Telecom/1996-04-telecom-walnutcreek.iso/reports/hr.3515.federal.law

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From: TELECOM Moderator <[e-mail]>
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To: [e-mail]
Subject: HR 3515
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 Subject: What the RBOCs Aren't Saying in Their Radio Ads About Info Services
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[TELECOM Moderator's Note: This message is the complete text of H.R.
3515, as sent along by Donald Yett <[e-mail]>. It is
posted here for your convenience, but all follow-ups should go to
comp.org.eff.talk where the message has been cross-posted.   PAT]


 From: Donald Yett <[e-mail]>
 Subject: What the RBOCs aren't saying in their radio ads about info services
 Date: 30 Nov 91 23:48:45 GMT
 Followup-To: comp.org.eff.talk
 Organization: University of Southern California, Los Angeles, CA

---------------------------------------------------------------------------

H.R. 3515 -- Transcribed by James D. Bryant II on Nov. 24, 1991
             I have proofed this twice, it should not contain any
             errors or omissions, I can't access my spell checker
             right now, there may be a typo or two somewhere..

The following document is a full transcription of the Telecommunications
Act of 1991.

If this bill does not pass, the Regional Bell Operating Companies (RBOCs)
will be able to force all other information services out of business.

Please TELL your Congressman and Senators, and all members of the
involved committees to vote YES on this bill.

The RBOCs have been conducting a massive disinformation campaign on the
radio bashing the sponsers of this bill and saying that if this bill
passes, that the public will not be able to use online information
services leaving the impression on the listener that they are the ONLY
ones that can provide these services.

This bill will also provide for open competition among phone companies at
the local level.  This is the second reason that the RBOCs oppose this
bill.

The following information is from the SW Bell brochure on the subject :

     "IT SOUNDS EXCITING

          The exciting news is that we already have the
          technology to put these services to work for us
          through the seven regional holding companies --
          Ameritech, Bell Atlantic, BellSouth, NYNEX,
          Pacific Telesis Group, Southwestern Bell Corpora-
          tion, and U.S. West.  Some larger businesses in
          urban areas already use a variety of information
          services.  But, they are not an option for most
          small businesses and the general public.

          That's because making the services available to
          everyone depends on the regional holding companies...."

Information services depend on cables and switching facilities owned and
operated by the RBOCs.  Having them in the industry is a massive conflict
of interest.

They want their monopoly back!

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H.R. 3515            102nd Congress, 1st Session           [Page 01 of 35]

                                  H.R. 3515

To amend the Communications Act of 1934 to encourage competition in the
provision of electronic information services, to foster the continued
diversity of information sources and services, to preserve the universal
availability of basic telecommunications services, and for other purposes.

--------------------------------------------------------------------------

            IN THE HOUSE OF REPRESENTATIVES

                October 8, 1991

Mr. Cooper (for himself, Mr. Bliley, Mr. Synar, Mr. Schaefer, and Mr.
Bryant) introduced the following bill, which was referred jointly to the
Committees on Energy and Commerce and the Judiciary.

--------------------------------------------------------------------------

                 A BILL


To amend the Communications Act of 1934 to encourage competition in the
provision of electronic information services, to foster the continued
diversity of information sources and services, to preserve the universal
availability of basic telecommunications services, and for other purposes.


  1        Be it enacted by the Senate and House of Representa-
  2 tives of the United States of America in Congress assembled,

  3 SECTION 1.  SHORT TITLE

  4        This Act may be cited as the "Telecommunications
  5 Act of 1991".

H.R. 3515            102nd Congress, 1st Session           [Page 02 of 35]

  1 SECTION 2.  FINDINGS AND PURPOSES

  2     (a) Findings--The Congress finds that--

  3              (1) the national welfare will be enhanced by the
  4     continued development of robust competition in the
  5     provision of electronic information services and tele-
  6     communications services;

  7              (2) the widest possible availability of informa-
  8     tion and telecommunications services requires an
  9     open telecommunications infrastructure that incor-
 10     porates market-driven advances in technology and
 11     whose features and functions are available on a non-
 12     discriminatory and unbundled basis;

 13              (3) the availability of multiple and inter-
 14     connected complementary telecommunications net-
 15     works can enhance competition in the provision of
 16     information and telecommunications services;

 17              (4) the redundancy inherent in a pluralistic
 18     telecommunications infrastructure offers protection
 19     against network failures;

 20              (5) the cost-effective deployment of advanced
 21     public telecommunicatins networks, subject to ap-
 22     propriate safeguards, can further the long-standing
 23     goals of universal telephone service at affordable
 24     rates;

 25              (6) the provision of information services by di-
 26     vested operating companies prior to the development of

H.R. 3515            102nd Congress, 1st Session           [Page 03 of 35]

  1     an effectively competitive telecommunications infra-
  2     structure would likely lead to higher rates for tele-
  3     phone exchange service and jepordize the diversity
  4     of information sources and services; and

  5              (7) current regulatory policies must be revised
  6     and supplemented to ensure the universal availability
  7     of telephone exchange service at reasonable rates
  8     and fair competition in delivery of telecommunicati-
  9     cations and information services.

 10     (b) PURPOSES--The purposes of this Act are to--

 11              (1) ensure the continued availability of afford-
 12     able telecommunications and information services
 13     that are essential to full participation in the nation's
 14     economic, political, and social life;

 15              (2) encourage the continued development of ad-
 16     vanced, reliable telecommunications networks;

 17              (3) ensure that the costs of such networks and
 18     the services provided over them are allocated equi-
 19     tably among users; and

 20              (4) ensure that the provision of information
 21     services by divested operating companies does not
 22     jepordize the universal availability of telephone ex-
 23     change service at reasonable rates or undermine
 24     competition in the information services marketplace.

H.R. 3515            102nd Congress, 1st Session           [Page 04 of 35]

  1                TITLE I -- INFRASTRUCTURE

  2                       DEVELOPMENT

  3 Sec. 101.  NETWORK STANDARDS

  4        Title II of the Communications Act of 1934 is
  5 amended by inserting after section 201 the following new
  6 section:

  7 "Sec. 201A. NETWORK STANDARDS.

  8     "(a) SERVICE QUALITY --

  9              "(1) ADOPTION OF STANDARDS.-- A Federal-
 10     State Joint Board shall be established under section
 11     401(c) not later than 90 days after the enactment
 12     of this subsection to impose and enforce network
 13     quality standards upon the common carriers for the
 14     purpose of ensuring the combined maintenance and
 15     evolution of common carrier facilities and services.
 16     Not later than 180 days after the date of enactment
 17     of this subsection, the Joint Board shall initiate a
 18     rulemaking proceeding to establish standards, to be
 19     enforced by the Commission and the State Commis-
 20     sions as to matters within their respective jurisdic-
 21     tions, for measuring common carrier network qual-
 22.    ity.

 23              "(2) REPORTS -- Each common carrier shall
 24     submit to the Joint Board established pursuant to
 25     paragraph (1) a quarterly data report, in a form re-

H.R. 3515            102nd Congress, 1st Session           [Page 05 of 35]

  1     quired by the Joint Board, reguarding compliance
  2     with the prescribed network quality standards.  The
  3     Joint Board may require periodic independant audits
  4     of common carrier compliance with the network
  5     quality standards.  The Commission, upon the rec-
  6     commendation of the Joint Board, shall establish en-
  7     forcement penalties and procedures, including expe-
  8     dited customer complaint mechanisms, to ensure
  9     common carrier compliance with network quality
  10     standards.

  11     "(b) INTERCONNECTION --

  12              "(1) GENERALLY-- Each local exchange carrier
  13     shall provide interconnection, on a reasonable and
  14     nondiscriminatory basis, to common carriers and
  15     other providers of telecommunications services and
  16     information services who request it.  An interconnect-
  17     ing party may physically colocate the equipment nec-
  18     essary for interconnection at the premises of a local
  19     exchange carrier, except as provided under para-
  20     graph (2).

  21              "(2) VIRTUAL COLOCATION-- A local exchange
  22     carrier that can demonstrate by clear and convincing
  23     evidence in a particular case that the physical
  24     colocation required under paragraph (1) is not pract-
  25     ticable for technical reasons or because of space lim-

H.R. 3515            102nd Congress, 1st Session           [Page 06 of 35]

   1     itations shall offer an interconnecting party virtual
   2     colocation with it's premises.  Virtual colocation shall
   3     be economically and technically comparable to inter-
   4     connection that is or would be obtained through
   5     physical colocation of the interconnecting party's
   6     equipment at the premises of the local exchange car-

   7     ier.  Nothing in this paragraph shall relieve a di-
   8     vested operating company of it's obligations under
   9     section 227(d)(12).

  10              "(3) EXCEPTION FOR RURAL EXCHANGE CAR-
  11     RIERS.-- Notwithstanding any other provision of this
  12     subsection, a rural exchange carrier shall not be re-
  13     quired to provide interconnection to another local ex-
  14     change carrier.

  15              "(4) REGUALTIONS-- Within 270 days after the
  16     date of enactment of the Telecommunications Act of
  17     1991, the Commission shall--

  18                 "(A) adopt and make effective rules to en-
  19          force the oblications imposed by this subsection;
  20          and

  21                 "(B) initiate a rulemaking to require that
  22          the interconnection offered by a local exchange
  23          carrier pursuant to this subsection shall provide
  24          for the portability of telephone numbers.

  25     "(c) NETWORK ACCESS--

H.R. 3515            102nd Congress, 1st Session           [Page 07 of 35]

   1              "(1) REVISIONS TO ORDER-- The Commission
   2     shall further revise the order of the Commission en-
   3     titled 'Filing and Review of Open Network Archetec-
   4     ture Plans' CC Docket 88-2, Phase I, released De-
   5     cember 22, 1988, and subsequently revised, to re-
   6     quire that--

   7                 "(A) the plans for compliance with such
   8          order offer unbundled features and functions;

   9                 "(B) such features and functions are made
  10          available on a reasonably uniform basis by all
  11          of the common carriers subject to such order,
  12          and that such features and functions are acces-
  13          sible throughout the service territory of each
  14          such carrier;

  15                 "(C) such plans include a schedule for
  16          timely offering of new features asnd functions;
  17          and

  18                 "(D) common carriers subject to such
  19          order not unreasonably discriminate between af-
  20          filiated and unaffiliated providers of informa-
  21          tion services in offering tariffed and non-
  22          tariffed features, functions, and capabilities.

  23              "(2) REVIEW OF ORDER AND PLANS-- At least
  24     once every three years, the Commission shall--

H.R. 3515            102nd Congress, 1st Session           [Page 08 of 35]

   1                 "(A) conduct a proceeding in which inter-
   2          ested parties shall have an opportunity to com-
   3          ment on whether the order described in para-
   4          graph (1), as further revised, and the plans
   5          filed pursuant to it have opened the networks of
   6          the carriers subject to such order to reasonable
   7          and non-discriminatory access by providers of
   8          telecommunications services and information
   9          services; and

  10                 "(B) not later than 180 days after receiv-
  11          ing the reply comments filed in such proceed-
  12          ing, revise such order as it deems necessary or
  13          appropiate and require the common carriers
  14          subject to such order to file new plans consist-
  15          ent with such revisions, which new plans shall
  16          also be subject to public comment and Commis-
  17          sion review prior to their becoming effective.

  18     "(d) PRIVACY-- Personally identifiable customer in-
  19 formation obtained or collected by a local exchange carrier
  20 in the course of providing telephone exchange service shall
  21 be used only in connection with the provision of such serv-
  22 ice, and shall not be made available to any affiliate of such
  23 carrier or any other person except--

  24              "(1) as required by law; or

H.R. 3515            102nd Congress, 1st Session           [Page 09 of 35]

   1              "(2) upon the affirmative request by the cus-
   2     tomer to which such information relates.

   3     "(e) TARIFFS--

   4              "(1) GENERALLY-- A local exchange carrier
   5     shall prepare and file tariffs in accordance with this
   6     Act with respect to the interconnection and network
   7     access services required under this section.  The costs
   8     that a local exchange carrier incurs in providing
   9     such services shall be borne solely by the users of
  10     the features and functions comprising such services.
  11     The Commission shall review such tariffs to ensure
  12     that--

  13                 "(A) the charges for such services are cost-
  14          based; and

  15                 "(B) the terms and conditions contained in
  16          such tariffs do not bundle together any sepa-
  17          rable elements, features, or functions.

  18              "(2) SUPPORTING INFORMATION-- A local ex-
  19     change carrier shall submit supporting information
  20     with it's tariffs for interconnection and network ac-
  21     cess services that is sufficient to enable the Commis-
  22     sion and the public to determine the relationship be-
  23     tween the proposed charges and the cost of provid-
  24     ing such services.  The submission of such informa-
  25     tion shall be pursuant to the rules adopted by the Com-

H.R. 3515            102nd Congress, 1st Session           [Page 10 of 35]

   1     mission to ensure that similarly situated carriers
   2     provide such information in an uniform fashion.

   3              "(3) UNIVERSAL SERVICE ELEMENTS-- A local
   4     exchange carrier may include in it's tariffs for inter-
   5     connection services an element intended to recover
   6     the amount necessary to preclude any substantial in-
   7     creases in the rates for telephone exchange service
   8     that would otherwise result from the offering of
   9     interconnection services.  Such element shall be im-
  10     posed at a uniform rate on any person who pur-
  11     chases such services, and shall also be included at
  12     the same rate in such carrier's charges for services
  13     offered by the carrier in competition with the serv-
  14     ices offered by interconnecting parties.  No later than
  15     270 days after the date of enactment of the Tele-
  16     communications Act of 1991, the Commission shall
  17     adopt and make effective rules governing the cal-
  18     culation of such element.  Any amounts recovered by
  19     the local exchange carrier through the imposition of
  20     this additional element shall be used to defray the
  21     costs of providing telephone exchange servicce.

  22     "(f) RESALE--  The resale of telephone exchange
  23 service (or the unbundled elements of such service) in conjunc-
  24 tion with the the furnishing of an interstate telecommuni-
  25 cations service or any information service shall not be pro-

H.R. 3515            102nd Congress, 1st Session           [Page 11 of 35]

   1 hibited or subject to unreasonable conditions by the Com-
   2 mission, any State, or any local exchange carrier.

   3     "(g) COORDINATED PLANNING--  The Commission
   4 shall adopt and make effective rules for the conduct of
   5 coordinated network planning by common carriers, subject
   6 to Commission supervision, to ensure (1) the effective and
   7 efficient interconnection and interoperability of common
   8 carrier networks, and (2) that the design of such networks
   9 does not impede access to information services by sub-
  10 scribers to telephone exchange service furnished by a rural
  11 exchange carrier.

  12     "(h) STUDY-- No later than 270 days after the en-
  13 actment of the Telecommunications Act of 1991, the Com-
  14 mission shall initiate an inquiry to examine the effects of
  15 competition in the provision of telephone exchange access
  16 and telephone exchange service on the availability and
  17 rates for telephone exchange service furnished by rural ex-
  18 change carriers.

  19 SEC. 102. EXPEDITED REVIEW OF CERTAIN COMPLAINTS

  20     Section 208 of the Communications Act of 1934 is
  21 amended by adding at the end thereof the following new
  22 subsection:

  23     "(c) EXPEDITED REVIEW OF CERTAIN COM-
  24 PLAINTS-- The Commission shall issue a final order with
  25 respect to any complaint arising from alleged violations

H.R. 3515            102nd Congress, 1st Session           [Page 12 of 35]

   1 of section 201A within 270 days after such complaint is
   2 filed".

   3 SEC. 103. EXPEDITED LICENSING OF NEW TECHNOLOGIES

   4           AND SERVICES.

   5     Section 7 of the Communications Act of 1934 is

   6 amended by adding to the end thereof the following new
   7 subsection:


   8     "(c) LICENSING OF NEW TECHNOLOGIES-- Within
   9 twenty-four months after making a determination under
  10 subsection (b) that a technology or service related to the
  11 furnishing of tlelcommunications services or information
  12 services is in the public interest, the Commission shall
  13 adopt and make effective rules for--

  14              "(1) the provision of such technology or service;
  15     and

  16              "(2) the filing of applications for the authoriza-
  17     tions necessary to offer such technology or service to
  18     the public, and shall act on any such application
  19     within twenty-four months after it is filed.  Any ap-
  20     plication filed by a carrier under this subsection for
  21     the construcction or extension of a line shall also be
  22     subject to section 214 and to any necessary approval
  23     by the appropriate State commissions".

H.R. 3515            102nd Congress, 1st Session           [Page 13 of 35]

   1             TITLE II -- PROVISIONS AFFECTING
   2               DIVESTED OPERATING COMPANIES

   3 SEC. 201. PROVISION OF INFORMATION SERVICES

   4     Title II of the Telecommunications Act of 1934 is
   5 amended by adding at the end thereof the following new
   6 section:

   7 "SEC. 227. PROVISION OF INFORMATION SERVICES BY DI-
   8                   OPERATING COMPANIES.

   9     "(a) PROVISION OF SERVICES-- A divested operating
  10 company or an affiliate thereof may provide information
  11 services, subject to this section and title IV.

  12     "(b) ELECTRONIC PUBLISHING-- A divested operat-
  13 ing company or an affiliate thereof may not offer elec-
  14 tronic publishing services in any State in which such com-
  15 pany or affiliate provides telephone exchange service until
  16 the Commission, after notice and opportunity for public
  17 comment and after consultation with the Department of
  18 Justice and the appropriate State commissions, deter-
  19 mines that--

  20              "(1) at least 50 percent of all businesses and
  21     residences within the areas in each State in which
  22     such company or any affiliate thereof provides tele-
  23     phone exchange service have access to transmission
  24     and switching facilities (other than those owned or
  25     controlled by a divested operating company or it's af-

H.R. 3515            102nd Congress, 1st Session           [Page 14 of 35]

   1     filiate) that are comparable in quality, cost, geo-
   2     graphic range, and functionality to those offered by
   3     the divested operating company for the delivery of
   4     electronic publishing services;

   5              "(2) at least 10 percent of all businesses and
   6     residences within the areas in each State in which
   7     such company provides telephone exchange service
   8     subscribe to services delivered over such alternative
   9     facilities; and

  10              "(3) the divested operating company or affiliate
  11     thereof seeking to provide such electronic publishing
  12     services has demonstrated that there is no substan-
  13     tial possibility that the divested operating company
  14     could use it's position as a local exchange carrier to
  15     (A) impede competition in the provision of electronic
  16     publishing services, or (B) impose additional costs
  17     upon subscribers of telephone exchange service.

  18     "(c) WAIVER-- A divested operating company or an
  19 affiliate thereof may petition the Commission for a waiver
  20 of subsections (b) and (h) to provide a particular elec-
  21 tronic publishing service.  Such petition shall be granted
  22 if such company or affiliate can demonstrate to the Com-
  23 mission by clear and convincing evidence that (A) such
  24 service would not exist unless offered by such company
  25 or affiliate, and (B) the provision of such service by such

H.R. 3515            102nd Congress, 1st Session           [Page 15 of 35]

   1 company or affiliate would not impose additional costs
   2 upon subscribers of telephone exchange service.  The Com-
   3 mission shall provide notice and opportunity for public
   4 comment with respect to any request for a waiver persu-
   5 ant to this subsection.  The provision of any service author-
   6 ized pursuant to this subsection shall be subject to all of
   7 the other provisions of this Act, including title IV and the
   8 requirements of this subsection.

   9     "(d) SEPARATE SUBSIDIARY--

  10              "(1) GENERALLY-- Except as provided in sub-
  11     section (e), a divested operating company or affiliate
  12     thereof may provide information services only

  13     through a subsidiary that is separated from the tele-
  14     phone exchange service operations of the divested
  15     company, in accordance with the requirements of
  16     this subsection and the regualations prescribed by the
  17     Commission to carry out this subsection.

  18              "(2) MINIMUM NUMBER OF OUTSIDE DIREC-
  19     TORS-- Any subsidiary required by this subsection
  20     shall have a board of directors not less than 33 per-
  21     cent of whom are not employees, officers, or direc-
  22     tors of any divested operating company or any affili-
  23     ate of such company.

  24              "(3) TRANSACTION REQUIREMENTS-- Any
  25     transaction between any divested operating company

H.R. 3515            102nd Congress, 1st Session           [Page 16 of 35]

   1     and any other affiliate of such company (including

   2     the subsidiary required by this subsection)--

   3                 "(A) shall not be based upon any pref-
   4          erence or discrimination arising out of affili-
   5          ation;

   6                 "(B) shall be carried out in the same man-
   7          ner as such company or affiliate conducts such
   8          business with unaffiliated persons;

   9                 "(C) shall be pursuant to contract or tariff
  10          reported to the Commission and made available
  11          for public inspection;

  12                 "(D) shall be fully auditable and reflect all
  13          costs associated with the conduct of such busi-
  14          ness; and

  15                 "(E) shall not have the effect of permitting
  16          any violation of the requirements of subsection
  17          (f) of this section.

  18              "(4) SEPERATE OPERATION AND PROPERTY--
  19     A subsidiary required by this subsection may not--

  20                 "(A) enter into any joint venture or part-
  21          nership with the divested operating company;

  22                 "(B) have employees or a financial struc-
  23          ture (other than as provided in this section) in
  24          common with the divested operating company;

H.R. 3515            102nd Congress, 1st Session           [Page 17 of 35]

  1                 "(C) own any property in common with a
  2          divested operating company; or

  3                 "(D) establish any other subsidiary or af-
  4          filiate except after notice to the Commission in
  5          such form and containing such information as
  6          the Commission may require.

  7              "(5) SEPARATE COMMERCIAL ACTIVITIES-- A
  8     subsidiary required by this subsection shall carry out
  9     directly it's own marketing, sales, accounting, hiring
 10     and training of personnel, purchasing, and mainte-
 11     nance.

 12              "(6) BOOKS, RECORDS, AND REPORTS-- Any
 13     subsidiary required by this subsection shall--

 14                 "(A) maintain books, records, and ac-
 15          counts in a manner prescribed by the Commis-
 16          sion which shall be seperate from the books,
 17          records, and accounts maintained by the di-
 18          vested operating company and the other affili-
 19          ates of the divested operating company, and
 20          which shall identify any conduct of business
 21          with such company and any such affiliates; and

 22                 "(B) prepare it's own financial statements
 23          (including balance sheets and the related state-
 24          ments of operations, stockholders' equity, and
 25          cash flows) that are not consolidated with the

H.R. 3515            102nd Congress, 1st Session           [Page 18 of 35]

  1          financial statements of the divested operating
  2          company and any other affiliate of such com-
  3          pany; and

  4                 "(C) prepare and file with the Commission,
  5          whether or not such subsidiary is publicly trad-
  6          ed, the annual and periodic reports required of
  7          publicly traded companies by the Securities and
  8          Exchange Commission.

  9              "(7) ADVERTISING-- A subsidiary required by
 10     this subsection may not carry out advertising with
 11     the divested operating company, except that such
 12     subsidiary may carry out institutional advertising
 13     with such company if (A) such advertising does not
 14     specifically relate to any service, and (B) the sub-
 15     sidiary and the divested operating comapany share
 16     any costs of such advertising in proportion to their

 17     revenue.

 18              "(8) SECURITIES INFORMATION-- A subsidiary

 19     required by this subsection shall submit to the Com-
 20     mission a copy of any statement or prospectus that
 21     such subsidiary is required to file with the Securities
 22     and Exchange Commission.

 23              "(9) OUTSIDE OWNERSHIP-- A divested operat-
 24     ing company or an affiliate thereof may not own
 25     more than 90 percent of any class of outstanding

H.R. 3515            102nd Congress, 1st Session           [Page 19 of 35]

  1     capital stock of any affiliated subsidiary required by
  2     this subsection.


  3              "(10) TRANSMISSION CAPACITY-- A seperate
  4     subsidiary required by this subsection may not own
  5     any transmission facilities, and may obtain the use
  6     of such facilities from an affiliated divested operat-
  7     ing company or affiliate thereof only pursuant to
  8     tariffs of general applicability.

  9              "(11) PRESERVATION OF SEPERATE SUBSIDI-

 10     ARY REQUIREMENTS FOR GRANDFATHERED FUNC-
 11     TIONS-- Nothing in this subsection shall be con-
 12     strued to relieve a divested operating company or
 13     any affiliate thereof (or any other local exchange
 14     carrier or affiliate thereof) of any seperate subsidi-
 15     ary requirement imposed before October 1, 1991.

 16              "(12) PROVISION OF SERVICES AND INFORMA-

 17     TION-- A divested operating company may not pro-
 18     vide any services or information to a subsidiary re-
 19     quired by this subsection unless such services or in-
 20     formation are made available to others on the same
 21     terms and conditions.

 22     "(e) EXCEPTION TO SEPERATE SUBSIDIARY RE-

 23 QUIREMENT-- A divested operating company or affiliate
 24 thereof shall not be required to establish a subsidiary pur-
 25 suant to subsection (d) with respect to any information

H.R. 3515            102nd Congress, 1st Session           [Page 20 of 35]

  1 service provided by such company or affiliate on or before
  2 October 1, 1991.

  3     "(f) PREVENTION OF CROSS-SUBSIDIARIES--


  4              "(1) COST ALLOCATION SYSTEM REQUIRED--
  5     Any divested operating company that provides infor-
  6     mation services, or which has an affiliate that is en-
  7     gaged in the provision of such services, shall estab-
  8     lish and administer, in accordance with the require-
  9     ments of this subsection and the regulations pre-
 10     scribed thereunder, a cost allocation system that, to-
 11     gether with the subsidiary requirements of sub-
 12     section (d), is intended to prohibit any cost of pro-
 13     viding such services from being subsidized by reve-
 14     nue from telephone exchange service or telephone ex-
 15     change access services.

 16              "(2) COST ASSIGNMENT AND ALLOCATION REG-
 17     ULATIONS--

 18                 "(A) GENERALLY-- The Commission shall
 19          establish regulations to require the just and
 20          reasonable assignment and allocation of all
 21          costs that are in any way incurred by a divested
 22          operating company or any affiliate thereof in
 23          the provision of any information service.

 24                 "(B) JOINT AND COMMON COSTS-- The
 25          regulations adopted pursuant to this paragraph

H.R. 3515            102nd Congress, 1st Session           [Page 21 of 35]

  1          shall include a requirement that any costs of
  2          any investment or other expenditure that can-
  3          not be allocated based upon direct or indirect
  4          measures of cost causation shall be allocated to
  5          unregulated services--

  6                      "(i) under a formula that ensures that
  7                  the rates for telephone exchange service
  8                  are no greater than they would have been
  9                  in the absence of such investment (taking
 10                  into account any decline in the real costs
 11                  of providing such service), or

 12                      "(ii) based upon the highest forecast
 13                  unregulated usage of the investment over
 14                  the life of the investment,

 15          whichever method results in the lesser allocation
 16          of such costs to telephone exchange service.

 17              "(3) INSULATION OF RATEPAYERS--

 18                 "(A) ASSETS-- The Commission shall, by
 19          regulation, ensure that the economic risks asso-
 20          ciated with the provision of information services
 21          by divested operating companies or affiliates
 22          thereof (including any increases in the divested
 23          operating company's cost of capital that occur
 24          as a result of the provision of such services) are
 25          not borne by customers of telephone exchange

H.R. 3515            102nd Congress, 1st Session           [Page 22 of 35]

  1          service in the event of a business loss or failure.
  2          Investments or other expenditures assigned to
  3          information services shall not be reassigned to
  4          telephone exchange service or telephone ex-
  5          change access service.

  6                 "(B) DEBT-- Any divested operating com-
  7          pany affiliate--

  8                      "(i) which is providing information
  9                  services, and

 10                      "(ii) which is required to be or is
 11                  structurally seperate from an affiliate en-
 12                  gaged in the provision of telephone ex-
 13                  change service,

 14          shall not obtain credit under any arrangement
 15          that (I) would permit a creditor, upon default,
 16          to have recourse to the assets of the divested
 17          operating company, or (II) would induce a cred-
 18          itor to rely on the tangible or intangible assets
 19          of the divested operating company in extending
 20          credit.

 21              "(4) TRANSFERS OF ASSETS BETWEEN AFFILI-
 22     ATED COMPANIES-- The Commission shall prescribe
 23     regulations governing the accounting for the transfer
 24     of assets between a divested operating company and
 25     it's affiliates.  Such regulations shall protect the inter-

H.R. 3515            102nd Congress, 1st Session           [Page 23 of 35]

  1     ests of ratepayers of telephone exchange service and
  2     require such transfer to be conducted by means of
  3     a transaction that complies with subsection (d)(3).
  4     Such regulations shall require that--


  5                 "(A) any transfer of assets from such an
  6          affiliate to it's affiliated divested operating com-
  7          pany be valued at the lesser of net book cost or
  8          fair market value; and

  9                 "(B) any transfer of assets fromm a divested
 10          operating company to it's affiliate be valued at
 11          the greater of net book cost or fair market
 12          value.

 13              "(5) ANNUAL AUTIDING REQUIREMENT--

 14                 "(A) AUDIT APPLICABILITY AND PUR-
 15          POSE-- Each divested operating company that
 16          engages in, or has an affiliate that engages in,
 17          or has a financial or management interest in an
 18          orginization or entity that provides information
 19          services, shall provide annually to the Commis-
 20          sion, and to the State Commission of each State
 21          within which such company provides telephone
 22          exchange service, a report on the results of an
 23          audit by an independant auditor conducted for
 24          the purpose of determining wether the com-
 25          pany has--

H.R. 3515            102nd Congress, 1st Session           [Page 24 of 35]

  1                      "(i) established and administered a
  2                  cost allocation system as required by para-
  3                  graph (1) of this subsection, and

  4                      "(ii) complied with the cost assign-
  5                  ment and allocation regulations prescribed
  6                  under this subsection.

  7                 "(B) CONDUIT OF AUDIT-- Such audit
  8          shall be conducted, at divested operating com-
  9          pany expense, in accordance with audit proce-
 10          dures prescribed by the Commission, by regula-
 11          tion, which shall include approval of auditor se-
 12          lection by the Commission and rotation of audi-
 13          tors or other procedures to ensure the inde-
 14          pendence of such auditor.

 15                 "(C) SUBMISSION OF AUDIT RESULTS;
 16          CERTIFICATION-- The divested operating com-
 17          pany shall submit the audit to the Commission,
 18          which shall make the audit report available for
 19          public inspection.  Such report shall be certified
 20          by the person conducting the audit and by an
 21          appropriate officer of such affiliate and shall
 22          identify with particularity any qualifications or
 23          limitations on such certification and any other
 24          information relevant to the enforcement of the
 25          requirements of this section.

H.R. 3515            102nd Congress, 1st Session           [Page 25 of 35]

  1                 "(D) ACCESS TO DOCUMENTS-- For pur-
  2          poses of conducting and reviewing such audit--

  3                      "(i) the auditor, the Commission, and
  4                  a State commission with jurisdiction over
  5                  the divested operating company shall have
  6                  access to the accounts and records of the
  7                  divested operating company and to those
  8                  accounts and records of any of it's affiliates
  9                  necessary to verify transactions conducted
 10                  with the divested operating company; and

 11                      "(ii) the Commission and a State
 12                  commission shall have access to the work-
 13                  ing papers and supporting materials of any
 14                  auditor who performs an audit under this
 15                  paragraph.

 16     "(g) RECOVERY OF USE OF INTANGIBLE ASSETS--
 17 The Commission and a State commission shall, within
 18 their respective jurisdictions, require a divested operating
 19 company to assess any affiliate providing information
 20 services a charge for the reasonable vvalue of any intangible
 21 assets used in the provision of information services, and
 22 to credit the amount of such charge to the provision of
 23 telephone exchange service.

 24     "(h) REMOVAL OF BARRIERS TO COMPETITIVE
 25 ENTRY-- A divested operating company or affiliate there-

H.R. 3515            102nd Congress, 1st Session           [Page 26 of 35]

  1 of may not provide electronic publishing services, other
  2 than those it provided on or before October 1, 1991, in
  3 any State in which such company or affiliate provides tele-
  4 phone exchange service, unless and untill all entry barriers

  5 to the competitive provision of telecommunications services
  6 imposed by each State or State commission in which such
  7 company or affiliate provides telephone exchange service
  8 have been removed with respect to such company or affili-
  9 ate.

 10     "(i) PROVISION OF GATEWAY SERVICES-- Any di-
 11 vested operating company or affiliate thereof that offers
 12 a gateway service shall make such service available concurr-
 13 ently to all it's subscribers at the same rates, terms,
 14 and conditions.

 15     "(j) ENFORCEMENT-- A person who is injured by a
 16 violation of any of the requirements of this section may,
 17 in lieu of filing a complaint under section 208, commence
 18 in a civil action for injunctive relief and monetary damages
 19 in any Federal judicial district in which the defendant re-
 20 sides or has an agent.  A residential customer of telephone
 21 exchange service shall have standing to commence an ac-
 22 tion under this section, without regard to the amount in
 23 controversy.  In any action brought under this section, the
 24 court may award the costs of litigation (including reson-
 25 able attorneys fees).

H.R. 3515            102nd Congress, 1st Session           [Page 27 of 35]

  1     "(k) ADDITIONAL AUTHORITY-- In addition to any
  2 other authority which the Commission may exercise under
  3 this Act, the Commission shall take such actions as are
  4 necessary--

  5              "(1) to prevent anticompetitive practicces be-
  6     tween a divested operating company and any affili-
  7     ate of the divested operating company;

  8              "(2) to protect ratepayers of divested operating
  9     companies from subsidizing the provision of informa-
 10     tion services by such companies or their affiliates;

 11              "(3) to prevent any divested operating company
 12     or any affiliate thereof fromm imposing any unjust or

 13     unreasonable rates or charges for any common car-
 14     ier services that are provided in connection with the
 15     provision of information services.

 16     "(m) DEFINITIONS-- As used in this section--

 17              "(1) AFFILIATE-- The term 'affiliate' means
 18     any organization or entity that, directly or indirectly,
 19     owns or controls, or is owned or controlled by, or is
 20     under common ownership or control with, a divested
 21     operating company.  For purposes of this paragraph,
 22     the terms 'own', 'owned', and 'ownership' means a di-
 23     rect or indirect equity interest (or equivalent there-
 24     of) of more than 10 percent of an organization or
 25     entity, or the right to more than 10 percent of the

H.R. 3515            102nd Congress, 1st Session           [Page 28 of 35]

  1     gross revenues of an organization or entity under a
  2     revenue sharing or royalty agreement.

  3              "(3) DIVESTED OPERATING COMPANY-- The
  4     term 'divested operating company'--

  5                 "(A) means any of the following compa-
  6          nies: Bell Telephone Company of Nevada, Illi-
  7          nois Bell Telephone Company, Indiana Bell
  8          Telephone Company, Incorporated, Michigan
  9          Bell Telephone Company, New England Tele-
 10          phone and Telegraph Company, New Jersey
 11          Bell Telephone Company, New York Telephone
 12          Company, US West Communications Company,
 13          South Central Bell Telephone Company, South-
 14          ern Bell Telephone and Telegraph Company,
 15          Southwestern Bell Telephone Company, the
 16          Bell Telephone Company of Pennsylvania, the
 17          Chesapeake and Potomac Telephone Company,
 18          the Chesapeake and Potomac Telephone Com-
 19          pany of Maryland, the Chesapeake and Poto-
 20          mac Telephone Company of Virginia, the
 21          Chesapeake and Potomac Telephone Company
 22          of West Virginia, the Diamond State Telephone
 23          Company, the Ohio Bell Telephone Company,
 24          the Pacific Telephone and Telegraph Company,
 25          and Wisconsin Telephone Company; and

H.R. 3515            102nd Congress, 1st Session           [Page 29 of 35]

  1                 "(B) includes any successor or assign of
  2          any such company, but does not include any af-
  3          filiate of such company.

  4              "(3) GATEWAY SERVICE-- The term 'gateway
  5     service' means an information service that, at the re-
  6     quest of the provider of an electronic publishing
  7     service or other information service, provides a sub-
  8     scriber with access to such electronic publishing
  9     service or other information service, utilizing the fol-
 10     lowing functions: data transmission, address trans-
 11     lation, billing information, protocol conversion, and
 12     introductory information content."

 13 SEC. 202. AUTHORIZATION OF APPROPRIATIONS.

 14     "(a) AMENDMENT-- Section 6 of the Communica-
 15 tions Act of 1934 is amended by adding at the end thereof
 16 the following new subsection:

 17     "(d) SEPERATE SUBSIDIARY REQUIREMENTS-- Such
 18 sums as may be necessary are authorized to be appro-
 19 priated for the implementation and enforcement of the re-
 20 quirements of section 208(c) and 227 of this Act.  Such
 21 funds shall be in addition to any appropriations authorized
 22 under subsection (a)."

 23     "(b) PROVISION OF INFORMATION SERVICES-- A di-
 24 vested operating company or an affiliate thereof may not
 25 provide information services until enactment of the

H.R. 3515            102nd Congress, 1st Session           [Page 30 of 35]

  1 initial appropriation of funds authorized under section
  2 6(d) of the Communications Act of 1934, as added by sec-
  3 tion 202(a) of this Act.

  4          TITLE III -- MISCELLANEOUS PROVISIONS
  5 SEC. 301. DEFINITIONS

  6     Section 3 of the Communicatins Act of 1934 is
  7 amended by adding at the end thereof the following new
  8 subsections:

  9     "(hh) 'Electronic publishing service' means the provi-
 10 sion of any information--

 11              "(1)(A) that the provider or publisher has (or
 12     has caused to be) authored, originated, gathered,
 13     collected, produced, compiled, edited, categorized, or
 14     indexed; or

 15              "(B) in which the provider or publisher has a
 16     direct or indirect financial or proprietary interest;
 17     and

 18              "(2) which is disseminated to an unaffiliated
 19     person through some electronic means.

 20     "(ii) 'Information services' means the offering of a
 21 capability for generating, acquiring, storing, transforming,
 22 processing, retrieving, utilizing, or making available infor-
 23 mation that may be conveyed via telecommunications, and
 24 includes electronic publishing, but does not include any
 25 use of any such capability for the management, control,

H.R. 3515            102nd Congress, 1st Session           [Page 31 of 35]

  1 or operation of a telecommunications service or the man-
  2 agement of a telecommunications service.

  3     "(jj) 'Local exchange carrier' means a provider of
  4 telephone exchange service that is classified by the Com-
  5 mission as a dominant carrier.

  6     "(kk) 'Rural exchange carrier' means menas a local ex-
  7 change carrier serving a total of 50,000 or fewer access
  8 lines.

  9     "(ll) 'Telecommunications' means the transmission,
 10 between or among points specified by the customer, of in-
 11 formation of the customer's choosing, without change in
 12 the form or content of the information as sent and re-
 13 ceived, by means of an electromagnetic transmission me-
 14 dium, including all instrumentalities, facilities, apparatus,
 15 and services (including the collection, storage, forwarding,
 16 switching, and delivery of such information) essential to
 17 such transmission.

 18     "(mm) 'Telecommunications service' means the pub-
 19 lic or private offering for hire of telecommunications facili-
 20 ties."

 22 SEC. 302. JURISDICTION

 23     Section 2 of the Communications Act of 1934 is
 24 amended--

H.R. 3515            102nd Congress, 1st Session           [Page 32 of 35]

  1              (1) in subsection (b), by striking out "223 or
  2     224" and inserting "223, 224, 225, and 227"; and

  3              (2) by adding at the end the thereof the following
  4     new subsection:

  5              "(c)(1) Notwithstanding subsection (b), a State may
  6     not regulate the rates, terms, or conditions for the offering
  7     of information service, except as provided in this sub-
  8     section and title IV.

  9              "(2) A State may impose regulations upon a local ex-
 10     change carrier with respect to the intrastate provision of
 11     information services by such carrier or an affiliate thereof
 12     if--

 13                 "(A) such regulations are necessary and appro-
 14          priate to seperate the provision of such services from
 15          the provision of telephone exchange services by such
 16          carrier or affiliate;

 17                 "(B) such regulations are intended to protect
 18          the privacy rights of customers of telephone ex-
 19          change services;

 20                 "(C) such regulations do not affect the rates,
 21          terms, or conditions for the provision of such infor-
 22          mations services or the types of such services offered
 23          by such carrier or affiliate; and

 24                 "(D) such regulations are not inconsistent with
 25          the purposes of this Act or impede signifigantly the

H.R. 3515            102nd Congress, 1st Session           [Page 33 of 35]

  1          enforcement of this Act or any regulation or order
  2          prescribed by the Commission pursuant to the
  3          Act."

  4 SEC. 303. TELEPHONE EXCHANGE SERVICE IN RURAL
  5           AREAS

  6     Nothing in the amendments made by this Act shall
  7 be construed to limit the authority of the States to take
  8 actions, consistant with the findings and purposes of that
  9 Act, to ensure thae availability of telephone exchange serv-
 10 ice at resonable rates in areas served by rural exchange
 11 carriers (as such term is defined in section 3(kk) of the
 12 Communications Act of 1934).

 13 SEC. 304. APPLICABILITY OF OTHER PROVISIONS OF COM-
 14           MUNICATIONS ACT

 15     Nothing in the amendments made by this Act shall
 16 be construed to relieve a divested operating company or
 17 affiliate thereof (as such terms are defined in section
 18 227(m) of the Communications Act of 1934) of any of
 19 the obligations, limitations, or responsibilities imposed by
 20 any other provision of the Communications Act of 1934,
 21 as amended.

 22 SEC. 305. APPLICABILITY OF ANTITRUST LAWS

 23     (a) APPLICABILITY OF THE MODIFICATION OF FINAL
 24 JUDGEMENT-- A divested operating company shall remain
 25 fully suubject to the Modification of Final Judgement in all

H.R. 3515            102nd Congress, 1st Session           [Page 34 of 35]

  1 respects except as expressly provided in the amendments
  2 made by this Act.

  3     (b) NO ANTITRUST IMMUNITY-- Nothing in the
  4 amendments made by this Act shall be construed to create
  5 any immunity to any civil or criminal action under any
  6 Federal or State antitrust law, or to alter or restrict in
  7 any manner the applicability of any Federal or State anti-
  8 trust law to the actions of a divested operating company
  9 or affiliate thereof (as such terms are defined in section
 10 227(m) of the Communications Act of 1934).

 11     (c) DEFINITIONS-- For purposes of this section--

 12              (1) FEDERAL ANTITRUST LAWS-- The term
 13     'Federal antitrust laws' means --

 14                 (A) the acts as cited in section 1 of the Clay-
 15          ton Act (15 USC 12),

 16                 (B) section 5 of the Federal Trade Com-
 17          mission Act (15 USC 45); and

 18                 (C) any law enacted after the datr of en-
 19          actment of this Act by the Congress which pro-
 20          hibits, or makes available to the United States
 21          or to any person in any court of the United
 22          States any civil remedy with respect to, any re-
 23          restraint upon, or monopolization of, interstate or
 24          foreign trade or commerce.

H.R. 3515            102nd Congress, 1st Session           [Page 35 of 35]

  1              (2) MODIFICATION OF FINAL JUDGMENT -- The
  2     term 'Modification of final judgment' means the
  3     order entered August 24, 1982, in United States -vs-
  4     Western Electric Co., Civil Action No. 82-0192
  5     (United States District Court, District of Columbia)

[END]

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HR3515.Z


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