office of the Vice President

________________________________________________________________________
For Immediate Release January 11, 1994

BACKGROUND ON THE ADMINISTRATION'S
TELECOMMUNICATIONS POLICY REFORM INITIATIVE

On September 15, 1993, the Administration issued "The National
Information Infrastructure: Agenda for Action," which unveiled our
National Information Infrastructure (NII) initiative. There is a national
consensus that construction of an advanced NII will "help unleash an
information revolution that will change forever the way people live, work, and
interact with each other." The "Agenda for Action" recognized that realizing
the full potential of the NII will require aggressive, far- sighted government
action on a number of fronts. The legislative proposals that Vice President
Al Gore has outlined today are the culmination of extensive Administration
efforts in one critical area -- telecommunications regulatory reform. Similar
work is being done in other important areas, including support for innovative
applications that will use the NII, improving access to government
information, and protecting individual privacy and intellectual property
rights.

In a December 21 speech at the National Press Club in Washington, DC, the
Vice President announced the Administration's plans to present a package of
legislative and administrative proposals concerning telecommunications and
information policy. He stated that the Administration's policy would be based
on the following fundamental principles:

o Encouraging private investment in the NII;

o Promoting and protecting competition;

o Providing open access to the NII by consumers and service
providers;

o Preserving and advancing universal service to avoid creating a
society of information "haves" and "have nots";

o Ensuring flexibility so that the newly-adopted regulatory
framework can keep pace with the rapid technological and market
changes that pervade the telecommunications and information
industries.

The major elements of the Administration's legislative initiative are
identified below, along with a brief discussion of how each proposal advances
the principles set forth above. In doing so, the Administration has studied
carefully the legislative initiatives of Senators Hollings, Inouye, and
Danforth and Representatives Brooks, Dingell, Markey, and Fields. Its
proposals reflect the strengths of, and build on, those bills. The
Administration is building upon the dramatic steps taken by the states,
including substantial and innovative regulatory reforms. The Administration
intends to work closely with the states, some of which are moving aggressively
to encourage competition, infrastructure modernization, and NII applications
in health care, education, and government services.

In addition to the legislative package, it is a goal of this
Administration that by the year 2000 all of the classrooms, libraries,
hospitals, and clinics in the United States will be connected to the NII.

ENCOURAGING PRIVATE INVESTMENT AND PROMOTING COMPETITION

To fully realize the benefits of private investment and more competition
in the information infrastructure, regulatory change is needed. For many
years, government regulation assumed clear, stable boundaries between
industries and markets. This assumption sometimes prompted regulators to view
(and to regulate) firms in various industries differently, even when they
offered similar services. It also caused regulators to address the threat of
anticompetitive conduct on the part of some firms by barring them from certain
industries and markets.

The time has come for another approach. Even if the lines between
industries and markets were clear in the past, technological and market
changes are now blurring them beyond recognition, if not erasing them
entirely. Regulatory policies predicated on such perceived distinctions can
harm consumers by impeding competition and discouraging private investment in
networks and services. The Administration is therefore committed to removing
unnecessary and artificial barriers to participation by private firms in all
communications markets, while making sure that consumers remain protected and
interconnected.

Cable-Telco Cross-ownership

The Administration proposes to remove the current cross-ownership
restriction of the 1984 Cable Act, and allow telephone companies to
provide video services in their local exchange areas in order to promote
investments that expand consumer choices and services. To ensure that
telephone company entry does not harm consumers or competition, such
entry will be subject to certain safeguards, most notably a requirement
that the telephone company make channel capacity available to
unaffiliated video program providers on a nondiscriminatory basis. This
requirement should create market opportunities for competing providers of
video services, thereby reducing prices and expanding the diversity of
services available to television viewers.

Further, to deter premature and potentially anticompetitive mergers
between telephone companies and their most likely competitors -- existing
cable companies -- the Administration proposes to prohibit telephone
companies from acquiring cable systems located in the companies' local
exchange areas. There would be an exception for those telephone
companies operating in rural areas, which may be unable to support more
than one carrier. However, to ensure that this measure does not outlive
its usefulness, the Administration proposes to authorize the Federal
Communications Commission (FCC) to begin proceedings that could allow
such acquisitions five years after the date of legislative enactment, if
certain conditions are met (e.g., the presence of sufficient competition
in the telco's service area). Any telephone company/cable system
acquisition would also be subject to the antitrust laws in the same
manner as an acquisition in any other industry.

Local Competition

Competition has generated substantial benefits for consumers in a
host of communications and information service markets, including
customer premises equipment and long distance service. The varieties of
customer premises equipment have expanded dramatically since
deregulation. In addition, the price of interstate long distance
telephone service for the average residential user has declined more than
fifty percent in real dollars since 1984, due to competition and
regulatory reform. Consumers will realize similar benefits by the
expansion of competition in the local telephone service market.
Competition in that market will reduce the ability of any telephone
company to harm competition and consumers through monopoly control and
will encourage investment and innovation in the "on and off ramps" of the
NII.

Accordingly, the Administration proposes to ensure that competing
providers have the opportunity to interconnect their networks on
reasonable, nondiscriminatory terms, with the facilities of all local
telephone companies. Such companies should also be required to unbundle
their service offerings so that alternative providers can offer similar
services using a combination of, for example, telephone company-provided
switching and their own transmission facilities. Finally, the
Administration's plan will preempt state entry barriers, as well as rate
regulation of carriers that the FCC finds or has found to lack market
power.

The Administration understands that the growth of competition for
local telephone services may require repricing of some local services.
Such repricing must not be allowed to cause "rate shock" for consumers.
Therefore, in implementing network interconnection and unbundling, the
FCC and state regulators will be directed to prevent undue rate increases
for any class or group of ratepayers.

Modified Final Judgement (MFJ) Restrictions

The Administration is grateful for and appreciative of the excellent
job done by the courts in connection with the MFJ. The break-up of AT&T
has helped spur the competition and innovation that have kept America at
the vanguard of the telecommunications industry. Now, the time has come
to move beyond a decree remedying only specific violations of law
administered by the courts and to enact a far-reaching and comprehensive
plan reflecting a vision of the telecommunications world of the future.
A key element of that plan must be to promote and protect competition,
the engine of progress and jobs.

Long Distance Service

The Administration supports the Brooks- Dingell bill
provision that requires Department of Justice (DOJ) and FCC
approval before the Regional Bell Operating Companies (RBOCs)
may provide interexchange services -- most notably long
distance service. In determining whether to lift the
restriction, the Department of Justice will apply the test
contained in Section VIII(C) of the MFJ. The FCC will apply a
public interest test like that set forth in the legislative
proposal offered by Chairmen Brooks and Dingell. These entry
tests are designed in part to ensure competition and to protect
consumers and local telephone ratepayers against
cross-subsidization and other potential abuses of monopoly
power. In working with the Congress, the Administration will
explore the creation of incentives for RBOCs to increase the
transparency of their facility-based local services, because of
concerns associated with cross-subsidization and abuses of
monopoly power. The Administration's plan will also include an
immediate and limited exception to the prohibition of the
provision of long distance services incidental to RBOC
provision of wireless, cable television, and certain other
services.

Information Services

As current law provides, the RBOCs are permitted to offer
information services. The Administration supports the approach
taken in the Brooks-Dingell legislation that requires a separate
affiliate for electronic publishing.

Manufacturing

In keeping with the principle of removing barriers to
participation by all firms in all markets except where necessary,
the Administration proposes to remove the current ban on RBOC
research, development, and manufacturing subject to safeguards to
prevent cross- subsidization and discriminatory practices. The
safeguards to be applied before entry would include a
notification-and-waiting-period procedure, as contained in the
legislation proposed by Chairmen Brooks and Dingell, under which an
RBOC would submit relevant information about its proposal to the
Department of Justice, which could investigate and sue to enjoin the
proposed entry. The Administration also supports substantive
post-entry safeguards, as contained in legislation introduced by
Chairman Hollings and passed by the Senate in the last Congress.
Those safeguards include, among other things, requirements that
manufacturing be kept separate from the monopoly portion of the
telephone company's business, that the RBOC not discriminate in
either procurement or sales, and that needed network information be
timely disclosed to competing manufacturers.

OPEN ACCESS/PROGRAMMING DIVERSITY

There is a long-standing national policy, embodied in the First
Amendment, of protecting diversity and competition in the flow of ideas.
This fundamental interest is critical not only with respect to the
provision of entertainment, but also with respect to educational
material, health information, information necessary to an informed
citizenry, and other programming matter. To further this goal, the
Administration plans to require the FCC, one year after enactment, to
impose nondiscriminatory access obligations on cable television systems,
except when technology, costs, and market conditions make it
inappropriate.

ENSURING REGULATORY FLEXIBILITY AND FAIRNESS

The new regulatory framework that the Administration seeks to create
is designed to adjust to the technological and market changes that have
undermined the regulatory regime created by the Communications Act.
Legislation in this area must stand the test of time, by addressing
tomorrow's challenges as well as today's. The Administration's lodestars
in this efforts are flexibility, adaptability, and fairness. The
regulatory instruments we choose must be supple enough to accommodate the
continual change that will typify communications industries in the
future. At the same time, those instruments must be equitable; similarly
situated services should be subject to the same regulatory requirements.

Beyond tackling the problems that have arisen as a result of current
technological and market changes, the Administration recognizes that a
new kind of communications service provider will emerge, one that offers
switched, broadband digital transmission services to home and office.
Such firms face the potential of being regulated under two different
parts of the Communications Act -- Titles II (common carriers) and VI
(cable communications). These firms will also be regulated at the state
level for the intrastate component of their Title II services and at the
local level for their Title VI services, creating a needlessly
overlapping and complex regulatory environment.

The nation needs a flexible, adaptable regulatory regime that
encourages the competitive provision of the broadband, switched digital
transmission services that can truly knit homes and businesses together.
The Administration will propose a future-oriented regulatory regime, to
be enacted as a new Title VII to the Communications Act, that will
encourage firms to provide these services.

The Administration's proposal would provide the FCC with broad
forbearance authority while maintaining key public policy goals,
including open access and interoperability requirements, along with
obligations to support universal service. In addition, consistent with
the approach taken in the 1992 Cable Act, the proposal will provide for
rate regulation until competition is established in these service
markets, with a presumption of forbearance for new entrants that are not
dominant in related services. State and local regulation of services not
subject to competition could take place subject to FCC guidelines. Under
the Administration's plan, the FCC would adopt transition rules to move
to this new regime. Firms would elect to be regulated under the new
framework, provided that they meet threshold criteria established by the
FCC.

In addition, the Administration proposes to allow the FCC to reduce
regulation for telecommunications carriers that lack market power. This
provision will ensure that unnecessary government regulation -- however
well- intentioned -- does not harm users of the infrastructure, or impede
competitive entry, investment, and the introduction of new services.

UNIVERSAL SERVICE

The United States has long been dedicated to "universal service" --
widespread availability of basic telephone service at affordable rates.
As stated in the "Agenda for Action," the Administration is committed to
developing a new concept of universal service that will serve the
information needs of the American people in the 21st century. Indeed,
the full potential of the NII will not be realized unless all Americans
who desire it have easy, affordable access to advanced communications and
information services, regardless of income, disability, or location.

It is a goal of this Administration that by the year 2000, all of
the classrooms, libraries, hospitals, and clinics in the United States
will be connected to the NII.

The Administration recognizes, however, that crafting a new,
meaningful, and practical definition of universal service will require
flexibility, foresight, and the balancing of diverse interests. Given
these circumstances, the proposed legislation will establish several
overarching guidelines and charge the expert agencies -- the FCC and the
state regulatory commissions -- with establishing the details.

The Administration therefore proposes to:

o Make the preservation and advancement of "universal service" an
explicit objective of the Communications Act, in order to
establish the goal that advanced services be available to rural
and urban lower income users, to users in areas where the costs
of service are high, and to social institutions, especially
schools and health care facilities.

o Charge the FCC and the states with continuing responsibility to
review the definition of universal service to meet changing
technological, economic, and societal circumstances.

o Establish a Federal/State Joint Board to make recommendations
concerning FCC and state action on the fundamental elements of
universal service. In its deliberations, the Joint Board must
gather input from non-governmental organizations.

o Oblige those who provide telecommunications services to
contribute to the preservation and advancement of universal
service. However, the FCC, in consultation with the states,
would be authorized to permit "sliding scale" contributions
(e.g., to avoid burdening small providers and new entrants), or
"in-kind" contributions in lieu of cash payments (e.g., to
reduce the monetary payments owed by providers that offer to
connect with schools, hospitals, etc.).


THE WHITE HOUSE

Office of the Vice President

________________________________________________________________________
For Immediate Release January 11, 1994
Contact: 202-456-7035

VICE PRESIDENT PROPOSES NATIONAL TELECOMMUNICATIONS REFORM

Bring the Information Revolution to Every Classroom, Hospital, and
Library in the Nation By the End of the Century

Los Angeles, CA--Citing the need to bring the economic, health, and
educational benefits of the information revolution to all Americans, Vice
President Al Gore, in a speech to the Academy of Television Arts and Sciences,
today outlined the Clinton Administration's proposals to reform the
communications marketplace.

Gore challenged his audience to provide free links from the information
superhighways to every classroom, library, hospital, and clinic in the
country. "You here today represent the companies that can do it," said the
Vice President. Following The Vice President's pledge during the 30 minute
speech, he stated the Administration's support for removing the legal and
regulatory barriers that prevent telephone, cable and long distance companies
from entering each others business.

The Vice President recalled the dream of the interstate highway system of
his youth. "Today," he explained, "we have a dream for a different kind of
superhighway -- an information superhighway that can save lives, create jobs
and give every American young and old, the chance for the best education
available to anyone, anywhere."

The Vice President said the Clinton Administration's position grew out of
the following five principles, which he outlined in a December speech at the
National Press Club in Washington, D.C.:

o Encourage private investment o Provide and protect competition o
Provide open access to the network o Avoid creating information "haves
and have nots" o Encourage flexible and responsive government action

In a much anticipated announcement, Gore presented a series of policy
decisions that will "clear from the road the wreckage of outdated regulations
and allow a free- flowing traffic of ideas and commerce for the benefit of all
Americans."

Specifically, Gore's proposal would allow telephone companies to get into
the cable business, and let cable and other companies into the telephone
business.

To make such new ventures possible, the Administration will prevent
states from imposing barriers to new companies entering the local phone
business and will require local phone companies to make their facilities
available to all comers without discrimination and to allow competitors to
provide all kinds of telephone services the phone company provides now.

On the issue of the court decree governing the breakup of AT&T, Gore said
he supported the effort by key Congressional chairmen to take the courts out
of the phone business and provide a pathway by which the local phone companies
can enter other lines of business -- like long distance service -- but
including also electronic publishing and manufacturing. Gore praised the work
of Congressman John Dingell (D-MI) and Jack Brooks (D-TX) and pledged his
support to work with them to enact a bill this year.

Gore also recognized the work of his colleagues in the U.S. Senate;
Senators Ernest Hollings (D-SC),Daniel Inouye(D-HI), and John Danforth (R-MO)
and in the U.S. House of Representatives; Ed Markey (D-MA),and Jack Fields
(D-TX). "In many ways our legislative goals complement (their) work, said
Gore. "We expect to introduce our legislative package shortly, and to work
with Congress to ensure its speedy passage."

###

THE WHITE HOUSE

Office of the Vice President
________________________________________________________________________
For Immediate Release January 11, 1994

TELECOMMUNICATIONS POLICY REFORM

New technologies and market forces have led to a convergence of once
separate communications industries, and this convergence requires a new
framework to ensure that the United States remains a leader of the information
age. This new framework is the Administration's legislative agenda on
communications outlined by Vice President Gore. It is only one in a series of
steps to encourage the development of the National Information Infrastructure
(NII), a seamless web of communications networks, computers, databases, and
consumer electronics that will put vast amounts of information at users'
fingertips.

The Administration's legislative agenda on telecommunications seeks to
facilitate greater economic growth by removing regulatory barriers, and to
create new jobs, new business opportunities and expanded diversity of choice
for American consumers. An advanced information infrastructure will bring
into millions of homes information that will enrich people's economic, social,
and political lives. Ensuring that this technology is used to promote
education, health care, and information access for the benefit of all
Americans is a major goal of the legislative initiatives.

Specifically, the initiatives aim to create a flexible, adaptable
approach to the communications industry that will encourage the development of
the information infrastructure -- a network that eventually will link homes
and businesses together in multimedia community networks. The legislative
initiatives promote what is known as a broadband interactive network, or a
network that enables vast amounts of information to flow back and forth. In
addition, the legislation will:

o Increase competition and private investment in communications by
removing unnecessary regulations and artificial barriers to
participation by private firms in all communications markets. For
example, the Administration proposes to permit cable companies and
others to provide local telephone service;

o Secure open access to the network for consumers and service
providers. For example, the legislation requires all local
telephone companies upon reasonable request to interconnect their
networks with the facilities of competing providers on
nondiscriminatory terms;

o Preserve and advance universal service for all Americans across all
sectors of society. Because full and productive participation in
American society will increasingly depend on access to information,
the Administration is committed to promoting the availability of
information resources to all people at affordable prices;

o Develop a new regulatory framework that is flexible and fair by
allowing the FCC to reduce regulation for telecommunications
carriers that lack market power.

The Administration's legislative agenda outlines a comprehensive approach
to communications. It is a broad vision of the future of the information
infrastructure, with a commitment to using communications technology to
improve and enhance the lives of all Americans.

##

THE WHITE HOUSE

Office of the Vice President

________________________________________________________________________
For Immediate Release January 11, 1994

REMARKS BY VICE PRESIDENT AL GORE
(as prepared)

Royce Hall, UCLA
Los Angeles, California
January 11, 1994

It's great to be here at the Television Academy today. I feel I
have a lot in common with those of you who are members of the Academy. I was
on Letterman. I wrote my own lines.

I'm still waiting for residuals.

At first, I thought this could lead to a whole new image. And maybe a
new career. No more Leno jokes about being stiffer than the Secret Service.
Maybe an opportunity to do other shows. I was elated when "Star Trek: The
Next Generation" wanted me to do a guest shot -- until I learned they wanted
me to replace Lieutenant Commander Data.

The historian Daniel Boorstin once wrote that for Americans "nothing has
happened unless it is on television." This of course leaves out a few major
events in our history. But this meeting today is on television -- so
apparently this event is actually occurring.

I join you to outline not only this Administration's vision of the
National Information Infrastructure but our proposals for creating it.

Last month in Washington, I set forth some of the principles behind our
vision. Today I'll talk about the legislative package necessary to ensure the
creation of that national infrastructure in a manner which will connect and
empower the citizens of this country through broadband, interactive
communication.

We've all become used to stumbling over cliches in our efforts to
describe the enormity of change now underway and the incredible speed with
which it is taking place. Often we call it a revolution -- the digital
revolution.

Speaking of cliches, I often use the analogy to autos, saying that if
cars had advanced as rapidly as computer chips in recent years, a Rolls Royce
would go a million miles an hour and cost twenty-five cents.

The last time I used it was at a meeting of computer experts and one of
them said, "Yeah -- but that Rolls Royce would be one millimeter long."

What we've seen in the last decade is amazing. But it's nothing compared
to what will happen in the decade ahead. The word revolution by no means
overstates the case.

But this revolution is based on traditions that go far back in our
history.

Since the transcontinental telegraph that transmitted Abraham Lincoln's
election victory to California in real time, our ability to communicate
electronically has informed and shaped America.

It was only a year before that election that the Pony Express was the
talk of the nation, able to send a message cross country in seven days. The
next year, it was out of business.

Today's technology has made possible a global community united by
instantaneous information and analysis. Protesters at the Berlin Wall
communicated with their followers through CNN news broadcasts. The fax
machine connected us with demonstrators at Tiananmen Square.

So it's worth remembering that while we talk about this digital
revolution as if it's about to happen, in many places it's already underway.
Even in the White House.

The day after Inauguration, I was astonished to see how relatively
primitive the White House communications system was. President Clinton and I
took a tour and found operators actually having to pull cords for each call
and plug them into jacks. It reminded me of the switchboard used by
Ernestine, the Lily Tomlin character.

And there were actually phones like these all over the White House.
They're still there. But we made progress. They're only in the press room
now.

Those phones didn't meet our needs. So now, especially on trips, I use a
cellular phone.

Our new ways of communicating will entertain as well as inform. More
importantly, they will educate, promote democracy, and save lives. And in the
process they will also create a lot of new jobs. In fact, they're already
doing it.

The impact on America's businesses will not be limited just to those who
are in the information business, either. Virtually every business will find
it possible to use these new tools to become more competitive. And by taking
the lead in quickly employing these new information technologies, America's
businesses will gain enormous advantages in the worldwide marketplace. And
that is important because if America is to prosper, we must be able to
manufacture goods within our borders and sell them not just in Tennessee but
Tokyo -- not just in Los Angeles but Latin America.

Last month, when I was in Central Asia, the President of Kyrgyzstan told
me his eight-year-old son came to him and said, "Father, I have to learn
English."

"But why?" President Akayev asked.

"Because, father, the computer speaks English."

By now, we are becoming familiar with the ability of the new
communications technologies to transcend international boundaries and bring
our world closer together. But many of you are now in the process of
transcending other old boundaries -- the boundary lines which have long
defined different sectors of the information industry. The speed with which
these boundaries are eroding is quite dramatic.

I'm reminded of an idea of Stephen Hawking, the British physicist.
Hawking has Lou Gehrig's disease. But thanks to information technology he can
still communicate not only to his students and colleagues but to millions
around the world. Incidentally, I read the other day that his voice box has
an American accent -- because it was developed here in California.

Anyway, in that American accent, Hawking has speculated about a distant
future when the universe stops expanding and begins to contract. Eventually,
all matter comes colliding together in a "Big Crunch," which scientists say
could then be followed by another "Big Bang" -- a universe expanding outward
once again.

Our current information industries -- cable, local telephone, long
distance telephone, television, film, computers, and others -- seem headed for
a Big Crunch/Big Bang of their own. The space between these diverse functions
is rapidly shrinking -- between computers and televisions, for example, or
inter-active communication and video.

But after the next Big Bang, in the ensuing expansion of the information
business, the new marketplace will no longer be divided along current sectoral
lines. There may not be cable companies or phone companies or computer
companies, as such. Everyone will be in the bit business. The functions
provided will define the marketplace. There will be information conduits,
information providers, information appliances and information consumers.
That's the future. It's easy to see where we need to go. It's hard to see how
to get there. When faced with the enormity and complexity of the transition
some retreat to the view best enunciated by Yogi Berra when he said: "What we
have here is an insurmountable opportunity."

Not long ago this transition did indeed seem too formidable to
contemplate, but no longer. Because a remarkable consensus has emerged
throughout our country -- in business, in public interest groups and in
government. This consensus begins with agreement on the right, specific
questions we must answer together.

How can government ensure that the information marketplace emerging on
the other side of the Big Crunch will permit everyone to be able to compete
with everyone else for the opportunity to provide any service to all willing
customers? How can we ensure that this new marketplace reaches the entire
nation? How can we ensure that it fulfills the enormous promise of education,
economic growth and job creation?

Today I will provide the Administration's answers to those questions.
But before I do let me state my firm belief that legislative and regulatory
action alone will not get us where we need to be. This Administration argued
in our National Performance Review last year, that government often acts best
when it sets clear goals, acts as a catalyst for the national teamwork
required to achieve them, then lets the private and non- profit sector, move
the ball downfield.

It was in this spirit that then-Governor Clinton and I, campaigning for
the White House in 1992, set as a vital national goal linking every classroom
in every school in the United States to the National Information
Infrastructure.

It was in this same spirit that less than a month ago, I pointed out that
when it comes to telecommunications services, schools are the most
impoverished institutions in society.

And so I was pleased to hear that some companies participating in the
communications revolution are now talking about voluntarily linking every
classroom in their service areas to the NII.

Let me be clear. I challenge you, the people in this room, to connect
all of our classrooms, all of our libraries, and all of our hospitals and
clinics by the year 2000. We must do this to realize the full potential of
information to educate, to save lives, provide access to health care and lower
medical costs.

Our nation can and must meet this challenge. The best way to do so is by
working together. Just as communications industries are moving to the unified
information marketplace of the future, so must we move from the traditional
adversarial relationship between business and government to a more productive
relationship based on consensus. We must build a new model of public-private
cooperation that, if properly pursued, can obviate many governmental mandates.

But make no mistake about it -- one way or another, we will meet this
goal.

As I announced last month, we will soon introduce a legislative package
that aggressively confronts the most pressing telecommunications issues, and
is based on five principles.

This Administration will:

-- Encourage Private Investment

-- Provide and Protect Competition

-- Provide Open Access to the Network

-- Take Action To Avoid Creating a Society of Information "Haves"
and "Have Nots"

-- Encourage Flexible and Responsive Governmental Action

Many of you have our White Paper today, outlining the bill in detail. If
you didn't get your copy, it's available on the Internet, right now.

Let me run through the highlights with you -- and talk about how they
grow out of our five principles.

We begin with two of our basic principles -- the need for private
investment and fair competition. The nation needs private investment to
complete the construction of the National Information Infrastructure. And
competition is the single most critical means of encouraging that private
investment.

I referred earlier to the use of the telegraph in 1860, linking the
nation together. Congress funded Samuel Morse's first demonstration of the
telegraph in 1844. Morse then suggested that a national system be built with
federal funding. But Congress said no, that private investment should build
the information infrastructure. And that's what happened -- to the great and
continuing competitive advantage of this country.

Today, we must choose competition again and protect it against both
suffocating regulation on the one hand and unfettered monopolies on the other.

To understand why competition is so important, let's recall what has
happened since the breakup of AT&T ten years ago this month.

As recently as 1987, AT&T was still projecting that it would take until
the year 2010 to convert 95% of its long distance network to digital
technology.

Then it became pressed by the competition. The result? AT&T made its
network virtually 100% digital by the end of 1991. Meanwhile, over the last
decade the price of interstate long distance service for the average
residential customer declined over 50%.

Now it is time to take the next step. We must open the local telephone
exchanges, those wires and switches that link homes and offices to the local
telephone companies.

The pressure of competition will be great -- and it will drive continuing
advancements in technology, quality and cost. One businessman told me
recently that he was accelerating his investment in new technology to avoid
ending up as "roadkill" on the information superhighway.

To take one example of what competition means, cable companies, long
distance companies, and electric utilities must be free to offer two-way
communications and local telephone service. To accomplish this goal, our
legislative package will establish a federal standard that permits entry to
the local telephone markets. Moreover, the FCC will be authorized to reduce
regulation for telecommunications carriers that lack market power.

We expect open competition to bring lower prices and better services. But
let me be clear: We insist upon safeguards to ensure that new corporate
freedoms will not be translated into sudden and unjustified rate increases for
telephone consumers.

The advancement of competition will necessarily require more opportunity,
as well, for the Regional Bell Operating Companies. Current restrictions on
their operations are themselves the legacy of the break-up of AT&T and must be
re-examined.

This Administration endorses the basic principles of the Brooks-Dingell
bill, which proposes a framework for allowing long-distance and local
telephone companies to compete against each other.

Regulation and review of this framework should be transferred from the
courts to the Department of Justice and the Federal Communications Commission.

This process of change must be carefully calibrated. We must make sure
that the Regional Bells will not be able to use their present monopoly
positions as unfair leverage into new lines of business. That is why the
Administration supports the approach of the Brooks-Dingell provision that
requires the approval of the Department of Justice and the Federal
Communications Commission before the Regional Bells may provide interexchange
services -- most notably long distance.

In working with Congress, the Administration will explore the creation of
incentives for the Regional Bells. We want to increase the transparency of
those facility-based local services that raise concerns associated with
cross-subsidization and abuses of monopoly power.

Our view of the entry of local telephone companies into cable television
also balances the advantages of competition against the possibility of
competitive abuse. We will continue to bar the acquisition of existing cable
companies by telephone companies within their local service areas. We need
this limitation to ensure that no single giant entity controls access to homes
and offices. But to increase diversity and benefit consumers, we will permit
telephone companies to provide video programming over new, open access
systems.

Even these measures, however, may not eliminate all scarcity in the local
loop -- those information byways that provide the last electronic connection
with homes and offices. For some time, in many places, there are likely to be
only one or two broadband, interactive wires, probably owned by cable or
telephone companies. In the long run, the local loop may contain a wider set
of competitors offering a broad range of interactive services, including
wireless, microwave and direct broadcast satellite.

But, for now, we cannot assume that competition in the local loop will
end all of the accrued market power of past regulatory advantage and market
domination.

We cannot permit the creation of information bottlenecks that adversely
affect information providers who use the highways as a means of supplying
their customers.

Nor can we can permit bottlenecks for information consumers who desire
programming that may not be available through the wires that enter their homes
or offices.

Preserving the free flow of information requires open access, our third
basic principle.

How can you sell your ideas, your information, your programs, if an
intermediary who is also your competitor has the means to unfairly block your
access to customers? We can't subject the free flow of content to artificial
constraints at the hands of either government regulators or would-be
monopolists.

We must also guard against unreasonable technical obstacles. We know how
to do this; we've seen this problem in our past. For example, when railroad
tracks were different sizes, a passenger could not travel easily from a town
served by one railroad to a town served by another. But the use of
standardized tracks permitted the creation of a national system of rail
transport.

Accordingly, our legislative package will contain provisions designed to
ensure that each telephone carrier's networks will be readily accessible to
other users. We will create an affirmative obligation to interconnect and to
afford nondiscriminatory access to network facilities, services, functions and
information. We must also explore the future of non-commercial broadcasting;
there must be public access to the information superhighway.

These measures will preserve the future within the context of our present
regulatory structures. But that is not enough. We must move towards a
regulatory approach that encourages investment, promotes competition and
secures open access. And one that is not just a patch-work quilt of old
approaches, but an approach necessary to promote fair competition in the
future.

We begin with a simple idea: Similar entities must be treated similarly.
But let's be clear: our quest for equal treatment of competing entities will
not blind us to the economic realities of the new information marketplace,
where apparent similarities may mask important differences.

This idea is best expressed in the story about the man who went into a
restaurant and ordered the rabbit stew.

It came, he took a few bites, then called the manager over. "This
doesn't taste like rabbit stew!" he said. "It tastes ... well, it tastes
like horsemeat!"

The manager was embarrassed. "I actually ran out of rabbit this morning
and I -- well, I put some horsemeat in."

"How much horsemeat?"

"Well -- it's equally divided."

"What's that mean?"

"One horse, one rabbit."

The lesson is obvious. A start-up local telephone company isn't the same
as a Baby Bell.

What we favor is genuine regulatory symmetry. That means regulation must
be based on the services that are offered and the ability to compete -- and
not on corporate identity, regulatory history or technological process.

For example, our legislative package will grant the Federal
Communications Commission the future authority, under appropriate conditions,
to impose non-discriminatory access requirements on cable companies. As cable
and telephone service become harder and harder to distinguish, this provision
will help to ensure that labels derived from past regulatory structures are
not translated into inadvertent,unfair competitive advantages.

As different services are grouped within a single corporate structure, we
must ensure that these new, combined entities are not caught in a cross-fire
of conflicting and duplicative regulatory burdens and standards. This
Administration will not let existing regulatory structures impede or distort
the evolution of the communications industry.

In the information marketplace of the future, we will obtain our goals of
investment, competition and open access only if regulation matches the
marketplace. That requires a flexible, adaptable regulatory regime that
encourages the widespread provision of broadband, interactive digital
services.

That is why the Administration proposes the creation of an alternative
regulatory regime that is unified, as well as symmetrical. Our new regime
would not be mandatory, but it would be available to providers of broadband,
interactive services. Such companies could elect to be regulated under the
current provisions of the Communications Act or under a new title, Title VII,
that would harmonize those provisions in order to provide a single system of
regulation. These "Title VII" companies would be able to avoid the danger of
conflicting or duplicative regulatory burdens. But in return, they would
provide their services and access to their facilities to others on a
nondiscriminatory basis. The nation would thus be assured that these
companies would provide open access to information providers and consumers and
the benefits of competition, including lower prices and higher-quality
services, to their customers.

This new method itself illustrates one of our five principles -- that
government itself must be flexible. Our proposals for symmetrical, and
ultimately unified, regulation demonstrate how we will initiate governmental
action that furthers our substantive principles but that adapts, and
disappears, as the need for governmental intervention changes -- or ends.
They demonstrate, as well, the new relationship of which I spoke earlier --
the private and public sectors working together to fulfill our common goals.

The principles that I have described thus far will build an open and free
information marketplace. They will lower prices, stimulate demand and expand
access to the National Information Infrastructure.

They will, in other words, help to attain our final basic principle --
avoiding a society of information "haves" separate from a society of
information "have nots".

There was a Washington Post headline last month: "Will the `Information
Superhighway' Detour the Poor?"

Not if I have anything to do about it. After all, governmental action to
ensure universal service has been part of American history since the days of
Ben Franklin's Post Office. We will have in our legislative package a strong
mandate to ensure universal service in the future -- and I want to explain
why.

We have become an information-rich society. Almost 100% of households
have radio and television, and about 94% have telephone service.
Three-quarters of households contain a VCR, about 60% have cable, and roughly
30% of households have personal computers.

As the information infrastructure expands in breadth and depth, so too
will our understanding of the services that are deemed essential. This is not
a matter of guaranteeing the right to play video-games. It is a matter of
guaranteeing access to essential services.

We cannot tolerate -- nor in the long run can this nation afford -- a
society in which some children become fully educated and others do not; in
which some adults have access to training and lifetime education, and others
do not.

Nor can we permit geographic location to determine whether the
information highway passes by your door. I've often spoken about my vision of
a schoolchild in my home town of Carthage, Tennessee being able to come home,
turn on her computer and plug into the Library of Congress. Carthage is a
small town. Its population is only about 2,000. So let me emphasize the
point: We must work to ensure that no geographic region of the United States,
rural or urban, is left without access to broadband, interactive service.
Yes, we support opening the local telephone exchange to competition. But we
will not permit the dismantling of our present national networks.

All this won't be easy. It is critically important, therefore, that all
carriers must be obliged to contribute, on an equitable and competitively
neutral basis, to the preservation and advancement of universal service.

The responsibility to design specific measures to achieve these aims will
be delegated to the Federal Communications Commission. But they will be
required to do so. Our basic goal is simple: There will be universal
service; that definition will evolve as technology and the infrastructure
advance; and the FCC will get the job done.

Reforming our communications laws is only one element of the
Administration's NII agenda. We'll be working hard to invest in critical NII
technologies. We'll promote applications of the NII in areas such as
scientific research, energy efficiency and advanced manufacturing. We'll work
to deliver government services more efficiently. We'll also update our
policies to make sure that privacy and copyright are protected in the
networked world.

We'll help law enforcement agencies thwart criminals and terrorists who
might use advanced telecommunications to commit crimes.

The Administration is working with industry to develop the new
technologies needed for the National Information Infrastructure Initiative.

I have been working with the First Lady's Health Care Task Force, former
Surgeon General C. Everett Koop, and others to develop ways we can use
networks to improve the quality of health care.

Beginning this month, we are concentrating first on the legislative
package I outlined earlier. We haven't invented all of the ideas it contains
ourselves. Representatives Dingell and Brooks, Markey and Fields--and
Senators Hollings, Inouye, and Danforth have all focused on these issues.

In many ways our legislative goals reflect or complement that work. We
expect to introduce our legislative package shortly, and to work with Congress
to ensure speedy passage this year of a bill that will stand the test of time.

Our efforts are not, of course, confined only to government. The people
in this room, and the private sector in general, symbolize private enterprise.

Our economic future will depend, in a real sense, on your ability to
grasp opportunity and turn it into concrete achievement.

As we move into the new era, we must never lose sight of our heritage of
innovation and entrepreneurship.

In some ways, we appreciate that heritage more when we see countries
without it. Last month, in Russia, I had a chance to see close up a country
that tried to hold back the information age -- a country that used to put
armed guards in front of copiers. In a way we should be grateful it did; that
helped strengthen the desire of the Russian people to end Communism.

My hope is that now Central and Eastern Europe can use technology and the
free market to build democracy -- not thwart it.

And my hope is that America, born in revolution, can lead the way in this
new, peaceful world revolution.

Let's work on it together.

A few months ago, Toni Morrison won the Nobel Prize for Literature. It
was a proud -- and signal -- moment for this country: recognition of an
African-American woman who has communicated her insight and narrative power to
readers all over the world.

In her acceptance speech, Tony Morrison used one version of an old story
-- a parable, really -- to make an interesting point. It's of a blind, old
woman renowned for her wisdom, and a boy who decides to play a trick on her.
He captures a bird, brings it to her cupped in his hands, and says "Old woman,
is this bird alive or dead?"

If she says "Dead," he can set it free. If she says "Alive," the boy
will crush the bird.

She thinks, and says, "The answer is in your hands."

Toni Morrison's point is that the future of language is in our hands.

As we enter this new millennium, we are learning a new language. It will
be the lingua franca of the new age. It is made up of ones and zeros and bits
and bytes. But as we master it ... as we bring the digital revolution into
our homes and schools ... we will be able to communicate ideas, and
information -- in fact, entire Toni Morrison novels -- with an ease never
before thought possible.

We meet today on common ground, not to predict the future but to make
firm the arrangements for its arrival. Let us master and develop this new
language together.

The future really is in our hands.

Thank you.

-!-
! Origin: In*Touch - Rochester NY, USA (1:2613/333)

TESTIMONY OF LARRY IRVING
ASSISTANT SECRETARY FOR COMMUNICATIONS AND INFORMATION
U.S. DEPARTMENT OF COMMERCE
ON
TELECOMMUNICATIONS REFORM LEGISLATION

BEFORE THE SUBCOMMITTEE ON ECONOMIC AND COMMERCIAL LAW COMMITTEE
ON THE JUDICIARY HOUSE OF REPRESENTATIVES

JANUARY 26, 1994

Mr. Chairman and Members of the Subcommittee:

INTRODUCTION

Good morning. Thank you for this opportunity to testify before you today
on issues related to the development of a national telecommunications and
information infrastructure -- and, specifically, on Administration legislative
proposals to promote the advancement of this infrastructure in a
procompetitive manner that benefits all Americans. I am pleased to join
Assistant Attorney General Bingaman, who will focus on the Administration's
reform proposals bearing on the AT&T Consent Decree. I will discuss more
generally the changes in the competitive landscape that make the passage of
telecommunications legislation this year a top Administration priority, and,
in the context of that discussion, highlight elements of the Administration's
proposals not covered by Assistant Attorney General Bingaman.

Vice President Gore and Secretary Brown unveiled the Administration's
National Information Infrastructure (NII) initiative in September of last
year, setting forth an agenda for a public-private partnership to help bring
about this revolution. This includes support for innovative applications that
will use the NII, improving access to government information, protecting
individual privacy and intellectual property rights, and the passage of
telecommunications legislation -- the subject of today's hearing.

Before proceeding further, let me underscore, Mr. Chairman, the profound
debt of gratitude the Administration owes you and Chairman Dingell for seizing
the initiative in developing H.R. 3626. Our proposals for reform of the AT&T
Consent Decree substantially build upon your efforts. The Administration also
wishes to salute the creative bipartisan legislative initiatives undertaken by
Representatives Markey and Fields, and by Senators Hollings, Inouye, and
Danforth, among others. We have closely studied their proposals. Aspects of
our set of legislative proposals, which I will touch on today, also build in
large part upon the foundation they have established. The Administration
looks forward to working closely with Congress to arrive at a final
telecommunications legislative product that will stand the test of time.

THE NEED FOR LEGISLATION

There is a national consensus that an advanced information infrastructure
will transform life for every person in the United States in the near future.
We have all heard of countless examples of how broadband, interactive
communications will connect and empower all people in this country. Vice
President Al Gore recently said that the word "revolution" by no means
overstates the changes ahead.

The newspapers bring us daily examples of the ways in which the
development of the NII will revolutionize American life. The January 19
Washington Post reported how interactive dial-up computer network services
allowed individuals to communicate with friends and relatives in the Los
Angeles area immediately after last week's disastrous earthquake, and to
spread vital news to other interested subscribers within a matter of minutes.
On January 19 Secretary of Health and Human Resources Shalala announced a
contract that will provide by the end of this decade for the electronic
payment of nearly all of the $1 billion annual Medicare bills. The Mountain
Doctor Television Project (MDTV) in West Virginia brings high quality care to
rural residents by allowing rural physicians to link to medical specialists at
the University of West Virginia. Likewise, the Texas Telemedicine Project
offers interactive video consultation to primary care physicians in rural
hospitals as a way of alleviating the shortage of specialists in rural areas.
Also, the Texas Education Network serves over 25,000 educators and is making
the resources of the Internet available to classrooms, so that students in
small school districts can access NASA and leave messages for the astronauts,
browse around in libraries larger than they will ever be able to visit, and
discuss world ecology with students in countries around the world, among other
things.

These and countless other examples attest to the rapid rate at which the
American public is entering the information age.

It would be a mistake, however, simply to "let nature take its course"
and allow change to proceed under the existing legal regime, whose underlying
structure was established 60 years ago. This is true for three essential
reasons.

First, in an increasingly competitive world trade environment -- which
will become even more open with the implementation of NAFTA and the GATT
Uruguay Round -- we simply must ensure that our telecommunications
capabilities remain the best in the world. Because information transmission
increasingly is the life's blood of all our industries, archaic rules that
inappropriately retard innovation by telecommunications firms have a negative
impact on the international competitiveness of the private sector in general
by inhibiting industrial productivity and job creation. Legislation that
lifts these outdated structures will enhance competitiveness and spur the
creation of good new jobs.

Second, the existing regulatory structure has been altered on an ad hoc
basis over six decades to meet perceived problems of the moment. This has
created an uneven playing field that artificially favors some competitors over
others, and that in some instances unnecessarily discourages investment and
risk- taking. These effects, in turn, inappropriately skew the growth of
industry sectors and retard the development of the NII itself. Accordingly,
legislation is needed to eliminate these unwarranted regulatory disparities.

Third, we need to be sure that our telecommunications policies are fully
responsive to the needs of the American people as a whole, and, in particular,
poorer and disadvantaged Americans. As Secretary Brown stated in a January 5
address, we cannot "become a nation in which the new information age acts as a
barrier, rather than a pathway, between Americans" -- a nation divided between
the information rich and the information poor. Yet, while the universal
provision of "plain old telephone service" has long been a national goal, the
existing regulatory structure may not be sufficient to ensure that all
Americans benefit from the broader range of information services that will
become available under the NII. Accordingly, legislative reform is urgently
needed to address this shortcoming. As Secretary Brown stated on January 5,
"the Administration will propose a renewal and re-invention of the concept of
universal service." I will have more to say about the Administration's views
on universal service below.

THE ADMINISTRATION'S PROPOSAL

The Administration, as promised last fall, has developed a comprehensive
set of legislative proposals setting forth the principles under which we
believe the advanced infrastructure should operate. As I have already
indicated, the Administration's proposals further the visions set forth in
House and Senate legislative initiatives. We build upon innovative regulatory
reforms and other dramatic steps taken by various states, and we will work
closely with the states in promoting an advanced telecommunications and
information infrastructure.
Together we can encourage competition, infrastructure modernization, and
advanced NII applications in health care, education, and government services.

Underlying the Administration's proposals are five fundamental principles
that Vice President Gore and Secretary Brown have outlined. These principles
are:

* Encouraging private investment in the NII;

* Promoting and protecting competition;

* Providing open access to the NII by consumers and service providers;

* Preserving and advancing universal service to avoid creating a society of
information "haves" and "have nots";

* Ensuring flexibility so that the newly-adopted regulatory framework can
keep pace with the rapid technological and market changes that pervade
the telecommunications and information industries.

ENCOURAGING PRIVATE INVESTMENT AND PROMOTING COMPETITION

The Administration believes it is time to act decisively to lift the
artificial regulatory boundaries that separate telecommunications and
information industries and markets. Those clear, stable boundaries served us
well in the past.

They enabled regulators to establish separate regulatory regimes for firms in
different industries. They also prompted regulators to address the threat of
anticompetitive conduct on the part of some telecommunications firms by
barring them from certain industries and markets.

Technological and market changes are now blurring these boundaries beyond
recognition, if not erasing them entirely. As Vice President Gore emphasized
on January 11, we are moving away from a world where technologically valid
regulatory distinctions may be made among local telephone, long distance
telephone, cable, and other purveyors of information transmission. Digital
technology enables virtually all types of information, including voice, video,
and data, to be represented and transmitted as "bits" -- the ones and zeros of
computer code. Thus, rules which artificially distinguish among different
types of "bit transmitters" based on old historical understandings will no
longer serve a socially useful purpose. Accordingly, regulatory change is
necessary to fully realize the benefits of private investment and greater
competition in the information infrastructure. Regulatory policies predicated
on the old boundaries can harm consumers by impeding competition and
discouraging private investment in networks and services. The Administration
is therefore committed to removing unnecessary and artificial barriers to
participation by private firms in all communications markets, while making
sure that consumers remain protected and interconnected. These reforms are
necessary in order for people in the United States to "win" the information
revolution as soon as possible.

To this end, the Administration supports the initiation by the Federal
Communications Commission (FCC) of a review of current broadcast policies.
Broadcasters remain the principal source of free, universally available
electronic information in the United States, and it is important to ensure
full participation by that industry in the NII.

LOCAL TELECOMMUNICATIONS SERVICES

The Administration supports removal of those barriers preventing
competition in the provision of local telecommunications services.
Competition already has generated substantial benefits for consumers in a host
of communications and information service markets. For example, the varieties
of customer premises equipment have expanded dramatically since deregulation.
In addition, the price of interstate long distance telephone services for the
average residential user has declined more than fifty percent in real dollars
since 1984, due to competition and regulatory reform. At the same time, the
infrastructure used to provide long distance service has been substantially
upgraded. There are now four digital, fiber-based national networks serving
this market, and many more interconnected regional networks. Consumers will
realize similar benefits in service innovation, declining prices, and
infrastructure enhancement from the expansion of competition in the local
telephone market. Such competition will reduce the ability of any telephone
company to harm competition and consumers through monopoly control and will
encourage investment and innovation in the "on and off ramps" of the NII.

Current policies regarding interconnection and service bundling, as well
as specific barriers erected by individual states, inhibit competition -- and
the low prices, service choices, and other benefits such competition brings to
consumers. The Administration proposes to ensure that competing providers have
the opportunity to interconnect their networks to local telephone company
facilities on reasonable, nondiscriminatory terms. Local telephone companies
will also be required to unbundle their service offerings so that alternative
providers can offer similar services using a combination of, for example,
telephone company-provided switching and their own transmission facilities.
Finally, in order to ensure a consistent, procompetitive environment for
telecommunications services, the Administration proposes to preempt state
entry barriers and rate regulation of new entrants and other providers found
by the FCC to lack market power.

Competition in local telecommunications markets should generally lower
prices and increase innovation in the services offered users. Nevertheless,
we are aware of concerns that repricing of some local services may result in
rate increases in some cases in an increasingly competitive environment.
Accordingly, in order to guard against any possible "rate shock" for users,
the FCC and state regulators will be directed, in implementing network
interconnection and unbundling, to prevent undue rate increases for any class
or group of ratepayers.

MODIFIED FINAL JUDGMENT (MFJ) RESTRICTIONS

The Modified Final Judgment (MFJ) in the AT&T Consent Decree helped
unleash an era of competition and innovation that brought low prices and new
service choices for consumers. In short, it has been a tremendous success.
The Administration acknowledges the great public service the judiciary has
performed in overseeing the breakup of that monopoly. But twelve years have
passed since the basic framework of the MFJ was established, and it has been
ten years since the breakup took place. Technologies and markets are changing
rapidly. A judicial decree may at some point become a barrier to a more
comprehensive, far-reaching approach to an advanced information
infrastructure.

Reform of the MFJ goes hand-in-glove with opening up local competition,
which I described above. The development of full- fledged competition in the
local provision of telecommunications services will alleviate the competitive
concerns that prompted the strictures placed by the MFJ on the activities of
the Regional Bell Operating Companies (RBOCs). Thus, comprehensive
legislative procedures for loosening the MFJ restrictions as competition
develops are appropriate. Implementation of these procedures in the wake of
enhanced local competition will allow the RBOCs to compete in markets for
goods and services now closed to them. This will further enhance innovation
in the American economy and benefit consumers.

Assistant Attorney General Bingaman will address the MFJ reform
provisions. I wish to note, however, that while Assistant Attorney General
Bingaman will describe the Administration's MFJ position, the Departments of
Commerce and Justice have worked together closely in developing our position
in this area. This position represents not only the joint efforts of our two
Departments, but also the work of others in the Administration who have joined
in this policy initiative.

CABLE TELEVISION-TELEPHONE COMPANY CROSS-OWNERSHIP

The Administration supports repeal of the current cable
television-telephone company cross-ownership restriction in the 1984 Cable
Act. We believe that telephone companies should be allowed to provide video
services in their local exchange areas, subject to effective safeguards to
protect consumers and competition.

OPEN ACCESS AND PROGRAMMING DIVERSITY

The public benefits of the information revolution would be severely
diminished without a wide range of diverse programming. An advanced
information infrastructure, to be truly useful, must offer a potpourri of
educational material, health information, home and business services,
entertainment, and other programming matter, both passive and interactive.
Barriers to open access and widespread availability of programming serve only
to harm users. The Administration's legislative proposals are designed to
further the goals of promoting a diversity of programming and open access to
distribution of this programming.

ENSURING REGULATORY FLEXIBILITY AND FAIRNESS

As barriers to an advanced information infrastructure fall, the
regulatory regime must adapt to the changing environment. In the rapidly
changing telecommunications and information industries, the only certainty is
uncertainty. A new regulatory framework is required that will stand the test
of time, without the need for continual upheaval in the nation's overall
approach to telecommunications and information policy. At the same time, in
the interest of fairness, similarly situated services should be subject to the
same regulatory requirements. The Administration proposes to address these
concerns by granting the FCC flexibility to reduce regulation for
telecommunications carriers that lack market power.

The Administration also proposes a new Title VII to the Communications
Act, that will encourage firms to provide broadband, interactive, switched,
digital transmission services. The Administration's Title VII proposal will
provide the FCC with broad regulatory flexibility while maintaining key public
policy goals, including open access, interconnection, and interoperability
requirements, and obligations to support universal service.

UNIVERSAL SERVICE

The Administration is committed to developing a new concept of universal
service that will serve the information needs of the American people in the
21st century. Indeed, the full potential of the NII will not be realized
unless all Americans who desire it have easy, affordable access to advanced
communications and information services, regardless of income, disability, or
location. In his January 5 speech, Secretary Brown challenged the private
sector "to expand universal service to the National Information
Infrastructure." He pointed out that promotion of universal service advances
American competitiveness, stating:

"Just as progressive businesses have increasingly recognized that their fate
is tied to education and good schools, so the businesses that will take
advantage of the new information marketplace must realize that our national
fortune is dependent on our national competitiveness -- on ensuring that no
talent goes to waste."

CONCLUSION

In conclusion, enactment of telecommunications reform legislation will
promote the development of the NII in a flexible, procompetitive fashion that
creates incentives for desirable investment, economic growth, and the
widescale availability to all Americans of new, highly valued information
services. The Administration looks forward to close collaboration with
Congress to enact a set of legislative proposals that achieves these desired
ends. This concludes my testimony. I would be pleased to respond to any
questions you may have.


GOVERNMENT INFORMATION TECHNOLOGY SERVICES WORKING GROUP

Minutes of December 16, 1993, Meeting


TIME AND PLACE: 10:00 a.m. Treasury Department Office of
Telecommunication Management Conference Room

SUMMARY OF WORKING GROUP ACTIONS

. Identify and prioritize National Performance Review Information
Technology Recommendations that can be acted on in the near term.

. Assign above action items to agencies for implementation.

. At January meeting develop a Vision of Electronic Government. This
vision would be used as input to agency information technology strategic
plans.

. Complete draft of Government Information Technology Services Working
Group charter.

IITF COMMITTEE CHARTERS

The Applications and Technology Committee of the Information
Infrastructure Task Force created the Government Information Technology
Services (GITS) Working Group which is chaired by James Flyzik, Director of
Telecommunication Management for the Department of the Treasury. The purpose
of the GITS Working Group is to oversee the implementation of the National
Performance Review recommendations on information technology. In addition it
will work inconjunction with OMB and the General Service Administration to
establish procurement and implementation policies designed to improve
productivity and reduce costs.

ISSUES DISCUSSED

. GITS Structure and Relationships

. Sources of Support/Outreach

. Review of Recommendations/ Action Items

ATTENDEES

James Flyzik, Chair, Treasury
Bruce McConnell, OMB
Jasmeet Seehra, OMB
Joe Thompson, GSA
Ron Piasecki, GSA
Janet Poley, Agriculture
Robert Woods, VA
John Grimes, DOD
Dan Grulke, DOD
David Nelson, Energy
Helen Wood, Commerce
Tom Thompson, HHS
Brian Hall, HUD
Roger Cooper, DOJ
Greg Woods, NPR
John Lane, SEC
Alan Proctor, FTC
Mike Corrigan, GSA
Henry Lai, GSA
David Lytel, OSTP
Sam Ewell, Treasury
Cita Furlani, NIST
Mark Mandell, NIST
Joe Bishop, Recorder, SETA

-!-
! Origin: In*Touch - Rochester NY, USA (1:2613/333)

? Area: Whitehou ?????????????????????????????????????????????????????????????
Msg#: 281 Date: 02-03-94 03:27
From: In*touch Read: Yes Replied: No
To: All Mark:
Subj: 5.0: 1994-01-25 White Pap
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ADMINISTRATION WHITE PAPER ON
COMMUNICATIONS ACT REFORMS

I. Introduction

Vice President Al Gore and Secretary of Commerce Ron Brown announced the
Administration's National Information Infrastructure (NII) initiative in
September 1993, establishing an agenda for a public-private partnership to
construct an advanced NII to benefit all Americans. In speeches and policy
papers since then, the Administration has proposed legislative and
administrative reform of telecommunications policy, based on the following
fundamental principles:

* Encouraging private investment in the NII;

* Promoting and protecting competition;

* Providing open access to the NII by consumers and service
providers;

* Preserving and advancing universal service to avoid creating a
society of information "haves" and "have nots";

* Ensuring flexibility so that the newly-adopted regulatory
framework can keep pace with the rapid technological and market
changes that pervade the telecommunications and information
industries.

The Administration shares the belief of many in Congress that legislative
reform of telecommunications policy is essential to meeting these goals, in
order to bring the benefits of advanced communications and information
services to the American people. For many years, government regulation
assumed clear, unchanging boundaries between industries and markets. This
assumption sometimes led regulators to view and regulate firms in various
industries differently, even when they offered similar services, and to
address the threat of anticompetitive conduct on the part of some firms by
barring them from certain markets and industries.

A new approach is needed. Even if the lines between industries and
markets were clear in the past, technological and market changes are blurring
and erasing them. Regulatory policies that are based on such perceived
distinctions can harm consumers by impeding competition and discouraging
private investment. In light of these realities, the Administration is
committed to removing unnecessary and artificial barriers to participation by
private firms in all communications markets, while making sure that consumers
remain protected.

In developing legislation to meet these challenges, the Administration is
grateful to Chairman Markey, Congressman Fields, and their colleagues on the
Telecommunications and Finance Subcommittee for their pathbreaking, bipartisan
work on H.R. 3636, which addresses many of the Communications Act issues that
are most important to the development of the NII. The Administration's
legislative telecommunications reform proposals build on H.R. 3636, as well as
S. 1086, developed by Chairman Inouye and Senator Danforth. The
Administration also salutes H.R. 3626, the related legislative initiative to
reform the AT&T consent decree undertaken by Chairmen Brooks and Dingell, and
the leadership of Chairman Hollings on these matters.

The specifics of the Administration's legislative proposals on
telecommunications reform are discussed below. Because the Administration
supports the general approach and many of the existing provisions of H.R.
3636, the provisions of that bill serve as a framework for describing the
Administration's proposals. Those proposals also reflect the innovative
regulatory reforms taken by many state telecommunications regulators.

II. Local Competition and Interconnection

Competition has generated lower prices, improved choices for consumers,
and rapid technological innovation in many communications and information
service markets, including customer premise equipment and long distance
service. Similar benefits should be realized by the expansion of competition
in the local telephone service market. Competition in that market also will
reduce the ability of any telephone company to harm competition and consumers
through monopoly control and will encourage investment and innovation in the
"on and off ramps" of the NII.

* The Administration supports the general requirement of H.R. 3636 that all
carriers must interconnect with other providers of telecommunications and
information services. Such a requirement helps ensure that the NII
functions seamlessly.

* The Administration also supports the approach of H.R. 3636 to impose more
specific pro-competitive interconnection requirements on local exchange
carriers (LECs), in light of these carriers' monopoly positions:

an obligation to interconnect at any "technically feasible
and economically reasonable point";

an obligation to afford nondiscriminatory access to network
facilities, services, functions, and information, where technically
feasible and economically reasonable;

no restrictions on resale or sharing of network facilities
and services.

* H.R. 3636 would require the FCC to adopt regulations governing the price,
terms, and conditions under which carriers may provide interconnections,
access, facilities, and services. The Administration agrees with this
general approach, but suggests that some of the details of this
provision, such as the tariff filing requirement for LECs, are
unnecessary based on current law and practice. The Administration also
would emphasize that, in carrying out this requirement, the FCC and the
States must prevent undue rate increases for any class or group of
ratepayers.

* The Administration supports the approach of H.R. 3636 of requiring
carriers to provide facilities, services, and network functions on an
unbundled basis, i.e., carriers would have allow customers to pick and
choose the constituent parts of the services to be taken. Thus, for
example, instead of offering only switched local telephone service, a
carrier would also have to offer separately the switching and transport
components of that service.

* The Administration supports authorizing the FCC to modify all of the
foregoing obligations for small LECs and LECs serving rural areas. This
differs slightly from H.R. 3636, which would exempt carriers serving
rural areas from the foregoing interconnection and unbundling obligations
and authorize the FCC to modify those requirements for carriers with
fewer than 500,000 access lines nationwide.

III. Relations with the States

Because of the crucial role of the states in protecting ratepayers and
addressing economic and technical infrastructure issues in their areas,
substantial state jurisdiction over telecommunications must be preserved.
However, when national interests are at stake in realizing the benefits of an
advanced, interconnected NII, particularly through local competition, national
policies, with limited preemptive effect in a few key areas, are necessary.

* H.R. 3636 would prohibit state entry regulation for telecommunications
services or state action restricting a firm from exercising the
interconnection rights granted by the bill. Similarly, in order to
realize fully the benefits to consumers of increased competition in
telecommunications, the Administration proposes to preempt state entry
regulation for provision of telecommunications and information services.

* H.R. 3636 does not address state and local rate regulation. However,
rate regulation of new entrants and other firms that lack market power
not only is unnecessary, but can act as a powerful deterrent to the
development of a truly competitive marketplace. Accordingly, to further
the procompetitive goals discussed above, the Administration proposes to
preempt state and local regulation of the rates for any service charged
by a telecommunications carrier that the FCC finds, or has found, after
notice and comment, to lack market power. However, the Administration
would permit states to petition the FCC to retain or regain authority to
regulate such rates under certain conditions. This approach for rate
regulation is substantially the same as that passed by Congress in the
last session for commercial mobile services, as codified in Section
332© of the Communications Act.

IV. Regulatory Flexibility

An Administration priority is to make government work better for the
American people by reducing red tape and eliminating regulatory overkill.
This is particularly important with regard to the telecommunications and
information industries, which are subject to continuing technological and
market changes. Detailed regulatory requirements that may be well-suited for
incumbent firms with monopoly or near-monopoly positions may be quite
inappropriate, and even anticompetitive, when applied to firms that lack
market power. Telecommunications reform legislation should provide the FCC
with the flexibility to adapt its regulations to meet changing conditions,
consistent with the public interest.

* The Administration proposes to authorize the FCC (1) to exempt carriers
lacking market power from any provision of Title II of the Communications
Act (except provisions relating: to the duty to serve and interconnect;
the duty to charge just, reasonable and nondiscriminatory rates; damages;
and customer complaints) and (2) to tailor the regulations it does impose
to reflect a carrier's market power. H.R. 3636 currently does not have
comparable provisions.

* The Administration supports the general approach of H.R. 3636 authorizing
the FCC and the states to permit carriers pricing flexibility for their
competitive services. H.R. 3636 is very detailed in requiring the FCC to
develop standards and criteria to guide regulators in exercising that
authority. The Administration believes that legislation should provide
more general guidance to the FCC.

V. Universal Service

The United States has long been committed to "universal service"
--widespread availability of basic telephone service at affordable rates. As
we move rapidly into a world in which advanced telecommunications
capabilities, well beyond traditional telephony, will soon be available to
many Americans, it is critical that our universal service goals and policies
advance as well. The Administration seeks to work with Congress and the
states to develop an enhanced concept of universal service that will serve the
information needs of the American people in the 21st century.

* It is an Administration goal that, by the year 2000, all of the
classrooms, libraries, hospitals, and clinics in the United States will
be connected to the NII. To help attain that goal, the Administration
proposes that the National Telecommunications and Information
Administration of the U.S. Department of Commerce conduct an annual
nation-wide survey of the availability of advanced telecommunications
services to those locations and report on its findings. Moreover, the
Administration proposes that the FCC be directed to commence an inquiry
and, subsequently, a rulemaking proceeding to ensure, to the extent
feasible, the availability of advanced telecommunications to public
school classrooms, health care institutions, and libraries. The FCC
would consider the tariffing of preferential rates for interstate
services to such locations, and ensure that standards are in place to
permit uniform interconnection to the NII.

* The Administration supports the approach of H.R. 3636 in making the
preservation and advancement of "universal service" an explicit objective
of the Communications Act (as opposed to an implicit goal emanating from
Section 1 of the Act). The Administration would provide more general
guidance, and more flexibility to the FCC and the states in specifying
the details of how that objective should be achieved. The Administration
would state that advanced services should be available to rural and urban
lower income users, to users in areas where the costs of service are
high, and to social institutions, especially educational and health-care
facilities.

* The Administration supports charging the FCC and the states with
continuing responsibility to review and revise objectives for expanding
universal service to meet changing circumstances.

* The Administration supports the requirement of H.R. 3636 that the FCC and
the states address universal service issues through a Federal/State Joint
Board. The Administration proposes giving the Joint Board more time to
develop its recommendations to the FCC, and the FCC more time to act on
them.

* H.R. 3636 would require all providers of telecommunications service to
make "an equitable and nondiscriminatory" contribution to the
preservation of universal service. The Administration agrees that the
FCC and the states should have broad authority to require all providers
of telecommunications services to contribute to the preservation of
universal service. In exercising that authority, the FCC and the states
must ensure that no service provider is unfairly burdened relative to its
rivals, and that contributions to universal service do not unduly distort
consumer choices among alternative services.

* The Administration also proposes authorizing the FCC, in consultation
with the States, to permit "sliding scale" contributions (e.g., to avoid
burdening small providers and new entrants), as well as "in-kind"
contributions in lieu of cash payments. H.R. 3636 has no comparable
provisions.

VI. Cable-Telephone Crossownership

Although the existing cable-telephone company crossownership restriction
of the 1984 Cable Act may have been appropriate when enacted, today it is an
unnecessary and artificial barrier to competition in the delivery of video
programming to American consumers and to investment in advanced local
infrastructure. The Administration's proposal to remove the current
restriction, coupled with its proposals to promote competition in local
telephone service, will allow telephone companies and cable operators to
compete in providing a full range of video, voice, and data services to the
public. Such competition can promote investment that expands consumer choices
and services.

To ensure that cable firms and telephone companies do not harm consumers
or competition in providing these services, the Administration proposes
several safeguards specified below, most notably requirements that most
telephone companies and cable operators make transmission capacity available
to unaffiliated video providers on a nondiscriminatory basis. In doing so,
the Administration also seeks to protect diversity and competition in the flow
of ideas, and to ensure that similarly situated firms are regulated similarly.

The Administration supports the general approach of H.R. 3636 to allow
LECs to provide video programming in their telephone service areas, subject to
certain conditions and safeguards. The Administration would propose somewhat
different conditions and safeguards, which, however, are also designed to
protect consumers and competition and prevent undue control of information
content and conduit by any one firm.

Structural Separation:

* The Administration supports the approach in H.R. 3636 of requiring LECs
to provide video programming through a separate affiliate, in order to
prevent improper cross- subsidization and discrimination by the LEC.

* H.R. 3636 specifies many of the details of the separation requirements.
The Administration proposes modifying this approach to charge the FCC
with specifying the required degree of separation, subject to two basic
requirements from H.R. 3636:

A LEC's video programming affiliate must have separate books,
records, and accounts; and

Any contract or agreement between a LEC and its affiliate (1)
must be pursuant to regulations adopted by the FCC, (2) must be on a
fully compensatory and auditable basis, (3) must be without cost to the
LEC's telephone service ratepayers, (4) must be filed with the FCC, and
(5) must adhere with rules that will enable the FCC to assess the
compliance of any transaction with its rules.

* The Administration supports the approach of H.R. 3636 in permitting the
FCC to modify separation requirements for small and rural LECs at any
time. H.R. 3636 would allow the FCC to modify separation requirements
for other LECs beginning 5 years after enactment. The Administration
proposes reducing that waiting period to 2 years, to provide greater
regulatory flexibility in the face of changing conditions.

Nondiscriminatory Access Obligations:

* In order to promote competition and diversity in the flow of ideas, H.R.
3636 would require a LEC that provides video programming to subscribers
in its service area to establish a "video platform," based on the FCC's
current "video dialtone" rules, and make it available to unaffiliated
programmers on nondiscriminatory terms. The Administration supports this
general approach, with some modifications.

* H.R. 3636, by its terms, would require that the rates for the platform be
nondiscriminatory. The Administration proposes specifying that LEC
provision of the video platform will be subject to all requirements of
Title II of the Communications Act.

* H.R. 3636 appears to require a LEC to afford nondiscriminatory access to
its video platforms only when it carries "affiliated" video programming
(i.e., programming in which the LEC has an ownership interest). The
Administration proposes requiring a LEC to afford unaffiliated
programmers nondiscriminatory access to its video platform whenever the
LEC carries video programming.

* H.R. 3636 would require the FCC to limit the number of channels on a
LEC's video platform that can be occupied by its video programming
affiliate (that limit can be no lower than 25% of the platform's
capacity). The Administration proposes to authorize the FCC to impose
such a limit and give the FCC discretion in selecting what the limit
should be.

* The Administration proposes to permit the FCC to modify any of the
foregoing requirements for small and rural LECs. H.R. 3636 contains no
similar provision for small, non-"rural" LECs.

* The Administration supports allowing the FCC to modify the definition of
"video platform" beginning 1 year after enactment. H.R. 3636 contains no
such provision.

* The Administration proposes to direct the FCC to adopt regulations,
within 1 year of enactment, that would require cable operators to offer
nondiscriminatory access to channel capacity on their systems for
unaffiliated programmers, except when technology, costs, and market
conditions would make such offering inappropriate. H.R. 3636 requires
that the FCC study whether to impose such obligations and report to
Congress within 2 years after enactment.

Anti-Buyout Provisions:

* To protect competition in the provision of communications and information
services and to further the flow of ideas, the Administration supports
limiting a LEC's ability to enter the video services market via
acquisition of cable systems operating in its telephone service area.
The Administration proposes to limit cable companies' ability to acquire
LECs providing local telephone service in the cable companies' franchise
areas.

* The Administration supports the provisions of H.R.3636 permitting
in-region acquisitions occurring in rural areas and for joint LEC/cable
operator use of the cable "drop wire." The Administration proposes
eliminating the provision of H.R. 3636 that would permit a LEC/cable
acquisition if the number of households served by the cable systems
acquired constituted less than 10% of all households in the telephone
service areas of the acquiring LEC and its affiliates.

* H.R. 3636 would also authorize the FCC to waive the anti-buyout policy at
any time under certain conditions. The Administration proposes
authorizing the FCC to change the policy by rule, or to grant waivers on
a case-by-case basis, beginning 5 years after enactment, if it determines
that such action would be in the public interest. Such acquisitions
would, however, remain subject to the antitrust laws.

Franchise Obligations:

* The Administration supports the general approach in H.R. 3636 of removing
some requirements of the Cable Act for the LEC's video programming
affiliate and any other user of the LEC's video platform, while
maintaining others, such as must carry, retransmission consent, the
provision of public, educational, and governmental channels, and others
designed to protect consumers.

* To promote symmetric regulation of similarly-situated firms, the
Administration proposes to authorize the FCC to remove some Cable Act
requirements (most notably, the requirement to have a cable franchise)
for cable systems that offer nondiscriminatory access substantially
similar to that required of LECs by the bill, while maintaining the
overall Cable Act regulatory structure. H.R. 3636 has no comparable
provision.

Rural Exemption:

* H.R. 3636 states that provisions concerning the video programming
affiliate, the video platform, provision of affiliated programming, and
the ban on acquisitions do not apply to LECs offering video programming
in rural areas. The Administration proposes to authorize the FCC to
modify those provisions for such LECs.

VII. Regulation of Two-Way, Broadband Transmission Services
(Title VII)

The Administration proposes adding a new Title VII to the Communications
Act to apply, on an elective basis, to providers of two-way, broadband,
digital transmission services, offered on a switched basis to end users. The
Administration would emphasize these services because, well into the 21st
century, they will connect and empower the American public by providing them
with a variety of voice, data, video services, and other information that will
enhance our nation's economic competitiveness and the quality of life of our
citizens.

A new Title VII would provide a unified, symmetric treatment of providers
of two-way broadband services, in contrast to the present disparate treatment
of common carriers and cable operators under Titles II and VI of the Act. It
also would provide important incentives to promote private sector development
of this part of the NII and spur availability of advanced services on a
widespread basis. The Administration recognizes that communications services
are developing in a rapidly changing technical and marketplace environment. A
new Title VII would create a regulatory regime that should stand the test of
time by providing the FCC with the flexibility to adapt its regulatory
approach in light of changes in market and technological conditions.

Eligibility and Certification

* Under the Administration's proposal, firms could elect Title VII
regulation of the two-way broadband, interactive, switched, digital
transmission services they provide to end users ("Title VII broadband
services"), if they offer such services to at least twenty percent of
their subscribers in a state. The FCC would be authorized to define
Title VII broadband services in greater detail and to modify the
subscriber threshold.

* If a firm were to certify to the FCC that it meets the threshold in one
or more states and the FCC does not disallow the election, the FCC would
apply streamlined Title VII regulation to the firm's Title VII broadband
services and the other services that share broadband facilities in those
states.

Regulatory Framework for Title VII

* Title VII would impose the following broad requirements (to be
implemented by the FCC) to apply to Title VII broadband services and the
services that share broadband facilities with them:

Open access obligations (including access for the disabled)
to enable all persons to send information over the firms' broadband
facilities;

Universal service requirements consistent with those under
other parts of the Communications Act; and

Interconnection and interoperability requirements

* Title VII would promote regulatory flexibility by providing that the FCC
shall:

Regulate rates only for Title VII services that are offered
by firms the FCC finds have market power in the provision of such
services; and

Establish procedures to resolve any complaints expeditiously.

* Title VII would also authorize the FCC adopt rules, as needed, to:

Address public interest concerns, such as those currently
addressed in Sections 223 through 228 of the Communications Act (dealing
with: obscene and harassing communications; regulation of pole
attachments; services for hearing and speech-impaired individuals;
telephone operator services; use of telephone equipment; and carrier
provision of pay-per-call services, respectively).

Ensure that delivery of video programming directly to
subscribers over broadband facilities is consistent with certain
principles now applicable to cable services (e.g., Sections 325(b), 611,
614, 615, and 632 of the Act, dealing with: retransmission consent;
public, educational, and governmental access; must carry; and protection
of subscriber privacy).

* If a Title VII firm also provides communications services that do not
share broadband facilities with Title VII broadband services, those other
services would remain subject to regulation under Title II or Title VI,
as appropriate.

Relations with State and Local Regulators

* Consistent with the Administration's general approach to relations with
state and local regulatory authorities, federal authority over the rates,
terms, and conditions under which communications services are provided
would predominate only when needed to ensure that national goals of
promoting competition and liberal interconnection and access require it.

* Title VII would preempt state and local authorities from regulating rates
of Title VII services if the FCC determines that the providing firm lacks
market power.

* States would continue to regulate rates for the intrastate components of
Title VII services provided by firms with market power:

for Title VII broadband services, in accordance with models
and guidelines adopted by the FCC in consultation with the states;

for other services delivered over the facilities used to
furnish Title VII broadband services, in the discretion of the states,
subject only to a reserved right of Federal preemption that could be
exercised to the extent necessary to avoid conflicts between state
regulatory actions and the policies of Title VII.

-!-
! Origin: In*Touch - Rochester NY, USA (1:2613/333)
 
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