Nader to Markey on Telecom Legislation

[James Love <love@essential.org>]

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TAXPAYER ASSETS PROJECT - INFORMATION POLICY NOTE
February 18, 1994

	The following letter by Ralph Nader and James Love to 
Representative Ed Markey outlines our concerns about (and suggestions 
for) telecommunications legislation that will be considered the week 
after next by the House Subcommittee on Telecommunications and Finance.  


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

               Ralph Nader, PO Box 19312, Washington, DC 20036
               James Love, PO Box 19367, Washington, DC 20036

February 17, 1994

Honorable Edward J. Markey
Chairman, Subcommittee on 
     Telecommunications and Finance
U.S. House of Representatives
Washington, D.C. 20515

Dear Congressman Markey:

     This letter is a follow-up to our statement and oral testimony provided to the Subcommittee on Wednesday, February 9, 1994, on the subject of HR 3636 and HR 3626, the two bills which would substantially re-write the Communications Act of 1934, and re
define the rolls and responsibilities of telephone and cable carriers.  It is a mistake for important legislation such as this is to be compromised by prematurely eager bipartisanship that gives new meaning to lower common denominator foreclosure of later
 improvements.  Given this state of affairs, we outsiders must strive against major odds.  So here goes.

     We recognize that the Congress and the executive branch have largely focused on issues relating to carrier jurisdiction, and the creation of a "level" playing field for carriers.  While adjusting industry disputes is an important issue, we believe th
e Subcommittee has not adequately addressed many large public policy concerns.  The following steps, at the least, should be taken to strengthen the legislation.

     CONSUMER REPRESENTATION

1.   One of the reasons the current debate over telecommunications legislation is so tilted toward the issues of interest to industry is that the carriers are the best organized and best financed participants in the debate.  This focus largely ignores wha
t should be the ultimate purpose of this legislation -- consumer participation, service and meaningful choice.  It is essential that citizen participation be enhanced through mechanisms that make it easier for consumers to organize.  The Citizen Utility B
oard (CUB) model, which provides for democratically controlled and privately funded consumer groups, should be included in HR 3636.  What do you say, oh sponsor of Cable Cub?  Aggressive leadership by you for this mechanism is the civic equivalent to the 
universal solvent.

     COMPETITION IN THE LOCAL LOOP

1.   HR 3636 goes too far in pre-empting state regulation on the issue of entry.  While it is appropriate for the federal government to set a national policy which supports competition for delivery of local switched network services, Congress should not p
revent state governments from imposing reasonable standards for service and reliability.  The states should be able to sanction carriers that engage in fraudulent business practices or violate consumer privacy.

2.   A very important element of any competitive telecommunications strategy is to encourage the development of a competitive wireless industry, which can deliver services to consumers without making large sunk investments in "last mile" facilities.  The 
Federal Communications Commission (FCC), however, has proposed that incumbent telephone, cable and cellular companies may acquire up to 100 Mhz of the available 120 Mhz of new Personal Communication Services (PCS) spectrum.  Cross ownership of telephone, 
cable, and cellular licenses with the new PCS licenses will greatly decrease competition in local services, and it should be expressly prohibited by HR 3636.

3.   Consumer interests should be protected by giving states the authority to regulate the rates for the service, and the entire cable system should operate under strong common carriage rules, ensuring open and non-discriminatory access.

     PRE-EMPTION OF STATE RATE REGULATION

1.   The Clinton/Gore Administration's new Title VII proposal, which was not available to the general public at the time of the Subcommittee's hearings on HR 3626 and HR 3636, proposes vast pre-emption of state rate regulation for Title VII services.  We 
strongly oppose any pre-emption of state authority to protect consumers through the regulation of rates for carrier services.  State governments have shown restraint in regulating prices for services that are truly competitive, but they have long exercise
d the right to protect consumers in markets where competition does not exist.  The FCC is ill equipped to second guess state governments on the issue of defining market power, and it has no claim to experience on the issue of rate making methodology, havi
ng failed to control cable rates.

2.   We believe that pre-emption of state rate regulation for wireless services which passed in the 1992 Budget Reconciliation Act and the pre-emption of state rate regulation of cable services should be repealed.  The FCC need not interfere with state co
mmissions that want to protect consumers in local markets.

     OPEN ARCHITECTURE AND COMMON CARRIAGE

1.   The new broadband networks should operate as common carriers.  Common carriage should extend to the entire capacity of the service, not just the 75 percent required in HR 3636.

2.   HR 3636 sunsets the requirement that video platform carrier provide access to non-affiliated companies in five years.  This sunset provision should be removed.

3.   We believe it is time to require the FCC to regulate cable as a common carrier within a fixed period or time, such as two years.  This is the only step consistent with Congress's professed interest in opening up networks to greater competition.

4.   We oppose provisions that allow telephone or cable companies to own the "content" which travels through the "conduit."  However, if Congress does allow vertical integration, it must provide the strongest possible protection against anti- competitive 
abuses.  The best protection against abuses are found in the language in HR 3626 regarding telephone company entry into electronic publishing.  These protection should be incorporated into the bill, and extended to affiliated video services.
 
5,   Congress should require the FCC to take steps to ensure that the so called "set top" controller for the broadband networks be based upon open architecture and competition.  Consumers should be able to purchase the set top from third party vendors.  M
oreover, the third party vendors should be able to provide consumers with  their own interface, allowing consumers greater control over how they access and locate information.  Persons providing information services should have opportunities to market the
ir services through a non-biased "virtual yellow pages".

     NON-COMMERCIAL INFORMATION SERVICES

1.   We strongly support the public television proposal that 20 percent of the capacity of broadband networks be available at no charge for non-commercial programming.

2.   Congress should establish a fund to support non-commercial information services.  All telecommunications carriers and holders of broadcast license should contribute a fixed percent of revenues to the fund.  Distribution of grants from this fund shoul
d be modeled after the system that has been used in the Netherlands to allocate television broadcast time.

     UNIVERSAL SERVICE

1.   Congress should ensure that a program to provide universal service is in place before it mandates competition at the local loop.

2.   The states should determine the level of contribution to the universal service fund, the definition of universal service, and the purposes for which the universal fund can be used, subject to minimum standards set by the FCC.

3.   Carriers should not be allowed to make in-kind contributions to the universal service fund. 

     PRIVACY

1.   The legislation should ensure that carriers protect the privacy of personal transactions conducted through these services.

We would appreciate hearing your position on these suggestions.  A "DemiRep" mousse is unbecoming to the fighting Ed Markey we once knew on the Hill.


               Sincerely,



               Ralph Nader              James Love


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