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Office of the Vice President

For Immediate Release January 11, 1994

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

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

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

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


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

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

Cable-Telco Cross-ownership

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

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

Local Competition

          Competition has generated substantial benefits for consumers
     in a host of communications and information service markets,
     including customer premises equipment and long distance service.
     The varieties of customer premises equipment have expanded
     dramatically since deregulation.  In addition, the price of
     interstate long distance telephone service for the average
     residential user has declined more than fifty percent in real
     dollars since 1984, due to competition and regulatory reform.
     Consumers will realize similar benefits by the expansion of
     competition in the local telephone service market.  Competition in
     that market will reduce the ability of any telephone company to
     harm competition and consumers through monopoly control and will
     encourage investment and innovation in the "on and off ramps" of
     the NII.
          Accordingly, the Administration proposes to ensure that
     competing providers have the opportunity to interconnect their
     networks on reasonable, nondiscriminatory terms, with the
     facilities of all local telephone companies.  Such companies should
     also be required to unbundle their service offerings so that
     alternative providers can offer similar services using a
     combination of, for example, telephone company-provided switching
     and their own transmission facilities.  Finally, the
     Administration's plan will preempt state entry barriers, as well as
     rate regulation of carriers that the FCC finds or has found to lack
     market power.

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

Modified Final Judgement (MFJ) Restrictions

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

          Long Distance Service

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

          Information Services

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


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


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


          The new regulatory framework that the Administration seeks to
     create is designed to adjust to the technological and market
     changes that have undermined the regulatory regime created by the
     Communications Act.  Legislation in this area must stand the test
     of time, by addressing tomorrow's challenges as well as today's.
     The Administration's lodestars in this efforts are flexibility,
     adaptability, and fairness.  The regulatory instruments we choose
     must be supple enough to accommodate the continual change that will
     typify communications industries in the future.  At the same time,
     those instruments must be equitable; similarly situated services
     should be subject to the same regulatory requirements.
          Beyond tackling the problems that have arisen as a result of
     current technological and market changes, the Administration
     recognizes that a new kind of communications service provider will
     emerge, one that offers switched, broadband digital transmission
     services to home and office.  Such firms face the potential of
     being regulated under two different parts of the Communications Act
     -- Titles II (common carriers) and VI (cable communications).
     These firms will also be regulated at the state level for the
     intrastate component of their Title II services and at the local
     level for their Title VI services, creating a needlessly
     overlapping and complex regulatory environment.

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

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

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


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

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

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

     The Administration therefore proposes to:

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

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

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

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