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Citation: 6 Bernard D. Reams Jr. & William H. Manz Federal Law A Legislative History of the Telecommunications of 1996 Pub. L. No. 104-104 110 Stat. 56 1996 the Communications Decency Act S6911 1997

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June 3, 1991 CONGRESSIONAL RECORD SEN ATE Ir 911allowed into manufacturing, they bill and we hope we can include this as ducted only through an affiliate (hereafterwould be much more likely to buy ex- part of the package we bring to the In this section referred to as a 'snanufactur.Istlng manufacturing operations than floor. I urge my colleagues to support ins affiliate') that is separate from any Bellto start new ones. This is particularly this amendment to ensure that rural Telephone Company.true for switch manufacturing, which companies have reasonable. enforces- "(c0 The Commission shall prescribe regu.lations to ensure thai--is very capital Intensive. If the Bell ble and continuing access to the equip. ") such la s oiate shallcompanies refuse to supply software to ment and Joint network planning they maintain books. record, and acounts sepa-independents, they can prevent the in- need so that all Americans, urban and rate from Its affiliated Bell Telephone Corn-dependents from providing new serv- rural alike, can share in a nationwide, pany which Identify all transactions be-ices. Then the Bell companies could Information-rich telecommunications tween the manufacturing affiliate and itsmarket such services to the small com- network, affiliated Bell Telephone Company and.pany's large customers, emphasizing _ _even If such manufacturing affiliate is not a'

t t CO Q publicly held corporation, prepare financialthat the small company was unable te .jT M ATI E P statements which are In co pllance withThe concern we have is that the Bell MENT RESEARCH AND MANU- Federal financial reporting requirements forcompanies couid divert the traffic of FACTURINI COMPETITION publicly held corporations, file such state-selected large customers to their ofn ACT ments with the Commission. and make suchstatements available for public inspection;facilities. This would leave behind The PRESIDING OFFICER (Mr.." 1 21 consistent with the provisions of thiscosts that remaining residential cus- REID). Under a previous order, the section, neither a Bell Telephone Companytomers would have to absorb through hour of 3 p.m. having arrived, the nor any of Its nonmanufacturtng affiliateshigher rates. A Bell company also Senate will now proceed to the consid- shall perform sales, advertising, installation.could use this leverage if it wanted to eratlon of S. 173, which the clerk will production, or maintenance operations for aacquire a neighboring small ndepend- now report, manufacturing affiliate; except that institu-ent in a growing area. It could further The legislative clerk read as follows: tional advertising, of a type not related toits acquisition objective by depriving A bill IS. 173) to permit the Bell Tele- specific telecommunications equipment, car-the target company of technology, phone Companies to conduct research on. ried out by the Bell Telephone Company or

Its affiliatssalbpemteifacprythus stimulating consumer complaints deslgn. and manufacture telecomrnunica. & te shall be permitted if each partyto regulators, tlions equipment, and for other purposes. pays its pro rata share;"(3)(A) such manufacturing affiliate shall

Small and rural companies are also The Senate proceeded to consider conduct all of its manufacturing within theworried that a Bell company could ac- the bill which had been reported from United States and. except as otherwise pro.quire an existing manufacturer, the Committee on Commerce, Science, vided In this paragraph, all component partschange the product line to meet Bell and Transportation, with amend. of customer premises equipment manufac.plans and needs, and cease to support ments; as follows: tured by such affiliate, and all componentequipment and software Installed by (The parts of the bill intended to be Parts of telecommunications equipmentsmall companies. If new software is stricken are shown in boldface brack- manufactured by such affiliate, shall havebeen manufactured within the Unitednot made available. a rural company ets and the parts of the bill Intended Slatesmight have to choose between install- to be inserted are shown In italics.) "IB such affiliate may use componenting a new switch or depriving Its sub- S. 173 parts manufactured outside the Unitedscribers of new services. Be it enacted by the Senate and House of States if-

Third. our amendn:ent would re- Representatives of the United States of "(I) such affiliate first makes a good faithquire the Bell companies to engage in America in Congress assembled, effort to obtain equivalent component partsJoint network planning, design and op- SECrION i. siiORT TIE, manufactured within the United States aterations. This Act may be cited as the "Telecom- reasonable prices, terms, and conditions;

S. 173 undercuts joint planning and munications Equipment Research and Man- andwidespread infrastructure availability ufacturing Compefition Act of 1991". "(it for the aggregate of telecommunica.

becae iB L FINDINtS. tions equipment and customer premisesbecause it only requires the Bell com- equimen mauacue and sol inthpanies to: First, Inform other I The Congress finds that the continued equipment manufactured and sold in thetpone toF irs Ifo teir local economic growth and the international orn- United States by such affiliate in any calen.telephone companies about their de- petitiveness of American industry would be dar year, the cost of the components manu-ployment of equipment; and second. assisted by permitting the Bell Telephone factured Outside the United States con-report changes to protocols and re- Companies. through their affiliates, to man. tained in the equipment does not exceed 40quirements. The bill's requirements ufacture (including design, development. percent of the sales revenue derived fromare too little too late. They will not and fabrication) telecommunications equip- such equipment:lead to a nationwide, information-rich ment and customer premises equipment. "(C) any such affiliate that uses compo-telecommunications infrastructure. and to engage in research with respect to nent parts manufactured outside the United

States in the manufacture of telecommuni-Small companies need a voice in the such equipment rations equipment and customer premisesProcess to assure that the network is EC. AMENDMENTS TO THE COMMNiCATIONS eqipment within the United States shall-pr s ACT Or 134."i) certify tin the Commission that a gooddesigned. implemented and operated Title It of the Communications Act of faith effrtfy to omin tha entJointly by all. 1934 (47 U.S.C. 201 et seq.l is amended by at ort was made to obtain equivalent

Small companies need a voice in the adding at the end the following new sectionL States at reasonable prices, terms and con.process to assure that the network is smoR o a-sos or MANIDFACTURINO SY BELL n dtites, which certification shall be filed ondesigned. implemented and operated TE HONS COMPANIEs a quarterly basis with the Commission andJointly by all local telephone comps- "Sw. 227. (a) Subject to the requirements list component parts, by type. manufacturednies to meet the goal of nationwide of this section and the regulations pre. outside the United States: andaccess to information age resources. scribed thereunder, a Bell Telephone Com. "(ill) certify to the Commission on an

Finally. our amendment calls for pany, through an affiliate of that Company, annual basis that for the aggregate of tele-strong district court enforcement pro- notwithstanding any restriction or obilga. communications equipment and customer

tion imposed before the date of enactment premises equipment manufactured and soldcedures, including damages. 5. 173 proof this section pursuant to the Modification in the United States by such affiliate in thevides only for FCC common carrier au- of Final Judgment on the lines of business previous calendar year. the cost of the com-thority. which proved inadequate to in which a Bell Telephone Company may ponents manufactured outside the United*remedy past refusals to provide equip- engage, may manufacture and provide tele. States contained in such equipment did notment to small local telephone compa- communicatlons equipment and manufac- exceed the percentage specified n ubpara

les. If Independents do not have the lure customer premises equipment, except graph (B)(li) or adjusted in accordance withability to go to district court with that neither a Bell Telephone Company nor subparagraph (0);their complaints, they cannot reason- any of its affiliates may engage in such "(D)() if the Commission determines.

manufacturing in conlunction with a Bell after reviewing the certification required inably have any confidence that the es- Telephone Company not so affiliated or any subparagraph (Ci(1). that such affiliatesential safeguards will be effective, of Its affiliates, failed to make the good faith effort re-

We are currently discussing this (ib) Any manufacturing or provision au. quired in subparagraph (il) or. after iv.-amendment with the .'uthors of the thorized under subsection Is) shall be con. viewing, the certification required in suo.

HeinOnline -- 6 Bernard D. Reams, Jr. & William H. Manz, Federal Telecommunications Law: A Legislative History of the Telecommunications Act of1996, Pub. L. No. 104-104, 110 Stat. 56 (1996) including the Communications Decency Act S6911 1997

86912 CONGRESSIONAL RECORD - SENATEVWM&(0WW). Cat Mch afilliate has ez.

- s the pmeentage speefied in slasora-

Peilties or forfeitures as pswldd L" in

"(il) any supplier clahaing to be dasesadhas a smasuterins sfatlae 4.lied to

srethe ased Isih effort resolved A.oubh.posxam 455 way make complaint asthe 0 as prvided for n secton,Wil OtiasA. or map bring suit for the ro-Cory 1 amiua domar for which hwAysghe da~sc aflch iate may he IableMol ise fsolos of this Act ,In ays dit11air anst Mte United M-ate of .p.ie

NXf) the Cosmmsseio In consulsaon withthe Sraw of Commerce. sai, on an

lela hwas& defne the cost of co-e1t GoLas manufactured outsIde the United

19aWe cnained in ali teiecnmsounlcallonsequiment and muatocoer promo onulp-ma adl i the 1En11Pd Ulates As ai percent-

gp AT h A enues 1m sales of suchegtdmeIn le previous calendar yes=

.17) a msaufaci cln a wflle ma In.tlltU02 pC created outside theuemed le In the manufacture of tel.moniconAM equipmnt and customerpemIes equipment in the United'Statex

"(0) the Conulsslon may not waive or14e Me reQulirments of tsa subsection.elegt that he Commission. on an annualhesihs Majust the percentage specifiedin Subparsgaph (581 to the percentagedotert lned by the Commission, In consulta'Son with the Seetav of Commerce. as di-rectedinaubpa-agraph ME-.

"III 2o mare tMan go [per centpnm ver-cent of the equity of such marsufactorins ar!fillate shall he owned by Its affiliated SellTelephone Company and any affilates ofthat Sell 'Telephone Company

"5) any debt incurred by such moanutse'toiag 11itate may zot be issued by Its af.

iles, gnd such mamrlactirlnsg ffilite92a to prohibited from Incurring debt In iamner hoat would permit a creditor, on de-fault, to have recourse to the assets of Its sf.EheAd Befi Telephone Compary's telecom.mmetiosserv business.

"16ua shamdcturtis affiliate sial notbe veqnhad to operate sepsatety fom th

'09ier Olin of its affiliated Bei Tele-phone~aitieqn

"il f n afffilbe of a Bell TelephoneOMPIM becomes affiliated with a mimu-fatur entity, such affliate shall Itbotted ma msumfatmng affillae of thatDei Val s'Ue Company withas he mean-sbM 9 wAdseeim (b) gnd shall scantly withthe aquirmuest of this setoe end

M61 mks sufaetorlisg affilie shall-- e alafe, 911theut dlserlabuatlon or

slf-proheiweu s to p ice. delivery, term,or ondiuc to all local telehone ex-€ne~ mu~le~~,far ume with the puttietes.esimunloatiecs ambos. Any telecommnl-eaticbs q*1anlt tn soetimre by suchaffiliate s "a as each such purchasingcarrier-

"(& des ot elther manufact-rellecom.unladmequipment, or have a msnulec.

toere affiaote which VmZcfuSses We-(imismoseqvsow inment, or

"4B) sen to ek waalable. to the BellTtqOpho 01ompany aflillsted with Michmanufatgawlg aiste or am of the othieaffilate ' od I[Oaswsy.3 Coespeasm tomaaesoiallson equipment nexvn-faotebed by Wadh psuesalsak carreer or byaMy entity or organisation with which sochean Ieri Mf fliste

'tdXlt imh Coinoios drall prescribererdatlons to eoiee tMat each Den "he*-phone Coimp a shall ecaintalm and filewith the Ommision full aed complete Jr,formation I I espe to the pretobois and

tech-4al sequirements for connection vithand use of Ifs telephone exchange service ia-cilles. Such regulations shall require eachsuch tcompany Closposu to reportpromptly to tse Commission any materialchanges or plauned changes to such protcob and reqniremens, and the schedule forlaouleenstatimn of sieb changes or planned

"M2 A Beld Telephone Caspany shan otdisosom to any of its affiliates any loform -tion required to be filed under paragraph(1) unless that Information is immediatelyso filed.

Ell When two or more carriers are pro-vidig regulated telephone exchange serviceIn the sone area of interest, each guch carri-er shall provide to other such carrierstimely information on the deployment ofteleconsou"thi equipme.

"(4) Tt Cosxamoon may prescribe suchelditiacsi segulMos under this subsectionas nay be necesmary to ensuce that manu-faclmers In oompetion with A Ben Tele-phone Company's manufacturig affiliatehave ready and equal access to the informs.lion required for such oompetAtlon thatmh [comany] C papn makes availableto its man facturing offiliate."eThe Commissio shall prescrie regu-

ltion requiring tUt any Bell TelephoneCompany which hba affliate that en-gages in any manufacturing asthorized bysubsection (a) shall-

('i) provide to other manufact-ers ofttelecoastudstios equipment and custom-er premises equipment, opportunities to sellinch omliament to such Bell TelephoneComlpany iWhich are comparable to the op-paetinkles which such ompany providesto Its affiliates;

"(2) not subsidize Its manufacturing affill.ate with revenues from Its regulated tele-commulcations services, and

"(I) ony purchase equipnvent from itsmanufacturing affiliate at the open marketprice.

"Yf I A Bell Telephone O pany and its a5-filiaes may engge in thee ciahboratonwith any roe tsuAner of customer prem-ises equipment or teleccomlmucstionsoalonsont during the desigo and develop-mest &I hardware. software. or combina-ions therof saistlog to such equpMent.

'1g) Tie Commissin may prescribe suchadditional rules and regulatons as the Corn-missin determirs neoessary to carry outtUe provisions of this section,

"th) Fr the Purposes of administeringand enforcing the provisom of this sectionand the regulations prscribed thereunder.the CQmissIon shal have the same au-thority, power, and fuctloos with respectto aty Bell Telephone Company as theCommission has In adxaLostering and en-forcing the provisions of this title with re-spect to any common carrier subject to thisAct.

"(I) The authority of the Commission topreseribe regulations to carry out this sec-lion Is effective on the date of enactment oftis seetion The oommission shall prescribesuch realatlions within one hundred andeigty days atter such date of enactment,and the authortty to engesm in the manufac-linng satheried In subseetion (a) shall notlate e wect regutl en prescribed bythe Commission nder subseetlons (c. (d).acd le) we di effect.

-(1 Vthing in this section shall prohibitany Bell ' -eplsme Company from engag-hor. irectly or through any affiliate, in anymainufcto"eng activity in which any Com-pan or affiUlate was authorteed to engageon the date of enactment of this section.

'1k) As used in this section:OtTh)term'affillate means any organi-

saton or entity that, directly or Indirectly.

June 3, 1991owns or contenis is owned or controlled by.or Is under common ownership with a BellTelephone Campany. Such term includesany organization or entity (A) In which aBell Telephone Company and any of Its st-filiates have an equity interest of greaterthan 10 percent. or a management interestof greater than 10 percent. or (Bl In which aBell Telephone Company and any of its af-fiites have any other sislficant financialinterest."(2) The term 'Bell Telephone Company

means those compm listed in appendix Aof the Modification of Final Judgment. andIncludes any successor or assign of any suchcompany. but does not include any affiliateof any such companty."3) The term 'customer premises equip-

ment' means equipment employed on thepremises of a person (other than a carrier)to originate, route. or terminate telecom.mnicatios.

"(4) The term 'manufacturng' has thesme meaning as such term haa in the Mod-fication of Final Judgment as Interpreted InUnited States , Western Electric, CivilAction No. 82-0192 (United States DistrictCourt. District of Columbia) (filed Decem-her S; ISMl)...(5) The term 'Modification of Final Judg-ment' means the decree entered August 24.1992. in United States v. Western Electic.Civil Action No. "0192 (United States Dis-trict Court. District of Columbia)."') The torm telecommunlcatons' means

the tratismlison. between or among pointsspecified by the user. of Information of theuser's choosing, without change In the formor content of the information as sent andreceived, by means of an electromagnetictranmnisslon medium. Including all Instro-mentalities, facilities, apparatus, and serv-ices (ilncluding the collection. storage. for-warding. switching, and delivery of such In-formation) essentli to such trausmotslio.

"(7) The term 'telecommunicaUons equip-ment' means equipment. other than custom-er premises equipment, used by a carrier toprovide telecommunlesitlons services."() The term 1teleeommunleatlons serv-

lee' meaws the offering for hire of telecom-munications facilitles, or of telecommunica-ttons by means of such facilities.".

The PRESIDIlN OFFICER. Doesthe Senator from South Dakota sockrecognition?

Mr. PRSSLER. Mr. President. Iwould like to speak briefly on this bill.If I could?

The PRESIDING OFFICER. Themanager of the bill.

Mr. FORD. Mr. President. I do notmind. It is a little bit out of order tospeak on an amendment before thebill has even been brought up. but Iwill be glad to yield to the Senatorfrom South Dakota, If he wishes toproceed.

The PRESIDING OFFICER. TheSenator from South Dakota Is recog-nized.

Mr. PRESSLER. Mr. President. as Imentioned earlier. I am certainly notgoing out of order in a way. Since theChamber Is empty. I thought I mightuse this opportunity to further speakon the amendment I shall be offering.which is of great importance to small.independent telephone companies andto rural cooperative companies.

A number of these saill and ruraltelephone oompanies blave contactedme to express their concerns about


June 3, 1991 COpbeing-abut out of the process. The pur-pose of the amendment to be offeredby myself and other Senators Is to dothree things, which we feel would helpto correct this problem.

Our goal Is universal service, andwithout universal servcle as a funda.mental premise of our national tele-communications policy, we in ruraland small city parts of the countryfeel we may be left behind in the ad.vancing Information age.

It has occurred to me that beth ourInner cities and our small cities havesomething n common. They are fre-quently left out of the telecommunca.tions advances. For example, only re-cently was Washington, DC, wired forcable TV. The same problem has beentrue of rural areas and small cities andtowns.

The companies that provide theseservices want to provide them the veryaffluent suburbs, the heavily populat-ed suburbs, and everybody forgetsabout the more difficult to serve areas.In 1934 we pas ed the CommunicationAct which established the concept ofuniversal service. To be consistentwith this concept, companies wouldtake some very rich routes, but theywould also take some very poor routes.That is how we built our national com-municatiom system.

So universal telephone service issomething that we are very, very con.cerned about. This includes not onlytelephone service but also service thatfiber optic cable will bring in thefuture: also service to small-town hos-pitals, to amall-town libraries, to farmsand ranches so that they can partici-pate in the information.

The manufacturing restriction relax-ation envisaged in S. 113 should be ac-companied by some very clear lan-guage protecting these smaller citiesand rural telephone providers.

As I have said, our amendmentwould require the Bell Company tomake software and telecommunicationsequipment available to other local ex-change carriers without discriminationor self-preference. For example, asmall. independent company or a ruraltelephone co-op might be sold a switchor some other piece of telecommunica-tions equipment but then not be ableto buy the software necessary to up-grade that equipment. They would beat the complete mercy of the regionalBell operating companies. That shouldnot be the case.

The bill. S. 173, requires Bell compa-ny affiliates to make equipment avail-able only to other local telephonecompanies and only for use with thepublic telecommunications network.Other local telephone companies mustmake available any telecomnunica-tions equipment they or any of theiraffiliates manufacture, to any Bellcompany that sells them equipmentand to any of their affiliates for anyuse.

Second. our amendment, as I havementioned. would require the Bellcompanies that manufacture equip-

4GRESSIONAL RECORD - SENATEment to continue making telecom-munications equipment available, in.cluding software, to other local tele-phone companies so long as reasonabledemand for it exists. I emphasize thisis a reasonable demand. S. 173 con-tains no requirement to maintainavailability to satisfy the reasonablecontinuing demand of other local tele-phone companies.

Small and rural companies are con-cerned that if the Bell companies areallowed into manufacturing, theywould be more likely to buy existingmanufacturing operations than startnew ones. This Is particularly true forswitch manufacturing.

The third area, and perhaps themost important one, deals with jointnetwork planning, design, and oper-ations I might say, before going intothat, that the small and rural compa-nies are also worried that a Bell com-pany could acquire an existing manu-facturer to change its product line tomeet Bell plans and needs and cease tosupport equipment and software in-stalled by small companies. If thatsoftware is not made available, a ruralcompany might have to choose be-tween Installing a costly new switch ordepriving Its subscribers of new serv.ices.

Fourth. our amendment would re-quire the Bell companies, to engage, asI mentioned, in Joint network planningand design. This may be controversialto some, but the small, independenttelephone companies and the tele-phone cooperatives should be a part ofthe planning process.

Some might ask, Why do we needthis provision? So that we do not havethe regional telephone companies justdictating policy. I think our small com-panies and co-ops, however, should beat the table. Their voices need to beheard. Otherwise, they will be forcedto do exactly what they are told, andthat is not in the public interest.

Small companies need a voice in theprocess to assure that'the network isdesigned, implemented, and operatedjointly by all. I have emphasized thisbefore. We have been in consultationwith many of the smaller telephonecompanies and co-ops in preparingthese amendments.

So at the appropriate time I shalloffer these amendments, and I lookforward very much to the debate onthis bill.

Mr. President. I suggest the absenceof a quorum.

The PRESIDING OFFICER, Theclerk will call the roll.

The legislative clerk proceeded tocall the roll.

Mr. FORD. Mr. President, I askunanimous consent that the order forthe quorum call be rescinded.

The PRESIDING OFFICER. With-out objection. it is so ordered.

Mr. FORD. Mr. President, today theSenate is considering S. 173. the Tele-communications Equipment Researchand Manufacturing Competition Actof 1991. This is an important bill

86913which I hope my colleagues will joinme in supporting. This bill removesthe manufacturing restriction on theregional Bell operating companies im-posed by the modification of finaljudgment. Let me note at the onsetthat this bill does not address theother restrictions Imposed on the Bellcompanies regarding Information serv-ices or long distance services.

Senator HoLusus. chairman of theCommerce Committee introduced S.173 on January 14. 1991, and It nowhas 25 cosponsors. A hearing was heldon the bill on February 28 of this year.S. 173 was approved overwhelminglyby the Commerce Committee onMarch 19, 1991. by a vote of 18 to 1.During last Congress, a similar versionof this bIll S. 1981. was also intro-duced in May 1990 by Senator Hou-Ltmos and two hearings were held onthe bill by the Commerce Committee.S. 1981 was approved by the Com-merce Committee on a voice vote.

Before I describe this legislation inmore detail, I want to thank SenatorHoLULSrs for this important legisla-tion. The Senator from South Caroli-na has worked very hard on this legis-lation over the last 2 years. It is onlythrough his initiative and leadershipthat the bill has reached the floor ofthe Senate. Ths work also has rqsultedin the inclusion of language to addressthe concerns of this country's commu-nications workers-to promote themanufacturing or telecommunicationsequipment In the United States. I be-lieve that this bill will be good for theU.S. workers while at the same timeenhancing this country's internationalcompetitive standing in the communi-cations equipment market.

S. 173 permits the regional Bell op-erating companies to manufacture andprovide communications equipment.At the same time. S. 173 recognizesthat the Bell companies continue tooccupy a dominant position n thelocal telephone service. The bill thusincludes a variety of strong safeguardsto protect against cross-subsiffmtlonand self-dealing. In conducting theirmanufacturing activities the Bell com-panies must comply with several safe-guards, including the following:

5o JOIT MUNUFACrURIO

To prevent collusion, the Bell com-panies cannot manufacture in con-Junction with one another. The bill re-quires that the Bell companies createseven independent manufacturing en-titlies that will compete with eachother as well as with existing manu-facturers.

aZPARATK APFIJAT

The Bell companies must conduct alltheir manufacturing activities fromseparate affiliates. The affillate mustkeep books of account for Its manufa-turing activities separate from thetelephone company and must file thisinformation publicly.


86914 CONGRESSIONAL RECORD - SENATE June 3, 1991SIno 5ZU- Wo - . I I its lead as a manufacturer of advanced are the only parties that are sure to

First. the Bell company may not Per- telecommunications equipment. I urge benefit from this bill. There is nothingform- sales, advertising, installation, all of my colleagues to support this in S. 173 for the consumers. That isproduction; or maintenance operations legislation. why every major consumer group In

-for-Its affiliate; second, the Bell com- Mr. President, I suggest the absence the country, all the State utility con-panymust provide other manufactur, of a quorum. sumer advocates, and the AARPers an opportunity to sell to the tele-. The PRESIDING OFFICER. The oppose this legislation.phone Company comparable to, that clerk will call the roll. The reason our Halls around herewhich It provides to its own affiliate; • The legislative clerk proceeded to have been filled with Baby Bell lobby-and third, a Bell company may only call the roll. ists is they know they can make'morepurchase equipment from its affiliate Mr. METrZENBAUM. Mr. President. money if they can go into this relatedat the open market price. I ask unanimous consent that the activity of manufacturing. Today

so caoes-eUSaSI"lTIos order for the quorum call be rescind there is a restriction. When and If thisThe Bell company is prohibited from ed- legislation becomes law, there will be

subsidlzin its manufacturing oper- The PRESIDING OFFICER (Mr. no such restriction. There will be someations with revenues from Its tele- Ross). Without objection, It Is or- limitations but they will not be suffl-Phon services. .. dered. dent to protect the consumer. And the

'-.:azs:qzsi o, rwosx mmamuom. Mr. METZ.ENBAUM. Mr. President, Baby Bells will again be in the posi-The Bell:company must file with the I rise in open opposition to S. 173. I tion that AT&T was In some years ago

'Federal- Communications Commission,' will be making an extension statement before the matter was in the courts.

EPFCC full and complete inormation, on this bill tomorrow, but today I There are claimed safeguards in S.Cicerning the telephone network'lm- want to very briefly outline my post- 173 which the proponents claim willmdiately upon revealing any such In. Ition on the bill, prevent anticonsumer and anticom-fnl~tt. " n Ir mnuf~uH =aefk'S. 173 eliminates the manufacturingformation to its manufacturing affil S. iminotae the AT petitive abuses. I say to my colleaguesate. restriction contained in the AT&T i h eae hysml ilntb

In additin. Mr. Preident. . 13 in consent decree. In itself, that is an ex- in the Senate. they simply will not becludes a ompromise ageement be- traordinary step. The Congressional effective. Have no cuestion about it.tween the Boll companes ag nd the Research Service has indicated that the suggested protections that are intommunications Worka si a e rhie the Senate has rarely, if ever, piece of the bill will not protect the consumersCom irear g tihses oAmeicau- legislation that overrides an ongoing and will not keep the Baby Bells fromracturin g rovision. This ompcmise Judicial consent decree. being able to go forward and manufac-

n provision.s Frst.ht t tohmerBe The purpose of this legislation is to ture and pass on those costs to the

companies conduct all their manufac- allow the Baby Bells to manufacture consumers.turing 'f the Uhited Statem and the switches and transmission equip- I am frank to say I have drafted a

seooiRl that a certain percentage of ment which are the backbone of their number of amendments designed to

th bomporients they u-se be mnufc- local telephone moonopolies. In my reduce the harm that would be causedtued in the United States Both the view, the effect of this bill will be to by this legislation. If those amend-

Bell companies and CWA support this hurt consumers and reduce competi- ments are not adopted, or to least a

provision and support S. 173. tion.. substantial portion of them. then this

Psssage Of. this legislation Is itical Many people think this bill is just a Senate will have passed a piece of leg-foranunber of reason One of the battle between AT&T and the Baby islation that I believe would be verymot imortant is international cm - Bells over-market share in the equip- anticonsumer. that would cause tele-

petitiveneas. The U.S. position in high- ment market. If that were the case. I phone rates to increase in the years

technology industries is in decline on a would not be standing here on the ahead of us.

nluibefrof fronts. US. research and floor and I would not be standing on I hope when those amendments

development expenditures as a per- the floor tomorrow. AT&T and the come before the Senate the managers

centege of GNP lag behind Japa and Baby Bells are all big companies. They of the bill will look at them. seeWest-Gtiany. for instance. TheBell can take care of themselves. But the whether they are fair, see whethercompanies spend far less of their reve- fact is that this issue is of critical im- there is equity, see whether it is just;nuataqa-R&D than the average high portance to anyone who pays a tele- accept some of those amendments. I

-technology firm phone bill every.month. do not think we can make a bad bill

-Tai-regional Bell operating compa- Make no bones about it. this is a con. into a good bill, but we certainly candeWove tremendous assets and expe- sumer issue. History has demonstrated make this bill into a much better bill

rience that could benefit the U.S. that consumers get hurt whenever the than it is by accepting some or all ofinternational competitive position sig- local phone monopolies can make the the amendments I will be proposing.nlflcantly, if they are allowed to m- equipment which is used in their tele- My colleagues should judge this billUfacture. The. Bell companies earn phone' networks. That is why AT&T according to a simple standard. Basedover $80 billion in annual revenues, was broken up in the first place. The upon our understanding of history.control over one-half the Nation's Bell operating companies simply monopoly behavior, and the effective-,enttie communications assets; and pro

- bought equipment from their manu- ness of regulatory oversight in the

vide. 80' pereett- of the Nation's local facturing affiliates, paid inflated telephone industry, will this bill be oftelephond service. -ifting- the blanu- prices and shifted excess costs on to benefit to both'consumers and compe-facturing restrictions would giVe the. consumers, and the regulators were tition? I believe the answer to thatBbll 1%paletncreased inoe.tives td powerless to prevent such abuses. If question is no. And I urge my col-conduct research and developbz* If ' e essthis bill we will be inviting his- leagues to oppose the bill and supportther- researchers develop a ndw: or tory to repeat itself.- the amendments I will submit.cheaper Produet. they can'profit from *The .Bell's incentive and ability to I believe otherwise the Americanthat research by bringing it to markeL- use monoploy power in an anticon- consumer will once again bear theThe Bell companies also are likely to sumer and anticompetitive manner burden, and the Bell operating compa-provide seed money to many mall en- has not changed and the regulators' nies will find themselves in the posi-trepreneurs who otherwise would seek ability to prevent such abuses has not tion that AT&T was formerly in, andcapital from foreign sources. ,- ; -- improved. That is why the antitrust they will able to raise prices to the-In closing. Mr. President I' again courts have continued to uphold the American consumer. Certainly, eco-

thank Senator HoLuwos and all of the manufacturing restriction, even as nomle times at present are not suchmembers of the Commerce Committee. they have loosened other parts of the that that is warranted.for theh work on this 'legislation.- consent degree. iyield the floor.Today we have before us legislation So this bill is all risk for consumers The PRESIDING OFFICEMI. Whothat will help the United States regain and no benefit. The Bell monopolies seeks recognition?


June 3, 1991 CO1pMr. FORD. Mr. President, I suggest

the absence of a quorum.The PRESUXINIG OFFICER. The

clerk will call the roll.The assistant legislative clerk pro-

ceeded to call the roll.Mr. FORD. Mr. President. I ask

unanimous consent that the order forthe quorum call be rescinded.

The PRESIDING OFFICER. With-out objection. It Is so ordered.

Mr. DOMINICI. Mr. President, theUnited States Is witnessing the begin-ning of a new era in telecommunica-tions. InnovaUve technologies arebreaking into the market In a widerange of areas from fiber optics to con-sumer products. Yet, while the US.communications industry is spendingmore on research and developmentthan ever before, we lag behind otherleading nations In percentage terms.Large European and Japanese firmsIncreased their research and develop-ment spending by 25 percent last year,while the United States' leading com-munications manufacturer has In-creased Its spending by less than 6 per-cent.

For the long-term best interest ofthis Nation. It is critical that we loosenthe chains that currently bind region-al Bell operating companies IRBOC'alfrom investing In research and devel-opment. Currently there Is littlemarket incentive for RBOC's to com-pete in the research and design of newtelecommunications technologies al-though they control more than half ofthe Industry resources. S. 173 is a sig-nificant vehicle for directing valuabletelecommunications resources intopromoting U.S. competitiveness andI rade.

I would be remiss, however, if Ifailed to comment on my opposition toa particular provision of S. 173 that Ibelieve Is Inconsistent with the intentof the legislation as a whole. The do-mestic manufacturing and contentffrorislon. while admirable in concept.

anticompetitive in practice. As theconsent decree that restricts theRBOC's from manufacturing commu-nications equipment Illustrates, oftentimes, unnecessary protections becomeInefficient barriers.

By requiring the RBOC's to manu-facture only in the United States, andto use only component parts manufac-tured here-subject to certain limitedexceptions-this provision of S. 173 se-riously undermines our Nation's fun-damental goal of achieving free andopen trade In telecommunicationsequipment markets both here andabroad.

Additionally. enactment of the do-mestic content requirements gives ourforeign trading partners a handyexcuse for closing the door on US.manufactured goods, Just when it hasfinally been opened. These provisionswill set a poor precedent for other na-tions that look to the United Statesfor guidance on trade policy matters.

S. 173 offers a unique opportunity tocreate new Jobs. stimulate technologl-

4GRESSIONAL RECORD - SENATEcal development. sharpen the U.S.competitive edge. increase the liquidi.ty of financial resources for use bysmall communications manufacturers,and enhance efficiency. S. 173 accom-plishes these feats without Federalfunding, but rather by utilizing a toolwhich is at the heart of the Americandemocracy, the market system.

Mr. HATCH. Mr. President, I sup.port enactment of S. 173. the Telecom-munications Equipment Research andManufacturing Competition Act of1991.

I believe it is time for Congress toassert Its role in setting telecommuni-rations policy for this nation. In doingso, Congress should acknowledge theimpressive advances of the telecom-munications industry in the last 10years and assure that such technologi-cal advances continue. The best way Iknow how to achieve this goal isthrough competition.

The benefits of the AT&T divesti-ture have included, for example, theability of consumers to choose fromamong several providers of long dis-tance service. The divestiture has,however. resulted in some problems.One of these problems is that a signifi-cant portion of the American telecom-munications industry is effectivelybanned from contributing to the ad-vance of technology. This ban is inhib-Iting the development of new servicesby telephone companies.

Mr. President, to an importantextent, the seven regional Bell operat-ing companies have been forbiddenfrom competing in a number of mar-kets. Whatever case may have existed10 years ago for these lines of businessrestrictions, it seems to me the com-petitive nature of the Industry todayhas convincingly undermined the casefor some, if not all, of the restrictions.Still, the restrictions remain. In this, Ishare the frustration of the Bush ad-ministration, which also supports re-moval of the ban on the regional Bellcompanies' ability to engage In manu-facturing.

As a result of this ban:American telecommunications re-

search and development has beenslowed:

Innovation has been retarded, andAmerican businesses interested inworking with the regional Bell compa-nies-businesses now able to work withand receive funding from foreign com-panies--are severely hamstrung intheir ability to do so.

S. 173 will inject more competitionInto the marketplace by permittingthe regional Bell companies to enterthe manufacturing field. This billcleared the Commerce Committeewith overwhelming bipartisan support"18 to 1. I commend Senators Ho~nmesand DAeORTH, chairman and rankingRepublican, for their leadership inthis matter.Tfla 1CCE MORS. 1s --CHMOUe CIaCUusTAscm

AT&T was broken up by the 1982consent decree entered in the Depart-ment of Justice's antitrust case inltil,-

86915d in 1974. The Department of Justice

obtained provisions In the consentdecree banning the divested regionalBell companies from manufacturing orproviding telecommunications equip-ment and from manufacturing custom-er premises equipment. The JusticeDepartment apparently feared that ifthe regional Bell companies were al-lowed to enter the manufacturingfield, they would discriminate againstother equipment manufacturers byproviding them poorer access to theirnetwork and denying them inform-tion about network changes. More-over, there was concern that the re-gional Bell companies would under-price their manufacturer competitorsby overcharging ratepayers buyinglocal telephone services from theirregulated monopolies, and by usingthat revenue to cross subsidize theirmanufacturing activities.

Whatever the merits of this barrierto market entry may have been in1982-and the merits were doubtfuleven then-changed circumsancesclearly call for its removal today.

KAsltzT&,5,Ce es RsIn 1982. one company made the vast

bulk of decisions on purchasing tele-communications equipment. Now,seven regional Bell companies and pri-vate buyers and carriers not deliveringlocal exchange service also buy largeamounts of telecommunications equip-ment.

Moreover, there are many other sup-pliers of telecommunications equip-ment to these regional Bell companiesand the other buyers of such equip-ment. No one regional Bell company'spurchases are likely to be anticompeti-tive. We have vigorous competition inequipment markets, including largecompanies that have the advantage ofeconomies of scale and scope. Whykeep these seven regional Bell compa-nies out of the market?

As Assistant Attorney General forAntitrust. James Rill said in a May 21,1991. written statement to the Senate

.Judiciary Committee-Removal of the manufacturing restriction

in all probabity will_ have Significant pro-competitive benefits. It It critical that thenation's telephone companies be able totake advantage of and Participate In therapid technological changes that affect thisIndustry. It Is wel-recognlzed that the (re-gional Bell companies) would be formidablecompetitors in the telecommunicationsequlment market. and they would be ex-pected to apply their ooniderable expertiseand efficiency In the development of lnnova-tve products to the beneflt of Americanconsumers. Removal of the manufacturingrestriction would permit the [regional Bellcompanlesl to design or work more closelywith Independent manufacturers to designequipment to beat meet their own needs andthose of other carriers and customers. ThisIn torn would facilitate the efficiest devel-opment and Implementation of new serv-ices--especially exchange Services to supportthe developing information service markets.

Removal of the manufacturhg restrictionalso would permit elimination of the currentwaiver process under the AT&T decree forsuch activities. That process currently


8 6916" CdNadeters or frstrtes outright the pro-s apby the reulonal Bell eampaniesl of

new prouct, an impocs unneceweary bur-denon the Industry, the Department, thecourts and the American public.. In light of the. potential for significantcompetitive benefits If the (regional Belleompaaiesl.are pernitted to enter telecom-munlCatioms equipment and customer prem-isM:equipment markets and the absence ofsL.lftnt risk of anticompetitive abuses.t hadminstration believes that the manu.fad f restrictions should be" eliminated@aaoon as possible.

dosirAau' APvsis nMPAcT OR, R&D:• -. AIMICAN COMPANIS •

Mr. President, this bill has been de-acped by some opponents a anti-onsumer. .I believe more competitionin the telecommunications manufso-turing field is proconsumer. I draw myoolleagues' attention to the testimonyof the Department of Commercebefore -the. Commerce Committee inxupport of the removal of the manu-faeturing restrictions. There, the De-partin6t of Commerce stated:I Elimination of the manufacturing restric-tion will -help promote increased 'telecoin-

" munications R&D In this country, and Itshould also have an impact on related infra-structure development. A 1989 NationalTelegomlunicatlons and Information Ad-loistration study found this restriction0a lijpa R&D, not only for the Bell compa-

" el themselves. but also for other entitiesdesiring to work with the Bell companies tomanufacture telecommunications equip-melt. The restriction has impaired both thePace at which innovations are beingbrought

- to the market and the overall cost of that

Mr. President. this impairment of re-search and development activity hurts

. "onumers by slowing down innovationS Increasing the cost of new prod-

ct and.Aefvicos when they are devel-dped. It :also harms America's globalcompetitiveness. As the Commerce De-pertment testifled.. US. competitiveness could be fostered bypernmittng the Dell companies to serve as aaource of 'seed" capital for smaller U8.manufacturing companies, and also to enterJoint manufacturing ventures themselves.In some caes. entrepreneurial UJ. compa-nies have had to turn to foreign firms as asource of funding or expertise. ." The testimony of Mark C. Smith.prisldent and CEO of Adtran. Inc..before the Senate Judiciary Commit-tee, is instructive in this regard andgives life to the points made by the ad-ministration. -Mr. Smith's companyhas over 200 employees In Huntaville.

• AL Adtran designs and manufacturesdigital loop transmission equipmentfor -tlephone companies.- .M. Smith testified that the manu-facturing ban-imposed on the regioal,Bell ompanies. "as currently inter-preted.-weakens both my [regionalBell company] customer base as wellas their ability to communicate theirneeds. The ban reduces competition byremoving the normal free flow of in-formation between the small entrepre-neur looking for the unfulfilled needsof -his customers." The regional Bellcompanies really cannot contribute toAdtran's research and development ef-

GRESSIONAL RECORD -'SEN,forts, a problem other American entre-preneurs also face. Adtran's 50 prod-uct design engineers are not able tocommunicate freely with the regionalBell companies in order to designequipment to meet their needs. Yet,Adtran is able to work with its othercustomers, including foreign custom-ers, and receive research and develop-ment funds from them. in order tomeet their equipment needs. Mr.Smith noted that the regional Bellcompanies..his biggest group of cus-tomers. "are having difficulty in en-suring the timely introduction of newtechnology in digital services for busi-ness applications."S. 173 WILL FOSnR rIeOVATION FOR pERsos

S WrTH DISABrLUTIES8

In addition. Mr. President. with re-spect to fostering innovation, let menote that the Americans With Dlsabil-ities Act is a broad mandate for accessfor persons with disabilities. In thetelephone context, however, it onlydoes so in a minimum way. ADA man-dates the use of Intrastate and Inter-state dual-party relay systems utilizingoperators to translate text from tele-communication devices for the deaf.TDD's, to voice and vice versa to allowa TDD user to converse with a user ofa standard telephone. Unleashing theregional Bells would spur innovationgenerally, including the design and de-velopment of servces for persons withdisabilities. What form might these In-novaLtions take? The best way to findout is by letting the regional Bell com-panies into the manufacturing market.Let me cite, however, the May 21.1991. statement of Deborah Kaplan.director of the Technology Policy Di-vision of the World Institute on Dis-ability:

There is no technical reason that the net-works of the future cannot be designed with"electronic curb cuts." features that permituse by everyone including persons. with dis-abilities. These design features would allowvoice output or voice synthesis for peoplewho cannot read enlargeable text. bothvisual and auditory prompts, multiplemodes of input to accommodate people withlimited or no dexterity, variable speed com-mand and control systems, and variablesound output to accommodate people withhearing impairments.

Implementation of these features asstandard user options will result In manyunforseen benefits and applications for thepublic at large, Just as with the originalfsidewalk] curb cuts. Just as curb cuts madelife easier for far more than the wheelchairriders who .pressed for them, this kind ofnetwork flexibility will produce all kinds ofbenefits for the public at large.

It is no surprise that Ms. Kaplan en-dorsed S. 173 because increasing com-petition will foster innovation and fur-ther the interests of the large marketconsisting of Americans with disabil-ties.

FEROF CROSS-SUBSIMU2ArmDISCIMINIATION MISPLACED

Finally. Mr. President, I believe thefears that the regional Bell companieswill abuse their entry into the manu-facturing field are misplaced. I have

TE June 3. 1991already mentioned the competitivenature of that market.

Let me also note that the antitrustlaws will still apply to the regionalBells In their manufacturing capac-ities-with both private scrutiny bycompetitors and Government scrutinyas well.

Let me respond to the concern thatthe regional Bell companfes will userates paid by users of their local tele-phone monopolies in their manufac-turing activities. While Federal andState oversight Is never 100 percentperfect. I respectfully submit thatsuch concern is much overstated. It isthe mission of regulatory agencies tokeep telephone rates low. They closelyscrutinize rate increase requests andefforts to attribute costs from unregu-lated activities to the rates paid bylocal telephone users. Moreover. asFederal Communications CommissionChairman Alfred Sikes and AssistantAttorney General Rill have testified.the FCC has improved rules pertain-ing to cost accounting and allocationthat should check the regional Bellcompanies If they seek to undertakeanticompetitive cross subsidies of theirunregulated manufacturing activitieswith local telephone ratepayer fees.

Similarly. I respectfully submit thatthe concern that a regional Bell com-pany may buy inferior equipment orpay inflated costs to its manufacturingaffiliates is unlikely to be realized.Current FCC regulations, for example.govern such affiliate transactions.Federal and State regulators can denyexcessive equipment costs.

The concern that a regional Bellcompany might impede competition bykeeping information about local net-work exchanges from competitor man-ufacturers is met by FCC rules requir-ing timely disclosure of networkdesign information. Further, currentmanufacturers of telecommunicationsequipment are already key actors inthe design of regional Bell networks.They will likely be aware of plannedchanges in any event. Of course, a re-gional Bell company is likely to pur-chase at least some of its own manu-facturing products. Such partial verti-cal integration occurs in many Indus-tries and generally fosters competi-tion.

The bill contains even more safe-guards. For example, the bill precludesone regional Bell company from en-gaging in manufacturing with anotherregional Bell company. Further, a re-gional Bell company must performany manufacturing through a separateaffiliate and may not engage in anysales, specific advertising, installation.and similar functions for the manufac-turing affiliate. Indeed, the Bush ad-ministration feels the bill's safegusrdsgo too far.

CONCLUSIONI urge my colleagues to open the

door to further competition by sup-porting S. 173 and removing the manu-

laturing ban imposed on the seven rv-


June 3, 199i CON!gional' Bell companies. Let's help ]American companies innovate andcompete in world markets.

MORNING BUSINESSMr. FORD. Mr. President, I ask

unanimous consent that there be aperiod for morning business, with Sen-ators permitted to speak therein.

The PRESIDING OFFICER. With-out objection, it is so ordered.

MESSAGES FROM THEPRESIDENT

Messages from the President of theUnited States were communicated tothe Senate by Mr. McCathran. one ofhis secretaries.

EXECUTIVE MESSAGESREFERRED

As in executive session the PresidingOfficer laid before the Senate mes-sages from the President of the UnitedStates submitting sundry nominationswhich were referred to the appropri-ate committees.

(The nominations received today areprinted at the end of the Senate pro-ceedings.)

WAIVER OF CERTAIN SECTIONSOF THE TRADE ACT-MESSAGEFROM THE PRESIDENT-PM 53The PRESIDING OFFICER laid

before the Senate the following mes-sage from the President. of the UnitedStates. together with accompenyingpapers; which was referred to theCommittee on Finance:

To the Congress of the United States:I hereby transmit the documents re-

ferred to In subsection 402(d)(11 of theTrade Act of 1974, as amended (19U.S.C. 2432(a)(1)) ("the Act"). wilh re-spect to a further extension of the au-thority to waive subsections Sal andSb) of section 402 of the Act. Thesedocuments continue in effect thiswaiver authority for a further 12-month period.

I include as part of these documentsmy determination that further exten-sion of the waiver authority will sub-stantially promote the objectives ofsection 402. I also include my determi-nation that continuation of the waiv-ers applicable to the Republic of Bul-garia, the Czech and Slovak FederalRepublic. the Soviet Union. and theMongolian People's Republic will sub-stantially promote the objectives ofsection 402. The attached documentsalso Include my reasons for recom-mending the extension of the waiverauthority, and for my determinationthat continuation of the waivers cur-rently in effect for the Republic ofBulgaria. the Czech and Slovak Feder-al Republic. the Soviet Union, and theMongolian People's Republic will sub-stantially promote the objectives ofsection 402. My determination with re-spect to the waiver applicable to the

GRESSIONAL RECORD -. SENATEPeople's Republic of China and thereasons therefor is transmitted sepa-rately.

I note that the extension of thewaiver applicable to the Soviet Unionwill apply to Estonia. Latvia, and Lith-uania. This In no way affects the long-standing U.S. policy of not recQgnizingthe forcible Incorporation of Estonia,Latvia, and Lithuania into the SovietUnion or our support for the right ofthe Baltic States to reclaim their inde-pendence.

GEORGE BUSH.THE WHITE HousE, June 3, 1991.

MESSAGES FROM THE HOUSERECEIVED DURING ADJOURN-MENT

eDROLLEO9 BILL SINEDUnder the authority of the order of

the Senate of January 3, 1991. the Sec-retary of the Senate. on May 24. 1991,during the adjournment of the Senate,received a message from the House ofRepresentatives announcing that theSpeaker has signed the following en-rolled bill:

H.R. 2127. An act to amend the Rehabili-talion Act of 1975 to extend the programsof such act, and for other purposes.

Under the authority of the order ofthe Senate of January 3. 1991. the billwas signed on May 24. 1991. during theadjournment of the Senate, by thePresident pro tempore [Mr. BYnD].

EINROLLED OILL SIGNEDUnder the authority of the order of

the Senate of January 3, 1991. the Sec-retary of the Senate, on May 30, 1991,during the adjournment of the Senate,received a message from the House ofRepresentatives announcing that theSpeaker has signed the following en-rolled bills:

H.R. 232. An act to amend title 38, UnitedStates Code. with respect to veterans pro-grams for housing and memorial affairs.and for other purposes;

H.R. 831. An act to designate the OwensFinance Station of the United States PostalService in Cleveland. Ohio, as the "JeSseOwens Building of the United States PostalService"; and

H.R. 2251. An act making dire emergencysupplemental appropriations from contribu-tions of foreign government and/or interestfor humanitarian assistance to refugees anddisplaced persons In and around Iraq as aresult of the recent invasion of Kuwait andfor peacekeeping activities, and for otherurgent needs for the fiscal year ending Sep-tember 30, 1991, and for other purposes.

The enrolled bills were subsequentlysigned on today. June 3, 1991, by theActing President pro tempore [Mr.FORD].

MEASURES PLACED ON THECALENDAR

The following bills were read thesecond time, and placed on the calen-dar:

H.R. 7. An act to amend title 18. UnitedStates Code. to require a waiting periodbefore the purchase of a handgun; and

S. 1151. A bill to restore an enforceableFederal death penalty, to curb the abuse oi

S,6917habeas corpus, to reform the exclusionaryrule, to combat criminal violence involvingfirearms, to protect witnesses and other par-ticipants in the criminal Justice system from.violence and intimidation, to address theproblem of gangs and serious Juvenile of-fenders, to combat terrorism. to combatsexual violence and child abuse, to providefor drug testing of offenders in the criminaljustice process, to secure the right of victimsand defendents to equal Justice withoutregard to race or color, to enhance therights of crime victims, and for other our-poses.

EXECUTIVE AND OTHERCOMMUNICATIONS

The following communications werelaid before the Senate. together withaccompanying papers, reports, anddocuments, which were referred as in-dicated:

EC-1277 A communication from the Ad-ministrator of the Environmental Protec-tion Agency. transmitting a draft of pro-posed legislation to amend and extend the,Federal Insecticide. Fungicide. and Rodent-cide Act, as amended, for two years; to theCommittee on Agriculture. Nutrition, andForestry

EC-128. A communication from the Administrator of the Environmental Protec-tion Agency. transmitting a draft of pro-posed legislation to amend the Federal In-secticide. Fungicide, and Rodenticide Act toprovide for the collection of certain fees bythe U.S. Environmental Protection Agency'to the Committee on Agriculture. Nutrition,and Forestry.

EC-1279. A communication from the As-sistant Secretary of Agriculture (Scienceand Education), transmitting pursuant tolaw. the 1989 annual report on the Food andAgricultural Sciences; to the Committee onAgriculture, Nutrition. and Forestry.

EC-1280. A communication from theComptroller General of the United States.transmitting, pursuant to law, a report onthe President's third special impoundmentmessage for fiscal year 1991; pursuant to theorder of January 30, 1975. as modified onApril 11, 1986, referred jointly to the Com-mittee on Appropriations. the Committeeon the Budget, the Committee on ArmedServices, and the Committee on Foreign Re-lations.

EC-1281. A communication from the As-istant Secretary of the Army (Manpower

and Reserve Affairs), transmitting a draft ofproposed legislation to amend titles 10. 14,and 37. United States Code. relating to thepromotion, separation, and mandatory re-tirement of warrant officers of the armedforces, to establish the grade chief warrantofficer. W-5. and for other purposes; to theCommittee on Armed Services.

EC-1282. A communication from the FirstVice President and Vice Chairman of theExport-Import Bank of the United States.transmitting, pursuant to law. a report withrespect to a transaction involving UnitedStates exports to the Republic of Indonesia:to the Committee on Banking. Housing. andUrban Affairs.

EC-1283. A communication from the Sec-retary of Housing and Urban Development.transmitting, pursuant to law, the annualreport on the Congregate Housing ServicesProgram for calendar year 1989; to theCommittee on Banking. Housing. and Urban

I Affairs.I EC-1284. A communication from the

Chairman of. the Interstate Commerce Com-mission, transmitting. pursuant to law, cer-tain legislative proposals adopted by the


HeinOnline -- 6 Bernard D. Reams, Jr. & William H. Manz, Federal Telecommunications Law: A Legislative History of the Telecommunications Act of1996, Pub. L. No. 104-104, 110 Stat. 56 (1996) including the Communications Decency Act [xxxvii] 1997

June.4, 1991 CONGRESSIONAL RECORD - SENATETo be spoken- ment's image with members of the United

That this nation under God States Congress.Shall have a new birth of freedom Sincerely.And that govenmenL, of the people John McCain. Robert Kasten, latryBy the people, and for the people Craig. Robert Smith, Orrin Hatch.Shall not perish from the earth Robert Dole. Connie Mack. DavidWe Just want to my taumk you Durenberger. Steven Symms,For we can hold our heads up highYes you have brought us all together CONCLUSION OF MORNINGUnder one big skyWe thank you Norm and Coln BUSINESSYou showed our nations pride The PRESIDING OFFICER (Mr.That we will all remember, until the day we LnmIpRgA). Under the previous order.

die the hour of 11 eam. having arrived.So let sing • God Ries America morning business Is now closed.

A COMMUNICATION TO THE TELECOMMUNICATIONS EQUIP-PRESIDENT OF NICARAGUA MENT RESEARCH AND MAKU-PACTURING COMPETITION

Mr. McCAIN. Mr. President today ACTSenators DoL, KAsT. MACK. CRAso, The PRESIDING OFFICER. TheD mza , S r. sts. HAT. clerk will report the pendin business.and I sent a letter to the President of Te le t cle ed asols:

N i c a a g u , D o a . l o l e a B r r i o d e T h e l e g i s l a t i v e c l e r k r e a d a s f o l l o w s :Chamorro. We wrote to inform Prsd A bill (S. 113) to permit the Bell Tele-esi- phone Co. to conduct research on. design,

dent Chamorro of our concern over and manufacture telephone communica-her government's recently concluded tLions equipment, and for other purposecontractual arrangement with The Senate resumed considerationRelehler and Soble, attorneys at law. of the bill.

I ask unanimous consent that the Mr. HOLLINGS. Mr. President. letletter be made a part of the Recoan me first thank my distinguished col-following the conclusion of my re- league, the senior Senator from Ken-marks, tucky. Senator FoRD, a very able

There being no objection, the letter member of our committee who tookwas ordered to be printed in the the floor in presenting this measureRecoup, as follows: on yesterday. We appreciate his strong

U.S. SXXAr statement and understanding of theWashington. DC Ha 24. 1991. issue at hand and his tremendous help

Her Excellency DosA VIOLA BUasatos D9 on yesterday in presenting it to thePreoiuo. Senate.

PreDsden f. Republic of McA ra veo. I rise today to speak in favor of S.Dzj M~ADa Ponwote. We have recent.-7.teTlcmmnctosEuply been informed that the Nicaraguan Min- 173 the Telecommunications Equip-Istry for the Presidency has coneluded a ment Research and Manufacturingcontract with Reichler and Soble. Attorneys Competition Act. This legislation Is es-at Law for the expresed purpose of repre- sential to the future competitivenesssenting Nicaragua's position on the clvl war and economic security of the Unitedin El Salvador to members of the United States.States Congress. As members of Congress. Mr. President, that is not a lightwe wish to make clear how disturbed we are statement. We have tried this ap-that the freely elected government of Nice. proach of restrictions and often it isragus would seek the services of Mr. Paul that we in the U.S. Congress thinkReichier. principal rtner of Reichier andSoble. and formerly the de facto spokeanian that when we get the domestic crowdof the Sandinista National U1beatlon Front. controlled and restricted that we have

We are among the moat faithful support- control. We are not in control at allera of Nicaraguan democracy. For many And it becomes more and more dra.yera in a variety of public fors, our sup- matically demonstrated each day thatPort of Nicaraguan democrats. as well as our passes.personal support for you, required us to I want to emphasize this to bringendure Mr. Relchler's unswerving defense of into focus the particular issue at handthe Sandlnistas' brutal repression of the because we are not running pell mellcause for which you have dedicated your for a monopoly. In essence, we areife. We are gravely disappointed that your going to be really struggling with thegovernment would now engage Mr. Reichier various amendments Of a monopolY;to represent to us your Position on the qu varely, aT& t wi a benthetion of El Salvmar. namely, AT&T. which has been the

Of all the Issues of mutual interest to the principal opponent. They have a goodUnited States. and Nicaragua. we cannot deal going. They have long distance,think of one where Mr. Reichier would be a almost exclusively.less credible sokesman- We understand What they do is. they manufacturethat Mr. Relchler has the right to represent and they deal with themselves. and allYour governMent. and that your govern' these amendments about self-dealing.ment has the right to employ Mr. Relehler. all these amendments about contentWe do not wish to interfere in the sovereign and various other things do not applyaffairs of your country.

However. as your supporters. we feel to them at all. And all the concerns ofobliged to advise you that at a time when my consumer friends about the ad.you are seeking additional economic sist. verse effect if this bill passes on con-ance from the United States. Mr. Reichler's sumners has not occurred, of course,representation of your government will with AT&T and long distance ratesharm, rather than enhance your govern- which are regulated both at the Feder-

S 6959al and State level obviously regulatedat the State level in the main and atthe Federal level for the regional Belloperating companies.

But more than that, there is a tre-mendous dynamic compeUtlon. If youwatch these Bell Cos. compete againsteach other. U I could. I would havechanged the name of the Bell Cos,' tothe Different Other Cos.' Let one beBell and another one be Horn, andevery instrument in the band, and callone the Drum Co. and one the Saxo-phone Co., to get the mentality of theUA. Congress changed to the partcu-lar issue at hand.

We have tremendous competitiongoing on. So much so, that with all $80billion in t4ie revenues of the seven op.erating companie, they go pe melloverseas, investing like gamg busters.buying up New Zealand, buying upMexico. buying up Argentina. Theyare putting in optic fiber trn Moscowto Tokyo, and cellular phones in down-town Hungary.

And we are sitting back here in theU.S. Senate, asying, We are in charge,we know what we are doing and wehave control of the market No,market forees operate.

I had that debate here only lastweek with respect to fast track, And Itwas very difficult to get that Ideathropgh everybody's mind. As long asthey understand that the GovernmentIs the most important element in thatmarket force in International competi-tion. Domestic content, for example.There will be many, many amend-ments made about domestic content.And we are forced, under the circum-stances, on the one band to meet thatkind of competition,

They have domestic content in thehome countries of all these foreign en-titles doing business in the UnitedStates. They have the domestic con-tent provisions there. On fast trackmost people, as a result of the diligentwork by the White House over a 7- to8-month period, came with mind setsto this floor and they did not under-stand that what we had, in essence.was not a debate about free trade butfee trade. The fees are being paid as Iam talking about free Mexico. And theforeign entities are moving in andpaying the fees, It is an accepted pro-cedure.

We have a Foreign Corrupt PracticesAct. But that is the rule of the game.If you are a member of the Diet, younot only get your stipend, you havethree or four companies that pay youon the side. That is not a Congress.Americans think everybody Is Just likeus. You have to pay the mordida indowntown Mexico now. And.they areall doing it and they lre all locatingthere. We are not losing jo s, we arelosing entire industries. It was not freetrade, It was fee trade. And all the re-ports said the little South CarolinaSenator was worried about his textiles.

That worry is practically gone. Wehave passed the textile bill four br five


S 6960 CONGRESSIONAL RECORD - SENATE

times and It has been vetoed eachtime. And we still struggle along.

Learning from that experience. Ithink it is very important, in this par-ticular measure, to bring right Intoshaip focus what the situation Is. Thesituation Is. due to a consent decreeback in 1984, the divestiture of Ameri-can Telephone & Telegraph. we hadeight companies, seven Bells andAT&T, and all were separated outunder a modified final Judgment, theMFJ.

It is very interesting to note. thatATT at that particular time saidthey did not want to have any restric-tions on any of the companies. I quotethe AT&T general counsel. I also havea statement of Charlle Brown, thechairman of AT&T at the time:

I am against restrictions. I will be happy Ifnobody In restricted en anything. After thisdivestiture ocurs, let the regional Bell Op-eating Ces. do what they want.

Well. the Justice Department didnot agree with that They had misgv-ings on antitrust, and they forbade theseven operating companies to get intoInformation services, into long dis-tane and Into manufacturing. This.bill S, 173. has no concern with infor-ihation services and long distance.Long distance is out there and beingoperated and there is no petition ordesire to get into that. Informationservices would be too complex and I donot think we would advance very farin all reality. But in manufacture, thisSenator. and many of our other col-leagues In the body. are very muchoonoerned about the ineffectiveness, Infact, the reverse effect of this legisla-tion jn our economy, our Investment,otir !"parch. our development-ourremaining on the cutting edge of com-munications technology.

If you cannot make money out of it,then why invest in It and why not goto New Zealand, and go down to Ar-gentina, and go down to Mexico, andgo anywhere else? After all, you havestockholders and they are looking forreturns. You want to be a forward-looking executive, a corporate head.and you want to make sure you get thebest returns. And It is mandatory youdo so In order to keep your rates down.So that is what we are doing.

Here is an entity, namely the U.S.Senate. with a Budget Committee andFinance Committee doing this, whileeverybody else is looking around forInvestmant dollars. I have describedthe competition down in Mexico on feetrade already, investing $1 billionNissan announced; $1.5 billion foxVolkswagen. $400 million from Hyun-dat-you can go right on down the listCorporate America is on Its financialheels. They are not investing. Theyare overextended at this particulaxmoment,

Here we have some of the strongescorporate entities, financially strongwith- money, to invest, that are beiniforbidden to do so by a rather fanciftirestriction that has not proved out. IIcannot be restricted because otheri

are coming in here and taking over themarket, buying up the companies, ad-vancing in the technology becausethey can do the research-we cannotdo the research and development-andliterally taking the remaining thing wehave left with respect to our technolo-gy.

At least the Senators can concen-trate on one. They cannot seem to getthe broad picture of internationaltrade. Let us hope they can get at

-least a picture with respect to commu-nications technology, communicationstrade, communications manufacture.research and development, and keep-Ing America stronr, and, yes, keepingthe consumers properly serviced withthe advanced technology.

This bill is not against the consum-ers, as they are going to try to chargein some of these amendments. This isa proconsumer bill if there ever wasone. if we. want to really satisfy theconsumers as they watch these otherdevelopments in France and every.where else tie these things in andwonder why.

It is like our late friend. SenatorRobert Kennedy said, "Some men seethings as they are and wonder why. Isee things that never were. and askwhy not."

Here we are going out of business be-cause of this restriction enforced bythe Justice Depirtment. in the origi-nal instance now, has gone by theboard. The foreign entities have gonearound the end. And it is not a smalladvance. I want the colleagues to un-derstand. Here are the companies withhome markets which have domesticcontent provisions, with financing andalL

We know the cartel provisions InJapan and the government-supports inall these other countries. They do nothave a Olass-Steagall Act in Germany.The bank can be part of the business.The business is part of the bank. Andwe are losing construction contractsthe world around.

Similarly, the aircraft industry islearning what France and the rest ofthem do over there, and the Europe-ans. EEC 1992. incidentally, is not or-chestrating and organizing for freetrade, they are organizing for thetrade battle. As we are sitting backhere, fat and happy, and dumb toboot, here Is exactly what is going on.

I will take a little time of the Senatebecause this is the alarm that soundedto me when I realized how pervasivethe invasion and takeover of our coin-munications industry in America is.

- almost like fleas on a dog. Hitachi.Japan. manufacturing computers and

I telecommunications equipment in nu-merous facilities around the country.

r In April 1990. Hitachi announced theirintention to acquire the U.S. computerperipheral maker, data products, for

- $160 million.r Matsushita operates eight.plants inI the United States. It expects to add

more. It opened a seventh researchi laboratory in September of 1990 to de-

June 4, 1991velop airline passenger informationand communications equipment. Theruling of Judge Greene, who has beenadministering this modified final judg-ment, has been interpreted on numer-ous petitions that we have madebefore the judge. to forbid, in reality.any research work.

Because if you do It. you can com-bine with some entity outside, butthen you cannot test it. and whoever Isdoing the research work you cannottell them why it did not test good. itwas faulty, and they have to guessagain and come back again. Of course.industry and business are too dynamicto put up with that nonsense, andthey just do not have research.

So the research moneys are comingright in here from the foreign entitieswho are taking over. Fujitsu has acommitment and they capture a shareof the U.S. digital central office switchterminal equipment market. Theyhave developed a switch and advancedbroad band capabilities. They want a10-year, $17 million contract with theTelecommunications System of Cali-fornia, in Fresno. They have six re-search and development centers aswell as manufacturing facilities in theUnited States. They have an $80 mil-lion telecommunications plant in Rich-ardson. TX. FuJitsu North AmericanCommunications Manufacturing Oper-ations will employ up to 4,500 by theyear 2000, and they want to increasethe product demand in the UnitedStates from 20 percent to 50 percent.

I ask unanimous consent. Mr. Presi-dent. to print this summary of foreigninvestment and control in the RcoD.

There being no objection, the mate-rial was ordered to be printed in theRrcoao. as follows:

FORZIGN COKasAIS ARs DOtNe WHMTAldEIC"I COasEsAMSa C . rr

Examples of foreign activity in U.S. mar-kets closed to the Bell Holding Companiesby the MPJ restrictions:

Hatachl (Japan). is lmplementing strategydesigned to signifncantly Increase Its infor-mation systems manufacturing base in theU.S. Is manufacturing computers and tele-comomunlcations equipment in several facili-ties around the country, and has plans tobegin extensive research and developmentactivity by 1990s. In April 1990, announcedintention to acquire U.S. computer periph-eral maker Dataproducts for $160 million.

Matsushita (Japan). operates eght plantsIn the US. and expects to add more. Since1983. has developed/acquired US. facilitiesto produce cellular mobile telephones.pagers, and computer systems components.Opened seventh U.S. research laboratory inSeptember 1990 to develop airline passengerInformation and coun~uicatlons euip-ment. Other facilities are conducting re-search in areas such as speech recognitionand synthesis, digital Image processing andhish density data recording, communica-tions systems, advanced computers and highdefinition television.

FuJitsu (Japan). has recentiy made com-mitment to capture share of U.S. digitalcentral office switch and ISDN terminalequipment market. gas been running US.trials on terminal equirment since 1984 andpurchased U.S. computer peripheral makerIntelligent Storage in 1988. A Fujitsu digital


CONGRESSIONAL RECORD - SENATEswitching system is currently undergoingbeta testing for US. market compatibility.Aiming for Bell operating company businessin the ISDN and post-ISDN marketplace.Fujitsu has developed switch with advancedbroadband capabilities. Fujitsu recently wona 10-year. $17 million contract to build inte-grated telecommunication system for Call-fornia State University at Fresno.

Fujiltu has six raeitch and developmentcenters as well as communications equip-ment manufacturing facilities in the U.S.Began construction in Fall 1989 of $80 mil-lion telecommunications plant in Richard-son, Texas scheduled for completion in1992. New plant will be base fur all FujitsuNorth America's communications equip-ment manufacturing operations: WIll employup to 4.500 by year 2000. Fujitsu wants toIncrease Its product demand in U.S. from 20Percent to 90 percent by 1992. Company isalso considering entering U.S. market forU74IX-based software applications: tents-ti ely plans to open software developmentcenter In U.S. by mid.1991. Fujitsu is report-edly among several companies negotiatingWith AT&T to acquire minority slake inUnix Systems Laboratories. AT&T subsidi-ary that develops Unix computer operatingsystems and software.

Nippon Telegraph & Telephone (Japan).Japan's domestic telephone company, an-n.-unced Its entrance into rapidly growing$40 billion U.S. data commuldcations aerv-iV,'s market In February 1990. Subsidiary.NTT Data Communications Systems Corpo-ration, has opened offices in Jersey City.NJ; initial target will be Japanese compa-nics doing business in U.S.; fulure targetsare likely to be U.S. companies. NT Datawill manage, data transmislon facilities.office phone systemst. and develop privatedata network software for customers.Project Is N'r's largest investment in U.S.;will initially be about $100 million. NilData employs 1.000 worldwide and had 1989revenues of $2.7 billion. N'T also owns over50 percent of NTl" International which es-tablished Dynamic Loop Corporation InDelaware to Invest in commumucationsprojects In U.S.

NT'1 is also the major investor In AlcoaFoJikura. a Spartanburg. SC Joint venturethat produces fiber-optic hardware for as-sembling communications networks.

NEC (Japan). has about 8 percent ofNorth American office telephone switch/equipment market. It Is dedicated to world-wide development of products and servicesthat integrate computer and comrsunIca-thons technologles. Operates four manufac-turing plants in U.S. and in 1988 increasedthe capability of Its specialized semicenduc-tor design centers and added new facilitiesfor developing communications systemssoftware and home information systemstechnology. Opened new research facility inIrving. Texa In November 1989. the Ad-vanced Switching Laboratory. that sill de-velop broadband hardware and software forcentral office and customer premises equip-mont. ASL employed about 50 doctoratelevel engineers by mid-1900 and plan is todouble that number. Lab is intended tobecome key source of software that drivesIEC's advanced communications equip'ment: was based in U.S. bemuse NEC be-lieves U.S. slill has superior software tech-nology and wants to take advantage of It.NEC Is reportedly among several companiesnegotisting with AT&T to acquire minoritystake in Unix Systems Laboratories. AT&Tsubsidiary that develops Unix computer sys-terns and software.

In May 1990. NEC opened a $25 million re-search facility in Princeton. NJ. wheremostly American scientists will concentrateon basic rpresrch in physics and computer

science, areas that are the foundation of ad-vanced communications technologies. Facili-ty Is expected to employ about 100 persons.about half of whom will be researchers; sev-eral scientists already hired were previouslywith AT&T'a Bell Labs.

Kokusal Denshin Denwa (Japan). estab-Ilshed first U.S. subsidiary to market tele-communicaetions products and services toAmerican firms in Fall 1989. In addition toseeking new business, KDD America will co-ordinate operations of Telehouse Interns-tional. New York-based firm of which KDDis largest shareholder with 25 percent. Tele-house is leading provider of super-secure.disaster-proof computer, coinmunications.and data processing centers to the financialindustry. It recently opened second facility.a S35 million center on Staten Island.(Except for 12 percent interest purchasedby AT&T In May 1989 the rest of Telehouseis held by other Japanese firms) KDD isalso part owner of tnfonet, California-basedpacket switch network company that pro-vides value-added network products andservices to global data communicationsmarket.

Nintendo (Japan). is developing Interac-tive videogame and information service net-work- for Introduction Into U.S. market by1991. Network would link already popularNintendo Entertainment System (NES) vi-dmogames for long distance sr..me playingand access o other information services,Users would access main computer and soft-ware from anywhere In U.S. AT&T Is ex-pected to be partner in venture.

Ricoh iJapan). has aggressive plans toespaid Its U.S. business to point where 29percent of Its revenues are from this coun-try. Company. which makes copiers. facstmi-le machines and other automated Office andcommunications equipment, now does 15percent of Its business in U.S. Ricoh opened$2.5 million plant outside Atlant. GA inOctober 1990 and plans to Increase its man-ufacturing presence in U.S. over next fewyears.

Recruit Company fJapan1. provides infor-mation management and telecommuica-tions services In New York City areathrough subsidiary Recruit USA. Operatessuper-secure, disaster-proof data service cen-ters in Newport, NJ and Staten island serv-ing customers primarily In the financial andbunking industries. Dedicated fiber-opticnetwork links centers to Manhattan.

Toshiba (Japan). began manufacturingtelecommunications equipment for U.S.market in I-vine. CA In October 1989. Deci-slon to move manufacturing from Japan islargely effort to avoid imposition of importduties if company is named in anti-dumpingsuit. Toshiba added 103.000 square feet toits plant in Irvine, CA to accommodate man-ufacture of PBXa and key systems, Irvineplant is also Toshiba's major U.S. personalcomputer assembly facility. In October 1990Toshisa announced goal to assemble allcomputers it sells In U.S. in Irvine by 1993and to increase local content from 25 per-cent to 40 percent. In effort to strengthensoftware development, particularly for Itslap-top computers. Toshiba also plans tomore than double number of software tech-nicians in Irvine to 160 by 1993. Toshiba isreportedly among several companies negoti-ating with AT&T to acquire minority stakein Unix Systems Laboratories, AT&T sub-sidiary that develops Unix computer Operat-Ing systems and software.

In April 1990. Toshiba America ConsumerProducts Inc. announced plans to open re-search center in New Jersey to develophigh-defnition television technology.

Mitsubishi (Japan). manufactures mobiletelephones in U.S. through Its subsidiaryMitsubishl Consumer Electronic. Inc. In

November 1990. announced plans to doubleannual output at its Georgia plant to 40.000mobile phones by March 1992.

Siemens AO (W. Germany). has launchedconcerted effort to increase Its presence inU.S. by acquiring over 10 U.S. companies Isconcentrating on five high-g1rowth areasfactory automation, office automation. tele-communications, semiconductor technologyand diagnostic medical equipmenL Majorcommunications deals: purchased 80 percentinterest in GTE's Communication Systems'Trtsmission Product Division (1986Y; ac-quired, for 4165 million, full control of TelPlus Communications, the largest U.S. inde-pendent interconnect company (1987); paidalmost $1 billion for ROLM. IBM's tele-phone equipment manufacturing arm(1988). Purchase of ROLM Increased Sie-mens' share of North American office-tele-phone equipment market from about 4 per.cent to over 20 percent. almost doubled itsshare of world market. Efforts to increaseshare of U3. digital central office switchmarket are backed by 900-engineer researchfacility devoted to specialized software de-velopment.

In November 1990, Siemens and U.K'sOPT Ltd. announced intention to merge thetwo companies; public telecommunicationsoperations in the U.S. Joint venture be-tween Siemens Communications Systems.Inc. of Boca Raton. FL. and Stromberg-Carl-son Corp. of Lake Mary. FL. will be knownas Siemens Strmberg-Carlson and will beNorth America's third largest public net-work aupplier. Venture. which will haveabout 4.000 employees based largely In Flor-Ida. will design develop. produce andmarket computerized public telephoneswitches, packet switching and transmissionsystems.

Deutsche Bundespoat Telekom (erma-nyl, will open U.S. office to spearhead effortto transfer its already successful German vi-deotext and value added network services toU.S. market. Is part owner of Infonet. Call-fornla packet switch network company thatprovides value-added network products andservices to global data communicationsmarket.

France Telecom (France), provides longdistance data communications through Min-itel Services Company (MSC is joint venturebetween Minitel USA and nlonet); MSC's"videotext network" Is slated to eventuallyserve 150 cities in US. and Canada.Through U.S. subsidiary Miniteinet. FranceTelecom is offering over 10.000 videotext in-formation services to US. including elee-tronic directory services it publishes.

Alcatel NV IPrance). is launching strategyto develop and market intelligent networkproducts worldwide. Gaining. ground InAmerican market Is Alcatel's top priority.plans to reenter U.S. public switchingmarket with broadband ISDN technology Inmid-t9905. Recent acquisition of U.S. fiberand cable business makes Alcatel third larg-est supplier in U.S. In 1987. Alcatel NVbegan manufacturing key systems andPBXa in Corinth. MS.

Oroupe Bull (France). agreed to purchaseZenith Data Systems for up to $635 million.Zenith Electronic's successful computerunit. Zenith Data Systems had 1988 sales of$1.4 billion; Is largest seller of battery oper-ated laptop computers in U S. Acquisitionwill make Bull largest European computercompany: It will gain market share In U.S.and Europe and be positioned to compete onglobal scale.

British Telecom tU.K.) wants to becomeleading information services company InU.S. by providing videotext and other Inor-

aJon services through BT-Tymnet, com-pany formed by consolidation of BT'a Dial-

Junej. 1991 S 6961


S6962 cotc Unit and recently Purchased Tyssnet.Iaton Rodavll, MD-based operationwith marketing am In U.K. and continen-tal Europe, waa purchased from rIT In 1989and ranked as third largest a-mal providerIn U.S. t 19M. Br has Invested over $30million to add new databases and advanced 2-mail Serv to Dialcom service. it has en-hAnced service offerings by lnking its U.&and U.X daa centers via long distance com-Runiatios; arrangement allows BT tooffer all Saviors to al users (whether InU.K. or U.SL without neurrinlg cost of du-Plicating software or databases. Dialcomcount, o IUs customers the US. Cou-Crusadora" Correspondence System whichProvides electronic mall service to the Hill.

In July IMi9. BT reached agreement withMcDonnell Douga to Purchase Tymnet.the second largest U.S. provider of value-added network Services with annual reve-lne of about $250 milion.Purchase priceWas reportedly 38 million. The acquisitionOf Tymnet gave ST a vast U.S-based net-Wo linking over 70 US. cities and morethan 20 countries. In addition to the net-work.'ale also Included McDonnell Douglas,e-mail and electronic dja Interchange Sys.ten which Sustantially strengthenedVr's already foridable position In the U.S.electronic snervie market.

BT IS also aiming to penetrate NorthAmerica computerlcommunlcationa sys-tems Integrton market. It plans to devel-oP. manufacture and market broad range ofdatt pommunicaUors equipment throughSerodon.*VA bae subeidiary BT Datacom.(POrmerliy Mil Datacoo. unit of Mitel. Ca.-ndian company In which BT has 51 percentbnteresIM Products will Include fiber opticLANaL computer Integrated telephony prod-

uctas PW ad ternamils. ST Is backing entry.Ito.. dsxta communications mairket, withOver SM milltio research and developmenteffort.

sm purchase of 22 percent stake InMcCaw Osltular Communications Inc. gaveIt ROOM to go percent of US. mobile cons-municaisaion markets. Including cellularradio paging and digital cordlem cosnmnuni-eatlk Through this venture ST can offerstatewide automatic cellular services, a Se."0s Hal company cellular operations cannotprovid, at coenkierable competitive disad.vantss due to WFJ nterLATA restric-Utis. BT 11-1 Puheased 80 percent of Me.trcA - hm Metromedia Telecom-

umtc~ and plans to spend over $21miu8on In sstem expansion. operations and

Cable & Wblreem (U.KL). provides long dis-tance telephone service throughout US.throughowned and leased facilities. Byhnet doubling capacity of U.S. portion of

Uts "GOa D1gl9a Highway.- Cable & Wire-I= baa cameL-to-mast network that is morethan 0 peresnt Mer optle and haa aceas to

= o of UA. buelne population withoT021111 ilinmie of high qual-

Ity cim epacity. Long distance trafficoem- thft network Increased by 1 percent toover m m/ion minutes. In December 1019.C&W began 100 percent dt end-toendPrivabe lbh gase v in Callfornia for In-statedab ta mi Company baa be tars asrvioM primarily to business custom-eM bet plign to begin marketing more ag-grendveav to residential customers.

In INovember 1990. Cable & Wirelessan agrement to acquire Washing-.

tla. DX n Alba Dt Technology. alokwa n flaimhsmera. Acquisition of D&tamerinse network+ will enable C&W toOffer wmay1c. eh as electronic mall andelectrid dats Interchange. C&W also Poe-chaed. lon d ance portion of GTE Tale-

3sege voice messaging business in Jan-usr 1091. Together. ansulaition wove C&W

4GRESSIONAL RECORD- SENATEcloser to goal of offering end-to-end en-hanced data networking services in US. andglobally.

Hawley (U.K.). paid $715 million forAmerican District Telegraph (ADT). leaderIn US. Security products and services (in-euding remote electronic security Informa-Uon services).L. M. Ericson (Sweden). has assets In U.S.

Of Only about $320 million but has about 5percent f US. PBX equipment and multi-plexer market and is aLming for 10 percent.Ericsson is becoming player In Integratedcommunicatlons systems business. In Spring1989 was awarded $3 million contract to in-Stall Integrated voice land data transportnetwork for State University of New Yorkhealth center; other installed systems in-cude California State University and Uni-veraity of Massachusetts.

Ericsmon is very active of U.S. market forceilular system infrastructure equipment.Primarily switching: In 1989. formed jointventure with GE to produce cellular phones,mobile radio products and Mobitex mobiledata communications systems. Venture;known as Eriesson GE Mobile Communica-tLens. In.. Is 60 percent owned by Erlison.40 Percent by CE. In late 1989. Ericmn es-tablished new company. Ericsson MobileData. Paramus. NJ. to supply, install andmaintain Mobitex system. Errcson is part-ner in American Mobile Data Coromunica.tions venture to build and operate first na-tionwide 2-way all-dligtal Mobitex mobileradio network. lnking top 50 U.S. special-ized mobile radio systems.

October 1990 announcement of majororder received from Mc-aw Cellular and LinBroadcasting made Ericson leading suppU-er of cellular equipment In U.S.. SurpassingMotorola and AT&T. With new order. to re-place Motorola equipment In New York-NewJersey area. Ericsson will have cellular sys-teOma in nine of Americas 13 largest cellularmauketg approximately 2.3 mIllion US. cel-lIar subscribers will be served by Ericssonequipment.

Ericsson GE Mobile Communicationsopened research and development center inResearch Triangle Park. NC in late 1990.R&D center will develop and commercialiedigital celular telephones and base stationsfor the North American market Initiallyemploying about 50 American and Swedishengineers center is expected to grow overnext several years.

Elsvier (Netherlands). owns several tradl-tional and electronic publishers In U.S.Holdings include Congressional InformationService. which specializes in U.S. govern-ment and congressional information publi-cetions and databases. and real estate datacotries Real Eltate Data and Danar.Growth of U.S. operatIons (32 percent in-creae in American publishing revenues be-tween 198" and 1988) prompted formationof two new business groups. Elsevier Information Systems and Elsevier Business Prem.VNU BV (Netherlands). owns Disclosure.

one of largest and most widely arlableU.S. badnes information database publish-

e.N.V. Philips tNetherlandsl. generates 20

to 30 Percent of total revenues through US.Bal. mostly of consumer electroni. Plansto aggresvely Increase its stake in U.S. toabout 50 percent by concentrating on In-Proving Its standin In information technol-og1m markets; will increase already signifI-cent U.S. manufacturing base accordingly.Philips IS largest Euro an manufacturer ofsemiconductors and has healthy stance InUS. market via acquisition of Signetics.

Thyssen-Borneis Ine. (Mormcol. ownsPvedicast. on of lest and most compre-hensive U.S. business and defense informs-tion database publishers.

June 4, 1991International Thomson Organization Ltd

(Cansda). established presence In US busi-ness Information services market throughacquisition of US. service and softwarefirms. In 1986. acqnutrd Business ResearchCorp. developer of IvestText and First Call(leading on-line financial database andequity resesrch network) and TechnicalData Corp.. publisher of financl informa-tLion and developer of software for institu-tional investment community. Companiesare grouped with other holdings under"International Fiancial Networks Group"known as "InflineL"

EuAnmi or Fogiycu Coasrarv Acrivrrr 1sUS. M&xic-rs Ctosam To sos Beim Hota-[so COKIPAgS

Compony, country. U_& business activitiesHitach. Japan. manufacturing: computers

and telecommunications equipmenLMatushilta. Japan. manufacturing elec-

tronic and communications equilpment: re-search and development of computer &communications technologies.

PuJitsu. Japan. research and developmentof digital central office switch technolog;manufscturing communications equipment:software development.

IT. Japan. data communications serv-ices: fiber optic hardware.

NEC. Japan. manufacturing computers.semlconductors communications equip-ment. and integrated systemns; research anddevelopment of communications systemssoftware and home Information systemstechnology

KDD. Japan. telecommunications prod-ucis and services: secure computer. commu-nittions. data centers: packet switch net-work, value-added network services.

Nintendo. Japam. interactive Informationservice network.

Recruit. Japan. information managrementand telecormunlcations aServices.

Tosliiba. Japan. manufacturng telecom-munictons equipment msfware develop-ment.

Ricoh. Japan. manufacturing office &communications equipment.

Mitsubishi. Japan masnulfacturing ftelt-communications equipment.

Siemens AG, Germany. manufacturing ofwide range of teleomnmunlcatlonf /autorts-tLon equipment; communications researchand development.

Deuteche Bundespost. Germany. marketing videotext packet switch network, value.added Services.

France Telecom. Prance. long distancedata communications videotext informationand directory services: packet switch net-work. value-added network services.

Groupe Bull. France. manufacturing com-puter equipment.

Alcatel NV. France. anufaeturing tele-communications equipment.

British Telecom. U.K. electronic data-base/information services; nationwide value-added network: com uter/cornmmncalonssystems integration and equipment manu-facturintg interLATA automatic celiularservices.

Cable & Wireless. U.K.. long distance tele-phone service throughout U..: enhanceddata network services.

Hawley Group. U.K.. remote electronic se-curty servces.

LM. Ericsson. Sweden. manufacturing ofcommunications equipment; integrated com-munIcations network systems: digital publicmobile data network: digital cellular re-search and development.

Elsevier. Netherlands, electrenic and trs-diltlonal publishing: US. 8overnmevsi/on-gressional Information online databases.


June 4, 1991 CONVseU BV. Netherlands. electronic and tra-

ditlonfl publtshinr. U.& business and; finan-rial databases.

N.V. Philp . Netherlands. manufacturingof electronic/mlcroelectronlc equipmentand components.

Thyssen-Boend sa. Monaco. electronicpublishlne/lnformatlon services: U.S. busi-nes and defense information database.

Int'l Thomson Ors.. Canada. electronicand traditional publishig. on-line fLnancialdatabase and equity research network: soft-ware development for Institutional invest-ment community.

Mr. HOLLINGS. I thank the distin-guished Chair. and I will continue tohighlight.

Fujitsu is among several companiesnegotiating with AT&T to acquire mi-nority stake in Unix Systems Labora-tory, an AT&T subsidiary. I emphasizethat because AT&T is wheeling anddealing free as the evening breeze withmarket forces. They are the onescoming in and saying, oh, boy, youhave to watch those Bell Cos. Theyare the ones who testified, do not con-trol them, let the market forces oper-ate.

Now they have a so-called monopoly.In essence, because of their very size,financial worth, they want to continueIt and deal with themselves. Whereby,this particular bill has provisionsagainst self-dealing, auditing, and ev-erything else of that kind. But they donot want that for themselves. Theyjust want that for the Bell OperatingCos.

NT&T. that is Nippon Telephone &Telegraph. employ 7.000 worldwide.They had $2.7 billion in revenues in1989. They own 50 percent of NT&TInternational which established theDynamic Loop Corp. in Delaware. Wehave to search these things out andfind out where they have their com-munications projects. But they areheavy in here. They are a major inves-tor with Alcoa Puitkura. in my back-yard, Spartanburg, making fiber optichardware for assembling communica-tions network.

NEC Japan has 8 percent already ofthe North American office telephoneswitch equipment market. NEC oper-ates four manufacturing plants in theUnited States. Not long ago, they in-creased their capability of specializedsemiconductor design centers. Theyopened up a research facility in Irving,TX. In November 1989. the AdvancedSwitch Laboratory developed broadband hardware and software for thecentral office and customer premisesequipment. Of course, they also areworking with AT&T for a stake in theUnix Systems Laboratory.

In May 1990. they opened a $25 mil-lion research facility in Princeton. NJ,and they have already employed 100persons there. Half -ill be researchers.several scientists already hired fromAT&T's Bell Labs. You will hear Sena-tors from time to time say we stillhave Bell Labs. It is being denuded; itis being taken away; it is being hi-Jacked by the foreign investors cominginto this country and NEC is one of

GRESSIONAL RECORD - SEN)them. They are starting it right nextdoor and giving the scientists betterconditions. I take it. better pay, whathave you. They will be running it righthere under our noses. But we are incharge; we have antitrust provisions;we do not want any predatory prac-tices, and we do not want any pricefixing. The dummy Congress is sittingaround losing the industrial backboneof the United States of America whilewe think we are in charge, and we arenot.

Kokusal Denshin Denwa fromJapan, has 25 percent of the NewYork-based firm of Telehouse Interna-tional. Telehouse is the leading provid-er of super secure disaster-proof com-puter, communications, and data proc.essing centers for the financial indus-try. They have a $35 million center onStaten Island. I will leave the rest ofthe summary.

Ricoh, of course, from Japan. hasopened a $28.5 million plant outside ofAtlanta, OA last fall, and they plan toincrease their manufacturing pres-ence.

The Recruit Co. are also in NewYork City. Toshiba of Japan beganmanufacturing telephone and telecom-munications equipment for the UnitedStates market in Irvine, CA. They justmoved their manufacturing fromJapan in an effort to avoid impositionof the import duties and the antidumping suit that had been brought.They added 103,000 square feet totheir plant in Irvine to accommodatethe manufacture of PBX's and theyare the major U.S. personal computerassembly facility. So they are workingwith AT&T on the UNIX SystemsLaboratories. Theg are also into highdefinition television, as we all know,and this arrangement was made inApril 1990 under the name of ToshibaAmerican Consumer Products, Inc.

Mitsubishi Japan, a subsidiary ofMitsubishi Consumer Electronics, thatparticular subsidiary manufacturesmobile telephones. They have a plantin Georgia and the output is expectedto be around 40.000 mobile telephonesby March 1992.

Siemens Germany has launched aconcerted effort to increase its pres-ence in the United States by acquiringover 30 United States companies. Theytook over 80-percent interest in GTE'sCommunications Systems Transmis-sion Product Division. They acquiredfor $165 million full control of TelPlusCommunications, the largest U.S. in-dependent interconnect company backin 1987. Then they paid $1 billion forROLM, IBMs telephone equipmentmanufacturing arm in 1988. SiemensCommunications, Inc., of Boca Ratongot into a joint venture with Strom-berg-Carson, that has gone British,and they will have 4,000 employeesdown there. They will develop,produce, and market computerizedpublic telephone switches, packetswitching, and transmission systems.

Mind you me. Mr. President, none ofthis separate subsidiary, none of this

ATE 86963provision of you have to have domesticcontent manufactured all here unlessyou can prove it is unavailable, noth-ing like that. They can do as they will,finance as they will. buy from eachother as they will. We have a highlyrestrictive measure in S. 173 on sevenvery, very competitive entities.

These that I list have none of that.They are into the open market andhave taken us over and are sending usto the cleaners. Deutsche BundespostTelekom in Germanr. France Tele-com. They provide long distance datacommunications. Minitel Services is aJoint venture with Minitel MSC andInfonet.

Alcatel of France-their recent ac-quisition of the United States fiberand cable business. It makes Alcatel ofPrance the third largest supplier inthe United States. It began manufac-turing key systems in PBX in Missis-sippi and a memo here outlines its par-ticular endeavor.

Groupe Bull of France-they pur-chased Zenith Data Systems for 635million bucks.

You can go down and see how theyare gaining U.S. market share.

British Telecom-Dialcom of Rock.yille. MD. providing even services tothe United States congressional corre-spondence system, is into the marketcorrespondence.

British Telecom reached agreementwith McDonnell Douglas to purchaseTymnet the second largest provider ofvalue-added network services with rev-enues of $250 million. They say theypurchased it for $355 million. Theyhave plans to develop and market andmanufacture a broad range of datacommunications equipment.

BT is backing its entry into the U.S.data communications market with alsoa $20 million research and develop-ment effort.

I keep mentioning research and de-velopment. You will find in my formalstatement that the average investmentin R&D is somewhere around 8 or 9percent. And the Bell Cos., since itdoes not pay 1.3 percent. our competi-tion is doing it because they can profitby it. They can explore, they can getthose particular advanced services.They can serve themselves with it andeverything else.

But we are stultifying, putting a wetblanket, if you please, on research inAmerica with this continued practiceof the modified final judgment of for-bidding manufacture. It is as simple asthat. That is why all these large enti-ties that are coming in are also setting

'up their research facilities to get intothat particular market and be down-field of the competitive curve so theycan maintain in that market.

Of course, BT purchased a 22-per-cent stake in McCaw Cellular Commu-nications and they have 30 percent ofthe US. mobile communicationsmarket including cellular radio,paging, and digital cordless ommuni-cations.


86964 CONGRESSIONAL RECORD - SENATEWe have L.M. Ericsson from Sweden.

They have assets in the United Statesof about $320 million, and have about5 Percent of the U.S. PBX equipmentmarket, and are aiming at 10 percent.They are becoming a major playerhere In Integrated communicationssystems business. In the spring of 1989-they were awarded a $3 million con-tract to Install integrated voice anddata network with the State Universi.ty of New York. California State, andUniversity of Massachusett. The ven-ture known as Ericsson GE MobileCommunications, Inc., is owned 40 per-cent by GE. 60 percent by Ericsson.And they are buddy enough, trying toreplace Motorola.

I can tell you here and now, as longas we can continue it. we ought to callthe modified final Judgment, a foreigntakeover entity act, to put the UnitedStates out of business

It is not complicated at all, but thecolleagues have not noticed this. Weare letting it pass by. all in the nameof not having any antitrust practicesor self-dealing or predatory prices.

The FCC now does have computers.They have a system that the tele-phone companies have to comply with.They can easily, with their computersand their new systems now for audit-ing-which we could not get hereto-fore before the 1980's-because Iworked in this field for the last 24 nowgoing on 25 years as a member of theCommunications Subcommittee ofCommerce-we could not get anythingout of AT&T. Now we have the rules,the systems, the regulations, the com-puters. They can have the audits.They are audited. The States canaudit and should audit, and everythingshould be aboveboard and could beseen and observed, audited and com-plied with.

But while we have all of that goingon, trying to get our own companies inthe manufacture under those particu-lar restrictions, very severe restric-tions, foreign entitles continue on likegangbusters

They also, Ericsson GE. opened a re-search and development center in theresearch triangle In North Carolinalast year. They will develop and com-merctalize digital cellular telephonebase stations in the North Americanmarket. They employed initially about50 American and Swedish engineersand, of course, It will go and grow asyou can see.

So. Mr. President, you have Hitachiin manufacture, Matsushita, Fujitsu,NTT, NEC, KDD, Toshiba, Ricoh, Mit-subishi,8lmem Groutpe Pull, AlcateLCable & Wireless, LM. Ericsson, M.V.Philips from the Netherlands manu-facturing electronic and microelec.tronic equipment. The list is replete.

When we understand this. Mr. Presi.dent, we begin then to take the cloudfrom our eyes and the bit from ourteeth, bent going down the road toantitrust, antitrust, antitrust, like weare regulating business for consumers,and begin to sober up and understand

that we are the ones denying the con-sumers the advanced technology be-cause we are denying the American en-titles a chance to do research, develop,and manufacture. They are the onesthat have been built up by the Ameri-can consumers, by the American tax-payers and otherwise and by thisblinded policy, forced to go overseasand develop Hungary and Moscow andNew Zealand and Argentina, and allthe other countries.

Yes. we had a good debate last week,and we are going to continue with thatdebate because we do not have a tradepolicy in the United States. More thanthat, we do not have a research anddevelopment policy in the UnitedStates because there is a mindset overthe administration about industrialpolicy.

When I come here and the Presidentsigns a minimum wage bill, he nolonger is pure. He went along with In-dustrial policy. What he said was, I donot care what your capability, capacityor talent is; in America you are worthso much per hour. We invaded themarket with our tax provisions. We in-vaded the free market with theExport-Import Bank and so forth thatwe set up. We invaded in various otherWays.•So we are not invading the market.

What we are trying to do is meetmarket forces and let us unleash theirdynamic capability both financiallyand talent-wise to manufacture.

AT&T our opposition-we might aswell identify It in the first instance.because we can tell it. You see this billwas reported out last year. again thisyear by our committee, after all thehearings, on a vote of 18 to 1.

My understanding in coming to thefloor now is that perhaps Memberswould have a stretch-out kind ofpolicy of amendment after amend-ment after amendment to try to bog itdown so nobody would be for the billwith all kind of nit-picking things likelooking for rural amendments. Every-body wants to do something for ruralareas. We have looked out for therural telephone operatives in thiscountry. This particular Senator has.You want to look out for the matter ofaudits, Let the States audit.

If we want to go further about thecross-subsidization, let us look at itand see that it is iron clad.

No one else is forbidden from buyingfor themselves. We put restrictions inhere that you should have It open andaboveboard, offer in any purchase youmake, all other manufacturers to comein, and buy and sell on the same basisthat you sell to any other competitorand so forth.

So all of those have been worked outin the committee, but they will try torevisit them like they have thought ofa new idea. Their new idea is to killthe bill We know that. We understandit. We will be as tactful as we can andas deliberate as we can. But I do notthink we ought to be taking up thetime of the Senate revisting time and

June 4, 1991time again a measure we have workedon now for many years and reportedout not only last year but again thisyear.

I would like to emphasize at thisparticular point, Mr. President. thevarious restrictions we have here onsafeguards in S. 173. My colleagueswill not think we have a bill and weare going to ram the bill through, andwe are not looking out for consumersand the rates might go up. and all ofthose particular arguments be made.

We have in here "no Joint manufac-turing.- In other words. RBOC'scannot manufacture in conjunctionwith one another. All of these entitiesI have listed can and do and continueto do so. I have listed those coming inwith AT&T. who is opposing this bill.They are coming in time and again.wheeling and dealing, buying out eachother, and everything else like that.

We say that these Bell OperatingCompanies cannot manufacture inconjunction with one another. Theymust create seven Independent manu-facturing entities and compete witheach other, as they are doing rightnow in world market business theworld around.

They must have separate affiliates.The Bell Operating Cos. must conductall of their manufacturing activitiesfrom separate affiliates. The affiliatesmust keep books of account for itsmanufacturing activities separatefrom the telephone company, andmust file this information publicly.How are you going to beat that?

We debated that out in the commit-tee. We wante to make sure they werenot going to play games and cut cor-ners. Nippon Electric financed, subsi-dized, and protected. Try to get In overthere and compete with any of theseentities. They are competing.

No. this is not going to really fore-stall entirely foreign investment in theUnited States of America. They willstill come, because they will still havemany advantages; because %%e willhave these kinds of safeguards. Iwould like to clean them all out andlet it all go.

Yes, we do have common carrier re-quirements of these Bell OperatingCos. Each Senator-and this Senator-wants to make certain that we are notpaying the bill for manufacture, ven-ture. and subsidizing particular enti-ties through increased telephonerates.

We have another provision in hereagainst self-dealing. No self-dealing.Bell Operating Cos. may not performsales advertising, installation, produc-tion. or maintenance operations for itsaffiliate. They cannot advertise, theycannot install, they cannot produce ormaintain for its affiliate.

They must provide opportunities toother manufacturers to sell to thattelephone company that are compara-ble to the opportunities that it pro-vides to its affiliates. RBOC may


CONGRESSIONAL RECORD - SENATEopenly purchase equipment from itsaffiliate at the open market price.

And we have one thing in here and.of course, under the law, on a privatecause of action, it ought to be men.tioned at this point that all of our lawssay go to the particular administrativebody. You go and apply, if there is aviolation, and exhaust your adminis.trative procedure at the Federal Com.munications Commission. In this par-ticular discipline, to make certain thatwe do not turn the courts into an ad-ministrative body. That would apply.ordinarily, to all of these.

We went one step further with themanufacturer. If they thought theywere being discriminated against andnot being applied to. the manufactur-er-not an individual fellow who ismad with his telephone rates because.we would clutter up the courts and getnothing done-can proceed with a pri-vate cause of action.

That was the one exception wemade. We are not making the excep-tion. Of course, for the lndividual pri-vate right of action.

It sounds pretty, but If you think onit. after a while, you will understandthat the orderly procedure is to makeyour complaint, and the FCC followsit up. and you have the expertise paidfor by the taxpayers, and the Investi-gation and the proceeding Itself takencare of by the public. You do not say: IaM a little individual citizen and donot have money enough for a lawyer.The procedure is there in every In-stance.

We have even gone further herewith respect to manufacturers. Nocross-subsIdization. Bell Operatng Co.are prohibited from subsidizing itsmanufacturing operations with reve-nues from its telephone service. Thoserecords are kept. and they are publicand subject to audit.

Domestic manufacturing require-ment. The Bell Operating Cos. mustdo all of this manufacturing withinthe United States.

Remember the thrust: remember theintent of this particular measure: Tocome home to America. We are nowopening up the market and giving youa level playing field as best we can. Westill have it somewhat tilted in favorof the consumers and in favor of anti-trust concerns. and those things. Wedo not totally level it.

But they must do all of their manu-facturing here, because we are tryingto create that manufacturing capabil.Ity in the United States. There is noquestion about that. That is the way itis.

As old Walter says. The worldaround, everybody else Is doing it. Ev.erybody else is taking these nationalentities, from Slemen's. from Ericsson.and all of these other particular com-panies who are all taken care of bytheir country, and say at least we wantto get the manufacturing done here inthe United States. We do not want totake all of this and let them setup overin Singapore.

This Senator is particularly sensi.tive. I competed, as Governor, onWestern Electric. In making the tele-phones, with my distinguished formercolleague. Gov. Luther Hodges ofNorth Carolina. We competed on twoof them: Western Electric and East-man Kodak. I won out on EastmanKodak and got it in South Carolina,and he won out on Western Electric.

I am the ultimate winner, because Isaw Western Electric in downtownSingapore when I visited over there.That is where they are making all ofthis hand telephone equipment. Sothe idea here is not to further subsi-dize manufacture out of the UnitedStates, but rather to reverse that par-ticular trend.

Limitation on equity ownership. TheBell Operating Co. fought like a tiger,and I guess they might still fight.They would like to own all of the com-pany, and they do not like to haveanybody have outside investors, oranything else of that kind. But we saythat they may own only 90 percent ofthe equity of Its affiliate. That is, 10percent must be made available to out-side investors.

Of course. I cannot do that, as amember of the Commerce and Com-munications Subcommittee. I wouldlike to have part of that 10 percent. Iknow how these people operate. Theyare the best of corporate citizens. Iknow my opposition here will start topoint to a couple of infringementsthat came out in the news in the last 2years. All America, when they getcompetitive, get competitive. That is.all we politicians singsong. They over-step. from time to time, the bounds.But there is no 4uestion that theseseven companies are about the sevenfinest operating companies you aregoing to find In all of the UnitedStates. If you get them setting up aseparate subsidiary, they know thatthey can move forward In the develop-ment of the technology and in the ad-vancing of those particular servicesthrough technology to the consumers.

We have to complete the loop andchange the mentality of the senatorialmind here that this is somethingagainst consumers; this Is for consum-ers. We are lagging behind in manyservices in this country of ours. be-cause it does not pay to get into them.That is all It is.

Even though you have common car-riers, the common carrier requirementdoes not say. now you put in advance-ments, and so forth. You can sit thereand get your rate and continue to sitthere and get your rate. and nobodyelse is going to-come In because It doesnot pay for them to come in.

Limitation on debt. The affiliateonly may secure debt from the finan-cial markets separate from the BellOperating Co. No creditor shall haverecourse to the assets of the telephonecompany.

We consider the telephone companyas common carriers and books and fi-nancial worth and everything else sep-

S 6965arate from that affiliate and Its manu-facturer. If it goes broke and every-thing else, it does not reflect on mytelephone rates and my telephonecompany.

Protections for the small telephonecompanies. The Bell Operating Cos.'manufacturing affiliate must make itsequipment available to other tele-phone companies without dhcrisina-tion or self-preference as to price, de-livery, terms, or conditions.

And then, disclosure of network in-formation. The Bell Operating Cos.must file publicly all, technical infor-mation concerning that telephone net-work.

You cannot get any more open thanthat. Someone may want to come andsay you could not buy at all from anaffiliate. I hope it is not the AT&Tcrowd coming around here that buysfrom Itself regularly. The majority ofits equipment is bought from Itself.and It has not affected the long dis-lance rates, and so forth. So we canwatch those; they are set.

But what we require here Is. asstated, that the Bell Operating CoLmust file publicly all the technical In-formation concerning their telephonenetwork. And those are the particularsafeguards that we have included inthere.

Mr. President. I see a distinguishedcolleague perhaps want to take thefloor.

Mr. GRASSLEY. No.Mr. HOLLINGS. Mr. President, I do

not want to start a quorum call. Thereare a lot of other things we ca ex-plain. Let us see, Mr. President. whilewe are putting our colleagues onnotice. Let me discuss practices inother countries; the requirements ofother countries. Under a new BC direc-tive, the European Community originpreference excludes bids with lessthan 50-percent European Communitycontent in telecommunications.

These are the foreign trade barriers.This is your competition. Do not comearound here acting like you are run-ning the little U.S. market and it is allinsulated and you have control Theforeigners have control. I tell you thatright now. They have their own FCCthey call MITI and all those other en-titles that you will find in Europe, andnow we will call It the EC. The Euro-pean Community talks about freetrade with Europe. Try to get in overthere. They have 50-percent EuropeanCommunity content in telecoimmun-rations. We would not dare counte-nance that kind of thing for all of ourtelecom market, but that is what theyhave and that is our competition.

The Canada procurement policy. Isthe preferred supplier relationship be-tween Bell Canada and NorthernTelcom. We have Northern Telcom. Ithas plants here. On the increasedexport market, the diminution in thebalance of trade that is down to a S"Omillion deficit In the balance of corn-munIcatOn trade. We should hall It.

June 1, 1991


.S 6966 CONGRESSIONAL RECORD - SENATE

,We should understand it. And the-reason, we hail it is because" we do not.understand it. If we understand it,that Is. what happened with all theseforeign entities coming in.

For agencies not covered by the free-trade' agreement, Canada maintains a10-percent price preference for Cana-dian content in telecommunications.Members ought to understand that.This is a very dynamic, very competi-tive. very subsidized, very controlledInternational market with the Govern-ment on the side. of the communica-tions industry in that country. Wehave a very controlled communica-tions market in the United States ofAmerica with the Government againstthe telecommunications companies inthis country.

We are trying our best to get theGovernment on the aide of manufac-ture. on the side of industry, yes, onthe side of Jobs, yes. on the Side of eco-nomic security, and prevailing in theeconomic war. We have gone, with thefall the year before last of the Wall inEurope. from the cold war to the eco-nomic war, the trade war, the industrywar, the production war, not just alittle bit here Jobs, a little bit thereJobs; they are basic industries. Let mestart with textiles.

I started with this n the fiftieswhen 10 percent of the clothing in thisChamber would have been representedby imports. Now more than 60 percent

-is represented by imports. It gets tothe point where it does not pay toInvest and be competitive. You know.we smart politicians running aroundbeating on peoples' heads, got. to becompetitive and more productive, wecontinue to appoint 10 more commit-tees; we are about the most unproduc-tive, uncompetitive entity you aregoing to find, falling over each otheraround here. Eighty-two percent ofthe shoes on the floor here are Import-ed.

We are going out of business also incommunications, and I am trying tostop It. I am trying to get us competi-tive here, and I am looking at my com-petition. The provincial quasi-govern-ment corporations follow a "buyCanada" policy. Unfortunatley we do,too. We have a "buy Canada" policywith Northern Telcom, a very finecompany, very fine executives, veryfriendly people. I would be friendlypeople if I was making out like Gang-busters like they are, I tell you thatright now. They do not have. anythingto gripe about.

But with a measure of this kind andthe sobering up of Government inWashington, DC-what is not produc.Ing and not competing is not the hin.terland. I can give you example after.example of the highest technology; Iknow it, I see it, I have been visitinawith it, and yet we still continue to gcout of business on account of us righthere in Washington. I visited wee)before last T.M. Brass in magnetic resonance in my own backyard, Thelexport 50 percent of what they make

I can go right on down the list. Theytalk about how the Japanese workharder, they have a work ethic. Youcannot beat the American productionworker. I do not care what they say. Ihave watched them; I have seen them.I have seen the Japanese come, Japa-nese and West Germans, for automo-tive electronic engineering, study 22countries, and, barn. come to SouthCarolina, not to Japan. not to Germa-ny, because of the productivity andthe skills we have in my own backyard.And in this past year now -we havetaken over from Toshiba the magneticresonance indicators, the MIRI, thehealth equipment, where we have nowa GE plant in Florence, SC, and weexport over 50 percent of it. We aregoing to take over the Japanesemarket-until they get into the healthmarket like they are getting into thecommunications market. Where theGovernment has not gotten into it yet,we are still surviving and beatingthem. But bit by bit, step by step.takeover by takeover, they are movingvery quietly, very effectively into mybackyard, into your backyard, and weare inviting them in. Any Governor ofany State in America worth his salthas an office in downtown Tokyo. It isdelightful to visit, on the one hand,you are out there trying to get the in-vestments. We have many fine Japa-nese industries, and I emphasize weare not bashing Japan or Germany orthe Swedes. We are not bashing any-body foreign: we are bashing Washing-ton, DC, trying to wake them up, givethem a wake-up call.

The United States is under siege bya host of Japanese, European, andother multinational firms who are ex-ploiting the openness of the UnitedStates market to our great disadvan-tage. These foreign companies recog-nized some time ago what the UnitedStates has not-the market for com-munications equipment is now a globalone, and we are not in it. In this high-stakes battle over world market share,the United States has only one majorparticipant-AT&T.

At the same time, the United Statesbars seven of its largest and most pro-ductive companies from designing, de-veloping, or manufacturing any formof communications equipment. Thesecompanies have tremendous assets, ex-perience, and expertise that couldbring enormous benefits to U.S. work-ers and consumers If they were al-lowed to manufacture. To continuethis restriction is simply contrary toAmerica's best interests. It is time forthe U.S. Congress to take control ofour economic destiny and lift the man-ufacturing restriction on the Bell Op-erating Cos.

This legislation has tremendous bi-partisan support. S. 173 now has 25 co-

o sponsors, including Members fromboth sides of the aisle. The CommerceCommittee reported this bill to the

- full Senate by a vote of 18 to 1. Lastr year, the committee also voted a simi-. lar bill to the Senate by voice vote. It

June 4, 1991Is clear that an overwhelming majorityof the Senate Is prepared to take upand pass this legislation.

Further, almost every sector of theAmerican public believes this restric-tion should be lifted. The Communica-tions Workers of America support thebill and believe that this legislationwill provide thousands of jobs forAmericans. Organizations representingthe deaf community, the disabled com-munity, and older Americans supportthe bill because It wil lead to greaterinnovation and better products to suittheir communications needs. Over 40small manufacturers believe that al-lowing the Bell Cos. to provide fund-Ing to start up manufacturing compa-nies will promote economic develop-ment and small business opportunities.A number of policymakers and schol-ars support lifting this restriction, In-cluding Henry Geller. the former Gen-eral Counsel of the FCC, and AlfredKahn. The consumers who have writ-ten to my office in support of this billoutnumber those who oppose it by 10to t. Clearly. the public is demandingthat Congress lift this restriction.

Mr. President, the current manufac-turing restriction on the Bell Cos. isan old-fashioned policy that has out-lived its usefulness. The manufactur-ing restriction originates from an anti-trust case that was filed against AT&T17 years ago. In that case, the Depart-ment of Justice alleged that AT&Thad used Its monopoly over telephoneservice to discriminate against compet-ing equipment manufacturers. Whilethe case was being tried, the Depart-ment of Justice and AT&T reached anout-of-court settlement under whichAT&T agreed to relinquish controlover the 22 Bell Operating Cos. Thissettlement agreement, which becameknown as the Modification of FinalJudgment, or MFJ. also banned the 22Bell Cos. from manufacturing commu-nications equipment. The districtcourt accepted the agreement and hascontinued to enforce it.

,,,, r 3UFACTRING RESTzlCF00 IS UNFAIR

There are several problems with con-tinuing this manufacturing restrictionin place, but one of the most obvious isits unfairness. Indeed. one must ques-tion why the manufacturing restric-tion was allowed to stand in the firstplace. The Bell Cos. were barred frommanufacturing even though the dis-trict court never ruled that AT&Thad. in fact, committed any violationof the antitrust laws. Further. the BellCos., which had not yet been created.had no opportunity to comment onthe proposal to ban them from manu-facturing before the agreementbecame effective. AT&T. a major man-ufacturer and one of the two partiesresponsible for imposing the restric-tion, had a clear self-interest in keep-ing the Bell Cos. from competing withit In the manufacturing market. Mean-while, the Department of Justice haschanged its position and now supportslifting the restriction.


Jane 4. 1991 CONIFurthermore. no other telephone

.service provider in the world is similar-ly barred from manufacturing. AT&T.the dominant provider of long distanceservice in the United States. is one ofthe largest manufacturers In the worldand buys almost all its own equipmentfrom itself. There are 1.400 other tele-phone companies in the United States:not one of them is barred from manu-facturing. In fact. no other countrybars Its local telephone companiesfrom manufacturing communicationsequipment.

THE COU, NOT" THE .TG5 fS. ACE iNCOHIRaOL

The enforcement of this manufac-.Luring ban is Inconsistent with the tra-ditions of American Government. Be-cause of the peculiar history of theMFJ. a single Federal court judge isnow responsible for setting US. com-munications policy. Congress is not Incontrol, and neither Is the President.A single Federal court Judge, with afew law clerks and a large case load,dicates the use made of over one-halfor the communications assets in thiscountry. At the same time, foreigncompanies, hacked by their govern-ments. are buying American compa-nies and taking an increasing percent-ege of our market share.

TI MAffHOaFCTO5ZR RESTRICTION t3UNiRL*5O9AX DD *ASM" Ts

Furthermore. the manufacturing re-sriction Imposes unreasonable and ar-bitrary limits on the BeU Cos.' abilityto manufacture. These restrictionsprevent the Bell Ces. from taking ad-vantage of the efficiencies betweenproviding telephone service and manu-facturing telephone equipment. As aresult, the Bell Cos, cannot bring newand better products to the marketthat will benefit all Americans.

The practical effects of the manu-factw-ing restrictlo.s are almost ludi-crous. For example:

First, under current law. the BellCo.s. can manufacture telephoneemuipment In foreign countries for saleoverseas. But the law bars them fromperforming any manufacturing in theUnited States for domestic customers.This forces the Bell Co, to investtheir capital overseas, as they havedone in Europe. Mexico. New Zealandand elsewhere.

Second, current policy allows thesecompanies to engage In the design anddevelopment of the telephone net-work. yet they cannot design and de-velop equipment to be used in thatnetwork. This removes any possible ef-ficiencies of operating in these twomarkets.

Third. the success of most high-tech.nology industries is founded on strongresearch and development activitiesthat usually comprise between 8 and10 percent of revenues. Under currenttau'. the Bell Cos. can perform re-search but they cannot engage In de-velopment. The uncertainty of the linebetween research and developmentand the fear of sanctions discourages'he Bell CO. from performing any re-

GRESSIONAL RECORD - SENAsearch at all. As a result, the Bell Cos.spend only about 1.3 percent of theirrevenues on research.

1f there was any Justification forbanning the Bell Cos, from manufac-Luring 10 years ago, they have longsince disappeared. The manufacturingrestriction makes absolutely no sensein today's world. Let me outline brieflysome of the benefits of allowing theBell Cos. Into manufacturing:

. t. AMZAcA.. CoMPL1TfVeNMSThe US. competitive position in

high-technology markets is severely atrisk. This decline Is apparent In almostevery sphere of the market. In re-search and development, patents.trade, and world market shares, Japa-nese. West German, and other foreigncompanies are outeompeting theUnited States In the internationalmarket. The United States faces achallenge to Its world leadership posi-tion as never before.: Some basic facts bear out this point.

Seven years ago. there were 15 majorswitch manuacturers in the worldmarket. 3 of them American. Todaythere are only eight-three fromJapan, three from Europe. one fromCanada. and only one from the UnitedStates. AT&T. From a $1 billion sur-plus in 1981. the US. trade balance incommunications equipment has nowdropped to a $700 million deficit.

Total U.S. spending on research anddevelopment lags far behind other de-veloped nations, According to the Na-tional Science Foundation, the UnitedStates spent 1.8 percent of its GNP onnondefense R&D last year. while WestGermany spent 2.6 percent and Japanspend 2.8 percent. In communications.the largest Europlan and Japanesefirms have increased their researchand development spending by 18-20percent per year. AT&T has increasedits -pending by about 8 percent peryear.

While the US. standing has de-clined, our foreign rivals have pros-pered. Annual foreign investment inU.S. high-technology Industries has in.creased from $214 million in 1985 to$3.3 billion in 1988. In the 6 yearssince the divestiture of AT&T. 66 dif-ferent U.S.-trased computer and tele-communications equipment companieshave been bought by or'have mergedwith foreign firms.

This decline In the U.S. leadershipposition has tremendous consequencesfor all American& The erosion of criti-cal US. industries means fewer jobafor American workers Increasing in.vestment in the United States by for.eign companies means that profit,from American activities flow over-

'seas. The Lack of an Industrial andhigh-technology base within theUnited States threatens our militarlcapabilities and our national defenseThe economic, social, and politicalramifications of the continued deterio-ration of US. strength In these crucisIndustries could be devastating.

Lifting the manufacturing restriction on the Rell Operating Cos. will

ATE. S 6967help to reverse this decline. The BellCos. are among the top 50 corpora-las In America. Together, they earnbout $80 billion in annual revenues.

employ almost 2 percent of the Asmeri-can work force. provide telephoneservice to 80 percent of the Nation'spopulation, ad control over one-haltof tWe United States telecommunica-tons assets. They have the knowledge.the resources, the experience. and.perhaps most important, the desire, tobe strong players in the world macnu-factoring market. How could theUnited States allow its world leader.ship in high technologies to runaground whsile I of its bgest and mostcapable cpenies are kept out of thegame?

2. JosSince the divestiture. AT&T has

closed down or reduced Its work forceat 33 manufacturing plants, resultingIn a loss o80.D00 manufacturLng-relat-ed jobs. At the same time. AT&T hassigned 18 Joint venture agreementswith foreign manufacturers and hasopened .7 new manufacturing tacililiesoverseas, This drain of Arnerican Jobsnot only harms the American worker.it also harms our Industrial oozopetl-tivenesL Trained and skilled workersare essential If the United States Is tocontinue Its rote as the world's techno-logical leader.

The Communications Workers ofAmerica firmly believes that liftingthe manufacturing restriction on theBell Co. will promote thousands ofnew job opportunities In the UnitedState. The domestic manufacturinsprorision requires the Bell Cs. to con-duct all their manufacturtng here inthe United States. Whether the BellCos begin to manufacture on theirown. whether they provide seed captital to small entrepreneurial busli ess-es. or whether their manufacturing so-tivities increase the demand for do-mesteally made components; liftingthe manufacturing restriction is cer-tain to result in significant numbers ofnew Jobs.

2. 5555A2CH A DEVU,0PK?The manufacturing restriction

places a significant constraint on theI Bell Cos:" willingness and ability to

engage In research and developmenLA As interpreted by the courts, the man-ufacturing restriction allows the BellCos. to engage in research but notdesign or development. The line be-

. tween research and development Is soarbitrary and unclear that the Bell

i Co& are afraid to engage In any re-search at all for fear of crossing that

1. line.Further. because the Bell Cos.

cannot turn the fruits of their re-search into a marketable product,. they

i cannot earn a profit from that re. search. Thus. the Bell Coa, hase littleI Incentive to conduct any resesrh at

all. As a result the Bell Cos. spend- only 1.3 percent of their revenues oni research, while most foreign manufe-


86968 CONGRESSIONAL RECORD - SENATE-tuers spend between 6 and 20 percent work. Such efficiencies include the vide-of. their revenues on research, sharing of joint costs, the knowledge turerS'Lifting the manufacturing restric- of the networks and the needs of cus- ny tion will give the Bell Cos. incentives tomers. The entry of the Bell Cos. will tunitto'conduct research. since they will be undoubtedly stimulate greater Innova- third

-able to turn that research into profita- tion and customer demand for commu- equl"ble .products. Lifting the restriction nications products in a way that will openwill also eliminate the arbitrary, un- advantage all equipment manufactur-clear, and unnecessary boundaries be- ers. Thtween reaearch and design and devel- THE DOMESTIC MANUFACTUR5IO ISIO dizinOPment. Some may ask how we can be sure with

4. INeEASMUsXV=T&ST IN Ta UNTsaX that this bill will benefit the United ices.STATES States? How do we know that the Bell

Foreign firms have di-amatically in- Cos. will not go overseas to conductcressed their purchase of US. high- their manufacturing? The answer is Atechnology firms. Since the divesti- that this bill includes a strict domestic perceture, foreign firms have purchased or manufacturing provision. If they man- Themerged with 66 different high-technol- ufacture, the Bell Cos. must conduct madeogy US. firms. In Just the last 2 years, all their manufacturing activitiesthe percentage of US. manufacturing within the United States. Further, the Themployees working in foreign-owned Bell Cos. cannot use more than a cer- from.companies grew from 8 percent of the tain percentage of foreign-manufac- fromU.S. population to II percent. tured components in the products reco

Many of these companies could have they manufacture. This provision was compbeen purchased by the Bell Cos. if not negotiated by the Bell Cos. and thefor the manufacturing restriction. The Communications Workers of America Thmanufacturing restriction bars the and has the complete support of both fullBell Cos. from owning any equity in- groups. I believe that a domestic con- ceriterest in a manufacturing concern, tent provision such as this is essential diateFurther. it is unclear whether a Bell to ensuring that the Bell Cos.' poten- mati

•Co. can loan capital or have any finan- tial manufacturing activities benefit I beal relationshIp with a manufacturer, the U.S. worker and economy. I ap- tant

'As one manufacturer testified at the plaud the representatives of both or- to ovhearing before the Commerce Com- ganizations for reaching this agree- thesmittee, the manufacturing restriction ment and have ilcluded their agree-implicitly restricts the business activi- ment in this bill.ties of every telecommunications man- IscsasseD AFEGUAS HAVE asUCEs THE

ufacturer in. America, THREAT oF A5usa ThAS a result of the manufacturing Let there be no mistake, however arti

llmltatlons, small, entrepreneurial about the premise on which this bill is statecompanies must often turn to foreign- based. I fully understand that these tobasedeompanles for necessary capital Bell Cos. continue to exercise a sub- Chic

Mostof hesesmal mnufaturrs aniMost of these small m facturers stantial degree of market power over caticwould rather work together with local telephone services, Many persons aAmerican-based Bell Cos. if they were arsoceephae ell Coo. pedomi cetnallowed to do so. For this reason, over nance of these markets could give an40 smal manufacturers of communica- them incentives to engage in unla ful iSoion equipment have expressed Sup- crscs-subsidization and self-dealing.port for this legislation. Lifting the -o se reaon a h a ing. eratimanufacturing restrictions would free For these reasons, I have included in turir

up he ellCoo' apial oures ndmy bill a hoot of safeguards dcsigned ratesup the Bell"Cos." capital sources and to prevent any kind of unlawful and reteencourage greater US. investment by anticompetitive activity. In conducting nikeU.. compaies. their manufacturing activities the tieS. 1SCrRZASZ0~ mo SAE auORFKERNAT HA BOC's must comply with the following the

NQU1PKEN SLAKETareThe US. share of the international safeguards: that

equipment market is in severe decline. Wo JOINT MANIPACrURING SutcEven the opponents of this legislation To prevent collusion, the BOC's anyacknowledge that the US.g market cannot manufacture in conjunction ufacshare has declined in almost every with one another. The bill requires sMalsphere of communications equipment, that, if the RBOC's decide to manu- handThe US. manufactures no fx s facture, they will create at least seven is mchines and- controls less than 20 per- independent manufacturing entities tecticent of the world market for central that will compete with each other as Chsoffice switches, and these figures in- well as with existing manufacturers, thatclude equipment manufactured in the SEPT AF u publUnited States by foreign-based compa- The BOC's must conduct all their conf.nies. manufacturing activities from sepa- Th

The Bell Cos.' entry into manufac- rate affiliates. The affiliate must keep clalnturing should have a positive impact books of account for its manufacturing propon the total market share controlled activities separate from the telephone ulatby US. firms. The BOC's have an inti- company and must file this informs- firstmate knowledge of the US. market, tion publicly. taletelephone standards, and business eco- NO SELF-sEALING barsnomics. Further. there are substantial First, the BOC may not perform crossefficiencies between the operation of sales advertising, installation, produc- courthe telephone network and the design tion, or maintenance operations for its fileof equipment to be used in that net- affiliate: second, the BOC must pro- tion

June 4. 19-91opportunities to other manufac-s to sell to the telephone compa-hat are comparable to the oppor-les it provides to Its affiliate; and. a BOC may only purchasepment from Its affiliate at themarket price.

NO CROSS*SUSSIDIZTION

e BOC is prohibited from subsi-g its manufacturing operationsrevenues from its telephone serv-

LIMITATION ON EQUIlT OWNEsHIP

BOC may own no more than 90nt of the equity of its affiliate.remaining 10 percent must beavailable to outside investors.

LIMITATION ON DEBT

e affiliate only may secure debtthe financial markets separatethe BOC. No creditor shall have

ure to the assets of the telephonetany,SCLOSUaE OF NETWVORK INFORMATION

e BOC must file with the FCCand complete information con-ng the telephone network Imme-ly upon revealing any such infor-an to its manufacturing affiliate.elieve these safeguards are Impor-and necessary, and I fully intend,ersee the FCC's efforts to enforcec safeguards fully.UEPAiTMENT OF JUSTICE. THE ccM. AND TtESTATES CAN PRoTrEC AGAINST AB5E

e combined resources of the De-ment of Justice, the FCC. and the* regulatory agencies are certainprevent cross-subsidization. Thef of the Antitrust Division, for in-ce, testified before the Communi-ns Subcommittee that antitruste was unlikely to occur if theufacturing restriction were lifted.me persons assert that the BOC'ssubsidize their manufacturing op-ons by recovering their manufac-ig costs through higher telephone.These people ignore the testimo-f the Chairman of the FCC. Als, who testified that "claims thatFCC's safeguards are ineffectivebadly outdated." He also stated"I believe the (Communicationslomsnittee can be confident thatrisks associated with Bell Co. man-turing are both manageable andI." The FCC is the expert agencydling communications matters andost directly responsible for pro-ng the public interest. If theIrman of the FCC is convincedthis legislation will promote thele interest, the Congress can beIdent that this legislation is wise..e FCC Chairman can make this

because of the enormous in-ements that have occurred In reg-on. For instance, the FCC, for thetime ever, has implemented a de-

d cost-accounting system thatthe Bell Cos. from engaging In

-subsidization. These part X ac-ting rules require the Bell Cos. towith the FCC detailed cost alloca-manuals. along with certification


June 4, 1991 CONGRESSIONAL RECORD - SENATEfrom an outside auditor that the infor-mation in the manuals is accurate.These manuals break down costs be-tween regulated and unregulated ac-tivities. The Bell Cos. have filed thesemanuals for the past 3 years. This his-tory gives the FCC and the auditors ahistory with which to compare futurecost allocations to ensure that costsare allocated properly between regu-lated telephone service and unregulat-ed activities.

Further, these cost data are nowsubmitted In computer format thatgives the FCC greater ability to moni-tor and evaluate changes. The Auto-mated Reporting and Management In-formation System IARMIS] computersystem installed by the FCC a fewyears ago significantly increases theFCC's ability to oversee the telephonecompanies' activities.

Moreover, the FCC has expanded itsown auditing capabilities. The Com-mission conducted 21 full-scale auditsover the past year. double the numberconducted in 1987. This does not in-clude an additional 12 attestationaudits of Bell Co. cost allocationmanuals. In addition, the FCC hasnearly tripled its budget for conduct-ing field audits since 1987. increasingits travel budget from $35.000 to$105.000 In 1991.

In addition to these regulatorychanges made by the FCC are the sub-stantial changes made by the States.The FCC has worked hard to developstrong relationships with the .Stateregulatory commissions that haveoversight authority over the Bell Cos.'intrastate activities. Further, the Com-munications Subcommittee of the Na-tional Association of Regulatory Utili-ty Commissioners supports lifting themanufacturing restriction by a vote of13-5. These Commissioners are theState officials most directly responsi-ble for the welfare of the telephoneconsumer.

CONCLUSIONIn my view, lifting this manufactur-

ing restriction is vitally important.This bill is critical to the future of theNation's telecommunication industryand this Nation's economic future. Iurge my colleagues to support thismeasure.

So there you are. We have the vari-ous issues covered. We will be glad toentertain the amendments as theycome to the floor, and perhaps. Mr.President. if I hush a moment, we willattract some folks. I suggest the ab-sence of a quorum.

The PRESIDING OFFICER. Theclerk will call the roll.

The bill clerk proceeded to call theroll.

Mr. DANFORTH. Mr. President. Iask unanimous consent that the orderfor the quorum call be rescinded.

The PRESIDING OFFICER (Mr.KERRY). Without objection, it is so or-dered.

Mr. DANFORTH. Mr. President. Iwant to compliment my chairman.Senator HoLLiNcs. for doing what has

been a long time coming and that isbringing to the floor of the Senate abill to at least partially lift the courtorder with respect to the telephonecompanies.

Many people have commented forquite a period of time that the idea ofa Federal judge operating a majorsector of our economy from his court-room is crazy and that we should dosomething about it. And yet. becauseof the size of the interests involvedand the importance of the issue, it hasbecome very, very difficult to legislate.

Senator HOLLNos has done theseemingly undoable In bringing thislegislation to the floor, and I want tocompliment him for his contribution.

National communications policyshould not be set by one FederalJudge. The Judicial process involvesdelay and. leaves uncertainty in thecommunications industry. Detailedregulation of this industry should bethe responsibility of the FCC, not acourt construing an antitrust decree.

The time is right to lift the manu-facturing restriction imposed on theBell Operating Cos.

Lifting the manufacturing restric-tion will improve the ability of theUnited States to compete internation-ally in the telecommunications equip-ment market. The seven Bell Cos. rep-resent one-half of the U.S. telecom-munications industry's human and fi-nancial resources. The Bell OperatingCos. employ between I and 2 percentof the entire U.S. work force. They av-erage $11 billion each in annual reve-nues. S. 173 will allow the Bell Operat-ing Cos. to use their vast resources toenter into equipment manufacturing. Ishare the view ol the Department ofCommerce that the Bell OperatingCos. "can make a difference, and theyought to be offered the freedom to doso.,.

Moreover, the need for the manufac-turing restriction no longer exists. Therestriction was intended to addressthree specific forms of anticompetitivebehavior associated with the Bell Sys-tem's predivestiture manufacturingpractices. S. 173 incorporates safe-guards to protect againt each of thesethree potential abuses.

The first is the alleged effort toimpede competition by giving themanufacturing subsidiary an advan-tage through privileged access to thetechnical specifications of the Bellnetwork. S. 173 prevents this activityby requiring each Bell Operating Co.to file such technical information withthe FCC anytime such information isgiven to its manufacturing affiliate.

The second problem is the possibili-ty of cross-subsidizing manufacturingefforts with funds derived from thelocal telephone monopoly. Such cross-subsidies could create an unfair priceadvantage while passing on losses tothe Bell Co. local customers. S. 173 re-quires the Federal CommunicationsCommission IFCCI to promulgate reg-ulations to prohibit cross-subsidies.The FCC has already implemented

S 6969new accounting and affiliate transac-tion rules which eliminate or signifi-cantly reduce the likelihood of cross-subsidization. S. 173 requires the man-ufacturing affiliate to secure debtfrom financial markets separate fromthe Bell Operating Co. and prohibitsany creditor of the manufacturing af-filiate from having recourse, upon de-fault, to the assets of the Bell Operat-ing Cos. telephone company.

The third potential abuse is the pos-sibility that a Bell Operating Co.would buy its affiliate's products in-stead of cheaper, better products man-ufactured by its competitors. S. 173 re-quires each Bell Operating Co. with amanufacturing affiliate to providesales opportunities to manufacturingcompetitors comparable to those af-forded to the affiliate. When a BellOperating Co. purchases- equipmentfrom its affiliate, it must pay the openmarket price.

S. 173 does not stop here. The billprovides additional protection formanufacturers, for small telephonecompanies, and for ratepayers. TheBell Operating Cos. cannot manufac-ture in conjunction with one anotherand must conduct all their manufac-turing from separate affiliates withseparate books of account. The BellOperating Co. may not perform sales,advertising, installation, production ormaintenance for its affiliate. At least10 percent of the equity ownership ofthe affiliate must be made available tooutside investors. The Bell OperatingCo. manufacturing affiliate must makeits equipment available to other tele-phone companies without discrimina-tion or self-preference as to price, de-livery, terms, or conditions.

The telecommunications industry,both in the United States and world-wide, has undergone tremendousgrowth since the divestiture. S. 173will allow seven of our greatest compa-nies to use their vast resources to com-pete, while ensuring that no harm isdone to competitors or to consumers. Isupport S. 173 and urge my colleaguesto vote for this important legislation.

Mr. HOLLINGS. Mr. President, letme thank my distinguished colleaguefrom Missouri, Senator DANMOaTs. Hehas been a leader in telecommunica-tions, both as a ranking member onour Commerce Committee and par-ticularly as a senior member of our Fi-nance Committee. It was because ofhis concern about this advanced tech-nology and losing our leadership posi-tion in this regard that he took overand was the leader in our institutionon Sematech. which was a move, as astopgap, to try to maintain this tech-nology. We particularly appreciatedhis leadership on this measure.

Once again, we emphasize this bill'sbalanced nature. Looking it over andstudying it, I guess, yes, there hasbeen a difference between the col-league from Missouri and this particu-lar Senator from South Carolina,whereby -I have not been enthused


86910 COPbout what they call free trade,

wherea my colleague from Missourihas been a leader for free trade. Yetwe both studied this bill from everySigle and made sure It had balance.: Yef we open up the role of -mnu-facturer to the several Bell OperatingCO. but we have strong safeguards. Inessetce, both the FC-we will get ItIn the Raman and refer our colleagueto that--bth the counsel at FCC andat the Justice Department said thatthe safeguards were too restrictive.But I went along In order to ensure abalanced approach.

Incidentally in 1984. the Justice De--arutmet advocated the Implstion ofthUs restriction prohibiting manufte-

tuing by. the Bell Opw ng Co&-now the Justice Department supportsmanufacturing by the Beil Cos In factthe Justice Department believes thatthis bill Is going too far the other wayby Imposing too many restrictions. Butsaid. no, the Congress is concerned andfeels there is a need for safeguards.We are looking out for consumers.'We also look out for antitrust Issues

and concerns. The wisdom of all theantitrust law is not necessarily vestedIn the Judiciary Committee. This par-ticular Senator Is chairman of the Ap-proprlations Subcommittee on Com-nerce. Justice. State, the Judiciary,and Related Agencies, and the Com-nerce Committee. We have tried tobeef up and update the Antitrust Dlvi.lon over at the Justice Department.

I am dismayed that there are casesthat sit in the Antitrust Division for1. 14, 15 years expending hugeamounts of. money, and still not reachi eoncliion. We have tried to be moreeffective and more responsive to theconcerns about antitrust issues. So Ido not yield to other colleagues onantitrust coneerns. I too, have notonly that concern, I have that respon-sIbIlity.

Because we are approaching thehour when both sides of the aisle willrecess for their caucus'. I want to taketime to address my trade concerns.The U.S. spending on research and de-velopment is actually in decline.

The United States spends only 1.8percent of its GNP on nondefenseR&D. and Japan and Germany spendbetween 2.6 and 2.8 percent In commu-nications. The budgets for research ofthe Bell Operating Cos. and AT&Tcombined grow at a rate of 9 percentbut their competition in Europe isgrowing at 19 percent, and Japan'sR&D budget is growing at, 28 percentover the same period. We Just com-bined the research budgets of AT&Tand the Bell Cos. so the opponentswould not my. oh. no, you have lookedat the Bell Co. but you'have forgot-ten AT&T. We take them both togeth-er and you can see the trend concern-ins actual research and developmentcompared to our foreign competitorsand how we lag behind.Most telecommunicatIons firms

spend between 6 and 10 percent oftheir revenues on R&D. and some

qGRESSIONAL RECORD - SEN/

spend up to 12 percent. As I pointedout earlier, and I emphasize again, ourBell Operating Cos. are only spending1.3 percent of their revenues on R&Dbecause if they did get into researchthey could fiot profit from it. Theycannot sell their results to anyone.They cannot manufacture. Theycannot profit from It, so why go downthat particular road, even though youare in that particular discipline?

You would like to always do a betterjob but as a result of this particularnational policy we guarantee that ourtelephone companies, as we knowthem, are not going to do a better job.There is no financial attraction to do abetter Job.

The modified final Judgment pre-ven the Bell companies from havingan incentive to engage in researchand development. Under the MFJ. asthey call it, the term "manufacturing"includes design and development.Thus, the Bell Cos. may currentlyengage in research but as a practicalmatter cannot engage in design or de-velopment of equipment

This line creates a number of prob-lems. We have the problem of uncer-tainty. The line between researchwhich is permitted and developmentwhich is prohibited is an unclear line.

They fear sanctions, Researchers areafraid to get anywhere close to theline. They do not want to get into thatresearch and find out something theyworked on for a year or two or more Is,all of a sudden, legally forbidden.

There is a matter of inefficiency.The Bell Co. researchers must stoptheir work whenever they get close toa design stage because they must turnover their work to an unaffiliatedentity. This creates tremendous ineffi-ciencies and new researchers will nothave the experience and know-how onthe research that has already beendone.

Arbitrariness is really a concern.The M PJ permits the Bell Cos. to de-velop generic product standards butbars them from developing products tomeet those standards. They design thecompany telephone network but theycannot design or develop the equip-ment to be used in the network.

The fear of sanctions is strong. Theline between research and develop-ment is so unclear, inefficient, and ar-bitrary, that the Bell Cos. are afraid todo any research at all and as a practi-cal matter, cut back and do not engagein it. The penalty for violating it canbe very. very severe.

Of course, research is unprofitable.If the Bell Cos. researchers come upwith a new idea, as I stated, theycannot produce a product for sale tothe Public. There is little potential, inother words, to recover your costs ofdoing research.

Industry experts believe that thepath to competitiveness is toward a dy-narnic production mode that involvesincreased sharing of knowledge be-tween researchers, manufacturers, andmarketers. We in the Congress are

LTE June 4, 1991constantly repeating that, yes. we dowell, we win the Nobel prizes; but theywin the profits. Supercomputers andthe other things. superconductorsdown in Texas and the other examplesthat we can point out-the fact of thematter Is the Nobel prize we might winhere in 1990 or 1991 was for researchwork done back in 1978-80. 10 yearsago. You are going to find by the endof the century we are not winning anyNobel priz-s. they are all going to b.-won by our foreign competition.

Robert Reich saidThis quiet path back to compettiven ,.

depends less on ambitious GovernmentR&D projects than on Improving the proc-ess by which technolo al Insights aretransformed into high quality products.

US. companies must link their own R&Defforts more closely to commercial oroduc-tion. Compared with Japanese firms, mostAmerlcan firms draw a sharper distinctionbetween reseach and development on theone saide and production and marketing onthe other. This division prolongs productdevelopment times. cauaing marketing op-portunItles to be iost.

Again, in Business Week, and Iquote:

A decade ago Japanese companies stunnedtheir UA. rivals by spewing out products ofever higher quality at ever lower and lowerprices. This stemmed largely from the f:tJapanese. emulating the way American co.-panies operated prior to World Wax 11, donthave separate design and nanufacturingfunctions. Their product engineers aeequally adept to both. Using concurrent en.gineering to harnes the ingenuity of Ameriea's small manufacturers could spark an in-dus rial renaissance.

That is the article in Business Weekentitled, "A Smarter Way To Manu-facture." in April 30 of last year. atpages 110 to 117.

Mr. President. I referred earlier tothe testimony of Antitrust DivisionChief James Rill. He said in his tesli-Mony:

We are concerned that statutory provt-slons mandating stru.turl separation andrequiring cosparable opportunities In theBell operating purchasing decisions may notbe neawy to achieve this objective andcould foreclose many of the pro-competitivebenefits the bill seeks to provide.

He is right. That could occur. Thatbothered this particular Senator. Butthis bill was not arbitrarily drawn.This bill was drawn with balance inmind, to allow the best of the best tocome Into research, the best of tiebest to come into development, thebest of the best to come Into manufac-ture and commercialize and therebybring the best of technology and thebest of technologically advanced scrv-Ices to the consumer. Yet. s-e put insome of these statutory provisions tomake sure that we would not becharged with a disregard for antitrust.

Chairman Sikes, the Chairman ofthe Federal Communications Commis-sion. stated: .

Adding new statutory requirements couldfrustral e the bsic goal of this bill, whisch ismore US. manufacturing. We would wel-come the chance. Mr. Chalrman, to workwith the subcommittee and Its staff to


June4, 1991 CONensure that legislative rules and our rulesare in harmony and that we do not uninten-tionally create a regulatory morass.

We have It. It has not been easy.Justice and the FCC now go along.saying this is a good bill. excepting ofcourse the administration. And thatshould be pointed out. The adminis-tratlon does not go along with the do-mestic content provision. But that isthe responsibility of Carla Hills. Wedealt with her till last week.

We really have the tall wagging thedog around here. The Europeans allsit there in the EEC-and I pointed itout-and emphasize just exactly whatthe content provisions are for all ofthe European Economic Community.And then the administration comes upand says, look, we better not put in adomestic content provision. That willruin one of our arguments in our tradenegotiations.

It should not be an argument. Thebest way to remove a barrier is to raisea barrier and remove them both.Market forces that I believe in;market forces operate. Unless anduntil you can bow and scrape to theJapanese with all of this special relationship nonsense you are not going toget anywhere. But unless and untilyou can make It in the economic Inter-est of the Japanese. they are not goingto deal, and I would not if I werethem.

Business is business. As a result, wehave to meet this particular competi-tion to try to level out the field and ifthere comes a time then in negotiatingwhere both sides can remove, let ussay, the agricultural benefits, havethem in both sides, not Just removethem for the one. Similarly. if bothsides can remove them with respect totelecommunications and domestic con-tent. we can do so.

Let me read what Henry Gellerstated on this.

It is simply wrong to suppress the compe.tition of over one-half of the United Statestelecommunications industry in this Impor.tant sector. Further. without manufacturingfacilities, the divested regional companiescannot reasonably be expeted to engagefully and effectively in the R&D that isvital to this dynamic area. There is simplyno need to protect AT&T and the foreignmanufacturers from the competition of theRegional Bell Operating Cos.

That is really what you have. He is aformer general counsel of our FederalCommission and head of NTIA, andGeller knows this field better thanany, in my Opinion. What the oppo-nents of this bill are really insisting onwith amendments that will be present-ed here is let us protect NTT and theforeign manufacturers, all under theauspices of looking out for the con-sumers and for antitrust law. All of asudden we have all become Justice De-partment lawyers.

The Justice Department endorsesthis bill with that regard, not with re-spect to domestic content. The admin.Istratlon opposes it. But otherwisethey are the ones that said, look. werequired the manufacturing restriction

qGRESSIONAL RECORD - SENATE S 69717 years ago, and now we know definite- These are the kinds of opportunitiesly it has not worked. It is a bad provi- that the United States must grasp ifsion. and we support Its removal, we are to remain an economic super-

Janice Obuchowski, Administrator power and a great Nation.of the National Telecommunications Tis autEG 5soL0oTrInformation Administration on behalf Unfortunately, despite an over-of the administration stated this: whelming vote for the fast track, some

In continuing to bar the Bell Cos. from wish to once again bring this issuemanufacturing, we are, in effect, handicap- before the Senate.ping the ability of the United States to meetaggressively the competitive challenge pre- Apparently, opponents of the fastsented by foreign commercial interests. The track have decided that If they cannotadministration believes that lifting the man. kill the fast track outright, perhapsufacturing restrictions will have a siif- they can cripple it with a flank attack.cant positive impact on the operation of the The most recent proposal wouldU.S. telecommunications industry. This Ina- undo the fast track for the Northportent growth industry will better be posi- American Free-Trade Agreement bytioned to thrive and to serve the Americanpublic as the United States strives to main- allowing amendments relating tctaln its competitive edge globally. Mexico and requiring another exten-

Mr. President. I suggest the absence slon vote next year.

of a quorum. I strongly oppose this effort. AfterThe PRESIDING OFFICER. The months of debate, the Senate hao

clerk will call the roll. spoken on the fast track-and spoken

The bill clerk proceeded to call the strongly.roll. I see no reason for more of the Sen-

Mr. HOLLINGS. Mr. President. I ask ate's valuable time to be spent consid

unanimous consent that the order for ering the fast track.the quorum call be rescinded. Let us stop debating procedural

The PRESIDING OFFICER. With- issues and allow our negotiators to gei

out objection, it is so ordered. idown to business._________TIS ADMIINISTRAT5ON'S SPIDEI

That said. I must confess to some seRECESS rious doubts about the outcome ol

The PRESIDING OFFICER. Under both the Uruguay round and thethe previous order, the Senate will NAFTA talks.stand in recess until the hour of 2:15 The negotiations will be tough.p.m. The United States must set high

Thereupon. the Senate. at 12:30 goals in the talks; U.S. economic secu-p.m., recessed until 2:15 p.m.: where- rity Is at stake.upon, the Senate reassembled when In the Uruguay round, our negotia-called to order by the Presiding Offi- tors must negotiate pragmatically.cer [Mr. ADams]. . Our major objectivs-liberalizins

Mr. BAUCUS. Mr. President, I ask agricultural and services trade andunanimous consent that I be allowed protecting intellectual property-arto speak as in morning business. sound; indeed, they are imperative.

The PRESIDING OFFICER. With- But the U.S. negotiators also musiout objection, it is so ordered, work for progress in other areas. For

example, they nist work harder teeliminate or lower tariffs in sector,

EXTENSION OF FAST TRACK where the United States has exportNEGOTIATING AUTHORITY opportunities.

Mr. BAUCUS. Mr. President, just In the agriculture sector, U.S. inter-before the Memorial Day recess, this ests would be best served by focusingbody cast one of the most important on the biggest problem--export subsi-votes of the year. dies-rather than promoting the ab-

The Senate voted 59 to 36 to extend stract principle of free trade.fast track negotiating authority for 2 If it Is to win congressional approval.more years. the Uruguay round must include pro-

Coupled with a similar House vote, visions, like these, that are of concretethis vote will allow the administration benefit to United States exporters.to conclude two critical international The administration has an eventrade negotiations: the Uruguay round more difficult job in the NAPTA nego-of GATT negotiations and the free- tiations. Negotiating a free-tradetrade negotiations with Mexico and agreement with a developing country.Canada. like Mexico. is an extraordinarily com-

I have spoken at length on the bene- plex task.fits of both of these negotiations, but I Numerous economic studies confirmwill briefly recap. that a free-trade agreement between

The Uruguay round alone has the the United States and Mexico could bepotential to create more sustained eco- a boon to the United States economy.nomic growth than any proposal that But if the agreement is negotiatedwill come before the Congress in the poorly or Ignores critical issues. itforeseeable future. The North Ameri- could cause severe dislocations in ourcan Free-Trade Agreement could economy.create a secure market for U.S. busi- Unfortunately. I still fear that someness of 360 million consumers-the in the administration are inclined tolargest in the world, negotiate an agreement that is dis-


HeinOnline -- 6 Bernard D. Reams, Jr. & William H. Manz, Federal Telecommunications Law: A Legislative History of the Telecommunications Act of1996, Pub. L. No. 104-104, 110 Stat. 56 (1996) including the Communications Decency Act [xxxviii] 1997

June 4. 1.991 CObto eradicate any vestige of Tibetan cul-ture.

Our Ambasador to China, JamesLilley. recently acknowledged that"Tibet is u occupation by China."This charge again t China s beingnewly recognized again as a crime notjust against the Tibetans but againsthumanity.

There needs to be a moral consisten-cy In American foreign policy which Isnow aparently lacking in regard toChina.

I could accept the President's objec-Uve if I thought our policy was funda.mentally conslstant. But why then dowe Insist on Isolating Vietnam andCambodia whose people hunger toofor political and economic change?Why not lift our trade and aid embar-go on those countries?

Why then do we not press China toend Its 1ieg occupation o f Tibet?

Our President. I am certain, has hisreasons. We shall have ours when wevote whether or not to grant China aspecial status not granted to all na-tiorn.

TELECOMMUNICATIONS EQUIP-MENT RESEARCH AND MANU-FACTURING COMPETITIONACTThe Senate continued with the con-

sideratlon of the bill.The PREIDINO OFFICER. The

Senator from Mississppi.Mr. LOTT. Mr. President. I join my

colleagues who have spoken n supportof S. 173. the TelecommunicationsEquipment Research and Manufactur-ing Competlon Act of 1991.

I have been a long-time supporter offreeing the Bell Cos. from the manu-facturtng restriction dating back to mytenure of service in the House of Rep-resentatives. In both the 99th and100th Congress my fellow colleaguesIn the Republican leadership and I in-troduced trade and competitivenesslegislation which incuded provisionsto enable the Bell Coe. to manufacturetelecommunications equipment in theUnited States.

Briefly. I would like to take this op-portunity to outline several of thepoints that have been made by oppo-nents of S. 173. with which I disagree.

First of all. opponents say over andover again that their concerns aboutthe Bell Coa.' manufacturing "Justcan't be regulated." This, despite thefact that the Bell Co. are some of themost heavily regulated companies InAmerica, There are extensive Stateand Federal rules to prevent abues--Itis Important to point this out, becauseit has been lost in the comments ofthe opponents.

Opponents also say the Bell Co. willcross subsidize their manufacturingoperations by shifting those costs tothe backs of ratepayer. Any Senatorwho takes time to look at this will un-derstand that in the current price capregulatory environment where the in-centive is to reuce. not increase.

GRESSIONAL RECORD - SEN,costs-eny company that would at-tempt to croa subsidie or Inflate Itscost structure would be bent on self-destrudton.

The most dclplicitous argument bythe opponents of S. 173 Is the allega-Uon of Bell Co. self-dealing, a practiceof buying only from its manufacturings ffillate, The Bell Cos. have estab-lisbed supplier-contract relationshipswith. and purchase billions of dollarsof equipment and products annually.from hundreds of different manufao-turers.

The Bell Co. also multisource eachof their separate product lines-as acompetitive procurement practice-toavoid dependency and ensure alterna-tive sources of supply.

The telecommunications equipmentmarket today is extremely diverse andcharacterized by niche suppliers, eachof whom fills a particular need. Rapid-ly changing technology has creatednumerous supplier opportunities thatwere nonexistent in the predivestitureeneirornent.

It is unsound, in my view. to thinkthat the Bell Cos. would attempt toreplicate what is now supplied to themby hundreds of different manufactur-ers with unique talents and proven ex-pertise.

It is far more rational to view theBell Cos. as having a strong businessinterest in seeing the U.S. equipmentmarket remain competitive, and limo-rative-and therefore, capable ofmeeting the changing, Increasingly so-phisticated needs of their customers

Some have suggested placing a re-striction on Bell Co. manufacturingwhich would prevent the Bell Cm.from self-deaing. The problem withthis approach. In addition to the un-fairness of applying such a restrictionto just the seven companies, is thatit would deprive many of the Bell Co.customers-mall businesses and resi-dential consaus-rom the benefitsof Bell Co. manufacturing efforts.

I the Bell Cm. can produce some-thing of value why should they not beallowed to sell It to their own custom-er and why should their customersnot be allowed to buy It?

The adrmtnistrnation is concernedthat the domestic content language iscontradictor" to our established tadepolicy as expressed in our GAIT talksand other trade negotiationa.

I think it is important to realize thatS. 173 in its c rent form Improves ourtrade negotiating position because Itbrings more leverage to the table. En-actment of S. 173 will enable the BellCos. to enter trade markets and devel-op an export capability for the firsttime.

The Bell Cm, will then be in astronger position to assist U.S. effortsand obtain reciprocal opportunities totrade and Invest overseas through pri-vrate negotiations and contract agree-ments, Also. 8. 173 sends the rightsignal to our trading partners that theUnited States walks like it talks inopening up our market and enabling a

ATE S 6975full oplemznt of players to cmnpeteon equal erms and comnition&

The existing policy bisdoi. m e setof rubs for the Bell Co. and a differ-et sat of rules for the rest of the in-daT. S. 173 would make everyoneplay by the same set of rudes, and'would also tend to en-a that newjobs created will be ereated in theUnitedStates. not ovesea.

The eurent ban on manufactuslngInpede the development of the US.tteeooincatos network. I feelvery strongly that continued develop-meat is essntial to continued econom-tc growth and internatonal competi-Uvenesa.

Entry by the Bell Cos. will giv tele-cosnamunications equipment manufac-turing in the United States a shot inthe.arm, and help to enable our do-mestic Industry to remain healthy andvibrant.

This legislation is a jobs bill, domes-tically. It is a bill that is long overdue.The Commerce Committee has comutd-ered this legislation very carefullyover the past, at least 4 years. We haveworked on It. We have reported thislegislation out. and I think It is verywell crafted.

I hope my colleagues will not try topick it apart piece by piece. We stillhave to go through the Senate.through the House, and go into con-ference. There may be some problemsthat can be w-nked out in the confer-ene. To have it delayed by an inordi-nate number. of amendments orstopped In the Senate by killer amend-ments I think would be a big mistake.

I say to my colleagues in the Senate.for too long the telecommunicationssystems In America have been run bythe courts. specifically by one Judge. Itis time we begin to reverse thaL Whyin the world would we prohibit Ameri-can companies from being able to com-pete domestically and In foregn mar-kets? We do not allow the baby Bellsto get In there and produce good qual-ity equipment.

I am convinced American companiescould produce better equipment at abetter Price.

This bill is long overdue from thestandpoint of letting the courts runthe telephone companies in America;It Is la overdue from the standpointof beg able to have better equip-

and it is long overdue inof jobe in America and every region ofthe country.

r think that the domesticpart of the bill is one of its strengths.We say that foreign componentscannrt exceed 40 percent, but If tereis an exceptional set of cirumstances.you can go to the FCC and have eventhat waived. What do we w-ant to do.guarantee that this equipment is madein same other country? Let .us giveAmericans a chance. This should notbe a killer amendment and If we knockthat minimal domestic content lan-guage out. of this bill it is going to


8 6976 COrsubstantially reduce the likelihoodthat we would get a bill at all.

8o I urge my colleagues to supportthis legislation. It is time we have alittle more "made in America" in ourtelephone equipment. It is also timethat we take this whole Issue backaway from the courts.i This Is a classic case of where the

system was not broke, and we fixed itanyway. It Is about time we tried tolevel out the playing field and alloweverybody to have a chance to com-pete In this very important area.. rwant to commend the chairman ofour Committee, the distinguished Sen-ator from South Carolina, and ourranking member, the Senator from.Missouri, for crafting this legislationand bringing it to the floor of theSenate. They have done a good Job.Let us go ahead and have the votes wehave to, and then let us report out fa-vorably this very important legisla-tion. I yield the floor.

Mr. HOLLINGS. Mr. President. letme thank the distinguished Senatorfrom Mississippi and a fellow committee member who has worked hard onthis particular measure, He really fo-cused on the point. This bill Is intend-ed to change the full employment forforeign manufacturers policy.

At the present time, there. is noquestion about where RBOC's are in-vesting their resources. Every one ofthese so-called very financially strong

*RBOC's (Regional Bell OperatingCoal, are investing overseas. We arelosing it all. That is why we put thedomestic content measure in to bringback Jobs, bring back the industry, andbring back technology to the UnitedStates. If we can get them into the re-search and development, then we canstart developing the technology, buildup our technological strength inAmerica, which has always been ouradvantage.

Our standard of living is too high tocompete with Singapore and otherplaces of that kind. Knowing that, wehave to have the advanced technologywhich Singapore does not have. If weare going to do that, we have tochange this foreign-employment andfull-employment policy for foreignerspolicy at the present time. That is ex-actly what we have with this bar onthe RBOC's ability to manufacture.

I might say. while we are trying towork out the so-called rural amend-ment by our colleague from SouthDakota, no one has been more con-cerned about rural America than thisparticular Senator. We are more ruralthan metropolitan or urban fromwhence I come. This bill does not dis-criminate against rule telephone com-panies at all.

What they really, in essence, haveasked for is that the RBOC's and thesmall telephone companies shall Joint-ly operate. When you say shall jointlyoperate your separate wholly ownedsubsidiary with the rural telephonecompanies, then the rural telephone

NGRESSIONAL RECORD - SENATEcompanies have a veto over any plansof the REOC they disagree with.

That is not required In business orindustry anywhere. It is not requirednow. It would not be required ofNorthern Telecom, Fujitsu. NipponElectric Cos.. Siemens-just go downthe list of all of these foreigners. Weare not requiring it now. We are notrequiring it of the 1.400 telephonecompanies. All of a sudden they wantto come in and say if and when youget that independent, wholly ownedsubsidiary, we want another restric-tion that you shall operate with us,

-namely, giving us a veto, and that youshall deliver on demand the equip-ment. If you have software or hard.ware that separate subsidiary pro-duces, if the software or hardware be-comes archaic, extinct, inefficient, youhave to still produce it.

For the Congress of the UnitedStates to pass a law that says a compa-ny has to produce and continue tomanufacture archaic equipment andsell it at a loss-this crowd has goneloco long enough on a lot of policies,but heavens above, that does not makesense. Yes. one provision of theamendment would require RBOC's tomanufacture and sell equipment, aslong as small telephone companieswant it, even if it means selling it at aloss "

I want my colleagues to read thisamendment. I am going to try to lookat it and be as reasonable as possible.But, we are not going to pas a provi-sion that has the National Govern-ment telling a company to sell at alosa. The whole idea is to advancetechnology, not to establish one par-ticular technology as of 1991 and con-tinue to sell it so long as an REA orrural telephone company demand it.

The South Carolina rural telephonePeople would be the first to sort ofsmile and laugh at me as I talk be-cause they know I am their bestfriend. I have supported all theirmeasures, but we cannot support thisamendment in its current form. It goesagainst the grain of common sense andbusiness practices. The rural tele-phone co-ops, they have remainedcompetitive. That is why they existtoday. They are economically strong. IJust have come from meeting with onecompany and heard their financialreport. It is wonderful to hear throughthe ears of a U.S. Senator that some-thing is in the black; that they are op-erating within budget. I have notheard that since 1968 or 1969 up here.I commend them. I sppport the ruraltelephone co-ops.

I see others want to speak. I hope wecan move along and get a compromiseamendment addressing the rural tele-phone companies concerns.

I do not want any misunderstandingabout the domestic content which theSenator from Mississippi has empha-sized on the one hand. It is an excel-lent provision. If we were going to JoinEEC '92. we would have to do it. We

June 4, 1991are just emulating our competition. Iyield the floor.



The assistant legislative clerk pro-ceeded to call the roll.

Mr. DANFORTH. Mr. President. Iask unanimous consent that the orderfor the quorum call be rescinded.

The PRESIDING OFFICER. With-out objection. It is so ordered.

(The remarks of Mr. DAIrORTH per-taining to the introduction of S. 1207,S. 1208, and S. 1209 are located intoday's REcoRD under "Statements onIntroduced Bills and Joint Resolu-tions.")

Mr. HOLLINGS. Mr. President. Isuggest the absence of a quorum.


The legisative clerk proceeded to callthe roll.

Mr. GRAHAM. Mr. President, I askunanimous consent that the order forthe quorum call be rescinded.


The Senator from Florida Is recog-nlzed.

Mr. GRAHAM. Mr. President, I askunanimous consent to proceed as Inmorning business.

The PRESIDING OFFICER. (Mr.KRrry). Without objection, it is so or-dered.

The Senator from Florida is recog-nized.

Mr. GRAHAM. I thank the Chair.(The remarks of Mr. ORaHAm per-

taiing to the introduction of S. 1211.S. 1212, and S. 1213 are located intoday's RECORD under "Statements onIntroduced Bills and Joint Resolu-tions.")

Mr. HATFIELD. Mr. President, I askunanimous consent that I may pro-ceed, with the permission of the man-ager of the bill. for 10 minutes.


The Senator from Oregon is recog-nized.

CIVIL RIGHTS LEGISLATION

Mr. HATFIELD. Mr. President, thismorning I was privileged to join witheight of my colleagues on this side ofthe aisle in introducing a comprehen-sive civil rights bill.

Mr. President, we have chosen to putthis bill into three parts as has beendescribed by our colleague from Mis-souri, Senator Daseoay. I shall not atthis moment attempt to go into thedetail of each of these three parts.

In effect, what we are trying to do isintroduce in parts what were the fun-damental components of last year'scivil rights bill with modifications. Isay with modifications on the basisthat we are looking at the possibilityof building on last year's experience.As you know. Mr. President, I, along


Jun,4, 1991 CONGRESSIONAL RECORD - SENATE

with others, were original cosponsorsof last year's civil rights bill and Ivoted to override the President's veto.the President of my party, or as afellow Republican.

There were some l1th hour attemptsto put together a compromise. ThePresident of the United States calledtwo or three Senators into the WhiteHouse a number of times to try tohelp work out those hangups, thosedifficulties, that proved to be impossi-ble at the last moment. But the goodfaith and the good effort of PresidentBush. I think is very evident.

Those of us who have known Presi-dent Bush for many years-and Icount It a privilege to be one of hisclassmates in the 90th Congress whenhe came to the House from a districtof Texas and I came to the Senatefrom Oregon-know that he has had along commitment in the field of- civilrights. And there is no exception tothat long record of commitment andaction in this particular day.

Mr. President, those who have raisedgreat concerns and fears, as if thiswere a crowbar approach, ought to goback to the fact that in the States ofthe Union we have proven the case. Amoment ago, when Senator GRAHAM ofFlorida was here on the floor, it wasvery interesting to note that all theMembers of the floor, including theChair, were former Governors. TheChair. as Governor of Nebraska; Sena.tor CHAYlK was here from RhodeIsland: Senator HOLLINGS. of course,the senior member of the Governorshere at that moment, from SouthCarolina; and myself from the State ofOregon.

Mr. President over 30 years ago, thetwo pioneer States that put togethercomprehensive legislation dealing withcivil rights in the workplace was the

.State of New York and the State ofOregon. When you go back to thatrecord, it is not something that is in-novative in the sense of a brand newidea that is coming upon us that some-how is threatening the tradition or theestablishment of whatever it may be.be It on the side of business or unionsor whatever it may be. This is a provenconcept that has been tested in theworkplace in a number of States lead-ing up to the first Civil Rights Act of1964.

Now since 1964, like other compre-hensive legislation of a pioneeringcharacter, there has to be fine tuningover a period of time of use. The court.in five cases, to many of us has notcarried out--and no disparagement onthe court-has not carried out whatcould be called legislative intent. Andtherefore the subsequent legislationthat occurred since the act of 1964 wefeel will be more in tune with theoriginal intent of abolishing discrim-nation in the workplace by the 1991bill.

You know. Mr. President, civil rightslegislation has been a long time before1964. but never could be enacted. Wedo not have to go back and recite the

history. We know the history of why itfailed. But the day came when the ma-jority leader was joined by the minori-ty leader. Senator Johnson fromTexas finally achieved the kind of leg-islation that Senator Dirksen of Illi-nois. the minority leader, could sup-port. And together they worked outthe civil rights bill of 1964.

I do not believe the situation is thatmuch different today in the sense thatwe have to have a bipartisan bill thatwill ultimately find support at theWhite House. That is the simplereason why we have come forth aswhat may be categorized as moderateRepublicans or radical Republicans orleper Republicans or whatever youwant to give us as a title or label to tryto start this kind of bipartisan processas against a situation that is happen-ing in the House legitimately.

And I am not being critical at all ofwhat is called the Democratic bill ofthe House that will be coming overhere. We joined the Democrats lastyear in making that effort of biparti-sanship. And so we are trying to find abill that will pass and be signed intolaw.

It may not please all of the peopleon either side but, nevertheless, let ustake action where we can find the abil-ity to take action and the agreementsnecessary to get a further step towardthe elimination of discrimination inthe marketplace.

I think, also, we have to understandthat some of these things are veryhard to define, whether in legal termsor other terms. One commentator said:Discrimination is like a hair acrossyour face. You Vannot see it. Youcannot find it with your fingers. Butyour keep brushing at it because thefeel of it is irritating.

We are in this status as far as dis-crimination. We hope to includewomen and minorities as well as thetraditional focus on the blacks in oursociety.

So. Mr. President. as I may, I am de-lighted to be a part of this effort. Weare very open to working with our col-leagues on the Democratic side. Werecognize we seven or nine Republi-cans, or however many will end upsupporting and cosponsoring our bill,are only a fraction of what we have tohave to pass a civil rights bill. But wealso realize that rhetoric has reacheda level where with serious negotiationsand people who are committed to theproposition, let us pas a bill, the bestwe can, get, the strongest we can get,the most effective one we can get.rather than standing back and saying,well, we can put it to a vote and dividethe sheep from the goats and see howit will play out in the 1992 elections.That is not helping the people we aretrying to help. Nor is it righting theIlls of our society.

I want to speak, again, to the factthat this is a tried and tested program,both in our Federal legislation and theState legislation that preceded it formany years. I am proud my State has

S 6977been in the forefront of civil rightslegislation. I consider It one of thegreat battles of my political careerwhich I hope will be a legacy to thepeople of my State. We pioneered inmigrant worker legislation, whenpeople said it woulo wreck the agrcul-tural community in my State. that theeconomy would be devastated. Wepassed it, and it did not wreck the agri-cultural economy in my State. And weare far from the goals, where weshould be. in migrant worker legisla-tion.

We have passed the point where civilrights should be a buzword but let uslook at human beings who are dis-criminated against, some by design.others unintentionally, and let useliminate all discrimination in our so-ciety. This is part of the long-termeffort, and I am proud to be part of it.I thank the Senator from South Caro-lina for yielding.

TELECOMMUNICATIONS EQUIP-MENT RESEARCH AND MANU-FACTURING COMPETITON ACTThe Senate continued with the con-

sideration of the bill.The PRESIDING OFFICER. The

Senator from Louisiana is recognized.Mr. BREAUX, Mr. President, I rise

in support of the bill pending beforethe Senate, and will make a few com-ments if those are in order.

I start by commending the chairmanof our full Senate Commerce Commit-tee for the effort he is making to putthe Congress back in the position ofmaking telecommunications policy inthis country. Some would agree thatthat is almost a novel idea, in light ofhow communications policy in thiscountry has been made, at least since1984. It has been made, not by theHouse of Representatives, not by theSenate, nor by the administration.

Communications policy in this coun-try. since the breakup and divestitureof the AT&T company, has essentiallybeen made by one Judge sitting in onecourt here in the District of Columbia.I refer to Judge Greene. who. becauseof a stituation regarding the legalsuits that were filed, is in charge offollowing that decision and ensuringthat the 1984 decision is continuallybeing followed.

The result of all that, to anyone whois listening, is that the policy deter-mining the future of telecommunica-tions development in this country isnot being made in open debate. It isnot being made by a duly elected rep-resentative of the people of this coun-try. But.the policy is essentially beingmade by one Judge sitting in one court.who just happens to be the personwho is in charge of carrying out thedictates of a lawsuit, a decision which.was rendered back in 1984.

It is clear, and I think everyone herewill agree, Congress should make thepolicy; the courts should interpretthat policy and should render deci-


86978 CODdonm based on the Policy set by theCongress. This legislation for the firsttime, really, since 1984, puts the Con-gers. back Into the decision on howour Poli is to be made regarding anIndustry very important to the UnitedStates of America, the telecommunica-ions industry.This legislation essentially allows

the Bell Operating Co. locatedthroughout the United States for thefirst tIme since that decision was rendered to become involved in the manu-facturing and the research and devel-opment of communications equipmentin this country.

This s a tremendous industry forthe United States of America. But weare losing It. We are losing It to for-eiln countrles. We are selling themour technology and they. in turn. areselling It back to us in iuttle boxes thatthey ship back to the United Stales ofAmerica. If we allow this to continueunchecked, this great, thriving indus-try that is now still an American in-dustry will be an American industryno longer.

Some of the companies, AT&T inparticular, say we oppose any changes;'we do not want to make any changesIn the current situtation.

t gum not, because they control itcompletely. But I suggest to themwhen they say if we paw this bill Itwill coat American jobs, that that losspales in comparison to the AmericanJobs that they are now exporting tocountries all over the world.

the divestiture of AT&r, wehave seen the elimination of over60,000 manufacturing jobs nationwide,the startup of 10 major joint foreignproduction ventures, and the institu-tin of four wholly owned offshoreproduction operations in Europe andAsia alone by AT&T We are talkingabout losing American jobs? They areexporting American Jobs faster thanany other company in the Unitedstes.

AT&T has steadily downsied theirdomestic manufacturing operationsand have reduced their work force bya net 68,500 Jobs through yearend1988. not taking into account the yearssince 188

in -January of 1989. AT&T an-nounced an additional 16,000 jobs willbe eliminated from its work force

AT&T has closed five productionplants: In Baltimore, MD: in Cicero,11 in Indianapolis. IN: In Kearny, NJ;and Winston-Salem NC.

In addition, the substitution of theirdomestic production and employmentwith offshore manufacturing has cost

Jobs as In the case of our own cityof Shreveport in Louisiana, where anentire equipment line was relocated iningapore. because they feel they can

do the work over there more cheaply.I suggest to anyone who argues that

this bill somehow will cost AmericanJobs. I say Just the opposite is true. Byallowing American companies toengage in manufacturing that is nowprohibited by an arbitrary decision by

JGRESSIONAL RECORD - SENATEone single Judge, to allow these newcompanies to engage in manufacturingwhich must be done In the UnitedStates, using component parts made inthe United States. if such are avail-able, is a move In the right direction tounchain these artificial shackles thatare binding America's leaders of tech-nology from doing what they can dobest. It is high time that the Congressrelieve them of those burdens andallow them to perform in a way thatwe think they will be able to perform,and in America. not in Singapore. notin Thailand. not in China, but In thiscountry producing products frr thismarket.

Some will say it is unfair to let thesecompanies, which are monopolies.engage in manufacturing because theywill Just sell It to themselves and allowno one else to sell it to them. Or theyWill use their revenues from their tele-phone service to subsidize the manu-facturing so that people who-use thetelephone will somehow be paying forthe costs of manufacturing this equip-ment.

I congratulate our committee, andcongratulate our chairman in particu-lar, and others who support this legis-lation because of the built-in safe-guards. that this bill has which pre-vents that from happening, such asthe requirement that the Bell Operat-Ing Cos., one. must conduct all of theirmanufacturing out of a separate allli-ate; a totally separately instituted af-filiate which cannot be run or operat-ed or controlled by the Bell Co. In ad-dition, they must provide to unaffili-ated manufacturers comparable oppor-tunities to sell their equipment to thetelephone companies that they pro-vide to themselves.

In addition, cross-subsidization-thisuse of revenues from the phone busi-ness to cross-subsidize the manufac-turing expense" specifically and ex-pressly outlawed, and penalties areprovided for any violation of thoseprohibitions.

In addition, the Bell Operating Cos.,through their affiliate, must maketheir equipment available to othertelephone companies under the sameprices, terms, and conditions.

I say to the Members, this, indeed, isa very important protection, to ensurethat a manufacturing company underthis bill must sell not only to them-selves but must offer to other competi-tors at the same price, terms, and con-ditions those Products. I think this is abuilt-in protection to make sure theysomehow are not giving themselvessome sort of a sweetheart deal, be-cause this legislation requires thatwhatever they offer the Bell Co. forthat equipment, they must offer It toall of the other telephone companiesto ensure that everybody has an op-portunity to benefit from this newtechnology and these new manufactur-ing techniques that the new compa-nies will be able to bring to this busi-ness.

June 4, 1991Mr. President, my own State of Lou-

isiana has lost up to 7.500 jobs as aresult of Judge Greene's decision inthe manufacturing industry alone be-cause of exports of American Jobs toSingapore and other parts around theworld. This is a jobs bill. that Is cor-rect, but it is an American jQbs bill. Itis also going to provide the technologyso America can continue to be a leaderin the free world in the telecommuni-cations industry.

I wholeheartedly recommend mycolleagues' affirmative attention tothis legislation.

On a final note, it was interestingthat I was handed a copy of a letterfrom a judge in the district, the judgeI referred to. Judge Harold Greene.U.S. district Judge from the U.S. Dis-trict Court for the District of Colum-bia, which is about 10 pages of com-ments essentially on the legislation,essentially saying he does not like It. Iappreciate the fact he does not like itbecause it is contrary to the decisionthey reached back in 1984.

But I also point out that the Con-gress makes the policy: courts inter-pret that policy. The Department ofJustice enforces that policy if. in fact.there are violations of that poUcy withcriminal intent.

I think it is highly unusual, and Ithink it is probably improper, in thisSenator's opinion, to have the views ofa Judge on legislation that is pendingbefore the Congress of the UnitedStates that affects decisions that hehas rendered In the past. I think hisrole is a proper one in carrying out theintent of the Congress as expressed bythe Congress and signed Into law bythe President of the United States.But certainly to provide the Membersof Congress a very detailed explana-tion, It almost looks like, I say to thechairman, a witness' testimony beforeour committee when they come beforeour committee to testify and give theirviews on legislation that is pending.We now have the fact that JudgeGreene does not like the legislation.

I submit It Is the Congress whoshould determine the policy of theUnited States when It comes to tele-communleations Industries in thiscountry, and It is the judge's appropri-ate and proper role to interpret thatpolicy after we pass it, not during theprocess.

So I urge my colleagues to supportthe chairman's bill. I enthusiasticallyserve as a cosponsor to that legislationand hope It will be adopted.

The PRESIDING OFFICER (Ms.Miammu). The Senator from SouthCarolina.

Mr. HOLLINGS. Madam President, Iwant to thank our colleague from Lou-isiana. Senator BzAxux has been aleader in trying to develop a balancedapproach to make this country com-petitive again and to regain our tech-nical leadership In the communics-tions field. We have a wonderful op-portunity so long as we do not sit here


CONGRESSIONAL RECORD - SENATEblindly, thinjing we are in control byforbidding the best of the best theseven Bell companies that we havebuilt up over the years. companiesthat are now competing with eachother. The competition is there. Thisis not the monolithic AT&T that ex-isted in 1984.

Senator Bazaux has helped lead theway. and I think he has properly com-mented on the letter. I have just re-ceived a copy of this letter from JudgeGreene. It seems our distinguished col-league from Illinois. Senator SxsaoN.had written Judge Greene for hisopinion on this bill. Judge Greene re-sponded in the first few lines by stat-ing he would not express an opinionon the bill but I will write on for thenext six pages giving a legal brief andargument against S. 173. It is totallyuncalled for and inappropriate.

I want my colleagues to understandthat we are not floating. I have beentrying to be deliberate. We heard fromMembers on health, we heard fromMembers on China and civil rights andeverything else while we have beentrying to negotiate with our friend.the Senator from South Dakota.

One way or another, we are going tovote on that particular amendment.The distinguished Senator from Illi-nois is also working on a matter of anaudit amendment. We do not need toinclude an audit provision in this billbecause the States already have theauthority to audit. We also provide inthis bill under sections H and I onpage 11 of the bill that the Commis-sion shall promulgate the rules andregulations relative to the authority.power, and functions with respect tothe Bell Telephone Cos. and their sub-sidiaries and prescribe the regulationsfor the audit to make sure that theydo not cross-subsidize.

We are not playing games. If theywant to try to specify even further, wewill have to look at it.

But we do have concerns about lan.guage that could result in 50 Statesauditing I manufactory affiliate andthe Bell Cos. having to pay for it.

With respect to the Commissioritself, we have to depend on the Commission. They have attested to thifact that they can dutifully auditThey have the authorities now. Heretofore, when we had the monolithicthey had to visit the several States. gito the company, get its records, everything else. Now it is computerized. IttZipped out to their computers and reports are made and the audit is had.do not see anything else is required.

I want to hasten colleagues to comion down with their amendments oragain, if we cannot get them and get Ivote. we will have to go to third readIng.

I appreciate the Indulgence of thSenator from Rhode Island. He habeen on the floor, and I yield to hirE

The PRESIDING OFFICER. ThSenator from Rhode Island.

Mr. CHAFEE. Madam President.want to thank the distinguished floo

manager, the senior Senator fromSouth Carolina. for giving me a fewminutes.

Mr. HOLLINOS. The senior JuniorSenator from South Carolina.

Mr. CHAFEE. That is right, he hasbeen here a long time but he is stillthe junior Senator.

The PRESIDING OFFICER. TheSenator from Rhode Island is recog.nised.

Mr. CHAFEE. I thank the Chair.(The remarks of Mr. CHAM pertain-

ing to the introduction of S. 1207. S.1208 and B. 1209 are located in today'sRmcoaD under "Statements on Intro-duced Bills and Joint Resolutions.")

Mr. HEFLIN addressed the Chair.The PRESIDING OFFICER. The

senior Senator from Alabama.


sideration of the bill.Mr. HEFLIN. Madam President, the

role of telecommunications in ourdaily lives seems to have few limits.Not long ago. we knew little of facsimi-le machines, voice mailboxes, call wait-ing services, or the ability to conductbanking transactions by phone. Yettoday, these technologies are routineparts of our lives to which we havebecome quickly accustomed and onwhich we have become rapidly depend-ent.

The future undoubtedly holds in-creased innovation in telecommunica-tions technology and Increased reli-ance on these technologies in both ourprofessional and personal lives. Inlight of these realities, I believe it isincumbent upon Congress to eliminateany unnecessary restrictions on our

e telecommunications industry so thatwe may compete in the global market-

. place. In that regard, I want to com-s mend my colleague. Senator HoLLrxes.I for his efforts with regard to s. 173,

the bill before us today.k Under this bill, the manufacturing. restrictions placed on the Bell Operat-

ing Cos. by the Modified Final Judg-ment would be lifted while putting

- into place a variety of important safe-, guards to prevent anticonsumer and

anticompetitive abuses.Among these safeguards are: First. 5

prohibition on the Regional Bell Cos.- from manufacturing in conjunctionI with one another; second, a requlr

ment that the Bell Cos. manufacturea only through affiliates that are sepa.. rate from the telephone company'a third, a requirement that manufacturing affiliates make their productJ

available to other local telephone come panies on a nonpreferentlal basis; ands fourth, a prohibition against cross-subt. sidization between a Bell Co. and Ile manufacturing affiliate.

Another important feature of thilI legislation is a domestic content provir slon designed to protect the Americar

worker. This provision requires thatthe Bell Cos. conduct all of their man-ufacturing in the United States-to methat is a very important provision-and that the cost of foreign compo-nents used in Bell equipment notexceed 40 pArcent of the sales revenuefrom that equipment during the firstyear, to be adjusted annually thereaf-ter by the FCC. I believe that these re-quirements will help protect theAmerican marketplace from unfaircompetition and from foreign competi-tion for American jobs.

For several years now, Congress hasfollowed the operations of the BellCos. in the wake of the AT&T break-up. Last year, this legislation waspassed by the Commerce Committeeby a voice vote. and this year. the billwas voted out of the committee on a17-to-I vote. The issues involved inthis legislation are extremely complexand have developed over time. It is mybelief that this carefully crafted billboth encourages competition and pro-vides safeguards for the Americanpublic. For these reasons, after care-fully reviewing the evidence. I believethat the time for this legislation hasarrived.

I urge my colleagues to join SenatorHotLimos and the other cosponsors, ofwhich I was one of the original, in sup-port of this much needed legislation.

Mr. GORTON. Madam President. asa member of the TelecommunicationsSubcommittee, of the Commerce, Sci-ence, and Transportation Committee.I have had the opportunity to talkwith a number of people in the tele-communications business regarding S.173.

As the chairman of the committeewell knows, last year. when we consid-ered a similar measure In the Com-merce Committee, I initially had reser-vations about the chairman's proposal.I was concerned that allowing the Re-gional Bell Operating Cos. to manufac-ture equipment could pose a threat toan already competitive, vibrant sectorof the telecommunications industry.

Therefore, over the course of thelast year, I sought the advice and opin-ions of manufacturers of telecommuni-cations equipment from Washington

*State. Contrary to my initial fears, theI vast majority of the telecommunica-

tions businesses in my State favor thepassage of S. 173.

. I would like to briefly mention someof the comments in the letters I have

. received.From Advanced Electronic Applica-

- tions of Lynnwood, "The proposed leg-islation would liberate companies such

- as AEA. to participate in businessi partnerships with the Bell companies- in the design and development of tele-I communications equipment."

From Eldec Corp. also of Lynnwood."Competitiveness cannot and shouldnot be legislated. Our best customer.

s Boeing, has virtually all of the capa-- blllties-ncluding fabrication-of itsi vendor-base and could easily be our

S 6979June ,J, 1991


8s6980 COmoestwmous competitor but the poten-tal vendors to the telecommunicationsindustry do not require or desire pro-

Prom Applied Voice Technology ofKirkland. "We believe the RegionalBell Opeirating C& to be an excellentsource for outaide Capital financingand aeategic partnering." Prom ICOMof Bellevue. "S. 17$ would enable us tocapitalize on the financial strengthand the network and customer knowhow of Bell Cc. like US West. Thoseawets, combined with our manufactur-Ing capability, would enable us to growour businesses and add new Jobs to theWashington economy."

Madam President. I believe in listen-ing to my constituents. As their ern-mAnts indicate, the small manufactur-era from Washington State clearlysupport enactment of this bill

I an. therefore, happy to Join withthe chairman, the distinguished Sena-tor from South Carolina, In support-ing the bill. I am also delighted thathe has considered very thoughtfullySOme amendments around the edges ofthe bill like that proposed by the Sen-a'. .from South Dakota, and I know Iwillg live great weight to the recom-meldidtons of the Senator from SouthCarolina In that conneetion.

I suspect there will be other amend-menta. Some may be contested; somemay not be. I will look at them but Iwill Judge them from the point of viewof cOnsidering that this bill moves usIn the proper direction.

Mr. NOLLJNOS addressed theChair.

The PRESIDING OFFICER, Themanager of the bill.

Mr. HOLLINOS. Madam president. Ithink the Senator from South DakotaI- mcmentarily coming to the floorwith a compromise amendment relathe to the rural local telephone ex-change carriers, and the offering ofequipment to those carriera, so long asthere is a reasonable demand for thatequipment, and that they do not, ofcourse, require. that that affiliateproduce it on a nonprofitable basis.

The marginal cost standard would beimplemented by the FCC itself. And Ido not want to mislesad, as I under-stand there is no agreement by theBell Operating Cos.. to that part ofthis Particular amendment. Parts ofthis have been worked on for the past3 weeks. The Bell Operating Con, stillhave not agreed to that.

This Senator is studying It closely tosee exactly what the Senator fromSouth Dakota presents. And also withrespect to planni and design, theamendment would require Joint net-work planning of telephone companiesoperating in the same area of interest.You could not take 1,400 differentlittie companies and require the BellTelephone Cos, to come along andstart negotiating with every little com-Pany. They would have to build mam-moth Office facilities to have the plan-ning rooms and so forth at one time.So It would be restricted to those corn-

4GRESSIONAL RECORD - SENATEpanles operating In the same area ofInterest.

We also remove the matter of requir-Ing joint operations. Under the jointoperations requirement as it appearedin the original amendment filed bySenator PRssLa, that amendmentwould have required one telephonecompany to operate the phone systemof the other company. Further, theJoint planning provision originallywould have provided one phone com-pany with a right to veto the planningdecisions of another company. As I ex-plained earlier on the floor, we couldnot accept that. I think that has beenclarified now where the operation Isnot to be included in the amendmentof the Senator from South Dakots.

No participant in such planningshould delay the introduction of new

.technology or the deployment of fa-cilities to provide telecommunicationsservices, They should not, in otherwords, have to require an agreementas a prerequisite for the introductionor deployment of new equipment.

We are trying to be considerate ofthe concerns that rural telephone op-peratives have, that the distinguishedSenator from South Dakota has, andwe are still trying to be sensible aboutIt. There is not a veto in It, and theycould not veto the introduction of Im-proved telecommunications technolo-gy. That is the whole Ides. This thingchanges overnight, and as we all know.that is competition, to come out withagain the more improved telecom-munications equipment and software.

I see that the distinguished Senatorfrom South Dakota has reached thefloor. I yield the floor.

Mr. PRESSLER addressed theChair.

The PRESIDING OFFICER. Thesenior Senator from South Dakota.

Mr. PRESSLER. I thank the Chair.Madam President. I rise today on

behalf of Senators OGssry. SassEs,BAucUs, BunDICK, CONRAD, DOL.WzLLsTro . fisoN. BuRNs, andmyself to propose an amendment to S.173, the Telecommunications Equip-ment Research and ManufacturingAct of 1991.

Madam President this amendmenthad been expected to go to a rolicallvote, and we had expected a very cceevote. But I and other Senators alongwith our staffs and the staffs of therural telephone community have beenmeeting this afternoon, and we believewe have reached a compromise.

Our goal Is uniform telephone serv-ice for all Americans. In 1988. 1 wrotean article In the UCLA Federal Com-munications Law Journal concerningthis concept of univeral service, whichemphasized the need for a coordinatedtelecommunications policy for theNation.

Without universal service as a fun-damental premise of this national tele-communications policy, we in smallercities and rural parts of our countrywould be left far behind in the advanc-ing age. The legislation I now propose

June 4, 1991ensures that rural areas will be fullparticipants in the Information age.

The amendment would do the fol-lowing:. First, my amendment wouldrequire the Bell Cos to make softwareand telecommunications equipmentavailable to other local exchange carri-ers, without discrimination or self-preference.

Second. the amendment would re-quire the Bell Cos. that manufactureequipment to continue making avail-able the communications equipment.including software, to other local tele-phone companies, so long as the FCCcertifies that manufacturing suchequipment is profitable. Smaller Inde-pendents and rural phone companiesare concerned that if the Bell Cos. areallowed into manufacturing, theywould be much more likely to buy ex-isting manufacturing equipment thanto start new ones. This is particularlytrue for switch mnufacturng, whichis capital intensive. If the Bell Cos.refuse to supply software, they couldprevent the independents from provid-ing new services. Then the Bell Cos.could market such services to the com-Pany's large customers, emphasizingthat the independent company wasunable to offer the service.

A Bell Co. also could use this lever-age, if It wanted to acquire a neighbor-ing small independent in a growingarea. It could further its acquisitionobjective by depriving the target com-pany of technology, stimulating th-consumer complaints to regulators.

Small and rural companies are wor.ried that a Bell Co. could acquire anexisting manufacturer, change theproduct line to meet Bell plans andneeds and cease to support equipmentand software installed by small compa.nies. If new software Is not made avail-able. a rural company might have tochoose between installing a new switchor depriving Its subscribers of nexservices

Third. our amendment would re-quire the Bell Cos. to engage in jointnetwork planning and design. The leg-Islation will lead to a nationwide infor-mation-rich telecommunication infra-structure that Will include not excluderural communities. To accomplish thisgoal, we offer this legislation to ensurethat small and rural phone companieshave a voice in the joint design of thetelecommunications network to meetthe goal of nationwide access to infor-mation age resources.

Finally. our amendment calls forstrong district court enforcement pro-cedures, including damages. This pro-vision gives rural phone companies theconfidence that the essential safe.guards will be effective.

I thank my colleagues for joining meto ensure that rural companies andsmaller companies have enforceableand continuing access to the equip-ment and joint network planning theyneed, so that all Americans. urban andrural alike. can share in a nationwide


June 4, 1991 COIInfornmation. rich telecommtmicationsnetwork.

ANM sex-r NO. SS(Purpose: To modify certain provisions of

the bi n).Mr. PRESSLER. Madam President. I

send an amendment to the desk andask for Its Immediate consideration.

The PRESIDING OFFICER. Theclerk will report the amendment.

The assistant legislative clerk readas follows:

The Senator from Sooth Carolina (Mr.Passatal for hmself. Mr. OS saLmr, Mr.Sossn Mr. haucuts, Mr. Bvjwca, Mr.Coroai, Mr. Doms, Mr. WrusTosr, Mr.Simpsson. and Mr. Bus. proposes anamendment numbered 210.

Mr. PRESSLER- Madam President, Iask unanimous consent that reading ofthe amendment be dispensed with.

The PRESIDING OFFICER. With-out objection, It is so ordered.

The amendment is as follows:On page 8. Lne 12. strike "and".On page 8. line 15. Insert -regulated' Im.

mediately after -all".On page & line 18. Immediately aler

"equipmert",. insert a canma and "includ-Ing software integral to such telecommunl-cations equipment including upgrades.".

On page 9. line 1. strike "other" and insertin lieu thereof "regulated local exchangetelephone carrier".

On page 9. line 3, Immediately after"'uipment". Insert a comma and "iclud-Ing software Integral to such telecoosmunl-cations equipment. Including upgrades".

On page 9. line 3. inunedlately after "ma.n-ofactured", Insert "for ue with the publictelecommunieationa network".

On page 9. line 5. insert 'purchazing" im-mediately before "carrier", and strike theperiod and insert In lieu thereof a semI-colon.

On page 9. between lines 5 and 8. insertthe followlnr

"9(DXA) such manufacturing affiliate shallnot disconunue or restrict sales to otherregulated local telephone exchange carriersof any telecomunictlons equipment, in-cludlng software integral to such te!ecom-municat!ons equipment. including Upgades.that such atflliate manufactures for sale aslong as there is reasonable demand for theequipment by such carriers; except thatsuch sales may be discontinued m restrictedit such manufacturing affiliate demon,strates to the Commission that it Is notmaking a profit under a marginal coststudy Implemented by the Corinslon, onthe sale of such equipment;

"(B) in reashlng a determinatlon as to thee' titence of reasonable demand as referredto in subparagraph (A). the Commissionsi--ll within sixty days consider-

"(I) wliether the continued manufactureof the equilment aill be profitable:

"(11) whether the equipment is functional-I or technologically obsolete;

"(iii) whether the components necessaryto manufacture the equipment continue tobe available:

"liv) whether alteratives to the equip-ment are available In the market; and

..(vI such other factors as the Conmnlssbondrms hecessary and proper:

"ilo) Bell Telephone Compnr~ls shall.consist'nt with the antitrust laws. engage inJoint n,'twork planni g and design withother regulated local telephone exchange,uriers opet ating in the same area of inter-est; except that no participant in such plan-ning shall delay the introduction of newtechnology or the deployment of facilitiesto provide telccommunicatiorn service, and

IG RESSIONAL RECORD - SENATEagreement with such other carriers shallnot be required as a prerequisite for such In-troduction or deployment; and

(11) Bell Teleplone Companies Ohal pro.side. to other regulated local telephone ez.chang a rgiers opeatil In the same areaof interest, Umely information on theplanned deployment of telecommuniltlomequipment, Including software integral tosuch telecommunications equipment, iclud-Ing upgrade:

On page 9. strie al on Ones 20 thsough24.

On page 10. line I. strike "(4)" and tnertin lieu thereof "43)".

On page it. line 7, insert "(1)" laumedlate,.iy after "(h)".

On Vage It. between lInes 13 and 14.Insert the followitg

-(2) Any refulaled local telephone ex-change carrer injured by an act or omissnof a Bell Thiephone Company or Its mana.factoring affiliate which violates the re-qulrementa of paragraph (8) or (9) of subection (c). or the Commlono regulations

Implementing such paragraphs. may Initiatean action In a district court of the UnitedStates to recover the foll amount of dam-ages sustained In consequence of any suchviolation and obain such orders o thecourt as are necesary to terminate eisltinviolations and to prevent future vioatonor such regulated local telephone exchangecarrier may seek relief from the Commia,slon pursuant to sections 206 through 209.

Mr. PRESS LR. Madam President, Ihave given the arguments on theamendment. I know that I am toldthat some of my cosponsors wish to beable to come to the floor to speak or toplace a statement in the R]cron re-garding this

Mr. BURDICK. Madam President. Iam proud to cosponsor this amend-ment to add rural safeguards to S. 173.the Telecommunications EquipmentResearch and Manufacturing Compe-tition Act of 1991. These safeguardsaddress many of the concerns aboutS. 173 that I have heard from ruraltelephone cooperatives and othersmall telephone companies. Thisamendment would ensure that thesesmall companies have nondiscrimina-tory access to the telecommunicationsequipment and software they need toprovide first-rate service.

As a lawyer during the depression. Ihelped write incorporation papers forseveral rural telephone cooperatives inmy State. I remember what a differ-ence telephone service, even party-lineservice, made to rural communities.Today, telecommunications servicesare vital to rural life, as well as torural development. Without access tothe latest telephone equipment andsoftware, rural telephone cooperativesand the consumers they serve wouldbe left out of the communications rev-olution.

One of the primary reasons for thislegislation Is to give regional tele-phone operating companies more In-centive to develop exciting new prod-ucts. Many young people In isolatedrural areas now benefit from Interac-tive learning, and this amendment Isdesigned to ensure that rural residentsnot be cutoff from future Innovationsin telecommunications. Without ruralsafeguards, allowing the Regional Bell

86981Operating Cos, to manufacture tee-phone equipment could cam theNation to be split into the "Information haves" and the information havenoa."

America's rural telephone coopers,tives want Bell Cos. entering manufacturing to make telecommunIcatlonsequipment and application softwareavailable to other local exchange carri-ers without discrimination or self-pref-erence as long as reasonable demandexists. They want the Bell Cos. towork with other local telephone systems in network planning, design. andoperations. And they want districtcourt enforcement to ensure thatthese requrements are met Theserural safeguards seem etremfely rea-sonable. and I urge my colleagues tosupport this amendment.

Mr. HOLLINGS. Madam President.our distinguished colleague, themember of our committee, the Senaterfrom Washington Is momentarily pepred to make a statement relative tothe bill.

I hope that my colleagues are read-ing that amendment right through. Iwas looking at the early part and fromwhat I understood, the amendment isproperly reported as a compromisewith the distinguished Senator fromSouth Dakota.

My point here for the moment Is. itis my tladestanding that there arethose who would wish we would notcomrmnse, that we would try totable this amendment But I think inthe spirit of trying to move this bill.and In the spirit of the concern thatall of us have relative to rural Americaand the smaller telephone companieswe have agreed to that amendmentwith the following changes: With re-spect to the first parts on page 8, line15, insert "regulated" Immediatelyafter "all." That next section on pagea, line 18. other early sections on page -9, are either technical or agreed to.

The Bell Co&e have been looking atthe amendment of the Senator fromSouth Dakota for quite some titmeduring the past several weeks.

The objection. as I stated a momentago, on page 9, lines 5 and 6 Is wherewe would not discontinue or restrictsales as long as there was a reasonabledemand. What we Included tn there"except that such sales may be discon-tinued or restricted if such manufac-turing affiliate demonstrates to theCommission that it is not making aProfit under a marginal cot standardon the sale of the equipment."

That one would be in dispute, butthe Senator from South Carolina, onbehalf of our committee, would beready to accept it. We have checkedwith the ranking member, SenatorDAIowrm

Specifically, the final section there,"Bell Telephone Companies shall, con-sistent with the antitrust laws, engagein Joint network planning and designwith other regulated local telephoneexchange carriers operating In the


S 8982 CONGRESSIONAL RECORD - SENATEsame area of interest," we restricted it!'IA the same area of ntetest" so thatti " Bell Telephone Co. are not em-powered by the measure here toengage with all local telephone ex-change carriers over the UnitedStates. And In saying "that no partici-Pant in such planning shall delay theIntroduction * I - of new technologywe wanted to emphasize affirmativelythat what we are trying to do is spawn.nurture, develop, and install new tech-nology In the deployment of facilitiesand new telecommunications services.The agreement with such carriersshall not be required as a prerequisiteof such Introduction or deployment.

The original amendment implied. aveto and we have eliminated that veto.

Then, the next section says that BellTelephone Cos shall provide to otherregulated local telephone exchangecarriers operating in the same area ofinterest timely information on theplanned deployment of telecommuni-cation equipment, Including software.Then there Is a provision with respectto these provisions of a company'sright of action, not the individualright of action.

Those are the main points of com-promise, and I sort of spelled them outin detail here. Obviously, I havebragged on and on about the characterand capability of our Bell OperatingCos.. but I do not represent them. Idid not put In this bill for them.. I putin this bill for the United States ofAmerica for the consumers, for thetelecommunications industry, fortrying to maintain the United StatesPosition on the cutting edge of tele-communications technology. So. at.times there are things that I ams con-vinced perhaps that the companiesthemselves, as worthy as they are,woUld differ with the Senator fromSouth Carolina and if they think an-other Senator thinks I am totally mis-taken I want them to have time tocome to the floor and air that andmake what motions they want to makebefore we Join in. which I would loveto do. with our distinguished colleaguefrom South Dakota.

I Yield the floor.(The remarks of Mr. OaTo per.

taining to the Introduction of S. 1215are located in today's RscoRn under"Statements on Introduced Bills andJoint Resolutions.")

Mr. GORTON. Madam President. Ithank both the chairman of the com-mittee and my dear good friend, thedistinguished Senator from Montana.who was here ahead of me and couldhave taken the floor ahead of me, fortheir courtesy to me In this regard.

Mr. BURNS. Madam President, I donot want to stop the flow of conversa-tion on the amendment of the Senatorfrom South Dakota and would speakgenerally on this bill. 5. 173. if thatwould meet with the approval of theChair.


Mr. BURNS. Madam President. Iwish to commend the distinguishedchairman of the Senate CommerceCommittee, Mr HOLLING.S for the ex.peditious manner in which he hasmoved to build upon his efforts begunIn the last Congress to provide relieffrom the manufacturing prohibition inthe modification of final judgmentIMFJI. I applaud the chairman's lead.ership, foresight, and steadfastness inmoving this important communica-tions legislation to the floor of theSenate. I would hope this momentumwill continue with speedy action bythe Senate, and the House action willfollow In timely fashion.

I do not know of anything we havetalked about more In the CommerceCommittee than communications.

Madam President, in my somewhatbrief tenure In this body, I have beenconcerned that we have generally ab-dicated our responsibility over commu-nications policy. Congress adopted theCommunications Act In 1934. and thenpretty much left it to courts and regu-latory commissions to make policywithin that framework.

When you stop and consider thatthe transistor did not exist in 1934,nor did fiber or digital switches, somemight argue that we've been a littleremiss n exercising our policy man-date. With S. 173, we have the oppor-tunity to take a-first step In correctingthat.

I am an original cosponsor of S. 173and of S. 1981, its predecessor in thelast Congress. From my perspective.this legislation is absolutly critical ifwe are to maintain our place as worldleader in communications. And thislegislation is absolutely critical if weare to rebuild our telecommunicationsinfrastructure so that we can competewith the French, British, Japanese,and other countries in the EuropeanCommunity and Pacific rim in the in.formation age and global economy ofthe 21st century.

While those countries have adoptedthe necessary policies to insure they'reat the forefront of technological Inno-vation, the United States, through aunique mix of action and Inaction, haschosen to idle more'than 50 percent ofthe telecommunications assets of thiscountry. While Japan is on a path offiber to the home by the year 2015,while France has gone from having asecond-rate telecommunicationssystem to being the world leader Invideo text. while the United Kingdomhas recognised that telephone andcable television are converging tech-nologies, the United States has beencontent to let a Federal Judge decidethe rules of the game. Including whomay play and who may not.

This is not a prescription for worldleadership. On the contrary. if wewant to fall behind-some wouldargue, stay behind-the French. Brit-ish. Japanese. and others, we ought tostay the course, leave telecommunica-tions policy to the courts, and keepvalued assets on the sidleines.

June 4, 1991That is obviously not what I am rec-

ommending. Indeed. I am pleased thatat least on the manufacturing issue,the Senate stands ready to exercise itspolicyrnaking responsibility. It Is onlya first step, but a very crucial firststep. I hope it serves as a precursor fordebate on the telecommunications in.frastructure.

By lifting the manufacturing provi-sion with the adequate safeguards thebill provides, S. 173 recognizes theprinciple that Government should notdecide what activities within an Indus-try particular companies may perform.Simply put, the Government has noway to determine who the most quali-fied or most advanced potential com-petitor might be. We do know, howev-er. that increased competition pro-duces additional benefits, many ofwhich cannot even be foreseen.

By removing the manufacturingcurbs on the Regional Bell HoldingCo.. S. 173 will put more Americans towork. and put American capital towork n the USA. And I want to em-phasize that. We need our capitalworkIng here In our own country. It isa sad paradox that a country whichleads the world into one of the mostdynamic technological fields of the20th century should hamstring onegroup with the potential to help usmaintain that leadership Into the 21stcentury.

In the hearings on S. 173 and S. 1981In the last Congress, concern was ex-pressed that the telephone companiesmight try to hide some of the costs oftheir competitive manufacturing ac-tivities within the regulated local ex-change sector, thereby transferringthe costs to the local ratepayers. Orthat they might also exploit theirknowledge of the technical details ofthe local network, or design the con-figuration of the network to favortheir product offerings in the telecom-munications equipment.

These concerns are real and born ofexperience. But times have changed.and the ability to monitor regulatedcompanies competing in unregulatedmarkets has increased enormously. Somuch so. that the Government-theDepartment of Justice as well as theFCC and NTIA-testiflied that S. 173had more than adequate safeguardsagainst these and other abuses.

The alternative to S. 173 is to contin-ue banning the Bell Cos. from partici-pating in manufacturing without evenattempting to make competition work.I believe such a "can't do- attitude iscontrary to the spirit that has madeour great country the leader It is.

I must temper my enthusiasm andsupport for S. 173. however, with theobservation that the foresight and Ini-tiative which the Senate is showinghas yet to be extended to anotheraspect of the telecommunications In-frastructure. We continue to be reluc-tant to take the one step necessary toensure the timely development of an


June J, 1991 COINadvanced. interactive, broadband com-munications network.

The telephone companies are in theprocess of constructing such a net-work, but the economic pump primerneeded to accelerate the process Is theability to provide cable service In com.Petition with existing cable systems.The potential benefits to the Amerl-can public and our economy are tre-mendous.

The Commerce Committee knowsfrom its extensive hearings on cablethat competition is sorely needed ifconsumers are to receive adequateservice at reasonable prices. We alsoknow that realistically the telephonecompanies are the only entities wIththe resources and expertise to competewith cable in the foreseeable future.

The same kind of legal and regula.tory safeguards which the committeefinds adequate with respect to the BellCos. entering the equipment manufac-turing business, are obviously also ade-quate to prevent cross-subsidy andcompetitive abuses if telcos enter thecable business.

A little earlier I mentioned that his-tory tells us AT&T did abuse its mo-nopoly poeition with regard to equip-ment manufacturing. But as the De.partment of Justice has said. therewas no evidence that AT&T did sowith respect to information services.

Based on what the Department ofJustice, the FCC. and NTIA have saidabout the adequacy of existing legaland regulatory safeguards and experi.ence. I do not believe the distinctionbetween our willingness to recommendS. 173 and our reluctance to supporttelco entry into cable is supported bylogic or sound public policy consider.ations. If we retard the rapid develop-ment of our telecommunications infra-structure, the harm to our economyand the American people will. in myview, even exceed that which willoccur if we fall to enact S. 173.

As a result. on Wednesday. June 5.Senator GoSS and I will introduce theCommunications Competitiveness andInfrastructure Modernization Act of1991 which will advance the nationalinterest by promoting and encouragingthe more rapid development and de-ployment of nationwide, advancedoroadband communications networksby the year 2015. My bil is designed tocomplement Senator HOLLINGS' effortson S. 173 and to move America for-ward into the information age of the21st century.

Again. Mr. President, I comniend theextraordinary effort of Senator Hol-lings and his staff. The chairman de-serves credit for bringing to theSenate legislation which will moveAmerica forward in the informationage of the 21st century. I stronglyt.rge my colleagues to support thismeasure.

Thank you, Mr. President: I yieldthe floor.

The PRESIDING OFFICER (Mr.RocxuTI.Lim). Who seeks recognition?

JGRESSIONAL RECORD - SENATEThe Senator from South Dakota Isrecognized.

Mr. PRESSLER. Mr. President, Ithink we have arrived at a criticalmoment in the formation of our Na-tion's telecommunications policy. Wewill now have, for the first time. a re-quirement that there be planning inthe formation of our telecommunica-tions infrastructure that will involveBell Telephone Co., small companies,and. rural telephone cooperatives. Itwill be nationwide planning, not onlyfor rural and small-town America, butfor all America.

Indeed, we do need a nationwide in-frastructure capable to bring advancedmedical services to rural America. Thisinfrastructure will allow smaller uni-versities and small businesses, toaccess new supereomputer technology.This network planning will also speedfiber optic deployment throughout theNation. This infrastructure will usherus into an era when people in smalltowns can video teleconference totheir jobs in large cities.

Since 1978. I have served on theCommunications Subcommittee. Wehave never had network planning untilthis legislation.

I think this amendment Is an histor-ic amendment in that sense. Manytimes in the Commerce Committee Ihave pointed out It Is not just ruralAmerica but also inner-city urbanAmerica that is left out.

The same thing Is true of transpor-tation in our country. I feel, since wehave deregulated the airlines, and Iwas one who voted against this deregu-lation, we have had some very severeproblems. We have some very greatchallenges to meet to preserve our air-line passenger service in this countryin a positive way.

That subject may seem separate andfar afield, but the fact of the matteris. all companies want to serve thevery rich areas and not serve upstateNew York or the smaller towns ofCalifornia.

The same thing is true of communi-cations. My wife and I just recentlyhad cable TV installed In our homehere in Washington, DC. In our homein South Dakota we have also just re-cently had it installed, and this is1991.

The point is, in rural areas andinner-city urban areas the companiesare not so eager to provide the service.The very centers of our cities, andrural and small city areas are left out.

With passage of the Communica-tions Act of 1934 we established thatthere would be a common carrier re-sponsibility. That is, if you have somevery rich routes, you also have to takesome very poor routes, It was not asystem of government subsidies, but agovernment system of assigningroutes. If a company took some verylucrative routes they would also acceptresponsibility to expand their commu.nication service to all areas of theirfranchise. That is how we built up ournational system of communication,

86983Today we are in a situation that, if

you live In a wealthy, densely povulat-ed suburb, you can get all informationservices. iber optic cable allows thesuburban hospital to be connectedwith the Mayo Clinic and elsewhere.But that Is not true If you live in asmaller city or rural area.

What we are doing here is very his-toric. because we are once again re-turning to the concept that there willbe nationwide planning, that all theplayers will be at the table-and thatis very Important. I have long foughtthat fight in the Senate not only forcommunications but also for transpor-tation.

I do not mean to say "I told you so"on airline deregulation, but I do notthink that, deregulation has resultedin everything positive. I .think therehave been many parts of our countrythat have suffered. I think now we aregoing to have to readdress it.

I make these points.to pay tribute toSenator HOLLINGS for his concernabout rural America. He has done agreat job in leading our committee andin leading us on these Issues.

I also pay tribuite to my colleaguesand cosponsors, Senator OGssszy,Senator SASSR. Senator Baucus. Sen-ator Busmzcx. Senator CONRAs. Sena-tor DoLz, Senator WsLmLSroNrE SenatorStursow, and Senator Busss.

I would like to thank KevinScheffer and Dan Nelson of my staffwho worked very hard on this legisla-tion. I also thank John Windhausen.of Senator HOLLINS' staff along withMary McManus and Mary Pat Blerleof Senator DANFbRms staff. I alsowould like to commend the work ofSue Sadtler, Margot Humphrey, Shir-ley Bloomfield, Dave Cossen. LisaZaina, and other members of theRural Telephone Coalition.

Mr. President. I urge the adoption ofthe amendment.

The PRESIDING OFFICER. TheSenator from South Carolina.

Mr. HOLLINGS. I thank our distin-guished colleague from South Dakota.He has put his finger right on thepulse. We ought not work with totaldisregard to the small. The Office ofTechnology Assessment has reportedthat we could develop much betterrural telephone services If there wasbetter coordination.

The Senator from South Dakota hastaken that charge and included pro-visions in here that the BellCos. would not necessarily support;namely, that the manufacturing affili-ates shall not discontinue or restrictsales, They did not want provisionsrelative to the discontinuance or therestriction of sales Once It was agreedto that it not only included the soft-ware integral to it. which was suggest-ed by the Bell Cos. but we put in therethat such sales may be discontinued Ifit is not profitable. That. : ngusge isbetter than the original s., iment.

Again, at the suggesti. the Bellcompanies, they want- to move


S 6984 CONGRESSIONAL RECORD - SENATE

promptly with respect toward the ter.mination. So we said the Commissionshall, within 60 days, consider variousfacets; namely, that at the Bell Cos.'suggestion, whether the componentsnecessary to manufacture the equip.ment continue to be available. We aretrying to be reasonable, trying to actwith common sense.

Otherwise. the Bell Telephone Cos.did not like a requirement that theyengage in Joint planning and designwith the local telephone exchange car-Tiers. We eliminated the idea of engag-Ing in the same operations so therewould not be any veto. We also speci-fied that they be operating in thesame area of interest. Wherein theyoperate in that same area of interest,the Senator from South Dakota hadprovided Just that; that they do haveJoint network planning and design.

We have eliminated a particular ob-Jection of the Joint operations provi-sion that the Bell Cos. opposed, andalso put in at their suggestion, thatagreement with such other carriersshould not be required as a prerequi-site for the introduction or deploy-ment of the new 6quipment.

Then we made a change at the sug-gestion of the Bell Cos. that any regu-lated local telephone exchange carrier,rather. than any person could go tocourt. We did not want anybody whohad a bad telephone bill run down andget a lawyer and Just clutter thecourts. If there Is an objection. underthe law, we are supposed to exhaustour administrative remedy; not fromthe courts, but; namely, the FederalCommunications Comm'ion. You ex-haust your administrative remedy, andthis puts the regulated local telephoneexchange carrier in the stream court ifit wants to challenge a manufacturingaffiliate which violates that require-ment.

That was included at the Bell Cos'suggestion. And also the final phrase"or such regulated local telephone 'ex-change carrier may seek relief fromthe Commission pursuant to sections206 and 209." It is not totally what thecompanies want, by any manner andmeans.

I commend the Senator froin SouthDakota and join with him in urgingthe adoption of the amendment unlessanother member wishes to be heard onthe amendment. The Senator fromIowa would like to speak on theamendment

The PRESIDING OFFICER. TheSenator from Iowa.

Mr. ORASSLEY. Mr. President. Iwant to take the floor because I thinkit is necessary for us who are cospon-sors of this amendment to express spe-cial gratitude and appreciation to Sen-ator HoLLnr0s and Senator DAmORTHfor their cooperation with SenatorPRzsstsa. myself and other cosponsorsof. the rural telephone protectionamendment.

I also want to commend the repre-sentatives of the Rural Telephone Co-alition who have forcefully and effec-

tively advocated the passage of theseadditional safeguards which are cru.cial to hundreds of rural independenttelephone companies and their cus-tomers throughout the Nation. Thecoalition-consisting of the NationalTelephone Cooperative Association.the National Rural Telecom Associa-tion. and the Organization for the Pro-tection and Advancement of SmallTelephone Companies-did an admira-ble job and service to rural Americans.

Mr. President. the rural telephoneprotection amendment will provideAmerica's rural telephone companiesand their customers crucial safeguardsagainst any anticompetitive activitieswhich might result from the passageof S. 173.

This amendment assures that thebenefits of the new manufacturing en-deavors anticipated under this bill willbe shared by independent telephonecompanies. They are guaranteed avail-ability of telecommunications andequipment, including software. Theywill be assured coordination and Jointplanning with the Regional Bell Tele-phone Co.

These protections are important andshould help prevent any return tosome of the unfair, discriminatory

.practices against independent tele-phone companies which occurred priorto the antitrust breakup of the AT&TBell System a few years ago, which anadministrative law Judge found to be.and I quote, "adversely impacted thequality and cost of independent serv-ice."

Two weeks ago, the Office of Tech-nology and Assessment released astudy requested by myself and otherswhich is entitled "Rural America atthe Crossroads: Networking for theFuture." The OTA made numerousfindings that will help policymakersassure that rural economic develop-ment is encouraged, not discouraged.by advances in telecommunications. Itwas concluded that we need to recog-nize and accommodate the specialneeds of rural areas. It was also deter-mined that we must have better co-ordination among telecommunicationinterests, businesses, and local. State.and Federal officials.

I believe that our amendment takesa major step in the direction recom-mended by this study.

On behalf of Iowa's 150 telephonecompanies, I want to again thank mycolleagues for their support of thisvery mportant anendment.

The PRESIDING OFFICER. Isthere further debate on the amend-ment?

Mr. PRESSLER. Mr. President. I askunanimous consent to add as cospon.sors Senator DOLE, Senator CoN.so.and Senator BURNS.


Mr. PRESSLER. I urge the adoptionof the amendment.

The PRESIDING OFFICER. Ifthere Is no further debate, the ques-tion is on agreeing to the amendment.

June 4, 19.91The amendment (No. 280) was

agreed to.Mr. PRESSLER. Mr. President. I

move to reconsider the vote by whichthe amendment was agreed to.

Mr. HOLLINGS. I move to lay thatmotion on the table.

The motion to lay on the table wasagreed to.

Mr. STEVENS. Mr. President I askunanimous consent at this time tomake a short statement to introducelegislation.


The Senator from Alaska is recog-nized.

Mr. STEVENS. I thank the Chair.(The remarks of Mr. Srevz¢s per-

taining to the introduction of SenateJoint Resolution 155 are located intoday's RECORD under "Statements onIntroduced Bills and Joint Resolu-tions.")

The PRESIDING OFFICER. TheSenator from Tennessee.

Mr. GORE. Mr. President. I rise tosupport amendment No. 280 and tostrongly support the underlying bill.S. 173, because I believe It is time toreconsider some of the arbitrary limitsplaced on the regional Bell Cos. andtheir abilities to compete in an in-creasingly complex and competitiveworld marketplace.

The chairman of the Senate Com-merce Committee. our distinguishedcolleague from South Carolina, hasbuilt a truly impressive record ofbringing this legislation to the floor.His leadership has enabled this bodyto address a relevant concern at a timewhen America's ability to compete intse world is really being challenged inan unprecedented way. There were se-rious concerns about the original bill.and the Senator from South Carolinahas been diligent in addressing all ofthose concerns, both with substantivechanges and with full consideration incommittee hearings.

Manufacturers who fear competitionfrom the Bell Cos. are Justifiably con-cerned that potential self-dealing be-tween the regional telephone compa-nies and their affiliates could stiflecompetitors' ability to sell their big-gest customers, the regional telephoneCompanies.

In particular. I understand the inde-pendent and rural telephone co-opsfear that their marketplace for majorequipment might be adversely affectedby Bell Co. involvement In manufac-turing. The bill goes a long waytoward alleviating this concern. I ampleased that this amendment resolvesall of the remaining problems, andagain I compliment the sponsor of tilebill for going to great lengths toensure that the legislation contain,;adequate safeguards against any anilcompetitive behavior by the Bell Cus.

I was especially pleased to learnduring the committee markup that theNational Federation of IndependeniBusiness has endorsed S. 113. express-


June 4, 1,991 CONIng Its satisfaction with the safeguardsin the bill. Moreover. I want to reportto my colleagues on the floor that Ihave personally heard from manybusiness leaders across my own Stateof Tennessee that important new busi-ness and consumer services are nowbeing held hostage to the currentrules being administered by the Courtunder the consent decree. It is time forthe elected representatives of theAmerican people to set the groundrules and the framework within whichcompetition can proceed.

Mr. President, it is significant thatthe organization representing the ma-Jority of our country's communica-tions workers has enthusiastically en-dorsed this legislation noting its posi-tive Impact on U.S. Jobs in an industrythat has seen tens of thousands ofjobs move overseas since the break upof AT&T.

Some opponents of this legislationhave suggested that if Congress opensthe door to the regional Bell Cos. toengage in manufacturing. then surelythe barriers to electronic publishingand other information services will becertain to fall.

Mr. President, this bill, of course, inno way affects the MFJ restrictions oninformation services. Many of our col-leagues who support S. 173 are equallyconcerned that we go slower in open-ing up information services to compe-tilon from the Bell Cos.

So again In closing. Mr. President, Icongratulate the chairman of theCommerce Committee for his leader-ship on this important issue, and Iurge all of our colleagues in thestrongest possible terms to standbehind the leadership of the Senatorfrom South Carolina to support thislegislation and make the very neededchanges embodied in It.

I yield the floor.Mr. INOUYE. Mr. Preident, it is

with deep regret that I rise today inopposition to S. 173. I have worked oncountless measures with the chairmanof the Commerce Committee oversome 25 years, and there are only afew times that we have disagreed on acommunications matter. I have greatrespect for the chairman and his in-depth knowledge of communicationsissues. However. after careful andpainstaking consideration of thismatter. I continue to feel stronglythat this legislation will not achieveIts objective of increasing Americancompetitiveness in the internationalcommunications market. In fact. I be-lieve it may do Just the opposite.

The chairman of the CommerceCommittee believes that the time hascome to lift the communications man-ufacturing restrictions and institute anew series of administrative safe-guards against anticompetitive behav-ior.

I believe that the modified finalJudgment Is of great benefit to ourtelecommunications market, its busi-nesses and users. Thousands of newmanufacturers have entered the

IGRESSIONAL RECORD - SENATEmarket since the AT&T divestiture. Asa result. consumers have benefitedfrom cheaper and more innovativeequipment and many new services.The trade deficit in communicationsequipment has been reduced from $2.6billion in 1988 to $0.8 billion in 1990according to the Department of Com-merce. In the area of research'and de-velopment, spending by U.S. compa-nies. including the BOC's, has in-creased, not decreased, since divesti-ture.

During the past 25 years. the U.S.Government has brought four anti-trust actions against AT&T. In threeof these actions resulted in divestiture.In four of these actions. AT&T.wasprohibited from engaging in certainactivities. The issues raised in S. 173are not novel.

At the heart of the last two antitrustactions was the matter of AT&T im-properly favoring its own manufactur-ing operations. The Government pro-duced extensive evidence that AT&Tpurchased virtually all of its equip-ment from itself, regardless of cost orquality, and that the FCC and otherregulators were unable to preventAT&T from using its local telephonebottleneck to act anticompetitively. Asa result, the 1984 modified final Judg-ment prohibited those with the bottle-neck facilities, the Bell Operating Cos.from manufacturing telecommunica-tions equipment.

From an objective standpoint, themanufacturing remedy in the modifiedfinal Judgment has worked. TheBOC's are no longer captive of onesupplier. They now purchase onlyabout one-half of their equipmentfrom their old relative, AT&T Tech-nologies-the new Western Electric.The number of domestic manufactur-ers has grown tremendously. In addi-tion. prices are down, and the rate ofinnovation Is up. The BOC's are ableto purchase the best equipment in theworld at the lowest prices. In addition,on the matter of trade, the UnitedStates continues to have a trade sur-plus in the most important sector ofthe telecommunications equipmentmarket, the higher value products,

Further, we simply cannot ignorethe Regional Bell Operating Cos.' in-centives and capabilities to engage inanticompetitive acts stemming fromtheir control of the bottleneck overlocal telephone equipment. The recentviolations by Nynex and US West areonly the latest examples of the BellCos.' potential to cross-subsidize andengage in discriminatory practices.

Virtually all of the largest phonecompanies which have been audited byregulatory bodies have engaged insome cross-subsidization or unlawfulbeha Ior. For example, a 1986 NARUCaudit of Ameritech found Ameritechwas cross-subsidizing its regulatedbusiness through its procurementprocess; a 1986 audit of Pacific Telesisby the California PUC found that thecompany was cross-subsidizing by as-signing personnel from the regulated

S 6985company to the unregulated company.to the tune of $3 million; -and a 1985NARUC audit of Bellsouth found thatthe regulated business cross-subsidizednew. competitive Bellsouth businesses.Finally, in a pending proceeding theFCC has proposed fining a OT/Contel subsidiary for cross-subsidizingthrough a purchasing subsidiary. 1could.go on for quite a while like this.but I think I have made my point

The primary issue before us iswhether there are other safeguardsadequate to prevent anticompetitiveconduct. I am concerned about, theFCC's ability to monitor these poten-tially anticompetitive acts. The Com-mission's accounting standard : formonitoring cross-subsidization appliesonly to the plant used for interstateservice, only about one-quarter of thetotal telephone plant. This means thatthe State regulators are key to ensur-ing against cross-subsidies, and theyhave not adopted standards similar tothe FCC'& There are even some Stateswhich have deregulated all or part ofthe provision of telephone service,thus ensuring no oversight or cross-subsidies.

Equally troubling is the well-recog-nized fact that the Commission doesnot have the resources to conduct fre-quent audits. In 1987, a General Ac-counting Office study looking at waysto control cross-subsidies between reg-ulated and unregulated telephoneservices found that the ?CC only hasthd resources to audit one telephonecompany once every 16 years.

Three of the FCC's present Commis-sioners, Including the Chairman, haveexpressed reservations about the abill-ty of regulators to regulate telephonecompanies. Chairman Sikes has statedthat he does not believe that:

Career Government people or forthat matter non-Government peoplecan find out what the true cost of [tele-phone] service should be.

Similarly, in 1990, FCC Commission-er Duggar. speaking about the possi-bility of letting the telephone compa-nies provide cable service, sold that hehas a "nightmare" about a:

Sixty story buldinsg * I filled with FCCsccountants that would be needed to moni-tor Itelephone company) cros-ubsIdIes ifthey were In the cable television busines,

State regulators also have limited re-sources and have not adopted stand.ards similar to the FCC's. FCC Com-missioner Barrett, a former State reg-ulator, stated in 1990 that:

In my years of rate regulation. I've onlyseen maybe two States that could recognizea cross-subsidy if it was starting them In theface.

As for the matter of discriminationor self-dealing, it is not clear that theFCC has the experience or resourcesto monitor such practices. There is nopractical way for the Commission tomonitor the many thousands, possiblymillions, of transactions, to determineif the price, terms, and conditions arenondiscriminatory. The only way to


June 4. 1901CONGRESSIONAL RECORD - SENATE

address thia problem it simply prohibitthe Bell Co. from selling the equip-ment to themselvez. They could stillse to other BOCs, other telephonecompanfhl, even companies overseas,just not to themselves. If you were toloolt at the total International marketfor telephone equipment, this wouldmea that they could sell to 95 per-cent or &H purchasers.

-While the alleged safeguards in8. 172 will do little to prevent anti-.competitfve acts, there are those whoargue that the entry of the BOC-s willdo much to Improve our Nation'scompetitiveness that they still shouldbe feed from the prohibition on man-

thetwks Snee the BOCs have littlenanufaetartu experience, they arermt Ukely to enter the mafketthlosso the purchase of another firm.Thb would merely substitute anotherPhao! for existing manmftteturer.The only potential benefit of a&owina teephose company to purchase ex-stfs manufacturers would be ff therewen ulpslfleant economies in beingbolt a network service provider and amasmaeturer. Again. the hearingsProdoced no evidence to prove suchlarge economies exist. In fact. almostevery natim around the world sraife Its network provider from equip-meA manufacturersI am also concerned that this legla-

tion doca not prevent the BOC's fromentering into joint ventures with for-eign manufacturers, particularly for.elgn manufacturers from countrieswhich are closed to US. companies.This bill would prevent a regulatedmonopoly to buy equipment fromcountries which do not permit otherunregulated companies from compet-Ing in their countre

I share the aim of . 1 3. I believethat we must make the United Statesa strong and competitive force in theinlernational markets. I do believethat thia legislation takes the right approach. The remedies are foundecmore on faith than fact. Moreover. iwe are wrong, It will do great harm Uour Nstulona and the world's top telecommnicsctinns equipment manufacturer as well as to other domestifirms. That price is too high to bearespecialy In comparison to the apeculathe benefIts. Thus. I must stand bopposition to this bill.

The PRESIDING OFFICER. Whyields time?

Mr. KOLLINOS. Mr. President.really appreciate the statement of thdistinguished Senator from HawalL HIs the chairman of our Communicstlons subommittee. and he has donthe Ion's share of the work on all cour communications Issues, As westated earlier by several of the conmittees Snators, we have spentguess. 80 percent of our time on conmunicatons. On one particular meaure mentioned by the distingulgheSenatar from Montana. I know vhave had at least 12 hearings and ILSenator from Hawaii has conducteach of those 12 hearings.

This Senator regrets that the com-mittee does not have his support. But 0

I have the full understanding of the wposition of the Senator from Hawaii. I Nappreciate his candor and the way he vhas presented it. cc

I am asking my colleagues to comeforward with their amendments now. ciWe did save, I am convinced, a good tiamount of time working out the ruralamendment that I had been hearing 0about for over 3 weeks. The Senator wfrom South Dakota is really to be com- tImended for taking the lead on this Iparticular matter, a

However, now we hear suggestions of Icother amendments.

+ but we are ready

to move to third reading. Let us come tforward with the amendments, let us Imove on and get some votes this tevening so we will be clear tomorrow. Iknow the majority and minority lead- aera have a backup of matters to beconsidered. We want to hear from iother Senators. I do not know of any- cthing else to do. We have been on thisbill since 3 o'clock yesterday after-noon.

As the distinguished Presiding Offi-cer knows, many Senators have madetheir statements either in support ofor, as our distinguished chairman ofthe subcomnsittee, against this legisla-tion.

I yield the floor.I suggest the absence of a quorum.The PRESIDING OFFICER. The

clerk will call the roll.The legislative clerk proceeded to

call the roll.Ms. MIIUL.SKI. Mr. President. t ask

r unanimous consent that the order for* the quorum call be rescinded.


Ms. MIKULSKI addressed theChair.

The PRESIDING OFFICER. .TheSenator from Maryland.

I MS. MIKUISKI. Thank you veryr much. Mr. President.

I rise in support of the legislation- pending before the US. Senate on

telecommunications. I would like to2 congratulate the manager of the bill

on crafting legislation that once more- restores the opportunity for Jobs in2 the American marketplace.

Ever since I have been a Member ofD the U.S. Congress. and that goes back

to my time In the House. I have beenI frustrated with the direction that oure telecommunicatlons policy has beena going. I have been frustrated over thev. fact that telecommunications policye has essentilly been drafted, directed.f and implemented by the courts, par.a ticutlarly Judge Greene and his so-I- called divestiture legislation, and theI consent agreement.I- Way back when I was a Member ofs- the House of Representatives and satAi on the Energy and Commerce Com-re mittee. I opposed divestiture. I op-le posed divestiture because It meant theed break up of AT&T. I happened to

have liked AT&T the way it was.

Why? BLcause we had the Bell Lab-ratories that had a number of peopleorking on it. some of whom were ofobel Prize quality, and working. de-eloping cutting-edge technologies Inommunlcations.We had as part of AT&T something

ailed the Western Electric Corp. thathen took the ideas in a laboratoryad converted them into telecommunl-Ltions products. In the old days. they,ere simply called telephones. Nowhe array of products is wide ranging.might add that the Bell Laboratories'ere not a government agency-abso-utely private sector.So we had the private sector doing

he research, then we had WesternElectric developing. manufscturinghe products, and then those productsaere sold by little Bells. or local oper-tUng companies.We have heard all kinds of language

n this bill, Baby Bells. local operatingcompanies. Back predlvestiture theywere simply called the telephone coin-)any.Along came divestiture and we broke

up the AT&T framework. And Inbreaking it up. we essentially haveeliminated the job manufacturingpart.

Yes. we still have Bell Laboratories.Yes. we still have the local telephonecompanies. But do you know what wedo not have? We do not have theWestern Electrics anymore. What ismore. in my State Senator SiAsAzirsand I. when we were both Members ofCongress. each at various times repre-senting the Third Congressional Dis-trict. represented Western Electric ina corridor of employment calledBruening Highway. General Motorswas there. Western Electric was there.Dundalk Terminal was there. And Itwas a beltway to Bethlehem Steel.

In that whole corridor, you had goodpeople making good wages, makingthings, making products, and. overall.employing somewhere over 35.000people.

Well, that is gone. Mr. President.Bethlehem Steel is down to 12,000.General Motors that once employedsix is down to four. We are hopingthey do not move out of town.

Guess what is gone completely?Western Electric, 4.000 jobs that em-ployed men and women. I might add. asubstantial number of women, longbefore there were equal opportunityprovisions for women. Those jobs aregone.

What do we have now? Well. wewere promised a cornucopia of comPe-tition; that only if we had competition.we would have cornucopia for the con-sumer. Well, this is one little consumerthat never found that cornucopia. Ifound confusion in the marketplace. Ihave never received a break on mytelephone bill. All these Cheap, long-distance rates I was supposed to havenever, ever happened, I was delugedby Sprint. MCI and all kinds of com-panies. But I only found high prices.

S 6986


June 4, 1991 CODAnd'then. to this day, I still get sev.

eral different kinds of bills, one fromAT&T and one from a local telephonecompany. It is now 5 years later, and Istill do not know who to call if some.thing goes wrong.

I think, if you do not get a dial tone,you call the telephone company. Ifyou cannot trace It-what time do Ihave to trace? You have to go out andsee If something is wrong with thepole. If something is wrong with thispole, it becomes AT&T.

So cornucopia competition has notmeant anything for me. I will tell youwhat it has meant to me as a Senator:4,000 men and women who worked atWestern Electric Co. are gone: 4.000people who got up every day and wentto work, earned a living, earned livingsat AT&T levels, working class people.and had the opportunity to even havea pension and stock options, and tothis day there are people in my com-munity that are on retirement fromtheir Social Security, their WesternElectric pension, and some of the divi-dends coming Out of that stock.

So where are we now, and what doesthat mean? I have been carrying thisfrustration around for 5 years. eversince we lost the divestiture fight.This legislation is the first opportuni-ty to give Americans a break to getback into the manufacturing business.

We have something in here called"domestic content." What does thatmean? It means the content has to befrom this wonderful country called theUnited States of America. People areobjecting to domestic content. Domes-tic content means products made inAmerica, and American hands-on put-ting it together.

I happen to like domestic content. Ilike domestic content more than for-eign content, because domestic con-tent means Jobs in my State and inother States.

There are those who say. well, this Isgoing to violate the antitrust provi.sions.

Mr. President, I am not a lawyer, soI do not know a lot about antitrust,but I do know one thing: The antitrustclause comes from a 19th-centuryeconomy when we had to regulate adifferent kind of economy. Twenty-first-century economics says thatmaybe instead of trying to complywith out-of-date antitrust laws. weought to change the antitrust laws.The o0d arrangement of laboratorymanufarturing to customer service isexactly the kind of model the Japa-nese have and on which they are nowbeating the zingos out of us in tele-communications.

So I am for this bill because it pro-vides jobs. I am for this bill, because ittakes the best ideas that the UnitedStates of America does and turns themInto products. I am very frustratedthat we win the Nobel Prizes with ourresearch, and other countries developthem.

JGRESSIONAL RECORD - SENATEI am glad that the local Bell Cos-if

this bill passes-will get back intomaking products.

So when my name is called, I amgoing to vote for this legislation. I amgoing to vote for it enthusiastically,knowing that it is going to produceJobs and produce telephone productsthat will be reliable, have Americanquality control, and be compatible.

So that is why when this legislationcomes to final passage, I want every-body to remember Western Electricand remember those 4,000 people whoright now-I do not know quite wherethey are, but I know they are notearning the same kind of living aswhen Ma Bell provided jobs.

I yield the floor.Mr. HOLLINGS. Mr. President, I

thank the distinguished Senator fromMaryland. She has really stated thecase with respect to domestic content,as well as the bill itself.

I am an enthusiastic supporter ofthe domestic content proceeding, be-c:use it is going to make America com-petitive again, particularly in the fieldof technology and. thereby provide forthe consumers advanced technologyservices and the improvements thatare so much in demand, set out in theOffice of Technology Assessmentreport.

With respect to the domestic con-tent provision, it is intentional. TheEuropean Economic Community, asset forth in this letter from the Presi-dent of the United States, has its ownrequirements.

I quote from that letter dated March9. 1990. from the President of theSenate majority and Republican lead-ers. On page 3. I qubte:

The directive mandates nondiscriminatoryand transparent tendering to all producerswhose products are at least 50 percent ECorigin. It also places a 3 percent price pref-erence on coronunity offers.

This has to do with the EuropeanEconomic Community in a report andfindings that substantial progress hasbeen made and the telecommunica-tions trade talk conducted under see-tion 1375 of the act with the EuropeanCommunity and Korea. and it containsthe reasons why an extension of thenegotiating period with the EuropeanEconomic Community and Korea isnecessary.

So when they are talking about aveto maybe, or disapproval of thismeasure on account of domestic con-tent. we live in the real world. Wouldit not been grand if the Europeans andother countries had no tariffs or bar-riers or governmental action? But themarket is full of it all. Antitrust is oneprovision that, in a sense, has outlived.to some extent, its usefulness. We usedto look upon size as a no-no. In orderto survive here in the internationalcompetition, you are going to have tohave substantial size if you are goingto survive.

I suggest the absence of a quorum.The PRESIDING OFFICER. The

clerk will call the roll.

S 6987The legislative clerk proceeded to

call the roll.Mr. GORTON. Mr. President, I ask


The PRESIDING OFFICER (Mr.HOLLrNrs). Without objection, it is soordered..

Mr. GORTON. Mr. President. is theSenate in morning business?

The PRESIDING OFFICER. No, Itis not.

Mr. GORTON. Mr. President. I askunanimous consent that I be allowedto proceed as if in morning business.

The PRESIDING OFFICER, With-out objection, it is so ordered.

The Senator from Washington isrecognized.

Mr. GORTON. I thank the Chair.(The remarks of Mr. ORToN per-

taining to the introduction of S. 1216are located in today's RzcoaD under"Statements on Introduced Bills andJoint Resolutions.")

Mr. GORTON. Mr. President. I sug-gest the absence of a quorum.



Mr. SIMPSON. Mr. President. I askunanimous consent that the order forthe quorum call be rescinded.

The PRESIDING OFFICER (Mr.KOHL). Without objection. It is so or-dered.

Mr. SIMPSON. Mr. President, I haveinquired of the manager of the bll,my good friend from South Carolina,and I ask unanimous consent to pro-ceed as if in morning business.


THE CIVIL RIGHTS BILLMr. SIMPSON. Mr. President. Just

two brief Items before I get back tothe matter at hand. I wll be glad toyield at any point, but I shall Just be afew minutes.

I wanted to discuss the latest com-promise civil rights bill being offeredby the proponents of H.R. 1, the CivilRights Act of 1991, and that debate, of,course, Is taking place this day.

I feel that the proponents of thatbill are simply trying to mislead theAmerican public into thinking thatthat bill does not cause quotas. I haveintroduced a bill for the considerationof the Senate. Our good friend fromMissouri has done that; others; Sena-tor DOLz. There are many proposalspresented.

We all realize. I think without any.question, that the only way you get anappropriate civil rights bill is with abipartisan approach. And I think theeffort with H.R. 1 in the House is a de-ception that will not prevail. The sub-stance of H.R. I would leave. U.S. em-ployers with no alternative but to hireby quota, pure and simple. However.the proponents of H.R. 1 have, I think,a clever little shell game going on


HeinOnline -- 6 Bernard D. Reams, Jr. & William H. Manz, Federal Telecommunications Law: A Legislative History of the Telecommunications Act of1996, Pub. L. No. 104-104, 110 Stat. 56 (1996) including the Communications Decency Act [xxxix] 1997

June 4, 1991 CONIcompedion appears to be what's bothermost Hispanics.

Immigrant workers are real, live people,with dremis. frustrations and familes. Butthat is a flat to be appreciated beforemaking the decision to import them. notafterward.

The nation should pause and give creditwhere credit Is due. First, there's the WalfStreet JournaL which has consistently op-posed any meaningful measure to control il-legal lunigration, successfully backed hugeIncreases In legal icmigration and nowseeks repeal of employer sanctions. Then.there's Sen. Dennis DeConcini. D-Ari., andRep. Joseph Moakley. D-Mass.. who lastyear wrangled yet another Immigration am-nesty, this one for Salvadoran Illegal aliens.

And let's not forget the Mexican Ameri.can Legal Defense and Educational Fund(MALDEF), the National Council of LaRa. (The Race"), the League of UnitedLatin American Citisens (LULAC. one ofwhose officials was recently charged withbilking Illegal aliens out of thousands of dol-lar3) and the archbishop of Los Angeles.Roger Mahony. who a little more thanthree months ago officiated at the funeralof 34-year-old Tins Kerbrat.

Tins Who? Tins Kerrat-she's the LosAngeles police officer who died on Feb. 11.after having been shot In the face by an-other drunken Salvadoran illetal alienacross the continent from Mount Pleasent,In the mother of all illeal Immigratlonsanctuaries, LOs Angeles.

The PRESIDING OFFICER. TheChair recognizes the Senator fromNew Jersey.

N ECOMMUNICATIONS EQUIP-MENT RESEARCH AND MANU-FACTURING COMPETITIONACT

The Senate continued with the con-sideration of the bill.

Mr. BRADLEY. Mr. President, I risetoday in opposition to the bill intro-duced by my distinguished colleaguefrom South Carolina, Senator HOL-LINGS. My opposition is somewhat re-luctant. First, because I share the goalof strengthening America's telecom-munications industry, and second be-cause the bill pits the Regional BellOperating Cos. against AT&T. Both ofthem-both in this case New JerseyBell and AT&T-are great contribu-tors to economic growth in the Nationand especially in the State of NewJersey.

I cannot support the bill as it exists,however. because of my great concernsthat the mechanisms that this legisla-tion uses to stimulate Am'erican com-petitivencss will be at best Ineffectiveand at worst counterproductive. Fur-thermore. I am concerned that wehave not learned the lesson that mar-kets are more efficient regulators thanregulators themselves. It is dilficultfor markets to be competitive whenr,;s nufacturers sell to themselves.

The antitrust action which broke upAT&T was based on the premise thatbecause AT&T controlled the bottle-neck monopoly at the consumer levelit was in a position to engage in anti-competitive behavior in its relationswith its suppliers. That is the basiccase. AT&T. the Government case

GRESSIONAL RECORD - SEN)argued, and the courts agreed, hadtaken advantage of its bottleneck mo-nopoly by providing Western Eiectric,its manufacturing subsidiary, withmore timely, accurate, and completeinformation about technical needsthan the information provided to anycompetitors. Purthermore, sinceAT&T's profits were determined by aregulatory formula which was basedon AT&T's costs, there was an incen-tive to shift costs into the rate base.AT&T did this by shifting the cost ofresearch, design, development, andmanufacturing into the basic tele-phone network. In other words, ontothe bills of consumers.

As a result, competition was stifledby the control that AT&T exercisedand the ability of Western Electric tosell Its products at below the cost ofeven making them. Consumers ab-sorbed the direct cost of this subsidyin their telephone bills, as I have juststated, and, in essence, AT&T was self-dealing and the consumers were hurt,which is exactly what would happen if8. 173 were to become law, self-dealingand the consumers hurt.

Where were the regulators in all ofthis? Well, the FCC tried to conductinvestigations. The States tried to ex-ercise their authority to examine localtelephone subsidiaries of AT&T. Butnone had Jurisdiction over the manu-facturing affiliates and no one coulddocument the subsidies that were per-vasive in this monopolized system. Asignificant step in what ultimatelybroke up the telephone monopoly wasthe court's rejection, in 197/6. ofAT&Trs claim that the FCC had ex-tensive and effective oversight overtheir activities and that it was impossi-ble for them to engage in the allegedcompetitive abuse.

AT&T urged the courts to continueto rely on the regulators. In otherwords, regulators could solve the prob-lem. But when the monopoly wasbroken up, the continued existence ofthe bottleneck monopolies was recog-nized as a continuing problem. Inother words, the regulators could notsolve the problem and the court decid-ed, and the parties to the agreement,that AT&T would be broken up.

Central to ensuring that the prob-lem of antlcompetitive behavior andrate base abuse did not recur was theimposition of restrictions on the com-panies that would not control the bot-tleneck monopolies, the seven Region-al Bell Operating Cos. or the RBOC's.as they are called. They were prohibit-ed from providing long distance serv-ice, Information services, or engagingin manufacturing.

The restriction, however, does notpreclude the RBOC's from engaging ina number of activities related to designand manufacturing such as market re-search, providing generic specifica-tions, selecting an exclusive manufac-turer, funding product development,or selling consumer premises equip-ment. None of those are excluded bythe court agreement.

LTE 86989Some of these allowed areas of activ-

ity have. indeed, thrived. Bellcore Labs'of New Jersey, for example. Is a testa-ment to this policy. I was struck bythe statement of the vice president oftechnology systems for Bellcore, citedin the minority views of Mr. INoyGcontained in the report on S. 173.

He describes the post-divestiture en-vironment as marked by-his words,vice president of Bellcore-a majorprogress towards the opening of thetelecommunications marketplacethrough the free flow of informationon architectures requirements. andinterfaces. The response has been anoutpouring of products that Bellcore'sclineta-that is the RBOC's-are usingto grow and to evolve their networks.to provide existing services more eco-nomlcally than heretofore and to pro-vide new services.

He goes on to cite that the supplierdatabase, the telecommunications sup-plier database, has grown from 2,000companies in 1984 to 9,000 compardesIn 1989.

How could Bellcore be affected by S.173? Proponents have argued thatsince the RBOC's would be manufac-turers they would invest more in Bell-core.

However, if each RBOC had a com-peting manufacturing affiliate, whatincentive would these competitorshave to contribute to a common R&Dpool? On the contrary. individualRBOC's would focus their R&D re-sources on their own projects, not onresearch that would be shared withtheir competitors.

Furthermore, this argument forgetsthat Bellcore is a special institution.exempted from antitrust laws specifi-cally because its clients, the RBOC's,are precluded from engaging in manu-facturing. If the regional companieshad manufacturing affiliates, thenantitrust laws would prohibit the shar-ing of R&D costs by competing manu-facturers. S. 173 might put Bellcoreout of business, not bring more inR&D.

The expanding telecommunicationsmarket and network of suppliers from2,000 to 8,000 in about 5 years is thedirect result of the free and open com-petition to supply the needs of the re-gional operating companies. Sincethey do not have an In-house supplierto whom they have every incentive torely on, the RBOC's have used theirsize, resources, and technical expertiseto essentially be investive money ma-chines for one of America's fastestgrowing and most important indus-tries.

S. 173 threatens that success. In-stead of a thriving industry, we couldvery well end up with a self-dealing,cros-eubsidy. and anticompetitive be-havior.

Proponents of this bill present adark vision of America's role in theinternational telecommunicationsmarket. In fact, the internationalmarket for high-end telecommunica-


S 6990 CONGRESSIONAL RECORD - SENATEtions is rapidly expanding and Ameri-can firma are the No. I benefactors ofIts growth.

Our trade surplus-underlined sur-plus-in switches, network needs, andother sophisticated technology hasgrown from $115 million in 1988 to$710 million in 1990, a 500-percent in-crease, The deficit in telecommunica-tions is in consumer products equip-ment. But even if we include consumerpremises equipment-the telephonesand fax machines-the U.S. trade defi-cit has declined from $2.6 billion in1988 to $800 million in 1990.

How will S. 173 change the situa-tion? Proponents hope that theRBOC's intimate knowledge of thetelecommunications network and theirtremendous capital and human re-sources will make them strong playersin the international telecommunica-tions market.

Frankly. I am concerned that S. 173may have the opposite effect. The twoqualities that RBOC undeniably pos-sess-their intimate knowledge andtremendous resources-are exactly thereasons that AT&T was able to engagein anticompetitive behavior and abuseof the rate base.

The regional operating companieswill get a share of the telecommunica-tions market but that may come at theexpense of other manufacturers andnot increase the overall total. Even ifeach regional operating company onlycaptures 10 percent of the market,that is 70 percent of the total that willbe foreclosed to competitors by theunfair advantage that the regional op.erating companies have by virtue oftheir regulated bottleneck monopolies.

So it could very well have the oppo-site effect as the proponents of thisbill contend.

S. 173 will clearly change distribu-tion within the pie, but it will notmake the pie any bigger.

Another way that S. 173 hopes toimprove the structure of the telecom.munications market is through a do-mestic content provision. That provi-sion hkas many loopholes that are pro-vided by the bill and those loopholesprobably make a bad situation worse.The regional operating companies mayuse parts manufactured abroad butmust certify to the FCC that it hasmade a good-faith effort to obtainequivalent parts in the United Statesand that the cost of these parts is lessthan 40 percent of the sales revenuederived from that equipment.

Each year, the FCC and the Secre-tary of Commerce shall determinewhat percentage of the revenues comefrom each RBOC. The FCC canimpose penalties if it deems a firm isin violation, and any supplier claimingthat the supplier did not make "a goodfaith effort" to buy the components inthe United States can file a complaintwith the FCC or can sue the affiliatefor damages caused by the manufac-turing affiliate's actions.

If I understand this correctly, f Iam an American firm that makes a

part that a telecommunications manu-facturer can use, and that telecom.munications manufacturer decides abetter and cheaper part Is made by acompetitor of mine that happens to beowned or based overseas, then I cansue the manufacturer for choosing abetter and cheaper part than mine.

The only American industry that Isee being made more competitive bythis provision is the legal industry, nottelecommunications.

Just as this bill would be a boon tolawyers, it would be a bust to all con-sumers of telephone services. It hasbeen argued here that S. 173 containsmore than adequate safeguardsagainst abuse of the rate base throughcross-subsidization. That has been theargument made countless times. It hasbeen said that we should rely on theregulators to prevent the regional op-erting companies from taking advan-tage of their bottleneck monopoly.

It has a strange ring of familiarity toit. It sounds Just like the argumentsthat AT&T made when the Govern-ment began to press its case. Let theregulators take care of it.

If there is any lesson that we shouldhave learned In the past decade, it isthat the markets are much better reg-ulators than the regulators them-selves. Even f the FCC can trackdirect subsidies, which is a major ques-tion, how will the regulators monitorthe indirect subsidies providedthrough cost allocation and the shift-ing risks from competitive to monopo-ly ventures? For example, how will theFCC allocate the cost of training andthe salary of regional operating em-ployees who are working, laying outthe generic specifications for the prod-uct and regional operating affiliate de-velops?

How. will the FCC determine whatpercent of the increase in a regionaloperating company's cost of capital isdue to the perception that It is affili-ated. is engaged in financiallY risky ac-tivities?

All of these are enormously compli-cated questions. They are now an-swered by this bill. And the answer, isthey will not be regulated.

To be quite frank, the honest answeris-I should say the most "honestanswer is that no matter how sophisti-cated their tracking and reportingtechniques, the regulators will neverestablish solid answers to these ques-tions.

Ironically, proponents of eliminatingthe manufacturing restrictions pointto the FCC's success in auditing themanufacturing arm of NYNEX.

The rate base abuse and cross subsi-dization that was taking place at mate-rial enterprises, however, was not re-vealed by sophisitlcated financial anal-ysis technique. It was not revealed byan audit team sleuthing for the regu-lator and discovering the abuse. No. Itcame to light only because an employ-ee leaked the story to the BostonGlobe. And even then the FCC wasnot able to act until 5 years after the

June 4, 1991violations occurred. And we are goingto depend on regulators In thismatter? It just will not be successful.

If we have learned the lesson thatmarkets are more efficient regulatorsthan regulators, if we ask whether thiswould increase the size of the telecom-munications market or just shift busi-ness to the regional operating compa-ny, if we are concerned about theimpact of cross-subsidization on thetelephone consumer, then the rightdecision would be to retain the manu-facturing restrictions on the regionaloperating companies.

Unfortunately. that is not what thisbill does. and that is why I will opposethe legislation.

Mr. HOLLINGS. Mr. President, Isuggest the absence of a quorum.



Mr. HOLLINGS. Mr. President. I askunanimous consent that the order forthe quorum call be rescinded.


MORNING BUSINESSMr. HOLLINGS. Mr. President, I ask

unanimous consent that there be aperiod for morning business with Sen-ators permitted to speak therein.


CRISIS IN YUGOSLAVIAMr. MOYNIHAN. Mr. President. re-

cently the esteemed Flora Lewis wroteof the ongoing crisis in Yugoslavia.She noted that this extreme exampleof ethnic conflict may well be a har-binger of things to come, that successor failure in this case may establish apattern for other similar disputeswhich are bound to arise. She closedher article with this warning: "It is atest of whether the new Europe cankeep its own order, with implicationsfar beyond Yugoslavia."

I commend this cogent article to mycolleagues and ask.unanimous consentthat it be printed in the RgcoRa.

There being no objection, the articlewas ordered to be printed in theRtcoao. as follows:(From the New York Times. May31. 1991

How To STOP A C xvL WaR(By Flora Lewis)

ZARED. YooaLavlA.-The shouting matchamon: Yugoslavia's ethnic rivals is becom-Ing a shooting match.

Some Croatian leaders say the warningthat civil war looms Is only "Serbian props-ganda" and that the country can and shouldpeacably break Up Into Independent states,In vowing yesterday to ecede from Tgo,slavia by June 30 unless the turmoil dividingthe country ts solved. Croatia confidentlysserted to the world that It can prosper onits own.

Tensions and tempers are high. There areminorities in too many places and interestsare too intertwined to solve the dispute byredrawing maps. The U.S. and the European


-June 5, 1991 COrFucdCMm UICATIONS EQUIP.

EtNT RESEARCH AND MANU.FACTURING COMPETITIONACTThe PRESIDING OFFICER. The

clek will report the pending business.wh1;.1 is S. 173.Th!: Wri:itant licislt'ie clerk reai'd

!) I Ilk'S:A bill 'S. 1-3) to permit the B-lI Tele.

ii0lolle Companils to conduct research oILei. and manufacture telecom unilis eqtuipment. and for oth,-.r purposes.The Senate irtsitmcd cotnsid.ralion

of tile bill.TIh PRESIDING OFFICER. The

Chair recognizes ttie ;vnator ftnimSolui Carolina (Mr. Hot.t.rnl.hl.. (OLLINGS. Mr. Preudelii. Ii

wGrl: 0iit on yesterday lie so-cii',edrural atned nent. where we ccrtainilygot as ay from the operations lan-luage in the original anendment so

there would be no veto. so that wewo'ltd -also rei-ire that. Ili otherworln. so long a3 they would beteati - tlrolit.

The orgilial amendment. I shouldtin' ("it, the amendment of tile Sen-lor from. zltih Dakota. had a veto byIl r rat I le:'hlone rompanit-s overtie u!s-;ntlIoa& o. the Bell Cos. Iti. loCr01 alined A provlision In there that ilhe13,11 Cos. had to tontlnue to sell to therural romlanttes Irrespective of weth-cr thor," ihad discont-inuej that partieu-r i:'.i'lplnernt slid mo%'(?d on t-n more

advaitvrd 4lilinlnnt. and cOlltilue tosill it 10 themn even at a loss.W4: dd o',Va with those thlngs, obvi-nly. and got togeth-r itl the dis-

I in Iitr .-tI ,SCt;aLor frol:i SothIIt)ak::ta. t t1,rk we have now a good.S;V'OOI, al:A;cllrl,'en whe reby thJOObis

vill nu. rio"ble up the smell.s; aher:bythere Itl be ptanning:; wherchy AC-Vill te adhering. In a sense, to the ad-inolltiol of the Office of TechnologyAsseSiieit. where they said rIthbetter planning with tite stnat.l ruralentitis by the largrr Sell Cos.. thatYoU could get advainced and betterseriices In the rural areas. And thnt,.' 5s tie Iniellt. I would"t say. I gUsti. oif.- .1 t00 -ntore.llowert r. al at!toSPtiere develops

h':VC whele fi for 2 days lthey con-Illl'Ie to telk about anendments. i ani&otti to have to revert to my old daysIn tile State legislature: You eitherbrolIit Your amendnents tlip or wemioved on. end we woulti jilst lave t,lget. to third reading.

Ttle rel.;on I att naking these como-MTntills tc"-I ant checking where .hey.:,y they iayst certail antitrust tar-

vl.a:;e. I sin Preplared to put up certainRl1Liti iSi 3tntu~ge, If there Is any clar-lCS:cliti, iefT;S;ary-I do not think so-I i;AVC tile I"ulguage that has been,:t d In everat other statuiltes. The

prelT delit Is set. There Is no intent inthis bill.

We did not Jtist bring Up tihis billyestcrday. This bill has been workedOni dillhently for the last 3 years by allfacets and al lawyers anii all tatl(ialid ali abilities.

NG R ESSIONAL RECORD - SEIt is very cautiously and dciibcrsltej

drawn, wit h a balance it theret tumake certain that the Bell Cos. are atlowid to manufactire through whollyowned subsidiaries, entirely separatedwithout any cross-subsidization, withnotiftcation, restrictcd kind of selfdealings and everything else and. withrespect to antit'ust-even when we gotto tile planning, sulid thia Is what in.duccd mty corlients here this nornintinltialy-we said il conformance wiltthe antitrust laws.

Some still think maybe that Is nolstifftilent. They want to rewrite thehill. "provided however. provide.ttoai er. .We are prepared to Lry tCable those intilnderilts but they dc

sol cisine alIth the amendienis. WeunJerstlind there Is one with domesticcontent. The inLent is clear. Competi-tion Itt the world market and every.thing else. all has domestic content Ilthere. We certainly did not put thisbill itt for foreign otanufarturers. Thatis where. they are. Wc are trying tobring ttein back home. Thre Is nodoubt. about what, tite Ittent is here, inthis partic:ular bill.

So those who want them to conLinueto maniiifacture overseas and every-inil1g eli about domestic content, letthe:n bring their amendment. or thispartictiar Setator Is really encour-aged. after 2 days and none of theamendments coining, to just put uptie ntildment anti nmove Lo table myown) at'etldnltent and move on. TheS-liLle im to get on with Its busines.

Maybe all RLtlOsphere has developedwla,-re sotle think we are wheeling andtll-iI:Ilt and ready to accept. We are:tot 'ro:en hard headed. We are willingto ta!lk; but in tile context of not ac-ceP.ing, it Is after due and deliberateconsideration. This bill has beenworked and worked and worked overand all the caveats are in there. It is awell-balanced bill. It has bipartisanSUpPOrt-Stt-ung support on all sidesbecause it has been worked and wehave taken care of these misgivingsth.1 some could have had. The intentis clear. We are ready to move.

I am checking with the other side oftlhe aisle to see if I cannot Just goahead wti the amoendment that Is ru-mored, bring it up myself and move totable my own amendment and moveon to third reading so no one can com-IsAlt they did not even get consider-.tlon. We are going to get consider-atien here shortly.

The PRESIDING OFFICER. TheChair recognizes the Senator front01110 [Mr. MatetlNS^UMl.

Mr. METZENBAUM. Mr. President.I respect the diligent efforts on tlepart of the muiager of the bill to passthis legilation. I spoke to the bittshortly after it came to the floor atidIndicate.td I had some concerns bothfrom tle consumer standpoint as wellas from the question of domestic con-

tl, lie question of whether or notwe would be losing Jobs rather thanmaking jobs. I was Prepared to comehere yestirday with a rather fulsome

BEST COPY AVAILABLE'ATE S 706.7)

spiech. I tlhougllt it was a pretty gnl(l!. speech I was going to make. But Lhe

tact Is Sorie Members on the other- sile of the aisle saw fIt to bring ttp• their position with respect to the civilI rights bill which they certainly had a* right to do. But that consumed about

an hour and a half of time. Thent there was considerable discussion con-

cerning the rural amendment, amatter with respect to which I was not

I directly Involved. And I am over herethis morning prepared to addressmyself to the subject arId have alreadyhad discussions with the manager ofthe bill.

It. Is ny tnderstandling. and I said tolhin I wss prepared to go forward, but

e I was prepared to explore the possibill-c ty of accepting or discussing some

amendments. The last I had spokenwith my friend from South Carolina,Lthe understanding was his representa-tives and mine were going to sit downaid mecet. I guess his representatives

tud nlne are sitting back there readyto see if they can work out these mat-ters. If they are able to do so. I thinkit will accelerate the process greatly.We are ready; they are ready to nego-liate.

I yield the floor.The PRESIDING OFFICER. Who

seeks recognition?Mr. METZENBAUM. Mr. President.,

I suggest the absente of a quorum.The PRESIDING OFFICER. The


call the roll.Mr. GORTON. Mr. President, I ask

Unanimous consent that the order forthe qtorum call be rescinded.

The PRESIDING OFFICER IMr.SAFRDs). Without objection, it Is soordered.

Mr. GORTON. Mr. President, I asknruilmous consent that I may proceedfor 5 or so minutes as In morning bus-ness.

The PRESIDING OFFCER. With-.out objection, It is so ordered.

DRIFT NET FISHINGMr. GORTON. Mr. President, time

and again, this Senator has urged theadministration and the Senate to takeaction to end the deplorable practiceof drift net fishing. During the lastcouple of years, this fishing practicehas gone from a scourge few peopleknew about to one recognized by theworld community as so destructivethat It must cease totally and Itomedl-ately.

I am heartened by the U.N. resolu-tion to end this practice by June 30.1992. I was proud to work with Sena-tors STesNS and PACKWOOD last yearIn incorporating new attldrift netamendments In the Magnuson Act. Iam also pleased to be a cosponsor ofSenator PACKWOOD's bill, S. 884, theDrift Net Moratorium EnforcementAct. This bill, which I predict will bepasoed by the Senate this year, would


CONGRESSIONAL RECORD - SENATErequire the President, on January 1, blel, the congressional fellow on the1992. to certify any country which has staff of the Republican leader, be givennot notified the United States of its in- privileges of the floor during consider-tention to stop drift net fishing by ation and votes on S. 113.June 30, 1992. It a country is certilied, The PRESIDING OFFICER. 7W;h-then the President is authorized under out objection, it is so ordered.the Pelly amendment, to ban theimport of fish or fish products from TELECOMUNIATIONS EQUIPtha -v .. UNICATI ON EQUIP-that country. In addition, it gives theMEN RSEARCH ANMANPresident the authority to invoke a FACTURING COMPETITION ACTwide array of sanctions against a coun-try that continues to violate the mor- The Senate continued with the con-torium after June 30 of next year. sideration of the bill.

Unfortunately. Mr. President. not Mr. HOLLINGS. Mr. President. soeveryone is getting the message that colleagues will know with respect tothe world community is demanding a the Simon amendment, I understandban on drift net fishing. I have just re- that they are now finalizing the lan-ceived evidence that on May 13 of this guage of the Simon amendment. Theyear, a National Marine Fisheries Simon amendment goes to the heartService agent accompanied Canadian of the issue concerning audit of theMaritime Forces on a high seas drift RBOC's. Under his amendment, therenet patrol utilizing a high-technology is a requirement that the FCC estab-Canadian P-3 aircraft. Over 4 days, lish the rules and regulations and con-the patrol covered nearly 750,000 duct audits of the RBOC's and theirsquare miles of high seas areas and Affiliates as well.10,000 miles of flight legs. This patrol I understand the distinguished Sena-detected in position 40 41'N/164 32E a tor from Ohio on the matter of the en-vessel of the People's Republic of gaging with the collaboration underChina. This citing is especially note- that section F. A Bell Telephone Co.worthy because it is the first instance and its affiliates may engage in closethat a Chinese vessel has ever been collaboration with any manufacturerdocumented conducting drift net fish- of customer premises equipment ofIng activities. It was seen in an area telecommunications equipment duringwhere numerous other high seas drift the design and development of hard.net vessels have been sighted illegally ware, software, or a combinationfishing for salmon and steelhead since thereof. That does not violate the pro-April of this year. This vessel was hibition against cross-subsidization.flying a People's Republic of China and It does not repeal the antitrustnational flag, displayed a large red provisions relative to this paticularstar on both smoke stacks, and had a act.large high seas drift net clearly visible We would go along with that phraseon Its deck and ready to set in the if It says also consistent with thewater. The vessel's name was deter- provisions prohibiting any cross-sobs-mined to be the Luo Ling No. 3. dization by the Bell Cos. with their

Mr. President. today I am sending particular affiliates.letters to the National Marine Fisher- We also would work with Senatorlea Service, the Coast Guard, and the SIMON to resolve the issue concerningDepartment of State. which has been States audit authority. As now undervery reluctant to report this violation, the law the States have not only thatdemanding that each of them investi- volition but they have that responsi-gate and pursue this matter aggres- bility from time to time to carry outsively. audits of the RBOC's. I inagine that

I welcome my colleagues' support for 25 percent of the Bell Cos. businessthis action. Working together with would be in tile interstate arena andSenators PACKWOOD, STEVENS, and I as a result audited at the Federal levelmay say the chairman of the Coin- by the Federal Communications Com-merce Committee, who Is here manag- mission. The remaining 75 percent ofIng the current bill. and other col- the Bell Cos. business Is regulated atleagues in the Senate who understand the State level as intrastate and thethe importance of this issue, we will local public service commissions thereattempt to convince the administra- would be responsible for the audits.tion. and the drift netting nations of It is the intent, as I understand, ofthe world, that this deplorable prac- the Senator from Illinois. that hisLice must end. amendment will require States to over-

Mr. HOLLINGS addressed the see audits of the RBOC's. TheseChair. audits shall be conducted by an ind.

The PRESIDING OFFICER. The pendent auditor selected by the localSenator from South Carolina. commission, and we are working out

Mr. HOLLINGS. Mr. President. I the specific language on tile Issue ofthank my distinguished colleague access to the books and records of thefrom Washington. and I hope we can RBOC's and their affiliates. Of course.move on that important matter, a you cannot do an audit unless youmatter of concern to all of us. have the books.

We do have some reserva ions on tiheissue of giving access to RBOC's finan.

FLOOR PRIVILEGES cial information about giving tieMr. GORTON. Mr. President. I ask States the right to look at the books

unanimous consent that Keith Kreh- anytime. for any or no reason. RBOC's

could find themselves being audited allthe time. at every level. We want tomake sure that Is carried on In a Judi-cious fh ion and w'th probable

audtors in ire RBO off,es aro'ndthe clock all the time. I hope wlhenboth sides clear the language we willbe ready to go.



The legislative clerk Proceeded 10call the roll.

Mr. INOUYE. Mr. President. I askUnanimous consent that the order forIhe quorum call be rescinded.

Tue PRESIDING OFFICE[?. Wilhlout obiection. it is so ordered.

AMIENDMENT NU. 283

Mr. INOUYE. Mr. President. I riseon behalf of Senators DoDD. LIEBla-MAN. AKKA. WELLSTONE. amid myself.to offer an amendinent to S. 173. tii.-Telecomniunications Equipmni:nt R.-s-arch and Manufaci uring C(,mlstiLion Act. The pil pose of niy mliitiud.liiit is to strenglhen til- salcguardsagan.t self-dealing by file Bell Tcle-

iout Cos. This ainendmel. %illenui'e that tile telecomniunitation.equipment market remains compeli.tile by: First. ensuring other lllatlfac-turers continue to have an opiortuni-ty to sell equipment to the Bill Cos..and second, requiring that Bell lli:Xiui-factiiring aftilites sell equipnlt ioother users.

My ainendniint addresses file motsi-rioils issue raiseid by tills itiisl:liioi.nlarttN tie ability arnd hocit ive of [h,

Bell relephone Cos.. which ari- localnlopolies. to purchase elilliplntfromn their affiliated nanuifacl urcrsand joint %entures to the detriment ofconsumers siad competitors. This ability to leverae their contiol over tiilocal bottleneck poses two dangers.

First. there is a danger that by ptlr.rlasiig from themiselves they will doso withoiit regard to file quality ,1price of tile product. This in tl:1n ill.errses rates to local residrni.vs iI:ibusilllesses beyond those ahich awouldexist in a comlpetitie local exliaglCsetting, Cross-subsidles from monopolyservices end up supporting less thancompetitive enterprises.

The other danger confronts the Bi!lntniifaCtiiriil affiliate's conpetitors.%ho are forcid to conlpete ialinst asubsidized and fasoc-d v nture latherthan in an open market. Fuoritismcould lake nlany foriis: Sharing al.i-aned iwtiork i!lfurlnal n. S iltd-irds. marketing alid other Infilion personntel exchainges: or v ell oit

right bias in procurement. Thisamiendinent does not bar self-defvligentirely.

This amendmnt rccognizts thati-acii Bell Co. wNeh Intends to rialm-favline ieletioii- eqiipient illlstiblinil 1to and i ceive FCC opp-ova l

Ia plin esiri!t that: Fir t, ecllh Bill°J't'he hom.( C,) tl,:t tvilgawiH inl Ilwwn~

S 7066 June 5. 1991


June S. 1991 CONfacturing will purchase a majority ofIts equipment from unaffiliated firms:second, each Bell manufacturing affili-ate must sell at least 20 percent of Itsequipment to unaffiliated companies:third, personncl of the Bell manufac-turing affiliates will not participate informulating or developing generic orspecific equipment requirements andstandards, or obtain advance notice ofsuch requirements; and fourth. unaf-fiiated firms have the same opportu-nity as the Bell manufacturing affili-ates to prepare and submit proposalsto sell equipment to the Bell Tele.phone Cos. and have their equipmentevaluated on their merits.

The restrictions Imposed by thisamiendment are of limited duration.Tile FCC must repeal these restric-tions tipon a finding that there is ef-fectise competition In the local ex-change service. Under this amend-ment, effective competition existswhen a majority of the residential andbusness subscribers have access toto-al telephone service provided by anuniaffiliated firm: and a substantialamount of such subscribers actuallysubscribe to an unaffiliated firn'sserviecs.

Finallv. this amendment requiresthe FCC to report to Congress on thestate of competition in local telephonemarkets, the prospects for the devel-opment of competition, and the par-tular regulatory. technical, and fi-sancial barriers to the creation aidmaintenance of competition. By pro-viding objective standards to judge thebehasior of the Bell Telephone Cos.and their affiliates. we preent titeB,11s from foreclosing their niiket tounrelated vendors.

Further. we provide a benchmerk toriasure the compeLitiveness of Belland non-Bell manufacturers. If Bellmanufacturing affiliates are unable tosell a substantial fraction of theirproducts to Independent third parties.lien one might Justifiably wonder%.hether they are truly economically\ able in a free market envlronment.0i subsisting on the local exchangemoilopoly.

This amendment is a reasonable-nipromise which meets the objec-tions of those who fear that the BellCo. will engage in cross-subsidies orself-dealing at the public's expense.This amendment provides an addition-al layer of protection for consumers,eonsumer advocates, mass media. andcompetitors.

Mr. President, if I may submit an in-q'liry to my chairman. I realize he hassorked most diligently for a longtriod on this measure. But. as heknows. I sincerely beiieve this measure:,srS some very serious Issues which Ibelieve must be addressed. If he wouldgive this amendment his serious con-sideration if and when we do go intoconference. I am prepared to withdrawthis amendment and do not wish toIrolong this proceeding.Mr. IOLLINOS. Mr. President. I

want to give the distinguished Senator

GRESSIONAL RECORD - SENATEfrom Hawaii that assurance he re-quires and requests.

The Senator from Hawaii and theSenator from South Carolina have asimilar Interest with respect to self-dealing. S. 173, as a result, prohibitsthe RBOC's from manufacturing Inconjunction with one another, theyalso must have separate financialr-cords and keep their books of ac-counts of manufacturing activities sep-arate entirely from their telephonecottpiny and they must file all of thisInformation publicly.

They cannot perform sales, advertis-ing, installation, production, or main-t,-nance operations for an affiliate.The RBOC must provide opportunitiesto other manufacturers to sell to thetelephone company that are compara-ble to the opportunities they provideRBOC affiliates and the RBOC mayonly purchase the equipment from itsaffiilate at the open market price.

The bill also contains provisions pro-hibiting cross-subsidization, limitingthe equity ownership of the affiliate,stid prohibiting the affiliate from In-curring debt from the RBOC itself.We think we have the RBOC's manu-fa.cturing affiliate pretty well fencedoff from the telephone company.

What happens. If you really get anamendment to limit self-dealing to 50percent or less, which would requirethe Bell Co. to obtain the majority ofIts the equipment from unaffiliatedfirms, you are really going to stultifythe incentive that we are trying toobtain-that is to allow the RBOCs tor-t Into research and into develop-meiit and into manufacture and stay.as we have said, on tile cttting edge oft-lecommunications technology forthe benefit of the consumer.

We think this is a consumer bill. Iknow the Senator thinks his amend-ment Is a consumer amendment. Itcould be that in conference we couldstudy it and we could make some ad-justmrnt, and I would be glad to lookat it is, that light.I lust. as a caveat, state in a sort of

botton line fashion, that no self-deal-Inc limitations are required of thoseforeign companies who have takenoser the market. It took me over anhour to list their activities, their pur-chases, their permeation of the tele-commtnications research and develop-nment ini this country. These foreigncumpanies manufacture here in thiscountry. You and I think we have anFCC. and xe have some little domesticccmparl-es o'er here with some moneyand we think we are going to controlthlin and we arc going to keel) freemarkets. Meanwhile, tile foreignersa:-e going to take over our marketriglht -,rsder our noses.

You see. that is the fundamentalintent here, that the Bell Cos. shouldbe able to buy the equipment theymanufacture. But it has to be done onan exen-Steven basis, all aboveboard,With no special pricing or anythingelse of that kind.

S 7067We would be dellihted to look at

that idea In conference.Mr. INOUYE. Mr. President, I am.

most assured by that commitment,and with that commitment and assur-ance, I will withdraw my amendment.

But before I do, I ask unanimousconsent that Senator MxrzEmzAuM belisted as a cosponsor.

The PRESIDING OFFICER. With-out objection, It so ordered.

Mr. DODD. Mr. President, I rise insupport of the Inouye-Dodd effort toIncrease the safeguards against self-dealing in S. 173. the Telecommunica-tions Equipment Research and Manu-facturing Competition Act of 1991,and to ensure an open and competitivemarket in telecommunications equip-ment.

First, I must compliment SenatorHOLLNtG0S and the Commerce Commit-tee on giving this Issue and telecom-munications policy. In general, suchserious consideration. It Is commonsense that our ability to achieve is di-rectly related to our ability to commu-nicate-this is as true for a person asfor a nation. And this is why defininga telecommunications policy for ourNation is critical and why I commendthe chairman and the committee fortheir work in this area.

However. I remain concerned thisbill has Insufficient safeguards toassure the desirable goal of the spon-sors. One need not go back to thestrong case made against MaBell,which brought on the divestiture ofAT&T, to locate cases of abuse. Just inthle past few years, both NYNEX andU.S. West were found in court to haveengaged In anticompetitive behavior.The NYNEX case strikes very close tohome in this debate, as NYNEX wascaught paying inflated prices to an un-regulated manufacturing subsidiaryand passing on these costs to theirlocal ratepayers.

I am seriously concerned that thisbill, while it does contain importantsafeguards, does not go far enough toprotect ratepayers, other consumers,and manufacturers.

As currently constructed, the poten-tial for abuse remains too great. Whilethe Regional Bell Cos. maintain mo-nopoly control over local telephoneservice, opportunities and, indeed, In-centives exist for them to frustrateand impede competition. For instance,timely information is essential to acompetitive manufacturer, If a region-al Bell Co. released technical informa-tion to Its subsidiary directly and thenlater to the Federal CommunicationsCommission, the delay would disad-vantage other manufacturers. There isalso the potential for other abusessuch as cross subsidization. These ef-fects may not be intended In thismeasure, but as they would provide acompetitive advantage and a greaterprofit at the expense of captive localratepayers, we must consider how tolessen the potential for such abuses.


S 7068 CONWe also owe the current telecom-

munications manufacturers this extraconsideration. Except for AT&T, thisindustry was nonexistent 10 years ago.Today. however, Bell CommunicationsResearch, the Joint research arm ofthe 7 regional companies, lists 9,000Suppliers of products to the Bell sys-tems. While there is a trade deficit inthis industry, it is declining-itdropped from $1.8 billion in 1989 to$800 million in 1990. In Connecticutalone, several thousand workers areemployed in this field and it Is a grow-Ing number. Just last week. I was inMiddlebury and visited a companywhich has grown from a small I manoperation to an enterprise which em-ploys over 1.700 Individuals In manu-facturing switches for shipmentaround the United States and theworld. This company and others like Itare not concerned about competition:they are concerned about the estab-lishment of an unfair playing fieldwith the enactmenlt of this measure.

The amendment, which we are nowconsidering, would eliminate the likeli-hood of such abuses, but at the sametime It would preserve the potentialbenefits of the entrance of the region-al Bell Operating Cos. Into research.development, and manufacturing-thebenefits to the Regional Bell Cos. aswell as to the industry and country asa whole. It would allow the Bells' man-ufacturIng affiliates to participate andcompete in the world market and Inother domestic markets, but disallow itfrom selling solely to itself and frombeing Its own sole equipment provider.

This provision would ensure thatthere is fair competition among manu-facturers. Including the Bell affiliates,to provide the local Bell TelephoneCos. with the best product at the leastcost. Thereby, manufacturers, rate-payers, and the Bell Cos, themselveswould be ensured of the benefits of afair marketplace.

Mr. President. while I am disap-pointed that this amendment -ill notbe included in this bill at this time. Iappreciate Senator HoLLirOS' commitment to give this amendment, and theconcerns which It addresses, his seri-oe consideration In the conference onthis bill.

The PRESIDING OFFICER. Theclerk will report the amendment, andthen the amendment will be with-drawn.

The legislative clerk read as follows:The Senator from Hawai IMr. litouv).

for himself, Mr. Doss. Mr. Luzatasaus,. Mr.Agis. Mr. WzLtsropvo and Mr. Mt.-asauw proposes an amendment numbered255.

Mr. INOUYE. Mr. President. I askunanimous consent that reading of theamendment be dispensed with.

The PRESIDING OFFICER. With-out objection It is so ordered.

The amendment is as follows:At the end of the bill. add the following:"Sw. 2. (a) The Commission shall pr-

sacrbe regulations requiring that any BellTelephone Company that has an affiliate

GRESSIONAL RECORD - SENATEengaging In any manufacturing authorizedby section 2271a) shall-

"(ll not engage In manufacturing tintil ithas filed and received Commission spprot, iof a plan that ensures-

That the personnel Of the Bell Compynyaffiliates that are engaged in the manilic-turing of telecommuoications equipmentwill not participate In the formulatlon of ge-neric or specific requirements for any suchequipment that the Bell Telephone Compa-ny will purchase and will not obtain noticeof such requirements In advance of unaffili-ated firms, and

That unaffiliated firms have the same op-portunity as the Bell Telephone Companyand its affiliates to prepare and submit pro-posals and quotes for telecornmunicotiotlsequipment to be purchased by the Bell Tele-phone Company and have that equiptmentevaluated on the merits:

"'(2) purchase from unaffiliated firms atlesat a majority of each type of telecor-munications equipment that is comparableto types of equipment manufactured by theBell Telephone Company or Its aftiliate:and

S'"(31 sell, either directly or through its af-fliate to unaffiliated firms a substantAlIamount of telecommunlcstlons equiimezitmanufactured by the Bell Telephone Cot,pary or its affiliate.

"(bXl) Within 180 days alter the &,te ofenactment of this Act. the Commission a!:aliadopt regulations defining the requirerre:.sin subsection (a). including a regulation de.fining the term "substantial" as an amountnot less than 20 percent. The Commissionmay not alter the definition of the term"substantial" for five years from the date ofenactment of this Act.

"(2) The FCC shall repeal the rereulaticisadopted pursuant to subsection (a) when Itdetermines that the Bell Telephone Coipa-ny fares effective competition In providiglocal exchange service. The term "effect i" Ccompetition" shall mean that a majority ofthe residential subscribers and a majority ofthe business subscribers in the serv ice areahsve access to local teletahone service pro.vided by an unaffiliated firm and that R sub-stantial amount of resIdential subscribersand a substantal amount of business sub.scribers actually subscribe to the services ofthe unaffiliated firm.

'(31 Within one year of the date of ciart.meint of this Act, the Commission 5hallreport to the Congress on the state of com.petition in local telephone marke'3. theprospects for the development of conpeti-ton. and the particular regulatory, technil-cal. and financial barriers to the creationand maintenance of competition.-

Mr. INOUYE. Mr. President. I awkthat my amendment be withdrawn.


The amendment (No. 2831 was with-drawn.

Mr. INOUYE. Mr. President. I suc-gest the absence of a quorum.




The PRESIDING OFFICER (Mr.SHrLBY). Without objection, It is so or-dered.

Mr. IIOLLINOS. Mr. President. Iwill be glad to yield to our distin.guished colleague from Ohio. I knowwe have been negotiating. In talking

June .5. 1991with the comanaser of the bill on theRepuiblican side. our ranking member.Senator DANFORTH. he is prepared andI am prepared to move to third read-Ing.

We do not want to be precipilotis.They talk about negotiations but Iknow the staff of our committee hasbeen talking to the staff of the Sena-tor from Ohio, the Senator from Illi.nlls. and other Senators for weeks onend. We are still talking. We are wait-ing for telephone calls to come. I knowthe distinguished Senalor can keep uengaged, I should say, for the rt.sl ofthe afternoon and tire evening.But I say let us be engaged or let ns

move to third reading. Everybodyshould know that negotiations as faras this Senator is concerned are terni-nat<ed. Let them offer their amend-menr, and we will get a better under-standing than we are from the negoi!-ations.

Mr. DANFORTH nddret.,d the-Chair.

The PRESIDING OFFICr'.I ]h 'Senator from Missouri.

M r. DANFORTI. Mr. Pres'den. Ihlave noticed a certain sluggishne.,s ii!the process of this legislation. I knowit has been on the floor s!nce Monday.It Is now afternoon on Wednosday. Ibelieve that during that period of timeone amendment has been offered andhats been accepted. There have been•arouss rmors about the posslbhlity rfother amendments. But they ri Ilyha.e been O:nly uniors. I -t. told lhitta Senator Is headed toward the floorto offer nn ansendment. Thal .Nolild b.fin--. -tlt I came to t1e floor about nihour or so ago and suggested to Seira-tor lnOLLIa1Gs that perhaps the timehad come to go to tillrd reading. Ifnothing happlcr2 on a bill. we do ntsail at outd foreer.

So I encourage ni" cliirirn to :.ceed to third readinlg at a %crydate. I think that if tire Lill jt:tl k c,;:.ali. c forever. It will sLart ottraeti::g I1kinds of extralieous smendnr-tts. 'I'isis an Iportant bill. It is an itora tulpublic Issue. and It deserves to be at-tended to.Mr. HOLUINGS. Mr. President. I rp-

preciate the remarks of our dislhi.guashed colleague from filissoutrl. As Iunderstand it. there are two amend-ments that are prepared and clearedon this side-one by Senator f tr-ENcAUM. one by Senator SIMON. Theymunist be cleared of course on lhe sideof ti e Senator from Missour. I hopewe can see whether they would becleared and, if not, of course theamendments would be offered. We willsee what halpbens.

I suggest the absence of a quorim.The PRESIDING OFFICER. The


eeeded to call the roll.Mr. D'AMATO. Mr. President. I at:;!:

unanimous consent that tire ord--r frthe quorum call be reseinded.


CONGRESSIONAL RICORD - SENATEThe PRESIDING OFFICER. With-

Out objection, It is so ordered.Mr. D'AMATO. Mr. President. let

me first say I have had conversationswith the manager of tile bill. and Sen-ator IIOLLiNGS has gone to greatlengths in order to attempt to accom-modate the Senator from New York. Ithank him for his attempt at seeing ifwe could not have the aniendln,.-n.which I am going to propose, whichdeals with Syrian participation in theforthcoming parade honoring thebiave young men and women whos(erved In Operation Desert Storm andDesert Shield.

That parade Is going to take placethis Saturday In Washington. Thatparade i: going to involve the use ofsome 13 million worth of taxpsayers"dollars. One of the terrible things thatAill be taking place in that parade Isthle flying of the colors of Syria. Weare going to have a U.S. servicemancnrrying those colors. I am going totalk about that as we go along.

The Senator who is managing thisbill so ably and has spent so muchthie and effort here attempted to ac-commodate this Senator by asking ifwe could have a freestanding sense-of-the-Senale resolution being consid-ered-and I want him to know I amdeply appreciative of that, and I at-I '-tpted to see if we could do this.

As a matter of fact. I believe theladershlp on our side has cleared thisamendment for consideration and Iwant you to know It is bipartisan innature.

Let me say. I think we could get justAbout all the Senators to come on tills.I'cluding the President of the Senatewho is now sitting. Let me tell yotwho we have on it. We have SenatorDECOXcINI. Senator ORASSLEY. Sena-tor MACK. Senator MUaROWSg. Sena-tor LiEBERMAN, Senator LAUTENsERG.Senator HELMs, and Senator MOPN-HAN, as well as the Senator from Ala.bama. Senator SHELBY. SO It Is biparti-san.

This is something I think should bebipartisan, and I am sorry we have tooffer it to this legislation. The onlyreason we have to do that Is becausewe Could not-and I want it to beknown that my good friend, dearfriend. Senator HOLLINGS. really at-tempted, starting last evening, to see ifwe could not clear a spot. And heagreed to suspend business so we couldconsider this freestanding and not en-cumoer the important legislationb,fore the Senate now and which tileCommerce Committee has voted outoserwhelmlngly and which the Sena-tor is looking to conclude.

AMNrDMENT NO. 2a4

'Purpose: To express the sense of theSenate regarding the victory oarad' InWa.shington. District of Columbia. sched.tiled for June 8. 19911Mr. D'AMATO. Mr. President. I send

an amendment to the desk and ask forits immediate consideration.

The PRESIDING OFFICER. Theclerk will report.


The Senator from New York (Mr.D'Amo]. for himself. Mr. DECoaci t. Mr.GRASSLY. Mr. Maca, Mr. MuRsowsai. Mr.LIr.lMAN. Mr. IrclaEGta, Mr. HELm. Mr.MOYNIHAN. and Mr. Snumsv proposes anamendetent numbered 284.

Mr. D'AMATO. Mr. President. I askuianimous consent that the reading ofthe amendment be dispensed with.


The amendment is as follows:At the appropriate place in the bill. insert

the following:SF,.. vENSK Or THE SENATE RGARDIN. sIg

NATIONAL VICIM)55 PARADE FOR TilPERSIAN GULF WAR.

It is the sense of the Senate that anyr, o t11y-

I1) for whIch United States assistance Isbting withheld from obligation and expendl-ture pursuant to section 481(h)(5) of theForeign Assistance Act of 1961; or(2) which is listed by the Secretary of

State under section 40(d) of the ArnsE-port Control Act or section 8(J) of theEyport Admlinistration Act of 1979 as acountry the government of which has re-Peatedly provided support for acts of International terrorism.shtould not be represented, either by diplo-matic. military, or political officials, or bynatiotnal images or symbols. at the victoryparade scheduled to be held in Washlington,District of Columbia. on June S. 1991, to eel-cbrate the liberation of Kuwait and the vic-tory of the United Nations coalition forcesier Iraq.

Mr. D'AMATO. Mr. President, whatmore grotesque an image could greetthe grieving survivors of the victims ofthe bombing of the Marine barracks inBeirut In 1983 and of Pan Am Flight103 in 1988 than a United States serv-iceman, perhaps even a marine, carry-iig the Syrian flag down ConstitutionAvenue as the Syrian Ambassador sitsproudly in the reviewing stand?

Mr. President, the inclusion of Syriain the victory parade, a nation directlyresponsible for more American deathsthan those lost in the recent war. Is anoutrage.

Why were the Syrians invited?What about the Assad government?

It is a government known to harborand train a wide spectrum of terroristgroups, including those thought re-sponsible for the bombing of theMarine barracks In Beirut and Pan Am103. They control the Bekaa Valley,Tne Bekaa Valley is one of the havensfor narcotics production and drug traf-ficking, one of the areas in whichmore poison is sent out to the worldand to this Nation.

The Government of Syria, the Assadgovernment. is guilty of every kind ofhuman rights violation, including tor-ture. which is routine. It is absolutelya government that will tolerate no op-position. It has wiped out Its Opposi-tion. It has used tanks, artillery shells.and cyanide gas. It is a governmentthat has employed none other thanAlois Brunner, who was a key Elch-mann aid personally responsible forthe deportation of tens of thousands

of Jews to death camps, and he is con-sultant to the Syrian security forces.

What the Syrians have done and aredoing at the present time in Lebanonis unconscionable. The slaughter ofthe innocent. the slaughter of theChristians. and of the Christian com-munity is something that continues.

Mr. President. that we would be as-sociated with such a regime; no matterwhat the political change, is difficultIf not horrifying. For that reason, Iwill offer an amendment that prohib-its Syrian representation "either bydiplomatic, military, or political fig-ures or national Images or symbols, atthe victory parade to be held in Wash-ington. DC on June 8, 1991. to cele-brate the liberation of Kuwait and thevictory of the U.N. coalition forcesover Iraq."

There Is no possible Justification forcuddling up to a killer with Americanblood on his hands. It is wrong. It Isdangerous. If this policy of cozying upto Assad persists. it Is one we will longcome to regret.

Mr. President. our President put to-gether a coalition and in that coalitionmaybe we did not have the kinds ofchoices we would like to, and In thereal world sometimes we have to workwith killers, we have to work with dic-tators, we have to work with torturers.That is what Hafez Assad Is. And I amnot going to be critical of the fact thatwhen that coalition and when ourtroops were there It may have beennecessary for the coalition to be ableto maximize its effectiveness to In-clude the Syrians.

But for us to now pay tribute totheir nation, to their leader, to theirdictator, someone who is a killer.someone who is an international ter-rorist, someone who our own State De-partment lists as It relates to the con-tinuance of harboring terrorists, some-one who our State Department andCommerce Department lists in termsof drug trafficking, so that on two ac-counts we find he continues drug traf-ficking, we find he continues-and Iam talking about HafeZ Assad. theleader of Syria-he continues toharbor terrorists-on two fundamentalaccounts he has failed.

As it relates to his present record,there are some who say, well, he ischanging. I would say the leopard doesnot change his spots, and Assad hasnot changed., There are 4,500 SyrianJews who are held prisoners, who areused as pawns, who seek to emigrateout, but who are not allowed to leave.

Why would we want to see theSyrian flag carried by an American inthis tribute to the coalition victorywhen indeed Syria and Assad flies inthe face of everything that victory wasabout? That victory was about over-coming evil, about freeing a country.about seeing to it those who would usetheir force will not be permitted to dothat because. they are stronger or havebetter arms.

June 5.J991 S 7069


S 7070 CONGRESSIONAL RECORD - SENATEThat victory was a noble one. That

victory was achieved at the cost ofmany ives. Yes, there were fewer cas-ualties than people thought, but therewas American blood spilled.

How is it that we would Pay honorand tribute to a nation that is ruled bysomeone who Is responsible for hun-dreds and hundreds and hundreds ofAmerican deaths; whose terrorist ac-tivities have led to the killing of Amer.lean marines In Lebanon; whose ter-rorists activities have led to the deathsof Innocent people on Pan An 103 bythe harboring of these various terror-Ists groups, and they continue to do so:who at the highest levels of his gov-ernment is deeply involved in drugtrafficking and providing protectionfor those drug traffickers?

How is it now that we would humili-ate the American public--and I saythat with all sense of recognizing theseriousness of this statement-that wewould humble the United States ofAmerica by allowing the Syrian bar-barian flag-because that is what itrepretents when Hafez Assad, the dic-tator. Is in charge-to come paradingdown Constitution Avenue?

I take strong exception to It, and forthat reason I have introduced thisamendment. I wish we could find abetter vehicle because I- feel verystrongly that we may not get a truetest as it relates to what the sentimentof this great body Is, This great bodyshould be repulsed by the idea that Inany way we would give any respectwhatsoever to Syria. to what it standsfor, and particularly the man whoruns that country, that brutal dicta-tor. Hates As"ad

Mr. President. I ask for the yeas andnays.

The PRESIDING OFFICER. Isthere a sufficient second? There is asufficient second.

The yeas and nays were ordered.Mr. HOLLINGS. Mr. President. I

want to deal openly with my distin.gished colleague, for whom I havethe greatest respect. Senator D'AuAToand I have become good friends hereIn the U.S. Senate. He came to me lastevening. We checked on both aides ofthe aisle. There were objections on theDemocratic side because I said Icannot allow this particular amend-ment on this bill. It is In the contextof trying to develop a discipline.

I know it might not appear this wayto the Chair. but I am beginning to seelight. I believe I have a bunch of West-morelands around me. We have hadlight at the end of the tunnel for 3days around here. But we do have twoamendments worked out with SenatorMhTZxiSmma: one with Senator SIMON.They are being checked now on theother side of the aisle, and momentari-ly we will agree on those amendments.

But in a ecordance with what I con-ferred and related to my good col-league. I said I am not going to breakthis discipline. We have it going herenow. and we are not going to start a

debate on this matter, although I havethe highest respect for him.

So I move to table the antendmfent.and I ask for the yeas and nays.

Mr. D'AMATO. I wonder if my col-league will withhold his motion totable just for a moment.

Mr. HOLLINGS. I withhold just fora moment.

Mr. D'AMATO. I suggest the ab-sence of a quorum.

Mr. HOLLINGS. If we are going toget everybody here to talk. that iswhat I am trying to forestall, the talk-ing.

Mr. D'AMATO. It is not for thatpurpose.



ceeded to call the roll.Mr. HOLLINGS. Mr. President. I ask

unanimous consent that the older forthe quorum call be rescinded.


Mr. HOLLINGS. Mr. President. Ihave conferred with my colleaguefrom New York. the author of tillsparticular amendment. The concern ofthe Senator from South Carolina wasthat we would not get into an ex-tended debate, because this could bean Issue and it could be well debated.That is why I a-sl prepared to move totable.

It does not look like it will develop inthat fashion. Senators are now beingnotified that we will have an tip ordown vote here at I o'clock. I thinkthat is the understanding, ithout anyrequest being made.

Mr. President, I ask unanimous con-sent that we give the Senator fromNew York anr up or down vote on hisamendment at I o'clock. and that nosecond-degree amendments be inorder.

The PRESIDING OFFICER. With.out objection. it is so ordered.

Mr. D'AMATO. Mr. President. I wishto thank my good friend. the distin-guished Senator from South Carolina.for the manner In which he has reallyafforded us an opportunity to heheard on this issue.

I publicly thank him for what he at.tempted to do last night, and what hehas done today.

Mr. President. I suggest tile absenceof a quorum.

The PRESIDING OFFICER. Tireclerk will call the roll.


Mr. POWLER. Mr. President. I askunanimous consent that the order forthe quorum call be rescinded.


Mr. POWLER. I thank the Chair.Mr. GRASSLEY. Mr. President, as

an original cosponsor, I rise in strongsupport of Senate amendment 284.

June 8 is tile day that our Nationgives its heartfelt "thank you" to menand women who so courageonsly

June 5. 1991served in Operation Desert Storm.Tile celebration Will be the largestparade held in decades.

There is no room in our celebrationfor Syria. a country on our lists of ter-rorists and drug traffickers.

In fact, Syria's contribution toDesert Storm included: The Invasionof Lebanon-and the de facto annex-ation of It: and the receipt of a billiondollars, with which they used to pur-chase weapons.

More Americans have died at thehands of Syrian-sponsored terrorismthan died in all of Desert Shield andStorm. Here are some more factsabout Syria:

Evidence indicates Syrian commpli-city in the terrorist attack on theMarine barracks in 1983.

Today. the perpetrator of Pan Am103 safely and freely finds shelter inSyria.

Twenty pernent of the heroin foundin the United States comes from Syriaand Syrian-controlled Lebanon.

Neither Syrian flags, nor official:;.nor troops, should be a part of our vic-tory celebration.

Ott Saturday, we will salute ourtroops-and we will salute all Ameri-cans % ho have given and sacrificed forour country. Ti:e memory of the vic-tlris of terrorism. who were killed be-cau s they were Americans. most fuibe marred.

Mr. PEIL. fr. President. I eanriitsupport the amendment of ny col.league front New York (Mr. D'AWATO].and from Arizona [Mr. DECONCINI). Iagree that President Assad and hisgovernment hate committed serioushuman rights abuses, most notably intile slaughter of the opposition In thecity of Hams. and I am gravely con-cerned by past, and possibly ontoing.Syrian sup~ort for internalionl hirrorism.

lowever, we are not iirinring tlh-Governmeint Of Syria In the parad-Saturday. If .ve uere in the busin,, ofhonoring goverranients. quite frankly Iwould have reservatlots about incliding the flags from some other coun-tries. For exanple, neither SaudiArabia. nor for that matter Kuwait.have had a sterling htmn rightsrecord.

We are honoring tihe nit-n andwomen %iho fought as part of thiallied coalition to defeat Iraqi aggres.sion. Syrian soldiers were part Of thatcoalition and many fought rotirreouisly In that effort. Some also died.

This amendment may make us feelgood but it wil! accomplish nothing.Indeed. it could be counterproduclivc.Our Secretary of State is engaged insensitive negotiations which tlit;deSyria. This could further reduce thelikelihood of any progress. I would notbe irccessArl!y opposed to en P.n..-sad amendment that Acotniplislidsome greater objective: For examplie.an amendment linking our relatloiswith Syria to progress on humanrights, the peace process, or ttirroris!t.


June 5,1991 CONGRESSIONAL RECORD - SENATEThis amendment will accomplish

none of these things. It Is merely agratuitous insult. We were not tooproud to fight shoulder to shoulderwith the Syrian soldiers. We shouldnot now be ungracious.

Mr. LEVIN. Mr. President. Syriashould not be invited to participate inthe Washington Victory Parade, whichwill take place this weekend. Syria'ssupport of international terrorism, itsoccupation of Lebanon, and Its unre-mitting hostility to Israel are toomuch at odds with our national inter-ests and our sense of morality for it tobe officially part of this vlctory cele-bration.

I am voting for the D'Amato amend-ment to the extent that it sends thissignal regarding official Syrian partici-pation. However. I am troubled by the%ery broad language of the amend-ment, which.if binding.could infringeon the first amendment rights ofpeaceful spectators to the parade whomight, for example, hold up a Syrianflag. If the language of the amend-ment were binding and still as broadas is contained in the current amend-ment. I would have voted against it forthat reason.

The Washington Victory Parade isnot only a celebration of the success-ful completion of Operation DesertStorm, but also a celebration of ourNation's democratic values. We shouldItnor those values in the process ofL noring those who fought for them.

. Whe PRESIDING OFFICER. Thej~5tton is on agreeing to the amend-Whi of the Senator from-New York.

leas and nays have been ordered.clerk will call the roll.

The legislative clerk called the roll.Mr. FORD. I announce that the Sen-

ator from Colorado [Mr. Wi sH] isnecessarily absent.

I also announce that the Senatorfrom Arkansa [Mr. PRYoal is absentbecause of illness.

The PRESIDING OFFICER tMr.IecaERR). Are there any other Sena-tors in the Chamber who desire tovote?

The result was announced, yeas 92.nays 6. as follows:

(Rolltall Vote No. 87 Leg.]YEAS-2

Ad-mA kPk.,

Bent.cside.Bond

Boro~n6radle.

erec-

B, ,

1:n1 d

Cra

Cr.llh

DI-N

DeCoo-In

DoddDole13nuenidiDureberiverxon

Pord

OoedFeeler

ale-,

Gortonoe-tf..

ormdreiRacki.

Nlliet

Ren

Inouim4.00

K:,oebac,

En-dKtennfedyIterrel,KerryKohllutenbem

Vto-nhfi.evlnLiebermon

tlak

,i~C' nnrllNetzenoun

Mtlchell

Boan.a

err-fler

Reid Rarbanes SeensRlB. 5.er BysmRobb selenoar ThurmandRonkefelter ShelbY WallopRoth alnuon WarnerRod-, Somah Wof tordganfoi Specter

NAYS-8Butnesm. Jeffol* aSonChatee Pell Wensto

NOT VOTING-2Pryor Wirth

So the amendment (No. 284) wasagreed to.

Mr. D'AMATO. Mr. President, Imove to reconsider the vote.

Mr. HOLLINOS. I move to lay thatmotion on the table.

The motion to lay on the table wasagreed to.P ZE A R DIN G PR555U 0 AM N" M ] o T O . 70

Mr. DOLE. Mr. President. I wouldlike to take a moment to congratulatemy colleague from South Dakota, Sen-ator PREssLZR. on what he was able toachieve last night on his amendmentto S. 173.

That amendment. adopted unani.mously. represents the culmination ofdifficult negotiations on a subject thatmost of us find pretty complex. Sena-tor PRzssLzR's staff worked with Com-merce Committee staff, representa-tives of the US. Telephone Associa-tion. and my own staff in attemptingto reach an agreement that would pre-serve the rights of rural telephone cus-tomers without hamstringing innova-tion by the Bell Cos. Not an easy taskbut the result produced by the Sena-tor's efforts come about as close as Ithink we can get. Needless to say. I amvery pleased to he % cosponsor of hisamendment.

Those of t-s. like Senator PazsaLERand myself, who are from rural Statesare keenly aware of the vital roleplayed by the rural Independent tele-phone companies and cooperatives.They are the lifeline of rural Americato the Information age; without them.universal service would be an impersa.bility.

This amendment ensures that. if S.173 becomes law. rural customers willhave access at reasonable rates to thenewest telecommunications and infor-mation products and services. It givesthe rural companies a seat at the tablein planning network development; pro-vides for access, at nondiscriminatoryprices, to software and hardware tech-nology; and gives a local telephonecompany the right to sue in Federalcourt to remedy violations of theserights.

Mr. President. those of us who sup-port S. 173 do so because we believethat it will help take us into thefuture of telecommunications. But thefuture belongs to all Americans. Thisamendment will help assure that.Thank you Mr. President.

Mr. ADAMS. Mr. President. as anoriginal cosponsor of S. 173, the Tele-communication Equipment Researchand Manufacturing Competition Actof 1991. 1 would like to explain what

S 7071drew me to this legislation and why Ibelieve we should support this bill. I

The legislation before us addresses asector critical to UJS. competitivenessin the global economy:, Informationsystems and telecommunications tech-nology. All of us are concerned aboutthe threat our industries face fromforeign government subsidies to theirtelecommunications and other indts-tries. Such practices give our foreigncompetitors an unfair advantage Inthird country markets and dstlrtcompetition in our own open. dome _market. m

8. 173 is an Important step in the de-velopment of a computer-based tech.nology. which has already revolutLon;ized domestic and international mar-kets. In an era of rapid technologicaladvancement and an increasinglyglobal economy, we cannot afford todelegate more than we already have ofone of the most promis segments ofour economy, the manufacture of tele-communications equipment, to facto-ries abroad.

This legislation holds great Impor-tance for workers in the telecommuni-cations equipment industry, where theCommerce Department has projecteda slight decline In employment overthe next 5 years. The provisions of S.173 should help stem this decline, andwill hopefully reverse it.

The findings in the committeereport on S. 173 should be a call-to-arms The report notes:

A large. worhdwide market shas Is becom-ing increasingly important to the develop-ment of new techologies becase of theheavy research and development coa thatare necemary to develop state-of-the-arttechnology. Unles the United States takesa more active role In permitting its compo-lies to compete fully in these International

markets, the United States faces the possi-bility that it will be shut out of the worldmarket altogether.

Similarly. a report by the UnitedStates Commerce Department foundthat. "Comparison of various measuresof technology innovation and produc-tivity in the telecommunication Indus-try suggest a general trend of decin-Ing United States competitiveness rels-tive to certain of its major trading.partners, particularly Japan."..

Lifting the manufacturing restric-tion will help United States competein several ways. First. the Bel. Cos.would have the incentive to increasetheir spending on research and devel-opment. There's little incentive todaybecause of the manufacturing restrc-tion.

Second. the Bell Cos. have a vest res-ervoir of knowledge about telecom-munication networks and the telecom-munications marketplace. Today, that.experience is a vastly under-used re-source. Not only are the Bell Cos. pro-hibited from competing in the manu-facturing area. but they are seriouslylimited in their ability to collaboratewith independent manufacturers.

Third. this legislation would allowthe Bell Cos. not only to collaborate


CONGRESSIONAL RECORD - SENATEVI .. other manufacturers, but to

.In'.them so well. Currently, en-Olin and small, startup compa-. t go to the Bell Cos, for

because of the MPJ-theIn final Judgment-restricton.

do the small startup companiesOf them, unfortunately,

l ichoice but to turn to foreign-

nlly in the last decade, wehavi o ideas and Inventions,such &s VCRHs, exploited by manufac-tes, aboard, The pattern of foreignCOMianies applying technology wehave 'developed. to manufacture newrddits is expanding in the telecom-

tuiaions field. The bill before usto.W . ill help stop this trend by al;V_ Amerian ompanies to dow h. -they do best-invent, market,"dindproduoe. Without this legiation,Qur ' large and growing domesticmieti will be exploited increasinglybY foreign manufacturers

, 17 will assure that we maintain astrong national economic base in theinformation and telecommunicationsmanufacturing sector. It will promoteour. technoloic know-how. it willhelp our Industry create the Jobs and.Products to keep the United States inthe-forefront of this key advancedt*Q ,. sector. I urge my col-leaues to Join:in supporting this bill..Mr. HOLLIN0 Mr. President, mo-Mi m rily the distinguished SenatorfromA Abarmnawill-address the Senatereltlie to the bill." We have been working out twoSamenments-one by the -distin-guished Senator from Ohio [Mr. Marz.mAuM) and one by the Senator fromIllinois [Mr. Sneowl. I am afraid I willhave td aove to table one of the Metz--] amendmenta"

%Bf want colleagues to know wewf this thing to a head hereahotly. I hope we can get rid of it mo-snwitasiy.I'a there ae other amendments, do-

mestic content or otherwise, we willhave.to deal with them if they come.But that is where we are right now.

Mr President, I yield the floor.Mg, AT L-BY addressed the Chair.The PRESIDINO OFFICER. TheSeat from Albm In recognizd.VI IJ.Y. Mr. President, I sug-

geal the absence of a quorum.I The PRESIDINO OFFICER. Theclerk will.call the roll.

The legislative clerk proceeded tocaj'itbe roll.

"Mr. SHEIBY. Mr. President. I askunaimous consent that the order forthe quorum call be rescinded.

The PREMDINO OFFICER., With-out objection, it is so ordered. I

Mr. '8LBY. Mr. President. I risetoday in support of &, 173. the Tele-communications Research and Manu-facturing Act of 1991.

I would like to commend my distin-guslied colleague, Senator HoLmmos.for his leadership on this issue both inthe 101.tand 102nd sessions of Con-gres. I am a cosponsor of S. 173. This

is a bipartisan bill and I believe that itwill be the foundation for the much-needed revival of American competi-tiveness in the telecommunications in-dustry.

Regional Bell Operating Cos.(RBOC's] have been operating underthe restraints of modified final judg-ment [MFJl. the consent degree thatbroke up the Bell System, since 1982.The AT&T breakup resolved years ofcontroversy over how the company ex-ercised its Oovernment-sanctionedtelephone service monopoly. As aresult of the MFJ consent decree, theseven regional Bell Operating Cos. areallowed to offer local telephone serv-ices, but are prohibited from manufac-turing telecommunications equipmentand offering long distance and infor-mation services,- At the time, the Justice Department

reasoned that ratepayers and Bell'scompetitors would be negatively im-pacted by the RBOC's control overlocal telephone service. It was the De-partment's contention that to avoidthese perceived potential abuses. BellOperating Cos. must be kept out ofcompetitive markets.

While barring baby Bells from theseactivities was supposed to avoid mo-nopolies similar to that of AT&T.what n fact has resulted is a monopo-ly of the Federal court system overUnited States telecommunicationspolicy. 5. 178 would reestablish therole of Congress in determining ourNation's telecommunications policies.

The MFJ has denied the UnitedStates the benefits of a competitivemarket. Since the consent decree re-sulting in the divestiture of AT&T.U.S. competitiveness has suffered tre-mendously.

For example: Over $3 billion In U.S.telecommunications assets are nowowned by non-US. Interests. This fig-ure is up from about $200 million in1985.

More than 70 US. telecommunica-tions and high-technology companiesare currently under Japanese and Eu-ropean ownership.

In 1980. 58 percent of worldwidetelecommunications Patents wereissued to the United States Thatfigure dropped to 46 percent in 1989.Meanwhile, the Japanese share ofthese patents rose from 18 to 33 per-cent.

Members of this body often urgetheir constituents to "buy American."However, we would do well to remem-ber that each time one of us uses orbuys a telephone, it was manufacturedoverseas. All telephone sets and athird of all telephone processingequipment are manufactured overseas.

It is no wonder that the U.S. balanceof trade n telecommunications is on adownward spiral. Department of Com-merce estimates reveal that this defi-cit could amount to as much as $7 bil-lion by 1995. if we continue our cur-rent policy with regard to Bell Operat-Ing Cos.

Bell operating companies controlmore than half of this country's tele-communications assets. Yet, throughthe MFJ. these firms, with almost$200 billion in assets, have been stifledand the United States has denied itselfa tremendous technological resourceby restricting Bell Operating Cos.from participating In technologiesthat are transforming the world econ-omy. This legislation will bring theUnited States back to the cutting edgein the telecommunications industry.

Mr. President. I think that the factsclearly show that foreign competitors.many with the backing of their gov-ernments, have taken the lead and arebenefiting from the United States' re-atrictive telecommunications policy.

Countries like Japan, France. and Oer-many are now In positions to overtakethe United States telecommunicationsIndustry, which historically was aleader in the development and avail-ability of telecommunication technolo-gy. By removing manufacturing re-strictions and permitting Bell Cos.access to the market, 5. 173 sets thestage to bring the US. telecommunica-tions industry back to a position oftechnological leadership and competi-tiveness.

Consumers will greatly benefit fromthe passage of S. 173. By removing therestrictions on Bell Operating Cos.. weopen the door for US. citizens toenjoy telecommunications productsand services already In use by citizensand businesses of other countries.

U.S. telecommunications companiescontinue to reduce their manufactur-Ing operations However, S. 173 pre-sents us with the opportunity to bringsome stability to the industry andbegin the recovery of many of the over60.000 U.S. manufacturing Jobs lostwith the implementation of the courtdecree.

The need for and benefits of compe-tition to revive the U.S. telecommuni-cations industry cannot be ignored.However, I share concerns that compe-tition be fair. S. 173 contains a numberof safeguards against anticompetitiveactions with respect to RBOC's manu-facturing activities.

The legislation prohibits the cross-subsidization of manufacturing bylocal telephone service and requiresRBOC's to purchase equipment onlyfrom their manufacturing affiliates atthe open market price. Bell Cos. mustmanufacture out of affiliates that areseparate from the telephone companyand are required to disclose informa-tion about their network to all manu-facturers immediately upon makingthat information available to theirmanufacturing affiliates.

Also. the Federal CommunicationsCommission IICCI now has In placestronger regulations to protect againstcross-subsldization. discriminationagainst other telephone companies.and preferential treatment to BellCos. in the sales of equipment by theirmanufacturing affiliates.

June 5, 1991


June 5, 1991 CONThe effort to lift the manufacturing

ban on Bell Cos. is supported by theFCC and the Departments of Justiceand Commerce. Furthermore, In re-viewing the history of the consentdecree. it is my understanding that allparties involved in the divestiture set-tlement. including AT&T. agreed thatthe MYJ restrictions should be re-moved as soon as It was determined bythe Department of Justice that theyare no longer necessary to protectcompetition. However. for reasons I donot understand, there are still thosewho oppose S. 173.

Mr. President, I agree with SenatorHoLLanes that removing manufactur-ing restrictions on Bell Operating Coo.is fundamental to the issue of Ameri-can competitivenem. We must allowBells to compete, otherwise the UnitedStates will be the runt in a world thattelecommunications technology istransformirg Into a global community.

We cannot let that happen.Mr. President. I yield.Mr. DgCONCINI. Mr. President. I

rise In support of B. 173. and commendmy distinguished colleague fromSouth Carolina for his leadership inthis area and so many others affectingour Nation's telecommunicationspolicy. However. I would like to receivehis assistance in clarifying the legisla-lion's intent, as reflected in the reportlanguage.

I am particularly interested in assur.Ing that the needs of education are ad-dressed In our work on S. 173. We areall concerned about our Nation's edu-cation system, and want to offer oursupport to professional educators inthe difficult and important work thatthey do.

As my distinguished colleague isaware, schools and other educationalInstitutions would receive great bene-fit from expanded telecommunicationsservices. If the Belis offer the properequipment and services, students willhave access to eletronle researchsources from around the world, andeducators will be able to improveteaching strategies through communi-cations with their professional peers.Specialized courses will be offered Inthe home as well as rural and othercommunities.

In light of this potential. I wouldhope that the Bell Cos. will devote at-tention and resources directly to edu-cation.

The report encourages the "BOC's* * to focus their resources on devel-

oping aces solutions to the publicnetwork for all people. - - -.

Mr. Chairman. do I understand thereport correctly to be referring topublic Institutions. especially schools.along with "'all people?-

Mr. HOLLINGS. I appreciate thecomments of my colleague from Arizo-na. He is In fact correct, and the intentof our committee is to assure that theneeds of education and other publicInstitutions are addressed by thepublic telephone network.

GRESSIONAL RECORD - SEN)We intend the legislation to encour-

age the Regional Bell Cos. to focus re-sources to develop access solutions,equipment, and services for use byschools and other education institu-tions. In order to accomplish this, it isour firm expectation that the Region-al Bell Operating Cos. will increasetheir investment in research and de-velopment for the public network, andfor education services in particular.

Our plans are for the CommerceCommittee to exercise continuingoversight of S. 173. in order to evalu-ate progress made towards these goals.

Mr. DBCONCINI. I thank my col-league from South Carolina for hisclarification. I am now confident ofthe bill's intent. I think that educatorsand others will be pleased to knowthat this excellent legislation will pro-vide appropriate Incentives for theBell Cos. to serve our Nation's educa-tional Infrastructure.

I note that the Senate CommerceCommittee report accompanying S.173 contains on page 18 and 19 the fol-lowing language:

In entering the manufacturing market.the BOCs should seek to accommodate thealternate access needs of Individuals withfunctional limitations of hearing, vision.movement, manipulation, speech and inter.pretatIon of Information. The BOCA are en-courmed to focus resources on developingaccess solutions to the public network forpeople. Including those with disabiltles.

As I understand S. 173, then, its goalis both to increase our Nation's com-

etitiveness and to encourage theBOC's to apply their new authority todevelop access solutions to the publicnetwork for people with disabilities. Ismy understanding correct, Mr. Chair-man?

Mr. HOLLINOS. The Senator is cor-rect. We understand that the publicswitch telephone network is the pri:mary means of access for the averagecitizen to basic and enhanced telecom-munication services. We believe thatthe new authority to be granted by S.173 will be used by the BOC's toengage in product development aimedat Improving the network and, there-fore. the means of access for peoplewith disabilities and functional limita-tions.

Mr. DrCONCINI. As the Senatorfrom South Carolina Is well aware,Congress recently enacted the Amer.cans With Disabilities Act IADA].Title IV of that act creates dual-partyrelay services nationwide by adding anew section 225 to the 1934 Commun.cations Act. New section 225(aX2) re-quires the FCC to encourage the .useof advanced technology, as appropri-ate. I would hope that the manufac-turing capabilities to be permitted bythe BOC's under the pending legisla-tion would be applied not only to im-plement better and faster relays, butin time. to allow persons with disabil-ities even better access to telecom-municatlions. perhaps even obviatingthe need for relays.

LTE S 7073Mr. HOLLINGS. That is certainly

my hope as well, and I would expecthat the Commerce Committee wOuldfrom time to time conduct oversigLothe BOC's to determine the extent towhich they In fact apply their new au-thority to achieving these Boals.. , .

Mr. DxCONCINI. Insofar as itle.IVof the ADA applies to all common cr-riers, I would hope that the intent ofCongress as expressed in the pendinglegislation and as explained in thecommittee report quoted above wouldclearly establish that it is nationalpolicy that common carriers maketheir best efforts to use adyancedtechnologies such as speech synthesisand, as it develops, speech recognition,to make the full range of telecom-munications products and services ac-cessible to persons with disabilities.

Mr. HOLLINGS. It is indeed, Sena-tor, and I thank the Senator formaking these points. It is these bene-fits that make enactment of 5. 173 im-portant to consumers.

AD[ MNTT 5o. 555

(Purpose: To Increase the penalty forfailure to maintain certain records)

Mr. PRESSLER. Mr. President. Isend an amendment to the desk andask for its immediate consideration.


The legislative clerk read as follows:The Senator from Sooth Dakota (Mr.

Fasus] proposes an amendment num-bered 285.

Mr. PRESLER. Mr. President, I askunanimous consent that reading of theamendment be dispensed with.


The amendment is as follows:At the end of the bill. add the following.

SEC. . ADIDONAL ANENOMDKEP TO 14 CONU.mcATIoNs AC? OP Inc4.

Section 220(d) of the Communications Actof 1934 (47 U.S.C. 220(d)) Is amended by de-leting $6,000" and inserting in lieu thereof"$1lo.0o.

Mr. PRESSLER. Mr. President, Iwant to explain this amendment brief-ly. The amendment would provide foran increase in the fine for a violationof the Communications Act by anytelephone company that falls or re-fuses to keep accounts, records, andmemoranda on the books in themanner prescribed by the. FederalCommunications Commission.

This amendment is intended to giveFederal regulators the additional toolthey need to assure that any tele-phone company will keep the recordsregulators need to protect the inter-ests of ratepayers.

Also, I think it should be a signal tosome of our telephone companies to bemore open about some of these mat-ters. I was talking with a reporterfrom one of the papers, and he said hehad made an inquiry about a consentdecree violation was sent several boxesof papers, which did not answer thequestion.


S7074 CONGRESSIONAL RECORD - SENATEI hope our large companies will be

open to Members of Congess and thepublic when there Is a violation of thelaw,- and even when there Is not. Butthere has come to be a practice of ob-fuscating the facts with boxes and car-tons 9f papers rather than writing aclear one- or two-page letter or answer.And In the whole regulatory area Ihave had the feeling that some tele--phone cmpanies have been unnecs-manfly nonresponave. That .s just ageneral statemnent,

I. hope this amendment sends asignal to those companies and individ-uals to be more open with inquiriesabout their business. This amendmentprovides for a #4,000 Increase in thefine for companies who fail to keeprecords In the manner prescribed bythe FCC. This is a clear signal thatCongress is very serious that comba-nies ae to do their business in aproper, honest, fair way. My minorityviews filed In the Commerce Commit-tee report on this legislation furtherexplain my views on this matter.

I ask unanimous consent that myminority views follow my remarks.

Mr. President. I urge the adoption ofthe amendment.

There being no objection, the viewswere ordered to be printed In theRPcoan as follows:

MWoaRaT VtMws 0? ML Fsosu .I share Chairman Hollings' g to in-

crease American innovation and growth inthe telecommunications equipment indus-try. and applaud his leadership on this keyIssue, This legislation passed the committeeby voice vote last year.

At that time, though. a number of con-sumer groups, senior citizens, small businessorganizations. and state regulators voicedconcern that, beause of the lack of ade-quate anti-competitive safeguards. somecompanies may abuse the freedom this ieg-

oisonis would give them. These groups wereconcerned that a DOC could use its controlof the local phone market to gain an unfairadvantage when it enters an unregulatedline of business. They argued that higherresidential telephone rates could resultfrom a BOCa decision to underwrite withratepayer supported capital and personnelthe expenses of launching its unregulatedbusiness ventures. These groups were con-cerned that consumers and competitorscould be harmed by having to competeagainst products subsidized by ratepayerfunds. And detection of these practicescould be made very difficult by informalagreements and "creative accounting" ofhuge corporations who could bury ratepayersubsidization In the books, even with theseparate subsidiary and other protection de-vices incorporated in this bill.

These groups and Individuas argued thattelephone companies are a unique business.My understanding o this aspect of theirconcern was best summarized by US. Dis-trict Court Judge Harold Greene's commentthat.

"To the extent that these companies per-calve their new unregulated businesses asmore exciting and more profitable than theprovision of local telephone service-as theyobviously do-it ti Inevitable that their man-ageral talents and financial resources willbe diverted."

They point Out that because telephonecompanies control the local telephone ex-changes and are guaranteed a rate-regulated

income, they have access to ratepayerfunded capital and possess the marketpower to use against their competitors inunregulated lines of businesses. This con-cern is predicated on the belief that a coM-pany could effectively hide prohibited prac-tices through informal agreements. creative

-accounting. or other methods.t.at year I did not object to this legisla-

tion. At that time I wan not personallyaware of any systematic evidence of viola-tions or of deliberate efforts to undermineefforts to investigate ratepayer impactIssues related to this legislation. However. Ibecame concerned when I read subsequentproes reports of a DOJ investigation intoconsent decree violations by US West, whichserves my constituents in South Dakota.The investigation led to the assessment of arecord $10 million fine against US West forengaging In anticompetitive behavior, pro-viding Information services prohibited bythe consent decree, and violating the con-sent decree's ban an manufacturing tale-communicatIons equipment. Part of theagreement was to drop the investigation ofthes and other activities under question.Because of the Importance the US Westcase had to my state, and becatuse of Its-rel-evance to this legislation. I tried to obtainmore information as to how these practicescould affect ratepayers in my state.

The nature of US West's record keepingmake It impossible for regulators or govern.ment officials to prove or disprove with cer-tainty whether violations occurred. A DOJmemorandum filed in Judge HaroldGreene's U.S. District Court warned USWest that: "[US West's] admitted history ofnoncompliance will provide a substantialbasis for finding that any similar additionalconduct is 'willful' and hence actionable ascriminal contempt of the decree."

An a practical matter it Is clear that acompany of this size can frustrate legiti-mate investigative efforts, as I have recentlylearned first hand. I hold no great hopethat any regulatory agency will have anybetter luck at receiving definitive answers inthe future if US West continues Its presentpractice of apparent stonewalling.

Because the majority of my constitutentsare US West ratepayers, this case is of par-ticular concern to me. Although DOJ wiselyand admirably stipulated that the $10 mil-ion fine should come out of shareholderfunds rather than ratepayers, even they ac.knowledged that the fungibility of moneymakes it impossible to insulate the con-sumer from paying the ultimate tab.

In addition to the potential consumerimpact of the fine. I raised concerns aboutthe rtepayer impact of US West's actionsto the extent that telephone companyfunds, which are generated by the ratepay-era, are being used to develop, market. andoperate these theoretically unrelated busl-nesses. During questioning at the Senatehearings, Mr. James Hill, Assistant AttorneyGeneral. Anti-trust Division, DOJ. indicatedhis confidence that US West telephone com-panies and their employees had engaged inthe activities involved in the violation of theconsent decree, but had no basis on whichto estimate the magnitude of ratepayerimpact related to the 13 activities in ques-tion. Only US West could answer this ques-tion definitely.

I think it is Important to ascertain theamount of ratepayer resources directed to-wards these activities, Not only would suchresource diversion put ratepayer service andfunds at risk. but It also would put competi-tors at an unfair disadvantage. And as JudgeGreene notes, it can distract them fromtheir primary mission of providing and im-proving basic telephone service. I contactedDOJ and the FCC to ascertain background

June 5, 19.91Information on this matter, and asked USWest to supply information on the extent towhich ratepayer funds were used In connec-tion with the development. operations, mar-keting. etc.. related to these activities. Un-derstandably, neither the FCC or the DOJare able to answer the ratepayer Impactquestion without complete informatilofrom US West.

Despite my repeated attempts to obtainanswers from US West. they responded byaltogether ignoring or redefining the ques-tions as to how much ratepayer funding wasused to launch and operate the practicesquestioned In the DOJ lawsuit. At best theirresponse can be characterized as avoidingthe question; at worst It was disingenuousand misleading. For example. US West in aninitial response sent to my office five boxesof paper with no organization or informa-tion describing the contents. In subsequentletters It misrepresented staff telephoneconversions and later simply redefined thequestion so narrowly as to be-as one con-sumer advocate put it -an insult to our in-telligene." Further inquiries on basic infor-matlon as to how much telephone companystaff time and resources were invested in de-veloping and marketing the 13 activitiesquestioned by DOJ were answered with "wecouldn't provide that type of Information"Yet US West went to great palns to providespontaneously, in writing, exactly howmany hours and employees it clalim to havedevoted to my simple, straight-forward re-quest for Information. So I find it hard tounderstand how a business so efficient atrecord keeping in one area is so incapable ofkeeping track of how It spends ratepayers'resources. This uncooperative non-responsemakes it impossible to determine the rate-payer Impact of US West actions, and givesme great concern that an unwilling corpora-lion of this magnitude cannot be monitorledsufficiently to protect Its ratepayers fromthe abuses mentioned by consumer groups.seniors, small businesses, and others.

I ea beginning to understand the frustra-tion Judge Greene expressed In the earlierstages of this case when he noted that: *-USWest has been engaged In a systematic andcalculated effort to frustrate the Justice De-partment's legitimate demands for Informa-tion, frequently by patently frivolous andusually dilatory maneuvers."

I commend the Chairman for his effortsto include safeguards in this legislation inhopes they will prevent actions similar tothose US West has undertaken. The USWest experience, however, leads me towonder whether those legislative safeguardscan prevent such a huge corporation fromusing Its local monopoly to compete unfair-ly, and from Juggling and confusing Its bookwork so as to make it impossible for any reg-ulatory agency or watchdog group to ade-quately protect consuners. Virtually everygroup we contacted regarding this casevoiced the unanimous opinion that USWest's response not only avoided the Ques-tion but was carefully crafted to avoid sup-plying any meaningful information fromwhich to conduct an independent analysisusing realistic definitions and relevant data.

The bottom line here is trust and corpo-rate accountability. My experience withmeat telephone companies would generallylead me to give them the benefit of thedoubt, as I have done in the past. I havefound the sast majority to be straightfor-ward in their dealings. I Still hope US Westwill be more directly responsive in thefuture. But my first priority is to my con-stituents, and they are monopoly bound toUS West. My vote against this bill In Com-mittee was based in large part on my disap-pointment with US West's dilatory !actics


June 5, !j991 CONGRESSIONAL RECORD - SENATEand mlsrepresentatlons to date. Like JudgeOreene I have felt frustrated. in attempts toget straight answers to the questions asked.US West is our largest single telephonecompany, with monopoly control over mostof my State. Its actions have a profoundImpact on the vast majority of my constitu-ents. I will continue in my attempt to get astraight answer to my inquiry. Pending theoutcome of that process. I will reserve Judg-ment with respect to future votes on thislegislatlon. I agree with Senator Holling'sdesire to move this technology forward. Butwe must take care to protect consumers.sciors, and small businesses in the proces. Ihope we can do so. But for the time being. Imust reluctantly voice my opposition to thislegislation based on this particular casewhich affects my State so profoundly.

Mr. HOLLINGS. The amendmenthas been cleared on this side. Mr.President.

The PRESIDING OFFICER. Isthere further debate on the amend-ment?

The question Is on agreeing to theanmendment.

The amendment (No. 285) wasagreed to.

Mr. PRESSLER. Mr. Plresident. Imove to reconsider the vote by whichthe amendment was agreed to.



Mr. SIMON addressed the Chair.The PRESIDING OFFICER. The

Senator from Illinois.

AMNDuTi No. 288

(Purpose: To require independent annualaudits of Bell Telephone Co., and to re-quire the Federal Communications Com-mission to review and anslyze such auditsand report its findings to Congress)Mr. SIMON. Mr. President. I send

an amendment to the desk and ask forits immediate consideration.


The legislative clerk read as follows:The Senator from Illinois IMr. Simo)

Proposes an amendment numbered 286.

Mr. SIMON. Mr. President. I askunanimous consent that reading of theamendment be dispensed with.


The amendment is as follows:On page 12. between lines 2 and 3. Insert

the following new subsection:"(k)(l A Bell Telephone Company that

manufactures or provides telecommunica-tions equipment or manufactures customerpremises equipment through an affiliateshall obtain and pay for an annual auditconducted by an independent auditor select-ed by and working at the direction of theState Commission of each State in whichsurh Company provides local exchange serv-ice. to determine whether such Companyia. complied with this see)ion and the regu-lations promulgated under this section. andparticularly whether the Company has com.piied with the separate accounting require-stents under subsection (c)( I).

"(2) The auditor described in paragraph1l) shall submit the results of such audit to

the Commission and to the State Commis-sion of each State in which the Companyprovides telephone exchange service. Any

party may submit comments on the finalaudit report.

"(3 The audit required under paragraph(1) shall be conducted in accordance withprocedures established by regulation by theState Commission of the State in whichsuch Company provides local exchange serv-Ice. including requirements that-

"(A) the Independent auditors performingsuch audits are rotated to ensure their inde-pendence; and

"(B) each audit submitted to the Commis-sion and to the State Commission is certi-fled by the auditor responsible for conduct-ing the audit.

"(4) The Commission shall periodicallyreview and analyze the audits submitted toIt under this subsection, and shall provide tothe Congress every 2 years-

**(A) a report of its findings on the compli-ance of the Bell Telephone Companies withthis section and the regulations promulgat-ed hereunder, and

-iS) an analysis of the Impact of such reg-ulations on the affordability of local tele.phone exchange service.

"(5) For purposes of conducting auditsand reviews under this subsection, an inde-pendent auditor. the Commission. and theState Commission shall have access to thefinancial accounts and records of each BellTelephone Company and those of its affili-ates (including affiliates described in para-graphs (e) and (7) of subsection (c) nece-sary to verily transactions conducted withsuch Bell Telephone Company that are rele-vant to the specific activities permittedunder this section and that are necessary tothe state's regulation of telephone rates.Each State Commission shall Implement aP-propriate processes to ensure the protectionof any proprietary information submitted toit under this section.

Mr, SIMON. Mr. President. I ampleased to say we have modified thelanguage in this amendment a little asoriginally drafted, and I believe it isacceptable to all sides.:

This amendment calls for an auditby the State regulatory bodies to seethat we are complying with the lawand that there be a report of the FCCto Congress. It is a protection for con-sumers. It is a way of making sure thelaw is being complied with.

I know of no opposition, and I hopethe amendment will be accepted.

Mr. HOLLINOS. Mr. President, Ithank the distinguished Senator fromIllinois for this Improvement to thebill. What you have in this amend-ment, in essence, is clear intent of theCongress that the Bell Cos. should beaudited. This is quite obvious in lightof the track record that brought aboutthe modification of final judgment in1984.

The Federal Communications Com-mission tried to audit the monolithAT&T, and by the time we wouldcatch up with an audit and get anorder, it would be obsolete or unableto be enforced. And we got into anantitrust case which resulted in thebreakup of AT&T by the court itselfin the modification final Judgment.

In this light, 20 percent of the BellCos: business is interstate business and80 percent is intrastate. The FCC canaudit only the interstate business andthe states can only audit the intra-state business.

S 7075The Senator from Illinois says let us

clarify that the States shall conductaudits and have access to the booksand records of the telephone companyitself and have access to the affiliatesthemselves, who do business with theBell Telephone Co. This will ensure itwill be a true, comprehensive, effectiveaudit.

So it has been cleared on this side.and I thank my distinguished col.league for his offering it. and I willsupport the amendment.

Mr. SIMON. I thank the distin-guished Senator from South Carolina.Let me add that Senator DzCoecsu isa cosponsor of this amendment. Ishould have added that

Mr. HOLLINOS. Mr. President, Iurge adoption of the amendment.

The PRESIDING OFFICER. Thequestion is on agreeing to the amend-ment of the Senator from Illinois.


Mr. SIMON. Mr. President. I moveto reconsider the vote.

Mr. HOLLINOS. I move to lay thatmotion on the table.


Mr. HOLLINGS. Mr. President thesenior Senator from Ohio is presentlyapproaching the floor. I think we havetwo amendments worked out with theSenator. We will clear those on bothsides of the aisle now, and I think theyare to be cleared. It will save us a goodbit of time. They are worthy amend-ments.

The Senator from Ohio is here.After these amendments, the Senatorfrom Pennsylvania [Mr. SP=7cTR] willwant to be heard on the bill. Therecould be a couple other amendments. Iwill be conferring with the distin-guished Senator from Ohio on that, tosee whether we have something wecan accept.

Mr. President, I suggest the absenceof a quorum.-The PRESIDING OFFICER. The


call the roll.Mr. METEENBAUM. Mr. President.

I Lask unanimous consent that theorder for the quorum call be rescind-ed.

The PRESIDINO OFFICER. With-out objection, it is so ordered.

AJ5KRMZNT NO. 287(Purpose: To add a provision on the

application of the antitrust laws)Mr. METZENBAUM. Mr. President.

I send an amendment to the desk andask for its Immediate consideration.


The legislative clerk read as follows:The Senator from Ohio [Mr. Mzc-

EmAU proposes an amendment numbered

Mr. METZENBAUM. Mr. President.I ask unanimous consent that readingof the amendment be dispensed with.


87076 CONGRESSIONAL RECORD - SENATE

The PREIDINO OFFICER. With-out objection, It is so ordered.

The amendment is as follows:At the end, add the following new section:

sac. APPcA£ToN of ANYTrT EAWS.Nothing In this Act shall be deemed to

alter the application of federal and stateaatibust laws as Interpreted by the respec-tive Court.

Mr. MAEZENBAUM. Mr. President,It is my understanding that thisamendment is acceptable to both man-agers of the bill. It is very simple. Itspells out specifically that, "Nothingin the Act shall be deemed to alter theapplication of Federal and State anti-trust laws as interpreted by the re-spective courts." It is my understand-

'Ing It is acceptable to the managersand. if so, we can proceed.

Mr. HOLLINGS. Mr. President. theamendment has been cleared on bothsides of the aisle, and we would be de-lighted to accept the amendment.

The PRESIDING OFFICER. Isthere further debate on the amend-ment? If not, the question is on agree-Ing to the amendment.

The unendment (No. 287) wasagreed to.

Mr. METZENBAUM. Mr. President.I move to reconsider the vote by whichthe amendment was agreed to.



Mr. MZTZENBAUM. Mr. President.I suggest the absence of a quorum.



Mr. MBEZENBAUM. Mr. President,I ask unanimous consent that theorder for the quorum call be rescind-ed.


awE"HzNTe NO. 555Mr. METZIEWBAUM. Mr. President,

I send an amendment to the desk andask for its immediate consideration.



The Senator from Ohio [Mr. Mres-nmspl proposes an amendment numbered

On page 11. line 3. strike "equipment."and insert in Ueu thereof "equipment, con-gslatent with subsection (e)[t).".

Mr. ME IZENBAUM. Mr. President,there is some question as to whetherone portion of the bill was limiting theapplication of another portion of thebill having to do with the subsidiza.tlon of manufacturing affillates andthis clarifies that. I am quite sure theamendment is acceptable to the man.agers of the bill.

Mr. HOLLINGS. Mr. President, thedistinguished Senator is correct. Orthe previous page, subsection 2 forbid,the cross-subsidization by a manufacturing affliate with the Bell Co. ThItamendment reiterates exactly tha

prohibition, which is the intent. The tdistinguished Senator wanted to malte oit absolutely clear. We accept tiheamendment. It has been cleared.

The PRESIDING OFFICER. Is bthere further debate on the amend- Iment?

If not, the question is on agreeing tothe amendment. t


Mr. METZENBAUM. Mr. President, jI move to reconsider the vote by whichthe amendment was agreed to.



Mr. METZENBAUM. Mr. President,I suggest the absence of a quorum.



Mr. METZENBAUM. Mr. President,I ask unanimous consent that theorder for the quorum call be rescind-ed.


A5OZISOENTr NO. 285(Purpose: To provide the Federal Commnli-

eatlons Commission and State utility com-missions with access to information con-ceming transactions between a Bell Tele-phone Company and Its manufacturing af-filiates)Mr. METZENBAUM. Mr. President,

I send an amendment to the desk adask for its immediate consideration.



The Senator from Ohio (hir. Mass-amnsot] proposes an amendment numbered289.

Mr. METZENBAUM. Mr. President.I ask unanimous consent I hat readingof the amendment be dispensed with.

The PRESIDING OFFICER. With-out objection It is so ordered.

The amendment is as follows:On page 3. strike unes 14 through 24 and

Insert the following:"(IA) such manufacturing affiliate shall

maintain books. records. and accounts sepa-rate from its affiliated Bell Telephone Com-pany, that identify all transactions betweenthe manufacturing affiliate and its affili-ated Bell Telephone Company.

"tB) the Commission and the State Com-missions that exercise regulatory authorityover any Bell Telephone Company affiliatedwith such manufacturing affiliate, shallhave access to the books, records, and ac-0count required to be prepared under sub-

paragraph (A). and"(C) such manufacturing affiliate shall.

. even if It Is not a publicly held corporation.prepare financial statements wh1ich are Incompliance with Federal financial reportingrequirements for publicly held corporatlons.

" and file such statements with Site Commis-sion and the State Commssions that "eer-

e else regulatory over any Bell Telephonek Company affiliate with such manufacturing

affiliate, and make Such statements avail-able for public Inspection;

3 Mr. MEI-2ENBAUM. Mr. President,t this is a significant amendment. It has

June 5, 1.dlo do wiLh State access to the recorditI the Baby Bells. It is designed torovide both the FCC and the Statitility commissions with access to theooks and records of a Bell manufac.uring affiliate.Absent this amendment, the Statt:

regulators would not have that a-hority and of course it Is appllcabh-nly to the State regulators havlorihat authority within their respertvc-urisdictions.The acces is essential so regultor,

an assure a proper allocation of cost.between the Bell Telephone Cos. andheir manufacturing affiliates. I amrank to say that I have my doubts

about whether regulators can evercome close to preventing all cross sub-sidies. But at the very least, thisamendment will help them In that d.rection because both the FCC anidState regulators would have access tothe books and records that would hell'them accomplish that task.

It is all this amendment Is de;;gyw-to do. It Is all It will do. It is my under-standing the amendment is acceptah-to the managers of the bill.

The PRESIDINO OFFICER. Tin'Senator from South Carolina.

Mr. HOLLINOS. The amendment olthe distinguished Senator from Ohiois well taken. There are no hiddenballs, or tricks, or otherwise. TI-.tintent of tile S,.nator from Ohio Is th"same as that of the Senator fio:-tiSouth Carolina. that we do haveaudits and we have them as we slatidIn the Simon amendment, both at tieFederal and State level. You can:otget a valid audit unless you haveaccess to the books. I thought it waks agiven. TIe distinguished Senator froutOhio wants to make sure of It and wehave worked this amendment out. Iihas been cleared on both sldes. I arglad to support the amendment.

The PRESIDINO OFFICER. k'there further debate? If not, the ques-tion s on agreeing to the amendment.

So the amendment (No. 280) wasagreed to.

Mr. METZENBAUM. Mr. Preiddn:.I move to reconsider the vote.

Mr. HOLLINOS. I move to lay %h:tmotion on the table.

The motion to lay on the tablte tv..

agreed to.Mr. METZENBAUM. Mr. Presld,-I'.

the Senator from Ohio does not Intendto offer any additional amendments. Iconsidered doing so. I very stronglysupport the Inouye amendment. Sen,-tor INouvE saw fit to withdrew it, an-dunderstandably so. I am not in faverof this bill. I think our amendmentsmake It a better bill thaua It was, but Istill have concerns about the BalyBells getting into the manufacturlngbusiness.

I am concerned it will have a nepa-tire impact upon the consumers ofthis country and will increase theircosts. I am concerned that, In a sense.we are going back and undoing the re-strictions that we had originally


June 5, 1991 CONplaced on AT&T through the courts Irequiring the breakup. Only now eachof the Baby Bells is a multibillion-dollar corporation on its own and theywant to get into the manufacturingbusiness. I do not think that will helpthe consumer of this country.

I have further concerns about thedomestic content provisions, andwhether or not there will be jobs pro-tected here in this country. I know Iam in disagreement with my colleaguefrom South Carolina on this point.

On the 40-percent provision con-tained in the bill. I think it is draftedin such a manner it will be very diffi-cult to provide any assurances thatthere will not be more product manu-factured overseas than domestically.But I think-I know the House of Rep-resentatives intends to give seriousand full consideration to this legisla-tion.

I can count. I know my colleaguefrom South Carolina has substantialsupport in this body. I am hopefulthere will be further considerable im-provement made in the House when Itgets to that body. I will not vote forthis bill. I do not think it Is good legis-lation but I do not intend to delay itscoining to a vote for final passage onthe floor of the Senate and then hope-fully we will see it come back in amore improved form from the confer-ence committee.

I want to express thanks for the co-operation and courtesy accorded meby the Senate from South Carolina.We happen to be in disagreement.onthe general thrust of this bill but hecertainly always conducts himself in agentlemanly way and it has been aprivilege to work with him.

Mr. HOLLINGS. It has been mypleasure to work with the Senatorfrom Ohio. I think we have saved agood bit of time. I think we have doneit in a deliberate fashion. I think thestaff of the Senator from Ohio andour own staff the committee. I amsorry he cannot support the bill but Ireally think it is because of any politi-cal persuasion on my part that I havethe votes. I think the bill has thevotes. I really do think this is a con-sumers' bill.

There is no question in my mind weare looking at a problem. We havetried, under the so-called manufactur-ing restriction and. with the approach.while we have a multiplicity of allkinds of designs and developments. ithas all been foreign, to the injury ofour own United States of America.

We have seen this happen now inbasic industries such as textiles whereyou have to put in a bill to guaranteethe foreign manufacturer the majorityof the business. No one does that outof goodness of his heart, but that ishow desperate we have become withsteel, with textiles, and electronics:you can go down the list. hand tools.machine tools. and otherwise.

So, I think we really are looking outfor consumers, and if I did not feelthat strongly about it-I am not look-

GRESSIONAL RECORD - SEN)ng out for the Bell Cos., they arericher than the Senator from Ohioand the Senator from South Carolina.They are more than capable of takingcare of themselves and they are pub-licly regulated entities and they aredoing extremely well.

My problem is they are doing ex-tremely well in downtown London, andin downtown Budapest. and in down-town Wellington. New Zealand. and inMexico City, and Buenos Aires. andnot in Charleston, SC. I am trying tobring them home.

On the audit amendment adoptedearlier with the Senator from Illinois,it is important that we protect theproprietary information of the BellCos.' manufacturing affiliates.

The PRESIDINO OFFICER. TheChair recognizes the Senator fromOhio [Mr. MrrzceAuMI.

Mr. MEVZENBAUM. Mr. President,the three amendments I have offeredwhich have been accepted by the Sen-ator from South Carolina will improvethe bill and provide consumers with agreater measure of protection againstpotential monopoly abuses. The lan-guage in section 227(f) of the bill.which suggests that ratepayer re-sources could be used to finance a Bellmanufacturing affiliate's product de-velopment activity, has been amendedto clarify that it is not intended topermit cross subsidy. Section 227(c)(1)has been amended to provide thateach State regulatory commission hasaccess to the books and records of aBell manufacturing company affili-ated with a Bell telephone companywithin its jurisdiction. State regulatorsmust have access to the manufactur-ing company's books and records inorder to help prevent harm to ratepay-ers.

Finally. the bill has been amendedto make it clear that the Bells remainfully subject to the antitrust laws. TheBells, the sponsors of the legislationand the Justice Department all agreethat this legislation does not grant theBells any exemption under the anti-trust laws. Stephen Shapiro, the Bells'antitrust lawyer, testified before myAntitrust Subcommittee that:

Relief from the manufacturing restrictiondoes not. of course, imply any immunityfrom regulation or Judicial supervislon. . .The Bell Cos. would be subject to the fullrange of civil and criminal remedies shouldthey engage In antlcompetitive practices.

This amendment merely codifiesthat understanding.

While these amendments have im-proved the bill. I still cannot supportit. The question posed by. this bill Iswhether or not the seven regional tele-phone monopolies known as the BabyBells. whose combined annual reve-nues amount to over $70 billion, oughtto be allowed to manufacture theequipment which is used in their localtelephone networks.

While this may be a complicatedissue, it is of critical importance toanyone who pays a telephone billevery month. The cost and quality of

LTE S 7077the switching and transmission equip-ment used in the local telephone net-work has a direct and significantimpact upon the telephone rates paidby consumers.

The Baby Bells currently are forbid-den from making telephone networkequipment because history has demon-strated that consumers get hurt when-ever the local phone monopolies canmake the equipment which is used intheir telephone networks. The harmoccurs because the phone companiescan simply buy equipment from them-selves at inflated prices and shiftexcess costs into consumers. Historyhas shown that it is almost impossiblefor regulators to prevent such monop-oly abuses.

But the bill on the floor today asksus to forget history. We are asked toforget the fact that on four differentoccasions in this century-1913. 1925.1949. and 1974-the Bell Cos. abuse oftheir local telephone monopolies hasprompted serious antitrust challengesfrom the Government. We are askedto forget the fact that in each in-stance, the monopoly power over localtelephone service was used to hurtconsumers and stifle competition in re-lated markets. And we are asked toforget the fact that regulation hasrarely been able to control such mo-nopoly abuses.

The central premise of this bill isthat the best thing the Senate can dofor both consumers and competitors inthe telecommunications business is toallow seven regional monopolies to getinto the business of making telephonenetwork equipment.

I don't share that view, Mr. Presi-dent. I think the Baby Bells are doingJust fine right now. These are compa-nies that average about $10 billionapiece in annual revenues; and theyare guaranteed at least a 11-14 percentreturn on their local phone business,which is still their major business. Inother words, the only parties that arecertain to benefit from this legislationare multibillion-dollar monopolies thatare guaranteed an annual profit.

What about consumers. That's whyevery major consumer group in thecountry, all the State utility consumeradvocates, and the AARP, all opposethis legislation.

Mr. President, this bill should beJudged according to a simple standard:Based upon our understanding of his-tory, monopoly behavior, and the ef-fectiveness of regulatory oversight inthe telephone industry, is this billlikely to help or hurt both consumersand competition?

I think the answer is that it willhurt both consumers and competition.And I want to outline for the Senatethe basis for my conclusion.

At the outset, let me explain the keyprinciple which I believe should guideanalysis of this bill. Legislation andpolicy involving telephone networkequipment should encourage the BellTelephone Cos. to buy the highest


S 7078 CONq4ality equipment at the lowest poill-ble prie. The reason for this is simple:]4tyers-that Is, consumers--ulti-

pay the costs of the networkequipment purchased by the localObose 0omoanies. U. those companiesaepurhasing the best possible equip-mont at the lowest Possible price, thentelephone rates should not be artificial.Iy high and competition should be pro.tftted, But if public policy providesthe local telephone monopolies withthe opportunity to purchase equip-me-t at Inflated prices, then both con-Sumers and competition will be hurt.

'That's why the phone company wasbroken up In the first place. WhenAT&T provided both long-distanceand local phone service to nearly theentire Nation, it purchased virtuallyall of the equipment used n the phonenetwork from Its equipment manufacs-turinf subsidiary. Western Electric. Inthe aputitrust case that led to divesti-ture, the Government showed thatAT&T's local telephone subsidiariesbought from Western Electric, evenwhen competing manufacturers madebetter quality equipment at a lowerprice. The evidence also showed thatAT&T's local phone companies provid-ed Western Electric with preferentialaceess to key information about theequipment needs of the local exchangenetworks. In addition. Judge Greeneconcluded that AT&T's manufactur-Ing affiliate was being Improperly sub-e ized by the Bell System's telephoneratepayers

That'kind of self-dealing and cross-subsidization hurt both consumers andcompetition. Regulators were power-less to control such monopoly abuse.Separating the local phone monopoliesfrom long-distance and manufacturingproved to be the only effective meansof preventing further harm to consum-ers and competition. That's whatJudge Greene did in 1982. And that iswhat this bill is trying to undo.

The bottom line is that the phonecompany was broken up because, inJudge Oreene's words-

A ecmbination of vertical integration andrsteoaf-return regulation has temded to gen-Mate decisions by the operating companiesto Purchase equipment produced by West-ern Electric that Is more expensive or ofleser quality than that manufactured bythe general trade.

Let's be clear. If we adopt the billbefore us today, we will reinstate thesame combination of vertical Integra-tion and local service regulation thatled to antitrust abuses In the tele-phone business.

Mr. President. I have not beenhappy with some of the after-effectsof divestiture. In some critical ways,consumers are worse off: Local rateshave risen, phone bills are confusingand customer service has suffered.Meanwhile, the Baby Bells have cre-ated dozens of new subsidiaries forventures into unregulated markets.Judge Greene has stated that this di-versification -is bound to diminishtheir management's interest In and at-

qGRESSIONAL RECORD - SENATEtentlon to the local telephone busi-ness." He also has suggested that thepoatdivestAture rise in local phonerates may be pertly due to "the diver-sion of ratepayers' moneys to financethe Bells' ambitions to become full-fledged players in conglomerate Amer-

Regardless of what caused the risein local phone rates, those increaseshave not been good for consumers. Onthe other hand, divestiture has provid-ed some benefits: Long distance rateshave fallen, thousands of small busi-nesses have entered the equipmentmarket, and many new products havebeen introduced.

While divestiture has brought aoutmany changes, one critical fact re-mains the game: Local telephone serv-Ice is still a monopoly. Consumers andsmall businesses make all their callsthrough one local phone company.Long-distance carriers like AT&T.MCI, and SPRINT still rely on thelocal network for the initiation andcompletion of almost all long-distancecalls. And big business relies on thelocal phone network to transport in-formation which is critical to domesticand foreign commerce.

In short, the local telephone monop-oly is still the critical factor for the av-erage American. It is true that thereare seven regional monopolies provid-ing local telepholle service, instead ofonly one national monopoly. But theincentive and ability to leverage thatmonopoly power has not necessarilydiminished, simply because there arenow seven regional monopolies, ratherthan Just one national monopoly.

Indeed, since divestiture, the Bellshave shown themselves to be capableof leveraging their monopolies inharmful ways. In February, U.S. Westagreed to pay $10 million for 4 viola-tions of the consent decree; another 9violations were dropped. Last year.NYNEX paid a $1.4 mlton fine afterIt was found to have inflated the pur-chase price of office equipment andsupplies which it bought from one ofits unregulated subsidiaries. Theexcess costs were passed ontoNYNEX's telephone ratepayers. Theovercharges in that case totaled $118million. Last year. Bell Atlantic agreedto pay $42 million to settle chargesthat It engaged in deceptive marketingpractices designed to make Pennsylva-nia ratepayers buy more services thanthey wanted or needed. And the Ohioconsumers counsel, along with otherMidwest consumer advocates, reportedthat Ameritech improperly chargedratepayers for millions of dollars inlobbying, advertising, and promotionalexpenses. So, Mr. President, the BabyBells have used their monopoly powerto hurt both consumers and competi-tion. My concern is that this legisla-tion will give them more opportunitiesto do so.

Mr. President, let's look at the prac-tical Impact of this bill on the realworld. If the Bells are allowed to makethe equipment which is used in their

June 5, 1991phone networks, they are going to buymost or all of their equipment fromthemselves. That's not just my view,Mr. President. It Is a view shared bythe Department of Justice. JudgeGreene. the D.C. Circuit Court of Ap-peals and antitrust experts fromacross the spectrum. Let me read toyou an excerpt from last year's deci-sion on the consent decree by the DC.Circuit Court of Appeals.

The Department of Justice makes the sig-nificant concession that any Bell OperatrgCo. that chooses to manufacture centraloffice switches, either sillaterally orthrough a Joint venture, will boy all (ornearly all) of its requirements from the a-fillated producer-thereby foreclosing a cer-tain portion of the market. regardless ofwhether or not there are economies to begained from such integration.

So the Justice Department. whichsupports this bill, concedes that therewill be considerable self-dealing if theBells are allowed into the manufactur-ing of equipment. And of course theywould have to make that concession.Any practical person would recognizethat if you have a choice -betweenbuying your equipment from yourselfand buying them from someone else,you buy from yourself. You do thatbecause you have got to maximizeprofits for your company and yourshareholders.

While the Justice Department recog-nizes that there will be self-dealng,they are less concerned about the con-sequences of such conduct, and believethat self-dealing abuses can be effec-tively policed. Their view Is not sharedby other antitrust experts around thecountry. Prof. Phillip Areeda of Har-yard. who Is perhaps the leading anit-trust expert in the country, has -rit-ten about the consequences of sell.dealing. He has stated that:

Each Bell monopoly Is likely to purtti.its own equlpintnt rather than better orcheaper equipment made by others. A ree-lated monopoly has powerful incentives topurchase from Itself, even If better andcheaper equipment Is available elsewhere.and regulatory safeguards are likely to beineffective to prevent It. - 0 - It followthat society would not receive the benefitsof the lowest price or the most advontedand reliable equipment. Hence. corsiucntr-would be exploited through higher pricesand worse equipment * * ". Costs are liktlyto be higher, quality and innovation Inet.and prices hither. The root cause 1i self.dealing with little regard for Price or qual-ity. Self-dealing provides a guaranteedmarket that dulls competitive pressurestoward Innovation. high quality, low eoand prices.

Robert Bork. whose views on anti-trust In general and vertical integra-tion in particular are almost totallydifferent from mine, agrees that allow-Ing the Bells into manufacturing-would Injure both competition in themarkets the Bells enter ad the rate-payers in the telephone service mar-kets over which the bells have monop-oly control." Judge Bork has writtenthat the injuries would ensue becausethe Bells-


June 5 91 OSimply would daom that their affiliated

mnanufactures made products superior tothose of other saufsctorers. reuardless oftheir actual quality. .nd would refuse toPurchase anything else. JAthough theequipment might cost moe, they could pasthe eoeae Onto ratepay-ers.

Mr. President. the concern aboutself-dealing abuses ar because it isexactly what has happened in the pastwhentevr one company baa been bothan equipment manufacturer and a mo-nopoly Presidea of phone service.

Prior to divestiture, the Bell Operat-Ing Cos. bought virtually all of theirequipment from Western Electric.even when. as Judge Greene put it. "Ageneral trade product ss cheaper orof better quality * - "." Similarly BellOperating Co. purchasing officialswere encouraged-

To wait until Wesern (Electricl productcomparable to the desired general tradeequipment was available. and they were re-quired to provide detailed Justification forgeneral trade purchases which were not nec-essary for the pIrchase of Western equip-ment.

GTE. which has local phone -monop.olies scattered around the Nation, alsoengaged in seLf-dealing abuses when Itmanufactured telephone equipment.The Bells submitted testimony to ahearing held by my Antitrust Subcom-mittee in which they argued that Con.gres should look at how GTE behaveda-hen it was involved in equipmentmanufacturing. But the fact is thatGTE did engage In anti competitiveand anti-consumer setf-lealing whenI hey were In the equipment business.In fact. they were found guilty of vio-lating the antitrust laws.

The Judge in the GTE case statedthat-

GTE be actually uesed Its vertical struc-ture to irrevocably forecle its gull marketshare by taking every means to exclude anychance. howsoever small of any portion o1It being se by competitor snanufacturersno matter how superior their products. se v.li or price.

The Judge also stated that:OTV3 conduct In Its In-house dealings

etnifests an oblective to maximize its prof.Its.

The Judge went on to state that:The single mt alarming aspect of GTE's

vertical Inbegration and resultant in-housedealing te the Use of ie monopoly leveragein the te ephoe opertng marit to f re-close eoamai-t/im in the telecommunlcs-Lions equipment Industry. GTE has be.trsled Its Public trust .. *

If the Bel believe that OTE's con-duct provides guidance as to how S.173 will affect the manufacturingmarket, then Senators ought to askthemselves whether It is a good idea topas this legislation.

The NYNEX procurement scandal.which %as finally blown open last)ear. demonstrates that the BabyBells are just as Inclined to self-deal aswas GTE and the old AT&T. In thatcase. NYNEX established a purchasingsubsldiary--Matertal Enterprises Co.-known as MECO. which was set up tobuy office equipment and supplies and

4GRESSIONAL RECORD- SENATEperform other Purchasing and servicefunctions for the NYNEX operatngcompanies. NYNEX corporate policydictated that the local phone compa-nies should use MECO as often a possible, even though It meant paying In-fated prices for the supplies and serv-Ices that MECO provided. As I men-tioned earlier, the overcharges in thatcase amounted to #118 mWilion,

In each of the examples I haveclted-NYNEX GTE. and AT&T-there were internal company policiesand rules which encouraged self-deal-Ing by the local phone ompanies,even If It meant that consumers wouldbe paying higher phone rates. It is ex-tremely difficult for regulators, nomatter how consclentious, to police in-ternal corporate policies. In order toprevent the adoption, either formallyor Informally. of rules and policks de-signed to encourage aell-dealing.

Now there are some who claim thatthe*NYNEX scandal shows that regi-lators are capable of pollclng self-deal-ing abuses. But the fact Is that theNYNEX scandal was not uncovered byregulators, but came to light onlyafter news reports first appeared inthe Boston Globe. The news reportsa-ere based on information provided bya whistleblower who was subsequentlyfired by NYNEX, Robert Abrams. theNew York attorney general, statedthat NYNEX offlicials "resisted usevery Inch of the way" while his officewas trying to gather Informationabout the procurement scandal AndPeter Bradford, the chairman of theNew York Public Service Commis-slon-the State regulatory agencywhich has made a valiant effort togIa-ple with this' matter-testifiedbefore my Antitrust Subcommitteethat no one should take comfort overthe fact that NYNEX ultimately wascaughL Chairman Bradford stated:

I think you could never hope to fullypolice the kinds of difficulties that arisewhen you link a competitve enterprise ofthe she and scale of manufacturing In thetelecMraounimctUons industry with a monop-olY bottleneck group of customem Untileither competition erodes that monopoly ofsulfdenet sfeguards am i Vace to realyemme the Independence of the operatincompany d kects ormae--eafsuards thatae cot in ti legi-latO-don't think sayregulator. in good corealence could tell youthat this was a policeable marketplace.

So. Mr. President. experience tells usthat if you link manufacturing withmonopoly phone service, you will aeself-dealing abuses, and the regulatorswill have difficulty preventing theproblem.

The danger for consumers is thatself-dealing will lead to higher phonerates. Every maJor consumer group inthe country opposes this bill becauseof their concerns that if the Bells buyequipment from themselves, rates willgo up.

Rates can rse in one of two ways.First, the Bells can simply buy fromthemselves at inflated prices and passthe costs on to their ratepayers. Be-cause a switch Is a highly complicated

87079piece of equipment-and can be cus-tomized to meet the paticular needsof an operating company-4t In diffi-cult for regulators to determinewhether the Bells will have paid toomuch.

Alternatively. the Bells can forceratepayers to bear an excesive shareof the coats associated with their man-ufacturing businme. Each Baby Bell Isa diversified holding company. witboth regulated and unregulated bud-neeses. The holding company Incurssubstantial Joint costs, and It baa pow-erful incentives to saddle ratepayewith an excess share of those costs. Asmore costs are loaded onto the ratebase, phone bills rise in order toensure that the operating companiesreceive their guaranteed rat ofreturn Regulators are supposed to dis-allow excessive cost-hifting onto therate base Unfortunately, they havenever been able to tack costs a005-rately. The last time the GAO lookedat the FCC's ability to control cro-subsidy-back In 1907-it concludedthat the Commission could not do theJob, The GAO found that"

The level of ovecalght FCC Is prepared toprovide will not provide telephone ratepay-era or competitors positlve assurans thatICC cast ullocation ruxles sd procedursare property controlling erosasuheldy.

The holding company strmcture ofthe Baby Bells makes the task oftracking costs that much harder. Forexample. a staff report by the Calfor-nia Public Utilities Commission statesthat:

The operatioes ad methods of Pac ficTelesis bring to life the sort nightmares ofregulators. There appears to be no advan-tage to the bolding company structureexcept to the unregulated basineses of Pa-cIfc Teless. which are croaabidhad atevery tnn by Pa Bell.

The bottom line Is that consumersrisk having to Pat higher phse ratesif the Bells are allowed into mcnufac-turing.

Now what about the impact on themarketiace? Judge Greene believesthat all of the Baby Bells will engagein self-dealing thereby foreclosingcompetition in up to T0 peroent ot theequipment manufacturing earketThe Justice Deparbuent has estmatedthat 6 to L5 percent of the competitinin the telecommunIcations equipmentmanufacturing market will be foeclosed. The D.C. Circuit Court of Ap-peals. noting these differing estimates,stated tat "thW seems to be no dis-pute that some subtantial portico ofthe equipment market will be fore-

Reduced competition raises thethreat of higher prims and lower qual-ity goods, The threat of foreclosurealso would have an adverse hmpact on.non-Bell purchasers of te ecommunl-cations equlpment--ehoit 10 percentof the market The low of independ.ent suppliers would hurt nonBell pur-chasers of bteisoomnitcations equip-.ment because the Bells. with a guaran-teed market to ,supply. would not be


S 7080 CONGRESSIONAL RECORD - SENATEsubject to the same competitive pres-sures as are independent suppliers.

So look what we have. Mr. President:If this bill passes most of the Bellsector of the network equipmentmarket will be foreclosed by self-deal-Ing. Meanwhile. the non-Bell sector ofthe market-in which companies likeMCL, American Express, and otherspurchase telecommunications equip-ment-will be hurt because the market

is lkely'to be dominated by self-deal-ing monopolies, which could raiseprices and reduce competition.

Besides simply buying from them-selves at inflated prices or saddlingratepayers with excessive costs, thereare other methods by which the Bellscould threaten competition and hurtconsumers They could design theirphone networks In a manner thatwould, In the words of Judge Bork."make their systems Incompatiblewith equipment made by other manu-facturers,"

The Bells could Inhibit competitionby providing their manufacturing af-filiates with advance notice of upcom-Ing equipment needs or changes in thedesign of the local exchange network.This head start would give them a crit-ical advantage over other equipmentmanufacturers, Again, this is not a hy-pothetical concern, but was one of thefactors In the Government's originalantitrust suit against AT&T. JudgeGreene noted that prior to the decree,Western Electric was frequently grant-e&

Premature and otherwise preferentluiacss to necesary technical data. compat-Ibulty standards and other Informationabout the operating companies' needs andrequirements and the evolving chsracterls-ties of the local exchange. The delays en-countered In these respects by WesternElectric's competitors frequently made itdifficult, If not impossible for them to com-pete for operating company businesm.

Now Mr. President, there are safe-guards in 5. 173 which are designed toprevent the Bells from engaging Inanti-competitive and anticonsumer be-havior. But these safeguards are notstrong enough to ensure that consum-ers will be protected.

For example, a provision In B. 173which requires the FCC to issue regu-lations to prevent the Bells fromgiving their manufacturing affiliatespreferential access to Informationabout changes In network design andequipment needs of the Bell OperatingCos. It's a well-intentioned provision.But the fact i that there is no practi-cal way to enforce It. Think aboutwhat would happen if a phone compa-ny engineer, either accidentally or in-tentionally. discloses informationabout future equipment needs to themanufacturing subsidiary. Is he goingto immediately tell the phone compa-ny that they have got to drop every-thing and run down to the FCC to filethat information? Mr. President. anFCC regulation is simply not going toprevent personnel from the operatingcompanies from discussing future

equipment needs with employees fromthe manufacturing affiliates.

Finally, Mr. President. let me justsay a word about the domestic contentprovision contained in the bill. It is adomestic content provision in nameonly. The provision places no limits onthe ability of the Bell Co. to use intel-lectual property created outside theUnited States. So under the bill, theBells could conceivably do much, ifnot all of their research and design ac-tivitles overseas.

The heart of the provision is a re-quirement that the" Bells must useAmerican-made parts in all the equip-ment which they manufacture. Butthere is an exception to this provisionwhich practically swallows the rule. Ifthe Bells cannot find the componentshere In the United States at a reasona-ble price, they can use foreign parts.

Now the bill does say that the costof the foreign-made components maynot exceed 40 percent of the revenuegenerated from the sale of equipment.But componentry costs almost neverexceed 40 percent of the cost of mostnetwork equipment products, let alonetheir sales revenue. So the Bells coulduse all foreign-made parts and stillmeet the 40 percent test that is in thebill.

The bill does say that the compon-entry percentage figure must be ad-Justed yearly to correspond to the av-erage for the entire industry. But thatdoesn't guarantee the use of moreAmerican-made components, becauseequipment sales by foreign firms willbe included in the calculation. Indeed,the Inclusion of sales by foreign firmmight even raise the ceiling, sincetheir products will be made entirelywith foreign parts.

Moreover, the bill says that theCommission shall adjust the percent-age figure after consulting with theSecretary of Commerce. It is my un-derstanding that both the Commissionand the Secretary of Commerce do notsupport the domestic content provi-sion. If they are included to relax theapplication of this provision, this lan-guage would seem to give them ampleleeway to do so. So as a practicalmatter, this provision is not going tolimit the Bells' use of foreign-madepartsMr. President, the bottom line on S.

173 is this The benefits are at bestspeculative and, at worst, illusory.Meanwhile, the risks to consumers andcompetition are too great. Some ofthat risk can be alleviated if the bill isamended, but in my Judgment, thislegislation should not go forward. Ac-cordingly, I will note "no."

Mr. President, I commend the Sena-tor from South Carolina's staff andmy own staff. It was not an easy nego-tiation. They have been involved forseveral days. They have been very co-operative. My own staff has been ex-tremely involved, knowing full wellwhat the situation was here on thefloor, trying to do what this Senatorwanted done. And the staff of the Sen-

June 5, 1991ator from South Carolina was certain-ly trying to do what their Senatorwanted done. I think all of them haveacquitted themselves admirably and Iam grateful the Senate has such ableyoung People on our staffs and work-Ing for us.

Mr. President, having said that. Ihave nothing further to say.

Mr. President, I ask for the yeas andnays on final passage.

The PRESIDING OFFICER. Isthere a sufficient second?

There is a sufficient second.The yeas and nays were ordered.The PRESIDING OFFICER. Who

seeks recognition? Are there furtheramendments?

Mr. DANFORTH. Mr. President. Isuggest the absence of a quorum.



Mr. SEYMOUR. Mr. President, I askunanimous consent that the order forthe quorum call be rescinded.

The PRESIDING OFFICER. (Mr.LiEBzEiAN). Without objection, it is soordered.

The PRESIDING OFFICER. TheSenator from California is recognized.

Mr. SEYMOUR. I thank the Chair.(The remarks of Mr. SsEYMOUa per-

taining to the introduction of S. 1225are located in today's REcoRn under"Statements on Introduced Bills andJoint Resolutions.")

Mr. SEYMOUR. Mr. President. Iyield the floor and suggest the absenceof a quorum.





Mr. HOLLINGS. Mr. President. Iwant to clarify one point that is cur-rently left somewhat unclear In thecommittee report regarding Bellcore,the Bell Co.'s Joint research center,when the committee reported S. 173 itwas the intention of the committeenot to change the legal status of Bell-core In any way. Bellcore will have thesame authority to work with any man-ufacturer, Including Bell Co. manufac-turing affiliates, after the bill is passedas Belicore has today.

To the extent that Bellcore talkswith manufacturers today, for In-stance, it may continue to talk to man-ufacturers, including the newly cre-ated Bell Co.'s manufacturing affill-ates, after this bill is passed. This bill.however, grants no new authority ItBellcore.



ceeded to call the roll.


June 5, 191Mr. eURENBEGER. Mr. Presi-

dent. I ask u-almous consent thatthe order for the quorum call be re-scinded.


Mr. DURENBEROER . I ask unani-nous consent that I might proceed forup to 10 minutes as though in morningbusiness.

The PRESIDINO OFFICER. Hear-inn no objection, that will be theorder.

Mr. DURENBERGER. I thank theChair.

NATIONAL HEALTH CAREREFORM

Mr. DURNBEROER. Mr. Presi-dent. let me first thank the managersof this bill for the opportunity to takethis time to congratulate my col-leagues in this body, especially thosefrom Maine, Massachusetts. and WestVirgina-Democratic Senators Mrrcn-n.L. KErinToy. and RocKIrLUR--onthe occasion of the Introduction oftheir -landmark legislation on healthcrse reform.

Regardless of the shortcomings ofthis particular proposal-and I believethere are several-this event today Is avery major milestone on the road tourgently needed health care reform inAmerica.It literally is a first.

Today. we have on the table a serl-ous proposal for the national reforn:of health car which is as close tccomprehensive as anything we haye;een. For want of a better alternativethis bill sets the agenda for the Cont-re.. It begins the long and difficullproces of health care reform.

Because we all tend to focus on thiday-to-day challtoges around hem woften cannot take in the longer view olegislation. For our colleague. SenatolKeuwaiT. this is not a -day event. Iis yet another step In a 30-year efforto bring access to health care to atAmericans. This is not an Issue to himnit is a passion, and I commend him fothat.

I also want to commend the othekey players in this proposal who arerelative to our colleagues from Masachu3ett. new kids on the block. It habeen my privilege to have served willboth GO soa Mrrcam,. and JaRocwrL.zs on the Medicare Butcommittee of the Senate FinncCommittee as long as they have beein the Senate. Osuacx and Jar epitmize Senators of the modern enThey are both good listeners and seros thinkers, and they have an abilitto push through the complexities cthe issues that we face to reach faireaching solutions.

I commend them for that effort anthe efforts they have made over thlast several ears to understand anmaster the health field and for mucgood policy which they now lay befoius. JaY ROcKas lt . I must say. alumade physilan payment reform a r

CONGRESSIONAL RECORD - SENATE

alty and made the Pepper Commis"sin work.

Democrats and Republicans in theCongress have been working onchanges In the way America pays forhealth care snce, I arrived her in 1979to meet the specter of somethingcalled hospital cost containment.There can be no question that Amer-Ica must change the way we produce.the way we well. and the way we buymedical services.Just 'a health is a basic issue to

every person. It is a fundamental Issuefor every buness, every Institution,and every level of Government inAmerica. Like a Person with very highblood pressure, each Institution of oursociety today is threatened with an ex-plosIve Increase in medical costs. Thisyear American health expenditureswill be $750 billion. By the turn of thecentury-only 8v. yeas from now-that amount will have tripled, to over$2 trillion. Can employers afford threetimes their current health care costs?.Can Government? Can individuals andfamilies? Of course not.

We have 31 million Americans whohave no health Insurance at all. withmillions more soon to join the ranksbecause of cost increase& We havemajor sectors of our society-in ruraland urban areas-grosly underserved.Change is urgently needed,

I I commend my colleagues for layingthis proposal on the table.

As I look over the proposal, I see anumber of very necessary reformswhich have been discussed in the Pi-

e nance Committee and in the PepperCommission. The bill is a great im-provement on the Pepper Commissionfinal report becausq it begins to ad-dress a major gap in the document-cost containment.

I I wish to thank the sponsors for Ine eluding a number of proposals which I

r have Just put forward over the Iasit several years, and I am especlall)

pleased to see a small business insurI ance reform component which I have.: been worlking on since March of lasir year and on which I have Introduce

S. 700. the American Health Securitr Act.

But, Mr. President, before I souncany more like a cosponsor of this pro

s posal. which I am not, there are severft al flaws which will cause this bill vIV fall short of Its own ambitlous goalsP- This afternoon I will mention Juose four.* First. introducing a bill without anto. financing to it is like wrapping up asL. empty box and putting it under thiI- Christmas tree, It is designed to disapy point. One of the lessons we were supif posed to have learned from the 1980,r- is that government should not promis,

for what it cannot pay, or is unwilllnd to pay.e Unfortunately, this bill falls intbd that trap. The bill is quite explicih about what we will do for the Amerle can people and silent on how they wilo pay for It. It proposes $O to $8 billioie- in Medicaid changes. Prom where I

S7081that money going to come? It proposesa payrol tax on buslnesses that do notchoose to povide Insurance. How bigwill that be-to percent, 15. 20? Thislegislation gives no answers. The fall-ue of the sponsors to agree upon a fI-nancin mechanism even among them-selves does belie the so-called compre-hensive nature of the bill.

Second. by relying on employer man.dates to solve the uninsured problem.the bill prescribes a treatment thathas alretty failed clinical trials in theState of Massachusetts. There is Amajor problem of the working unln-sured-people who have jobs butcannot get insurance In the workplace.But the problem is not that their em-ployers--mostly small businesses-willnot provide Insurance: It Is simply thattheir employers cannot.

Finding and keeping affordable in-surance In the current cost spiral hasbeen nearly impossible, and to add amandate to buy Insurance in this situ-ation is simply to mandate bankrupt-cies.

The bill requires employers to eitherprovide a health plan for their em-ployees or pay Into a State Insurancefund; in other word& "play or pay."The eventuml result will be employersabandoning their responsibility toinsure workers and dumping them Intoa huge State system. In other word-%we will get a Canadian system by theinstallment plan.

But the greatest unfiess In thImandate is It trests all employers andall businesses as though they were thesame; it ignores differenes which arecrucial to how these employers mAketheir health care decisions, even thedecision to play or pay.

There are differences between em-ployers located in urban and those Inrural areas, different kinds of bisn -nesses-manufacturet, service indus-try-the kind of business that can Passon these costs on goods and servioesand those that cannot. There are dIf-ferences between the coastal areas of

I this country and its heartland. To sayr these disparities do not exist guaran-

tees bad policy outcomes.I The third flaw in this bill is that It- leaves totally unreformed &1O0 billion- a year in Federal health spending on

the tax side of the ledger. There Is a- very large hole in the Natlon's health

bucket that simply must be plugged ifwe are going to get the kind of eff

r ciency we need in this system. Everyn year. we hand out $100 billion In taxe benefits-or the taxpayers do-forhealth expenditures, and the Ameri-- can people get no better system for It.9 We subsidize the average lawyer inD this city about $1,000 a year for his

health Insurance. a tax subsidy paidfor by farmers in Minnesota who donot get that kind of subsidy and have

t to pay twice as much for their premi-[- ums without the beneflit of a deduc-I tion.n Fourth. I am sure the sponsorss would also agree that even passage of


87082their bill today would not nearlyfinish the Job of health reform. Westill have to deal with Medicare re.structuring and optional services forlong-term care. We have to deal withthe.medical arms race in this countrywhich Is raising costs by 11. 12 percent

year. We have to deal with restoringvidual resonaiblity and changing

the wasteful way in which health careis currently delivered In this country.This is the real key to cost contain-Inent In America today, changing theway people access health care'andchan the way medicine is prac-ticed.

I would suggest that if every healthprofessional in America practiced aspart of a Mayo Clinic we would doublequality assurance -in America. and Iknow we would cut the costs by atleast a third.

The majority leader. Senator MrTcH-=I, In his statement said this is a"comprehensive bill to reform the Na-tion's health system to provide accessto affordable heath care for all Ameri-cans."

But without the details of the fi-nancing, without a sustainable solu-tion to the uninsured problem, with-out a tax component or reform inother major areas, this bill will havetrouble living up to that reputation.

Mr. President. the process of healthreform will be a long and difficult one.Changing how 13 percent of the GNPin this country operates when it is oP-erating in a drug company over hereand in a small town clinic over there.is a huge challenge. But we have tostart some place. And some place isthe bill our colleagues. Senators Kar-mmn, MITCHILL, and RocgKgznrzg,have put before us.

I commend them for their leader-ship and for the correct choices theyhave made, and I look forward toworking with them in the areas-andthere are many-where we will havedisagreements.

This will be a long Journey-10years' worth of work perhaps. But wecannot get there unless we get started.

Credit belongs to those Senatorstoday. Because of their efforts, we arefinally underway.

Mr. President, I suggest the absenceof a quorum.

I yield the floor.


sideration of the bill.Mr. KERREY. Mr. President, I rise to

state my support for S. 173. and inparticular I want to call my colleagues'attention to what I think is an ex-traordinary accomplishment on thepart of the distinguished senior Sena-tor from South Carolina, who hasfought this battle long and hard. I amvery grateful he has been willing to doIt.

CONGRESSIONAL RECORD - SENATEThere has been a considerable

amount of opposition, persuasive argu-ments on the other side, and I suspectwe are rather close now to passing thispiece of legislation.

I have had a great deal of interest intelecommunications for some time. Iwas chairman of the National Gover-nors Association's Task Force on Tele-communications Policy and, as a con-sequence of that, we took some regula-tory action while I was Governor. Andthe object of the deregulation actionwas to try to encourage the localphone companies to invest more incommunications technology.

The Jury is still out as to whether ornot that will occur.

I am pleased with some of the actionthat has occurred, and not so pleasedwith some others.

Mr. President, I believe this is an ap-propriate legislative response to an in-appropriate Judicial situation. SinceFederal District Judge HaroldGreene's modified final Judgment onthe breakup of AT&T went into effectin 1984. the RBOC's have been barredfrom manufacturing telecommunica.tions equipment. The RBOC's createdin that divestiture, and as a part ofthat divestiture agreement and theconsent decree, as a consequence werenot allowed to get into the business ofmanufacturing telecommunicationsequipment.

This edict on the part of JudgeGreene-in fact, a consent decreesigned between the U.S. Governmentand AT&T-was targeted toward le-gitimate ends. That end is to protectthe consumer from unduly high phonebills and shielding other telecommuni-cations firms from unfair competition.

I emphasize this is a legitimate regu-latory objective. These are still compa-nies with highly monopolistic charac-teristics particularly deserving of regu-lation.

The result has been one of unelectedJudicial officials now doing more thanperhaps any elected official to shapeAmerica's telecommunications policy.And the result has been a restrictionof the RBOC's that is broader thanneeded to protect wallets of Americanconsumers and the competitive inter-ests of American manufacturers.

I believe the sponsor of the bill, as Ihave indicated earlier, the distin-guished Senator from South Carolina[Mr. HomrNGas, has done a tremen-dous Job, an admirable Job In craftingthis legislation in a way that balancesthe various interests, the various con-flicting interests.

It erects Quite concrete barriers toprevent the RBOC's from using theirregional monopolies over the phoneservice to cross-subsidize their manu-facturing operations, and to that end Ibelieve the amendments offered bythe distinguished Senator from Ohioimprove the extent to which we will beable to monitor and prevent thatcrosa-subsidizatIon.

Further, the legislation takes stepsto ensure the RBOC's will reenter the

June 5, 1991manufacturing competition on a play-Ing field that will remain level. It In-cludes measures that will enhanceAmerica's position in global trade.

For these reasons I plan to vote Infavor of this bill. But for other reasonsI will vote for the bill with someregret. What I regret is simply this:America's elected leadership, In par-ticular the administration, is doing solittle to set and achieve a bold and

-broad-reaching telecommunicationsvision for our Nation's future.

All of us in political life, any whohave been in business, understandautomatically the power of moderntelecommunications.

There can be no doubt that thenature of our telecommunicationssystem in the next century will shapeAmerica's destiny as powerfully as ourrail, water, and highway systems havedone over the past two centuries. If wetook the right steps today, we couldbegin to revolutionize every aspect ofour lives: The way we educate our chil-dren, the way we obtain our healthcare, and the way we do our jobs. Ihave seen some of those possibilitiesdemonstrated already in some of theNebraska schools.

Mr. President. it is very exciting.One portrait of what we can achievewas recently painted by George Gilderin the Harvard Business Review. Mr.President, the article is too long for in-clusion in the Racoan, but I recom-mend it to my colleagues.

Mr. Gilder presents to us a ratherexciting proposal. It is one that has aconsiderable amount of risk attachedto It, as well. But the proposal, Mr.President, says that what is missing Inthe United States is the infrastruc-ture not the high-end infrastructure,but the infrastructure that connectsthe American home and family to thathigh-speed network that we generallyuse with long-distance phone systems.

That pared copper line that con-nects every American home and mostof America's businesses with ourphone system is the greatest barrier. Ibelieve, not only to our being able todevelop a fully integrated informationsystem In our country, but in seeingthat marketplace. information market-place, explode and grow even morerapidly than it has In the 1980's.

What Mr. Gilder proposes is that weare simply not regulating for the rightobjective; we have not taken into ac-count changing technology and whatthat technology has done for us. It hasgiven us the opportunity to refashionour laws, not without some risk.

I assume Butler Aviation, both atNational and Dulles, is doing a lot ofbusiness this week. I assume there is alot of heavy iron coming in trying toinfluence our vote. I have seen a con-siderable amount of evidence of thatout in the rotunda. There will be a lotmore heavy iron in town if we were, Inmy judgment. to consider that whatMt-. lIde- is saying is, in fact. correct.That is this. Mr. President: What we


June 5, 1991 CONhave done is we have assumed thatthere is a shortage of airwave space.and that that shortage has createdproblems for new technologies as theycome into the marketplace.

But what Mr. Gilder is saying isthere Is no shortage of air space. Infact. what we have done is we havelost sight of what the change in tech-nology has done for us. It has donethis. Mr. President: It has given us thepotential of saying that the lines thatwe currently regulate and reserve fortelephones should be used for video.and the air space that we currently re-serve for broadcasts and other, such ascable, that that air space should be re-served for voice communication, fortelephone.

It is a tremendous underlying as-sumption, Mr. President. If what Mr.Gilder is proposing Is true, then weneed to do much more than simplypass this piece of legislation. We aregoing to need to provide controversyin the industry out there that will beenormous. If what Mr. Gilder is sayingabout the potential economic growtha:9 a consequence of this change is cor-rect, it will be worth the battle.

Today. I believe we are doing littleto imagine and create a telecommuni.cations future that serves the public'sInterest, a system that is Intentionalrather than accidental.

I must call my colleagues' attentionto the fine work that has been done bythe distinguished Senator from SouthCarolina. I have heard him talk aboutthe need to challenge our regulatoryenvironment and describe our future.

I have heard the distinguished Sena-tor from Tennessee. at length, de-scribe what we as policymakers needto consider, if we are going to draftour laws correctly.

In the Sunday New York Times,there was an article about the Chair-man of the Federal CommunicationsCommission, Alfred Sikes. and hisviews were expressed In this article.

I ask unanimous consent that thisarticle be printed In the RECoao at theconclusion of my remarks.

The PRESIDING OFFICER. With-out objection, it Is so ordered.

(See exhibit 1.)Mr. KERREY. Chairman Sikes'

statements in this article reveal an un-derstanding on this issue that is deep,rare. and admirable. They indicatethat he Is visualizing a way to trans-form how we use telecommunicationsin America, and then using regulatorypolicy to achieve that vision. That isthe right way to use regulatory policy.

Today. unfortunately, we are toooften regulating backward. We setrules for some piece of the telecom-munications market, and we determinehow those rules are going to work,without first deciding what ends wewant those miracles of electronics toserve.

Mr. Sikes seems to have an admira-bly broad vision, but Mr. Sikes Is anappointed official. An appointed offi-cial can only do so much to educate

GRESSIONAL RECORD - SENATEand lead the public toward an overallset of goals.

So I find myself asking. Mr. Presi-dent, what and where is the vision ofPresident Bush who appointed Mr.Sikes? Recently. we witnessed howmuch the President can achieve whenhe focuses the Nation's sights on along-term view.

When Congress was discussing anddeliberating whether. to give the ad-ministration fast-track authority inour trade negotiations, the Presidentaggressively argued that we must lookat the longrun benefits of free trade.He painted a broad and persuasive pic-ture of the benefits that would ulti-mately flow to our Nation if wepressed our trading partners for lowerbarriers.

This is precisely the kind of execu-tive leadership our Nation needs ontelecommunications. We need leader-ship to mobilize public opinion aroundthe very large investments that will benecessary to link each of .America'shomes and businesses to a digital net-work. leadership that will transformthe way Americans think about thepossibilities of telecommunications; sothat they see it as an electronic doorto stimulating opportunities, not justas an electric babysitter for bored chil-dren.

Mr. President. I must point out, as Iam sure the distinguishged occupantof the chair knows, and all of us Inpolitics know, that television has tre-mendous power. We talk often aboutIts power in electing representatives,not only to this body, but to Statebodies as well.

Mr. President, this most powerful oftechnology tools, perhaps the mostpowerful of the 20th century, is beingapplied in such a tremendously goodfashion in the marketplace and by themarketplace.

Mr. President, I would rather my 14-and 16-year-old children not watch tel-evision. That is how good a Job theyare doing. I find the nature of massmedia today to be such that I wouldprefer that my own children not be ex-posed to it.

Something is wrong and, again, Iurge my colleagues to have a look atMr. Glider's article. It appears in thismonth's Harvard Business Review.

Mr. Gilder describes what Is possible.He says, "A mass medium is inherentlycoarse and vulgar." I certainly agreewith that. "It has to deny the unique-ness of human beings, their brains,and appeal to their glands and propa-gate a culture that degrades ratherthan inspires."

Mr. President. of all the things I be-lieve we have before us with telecom-munication. I believe we have the pos-sibility-if we see what it can do for usand are willing to fight the kind ofbattles that the distinguished Senatorfrom South Carolina Is fighting withS. 173. if we are willing to fight thosekinds of battles, we can give our chil-dren something other than what theycurrently have. And rather than wor-

S 7083rying about what happens when theyturn on the television set, we can beexcited about what happens whenthey come into contact with the workstation in our homes.I will vote for S. 173. I applaud the

work of the distinguished Senatorfrom South Carolina.

I yield the floor.ExHsrr I

(From the New York Times, June 2,19911PtUsOus AL Sigs' GRAND AOgisDA

(By Edmund L Andrews)WsAslrror.--By any measure, Alfred C.

Sikes has a bold blueprint, and he is In ahurry to put it in place.

As chairman of the Federal Communica.tions Commission. he sees a world in whichpeople could use satellites and high-speedfiber-optic communication lines to take col-lege courses at home, have television setsdouble as multimedia computer work sta-tions. use communication networks to trans.mit the contents of an entire library in sec-onds and track down a person anywhere onthe globe to deliver the data.

To speed these developments, the 51-yearold Mr. Sikes has embraced a sweepingagenda to overhaul communications policyin the United States and in the Process putcompanies on equal footing with those inEurope and Japan. He wants to free upspace on the crowded airwaves for advancednew services, from pocket-sized radio tele-phones to Interactive television and satellitemessaging. He is also pressing to end thepractice of assigning valuable licensesthrough lotteries, a practice he said has al.lowed speculators to earn huge profits bysimply reselling licenses, and Is pushing forauthority to award licenses through auc-tions. He Is also bent on spurring competi-tion by knocking down regulatory barriersthat now segregate services into Isolatedfiefdoms for telephones, cellular service,cable television and broadcasting. He Ispressing for legislation to lift key restric-tions on the Bell telephone companies whileforcing them to open their networks to newrivals.

"For decades, the United States has beenthe world's Gulliver," he remarked recentlyin his corner office overlooking downtownWashington. "We assumed we were better.Now. It's quite clear the Interational com-petition is fierce. There Is hardly an area inwhich we are competitively engaged Inwhich we are not In a fight for our lives."

But some experts contend that Mr. Sikes'sblueprint is itself in danger of being tied upIn Lilliputian knots. Democrats in Congressare resisting moves to relax telecommunca-tlons rules in several areas; state regulatorsand corporate opponents have already woncourt decisions that have stalled F.C.C.moves to ease regulations on beth AmericanTelephone and Telegraph and the Bell com.panies.

Closer to home, the agency's five-membercommission faces an onslaught from special-interest groups and s itself riven by dimen.sion and turf battles.

VOTED DOWNs ON aRUNSThe weight of all these obstacles was

brought Into stark relief in April. when Mr.Sikes suddenly found himself outmaneu.vered and outvoted by three eommnlS onmembers on the hotly contested issue oflifting rules that bar television networksfrom owning rerun rights to prograns. Mr.Sikes had argued fervently that the restric-tions were outdated, but commissionersAndrew C. Barrett. Sherrie P. Marshall andErvin S. Duggan pushed through a measure


S 7084 CONGRESSIONAL RECORD - SENATEthat meed many restrictions and evenadded new ones

It was a blow to Mr. 8lkes and raised ques-Utios about hls ability to coax the commis-siOn Into a policy-making consensua. "Wehave an F.C.C. subject to a lot of internaldlireeusometa and therefore subject to a lotof disparate lobbying at a time when wereally need a coherent piz.*" si AilenHammond. director of the CommunicationsMedia Center at New York IAw School."Simply looking at decisions as a way to aPease one Interest group or another is notgoing to work."

Others are more sanguine. "I think thisissue was unusual." said Richard Wiley. alawyer and former F.C.C. chairman. I.think Al will be successful."

The commission faces daunting politicalprures brought about In Part by rapid ad.Van315 in technology and growing competi-tion. Cable television companies want to usetheir networks to carry telephone cals anddat. Mobile radio systems for car and truckfleets are being adapted with new digitaltechnology to compete with cellular tele-phones. Local telephone companies arelein business as corporate customers rlymore heavily on private.satellite networksand alternative carrers that offer low-coatfiber-optic circuit.

But any attempts to change the rules pro-Tokes intense opposition. Radio stations, forexample, are fighting proposals by severalnew companies that want to use digitaltechnology to broadcast high-fidelity musicover sateite. Lon-dilstance carreres likeMCI Communicatlons and US Sprint aretrying to block moves that would liberalizePricing for A.T.&.T. And A.T.&T. is fight,hll blelton, supported by Mr. Sikes. thatWould allow the regional Bell companies toMamufaturequipment.

Tays communications laws and Indus-try lobytists have combined to form theenulvalent of their own Army Corps of Engi-fleess" Mr. Sikes said in a recent speech"Much like the corps' penchant for dam-ming free-flowing strems, today-s eonmu-nieations lobbies too often lock a stream ofideas and Instlations.

More than mot of his predecessors, Mr.Bikes brought with him an Unusually de-tailed game plan when he assumed office 22months ago. He has served from 1a8 to1139 0s head of the Commerce Depart-ment's National Teleconunnlcatlona andInformation Administration. which sets

nommonlcatlons policy for the executivebranch. While there. Mr. Sikes produced amsdae Analysis of trends and policy pre.Scritions that guides much of his agendatoday.

Ake Man Other Republicans, Mr. Sikes isa strang advocate of eliminating regWlaxowhenever - slble. But he hs not taken anentirely lase-faire avroach. showing a wfi.

nees I ead to sne government force toPry open markets for new competitors. Lastmonth, for example, the F.C.C. proposedforcing local telephone companies to let newcompeting local carriers plus directly intotheir networks. In effect, the rivals wouldhave the right to set up operations at tele-phone company switching stations. a re-markably intrusive act.

Indeed. Mr. Sikes seems to be more of amoderate thin his two predecessors. whoPursued deregulation with almost fanaticalsal. In March, for example. the F.C.C. pre-

ps-d tough new rules to combat fraud anddeceit by companies that provide Informs.tion services over "900" telephone numbersAnd next month, the comniason is expect.ed to adopt rules that give local governments somewhat more authority to roback rces of cable television.

Tsc aIO tarrrTIvel aThe Missouri Republican has already n

pushed through a number of Important tni- ttiatives. including more flexible pricing Prules for both A.Ts.T. and the Bell compa- cnles. The commission has also moved to Ppush down the arbitrarily high rates that sforeign telephone companies charge for con-necting international cols. And Mr. Sikes dwon approval for one of his pet issues,giving a "pioneer's preference" in the licems- Ping process to companies that introduce Im-portant new technologies.

In a ity of prickly poitical egoes. Mr.Bikes practices an earnest courtliness andseems uncomfortable with soaring rhetoric. Sglad-handing and back-office intrigue wlienconfronted with the certainty of defeat, ashe was on the Issue of reruin rights, heseemed content to quietly stick to his gurs."It Just isn't true that I've been humiliat- ted." he remarked at one point. "Humiliationis when you've been forced to compromiseon your principles, and I haven't donethat.

This quiet pronto has helped him moathrelations with Congressionial Democrats.who still seethe at the memory of what theyconsider were heavy-handed prcde sors. IMark Fowler and Dennis Rt. Patrick.

Mr. SiLes will need the Democrats' siuport in unLangling the snarl of issues. Thebiggest and most complex is finding space othe crowded radio spectrum for servicesbased on new technologies. Assigning fre-quencles to them will squceze out existingusers. Yet at leat a dozen new services arenow pending before the commission, andmore are on the way.

Congress now appears likely to approvelegislation that tould shift a significantchunk of the spectr m from government tocommercial use. which the F.C.C. couldthen allocate to some of these new technol-ogles. In addition. however. Mr. Sikes istrying to create an extra "spectrum reserve"by Identifying commercial uses that can becrammed into ss*iler channels or be shift i'dto wirebased transmission systems.

Even if it got that far, the F.C.C. wouldstill face the contentious question of whichnew technolocies to endorse and how toaward the licenses. Mr. ikes and the BushAdministration want to asetion licensesthrough competitlve bidding, shich theycontend is simpler and more rational thaneitter lotteries or the traditional corrpara-tive hearitgs. But Democrats are pushinghard for comparative hearings, arguing tihatauctions will favor large corporatlio oversmlnler Innovative companies.

WUAT's AH rAD

Separately. Mr. Sikes Is now presstng atleast a half-dozen other initiatives. Amongthem

Relaxing and perhaps repealing rules 1m-ItIng the number of radio and television sta-tia a single company can own. Currently.a company can own no more than 12 AMstations. 12 PM stations and 12 televisionstations. Last month. the F.C.C. formallyproposed relaxing the rules for radio. ad itis expected to ask for opinions about televi-sion in a month or two.

Mr. Sikes contends that broadcasters areunder growing pressure from cable televi-alon. direct-broadcast satellites and othertechnologies. and need as much flexibilityas possible. But there are rumblings, par'ticlarly from Representative John Dingell.Democrat of Michigan and chairman of thepowerful House Energy and CommerceCommittee.

Streamlining rate-setting rules forA.T.&T. long-distance services. A.T.&T.. a

I "dominant carrier." must obtain Federal ap-prova for all Its prices and its rates must

June 5, )(/91pply equally to all customers. That haoade it difficult to compete against MCInd Sprilt in offering low prices for corm-lex packages of services tailored to targ,orporations. MCI and Sprint have won sup-art in fighting AT.&T. from Mr. Dingellnd others.Selecting a broadcast standard for high.

deflnltion television. The F.C.C. is oversee-ng tests of six rival systems and says It willpick a winner by mid-1993.

TO avoid making conventional teiev sonets obsolete. Mr. Sikes insisted that com-etitors produce a system capable of trans.sitting over ordinary television channelslome experts complained initially thal ticrhigh-definition television consumed sosuch radlowave frequency '*bandwidth"hat It could only be broadcast by satelilte.But several of the six systems to be testedhis year and next say they can transmitprogramns entirely in digital code over atandard television channel. These systenmscould easily evolve into interactive comput-ers once high-capacity fiber-optic linesreach Individual homes. early in the nextcentury.

Deciding on technical standards for wire.v. .personatl communication networks'-extremely lightweight, low-powered tv'phones that relay signals through smallradio towers. like those used in celluilar Ct-phone system, loated close to each other.Party-s!x companites have reeived expertmental licenses in the last year. Icludingseveral cable television companies that hopa,to use their networks to link the radio an.Leona into a system reaching as many loca-tions as today's telephone companies. No de-cision is expected for several years, however.

Deciding os technical standards for diallalradio. Several companies have proposedl o.5tcos that would transmit music with th,sound quality of compact discs. The yalloa-al A.Lsoitlous of Broadeasters hs end,'-,,a system developed In Europe that trar,mits over ordinary radio frequentcler.. t11.tseveral small companies have Mked 11,tran mit programming nationwide by .lu.ilite.

Opinions differ on whether Mr. Bikes casmuster stpport both in Congress and anorlemhis fellow con-nissioners to forge cilar poll-cles. Ills commslisoncrs have privatt-ly rum-plalned that the chaiiran treats them ikteemtploy-s and that he presents imminmir-tactions as falls aeco'vpli. -That's a .*.,.rd."he responds lestily. arguing thatthe .t, 1

ey's top staff s usually availabit- to brt,"

conlanlasloocrs about Issues.

raoss.Erts wl"I rowERTli trnsions stent In part from vartl.;

poer Struggles between Mr. Sikes and throther coemtsloners. Mr. Bikes comreltealfor the chalrman's post against Ma. Mar-shalL who worked for James A. Baker wlethe was Treasury Secretary and who coardinated President flush's unsuccessful effurtto name former Senator John Tower as S::;retary of Defense.

Some Industry experts contend tha ,r.Sike's hand will grow stronger next lcarwhen Ms. Marshall's term espires. Mr. Sikespoints out that he has been forced to di.sent on only one Isue since taking office. "IthlItk he's going to do quite well." sid Mr.Wiley. F.C.C. chairman until 1977.

Added Mr. Patrick. Mr. Wiley's surr.ur:"Part of the problem here is that the pro.en of decislon-making in a democratic Insti-tution is a very messy and inherently con-troversial process. It's not al sys obviouswhat to do."

Mr. HoLLINOS. Mr. President, Ithank my colleague from Nebraska forhis very generous comments. I want In


CONGRESSIONAL RECORD - SENATEemphaafe to all Senators that his is cratic Party solution is the always-one of the more meaningful state- make-somebody-else-pay-for-it orments In this entire debate, and his always-make-someone-else-do.it ap-comments are right on the mark. proach. Spend somebody eise's money.

It is not surprising since the distin- This will cost at least $30 billion. Andguished Senator. as has been noted, whose money? It has to be the Ameri-chaired the Governors Conference on can workers. You can say we will justthe Telecommunications Task Force. have American business pay for It. Ul-He has kept up and led the way In the timatcly that is taken out of the hideU.S. Senate. of the workers of America. -

We appreciate very much his sup- Our employer-based health insur-port. and we value very much his sug- ante system is a historical accidentgestions. I too am concerned about that is in part responsible for our cur-what we see on television and ensuring rent health care mess. As health carethat the communications industry is costs have increased, many employerscompetitive, have found they cannot offer health

We thank the Senator for his com- care benefits and stay in business.ments and his support. Most employers offer health Insur-

The PRESIDING OFFICER. The ance. if they can afford It.Senator from Utah. Mr. HATCH. Mandates on employers limit both

Mr. HATCH. Mr. President. I ask employers' and employees' flexibility,unanimous consent that my remarks damper their creativity, and, in thebe considered as In morning business, case of health insurance, may threat-

The PRESIDING OFFICER. With- en their very survival. It is particularlyout objection, it so ordered. 41disconcerting that the pay-or-play

I.... mandate will fall hardest on employ-HEALTH CARE ers who offer entry-level jobs-the

very Jobs that we need in this countryMr. HATCH. Mr. President. I have to enhance family and societal stabil-

been interested that the majority ty in high-risk situations. Often thoseleader s talking in terms of a Demo- entry-level jobs are part-time or acrat health care plan for America. And second job or spousal employment.from what I understand about the These kinds of employees often chooseplan, I would like to Just say a few not to be covered by health Insurance.words about it because I think It is The Democrat approach, or pay-or-very important that this debate begin, play, will provide them something that

I believe that health care Is one of they may not need or may not want inthe two or three top Issues in the fact probably will not want and per-minds of everybody In our country haps at the expense of having no jobtoday. There is no question we are in at all.trouble. Health care costs are rising at It is clear that many of these em-an annual 12.5 percent of the gross na- ployers are on a thin margin. An 8-per-tional product rate. That Is too fast cent increase in their taxes-essential-and too much. Compared to any other ly applied to their gross receipts, sincecountry in the world, we spend more their expenses are heavily payroll andper capita than any country in the they have no profit-could drive themworld. Something has to be done. I do out of business. As small employersnot think this administration or any- fall, so does most of our job creationbody else can stand back and say we capacity. Everybody knows that the%ant to do it in a leisurely pace. largest part of small business' expenseHealth care costs are going to 18 per- happens to be with payroll. If youcent unless we find some way of conhave a tax of 8 percent of payroll, youtaining the escalation of those costs. are disproportionately hitting small

Staving said all that and having also business where it hurts.indicated that I am pleased that the In reality, this pay-or-play approachmajority leader and my fellow col- is a mandate on the backs of Americanleagues on the other side are willing to workers. What they get is a loss ofdo something in this area. I am jobs. loss of flexibility, and loss ofpleased that they will file a bill that wages. Before we mandate new ex-will begin the debate and will begin penses on the backs of American work-discussion and will cause people to sit er. we better get health care costadown and consider these very delicate under control.alnd important, complex matters. I would like to spend a minute or

Having said all that, I would like to two on the national expenditure tar-say a few things about the bill Itself gets. The Mitchell plan sets "volun-that I have been led to believe Is to be tary spending targets" for health carefiled by my friends on the other side. spending. If spending exceeds a specd-

One thing that I have great difficul- fled amount, certain rate regulationsty with is employer mandates. As I un- are likely to go into place. This is ratederstand it. the Democrats' bill would regulation pure and simple. It is also ahave an employer mandate because if gutless Federal Government approachan employer did not provide health in- to rationing from the worst possiblesurance that employer would have to position-centrally, "on high."pay an 8 percent payroll tax into a Hospital costs in rate-regulatedpublic program. States have increased faster than the

The thing that bothers me about national average and much faster thanthat is there is too much of that atti- In nonregulated States. Medicare phy-tude in this body. The typical Demo- sician expenditure targets, the

S 7085RBRVS. have led to Increased costsbecause of volume phenomena. Allthis has led to more proposed regula-tion.

Rate regulation ignores the onlyproven way to control costa, and thatIs the market Rate regulation tends tofreeze inequities as they currentlyexist, and there are plenty of them.Current inequities include no access tohealth care for over 30 million of ourcitizens, while many of them overcon-sume. driving up costs. Who is to sayhow much we should spend on healthcare? That should depend on individ-ual freedom of choice as long asmarket Incentives are not distorted.Expenditure targets would ration carefrom on-high' while leaving horribledistortion in our centrally plannedhealth care system If that is what weopt to go for under this particularplan.

Why cannot my colleagues who aresponsoring this bill learn a lesson fromEastern Europe and the Soviet Union?Regulation does not work. Unencum-bering the market does work. And theapproach of those who are filing thisbill is once again more encumbrances.I wonder if my democratic colleagueshave ever wondered why no innova-tions in health care have emergedfrom socialist countries.

I have problems with mandated ben-efit packages. The Mitchell plan wouldeither define a set benefit Plan or havea Federal board do it. Thus my col-leagues who are sponsors of this billseem to accept that over 700 Statemandated benefits have contributed toour current problems. But they againinsist on mandating highly specificbenefit packages, which will be verycostly for employers and employees.They will have to pay for this whilegiving little or no flexibility to employ- "ees. What is the difference betweenState and Federal mandates?

Mandated benefits increase cost, de-crease insurer flexibility to customtailor insurance packages, and removeindividual freedom of choice. As anation of individuals, we thrive on ourdiversity. One-size-fits-all solutions areinappropriate for us; most important.they will not improve our collectivehealth, but they will increase ourcosts.

Let us let the market define benefitpackages which individuals, exercisingfree choice, can choose among. Let usgiven them the choice. Let us not havegovernment bureaucrats or ourselvesdefine those packages. The marketwill work to provide appropriate bene-fits at a minimum cost if we let it. I donot know one American who cannottell me what he or she needs when itcomes to health care.

Now, this pay-or-play system bothersme a great deal. As usual, those whosupport this type of approach cannotpay for the program, except on thebacks of employers and Americanworkers They will not constrain theoverconsumption which results from

Ju ne 5, 1991


87088 CONdressed In this proposal. The proposalWould provide grants to States to ex-Periment with alternatives to our tortsystem. While grants could be a smalluseful component to medical liabilityreform, simply throwing grant dollarsto a State will do little to encouragedevelopment of alternative disputeresolution systems and urge plaintiffsand defendants to use them. The costof medical liability-including premi.Urns and defensive medicine-accountsfor about $12 to $14 billion per year.- The proposal also includes an entire-

ly new public program. However. thereis a requirement that all individuals becovered. and the States will be re-quired to pay a significant share of thecost. Unless they significantly increaseFederal matching funds to States, acostly proposition, this could be a realproblem for the many States whichare already facing severe budget prob-lems

Now, it is easy to criticize a proposal.My response to critics is generally. Doyou have any better ideas? In this casethe answer is "yes," I think some of usdo.

As I mentioned earlier, in the Re-publican Health Care Task Force ourgoal has been to pull together a pro-posal that may not offer all things toall people, but that is reasonable andhas a chance of getting beyond therhetorical stage-in other words.policy over polities.

We are looking at ways to encourageemployers to provide health insurancecoverage to their employees. Thiscould be done by making insurancemore affordable to small businesses.We are discussing providing incentivesfor small businesses to form purchas-ing groups so they can gain marketstrength to negotiate more effectivelywith insurance companies.

We are looking at reforms in insur-ance market practices which make itdifficult for small employers to pro-vide coverage to their employees. Suchpractices include underwriting andrate setting policies, which excludehigh-risk individuals or groups.

We are discussing development of amodel benefits package, which couldbe used to allow employers to offerlower-coat benefit packages. In orderto do this, we would have to preemptState mandated benefits which cansignificantly increase the cost ofhealth care Insurance. These man-dates range from in-vitro fertilizationto treatment for hair loss.

If we are going to control costswithin our system, we must examinecurrent Federal expenditures onhealth care. When we think of healthcare entitlement programs, we thinkof Medicare and Medicaid. There is,however, another significant Federalhealth care entitlement program. I amreferring to the treatment of healthcare benefits under the Tax Code.This loss of revenue to the FederalTreasury amounts to almost $40 bil-lion annually, and is the third largest

GRESSIONAL RECORD - SENATE June 5, 1991Federal expenditure on health care, level. Only through experimentationbehind Medicare and Medicaid. such as this can we best determine

Under current law, all employer how to address most effectively, defi-contributions to an employee health ciencies in our health care system.insurance plan are excluded from the I will be the first to admit that theseemployee's taxable income. An individ- proposals will not solve all our prob-ual who does not receive employer- lems. I would like to go further. It isbased insurance not only will pay more easy to support providing health In-for insurance because he is purchasing surance coverage for all Americans. Itit outside of a group, but also will pay is easy to say that we should create afor it with after-tax dollars. Thus, we new public program for all uninsuredare subsidizing health care for a signif- individuals. It is easy to point toicant number of upper- and middle- Canada. West Germany, and Swedenincome individuals. Workers in busi- and say. "If they can do it, so can we."nesses that do not provide insurance. Simply put, we have neither the sup-usually low-wage workers In the serv- port nor the resources to enact suchice industry or seasonal workers. do poor The rsre s t tnot receive this subsidy. proposals. The harsh reality is that

nt reive etinidy. tepamntf there is no consensus on what radicalWe are examining the placement o reform should include, and how ita cap on the deductibility of very gen-erous employer provided plan, given should be paid for. The Democratsthat so many in our society have no can't agree, and neither can the Re-health care whatsoever, publicans. The business community

We are looking at expanding the de- cannot agree, nor can consumerductibility of health costs to those groups, nor can health care providers.who purchase insurance outside of an We can make significant stridesemployer group, as well as to those toward what may one day be a radicalwho are self-employed. Another change In our health care system-notmethod of expanding access to both by revolution, but by evolution.insurance and services is through the It is my hope that once the bill is in-use of credits for low-income families troduced, the Democrats will go backand small businesses which is a pro- to the drawing board with us and tryposal we are examining, to develop an approach to this critical

We are also considering changes problem that really can be enacted.which will help control the spiraling Clearly, nothing will pass that doescost of health care, such as preempt- not have the support of business, con-ing State laws which create obstacles servative Democrats. Republicans, andto managed care arrangements. An- the President.other issue we will address through Mr. SPECTER. Mr. President, Isignificant reform is medical liability, have been waiting on the floor to ad-Health care providers are paying out- dress the pending legislation, Senaterageous premiums, and are practicing bill 173. but before doing so. I will takedefensive medicine to ensure they just a moment to congratulate my dis-have the ability to defend against a tinguished colleague from Rhodenegligence suit. Island, Senator CHA, for his out-

We are also looking at increasing the standing work as chairman of the Re-availability of health care services for publican Task Force on Health Care. Ilow-income individuals who do not similarly compliment the Democratichave access to employer-based cover- Members who have offered healthage. I and a number of my Republican care legislation. It is an extraordlnari-colleagues have introduced legislation ly complex problem. As I traveled mywhich will increase access to critical State extensively. It is an issue I hearhealth care services for individual raised as much if not more than anyliving in medically underserved areas, other.All too often. we as policymakers With some $660 billion or 12 percentforget that Just giving someone a Med-icaid card, or private insurance for of the gross national product being althat matter, does not necessarily guar- located to health care. we still find

antee access to health care. millions of Americans not covered. It

In both rural and inner-city areas is an issue which has to be addressed.

there are shortages of qualified medi- We have to find a policy that we can

cal personnel. In addition, there are pay for.shortages of health professionals who As Senator CHAm noted, I have

will accept Medicaid patients. Commu. been working with him on the tasknity health centers are one solution to force, and it is an issue which mustour health care delivery problems. command considerable attention byThey provide cost-efficient high qual- the Congress of the United States andity primary and preventive care serv. by the administration.ices to the uninsured, as well as per-sons with Medicare. Medicaid. or Prl- e ECOMMUNICATONS EQUIP-vate coverage. We are looking at a sig- M RESEARCH AND MANU-nificant increase in the funding avail- FACTURINO COMPETITIONable to these centers.

We are also considering proposals to ACTgive States increased ability to enact The Senate continued with the con-statewide health care reforms. This sideration of the bill.could help us to determine what strat- Mr. SPECTER. Mr. President. as Iegies we should pursue on a Federal have noted. I have been on the floor


June 5, 1991 COI

for a good part of the afternoon tospeak about the pending legislation.

At the outset. I compliment the dis-tinguished Senator from South Caroli-na [Mr. HouNs] and the rankingRepublican on the Commerce Commit-tee. Senator DANIOROM, as well asother members of the committee. Inote the very substantial majority ofthe committee who are supporting thisbill. I note also the very cogent dis-senting views of Senator INOUy andthe cogent dissenting views of SenatorPaZSStr.a.

The issue has a very profoundimpact on the Nation and a specialimpact on Pennsylvania where thereare thousands, really tens of thou-sands employed by both Bell and byAT&T whose Jobs may be on the lineby this legislation.

I have visited the AT&T facilities inAllentown. Reading. and the Bell fa-cilities In Philadelphia and I have hadextensive discussions with the man-agement of both companies and alsowith th,? employees on this issue.

The Judiciary Committee on which Iserve had a cross-reference hearing,taking Jurisdiction from the Com-merce Committee, which has primaryjurisdiction, and I participated In thatlengthy hearing and participated Inthe questioning of both AT&T wit-nesses and Bell witnesses and asked aseries of questions as to what theeffect of this bill would be in view ofthe contradictory claims by both ofthe principal parties.

Both claimed that their positionswere pro-consumer; both claimed thattheir positions would increase competi-tiveness; both claimed that their posi-tions would have a significant Impacton the International trade deficit; bothclaimed that their positions wouldyield more jobs.

I then asked for statistical data,hard evidence, on those questions andcct very little In a concrete way toshed light and to make a factual deter-rmination as to which side was correct.

What I have seen. Mr. President, isthat the conclusions are speculative asto what the impact will be whetheryou maintain the current prohibitionOn tihe regional Bells for manufactur-ing equipment or not.

In the course of the past severaldays. 1 have had extensive meetingswth representatives on both sides ofthis legislation; yesterday, with repre-sentatives of the regional Bells. I alsomet with representatives of AT&T andtalked with them again today.

After considering the matter at verysubstantial length, my conclusion Isthat Congress should not disturb thejudgment of the U.S. District Courtfor the District of Columbia which hasbeen affirmed by the Court of Appealsfor the District of Columbia andwhere certiorari has been denied bythe Supreme Court of the UnitedStates which leaves, in effect, the dis-I rict court's opinion.

Mr. President. I have been asked byAT&T to offer an amendment which

IGRESSIONAL RECORD - SENATEmight provide a compromise, and Ihad discussed the substance of thatamendment with representatives ofthe regional Bells and had concludedthat it was not going to work out tosomething that would be agreed to.

I ultimately decided not to offer theamendment. A similar amendment wasoffered by Senator Iteouyi of Hawaii.but I decided not to because the com-plexities of the amendment led me tothe same conclusion I had about theunderlying bill, and. that is, that thestatus quo was represented by whatJudge Greene had to say was the mostpersuasive line of reasoning and incor.poration of evidence we had seen. .

Senator SiMoN, who is on the Judici-ary Committee, a committee on whichI serve, wrote to Judge Greene datedMay 21, 1991, and asked Judge Greenefor his views on Senate bill 173. JudgeGreene then replied by a letter datedMay 29, 1991.

Mr. President. I ask unanimous con-sent that Senator SrcoN's letter andJudge Greene's letter appear at theconclusion of my statement today sothat those who will review the Cox-CRESgSlOtAL RECORD will see the fullcontext of Judge Greene's views.

The PRESIDING OFFICEM. With-out objection, it Is so ordered.

(See exhibit 1).Mr. SPECTER. Mr. President, Judge

Greene starts by raising a question asto the restrictions of the canons ofethics, judicial ethics, and then statesthat he is going to not comment di-rectly on S. 173 but give his summaryof what he has decided In the casewhich amounts to about the samething. And, obviously, I am not goingto get involved in any discussion aboutthe propriety of what Judge Greenehas had to say. But It is on the record.I think it is worthy of our consider-ation today. Certainly, that is, at least,my view.

Judge Greene noted that his opinionwas affirmed by the D.C. Circuit Courtand that the Supreme Court of theUnited States let that decision standby denying certiorari which I shouldsay, parenthetically, does not meanthat the Supreme Court necessarilyagrees with the circuit court but thatthey decided not to disturb the views.

Judge Greene then takes up thequestion of cross-subsidication whichIs a very Important issue as to whetherIf you allow Bell to manufactureequipment that is going to have thepractical effect of having Bell allocatesome cost to the ratepayers on tele.phone service which really ought to befor the equipment produced. That isnot done when you have AT&T orother manufacturers make the equip-ment and sell It to Bell and then Bellcharges only for the service which isrendered.

This is what Judge Greene had tosay about this subject on page 2 of hisletter to Senator Simom, He noted thatIn the prior practice before there wasa breakup of AT&T that:

S7089* " " the companies subsidized the prices

of equipment with revenues from their reg-ulated monopoly services. The court furtherconcluded that. largely because of size.power, and complexity of the Bell System.regulation by federal and state bodies hadconsistently been. and would is the futurebe, ineffective.

Judge Greene then noted:- . these Regional Companies hav the

same abUities and incentives for antieom-petitive conduct that they Bad possessedprior to the break-up.

Judge Greene then took up the sub-ject of a relationship of the regionalcompany's entry into the manufactur-ing market and the antitrust laws anddealt with the question of self-dealig.which Is a very Important question.and said. in part. at page 3:

... If the manufacturing restricltion wereremoved. "each of the Regional Companieswould satisfy all or nearly an of Its equip-ment needs from Its own manufacturing af-ntliate,"

He then noted in a footnote thecourt of appeals' agreement with hisopinion on this subject with the fol-lowing language which appears atpage 3 of Judge Greene's letter to Sen-ator Sxmo:

When the 1987 opinion reached the ourtof appeals. that tribunal agreed that -thepossibility of self-dealing bias in the tele-communicationas equipment markets posesdangers to competition that do not exist Inthe other markets-He goes on to say:

If combined with crosa-aubsidlsation, wouldappear to allow the [Regional Companies].in effect, to raie prices (and therefore exer-cise a form of market power) in the fore-closed sectors of the equipment market bydisguising inflated equipment pricem as costsin the local exchange markets * ' *.

The court of appeals goes on to com-ment that there is nowhere an expla-nation "why any significant amount ofcross-subsidization that, in practicalterms, enables"--again referring to theregional companles-"to charge higherprices for the equipment it produceswould not be akin to an exercise ofmarket power that would Impede com-petition in the telecommunicationsmarket."

I am very concerned, Mr. Predent,after noting Judge Greene's commentsabout this cross-gubsidy and the in-creased prices to the consumer and thefinding which is upheld by the courtof appeals in a context where there ismuch greater analysis and dellibera-tion than is possible, I think, in ourlegislative context, at least possible forthis Senator. Because of the length ofthe letter. I am not going to read someportions I had intended to read. Mr.President, but I would like to focus onpage 5 of Judge Greene's letter to Sen-ator SioO where under the categoryof "Effect on Competition." JudgeGreene points out thauRegarding the practical effect of a remov-al of the manufacturing restriction. h

court concluded that such a removal wouldbe counterproductive for a "fluorishing.broad-based. Innovative Industry would becut back to become one dominated by a


S 7090small number of muscle-boundgiants . "

The Department of Justice. while support-Ing the Regional Companies' request forrelief, acknowledged that "'removal of therestriction will be followed by the displace-ment of many of the competitors. Poetulat-Ing that Increasing concentration in theequipment markets is inevitable."

Judge Greene went on to say:The court characterized this Justice De-

partment review as contemplating with "re-makable equanimity for an antitrust en-foreement agency, the ready destruction ofmany high-quallty firms providing high-Quality goods that have emerged since dives-titure. and that are performing importantservice to the economy."

The basic thrust by the proponentsof S. 173 has been that competitionwill release innovation. But at leastthe. findings of Judge Greene, af-firmed by the court of appeals, areprecisely to the contrary.

Judge Greene then took up the im-Portant subject of "Effect On Innova-tion" and made the following observa-tions:

With respect to the question of innovationof the telecommunications equipment mar-kets, the court noted that since the breakupof the Bell System I - - there has been aflowering of research, development, Innovs-tion. introduction of new products, andquality assurance; new firms have enteredthe market; prices of equipment have de-dined dramatically • and competitionflourishes in a market that had seen rela-Uvely little of It before. The equipmentmarket now consists of six or eight verylarge firma. 100 to 200 medium-aized firms.and hundreds of still smaller, vigorous, andinventive firms

U the restriction were rem~oved, therewould be'a serious risk of return to condi-tions of antiompetutive activity, concentra-tion of the telecommunications equipmentmarket in few hands, monopolistic pricing,

and a relatively sluggish pace of innovation.Mr. President, I find that conclusion

very strong and thus I think this billwould be very anticompetitive if JudgeGreene is correct. Again, his analysisis much more extensive. He has sat onthis cae since 1979. Again, his conclu-sions have been affirmed by the circuitcourt of appeals.

Very briefly. Mr. President, becauseof the passage of time-and other col.leagues are on the floor-under theheading "Foreign Domination of theIndustry," Judge Greene wrote:

In that respect the court cited a report ofthe National Telecommunications and In.formation Administration- of the Depart-ment of Commerce. which noted that "thetost plausible scenario in at least one tele-communications market is that. in the eventof a removal of the decree restriction onIminufacturin, the Regional CompaniesWill Join forces with mammoth manufactur.ing empires, most likely foreign, and thatthis will Pase a substantial risk of destru-tion'of the UA. central office equipmentmanufturing industry."

Mr. President, It may be that conclu-ston would be tempered by the "BuyAmerican" provisions, but the innova-tive construction or development ofconglomerations or Joint ventures issomething that cannot be anticipatedby any legislation in its fullest extent.

CONGRESSIONAL RECORD - SENATEJudge Greene concluded by saying:In summary, it was on the basis of the

considerations discussed above and at great-er length in the 1987 opinion itself that thecourt concluded that removal of the manu-facturing restriction could be expected to befollowed by (1) a recurrence of the antlcom-petitive conduct of the local OperatingCompanies operating under the aegis of theRegional Companies: (2) the displacementof most independent manufacturers of tele-communications equipment: (3) a markedreduction in competition in the market andhence a sharp reversal of recent trendswhich have witnessed decreases in price: (4)a slowdown in product Innovation; and (5)domination of the domestic market by largeforeign supplies.

In the absence, Mr. President, ofcountervailing evidence and a Judg-ment to the contrary, my own view isthat significant weight ought to be at-tached to Judge Greene's opinion.

What we have in essence here is abreakup of AT&T and the Bell Sys-tems, and the Judge made a determina-tion about what was fair as betweenthe Bell Cos. and AT&T and the courtmade a determination about whatwould produce competition, whatwould be helpful to the consumers,and what would be fair and Just underthe antitrust laws. His conclusionswere taken on appeal and were af-firmed by the appellate court and letstand by the Supreme Court of theUnited States.

In my Judgment, that is the greatestweight to be followed on the legisla-tive Judgment here today.

Mr. President, I had passed on theseconcerns to Bell Atlantic, which is aconstituent of mine in Pennsylvania.They get my checks for telephone billsboth in Pennsylvania and the Districtof Columbia. As a matter of 'airness. Iwant to make a part of the RECORD theresponse by Mr. Robert A. Levetown,vice chairman of the Bell Atlantic. Imet with him yesterday, as well as Mr.Raymond Smith, the president of theBell Atlantic. whose office Is In Phila-delphia.

Mr. Levetown makes the Point in aletter and in certain extracts fromJudge Greene's speeches that JudgeGreene himself acknowledges it is amatter for the Congress. Mr. Levetownpoints out:

Yesterday you raised the issue of the ap-propriateness of Congress intervenins toalter the rules of the telecommunicationsindustry that are now controlled by a Judi-cial decree.

Mr. President, I ask unanimous con-sent that Mr. Levetown's full letter bemade a part of the RECORD followingmy presentation.


(See exhibit 2.)Mr. SPECTER. It is not precisely ac-

curate that I raised a question of ap-propriateness of Congress to inter-vene. Congress has full authority tomake a change in what the court hasdone here. The laws are the laws ofthe Congress. We have the full au-thority to modify what Judge Greenehas done. We have the full authority

June 5. 1.'1

to modify any statute as long as it con-forms to the Constitution of theUnited States. We can repeal the anti-trust laws if we choose to do so.

My point is on the basis of therecord I see. considering the exhaus-live and able work of the CommerceCommittee. that the bulk of the evi-dence, the weight of the evidence. andthe weight of the Judgment I thinklies with what Judge Greene has con-cluded and the appellate courts haveupheld.

Mr. President, I ask unanimous con-sent that an extract of Judge Greene'sspeech at the Brookings Institution,dated December 4, 1985. an extract ofJudge Green's speech of Hastings Col-lege of Law, dated April 17, 1987, andan extract of Judge Green's speech toCPA dated October 23, 1986. regardingthe so-called Dole bill. all be Includedin the RECORD at the conclusion of mypresentation.


(See exhibit 3.1Mr. SPECTER. Mr. President, with-

out reading them, the essence of whatJudge Greene had to say is that it isup to the Congress. Judge Greene hasexercised the authority which he h-asin the absence of any legislation.

When I take a look at this entirerecord, it is my view the Congressshould not disturb the conclusionswhich the courts have made consider-tig the underlying evidentiary base.the facts, and considering the conclu-sions.

This Is obviously not an easy matter.I know that in expressing my opposi-tion to Senate bill 173 there will bemany disappointed constituents. Rep.resenting a State like Pennsylvania,Mr. President, if you take up questloitslike abortion, for example, there arc 6million of my 12 million constituentslined up on one side, and 6 million onthe other. The vote immediatelymakes 6 million enemies, and 8 millionwho agree with my position. Custom.arily, they say, well what alternativedoes the Senator have? He just didwhat was appropriate.

I do not have 6 million constituentson each side of this issue. But thereare perhaps as many as 22,000 bell em-ployees on one side. and as many as15,000 AT&T employees on the otherside, and many others. It is not aneasy matter. I criticized the desputesmy two sons had. Occasionally. youhave to get involved.

Obviously. this matter is turning upfor a vote. But as I have outlined. Ihave considered It at great length, vis-ited the facilities from both sides, andtalked to the officials right up untilearly this afternoon.

As I look at this record in very sub-stantial detail I conclude that thedecree ought not be altered; that theBell Co. have adequate recourse to goback to Judge Greene. that the prohi.bition against manufacturing will enounder his decree at a time when there


June 5, 1991 CONGRESSIONAL RECORD - SENATE

is competitit with the Bell OperatingSystems; and that that is the prefers-bit course.

I thank the Chair. I yield the floor.Exmire I

U.S. SEN.COMMIrrirs ON TIES JUDICIARY.

Washington, DC. May 21. 1991.Judge HAROLD H. Ottgrns.U.S. Courthouse, Wasisninn. DC

DEAN JUc 0azxwr As I am Sure youknow, Congress is now considering legisla-tion, S. 173, to remove the manufacturingrestrictions on the Regional Bell OperatingCompanies. Today the Antitrust. Monopo-lies and Business Rights Subcommittee onwhich I serve held a hearing on this and thefull Senate may consider this legislationshortly. Olven your obvious expertise in thissubject. I would very much appreciateknowing your views on 5. 173. 1 have en.closed a copy of the bill and the Committeereport for your convenience. I appreciatey,'ur assistance on this matter.

My best wishesCordially.

PAtL SIMOV.U.4 Senator.

U.S. DISTRIT COURTroe tim DItaigicT O COLOBIA.

Washington, DC. Afay 29. 1991.Hon. PAUL SIMON.United States Senate Committee on the Ju.

diciary. Washinoton, DC.DiAR SENATOR SIMON. Thank you for your

letter of May 31. 1991. which requests myviews on S. 173, a bill to remove the manu-facturing restrictions on the Regional BellCompanies. While it is not at all clear thatthe Canons of Judicial Ethics prohibit mefrom expressing my opinion on the desir-ability of the enactment of 5. 173, 1 haveconcluded that, in view of the possibillly offurther litigation on the manufacturing re-striction parallelling in some respects theis.sues presently before the United StatesSenate. commenting on the bill could createthe appearance of Impropriety. In order toavoid any question In that regard. I have de-cided not to comment directly on S. 173. 1have also concluded, however, that there isno reason why. in response to a requestfrom a member of the Antitrust. Monopo-lies and Business Rights Subcommittee 01the Committee on the Judiciary of theUnited States Senate. I could not render as.v.tance to the Subcommittee by callingYour attention to pertinent parts of pub-lIthed opinions in my court on the subjectunder the Subcommittee's consideration. Iam accordingly doing so In this letter.

On September 10. 1987. 1 Issued an opin.Ion In the AT&T Antitrust case which dealsin significant part with the restriction Invoted on the Regional Companies with rebPect to the manufacture of telecommunica,lions products and customer premises equipment. That opinion is reported as UnitecStates v. Western Electric Co., 6-3 F. Supp525 (D.O.C. 1987). and insofar as the manulacturing restriction Is concerned, the rullegs of my court were affirsmed by the Courof Appeals for the District of Columbia Circult on April 3. 1990. United States v. IWtvr"s Electric CO. 900 F.2d 283 (D.C. CirI P90). certiorari denied. -- U.S. - 1990)For sour convenience. I am pleased here

with to summarize same of the principapoints of the 1987 ruling on the manufacturing restriction, under live headings. a.follows: (I) history and background of th,adoption of the restriction; (2) relatlonshiibetween the antitrust laws and RegionsCompany entry into the manufacturinmarket; (3) effect of such an entry upon thtilccommunications manufacturing indus

try: (41 effect of such as entry upon productInnovation and the availability to the publicof new products at reasonable prices and (5)effect of the removal of the restriction uponthe domestic manufacturing Industry.

1. HISTORY AXID BACKGROUNDThe restriction on manufacturing was in-

c rporated In the consent decree whichended the AT&T lawsuit on the basis of evi-d-,nce adduced In the course of an eleven-month trial in this court indicating that theBell System had "Improperly monopolizedthe market for telecommunications equip-ment, in that Its local Operating Companiespurchased such equipment primarily fromWestern Electric Company. the System'smanufacturing affiliate, and 'engaged insystematic efforts to disadvantage outsidesupplierr.' 573 F. Supp. at 552.

The court found upon consideration ofthe evidence that the local Operating Com-ponies, which accounted for over eighty per.cent of the nation's central office switchingand transmission equipment purchases, hadengaged in three general types of Lnticom-petitive conduct: first, the companies puT-chased Western Electric equipment evenwhen these products were more expensiveor of lesser quality than alternative goodsavailable from independent vendors. second.the companies discriminated in the dissmi-nation of information and design by grant-ing Western Electric premature and otherwise preferential access to technical data.compatibility standards,- and other neces-sary information; and third, the companiessubsidized the prices of equipment with rev-enues from their regulated monopoly serv-Ices. The court further concluded that.largely because of the size, power, and com-plexity of the Bell System, regulation byfederal and state bodies had consistentlybeen. and would in the future be, ineffec-tive. 673 F. Supp. at 530-31. 554. 569-71. As aresult of divestiture, control over thetwenty-two local Operating Companiestransferred to the seven Regional Compa-nies: and these Regional Companies havethe same abilities and incentives for anti-competitive conduct that -they had pos-sessed prior to the break-up.

It was basically for these reasons that thecourt determined in 1982 that the Depart-ment of Justice's proposal for the adoptionof the manufacturing restriction on the Re-gions Companies was Justified under theantitrust laws and was in the public interest.The restriction was accordingly included inthe court's approval of the consent decreest bmitted by the parties to the litigation.2. RLLATIONSHIP OF A REGIONAL COWpARTENTRY INTO THS MANUFACTURING MARKETAND THE ANTITRUST LAWSIn 1987. three years after the manufactur-

Ing restriction had become effective, the te.gional Companies. with the support of theDepartment of Justice, requested that therestriction be removed. However, in its opin.

I Ion issued that year, the court concluded,following a detailed examination of thesue, that there was no basis for such a remoral, and that. to the contrary, under the

I antitrust laws and the court decree, the re,* striction had to be maintained. Even the De* partment of Justice acknowledged, and thi• court found, that if the manufacturing re

slriction were removed. "each of the Regional Companies would satisfy all or nearll

I all of its equipment needs from its own manufacturing affiliate.- 673 F. Supp. at 556.'

When the 1007 opinlon reached the Court oAppes. that tribunal arteed that "the poalbit3of self-deailn, bhsa in the telecofmunlestIome evuipment markets poses dangers to eompentirthat do not exist In the other markets the IRegion

- a Companles} seek to enter ... Iforecledure am

S 7091The court also found on the basis of the evi-dence that other.serious antitrust concernswould be raised by an entry of the RegionalCompanies. Into the equipment marke",-both as aresult of leveraging of the reguilt-ed monopolies into a related but uregul .ed market, and because of the unquestion,-.able dominance of the Regions] Companisin their particular regions 673 P. Supp. at556-57.

The court further concluded, based on evi-dence from a number of expert, Includingexperts proffered by the Department. OfJustice. that the Regional Companies re--telned the same "bottlenecks" they had con-trolled when they were still part of the BellSystem. More specifically, the evldemc6demonstrated that, to reach the ulti"atetelephone sub cribers. over ninety-nine per-cent of all telephone traffic had to psmthrough the Regional Companies' localSwitches and circuits at some point in Itsjourney, and that possession of these Pres-sure points gave the companies an unsur-passed opportunity for anticompetitiveaction. Here, too, the Department of Justice.conceded that "only one-tenth of one per-cent of (long distance) traffic volume, gen-erated by one customer out of one million, iscarried through non-Regional Company fa-clties to reach a (long distance] carrier

l - * (and that] only twenty-four customersIn the United States * " I managed to deliv-er their Interexchange traffic directly totheir interexchange carriers, bypassing theRegional Compandes." 673 F. Supp. at 540.

Based upon this factual background, the1981 opinion noted that the local bottleneckmonopolies retained by the Regional Com-panies following the AT&T divestiture werea central feature of their domination of themarket for telecommunicatlons productsand customer premises equipment, and itfurther concluded that the incentive andability to act anticompetitvely had not beensignificantly altered by the division of theBell System Into seven Regional Companies.by Federal Communications Commissionregulation, or by any other factor. 673 F.SupP. at 552.

On the question of the efficacy of FCCregulation to prevent anticompetitive activi-ties by the Regional Companles, the courtcited the opinions of a number of experts.including the chiefs of the FCC's ownCommon Carrier Bureau, who reported onthe futility of such regulation then or in thefuture, in view of the size and complexity ofthe Regional Companies and their ability tocombat regulatory efforts with funds ex-tracted from the ratepayers. 673 F. Supp. at531.

.. asr ON COsUPsrtToNRegarding the practical effect of a remov-

al of the manufacturing restriction, thee court concluded that such a removal wouldbe counterproductive, for a "flourishing.

broad-based. Innovative industry would becut back to become one dominated by asmall number of muscle-bound giants" * '."The Department of Justice. while support.

these esmpanies of a large porton of the eulp-messt asarkeLI. if combined with msa idtal-ima. would appear to allow the iR0lfonal COMP-iels. in efect, to er prices (and thtee0fo exer-

else form Of market p.owe) in the foreclosed me." toe of the equlpment market by dissuisiag lslatd

equilpsnt priees a ats In the local exchagemarket ... tThe Defartmaet of Junior sad theRegional Complnies] nowhere explain ... why

I y significant amont of osrsm-tUhldattlns that,r in practical terms, nables the tResolsal Comtps-I esa] to charge higher pries for the eqsulmerst Itk prodoes would not be skin to sn exercise of- marcet power that woald impede cOmpetition Inr the telecsasiocations market." BOB P.2d S 303.


S7092 CONM th Region Companies, request for

t. *cmOleded that "removal of theretrction wil be followed by the displace-aent of many of the competitors, postulat-ins teaM Increasing concentration In theei4Pipmqt~ marketis Iilnevitable' 673 F.Suii, at 'i. The court characterized thisJusge Department view as contemplatingwiMl 'remarkae equanimity for an anti-trod 60os en t agency. the ready de.A•trauctls of many hih-quality firms provtd-tn li quality good that have emergedstaei dkoture and that are performingfipoetaft seevise to the economy." 673 P.

4. -, ON EINOVATION

With respect to the question of innovationIn the telecommunications equipment mar-kets. the court noted that since the break.up ot the Bell system-

- * *there has been a flowering of re-search, development, Innovation. introduc.tion of w product, and quality assurance;new firms have entered the market, Pricesof equipment have declined dramatically** andcompetition flourishes in a marketthat had aeon relatively little of It before.The equipment market now consists of sixOr efghl very ulge firma, one to two hun-dred medium4sid firma, and hundreds ofstill smialler, vigorous, and inventivefirm" * .

"If the restriction were removed, therewould be a serou risk of return to condi-tions of anticompetitive activity, concentra-tion of the telmesmuniclUons equipmentmarket In few hands monopolistic pricing.and a relatively sluggish Pace of Innovation.Acordlair to a distinguished outside observ-er, the Regional Companies would thenhem entral vigorous players in theequipment market, buying many of theamaNfer Mflrml. Integrating services andeqofpliso Baim and developing into sevensmaller versions of what once wus AT&T."673 F. Hopp. at 560 (footnotes omitted).

The eourt went on to point out wRithregard to Inovation more specIftcally ofdir et we to consumers, that, while prior tothe advent and preure of competition inthe telecommunicslons manufacturingmarkets, i 1964 relatively little Innovationof ae to consumers had emerged. This wasso notwftilustandla the presence within theBell Sytem of the excellent and prestigiousBell laboratore research arm. However.subsequent to the emergence of competitionin to"

-* *there twere in 19871 on the marketat reasonable prices such by now common.plae features as residential telephones thatar able to memorise dozens or hundreds ofdifferent phone numbers; telephones thatrepeat the last number cklled until It is notlonger busy; cellular phones for buslnesand emergency use, cordlessphonex Instru-meat that can be Inst-ucted by voice (eg.in an automoblle) to cal a certain Individ-uL ofice, or number. and many others,

"Pral with the development of equip-ment that provides greater acessbility tothe telephone user, devices are being pro.duced and marketed that, in a sense, oper-ate in the opposite direction: some of themdispl the callers number before the re-cetcu Ini been lifted. others provide a dia-.tinife str~n when a call to received from anumber weviously designated as worthy ofprIMt coosdderatio siM others sutomat-cAllY b1ock cals from persons with whomthe Phones owner does not wish t0 speak.For the fMrst time since the invention of thetelephone, these delies ae rebunuin con-trol to the htrument's owner from everysalesman, unwelcome relative, or evencrackpot who ia decide to call at any hourof the day or night.

GRESSIONAL RECORD - SEN).'It is surely not a coincidence that these

features, and many more. have becomeavailable since the Bell monopoly was endedby divestiture and competition began toreign In the telecommunications market-place." 673 F. Supp. at 601 tL330.

S. maOseN oMrIATION Or TIER INDUSTRYThe court also considered and discussed

the effect of a removal of the manufactur.Ing restriction on the International compet-tiveness of the American telecommunica-tons industry and the employment opportu-nites of American worker. In that respect.the court cited a report of the NationalTelecommunications and Information Ad-ministration of the Department of Com-merce (NTIA), which noted that "the mostplausible scenario in at least one telecom-munications market is that. in the event ofa removal of the decree restriction on maunu-factoring, the Regional Companies will Joinforces with mammoth manufacturtng em-pires, most likely foreign, and that this willpose a substantial risk of destruction of theUnited States central office equipment man-ufacturing industry." NTIA Trade Report at125-26. 673 P. Supp. at 561-62 (footnotesomitted). And the court continued on thistopi

"These predictions are plausible. (Asurvey by the government's expert] hasfound that affiliations between centraloffice switch manufacturers and telephoneservice companies have tended to developaround the ,world wherever structural re-straints are absent . . . This is not surprs-Ing. Manufacturers have strong incentivesto seek market shamre "guarantees" in theform of an affiliation with lute exchangeservice providers such, as the Regional Com-palies; and these compandes, in turn are at-iraeted by the acquisition of expertise and.more importantiy, the mnlnihation of riskembodied in partnerships with huge manu-facturers with ample capital.

"Because of their size. capital, and assuredsource of income from the ratepayer-sup-ported telephone affiliates of the RegionalCompanies, these international giants willhave the market power to adjust pricealmost at will to achieve market share, tothe Inevitable detriment of Independent do-mestic producers. In short, the effect of theJustice Department's scenario is likely to bethe displacement of small, efficient Ameri.can firms by a few huge syndicates com-posed of foreign company and RegionalCompany components whose survival anddomination in this environment will havebeen achieved by factors unrelated to effl.cievcy or quality of performance." 613 F.Hupp. at 562.

In summary, It was on the basis of theconsiderations discussed above and at great-er length in the 1981 opinion Itself (a copyof which is attached hereto) that the courtconcluded that removal of the manufactur-Ing retriction could be expected to be fol-lowed by (1) a recurrence of the anticom.petitive conduct of the local OperatingCompanies operating under the aegis of theRegional Companies: (2) the displacementof most independent manufacturers of tele-communications equipment; (3) a markedreduction In competition In the market andhence a sharp reversa of recent trendswhich have witnessed decreases in price; (4)a slowdown in product innovation; and (5)domilaUon of the domestic market by largeforeign suoplers. In view of these conclu-slons the court declared that no JustifIra-tion existed for removing the antitrust de-cree's restriction on manufacturing.

Fnally, I wish to advise you that no evi-dence has come to my attention in the lastthree and one-half year that would cstdoubt on the findings and conclusions

LTE June 5. 1991stated in the September 10. 1981 opinion orcall for their repudiation.

I hope that this summary has been helo-ful to you and the Subcommittee.

Very truly yours.oAOLD H. GREENE.

ExHarT 2BEtL ATLAimc :or.,

Arlington, VA. June 5. 199f.Hon. AJLN Brecys,Hart Senate Office Bulifdn.WaohingtMo DC.

DEAN Searos SercTn: yesterday, youraised the Issue of the appropriateness ofCongress interrenting to alter the rules forthe telecommunications Industry that arenow controlled by a Judicial decree.

Congress of course. often changes the re-suits reached by judicisl decision. The cur-rent civii rights legislation is an example ofa current effort in that direction.

But. more to the point. Judge Greenehimself has often said that he does notrelish the central role he has come to playin the telecommunications industry-thatWas a role for Congress-but Congress re-fused to act!

In short. Judge Greene has cion.-d thatthe antitrust case was thrust up.n him byCongressional inaction and that, he contin.ues to have to umpire this industry becauseCongress cannot reach a consensus onpolicy.

Excerpts to this effect from a few ofJudge Greene's speeches are attached.

Thank you, by the way. for making your-self available yesterday for the discussion othis Important matter with Ray Smith andme.

With best regards.Boa LvrrowNi.

Vice Chairman.

EXHraIT 3

EXCERPT or Syeu:lsGRcXIS XPzs, BROOKINs INSTITUTION.

sOCrs1U 4. lossIn addition to their legitimate cole In con-

sUtutiomal adjudicatlon. the principal obli-gation of the federal courts Is to Interpretand enforee statutes enacted by the Con-gres The Congress sometimes enacts lawswhich are less than precise, and on occasionIt falls to address difficult and controversialproblems, particularly these which are atthe margins of public lais. preferring toleave them to later adjudication by thecourts. And finally. of course. poliltial cur-rents and reoss-currents sometimes make Itimpossible for the Congress to act.

The AT&T case may be an example ofsuch a situation. How did It come about. It isoften asked, that a single member of the Ju-dicla y has come to wield so great an Influ-ence on telecommunltlions. a basic Ament-can industry? Wouldn't it have been moreconsistent With American constitutional andpolitical traditions if the basic policy dcei-slm had been made by the Congress?

I agree with these critics. As a matter ofconstitutional theory, an undertaking asdriven by policy as the restructuring of thenation's teleommunications industry wouldmost appropriately have been directed bythe political branches, lot the courts. Yetwhen we look at the problem closely we findthat It Is these branches which, by action orinaction, have thrust the courts into theirpresent role.

GREENE SSEH. hAgr"INcs CoLLEGe or LAW,APRIL 17. 198

Second. there has been a treat deal ofcomment, In the media ond otherwise. aboutthe incongruity of a restructuring of the na.


CONGRESSIONAL RECORD - SENATEtLinn's tailcon unlcatior industry by thedecree of a single federal Judge. and the sus.gestion is quite often made that so impor.tint a decision should have been reserved tothe Congress. In theory, these critics arecertainly correct national policy is most ap-propriately made by the elected representa-tive of the people. But the Congress. In spiteof much debate and committee consider-ation, was unable to agree on what shouldbe done either about AT&T or about the in-dustry of which it is a part

That failure of course does not vest acourt with Jurisdiction where none other.wise exista. But the fact Is that a lawsuit.brought by the Attorney General on behalfof the United States, wa already pending Incourt under a law Of unimpeachable validityenacted by the Congress and never repealed.Indeed. considerable pressures were broughtto bear on the Department of Justice to dIls-miss the suit, and President Reagan himselfpresided over at least one conference wherethis course of action was discussed. But tono avail; the action was resolutely pursuedby the government's lawyers.sents" gree To ClPA' oc'roma s. ts9, R-

GASSINo THf "DOLE BL"U. WHICH WOULDUoVe sAIuSaZ3M JURISDICION OVR THEMFJ TO TIOS FCCAa you know. congressional committees

have considered legislative proposas totransfer Jurisdictlon over the Interpretationsld enforcement of the AT&T decree fromthe courts to the Pederal CommunicationsCommission. In a democratic society, it issilte properly the elected legislature thattAys down policy; telecommunications policyis no exception; and congressional con.sider.slin of this subject is therefore to bewarmiy welcomed. During the period whenbills to carry out transfer proposals werepending In Congress, I did not comment atall on this subject, Obviously I will still notspeak In any way to the legality of such pro-pos. nor would I even now comment onthe details of the bills that were pending Inthe last Congress. However. having becomesuimewhat acquainted with telecommunica.tlons during the last few years. I want toshare with yOU my views on the general sub-Ject of a transfer of Jurdlctlomv

My feelings on such a transfer are mixed.Considering only my own interests and con-venience. I would greatly welcome being re-lieved of this work. The task of interpretingand enforcing the decree usually does notrequire a great deal of novel or complicatedlegal reasoning and writing. and much of Itis technical without being intellectuallychallenging.

Mr. KOHL addressed the Chair.The PRESIDING OFFICER. The

Senator from Wisconsin is recognized.

Mr. KOHL Mr. President. today weare considering an issue of great Im-portance to the telecommunicationsIndustry-allowing the RBOC's tomanufacture equipment. But I wouldlike to discuss for a moment anothertelecommunlcatlons issue, Caller ID.

As some of you may know, Caller IDIS the technology that allows a tele-phone call recipient to see the phonenumber of an Incoming call on a smalldisplay screen attached to the tele-plhone. Caller ID is spreading rapidly-I is being offered In Maryland. Virgin-Ia. and the District of Columbia, andthere are plans to expand It to manymore States.

In my mind Caller ID is a welcomedevelopment. it can help us screen our

calls and ultimately enhance our pri-vacy.

But In what form should it spread?Should there be forced Caller ID, inwhich a phone company requires ourphone numbers to be displayed everytime we make a call-even if we havean unlisted number? Or should therebe voluntary Caller ID, in which con.sumers decide when It's appropriate togive out their numbers? Since a call re-cipient can easily obtain the caller'saddress with his or her phone number.mandatory disclosure means revealingwhere you live-whether or not youwant someone else to know.

Forced Caller ID violates our funda-mental right to privacy. Do we nothave the right to call a crisis hotlineor a Senator's office, or even the IRiSto ask for help without saying who we'are? And why should the phone com-pany compel us to identify ourselveswhen we call a business for informa-tion? Such disclosure does not evenseem logical: After all, if a strangercame up to you on the street andasked you for your home phonenumber, would you give It to him? Ofcourse not.

There are even times when forcedCaller ID is dangerous. Undercover of-ficers sometimes call drug dealersfrom precincts to arrange buys. If atarget recognizes where the call camefrom, It could scuttle the bust-or,worse, result in the death of an agent.Battered women often taken refugewith friends but call home to check onthings. They should not be compelledto tell their abusing husbands wherethey are staying.

We know of other dangerous situa-tions, but the point 14 this: Phone com-panies cannot determine when it issafe to reveal our numbers and ad-dresses. There are Just too many varia-bles the phone company cannot fore-see.

The answer Is to allow consumers toretain their freedom of choice. Lettitem dial a few digits on the phonewhen they want to make private calls.With this per-call blocking option,people can display their numberswhen calling friends and firaily-andthey can keep their numbers confiden-tial when they need to do so.

A growing number of phone compa-nies have recognized the importanceof protecting a caller's right to priva-cy. But I introduced the TelephonePrivacy Act of 1991 in order to ensurethat all telephone customers retainthis crucial freedom of choice.

My bill Is simple, effective, andstraightforward. It would requirephone companies that offer Caller IDto give callers the option of blockingthe display of their telephone num-bers or any other individually identify-ing information-without charge. Inthis way, the bill would balance theprivacy Interests of both callers andrecipients.

The proposal makes sense for sever-al important reasons. First, the newtechnologies that are available with

S7093Caller ID give us the ability to stopharassing phone callers without in anyway undermining the privacy, .of law-abiding citizens: Callers can use CallTrace, Call Return, and Call Block tofoil their assailants, For example, CallTrace lets the victim of a harassingphone call automatically send thenumber of the harasser to the authori-ties after hanging up-merely by dial-ing a three-digit code.

Though a few telephone companieswould like to promote Caller ID as away of reducing obscene phone calls,this approach is ultimately deceptive.Simply put, these new technologieswork even if a caller uses blocking. So'it turns out that we have the ablity toprotect victims and privacy at thesame time.

Second. before we go any furtherwith Caller ID, we have got to makesure that it is legal. Last summer, aPennsylvania court ruled that CallerID violates that State's constitutionand its wiretap statute-which isalmost identical to the Federal ver-sion. My proposal would resolve theambiguities in our Federal laws,ensure the legality of Caller ID, andestablish a uniform national privacypolicy in this area.

There is one more reason to passthis legislation-blocking alreadyexists for the wealthy. A new 900 serv-iceallows people to make private callsfor a few dollars a minute. That iswrong. Blocking is a matter of equityas well as privacy: I believe phonecompanies should make it available toeveryone-rich and poor.

The widespread support for this pro-posal underscores its commonsense ap-proach. All around the country tele-phone companies are opting for block-ing. or State PUC's are requiring It.And here in Washington a consensusis developing that Caller ID withblocking strikes the proper balance be-tween telephone callers and recipientsalike.

Mr. President, I had originally con-sidered offering this legislation as anamendment to S. 173. However, sincemy measure will soon be marked up bythe Judiciary Committee, I have decid-ed to allow it to come to the floor inthe normal course of business. Whenthat happens. I hope my colleagues.will join consumer advocates privacyexperts, and law enforcement groupsin enacting this legislation and makingprivacy protection a reality for allAmericans.

Thank you. Mr. President.The PRESIDING OFFICER. Who

seeks recognition?Mr. HOLLINGS. Mr. President, I

suggest the absence of a quorum.The PRESIDING OFFICER. The


call the roll.Mr. GRAMM. Mr. President, I ask


June 5, 1991


S7094 CONGRESSIONAL RECORD - SENATEThe PREIDING OFFICER (Mr.

Caoagn. Without objection, it is so or-duze&,

ARAZINIET 50. s4(Pnzom To foster economic growth and

sMrengthen American international com-atlulvenss by striking the domestic con-tent requirement)Mr. GRAbM. Mr. President. I send

an amendment to the desk and ask forid Immediate consideration.

The PRESIDINO OFFICER. Theclerk wll report.

The assistant legislative clerk reads follows:The Senator from Texas (Mr. OaLuml

proposes an amendment numbered 290.Mr. GRAMM. Mr. President. I ask

unanimous consent that the reading ofthe amendment be dispensed with,

The PP1DBINO OFFICER. With-out objection. it Is so ordered.

The amendment is as follows:0n pg 4. beginning with line 10. strike

out al through line 17 on page? .Mr. GRAMM. Mr. President. I am

willing to agree to a time limit. I havediscussed f4 briefly with the distin.awished chairman of the committee.Perhas I could yield to him and ,lethim propound a time agreement whichwill be 15 minutes on each side. at theend of which the distinguished chair.man will move to table the amend-me

Mr., HOLLINOS. Very good. I appre-late the Senator from Texas agreeing

to a time agreement. There will be nosecond-degree amendments and theunderstanding is we will move to tablethe amendment at that time and havethe yeas and nays. Will that be all

Mr. ORAMM. That will be all right.

Mr. HO LINGS, I ask unanimousconsent Mr. President. there be 3eminutes equally divided on theOramm amendment and controlled onthe Omarnm amendment: that noamendments be in order to the amend-ment. or to the language proposed tobe stricken: that when all time is usedor yielded back, the motion to table bemade by the Senator from SouthCohm If that unmanimous-consentrequest Is agreed to. then I will ak forthe ym and nays on that motUon.

The PRJEI8 GO OFFICL Isthere objection to the unanimous-n-sef zequest

Without objection. it is so ordered.Mr. HOLLINOG I ask for the yeas

ona na on the motion to table.The PRESIDING OFFICER. Is

there a sufficient second?7%s Is a asuficient second.The yeas and nays were ordered.Mr. HOLLINGS. I thank my col-

league.Mr. ORAMM. Mr. President. the

amendment I have offered is a verysidmpi and straightforward amend-ment. It reaches to the very heart ofAmerican trade policy. The questionsIt addesses ar: Can we promoteAmerican Interests by trying to build

walls around America, by trying toforce American companies, againsttheir will. to buy American productsand in the process, by Governmentmandate, dictate how private industryis to be run? Should we enact Federalmandates that lower American effi-ciency and lower American competi-tiveness, or can we better promoteAmerican interests by trying tobecome more competitive?

Mr. President. I do not think wehave.to have a long debate on this sub-Ject. I think we are roughly dividedalong philosophical and partisan lineson this issue.

I might also say. Mr. President. thatit is with great sadness that I recog-nize the majority of the votes on thisissue often fall on the side which isnot enlightened, at least as I woulddefine it. in terms of what is best forAmerica's interest.

Here is basically the problem, Mr.President. What this bill says is thatthe Regional Bell Companies wiU beallowed to manufacture telecommuni-cations equipment but will not be al-lowed to engage in any joint ventureswith other such companies. They willbe limited in terms of the final valueof the product they put on themarket. No more than 40 percent ofthat value can be of foreign content.

Mr. President, all of us want Ameri-can products to entail American con-tent. The question* is. however, wheth-er or not we want to take an actionthat files in the face of everythingthat for two decades we have tried toget other countries to stop doing.

Our Trade Representative today isinvolved in the process of trying to getother countries to stop exactly thekind of action we are about to vote toimpose here in America. We havespent 20 years trying to assault andbeat back domestic content provisionsin other countries. We have tried toopen markets to American productsand, quite frankly, in my opinion, wehave picked the wrong area to try toplay this protectionist game.

I remind my colle gues that theUnited States has made great progressin telecommunIcation. Proof of ourprogress is that in 1988 we had a tradedeficit in telecommunications equip-ment of $2.81 billion. Since then wehave become substantially more corn-petitive. Our exports have grown veryrapidly and. as a result. we are now ap-proaching a balance of trade where in1990 we had only $790 million of defi-cit.

Also. Mr. President. the area wherewe are very competitive, where we hada trade surplus of $1.28 billion In 1990.is'the high-technology end of the busi.nes Network and transmssion equip-ment.

Now. Mr. President. at the very timethat we are seeing our market penetra-tion abroad growing by 25 percent ayear, when we are seeing imports growby only 2 percent a year. when wehave closed the trade gap. and when inthe high-technology end of the busi-

June 5. 1991ness we now have a $1,28 billion sur-plus, why do we want to pick this In-dustry to say we want domestic con-tent. Therefore. by Implication we aresaying to our trading partners thatsince we are practicing domestic con-tent. we would expect you to do it too.

Mr. President. this provision is theworst sort of legislation because it is adeal cut by business and labor, basical-ly. to the exclusion of the interests ofthe working men and women of Amer-ica. to the consumers of America. andto broadly defined American interests.

This agreement is clearly In viola-tion of what we are trying to achievein our trade negotiations. It is anagreement that could violate theOATr. It Is moving the Nation in the%ton direction.

What I have proposed is simply thatwe strike this provision and move onthe underlying bill, which deals withtrying to allow more competitors tomanufacture telecommunicationsequipment.

Further. Mr. President. this provi-sion is not going to foster the adoptionof this bill. The President has said inthe clearest possible terms that if thisdomestic content provision, whichclearly is in opposition to everythingwe are trying to do In the world on thetrade issue. is part of this bill. he isgoing to veto this bill.

So I say to those who want to seethis bill adopted, let us strip out thismeasure which does not belong in thisbill. which is a totally anticompetitiveprovision, which represents a peculiaraction by Government that tells a pri-vate industry what it can and cannotdo in terms of trying to be competi-tive. and let us pass a bill which thePresident can sign.

Mr. President, the issue very clear.Domestic content s a seductive kindof proposal.

The problem is. this proposal wouldnot work. We cannot build a wallaround America. We ate the world'slargest exporter. Every time we try toget into this protectionist mode, weencourage other countries to keeptheir markets closed and to refuse toopen those markets to America's Prod-ucts. You cannot have It both ways.We cannot be the fundamental forcein the world in trying to promote motetrade openness and at the same timeexpand protectionist measures here inour own country.

Mr. President. I know that this billhas long-term escape clauses. I know itrequires the Federal CommunicationsCommission and the Department ofCommerce to analyze foreign contentin the telecommunications industry.and over a period of time make adjust-mehits in the domestic content require-ment. But the bottom line is this pro-vision could violate the OATT. It fliesin the face of everything we are tryingto do on trade policy. It is protection-ism. pure and simple.

I urge my colleagues to support thisamendment and avoid a I-residential


June 5, 1991 CONveto. I rerve the remainder of mytime.

The PRESIDING OFFICER. Whoyields time?

Mr. HOLLINGS. Mr. President. theSenator Is so enlightened he is blind-ed. The fact is that he is Just runningat one little provision of the bill. Theentire bill is Intended to bring aboutcompetitiveness. His amendment doesnot address the real world in which welive. We are not In an economics 101class with the so-called comparativeadvantage argument of free trade. Weare In the real world, where we havebeen losing our shirts.

In Communications Daily today.June 5. it is reported that AT&T CEORobert Allen will be In GuadalaJarlaMexico, July 24. 1991, to dedicateAT&T's new answering machine plant.Whoopee. There goes another one-thousands of Jobs lost.

A communications report of the Fi-nance Committee. I think, reportedsome 60.000 jobs have been lost sincedivestiture and the 1984 MFJ decision.This entire bill Is intended to promotecompetitiveness and Improve the envi-ronment in which we live.

When you come to what they maybe trying to do with this free-tradepolicy, I have been around here 25years, and we keep going in the wrongdirection with this free-trade policy. Ihave listened to the Tokyo round. NowI am listening to the Uruguay roundand the fast track Mexico. I have theOECD report. the Organization ofEconomic Community Development.and Canada-like all of the countrieson this list, has domestic content pro-visions; Prance. Germany, Japan,Sweden. United Kingdom. all of themhave some form of domestic contentprovisions going right down the list.

In fact. President Bush. in his letterin March of last year to the Senatemajority leaders and Republican lead-ers and the chairman and rankingmember of the Finance Committee,talking about the directive of EEC.says that the directive mandates non-discriminatory transport tendering toall producers who are at least 50-per-cent EEC origin.

That is how we are try!ng to com-pete. We have tried to set the exam-pie. and set the example for 45 years,even taxing ourselves with the Mar-shal plan and sending over our tech-nology. Then our naUonas becamemultinationals. and they got togetherwith the bank and the Trilateral Com-mission, and they fleeced us all. Wehave lost the industrial backbone ofthe country.

The exports the Senator talks aboutare being made up by Siemens, Fu-Jitsu, Northern Telecom. Ericsson-wewent down the list which we includedIn yesterday's ReCOD.

Mr. HOLLINGS. We are being in-vaded like fleas on a dog. just takingover at every turn. That is what theyare exporting, and we are losing thejobs. So tlie entire bill Is to. yes, msnu-

GRESSIONAL RECORD - SEN

facture in the United States of Amer-Ica.

Now. If you want to continue themanufacture beyond the United Statesof America. throw the bill away.Forget about the bill. It is not a littletechnical requirement.

This bill is reasonable. What was thereason? The reason was to recognizethe fact of life that a lot of these partsyou cannot get any longer in theUnited States. Western Electric makesall of their telephones now in down-town Singapore. We have been thereand seen that. Thousands of jobs aregone.

The Senator says that US. work-ere-8% million people unemployed-will hinder the ability of the Bell Op-erating Cos. to compete.

And exports means manufacturedhere. If you want to get manufactur-lg here. say so. That is what we want;that is why the domestic content pro-vision is here.

If the other countries change thenwe can change-my theory of competi-tlon is If you raise a barrier against abarrier, then you can remove themboth. But fleecing, causing a specialrelationship--look at the example weset. We are not in charge. Our clock isbeing cleaned every day. It has to stop.Here we have the wealth of the sevenBell Operating Cos. being forced toInvest overseas at the same time weare looking in the Budget Committeefor investment in this country. Andthe Bell Cos. like many other compa-nies, cannot manufacture abroad be-cause of the barriers in those coun-tries.

Mr. President. I reserve the remain-der of my time. How much time do Ihave?

The PRESIDING OFFICER. TheSenator has 9 minutes, 25 seconds.

Mr. HOLLINGS. I yield to the dis-tinguished ranking member.

Mr. DANFORTH. Mr. President. asalways, the Senator from Texas hasmade a very persuasive case and hesets forth an excellent philosophicalargument, one with which I wouldnormally agree. I have told my chair-man. Senator HOLLINOS. that as a gen-eral principle, I hate the Idea of do-mestic content requirements. I thinkthat is a matter of bad policy and badtrade policy. The problem is trying tomatch philosophy with the practicalrealities of the case. unfortunately.the two clash in this instance.

That clash Is recognized by state-ments made by both the Reagan ad-ministration end the Bush administra-tion. In 1987, during the Reagan ad-mlnistratlion, the Commerce Depart-ment said that If the Bell OperatingCos. were to diversify into electronicor digital switch manufacturing, Itwould almost certainly undertake ajoint venture with a foreign-basedfirm. Then the Commerce Departmentconcluded that such Joint venturingwould likely cause-these are thewords used-significant harm toAmerican competitive technology and

kTE S 7095trade positions, and can pose thethreat of destroying this countr7s in-digenous central office equipmentmanufacturing capacty." That b thelanguage used by the US. Departmentof CIDeroe during the Reagan ad-ministration.

During the Bush administzation, theDepasrtnent of Labor, in a staff study,estimated that 18.000 to 27.000 US.Jobs could be lost if the manfacturimnrestriction were lifted, and noted thatthis number does not include potentialadverse effects on employment in re-search and development functionswhich might be transferred abroadthrough Bell Operating Co. Joint van-tures with foreign manufacturers.

That s the reality.Mr. President, my hope would be

that somehow between now and whenthis bill is submitted to the Presidentfor his action that there could be someway of working out this problem. Ithink that there is a middle ground.perhaps one that tracks the conceptsof the 1988 Trade Act which condl-tioned access to our markets on recip-rocal access to the markets of theother countries. That kind of ap-proach, to me. is better than a domes-tic-content approach. But to take thephilosophical approach, that I com-mend Senator GRAism for. In and ofltselL without any way to cushion theblow, that is going to cause a very seri-ous adverse effect on American Indus-try and on American Joh Por thatreason, I will support my chairman Invoting to table the Grsmm amend-ment.

Mr. GRAMM. Mr. President. I yield5 minutes to the distinguished Repub-lican leader.

Mr. DOLE. Mr. President. I rise insupport of the Gramm amendment,and ask that I be made a cosponsor ofthe amendment.

The PRESIDNO OPFICER. With-out objection. it Is so ordered.

Mr. DOLE. Mr. President. I rise Insupport of the Gramm Amendment tostrike the domestic content require-ments from S. 173.

Let me first say plainly. Mr. Presi-dent. I support S. 173. I am fully infavor of increased competition in tele-phone and other communicationstechnologies-competition that willbring new products, new services atlower prices to consumers. I supportfreeing up America's telecommunlca-tins resources to compete more effec-tively in the world market.

Some here today may rememberwhen, a number of years ago, this Sen-ator Introduced legislaUon to transferJurisdiction over the telephone indus-try from Judge Greene's courtroom tothe FCC.That bill was not intended so much

as a criticism of Judge Greene-in myview, an able and hardworking Jurist,diligently applying the antitrust law-as an effort to bring the formulationof America's telecommunicationspolicy, out of the courts and back


87096 CONGRESSIONAL RECORD - SENATEwhere It belongs-in the hands of theagency with expertise, overseen by theCongress.

That bill generated a lot of opposi-tion. Mr. President, opposition fromsome powerful interests with a largestake in the status quo. So I want tocongratulate Senator HOLLINOS on hisleadership In getting at least a partialMFJ bill to the floor. I know some ofthe obstacles Senator DarOarTH andothers have faced; believe me. I havebeen there.

Having said that, however. I find itIronic that this bill, a principal pur-pose of which is to make our commu-nicatlons industry more competitive,contains highly anticompetitive do-mestic content restrictions. What thebill gives with one hand. it takes awaywith the other.

The provisions which would bestricken under the Oramm amend-ment would:

Single out the Bell's affiliates, ia.posing restrictions not binding ontheir competitors:

Undermine current U.S. trade negoti-ations with the European Communityand other trading partners;

Ultimately result in higher prices toconlumers.

First, the bill's restrictions on im-ported components would apply onlyto the Bell manufacturing affiliates.Other manufacturers-Northern Tele-com of Canada, the various Japaneseand European companies, and thedominant American manufacturer.AT&T--can all buy components with-out restriction from any source, andthus manufacture at the most effi-cient cost; only the Bells are hand-cuffed. Does this make sense? Is thisfair? Will it save Jobs?

Hardly, Mr. President. AT&T nowJoint ventures with foreign manufac-turers in 15 countries and importsproducts into the United States. whilehere at home it has closed down 6plants and reduced activity at others.Yet this bill leaves that alone, whilehamstringing the Bells from compet-ing on equal terms. At such disadvan-tage, it is hard to see how the Bellscould compete and grow. And growthmeans Jobs.

Second, this portion of the billwould seriously undercut the U.S. po-sitlon In several market-opening ef-forts presently being negotiated. TheEC and Canada have already threat-ened to challenge this provision ininternational tribunals. An adversefinding would result in retaliationagainst our exports. Our trade nego-tiators are working to open foreignmarkets and are presently involved Insensitive negotiations to promotetrade agreements and reduce barriersto our imports everywhere-and herewe are, Mr. President. sending the op-posite signal and inviting the label ofprotectionist.

The President's advisors say hecannot sign such a bill. I ask unani-mous consent to have reprinted In the

RECORD a copy of a letter from Secre-tary Brady, Ambassador Hills, Secre-tary Mosbacher. and others.

There being no objection, the mate-rial was ordered to be printed in theRECORD, as follows:

Tnz ScarrARY or COMMERacE,Wshington, DC, May 30, 1991.

Hon. Boa DomsU.& SenafeWashingtol, DC.

DEA SENaTOR Domx: The Administrationwishes to affirmits strong support for legis-lation that would lift the manufacturing re-strictions currently placed on Regional BellOperating Companies (RBOCs), and we ap-plaud your efforts on behalf of this objec-tive. As the Administration has previouslytestified, we believe that this objective of S.173 represents sound economic policy thatwould promote competition. increase U.S.research and development, and open up ad-ditional Investment opportunities in tele-communications In the United States. Un-fortunately. 8. 173 also contains other provi-sions-in particular, the domestic contentand local manufacturing requirements-that would undermine Important interna-tional trade objectives and detract substan-tially from the bill's own stated objectives.If these provisions are not removed from S.173, the President's senior advisers wll1 rec.osrnend that he veto the bill.

As you have recognized, the RBOCs repre-sent a very significant U.S. resource thatcould be applied to the advancement of U.S.telecommunications and related high-tech-nology endeavors. Their assets, in the aggre-gate. represent a major component of thecountry's telecommunications base. We be-lieve these resources should be freed tobetter serve the American public by beingpermitted to participate in the manufactureof customer premises and telecommunica-tions equipment. Among other benefits,elimination of the manufacturing restric-tion will help promote Increased telecom-munications research and development Inthe United States, which may also have abeneficial effect on related Infrastructuredevelopment By enhancing their develop-ment of new technologies, the legislationwould also greatly promote the internation-al competitiveness of U.S. Industry.

Given our agreement on the many bene-fits of lifting the manufacturing restric-tions, we regret that we are unable to sup-port S. 113 as currently drafted. The Admln.Istration oppoaes on a number of groundsthe local content and domestic manufactur-Ing requirements of 5. 173.

First, since such requirements serve to dis-courage certain imports--components in cer-tain cases, finished products In others-theydistort trade. Private companies that wouldotherwise make purchasing decisions onsound economic and technical grounds In-stead will be forced to procure and produceequipment on the basis of government flat.In addition, the Bell companles-with theirnew-found ability to manufacture-may findthemselves at a competitive disadvantagevis-a-vis other telecommunications equip-ment manufacturers, who are not requiredto adlere to local content and local manu-factorig restrictions. -

Second. the Imposition of local content/manufacturing requirements for the BellCompanies creates serious questions for exist-Ing U.S. International obligations. TheUnited States' trading partners could raisecomplaints under the General Agreementon Tariffs and Trade (GATr), the U.S.-Canada Free Trade Agreement, and numer-ous treaties of Friendship, Commerce. andNavigation. Certain of our trading partnershave already made It clear that they would

June 5, 19 1challenge the local content measure ininternational fora. A GATr finding that theUnited States had violated its obligationscould lead to potentially costly retaliationagainst U.S. exports. This could put In Jeop,ardy our trade surplus in telecommunica.tions with the EC (in 1990 we exported tothe EC $1.4 billion in telecommunicationsequipment while we Imported form themjust $391 million).

Third, local content/manufacturing re-quirements would also seriously undermineU.S. positions in ongoing Uruguay Roundnegotiations. which are intended to openforeign markets to U.S. goods and services.In the GATT Government ProcurementCode negotiations. a cornerstone of U.S. ne-gotiating objectives under the 1988 TradeAct, the United States has maintained thatprivate companies, like the RBOCs. procurecompetitively and thus need not be subjectto procedures like those of the Code. Thelocal content/manufacturing provisionswould be viewed as Inconsistent with thisposition. If we fall to achieve a positiveresult in these negotiations. U.S. suppliersof telecommunications equipment and serv.ices-including the Bell companies under S.113-will be shut out of many foreign mar-kets. The EC's government procurementmarket for telecommunications equipment,with an estimated value of tens of billions ofdollars. will remain closed to U.S. providersabsent a new. GATT agreement.

Local content/manufacturtng provisionsare also inconsistent with US. efforts in theGA7r to discipline and eliminate trade-re.lated investment measures (TRIMs). Wehave placed a high priority in the UruguayRound on the achievement of discipline incountries' use of TRIMs. such as local con-tent and domestic manufacturing require.ments. Approval of such restrictions as partof S. 173 would create serious problems forthe TRIMs negotiations.

Fourth, the restrictions contained In S.173 are more likely to cot U.S. Jobs In thetelecommunications ndustry, not savethem. Any weakness In the US. competitiveposition in telecommunications equipmentfalls in the low end of the market, such asin the production of Inexpensive telephones.where technological advantage is not cru-cial. The restrictions contained in 5. 173would have little effect on U.S. trade andemployment in the low end of the marketbecause the RBOCs are unlikely to conen-Orate their manufacturing efforts on It.

The strength of the U.S. competitive posi.tion in telecommunications equipment liesin the higher end of the market. wheretechnological know-how is decisive. andwhere the United States had a $1.3 billiontrade surplus In 1990 fin network and trans-mission equipment). The restrictions con-tained in S. 173 will hinder the ability of theRBOCs to compete in this part of themarket, and may impede their ability tocontribute to the ongoing expansion of ex-ports and export-related employ-ment associ-ated with these products.

The Administration also has deep reserva.tions about the bills fiat prohibition onJoint ventures among the RBOCs. TheRBOCs should be subject to ordinary anti-trust Principles, which permit procompeti-tive joint venture arrangements, but prohib-It those that would harm competition.

The administration supports the primaryobjective of S. 173. Unfortunately. the Ad-ministration cannot support the bill with itsprovisions on local content and domesticmanufacturing.

Sincerely.Nicholas F. Brady, Secretary of the

Treasury; Lynn Martin. Secretary ofLabor Lawrence S. Eagleburger.


June 5,J991 CONGRESSIONAL RECORD - SENATEActing Secretary of State; Robert A.Mosbacher. Secretary of Conuserce;Carla A. Hills. U.S. Trade Representa-tive.

Mr. DOLE. Finally, if one thing isclear, It Is that import restrictionsmean less efficiency, less choice, andless competition for producers. Weknow who pays the price for that, Mr.President. Consumers do. Lcss realcompetition means higher prices foreveryone.

So I urge my colleagues to vote withSCelator GRAMM to strike this provi-sion. It Is not a vote against this bill.

I am not certain. I had intended tovote for the bill. I am not certain wisatwill happen. I do not think we will pre-vail. I assume Senator Hot. rns hasthe votes to table the Oramm amend-ment, but I want a bill the Presidentcan sign. Maybe there is some way. Ifwe do not prevail here. At leett bymaking a record there will be some In-cenhve in the conference, if it reachesa conference, where the conferees.Senator HOLUiwGS. Senator DAhrvowTf.and others, can figure out some middleground.But In the Interim. Mr. President, I

certainly strongly support the amend-ment by the distinguished Senatorfrom Texas.

Mr. HOLLINGS. Mr. President. thisparticular request has been clearedwith the distinguished minorityleader. I ask unanimous consent thatupon disposition of the Granmamendment, the Senate. without anyintervening action or debate proceed,to vote on the passage of S. 173.

The PRESIDING OFFICER. With-out objection. it Is so ordered.

Mr. HOLLINGS. I understand mycolleague only has 2 minutes left. Ihave 6.

The PRESIDING OFFICER. TheSenator is correct. The Senator hasJust under 6 minutes.

Mr. HOLLINGS. I yield 2 minutes tothe Senator from Colorado. eventhough he is against it.

Mr. BROWN. Mr. President. let meexpress my thanks to the distin-guished Senator from South Carolinafor his kindness even though I may bemisguided on this particular amend-ment. I appreciate his consideration.

I rise simply to propround a questionto the distinguished Senator fromSouth Carolina. The Senator. Ithought In a very articulate fashion.pointed out that a number of coun-tries around the world do have whatwe would call domestic content re-quirements. The paper that the Sena-tor was referring to indicates thatSweden. West Germany, France.Canada. and a number of the EasternEuropean countries have similar promi-slons.

My question to the distinguishedSenator would be this: He has indicat-ed concern about elimination of thedomesUc content provision in circum-stances Involving countries whichmaintain domestic content require-ments. Would the Senalor have a dif-

ferent feeling when dealing with coun-tries that do not have a domestic con-tent provision? In other words, wouldhe be receptive to looking at havingthe domestie content provision applyonly to those countries that have thesame kind of treatment accorded ourproducts, but be willing to look atwaiving that domestic content provi-sion when we are trying to trade withcountries that do not have any domes-tic content provision of their own?

Mr. HOLLINGS. No. The predoml-nant countries in this particular com-munications market are the countriesfrom the OECD. They are the princi-pals In telecommuncations. And theyare the ones that are cleaning ourclock, taking our industry away fromus. If the picture cleared some yearsfrom now, I would look at the real lifesituation.

I do not want to confuse the pointhere-the thrust of this bill entirethrust of this bill is to get manufactur-ing here back home in the UnitedStates.

AT&T closed down or reduced itswork force at 33 manufacturing plantssince 1984. with a loss of 60,000 jobs.Of course, we have been forbiddenunder law to allow the Bell Cos. toercate any of those manufacturingjobs. That is my problem.

I am not trying to have fair playwith anybody right now. I am tryingto survive. That is what I am trying todo. We are in an economic war, and!think we are going to have to fightlike the dickens to survive, and that Isthe guts of this bill. It you want to gutthe bill. then you would vote with theSenator from Texas.

Mr. BROWN. I appreciate the distin-guished Senator's answer. He is veryforthright and an eloquent spokesmanfor his point of view.

This Senator believes that it is amistake to impose domestic contentprovisions on countries that do nothave domestic content provisions oftheir own. If we are fighting for fairtrade, it seems to me that the Senatorfrom Texas has a sound point.

I thank the Senator.Mr. HOLLINGS. I reserve the re-

mainder of my time.Mr. ORAMM. Mr. President, our

dear colleague from South Carolinatalks about the Marshall plan, but letme remind my colleagues that the aidprovided by the Marshall plan reallywas a Utile lighter fluid. It was tradewith Western Europe that rebuiltEurope. that helped build the econo-mes of Japan and Kores, that helpedcreate a wealth creation machineworldwide, that tore down the BerlinWall, and that today has us on theverge of winning the cold war.

Mr. President, I find it amazing thatwe are here trying to pass a law tomake People invest in America. whenfor the last 10 years America has hadmore foreign investment than anyother country in the world. In fact.foreigners have knocked down ourdoor trying to get here, and often we

S7097hear people on this floor denouncintforeigners for wanting to invest inAmerica.

Mr. President. a free society does notprosper by enacting laws that forepeople to make econominc decisionsthey otherwise would not want tomake. If we are going to be compeU-tive, we are compeUtive, we are goingto have to compete. We cannot build awall around the greatest tradingnation In the world.

Finally, If Senators need a noneco-nomic reason to vote for this amend-ment, It says to Ma Bell, you caninvest abroad, you can buy foreignconteM you can produce telecom-municatons equipment, and you cansell it. It says to Regional Bell Cos.you cannot do it. I hope my colleaguesremember the equal protection clenseunder the 14th amendment of theConstitution. The Constitution saysthat persons-and that includes corpo-ratlon--must have equal protectionunder the law.

This provision, in my opinion, Is to-tally unconstitutional. You cannothave some companies treated by oneset of rules in a market, and othercomanies that are treated by anotherset of rules under Federal statute,without violating the equal protectionclause of the Constitution.

go I do not doubt the sincerity of mycolleague from South Carolina, but Ithink he is absolutely wrong on this,and everything he is saying and doingis counterproductive to what we wretrying to achieve.

The PRESIDING OFFICER. TheSenator's time has expired.

Mr. HOLLINGS. Mr. President, ifthe Senator was correct about theequal protection clause, then the BellCos. have the sorriest constitutionallawyers in the world, because theyhave been trying to get out. They arethe ones that everybody discriminatedagainst, they are the ones that havebeen required to what? Invest overseasand not Invest here.

Let the companies do what. theywant to do. That Is exactly the billitself. The Bell Cos. want to producehere. They want this domestic contentprovision. They have agreed to thisprovision. They understand It is notgood business to be doing all this over-seas while we have 8% millllon unem-ployed in America. They are publicservice companies, depending on thepublic support. As a result, they havea hard time explaining that theycannot even do this right here. It is anartificial thing.

I wish he were right that a domesticcontent provision was unconstitution-al, because then no one would havehad domestic content and you wouldhave had a bare bill at this particulartime. Protectionism built Europe,They have had domestic content pro-visions since the word go in Europe.Protectionism built Japan in the Pacif-ic Rim. Before I can sell a textile indowntown Korea, I have to get perms-


S 7098 CONGRESSIONAL RECORD - SENATEsian from the textile industry inKorea. You cannot get licensed inJapan. You can go right on down thelist.

So they have practiced protection-Ism. We tried to set the example. Wehave been the high-wire boys and thelittle fellows with the Christian ethnicand the Golden rule. That does notwash in the international market. Youhave to have not fair, but competitivetrade. What works are the same do-mestic practices that, in essence, builtthis industrial giant, the United Statesof America.

We are not investing in research anddevelopment, Mr. President. because itdoes not pay to do so. The Bell Cos.cannot manufacture. We are losing outin the industries that are on the cuttingedge of technology, and as a result, theconsumers of America are losing out onfine advanced services. It does not payto even produce it here.

That is a sad, terrible situation. TheSenator knows his suggestion wouldgut the bill. The administration hasbeen toying around for a full day onthis. They have been taking headcounta ad bringing all the pressureand everything else n the world onSenators to offer a new kind of restric-tign. That is a last gasp of trying tokill the bill.

If You are for America, for Joe-Six-Paok in Texas-the Senator hastaught me all about old Joe-Six-Packdown in Texas--then vote for Joe-Six-Pack to have a Job, and for buildingAmerica, so he does not have to goabroad to make a living. I yield the re-mainder of my time.

I move to table the amendment.The PRESIDING OFFICER. The

question is on the motion to tableamendment No. 290 offered by theSenator from Texas.

The yess and nays have been or-dered. The clerk will call the roll.

The legislative clerk called the roll.Mr. FORD. I announce that the Sen-

ator from Iowa (Mr. HhARKMl and theSenator from Colorado [Mr. WIaua]are necessarily absent.

I also announce that the Senatorfrom Arkansas (Mr. PaYoal is absentbecause of illness. ,

Mr. SIMPSON. I announce that theSenator from Rhode Island [Mr.Clnmi is necessarily absent.

The PRESIDING OFFICER. Arethere any other Senators in the Cham-ber desiring to vote?

The result was announced-yeas 64.nays 32. as follows:

(Rollcall Vote No. 88 Leg.)YEA-41

Aft= Byrd GlennAk.kl Cohen On.ata Conrad ortonBentamn Cranston OrahmBiden Danforth BelinBin man D..chl Helm.Bon DeCeclni HolliesBea= Dines InouyeBryan Dodd Jefford.Bumrs EO0 JohnstonBrdick Ford KssebauinBores Fowler Kasten

KennedyKerryKohlLAutenbergLeahyLevnLlebernLoUs

MetzenbaunMikuloki

BondBradley

Coal.Cochran

CraigD'Antat.

DoleelDoreneeseDurenbergerGi

MitchellMoynihanNunnPellReidRlegleRobbRockefellerSanfordSartmnes

NAYS-32OraooonrusleyHaLhHatfieldKerreyLosacMackMcCainMcConnellMurkowalNickle.

SaserShelbySimonSpecterStevensThu-condWellstoneWolford

PacknoodPerelerRothRudranSeymourSiopeonSnithSym-oWallopW.rner

NOT VOTINO-4Chfee PryorHarkin Wirth

So the motion to lay o the tablethe amendment (No. 290) was agreedto.

Mr. COCHRAN. Mr. President, I aman original cosponsor of this legisla-tion, and I am hopeful the Senate willapprove it.

This bill will remove the restrictionon manufacturing by Regional BellOperating Cos. This manufacturing re-striction has allowed much of the in-dustry's intellectual property andmanufacturing capacity to be pur-chased by overseas competitors whooperate under no similar restriction.

Removal of this manufacturing re-striction will provide an Incentive tothe Regional Bell Cos. to increase theirspending on research and development.This is essential if American firms areto be competitive in today's rapidlychanging communications industriesand meet the challenges posed by unre-stricted foreign competitors.

I urge the Senate to pass this bill.Mr. ADAMS. Mr. President. as an

original cosponsor of S. 173, the Tele-communication Equipment Researchand Manufacturing Competition Actof 1991. I strongly support this bill. Ibelieve the Gramm amendment wouldtotally undermine the purpose of thislegislation.

The legislation before us addresses asector critical to U.S. competitivenessin the global economy: Informationsystems and telecommunications tech-nology. All of us are concerned aboutthe threat our industries face from for-eign government subsidies to their tele-communications and other industries.Those practices give our foreign com-petitors an unfair advantage in thirdcountry markets and distort competi-tion in our own open, domestic market.

We cannot afford to lose more thanwe already have of one of the mostpromising segments of our economy.the manufacture of telecommunica-tions equipment.

This legislation is critically impor-tant to workers in the telecommunica-tions equipment industry, where theCommerce Department has projected

June 5, 1991a slight decline in employment overthe next 5 years.

The provisions of S. 173 should helpstem this decline, and will hopefullyreverse it. But we will only see a great-er loss of Jobs if we go along with theGramm amendment.

Lifting the manufacturing restric-tion will help our Nation compete inseveral ways. First, the Bell Cos. wouldhave the incentive to increase theirspending on research and develop-ment.

Second. the bill would enable theBell Cos. to tap into a vast underuti-lized reservoir of knowledge abouttelecommunication networks and thetelecommunications marketplace.

Third. this legislation would allowthe Bell Cos. not only to collaboratewith other manufacturers, but toinvest in them as well.

Unfortunately, some small startupcompanies have no choice but to turnto foreign-based investors.

Consider what has occurred in thelast decade. We have seen our ideasand inventions, such as VCR's, exploit-ed by manufacturers abroad. The pat-tern of foreign companies applyingtechnology we have developed to man-ufacture new products is expanding Inthe telecommunications field. The billbefore us today will help stop thistrend by allowing American companiesto do what they do best-invent.market and produce. Without this leg-islation. our large and growing domes-tic market will be exploited increasing-ly by foreign manufacturers.

S. 173 will assure that we maintain astrong national economic base In theinformation and telecommunicationsmanufacturing sector. It will promoteour technological know-how. It willhelp our industry create the jobs andproducts to keep the United States Inthe forefront of this key advancedtechnology sector.

I urge my colleagues to Join in sup-porting this bill.

Mr. THURMOND. Mr. President. Irise today in support of S. 173. theTelecommunications Equipment Re-search and Manufacturing Competi-tion Act of 1991. As my distinguishedcolleagues are aware, this legislationremoves the manufacturing restrictionimposed on the Bell Operating Co.pursuant to the modified final Judg-ment. That consent agreement was en-tered into in August 1982 by AT&Tand the Department of Justice, andaccepted by Judge Harold Greene ofthe Federal District Court for the Dis-trict of Columbia. in settlement of anantitrust suit filed by the Departmentof Justice. The remaining restrictionsin the MFJ are not affected by thislegislation.

Mr. President. in my view, issuesconcerning the telecommunications in-dustry are among the most importantthat the Senate will face in this Con-gress. These issues affect not only thetelecommunications industry itself.but innumerable other Industries and


June 5, 1991 CONservices t1at are dependent on thetelecommunications industry for theirgrowth and development. If this legis-lation does nothing else, it will haveforced this distinguished body to focuson how critically important this indus-try is to our technological develop-ment as a nation, and to our ever Im-portant competitive position on thehiternational stage.

Having said that. Mr. President. letme make clear that I did not reach mydecision to support this legislationedsily. There is little doubt that S. 173raises difficult Issues concerning tele-communications policy and our anti-trust laws. There is also little doubtthat this legislation raises legitimateconcerns about the legislature's rela-tionship with the judiciary and wheth-er litigants can. and should, changetheir forum every time they are facedwith unwanted prohibitions.

Mr. President, in 1981. before thehreakup of AT&T, I supported propos-ils to lift. some of the regulatory re-

strlctlons under which AT&T then op-erated. At that time, I made clear thatmy support was premised on the ac-ceptance of certain amendments thataddressed legitimate anticompetitiveconcerns. My support of S. 173. is like-wise premised on antitrust protections.

On balance, Mr. President. I believethat we Improve competition In thetelecommunications industry if we liftINe manufacturing restrictions on theBall Operating Co. and allow them tocompete with the other telecommunl-cations manufacturers. While we mustrot Ignore the legitimate antitrustconcerns that are raised because of1!;e monopoly that exists in the localv.ehanges. I am persuaded that the.,feguards that are contained in this!egislation should provide adequateprotection to those companies thatwill compete with the BOC's.

Mr. President, It is my view. that nomatter which way we proceed on S.173, there are no guarantees. Thereare no assurances that S. 173 will workperfectly. However. I believe that theresponsible regulatory bodies-theFederal Communications Commissionand the various State commissions, aswell as the Federal and State antitrustenforcement agencies--will insure thatthe type of conduct that broughtabout the MFJ In the first place, willnot be repeated. In fact. these agenciesand the Bell Operating Cos. them-selves. should be duly warned that ifanticompetitive conduct rears Its head,this Senator will be back before thisbody with whatever legislation is,ieeded to correct the situation.

The alternative to this legislation.Mr. President. would be retaining thestatus quo. This also provides no as-surances. There is no conclusive proofthat if we defeat this legislation wesill retain the competitive edge intelecommunications technology that Isso Important to our Industrial stand-ing worlds ide. There is also no conclu-sive proof that consumers will benefit

GRESSIONAL RECORD - SEN)from lower rates and a wider variety ofproducts.

In the end, Mr. President. It comesdown to a balancing of interests andprotections. In my view. such balanc-ing tips the scales In favor of this leg-islation. and, therefore, I will supportand vote for passage of S. 173.

Mr. BRADLEY. Mr. President, Iwish to take this opportunity to cor-rect some erroneous information thatmay have been communicated in thecourse of remarks on S. 173 today.

The suggestion made today thatAT&T may have sold some portion ofBell Laboratories is completely false. Ihave been assured by AT&T repre-sentatives that no portion of AT&TBell Labs has been sold to any compa-ny, domestic or foreign, and no suchsale is contemplated.

More than any other single Institu-tion, AT&T Bell Laboratories hashelped weave the technological fabricof modern society.

It is the birthplace of the transistorhlser, solar cell, light-emitting diode,digital switching, communications sat-ellite, electrical digital computer, cel-lular mobile radio, long-distance TVtransmission, artificial larynx. soundmotion pictures, and stereo recordingas well as many major contributions tothe telecommunications network. Ithas more than 22,000 patents, averag-ing one per day since the company'sfounding in 1925.

The mission of AT&T Bell Laborato-ries is to design and develop the infor-mation movement and managementproducts. systems, and services neededby AT&T, to provide the technologybase for AT&T's future business, tosearch for new scientific knowledge,and to apply sound R&D techniquesto AT&T's manufacturing facilities.

To accomplish this mission, BellLaboratories currently has some29.000 employees in 8 States and 9 for-eign countries. About 4,000 hold doc-toral degrees in 19 disciplines.

At the time the AT&T divestitureoccurred, AT&T pledged not to under-cut its long tradition of commitmentto research at Bell Labs. AT&T hasmore than lived up to that commit-ment. Although AT&T overall has hadto cut back on the number of people itemploys and has undergone consider-able reorganization since divestiture, ithas increased rather than decreasedits researchers and funding at BellLabs.

At divestiture, on January 1, 1984,AT&T Bell Laboratories employed19,300 people and had an annualbudget of $1.9 billion. On December31. 1990, Bell Labs employed 22,200people directly, and its budget for lastyear was $2.9 billion. In addition, an-other 8.000 people at AT&T were en-gaged in closely related research work.

Early in 1991. Bell Labs researchersset two world records for the shortestand fastest laser light pulses. Thelaser generates 350 billion pulses asecond, each one shorter than one tril-lionth of a second. The fastest com-

ATE 87099mercial system today generates 2% bil-lion pulses a second. -

Other Bell Labs scientists have dem'-onstrated the world's first digital opti-cal processor. an experimental. ma-chine that carries out informationprocessing with light rather than elec-tricity. The processor is a major ad-vance toward an optical computer thatcould eventually be one thousandtimes faster than today's best ma-chines.

Mr. President, I am proud to saythat AT&T Bell Laboratories remainsa premier research institution in NewJersey. in the United States. and inthe world.

Mr. CRAIG. Mr. President. I rise tosupport 5. 173. the Telecommunica-tions Equipment Research and Manu-facturing Act of 1991. which will effec-tively lift the manufacturing restric-tions imposed on the seven RegionalBell Operating Cos. created by theAT&T divestiture.

The manufacturing restriction haskept the Bell Cos. from playing a rolein the development of technology andthe production of telecommunicationsequipment. In an era when technologyis rapidly evolving, this kind of restric-tion simply cuts our competitive edgewith foreign producers. Maintainingthe manufacturing restriction willonly push our communications prod-ucts industry farther behind the restof the world.

Communications technology hasgreat potential for improving thefuture of rural States. affecting rurallife in a variety of ways, from educa-tion to health care delivery. RuralAmerica deserves to enjoy the benefitsof these developments.

S. 173 will open up rhore of these op-portunittes by alowing some of the ex-perts in the field more flexibility to re-search, develop, -and manufacturethese high-technology products. S. 173will establish a telecommunicationspolicy that will generate new jobs forAmerican workers and new telecom-munications products and services forAmerican consumers.

Opponents of this legislation haveargued that the bill would allow theBell Cos. to revert to predivestituremonopolistic practices. It has been as-serted that this legislation will allowthe Bell Cos. to abuse their telephonefranchises, harming competitors andtelephone ratepayers by using tele-phone service revenues to subsidize re-search and development. Mr. Presi-dent, S. 173 contains safeguards toprevent this sort of abuse.

The legislation prevents the Bellsfrom manufacturing in affiliation withother Bell Cos. This ensures that theseven Bells are in competition witheach other. The bill also requires man-ufacturing operations to remain sepa-rate from the telephone operations toprevent cross subsidization. Minimumrequirements constituting separationare outlined in the legislation.


S 71008. 173 also requires that 10 percent

of the manufacturing affiliate must bemade available on the open niarket tooutsde Investors. It requires the man-alseturbo affiliate to sell its equip-mnt to ether telephone companies atthe ame prie, without discrimination

n trme and eondltios.Mr. Predmdent, I have read the Com

metf Scence, mnd TransportationCommltee's report on 8. 13 verycarefully, The safeguards contained inthe legistom are clearly outlined inthe report.

Mr. President. I can understand theinit

i t concerns and fears some may

have with the changes this legislationwould make by lifting the manulactur-ing reattctions imposed on the sevenBell CoL However. if one looks at thechanges that have occurred in the In-dustry. the competitive base that noweilsti. and the clearly definet safe-guarf in the legislation. I am surethat these fears would be dispelled. Asa cosponsor of S. 173. I hope that myfellow colleagues will read the legisla-tion and comnittee report carefully,and support this timely, important leg-ISlatioIL

Mr. PACKWOOD. Mr. President. Irise today to support the goals of 5.ZW1-to promote U.& competitivenessto gleW telecomm unications marketsand to Preserve U.S. leadership In de-vellop Inovative telecommunic.tisom .tec-mologtes. These are laudablegoals, and ones the US. Senate shouldseek to achiev. S. 173 moves us In the

ht drection.Mr. President, I come to this debate

with a lot of history on this Issue. Iw chaiman of the Commerce Cmn-mitee when the Senate pawed S 898-a bill which, at the time. wa the meatcaprheesve proposal for chsuge Inthe communications laws In almost 50yearsfay of the Participants In thisdebate today were active in that dia

Ten year have passed, and the tele.communications Industry looks sub-stantially different. We considered S.829 before the divestiture of AT&TThe Bell Operating Cos, did not existas separate entities. In spite of thechange, many of the issues have notchanged.

The basic question i: Should weallow seven of the biggest most knowledgeable teletommsmlcatfona compshies In the country to manufactuequipment? I believe the answer t(that question to yes.

Clearly. we must ensure the Bell Opcrating Ob. do not use their monopolipower to gain some advantage In thicompetitive manufacturing arena, Woalso must ensure the small, rural telephone companres we treated fairl. FInally. and most Importantly, we musensure the consumer. the local ratepayer. doew not pay for the entry othe BOC's into manufacturing.

8. 173 contains safeguards to hellprotect against these abuses. Theymay be other safeguards that could badded that would not so hamstring th

CONGRESSIONAL RECORD - SENATEBOC's as to make the bill meaningless.We should consider such safeguards asthis bill moves forward through theHouse and through conference.

Mr. President. although I supportthe thrust of S. 173. I must raisestrong objections to the so-called do-mestic content provislons. This provi-sion requires that all manufacturingfor sale in the United States be per-formed domestically, and arbitrarilylimits the use of non-US. componentsto a certain percent of the sales reve-nue from the manufactured equip-ment.

This represents exactly the wrongpolicy at the wrong time. At a timewhen US. telecommunications exportshave been increasing, this provisionwould invite our foreign trading part-ners to take retaliatory action andclose their doors to U.S.-manufacturedgoods. At a time when we are trying tonegotiate market-opening commit-meats in the Uruguay round, this pro-vision. i enacted would seriously un-dermine those negotiations.

The provision would not create jobsIn the United States, In the long run.it would have the opposite effect, be-cause US. companies would be lesscompetitive if they are forced to usecomponents they would not otherwiseuse, The conumer would suffer aswelL in the form-of higher prices.

Finally. the domestic content provi-sion would violate existing U.S. inter-national obligations under the OATTand under virtually every other U.S.trade agreement.

Mr. President. in spite of my opposi-tion to the domestic content provision.I plan to support S. 173. It is my hope.however, that as the bill movesthrough the Houe and through con-ference., It will be amended to takecare of my concerns about this provi-sion.

Mr. LAUTENBERO. Mr. President.I rise In opposition to 5. 173.

Mr. President. let me begin bysaying that I support the general goalof this legislation-to preserve Ameri-ca's telecommunications leadershipand to promote American jobs. I ap-plaud the distinguished chairman ofthe Commerce Committee. Senator

t HoLuns, for his commitment to in-c creasing American competitiveness.

The issues before us have often been• portrayed as a fight between two large

corporate interests-the Regional BellOperating Cos. on one side, and AT&Ton the other. Mr. President, what is at

r stake Is much more than that. Theissue to how to assure that .America

Shas the best telecommuniatiomsystem in the world. The Issue is hou

- to assure that America keeps Its leadIt in the design, development, and manu.- facturing of telecommunlcatiotf equipment and the design, develop

ment. and provision of telecommunirap tions services. That leadership mean.a Jobs for Americans. That leadershlie means benefits for our economy .,e whole.

June 5, 1991The future of our telecommunica-

tions industry affects not only thecompanies in the Industry Itself. It af-fects the future of every Americancompany that relies upon our telecom-munications system. In the informa-tion age. our telecommunicationssystem Is as much a part of our infra-structure as our roads. rails. airways,and waterways. Our economic produc-tivity and our competitiveness, de-pends in significant part on our abilityto process, to convey, and to share in-formation efficiently.

The telecommunications Industry isan especially important one In myState. The Nation's leading telecom-munications research and develop-ment facilities. Bell Labs and Belicore.are located in my State. So are tens ofthousands of other employees ofAT&T. New Jersey Bell and othertelecommunications manufacturersand service companies.

I agree that we need to promotecompetition In telecommunications.Competition brings innovation, and in-novalion brings efficiencies. Innova-tion means better products, moresales, and more Jobs.

On Its face, this bill seems to pro-mote competition, by increasing thenumber of competitors.

However. Mr. President, more com-petitors does not necessarily meanmore competition. Particularly whensome of those competitors are monop-olies. And that's the nub of the prob-lem.

Almost by definition, monopolies areimmune from many of the constraintsof a free market. So when they takethis immunity and move into a com-petitive market, real concerns lreraised. Concerns about fairness to themonopolies' consumers. Concernsabout fairness to the monopolies' com-petitors. and concerns about maintain-ing competition in the industry.

These concerns are based largely onthe threats of anticompetitive self-dealing, and cros-subsidization.

Of course, the bill does contain pro-visions that are designed to preventthese abuses But I am not convincedthat these assurances are adequate.

Take, for example, the bill's provi-sions on self-dealsg. The legislationsays that a Bell Telephone Co. Is sup-posed to provide unaffiliated manufac-turers with comparable opportunitiesto sell It equipment, and may only pur-chase at the open market price.

The language to simple and straight-forward. Mr. President. But applyingIt to the real world of business will beextremely difficult.

S PFirst. there by be no benchmark-no- standard of comparison-by which to

determine an open market price. For. example, if a manufacturing affiliateSsells all of Its equipment to Its parent.

there could be no open market. Andwithout an open market with a rangeof similar prices, there can be no openmarket price.


CONGRESSIONAL RECORD - SENATECompounding matters, manufactur-

ing affiliates will often develop equip-ment that is customized to fit theunique needs of Its parent. So not onlywill there be no outside sales by whichto determine similar prices, there maybe no products at all on the marketthat are similar.

Under these circumstances. it couldbe virtually impossible for the FCC todetermine whether the price paid toan affiliate represents the openmarket price, or whether the transac-tion amounts to improper self-dealing.

Mr. President, Just for the sake ofargument. let us say that the FCC canfind similar products with similarprices. and so can ascertain an openmarket price. Its still going to be ex-tremely difficult for the Commissionto adequately police self-dealingabuses.

For one thing, it could take an armyof FCC personnel to Identify viola-tions and adjudicate complaints. YetGAO indicated that the FCC has theresources to fully audit each majortelephone company only once every 16years.

Mr. President, every year, theRBOC's enter into thousands of equip-ment transactions. Even if a small por-tion of these were taken to the FCC.the Commission would lack the re-sources to deal with them. And. giventhe tight budgetary constraints wenow face. I just don't think it's realis-tic to expect that they'll have substan-tially greater resources any time soon.

Also, even if it were possible to iden-tify abuses, and even f the Commis-sion is provided with a huge increasein personnel, It's still not clear thatthe bill provides an adequate remedyto the self-dealing problem. Under thebill, the FCC would act on self-dealingclaims only after the fact-that is.after an RBOC has failed to buy aproduct from a competitor. By thetime the competitor brings a claim-tothe FCC, and a decision is rendered,the competitor and other manufactur-ers may be out of business.

Mr. President. the point is not lackof faith in the people who run theRBOC's. To the contrary. Speakingat least of the people I know in NewJersey. these are some of the mosthonorable corporate citizens I know.The problem is with the inadequacy ofFCC and State regulation in such acomplex, difficult area.

Mr. President, AT&T was broken upnot because it was a dishonest compa-ny. It was broken up because thestructure of the market-namely,AT&T's dominance as a monopoly-created Incentives for anticompetitiveactivity resulting in unfairness to tele-phone users and to other competitors.And it was widely believed that. with-out changing the very structure of thecompany, regulation could not do theJob.

I realize that times have changed,and now instead of one giant companywe have seven. But so long as theRBOC's can take advantage of their

continuing monopoly over local tele-phone service, many of the same con-cerns that led to divestiture still apply.

After all, if the RBOC's all boughtfrom themselves, they could choke offcompetition for 70 percent of the do-mestic market for high-technologytelecommunications equipment. Ifthat happened. R&D at other equip-ment manufacturers, such as that con-ducted at Bell Labs In New Jersey,would probably be cut substantially.In fact. If the bill is enacted in Itspresent form, Just the risk of a closedmarket could lead to a significant re-duction in R&D among the RBOC'scompetitors.

The end result could be fewer U.S.Jobs, lower quality products for American consumers, and American busi-n ses, and reduced U.S. competitive-ness.

Mr. President, it is clear to me that Iam In a minority. This bill is going topass the Senate.

But, it is my hope that it will be im-proved in the House. It is my hopethat if the RBOC's are given legal au-thority to enter manufacturing, theywill do so in a way that preserves openand competitive markets. It is myhope that their operating companieswill choose equipment on the basis ofwhat can best serve the needs of theircustomers.

But. Mr. President, without ade-quate assurances built into the stat-ute. I feel compelled to vote againstthe bill.

Mr. DURENBEROER. Mr. Presi-dent. the proposal which my col-leagues and I are considering today,the Telecommunications EquipmentResearch and Manufacturing Compe-tition Act of 1991, will Inaugurate anew era for the telecommunicationsindustry In the United States. Becausethis industry and the services It pro-vides are such an integral part of busi-ness operations and in the lives of consumers, the benefits of this bill willripple throughout all aspects of Amer-ican life. In my judgment, S. 173 willexpand the services enjoyed by con-sumers and ensure the leading posi-tion for the American telecommunica-tIons industry.

Fundamentally, S. 173 is an issue ofcompetitiveness. It is not about undo-ing the divestiture of AT&T and theantitrust provisions of the modifiedfinal Judgment. In the course of thecourt-ordered divestiture, the poten-tial of seven world-class manufacturershas been thoroughly squelched. Thisshould not have been the case. 5. 173will help to realize the stifled poten.tial of the Bell Operating Cos., whilepreserving the protections establishedin the modified final Judgment.

As Important as divestiture and theMFJ is to fairness and competition inthe marketplace, we cannot permit thefear of unfair competition to paralyzeprogress in the U.S. telecommunica-tions industry. While the court's roleIn the divestiture of AT&T must notbe lightly dismissed, we must remem-

ber that It was charged to preventunfair competition, not protectionfrom competition, within this criticalindustry. -

The passage of S. 173 stands to offera multitude of blessings and benefitsfor American consumers, for Amerieanbusinesses, and for our national com-petitiveness in the world marketplace.Permitting the Bell Operating Cos. toconduct research and development, aswell as to manufacture telecomlluni-cations equipment, will permit the de-"velopment of new and Innovative serv-ices and provide a new source of. lelership and innovation in the Worldmarketplace.

Of course, unleashing such poiaisnot without risks Important segmentsof American society who have a stakein the telecommunications industry-consumers, smaller telephone -compa-nies and manufacturers-have legiti-mate concerns which deserve to.be ad-dressed. Adequate safeguards and reg-ulatory authority must be includedwith this proposal to ensure that con-*sumers do not suffer from increasedcosts and that smaller manufacturersdo not suffer from unfair competition.

The superior resources of the BellOperating Cos. must be kept in propercheck so that S. 173 creates sevenmore competitors, not Just sevenmega-manufacturers. Existing produc-ers must not be shut out of the mar-ketplace through widespread self-deal-ing. They must have the opportunityto work in concert with the operatingcompanies and the new manufacturersof equipment to develop an enhancedand nationally integrated telecom-munications system.

Providers of services, includingsmaller telephone companies and co-operatives, ought to be protected fromthe risks of uncompetitive pricing andinaccessible, but nonproprietary,design specifications between the BellOperation Cos. and their new manu-facturing entities.

In my judgment, these concernshave been effectively addressed.Thanks to the efforts of Senators HOL-Lr5qaS, DANIPORTH, AND Pats5Asx I be-lieve the amendment adopted yester-day strikes the balance necessary tosafeguard against unfair competitionfor small telephone companies andsmall manufacturers. The Pressleramendment ensures that small manu-facturers and telephone companieswill be able to play a part In the build-ing of this Nation's new telecommunl-cations system. Under this amend-ment, design specifications must beshared among producers and carriers.Self-dealing protections will'guaranteethat non-Bell manufacturers will con-tinue to have access to markets. Newand enhanced FCC and State regula-tions Will protect against unfair finan-cial relationships between the Bell Op-erating Cos. and their new manufac-turing entities.

I am pleased to support 5. 173 andthe efforts of my colleagues to ensure

8 7101June 5,,1991


S 7102 CONGRESSIONAL RECORD - SENATEthat. America Is the leader of the tele-c ationa Industry from thevery beginning of the 21st century.. Mr. LEVIN. Mr. President. the legis-laton -we are considering today issbout the future. The future of tech-n klow and telecommunlcations is ex-citing an great things appear on thehorisa that will benefit society if auf-ficlet frnestmants ar made in inno-ratio and human resources. By liftingthe manufacturing restrictions placedon the Regional Bell Operating os.[ABOCKs we seek to bring that futurea little closer to the Present and to doIt in a way that benefits both Ameri-can workers and consumers.

This bill is a particularly difficultone because we are projecting likeli-hoods, not certainttes S. 173 wil re-quire the RBOC%' separate affiliates,if they choose to form them. to menu-facture in the United States. There isaso a proision hi this M that re-Quires the RBOC- mamwfacturlar af-fillatee to puehase eempment partsIn the United States. There is an ex-ception to that latter rule stati thatthe afflilate may purchase parts fromoutside the United States It it has,after making a good faith' effort, beenunable to obtain equivalent compo-men pts domestielly. It Is then andcmly then that the affillabe may pur-ce up to a certain percentage offoreig paula This should have a posi-tive bhasct on the total market sharecontrolled by U.S. firms. This mearnthere should be gain of new jibs, newjobs creating products that should im-prove OW belance of trade and stimu-late the domestic economy. It Is thisP0tentis for new American jobs thatis the clearest reason for Passing thislegslat o . We have seen our manu-factufig seeior erode in recent yearsas a result of foreign eompetitionoften unfair In a number of resectsThis legislation will foster the creationON Jobs In an are with enormous po-teti tor the future. While it isargued, On the other hand, that dislo-cation and Job losses may occur due toIncreased competition and the en-tranm of large manufacturers Into afield of ge samaller firma, on bal-acs I belloit likely that more

American Jobs will be created In thetelecasamntcation area by this billthan WUlho"u It

In addition to the likely benefit interma of American jobs, with the entryof new. Capable manufacturem intothe market there Is the Prospect thatcOsneRM of telecoemuacationsProducts snd services could see pricesthat am eflecive oc Increased conpe-titlm, If each of the seven RBOC'sente masiacturIng there will be thePotential for an Infusion of expertiseand ImoatSsa Into the marketplace.This legisati authorizes the FederalCommmsiciaa Coammission LFCCIto promlate regulations to preventthe Jre market from being distortedby anticompetltlve behavior by theRBOC%. If. however, the FCC doesnot effectively enforce the regulations

which S. 173 requires them to promul-gate to prevent self-dealing, collusion.and discriminatory pricing, or if com-petition does not evolve, there existsthe possibility that consumers will notsee the benefits of increased competi-tion, But, the safeguards in S. 173should act as a deterrent to any RBOCthat might consider engaging in any o.these activities,

This legislation Offers the real possi-bility for the stiulation of the creativeprocess in a competitive market by al-lowing the RBOC'a to be involved inthe design and development phase ofmanufacturing. The current languageof the modified final judgment andthe court's interpretation of it createsobstacles to effective research and de-velopment of new telecommunicationsproducts and software. Innovationcannot take place efficiently underthese conditions and this results inlost opportunities for jobs and newproducts. Here are two examples ofhow S. 173 would improve the chancesthat our Nation will enter the 21stcentury with a telecommunicationssystem worthy of one of the mosttechnologically advanced societies inthe world, and do it with a positivebalance of trade.

Under the current manufacturingban. mansiacturers who would like toproduce a product for a telephone net-work cannot work, closely with theRIBOCa on the testing of the productwithin the network in a completelyfree and open manner. The relation-ship must proceed in a trali-and-errorfashion. The Commerce Committee'sreport details the inefficient develop-ment process in the following way:

U a mantufscturer tests a piece of equp-ment on the BOC network. BOC engineerscan tell the manufacturer that the productdoes not work. but they cannot tell themsnufacturer why the product does notmew or bow to fix it. The manufacturermust return to its own shop and try again.wth no ides what the protlen Is. Such amamfacturer must continue in the "tria-and-error" fashion until the manufacturerdiscovers the problem or abandons theeffort completely.

Without a free exchange of scientif-ic and logistical data between pa-tiesseeking to develop new products, crea.tivity is stifled.

A second example of how creativityis stifled by the manufacturing ban isthe prohibition on innovation fromwithin the RBOC, Currently. if a re-searcher or employee of one of theRBOC's has an idea to create a prod-uct. which may or may not be commer-cially attractive to manufacturers.there Is no simple and coat-effectivemethod to formulate the specifics soas to bring it to market. For instance.assume one of the RBOC's has an em-ployee who has a proposal for a digitalcentral process unit (CPU) that wouldreconfigure transmitted frequencies orvoices to suit the hearing pattern ofthe recipient, making It possible tocompensate for a specific type of hear-ing loss or impairment. Such a productor service would allow certain individ-

June 5, 1991uas to have greater access to the com-munications network. The profitabil-ity of the product is certainly of Inter-est to the RBOC in question, thoughits interest may primarily be in stimu-lating network usage and not necessar-ily focused on that product's profitmargin. But. the RBOC's provision ofsufficiently detailed technical specifi-cations to an outside manufacturer inorder to make this product would mostlikely be a violation of the modifiedfinal Judgment. Under the bill we areconsidering, the RBOC will be allowedto develop this technology and manu-facture this product through its ownaffiliate, or another contractor. Thenet result could be making available toconsumers a product that might nototherwise be generated as a result ofcurrent production arrangements.

Allowing greater interaction betweenthe RBOC's and manufacturers,whether it be the RBOC's own affili-ates or not, is not without possibleantitrust Implications. This issue wasan integral part of the original deci-sion to separate AT&T from It'swholly owned manufacturing subsidi-ary, Western Electric. The fear thatthe RBOC's will engage In preferentialdealing with their individual affiliatesto the exclusion of other manufactur-ers has been aired by several parties.But the bill's safeguards should pro-vide adequate protections against suchan event.

Predicting the future accurately isnot always easy. But sometimes weneed to test the edges of the envelopeIf we are going to create the futurethat we wanL Removing some restric-tions on the RBOC'a should help keepthe United States at the forefront ofthe technological changes that havecreated the new Information age. Thisshould create more American jobs.better and lower cost products, and im-proved quality of life. Should thesepredictions not come true and theRBOC's do not live up to the inten-tions they have stated or to the safe-guards presented in the bill, Congresswill be In a Position to reenter theissue and act on the then existing con-ditions in the public interest,

Mr. LEAHY. Mr. President. techno-logical advancements in our ability totransmit information have beenbreathtaking in recent years and It isprobably safe to say that this is onlythe beginning. Nor is it only technolo-gy that is changing-the structure ofthe industry itself has undergone aprofound transformation since thebreakup of AT&T In 1984. That break-up resulted in the development of a vl-brantly competitive manufacturingmarket with thousands of new comspa-nies getting into the busines. It led aswell to healthy competition in longdistance and to a burgeoning and com-petitive market in Information serv.ices.

The bill before us today, by liftingthe manufacturing restriction and al-lowing the baby Sells. through sepa-


June 5. 1991 CONrate affilliates, to enter manufacturing.will Increase that competition.

I have always supported measures toincrease our internatonal competitive-ness and enhance our technologicalbase. At the same time. I think thedangers of cross-subsidies and self-dealing are very real. The baby Bellswill inevitably have an incentive tobuy from their own manufacturingsubsidiaries to the exclusion of Inde-Pendent competitors. They will alsohave an Incentive to maximize thecosts allocated to themselves-sincethose costs can be passed on to theratepayers-while minimizing thecosts allocated to their manufacturingsubsidiaries. The result of such behav-ior would be to Injure consumers andIndependent competitors alike.

I do believe, however, that thesedangers have been diminished by thesafeguards built into the bill and thoseadded by the amendments we haveadopted In the last 2 days. These safe-guards will. among other things, pro-tect rural phone companies, requireStates to audit the manufacturing af-filiates of the regional Bells and guar-antee access to their books.

I will be frank in saying that Ilooked forward to supporting SenatorINoUYsS amendment, which he with-drew. That amendment would haveput reasonable limits on the degree towhich the regional Bells can purchasefrom their own subsidiaries. But I ampleased by Senator HOLLINGS' assur-ance that he will consider SenatorINOur's Ideas on limiting self-dealingwhen it comes time to conference thisbill with the House.

Let me add one other point. Since S.113 was Introduced. many businessesand consumer groups have visited meto express their concern that it wouldbe only the first in a series of bills tooverturn all of the line-of-business re-strictions placed on the regional Bellsby the modified final judgment.

I want to make It very clear that asfar as I am concerned, this bill is notthe camel's nose under the tent whenit comes to long-distance or informa-tion services.

I am particularly concerned aboutthe implications of lifting the restric-tion on information services. Ofcourse, there will be ample time toconsider that issue if it ever comesbefore us. But nothing in my supportof this manufacturing bill todayshould be construed as indicating sup-port for the lifting of any other re-striction.

Mr. President. in closing, let me saythat. assuming this legislation is en-acted into law. I will be watching thedevelopment of telecommunicationsmanufacturing with great interest.The regional Bells have made broadrepresentations In supporting this bill.They have assured us that lettingthem into manufacturing will increaseAmerican competitiveness and benefitAmerican consumers. They havepromised that they will not engage incross-subsidization or unfair self-deal-

GRESSIONAL RECORD - SEN)ing. It is up to the FCC and the Con-gress to hold them to their word.

Mr. DODD. Mr. President, regretful-ly. I rise today In opposition to passageof S. 173. the TelecommunicationsEquipment Research and Manufactur-Ing Competition Act of 1991.

The goals of this measure are admi-rable and ones that I fully support.Our competitiveness overseas ts anIssue vital to the health of our econo-my-and especially in the field of tele-communications which is one of thekeys to future growth In this the In-formation age. In this regard. figuresshowing a trade deficit In telecom-munications equipment are certainlyalarming, when our dominance In theindustry was unchallenged Just adecade ago. We must look closely atcurrent policy which prevents nearly50 percent of our telecommunicationsindustry from participating in productdevelopment and manufacturing and Icompliment the chairman and theCommerce Committee for theirthoughtful work In this area.

Earlier today. Senator INouy and Ioffered an amendment that I believewould have added some importantsafeguards to this bill and, althoughour amendment was not adopted, I amhopeful that the specific issues ad-dressed In our amendment will be con-sidered as this bill proceeds. As thisbill is however; I am concerned thatthe safeguards it includes do not gofar enough to lessen the opportunitiesand ncentives for the Bell Co. toengage in anticompetitive behavior inthis manufacturing enterprises at theexpense of ratepayers. other consum-ers and manufacturers. :

The record of anticompetitive behav-ior in this industry is difficult toignore when considering this issue.The original divestiture of AT&T wasbrought on by some of the worst anti-trust abuses in our history. More re-cently, the U. West and NYNEXscandals were on front pages aroundthe country. It is unclear that this billwill do enough to discourage such be-havior in the future.

I am pleased that the Simon andMetzenbaurn amendments were adopt-ed earlier. I believe that. in improvingthe regulatory safeguards in this bill.these changes go a long way to ensurethat local ratepayers and other con-sumers will be shielded from the costsof any anticompetitive behavior.

However. the potential for self-deal-ing abuses remains. While the Region-al Bell Co. maintain monopoly controlover local telephone service, opportu-rties and incentives exist for them tofrustrate and impede competition.

Our telecommunications manufac-turing industry has growmn during thelast 10 years and has brought to us aplethora of new products-everythingfrom network switches to consumerservices such as call waiting and callerID. This is not a weak industry-its ex-ports are increasing and are daily gain-Ing on the trade deficit. As I said earli-er In this debate, this vibrant industry

TE S7103Is not concerned about new compeli-tlon; It is concerned about the poten-tial for the establishment of an unfairplaying field with the enactment ofthis measure.

In this regard. I am pleased that thepotential for self-dealing will belooked at closely In conference and amhopeful that measures such as thosesuggested by Senator INoury and Iwill be included in the conferencereport. I am hopeful that. at thattime, I will be able to support a meas-ure that ensures a fair market and es-tablIshes a system that produces thebest products at the least coat, In acompetitive market, ratepayers. otherconsumers, the manufacturing Indus-try, our International competitivenessand the Bells themselves will all bene-fit. However, until a competitivemarket can be guaranteed, the risks toconsumers, to manufacturers and tothe industry are too great.

Mr. President. I urge the rejection ofthis bil.

Mr. HARKIN. Mr. President, I riseto express concern about S 173.

The telecommunications and nfor-"mation industries are enormously im-portant to our Natioe's economy be-cause they play an Increasingly impor-tant role In the lives of our citizens,both at work and in the home. The en-actment of a. 173 would undoubtedlyinfluence the evolution of these indus-tries for many years to come. The billthus warrants careful scrutiny.

It is bnaportant to remember that themodified final Judgment is the productof two major governent suits Involvingdecades of alleged antitrust violationsby the former components of the BellSystem. The manufacturing restric-tion was imposed on the Bell Cos. be-cause they maintained the local tele-phone monopolies when AT&T brokeup in 1984. Divestlture was costly anddisruptive, but many think It wasworth the benefits that resulted fromincreased competition in equipmentmanufacturing and In long distancetelephone services. In those two areas.prices are down. quality Is up and con-sumer choices have expanded.

The question which must be ad-dressed is whether removing the man-ufacturing restriction will increasecompetition, or reduce It, According toBell Communications Research. thejoint research arm of the 7 regionalcompanies, there are now 9.000 suppli-ers of products to the Bell System, aremarkable increase over the 2.000which existed In 1984. But would S.173 simply add seven major new play-ers to the market or allow for the dis-placement of already existing compel-tion? If the latter Is true, then I can'thelp but be concerned.

If the Bell Cos. are allowed to manu-facture the big ticket telecommunica-tions equipment necessary to operatetheir networks, they would almost cer-taindy buy from their own manufac-turing affiliates thus excluding othersuppliers in the marketplace. By


S 7104 CONGRESSIONAL RECORD - SENATEhaving ownership interests in theirsuppliers, the Bell Cos. would have theOpportunity and the incentive tocharge themselves higher prices forthe equipment, passing on the extraclarges oP to their captive ratepayers.Ln the end. it Is these ratepayers whoare forced to fund the local telephonemonopoly becuase they only have onetelephone service form which to.ch6ose. A system such as this wouldinevitably lead to higher rates for con-

I1m also concerned about institution-al upstlios embodied in this bill. Con-gries" often changes rules of decisionby amending the law on which a courtdecision Is based: but amending Judi-ial, consent decrees, especially where.

as here; we are not touching the stat-"ute on which the decree is based, Ishighly unusual. I am worried that'Congress may be setting a bad prece-dent by amending Judicial consent de-crees under these conditions. Most ofus have only a passing familiarity withthe evidence in U.S. versus AT&T, andI doubt that any of us had read thecourt rulings that we would be over-turning with this statute. Should thedisposition of antitrust litigation.based on our Nation's moat venerabletrade regulation statute, the ShermanAct, and abundant specific evidence ofanticompetitive conduct, really besecond-guessed in a forum that hasnot carefully reviewed the record?

Mr President. communicationsequipment shipments grew at a rapidPace during the 1980's and today thetelecommunications manufacturing in-dusts'y. in America i healthy, vibrant,and still Vrowing. Many industry ex-pear attribute the success of telecom-mudeatIons in.America to the indus-try-xtructure that was put in place bythe .1982 antitrust decree. Mr. Presi-dent..I think is is very unwise to turnback the clock now by passing bad leg-islation when we have a strong andgrowing industry.

Mr. RMaLE. Mr. President. I risetO •j a a cosponsor of 5. 173, theTelopmmurnications Equipment Re-ReaXch and Manufacturing Competi-tion Act of 1991.

Our great challenge as a nation is torebuild our industrial base so all citi-sen can obtain quality jobs. In orderto. do. thba we must save more, investmore,. become better educated andmore productive, and increase ourtechnological base. Lifting the manu-fatwling restrictions on the Bell Cos..ha4,,the potential to both improve ourtohnological base to meet the needsof.the next century and improve ourlq496trial base by investing in and cre-ating more manufacturing Jobs athome.

In the 7 years since the modifiedfinal judgment placed manufacturingroatctons on Bell Cos., our trade Po-sitl0n in the field of telecommunica-tions has declined rapidly. Shortlybefore the MFJ, we had a surplus intelecommunications trade. Last year-Ia year in which there was some im-

provement-we had a telecormmunica-tions trade deficit of about $800 mil-lion. Since 1984, our cumulative tele.communications trade deficit has ex-ceeded $15 billion.

Our own trade position may beworse than an initial look would leadus to believe. A significant quantity ofthe components in American manufac-tured telecommunications goods wereproduced abroad. In addition, much ofthe export value attributed to theUnited. States comes from foreignowned companies that have plants Inthe United States. And the trendtoward foreign ownership of telecom-munications companies in the UnitedStates has accelerated: dozens of U.S.manufacturers have been bought byforeign manufacturers since the man-ufacturing restrictions were put inplace. While we should not complainthat foreign-owned companies aremanufaecturing and investing in theUnited States, we would be In a muchbetter position if more U.S. manufac-turers were owned by U.S. entities.

While our trade deficit continues togrow, our foreign competitors haveratcheted up their ability to competein telecommunications. Japanese firmshave dramatically increased theirspending in research and developmentover the past decade. And this newpush comes as if the Japanese tele-communications industry were not al-ready doing well. Far from It: Japanhad a $22 billion surplus with theUnited States in telecommunications,computers, and electronics last year.

The trade figures I have cited arenot some abstract figure on a ledgersheet-they represent lost Jobs andlost opportunities for American work-ers. Since 1984, 60,000 telecommunica-tions manufacturing Jobs have beensent abroad. In my State. MichiganBell has lost half of its workforce andthe Communications Workers ofAmerica has seen Its membershipdwindle over this period.

The jobs that are being lost arehigh-quality Jobs that enable workersto own homes and send their childrento college. Too often for the workerswho lose their jobs and for workerswho never had the opportunity to getthese good Jobs, the alternatives arefar less attractive-mostly in lowerpaying areas in which their skills willbe underutlized. Many of the prob-lems we have as a society-crime, drugabuse, racism-are made worse whenthe number of good Jobs shrinks. Andwe will continue to see these AmericanJobs move to Mexico, or China orJapan, or some other country unlesswe do something to turn this around.

The manufacturing restriction onthe Bell Cos. currently in place pre-vents us from putting our best teamon the field: and n our extremelycompetitive world, that means that wewill lose games that we should win. Wesimply cannot continue to afford toleave major players out of our lineup.

The Bell Cos. have a great deal ofexpertise in telecommunications. The

June 5, 1991seven Regional Bell Operating Cos.employ 2 percent of all Americanworkers and have annual revenues of$77 billion. It's time we allowed themto get back Into the business of pro-ducing telecommunications equip-ment.

At the same time that the manufac-turing restrictions are lifted, theremust be safeguards to ensure that con-sumers will not be hurt and that com-petitive U.S. manufacturers retain fairaccess to markets. The bill contains aseries of provisions designed to pre-vent abuses such as cross-subsidizationand self-dealing. The 'CC has theduty to enforce these provisions andthey must be rought in doing so.

Lifting the manufacturing restric-tions should mean not that marketshare is simply moved from one U.S.company to another-it must meanthat Jobs are created here and thatthey remain here. Tough domesticcontent provisions are vital to ensur-ing that the United States regain itsleadership in telecommunications. Thebill requires that the Bell Co. conductall of their manufacturing In theUnited States.

Yet despite the fact that the domes-tic content provisions are supported byboth the Bell Co. and the Communica-tions Workers of America, members ofthe President's Cabinet have indicatedthat they weill recommend a veto ofthis bill if it contains any domesticcontent provision.

It is unfortunate that the admlnis-tration is taking this view-but it isnot surprising. For 11 years, we haveseen administrations sit and watchwhile American Jobs have moved over-seas and left American workers worseoff. The legislation we have on thefloor today is designed to improve U.S.competitiveness with domestic contentprovisions that ensure that jobs stayin the United States. It is my hopethat should this bill reach the Presi-dent with a domestic content provisionin It. he will ignore the advice of mem-bers of his cabinet and sign a bill thatcreates and keeps jobs at home.

I urge my colleagues to support thisbill and I thank the distinguishedchairman of the Commerce Commit-tee for the leadership he has shown inthis matter.

Mr. BIDEN. Mr. President, I rise fora brief statement on S. 173, the Tele-communications Equipment Researchand Manufacturing Act of 1991. Thelegislation. introduced by my verygood friend and the chairman of theCommerce Committee. Senator HOL-LIN0S, would allow the Bell OperatingCos. EBOC'sl to manufacture telecom-munications equipment, one of threelines of business from which they arecurrently precluded by the modifiedfinal Judgment of the AT&T consentdecree.

This legislation has many benefitsand Senator HoUAunob has Workedlong and hard In producing a fineproduct. His efforts to make U.S. con-


CONGRESSIONAL RECORD - SENATEpanics more competitive international-ly and at the same time protect Ameri-can workers are to be commended.

In the end. my vote on 5. 113 is avery close calL But I must do what Ibelieve is in the conumers" best inter.et-4nd that Is to vote against the leg.Islation.

My principal concern relates to theissue of cross-subsidization.

My concern s that a BOC will createa manufacturing subsidiary, whichwould then customize its product as tomeet the special needs of the HOC.The HOC would then provide "comps-rable'" opportunities to other manufac-turers to sell to It as S. 173 requires.but the BOC would buy most of Itsequipment from its own subsidiaryanyway-arguing that It is customizedto suit Its needs. The HOC would thenpay inflated prices for the equipment.with those inflated equipment costspassed on to telephone customers inthe form of higher rtes. In this way.conuomers of local telephone servicewould subsidize a BOC's manufactur-Ing subsidiary.

While S. 173 does contain some safe.guards on crosaaubsidization. 1 do notbelieve that they are adequate.1 hus. Iwill vote against this bill today. If,however, the Issue of cross-subsidiza-tion is addressed in conference by anamendment limiting the ability of theBOC's to engage in self-dealing, I re-serve the right to vote for the bill atthat time. Given the benefits the billdoes offer, I sincerely hope that thei sue of self-dealing can be resolved inconference.

AM5W DM 'T 282Mr. SASSER. Mr. President, I am

pleased at the action of the Senatelast night in adopting the amendmentof my colleagues from South Dakota.Mr. PMSLraL

I am a cosponsor of this amendment,which I believe will offer a valuablemeasure of protection for our ruraltelephone companies. A modern, state-of-the-art telephone network is criticalfor rural America-critical for develop-ment. critical for education, criticalfor health.

Access to highly advanced telecom-munications facilities Is essential for acommunity to attract industry. Moreand more business Is driven by accessto information. Companies requireaecess to visual transmission and thecapacity to use and send sophisticatedengineering and technological infor-mation.

A company In my State of Tennesseecan communicate as easily today withParis. France, as it could with Paris.TN. 25 to 30 years ago. And unless atelephone company can offer thatkind of telecommunications capacitythe local community will not be ableto attract business and jobs.

In the same way. a top-notch tele-communications system offers ruralcommunities access to educational op-portunities that would otherwise beclosed to them. Many of the communi-ties In my State simply cannot afford

to offer many advanced, highly spe-cialized courses, They cannot afford todedicate a teacher salary to onenarrow area.

Through modern two-way visual andvoice communications, several schoolsystems can pool their resources andhire one teacher or obtain access touniversity professors. There will bemajor advancements in this area inthe near future and I want to assurethat rural Tennessee and rural Amer-ica share in that future.

Medicine is another area which Is be-coming more and more dependent ontechnology and telecommuncatiosCommunities which in the past werelucky to have a doctor at all now senddata on their difficult cases to special-isa and university hospitals. They canconsult with top specialists, not bytrying to describe symptoms, but bysharing the actual test results. Thisallows them to offer a level of care un-dreamed of even a few years ago.

Mr. President, I've lived In ruralAmerica. I remember when electricitycame to parts of my State. The nextgeneration of telecommunicationstechnology will be as basic and essen-tial as electricity was then. Ouramendment will ensure that ruralareas are part of that telecommunica-lions revolution.

First of all, it requires the Bell Cos.to make software and equipment avail-able to other telephone companies ona nondiscriminatory basis. This is par-ticularly important in the area of soft-ware. which is rapidly becoming thekey in telecommunications. All toooften prior to divestiture, rural tele-phone companies had difficulty in ob-taLning access to equipment. We mustensure that doesn't happen again.

Sec-,nd, our amendment requires theBell Cos. to continue to make equip-ment available as long as reasonabledemand exists. The equipment used bysmall companies is often not as profit-able for manufacturers as are largersystems. A manufacturer seeking totrim his product line might be tempt-ed to drop equipment vital to ruraltelephone companies. Our amendmentwill prevent that.

Third. the amendment requires theBell Co. to engage in joint networkplanning. Small telephone companiesneed to be involved in the planningprocess to ensure that the nationaltelephone network is accessible to all,

Finally. our amendment allows inde-pendent companies to go to court toenforce the safeguards contained inthe bill. This is a critical part of theamendment. I must say I have notbeen impressed with the FCC's sensi-tivity to rural and other independenttelephone companies' past complaintsabout refusals to provide equipment.This part of the amendment will allowthese small telephone companies toobtain effective relief.

So. Mr. President. it was a pleasureto work with the Senator from SouthDakota (Mr. PnasaLul on this amend-ment. He is to be commended for of-

fering It, and I thank the-managers ofthe bill for accepting It .

Ii or O0 DOMaU5C cONTr"Mr. IEOLL Mr. President. I would

like to clarify a couple pohnt aboutthe enforcement of the domstic con-tent provisions. In particular. I wouldlike to ask the distinguished chairmanof the Commerce Committee, thesponsor of the TelecommunicationsEquipment Research and Manufactur-ing Competition Act of 1991 . andwhether It Is the intent of the commit-tee that the certiicatlion requiredunder section 2t7 (c)(3XC1(I) be madeavailable to the public in a timelymanner. This provision requires manu-facturing affiliates to certUfy that agood faith effort was made to obtainequivalent parts manufactured in theUnited States at reasonable prices,terms, and conditions.

Mr. HOLLINOS. The Senator is cor-rect, It is the intent of the committeeto compel the Federal Communica-tions Commission to make these cert-fIcatIons available to the public In atimely manner.

Mr. RIULE I believe that Ameri-can firms should have real opportuni-ties to prove that they can provideparts to manufactuing filliates atreasonable prices, terms, and condi-tions, Therefore, I would also like toask the distinguished chairman of theCommerce Committee whether it iathe intent of the committee that therequirements under section 227(cX3XDXI) and section 227(cX3)(DXii) be fulfilled in a timelymatter.

Mr. HOLLINGS. The Senator is alsocorrect. It Is the intent of the commit-tee that the Federal CommunicationsCommission fulfill its duty in a timelymanner to determine whether manu-facturing affiliates have made a goodfaith effort to obtain equivalent com-ponent parts manufactured in theUnited States at reasonable prices,terms, and conditions. It is also theintent of the committee that the Fed-erul Communications Commission ful-fill its duty in a timely manner to de-termine whether or not manufactur-ing "affiliates have met the require-ment that the percentage of compo.nents manufactured outside theUnited States does not exceed thelimits called for in the legislation. Fur.ther. it is the intent of the committeethat the Federal CommunicationsCommission rule in a timely manneron complaints filed by suppliers claim-Ig to have been damaged because a

manufacturing affiliate failed to makea good faith effort to obtain equiva-lent parts manufactured in the UnitedStates at reasonable prices, terms, andconditions

Mr. RIEGLE. I thank my distin-guished colleague for these clarifica-tions and for his leadership on thislegislation.. The PRESIDINO OFFICER. Thebill is before the Senate and open toamendment. If there be no further

$7105June 5, 1991


S7106 coilamendment to be proposed, the ques-tion is on the engrossment and thirdreading of the bill.

-The bill was ordered to be engrossedfor a third reading and was read thethird time.

.The PRE8IDINO OFFICER. Thequestion occurs on the passage of thebill an amended. The yeas and nayshave not yet been ordered.. I Mr. HOLLINO. They have. I asked

-for the yeas and nays. I think theyhave been.. The PRESIDING OFFICER. Isthere a sufficient second? There is asufficient second.

The yeas and nays were ordered.The PRESIDING OFFICER. The

bill having been read the third time,the question is. Shall the bill pass?

The yeas and nays have been or-dered and the clerk will call the roll.

The bill clerk called the roll.Mr. FORD. I announce that the Sen-

ator from Iowa [Mr. fIaRxin], the Sen-ator from Massachusetts [Mr. KKgmr-

IDY. and the Senator from Colorado(Mr. WrnHl are necessarily absent. Ialso announce that the Senator fromArkansas (Mr. PRYOR] Is absent be-cause of Illness,

I further announce that. If presentend voting, the Senator from Massa-chusetts [Mr. Kjarltuyl would vote"aye."

Mr. SIMPSON. I announce that theSenator from Rhode Island [Mr.CUATM] is necessarily absent.. The PRESIDING OFFICER. Arethere any other Senators in the Cham-be- who desire to vote?

The result was announced, yeas 71.nays 24. as follows:

Mollcall Vote No. 9 Leg.]YEAS-71

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NOT VOTINO-5Chaee Kennedy W tbRk PryarSo the bill (S. 173). as amended, was

p(ted as follows:

GRESSIONAL RECORD - SENATE8.173

Be it enacted by the Senate and House ofRePrew itivlr of the United States ofAmerica in Congress osembled,5ECflON L SHOR TITLE.This Act may be cited as the "Telecom-

munications Equipment Research and Man-ufacturing Competition Act of 191".SEC.L IrlLNGS.

The Congress finds that the continuedeconomic growth and the international com-petitiveness of American industry would beassisted by permitting the Bell TelephoneCompanies, through their afftliates. to man-ufacture (including design, development.and fabrication) telecommunications equiv-ment and customer premises equipment.and to engage in research with respect tosuch equipment.SE. L AMENDMENTS TO THE COMMUNICATIONS

ACTOF 14,Title II of the Communications Act of

1934 (47 U..C. 201 et seq.) is amended byadding at the end the following new section:

"REGULATION Of ANUFACTU Oleo BT SELLT31InONsg oMPAMSs

Sc. 227. (a) Subject to the requirementsof this section and the regulations pre-scribed thereunder, a Bell Telephone Com-pany. through an affiliate of that Company.notwithstanding any restriction or obliga-tion imposed before the date of enactmentof this section pursuant to the Modificationof Final Judgment on the lines of businessIn which a Bell Telephone Company mayengage, may manufacture and provide tele-communications equipment and manufac-ture customer premises equipment. exceptthat neither a Bell Telephone Company norany of Its affiliates may engage in suchmanufacturing in conjunction with a BellTelephone Company not so affiliated or anyof Its affliates.

"b) Any manufacturing or provion au-thorized under subsection is) &hall be con-ducted only through an affiliate (hereafterin this section referred to as a 'manufactur-ing aff~llate') that is separate from any Bell

Telephone Company."(c) The Commission shall prescribe regu-

lations to ensure that-(1XA) such manufacturing affiliate shall

maintain books, records, and accounts sepa-rate from Its affiliated Bell Telephone Com-pany, that Identify all transactions betweenthe manufacturing affiliate and Its affill-ated Bell Telephone Company;

"(B) the Commlsion and the State Com-missions that exercise regulatory authorityover any Bell Telephone Company affiliatedwith such manufacturing affiliate. shallhave acces to the books, records, and ac-counts required to be prepared under sub-paragraph (A): and"(C) such manufacturing affiliate shall.

even If It is not a publicly held corporation.prepare financial statements which are incompliance with Federal financial reportingrequirements for publicly held corporations.and file such statements with the Conmis-sin and the State Commissions that exer-cise regulatory authority over any Bell Tele-phone Company affiliated with such manu-factoring affiliate, and make such state-meits available for public inspection'"(2) consistent with the provisions of this

section. neither a Bell Telephone Companynor any of its nonmanufacturing affiliatesshall perform sales, advertising, Installation.production. or maintenance operations for amanufacturing affiliate; except that institu-tional advertising, of a type not related tospecific telecommunications equipment. car.ried out by the Bell Telephone Company orits affiliates shall be permitted If each partypays Its pro rats share;

June 5, 1991"(3)A) such manufacturing affiliate shall

conduct all Of its manufacturing within theUnited States and, except as otherwise pro.vided In this paragraph, all component partsof customer premises equipment manufac-tured by such affiliate, and all componentparts of telecommunicatlons equipmentmanufactured by such affiliate. shall havebeen manufactured within the UnitedStates;

-- B) such affiliate may use componentparts manufactured outside the UnitedStates If-

"'(i) such affiliate first makes a good faitheffort to obtain equivalent component partsmanufactured within the United States atreasonable prices, terms, and conditions:and

"(ilt for the aggregate of telecommunica-tions equipment and customer premisesequipment manufactured and sold in theUnited States by such affiliate in any calen-dar year. the cost of the components manu-factured outside the United States con-tained in the equipment does not exceed 40percent of the sales revenue derived fromsuch equipment;

-(Ci any such affiliate that uses eomponent parts manufactured outside the UnitedStates in the manufacture of telecommuni-cations equipment and customer premisesequipment within the United States shall-

-it certify to the Commission that a goodfaith effort was made to obtain equivalentpats manufactured within the UnitedStates at reasonable prices, terms, and con-ditions, which certification shall be filed ona quarterly basis with the Commission andlist component parts, by type, manufacturedoutside the United States; and

"Iil) certify to the Commission on anannual basis that for the aggregate of tele-communications equipment and customerpremises equipment manufactured and soldin the United States by such affiliate in theprevious calendar year, the cost of the com-ponents manufactured outside the UnitedStates contained In such equipment did notexceed the percentage specified in subpara-graph (BXlit or adjusted in accordance withsubparagraph (0):

"()(I) If the Commission determines,after reviewing the certification required insubparagraph CiO. that such affiliatefailed to make the good faith effort re-quired in subparagraph (BXIt or. alter re-viewing the certification required in Sub-paragraph (C)lli. that such affiliate has ex-ceeded the percentage specified in subpara-graph (BXii). the Commission may imposepenalties or forfeitures as provided for Intitle V of this Act;

(il) any supplier elaiming to be damagedbecause a manufacturing affiliate failed tomake the good faith effort required in sub-paragraph (BXi) may make complaint tothe Commission as provided for in section208 of this Act. or may bring suit for the re-covery of actual damages for which suchsupplier claims such affiliate may be liableunder the provisions of this Act in any dis-trict court of the United States of compe-tent jurisdlction:

"E the Commission. in consultation withthe Secretary of Commerce. shall, on anannual basis, determine the cost of compo-nent parts manufactured outside the UnitedStates contained in all telecommunicationsequipment and customer premises equip-ment sold in the United States as a percent-age of the revenues from sales of suchequipment in the previous calendar year

-IF) a manufacturing affiliate may use in-tellectual property created outside theUnited States in the manufacture of ete-comnunlcations equipment and customerPremises equipment in the United Stales:


June 5, 1991 CONGRESSIONAL RECORD - SENATE'(0) the Commission may not waive or

alter the requirements of this subsection.except that the Commission. on an annualbasis. shall adjust the percentage specifiedIn subparagraph (BXii) to the percentagedetermined by the Commission, in consulta-tLion with the Secretary of Commerce. as di-rected in subparagraph El:

"(4) no more than 90 percent of the equityof such manufacturing affiliate shall beowned by its affiliated Bell Telephone Com-pany and any affiliates of that Bell Tele-phone Company:

"(5) any debt Incurred by such manufac-turing affiliate may not be issued by Its af-fillates. and such manufacturing affiliateshall be prohibited from incurring debt in amanner that would permit a creditor, on de-fault, to have recourse to the assets of its af.filiated Dell Telephone Company's telecom-municatIons services business:"(6) such manufacturing affiliate shall not

be required to operate separately from theother affiliates of Its affiliated Bell Tele-phone Company;

"(7) Il an affiliate of a Bell TelephoneCompany becomes affiliated with a manu-facturing entity. such affiliate shall betreated as a manufacturing affiliate of thatBell Telephone Company within the mean-ing of subsection (b) and shall comply withthe requirements of tbis section:

"(8i such manufacturing affiliate shallmake available, without discrimination orself-preference as to price, delivery, terms,or conditions, to all regulated local tele-phone exchange carriers, for use with thepublic telecommunlcations network, anytelecommunications equipment, includingsoftware integral to such telecommunica-tions equipment, including upgrades. mnu-factured by such affiliate so long as eachsuch purchasing carrier-

'IA) does not either manufacture telecom.munications equipment, or have a manufac-turing affiliate which manufactures tele-communications equipment, or"'(B) agrees to make available, to the Bell

Telephone Company affiliated with suchmanufacturing affiliate or any of the regu-lated local exchange telephone carrier affili-ates of such Company, any telecommunica.tLions equipment, including software integralto such telecommunications equipment, in-eluding upgrades manufactured for use withthe public telecommunications network bysuch purchasing carrier or by any entity ororganization with which such purchasingcarrier is affiliated:

"(9)A) such manufacturing affiliate shallnot discontinue or restrict sales to otherregulated local telephone exchange carriersof any telecommunications equipment, in-cluding software Integral to such telecom-munications equipment. including upgrades.that such affiliate manufactures for sale aslong as there is reasonable demand for theequipment by such carriers: except thatsuch sales may be discontinued or restrictedif such manufacturing affiliate demon-strates to the Commission that it is notmaking a profit, under a marginal coststandard implemented by the Commission.on the sale of such equipment:

"(Di in reaching a determination as to theexistence of reasonable demand as referredto in subparagraph (A), the Commissionshall within sixty days conider-

"(I) whether the continued manufactureof the equipment will be profitable:"(I1) whether the equipment is functional.

ly or technologically obsolete:"(Ili) whether the components necessary

to manufacture the equipment continue tobe available;

"(li) whether alternatives to the equipment are available in the market: snd

"v) such other factors as the Commissiondeems necessary and proper;

"(t0) Bell Telephone Companies shall,consistent with the antitrust laws. engage inJoint network planning and design withother regulated local telephone exchangecarriers operating in the same area of inter-est: except that no participant in such plan-ning shall delay the introduction of newtechnology or the deployment of facilitiesto provide telecommunications services, andagreement with such other carriers shallnot be required as a prerequisite for such in-troduction or deployment; and

"(11) Bell Telephone Companies shall pro-vide. to other regulated local telephone ex-change carriers operating in the sne areaof interest, timely information on theplanned deployment of telecommunicationsequipment, including software Integral tosuch telecommunications equipment, includ-ing upgrades:

"(d)(l) The Commission shall prescriberegulations to require that each Bell Tele-phone Company shall maintain and filewith the Commission full and complete in-formation with respect to the protocols andtechnical requirements for connection withand use of Its telephone exchange service fa-cilities. Such regulations shall require eachsuch Company to report promptly to theCommision any material changes orplanned changes to such protocols and re-quirements, and the schedule for implemen-tation of such changes or planned changes.

"(2) A Bell Telephone Company shall notdisclose to any of Its affiliates any informa-tion required to be filed under paragraphil) unless that Information is inmediatelyso filed.

"(31 The Commission may prescribe suchadditional regulations under this subsectionas may be necessary to ensure that manu-facturers in competition with a Bell Tele-phone Company's manufacturing affiliatehave ready and equal access to the informa.tion required for such competition thatsuch Company makes acailable to its manu-facturing affiliate.

"(e) The Commlsson shall prescribe regu-lations requiring that any Bell TelephoneCompany which has an affiliate that en-gages in any manufacturing authorized bysubsection (a) shall-

"It) provide, to other manufacturers oftelecommunications equipment and custom-er premLses equipment, opportunities to sellsuch equipment to such Bell TelephoneCompany which are comparable to the op-portunities which such Company providesto its affiliates;

"(2) not subsidize its manufacturing afflI-ate with revenues from Its regulated tele-communications services; and

"(3) only purchase equipment from Itsmanufacturing affiliate at the open marketprice.

"(f) A Bell Telephone Company and its af-filiates may engage in close collaborationwith any manufacturer of customer prem-ises equipment or telecommunicationsequipment during the design and develop-ment of hardware, software, or rombina-tlions thereof relating to such equipment,consistent with subsection (e)(2).

"1g) The Commission may prescribe suchadditional rules and regulations as the Com-mission determines necessary to carry outthe provisions of this section.

"(h)l) For the purposes of administeringand enforcing the provisions of this sectionand the regulations prescribed thereunder.the Commission shall have the same au-thority. power. and functions with respectto any Bell Telephone Company as theCommisn&ion has in administering and en-forcing the provisions of this title with re-

S 7107spect to any common carrier subject to thisAct."(2) Any regulated local telephone ex-

change carrier Injured by an act or omissionof a Bell Telephone Company or Its manu-facturing affiliate which violates the re-quirements of paragraph (8) or (9) of sub-section (c), or the Commission's regulationsImplementing such paragraphs, may Initiatean action In a district court of the UnitedStates to recover the full amount of dam-ages sustained In consequence of any suchviolation and obtain such orders from thecourt as are necessary to terminate eistingviolations and to prevent future violations;or such regulated local telephone exchangecarrier may seek relief from the Commis-sion pursuant to sections 208 through 209."(I) The authority of the Commission to

prescribe regulations to carry out this sec-tion is effective on the date of enactment ofthis section. The Commission shall prescribesuch regulations within one hundred andeighty days after such date of enactment.and the authority to engage in the manufac-turing authorized In subsection (a) shall nottake effect until regulations prescribed bythe Commisson under subsections (c). (d.and Ie) are In effect."(J) Nothing in this section shall prohibit

any Bell Telephone Company from engag-ing. directly or through any affiliate, In anymanufacturing activity in which any Com-pany or affiliate was authorized to engageon the date of enactment of this section.

"(kXl) A Bell Telephone Company thatmanufactures or provides telecommunica-tions equipment or manufactures customerpremises equipment through an affiliateshall obtain and pay for an annual auditconducted by an independent auditor select-ed by and working at the direction of theState Commission of each State in whichsuch Company provides local exchange serv-ice, to determine whether such Companyhas complied with this section and the regu-lations promulgated under this section. andparticularly whether the Company has com-piled with the separate accounting require-ments under subsection (Xi)."(2) The auditor described In paragraph

(I) shall submit the results of such audit tothe Commission and to the State Commis-lson of each State in which the Company

provides telephone exchange service. Anyparty may submit comments on the finalaudit report.

"(31 The audit required under paragraph(1) shall be conducted in accordance withprocedures established by regulation by theState Commisslon of the State In whichsuch Company provides local exchange serv-ice, including requirements that-

"(A) the independent auditors performingsuch audits are rotated to ensure their Inde-.pendence; and

"Bl each audit submitted to the Commis-sion and to the State Commission is certi-fied by the auditor responsible for conduct-Ing the audit."4) The Commission shall periodically

review and analyze the audits submittedtoit under this subsection. and shall provide tothe Congress every 2 years-

"(A) a report of its findings on the compli-ance of the Bell Telephone Companies withthis section and the regulations promulgat-ed hereunder. and

"ID) an analysis of the impact of such reg-ulations on the affordability of local tele-phone exchange service."(5) For purposes of conducting audits

and reviews under this subsection, an Inde-pendent auditor, the Commission, and theState Commission shall have access to thefinancial accounts and records of each BellTelephone Company and those of Its affill-


S7108 CO!atM (icluding affiliates described in pars.graph& (6) snd (7) of subsection (ci) nece-SAy to verify transactions conducted withsuch Belt Telephone Company that are rele.vant to the specific sctivities permittedunder thils aecton and that are neceary tothe States egeulation of telephone ratesEach State commisson, sh implement -SUOewiate Procedures to ensure the protc-Uon Of any proprietary Information Submit-ted to it under this section.

"(1) An used In this section:"(1) The teem 'affiliate' meas amy organi-Nation or entity that directly or Indirectly.owns or controls. is owned or controlled by.or in Under common ownership with a BellTelephone Company. Such term includesany Organization or entity (A) In which aBell Telephone Company and any of Its af-fillates have an equity interest of geaterthan 10 perent or a management interestof greater than 10 percent. or (S) In which aBell Telephone Company and any of Its af-fUlates have any other significant financialInterest.

"(2) The term 'Bell Telephone Comoany'means those companies lted in appendix Aof the Modlilcation of Final Judgmrent, andIncludes any successor or assign of may suchcompn.y, but does not Include any affiliateof any such company."(3) The term 'customer premises equip-

ment means equipment employed on thePremises of a person (other than a carrier)to originate, route, or terminate telecom.municatitons.

"(4) The term 'manufacturing' has theSame meaning as such term has In the Modl.fLeatCn of Final Judgment as interpreted inUnited States v. Western Electric, CivilAction No. 82-0192 (United States DistrictCourt, Distrct of Colombi) (filed Decem-her 3, 187"(5) The term Modification of Final Judg.

ment' means the decree entered August 24.1082. In United States v. Western Electric,Civil Action No. 82-0192 (United States Dis-trict Court. District of Columbia)."(8) The term "telecommunlcations' means

the tranmision, between or among pointsspecife by the user, of information of theuser's ehoosing. without change In the formor content of the Information as sent andreceived, by means of an electromagnetictransmission medium including all ismtru-mentalities, facltie& apparatus, and aerv.ices (including the collection, storage, for-wardng, switching. and delivery of such in-formation) esential to such transmission.

"(7) The term -telecommunications equip-ment' moans equipment. other than custom-er premise equipment, used by a carrier toprovide telecommunications services."(8) The term 'telecommunications serv-

ice' means the offering for hire of telecmo.municatlons facilities, or of telecomasunica.tions by means of such facilities.".a= 4. ADDOIKAL AM3=WOiyi TO THE COU-00C555o0a ACO 05,Section 220(d) of the Communications Act

of 194 (47 U.S.C. 220(d)) Is amended by de-leting "$,000" and Inserting In lieu thereof

SEC. & APPLICATION OF ANTIrSUST LAWS.Nothing in this Act shall be deemed to

alter the application of Federal and Stateantitrust laws as interpreted by the respec-tive courts

TI1Z----4NERAL PROVISIONSSEC. 1i1. SENSE 0F TiE SWKA'I REGARDING THE

XATOXAL VICIORY PARAD iOa TUNPERSAN GULZ was

It Is the ame of the Senate Uta anycountry-

(1) for which United StAtes assistance isbeing withheld from obligation mad expendl-

NGRESSIONAL RECORD - SENATE June 5, 1:,11ture pursuant to section 481(h)(5) of the ACCESS TO HEALTH CARE FORForeign Assistance Act of t91: or ALL AMERICANS(2) which is listed by the Secretary of

State under section 40(d) of the Arms Mr. KENNEDY. Mr. President, on aExport Control Act or section 8(J) of the matter which was addressed earlierExport Administration Act of 1979 as a today by the majority leader and acountry the government of which has re- grout of Senators In advancing thepeatedly provided support for acts of Inter- cause of access to health care and ef-national terrorism, fective cost containment, I noticedshould not be represented, either by diplo- during the afternoon that there werematie, military, or political officials, or by negative commets from some of ournational images or symbols, at the victory colleagues about what I consider to beparade scheduled to be held in Washington.District of Columbia on June 8. 1991 to eel- excellent proposal that has nowebate the liberation of Kuwait and the vie- been introduced.tory of the United Nations coalition forces The majority leader indicated that itover Iraq. represented the joint effort of a

Mr. HOLLINGS. I move to reconsid- number of Senators. building on theer the vote. work that has been done by Members

Mr. DANFORTH. I move to I- that on both sides of the aisle, and he indi-

motion on the table. cat rd during the course of his prcss

The motion to lay on the table was conference that he was eager to work

Wv-eed to. witl all of those In this body and rut-

Mr. HOLLINGS. Mr. President. I side this body who are concerned. as

take this opportunity to thank our d he is, with the Increasing costs In ourtaketisopostafnity ca tell your is- health care systems.tnihed staff, I carn tell you they We are facing a health care crisis.have worked around the clock and Health care is the fastest groaing fall-done yeomen's work, John Windhou- Ing business In America. In 1970. thesen. Toni Cook. Linda Morgan Jim United States was spending $65 bills'nDrewry, Loretta Dunn, and Kevin on health care. Now we are spendingCurtin, the whole Commerce Commit- S650 billion a year. The best estimatetee staff over there, plus my own staff, is It will be $1 trillion 500 billion by

I want to thank our distinguished the year 2000.counterpart and former chairman, the The time ha.s come. Mr. President.distinguished Senator from Missouri for action. This public policy Lssue has[Mr. DANFORTH), Walter McCormick, been studied to death. Real peoile areof his staff, and others. We have had a hurting. The 10 million children in ourbipartisan effort, as Is obvious from society who have no coverage are hurt-the vote. ing. Millions of workers without cover-

Mr. DANPORTH. Mr. President, I age are hurting. They work hard everysimply want to express my apprecia- day. 40 hours a week. 52 weeks of thetion for the work of our chairman, year. and have no health InsuranceSenator HotiuN0s. This has beets a re- coverage. They're playing Russian rmu-markable accomplishment. Many lette with their health. They are hurt-people have said for a number of years Ing. Sixty million more America'lsthat we have to do something about have health insurance that even thethe present state of affairs in our tele- Reagan administration said was iriad-phone Industry where a Federal judge equate. Approximately 100 million ofbasically makes the decisions. We have our fellow citizens in this country ofnow moved in the direction of Con- 250 million have Inadequate co-erLgegress taking over the decisionmaking, or no coverage at all.which is exactly what should be the Employers are paying too muchcase. today because they are also paying tihe

This is a major accomplishment. I bills for those who have no cover age.think that we are going to have some They're paving In the form of higherdifficulties with the administration, premiums, because other firms refuseand. hopefully, there can be some to provide coierage. Workers In p!'ntsroomd for give with respect to the do- eod factories all over this country are

oproriet rspettont. ed effectively paying te bill for charityIsuportedt mrvhio an, i care for other workers who are notI supported my chairman in this covered.

connection, I intend to continue to We face increasing problems in deal.work with him as the bill progresses, ing with AIDS and substance abuse,and my hope is that we can end up not just in urban areas, but in ruralwith something that the President "reas. as well. Our whole he.lth carewould be willing to sign. system is In a state of crisis. We do not

have time to keep studying the lsstuand keep refusing to deal with It.

MORNING BUSINESS Senior citizens were hurting in theMr. HOLLINGS. Mr. President, on Depression. and with Franklin Roose-

behalf of the leadership, I ask unani- veilt's leadership, we adopted Social Se-mous consent there be a period for eurlty. We did not wait for the vartousmorning business with Senators per- States to try to deal with that prob-mitted to speak therein, lem. In the 1980's. when we adopted

The PRESIDING OFFICER. With- Medicare, we were not sayin=. Let usout objection, it is so ordered. wait to see what the States do. We had

national leadership to deal with the


Document No. 129

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HeinOnline -- 6 Bernard D. Reams, Jr. & William H. Manz, Federal Telecommunications Law: A Legislative History of the Telecommunications Act of1996, Pub. L. No. 104-104, 110 Stat. 56 (1996) including the Communications Decency Act [xli] 1997

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ipmall.law.unh.edu · 2013-04-30 · +(,121/,1(Citation: 6 Bernard D. Reams Jr. & William H. Manz Federal Law A Legislative History of the Telecommunications of 1996 Pub. L. No. 104-104