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Office of the Press Secretary

For Immediate Release January 25, 1994

I. Introduction

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

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

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

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

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

II. Local Competition and Interconnection

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

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

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

          no restrictions on resale or sharing of network 
     facilities and services.
*    H.R. 3636 would require the FCC to adopt regulations 
     governing the price, terms, and conditions under which 
     carriers may provide interconnections, access, 
     facilities, and services.  The Administration agrees 
     with this general approach, but suggests that some of 
     the details of this provision, such as the tariff filing 
     requirement for LECs, are unnecessary based on current 
     law and practice.  The Administration also would 
     emphasize that, in carrying out this requirement, the 
     FCC and the States must prevent undue rate increases for 
     any class or group of ratepayers.

III. Relations with the States

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

IV. Regulatory Flexibility

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

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

VI. Cable-Telephone Crossownership

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

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

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

Structural Separation:

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

Nondiscriminatory Access Obligations:

Anti-Buyout Provisions:

Franchise Obligations:

Rural Exemption:

VII. Regulation of Two-Way, Broadband Transmission Services

(Title VII)

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

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

Eligibility and Certification

Regulatory Framework for Title VII

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

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

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

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

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

Relations with State and Local Regulators

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

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