==================================================== ################ ############# ################ ## # ## ############# ## ### # ### ### # # # ## # ### ### ## # # # # # # # # ## # # # # ## ## # ## # # # ## ## ## # # ### # ## # # # # # # # ## # ## # # # # ## ### ### ### ### # # # ## # ### # ==================================================== Free Speech Media, LLC Computer Professionals for Social Responsibility November 9 1995 Number 18 ==================================================== Compiled, written, and edited by Coralee Whitcomb Please direct comments and inquiries to cwhitcom@bentley.edu. ==================================================== For more information on Computer Professionals for Social Responsibility, please write CPSR@CPSR.ORG or call 415-322-3778. ==================================================== The Telecom Post is posted to several distribution lists and is also available from the CPSR listserv. To subscribe, send to LISTSERV@CPSR.ORG with the message SUBSCRIBE TELECOM-POST YOUR NAME. Unsubscribtion requests should be sent to the list from which you receive the Telecom Post unless you purposely subscribed to it through CPSR in which case you would write to LISTSERV@CPSR.ORG with the message UNSUBSCRIBE TELECOM-POST. ===================================================== The Telecom Post is posted more or less weekly. My apologies for cross-posts. ====================================================== TOPICS: 1. S.652 is in Conference 2. Telecom Bill Issues of Concern - a Primer 3. 90's Channel & CNN Editorial Discretion a sign of things to come S.652 IS IN CONFERENCE The Conference Committee for the Telecommunications Bill has begun to meet. Staff for the Committee members are now in intense deliberations in an effort to get a reconciled bill out of committee by December. So far, however, the House and Senate staffs have run into many more snags than they expected. When the staffers can't reconcile differences, the list grows for the members, themselves, to get down and dirty. They've been remanded to around the clock negotiations through the Thanksgiving recess if necessary. It should be noted up front that the leaders of the Conference Committee are also the largest recipients of telecom industry PAC dollars. Of the $2m that industry has showered on Congress since the beginning of the year, Sen. Pressler (R-SD) found $103,165 in his bank account and Rep Jack Fields (R-TX) found $97,500. In total, conference committee members enjoy the bulk of the donations with the Reps averaging $18,824 and the Senators $58,182. I'm following this Post with the promised Conferee list, contact information, donation data, and bill oversight. The President has reiterated his displeasure with much of the bills. He has threatened to veto the legislation if it remains true to the House and Senate bills. He is working on recruiting Hollings (D-SC) and Daschle (D-SD) to carry his banner in negotiations. Hollings is seen as a key advocate and is wedded to a clear approach for ensuring adequate competition exists before Bells are allowed into long distance. Though Hollings worked hard for passage of the Senate bill due to various commitments he had made, those have now been honored and it is hoped by the President that he is now free to work on the President's behalf. The list of detractors for this bill seems to be growing. So far those opposed to anything close to what we have are the President, the long distance industry, state utilities, local authorities, consumer groups, and public advocacy groups. Education and libraries want stronger universal service language. To override a presidential veto, the Senate must come up with 60 votes. There are 53 Republicans in the Senate. The Bell companies, cable, entertainment, and media love the bills as does the disabled community. Public access television likes the language they've received. Indeed, if this thing does pass despite the wishes of much of the public - public access television could well be our only public voice left - get out those camcorders. Freedom of Speech Roster In terms of representation on the conference committee, our First Amendment is in serious trouble. Included in the conference committee: Senator Exon - Exon Amendment Senator Gorton - Communications Decency Act, CDA Rep. Hyde - sponsored indecency amendments in House bill All Senate conferees voted for the CDA All House conferees voted for the indecency amendments in the House bill (but they were slipped in at the last minute) Excluded from the conference committee: Rep. Cox and Wyden - authors of the Internet Freedom and Family Empowerment Act Sen. Leahy - sponsored study alternative to CDA Senate Judiciary members Senators who voted against the CDA TELECOM BILL - A PRIMER 1. Media Concentration - We face entire information markets owned by a single entity. Barriers will be lifted from a single owner accumulating radio stations, TV, cable, newspaper, electronic network providers, and, in markets of under 50,000, phone. This will look like the mergers we are already seeing and will serve to put most of the content delivered into our homes in the hands of a few mega-companies. Hardly the competition de-regulation is supposed to inspire. 2. Cable-Telco mergers - The natural competition for phone and video service is between cable and telephone companies. Yet in markets of under 50,000 they will be allowed to merge. Where are the lower prices and better service from that arrangement? 3. Universal Service - The Senate bill provisions for universal service are referred to as the "Snowe-Rockefeller-Kerrey-Exon Amendment". They provide discounted telecommunication rates for libraries, k-12 schools and rural health-care providers. The amount of the discount would be determined by the FCC and the states. Providers would be subsidized by a universal service fund made up of contributions from all providers. Though the House did not include this provision it is looked upon favorably by both sides. One note - S652's universal service provisions must be included in the final bill to achieve the results we're looking for. Universal service is where the "have-not" issue comes in. Many of us - even beyond schools and libraries - will not be able to afford rates that are based on the cost of providing the service. The 1934 Communications Act used the concept of affordable rates to everyone as a basic principle in designing the regulatory environment that brought us today's telephone infrastructure. This principal has now taken a back seat to the belief that competition will suffice in serving the public need. Most public advocates simply don't believe that competition will do the trick. Pro|visions like cross-subsidization were built into the original design to ensure universal service. The Snowe-Rockefeller amendment is the only protection in the current legislation. There is a provision for a Federal-State Joint Board to address important universal service issues. The Joint Board will review the definition of and adequacy of support for universal service. HR1555 includes one state-appointed utility consumer advocate on this board. S652 does not. This is generally seen as inadequate representation on behalf of the consumers. Other members will be state and federal regulators. 4. Freedom of Speech - It's ugly. On the Senate side we have the CDA, Title IV, Section 402, which makes someone who "initiates the transmission of any comment, request, suggestion, proposal, image, or other communication which is obscene, lewd, lascivious, filthy, or indecent, with intent to annoy, abuse, threaten, or harass another person," can be fined up to $100K and imprisoned for two years. The same holds true for whoever " knowingly within the United States or in foreign communications with the United States by means of telecommunications device makes available any indecent communication in any form including comment, request, suggestion, proposal, or image, to any person under 18 years of age regardless of whether the maker of such communication placed the call or initiated the communication". Similar language is found in the House bill. Many of us took heart when the House, Cox/Wyden amendment passed overwhelmingly. The amendment denied FCC regulation of the Internet. We must not allow that victory to make us complacent. The Religious Right has caught the attention of Bliley and Pressler with a letter from Ed Meese. The letter claims "[i]t is not possible to make anything more than a dent in the serious problem of computer pornography if Congress is willing to hold liable only those who place much material on the Internet while at the same time giving legal exemptions or defenses to services or access providers who profit from and are instrumental to the distribution of such material". Meaning Internet Service Providers will be expected to monitor EVERYTHING and we will be forced to restrict all speech to that deemed acceptable by our souls' watchdogs. 5. Spectrum Flexibility - By now everyone has heard of the spectrum auctions and the big bucks they are bringing in to reduce the deficit. Broadcasters were given a nice chunk of spectrum in order to develop HDTV capability. Well, HDTV hasn't really gone anywhere and broadcasters would like to take that extra spectrum and put it to more profitable lines of business. Both bills would allow them to do that without making a peep. This spectrum is worth a lot of money and is a public good. Many feel that we should get SOMETHING out of it. Initiatives have been launched for really *radical* public concessions like free time for political candidates, enhanced children's informational and educational programming, and a reservation of capacity for low-cost nonprofit use. 6. Cable Rate Deregulation - supposedly upon competition, rates will naturally fall to their lowest level from market forces. Both bills will lift current regulation on cable rates well before adequate competition can possibly exist. The Consumer Federation of America expects with will result billions of dollars in overcharges to the American people. 7. Bell Entry into Long Distance - Several issues arise over the process devised to open the gates to the Bells, freeing them from monopoly regulation. Let's remember that it is basically un-American to be a monopoly. In cases where there is market failure we do let monopolies exist but only within a strict regulatory environment. Bells and cable companies both serve as monopoly entities and their revenues are carefully monitored to protect the rate payer. We are looking at eliminating much of today's governmental oversight and if we don't this right, we unleash enormous unregulated monopoly power onto the public giving us no recourse for phone or cable rates but to pay - whatever. History shows that the Bells are not adverse to making big profits. The Consumer Federation of America released a report claiming that the Bells have enjoyed excess profits of nearly $30b since divestiture. This study finds that price increases on basic service have increased 80% since divestiture. Plus they are able to divert this money into unregulated businesses bypassing traditional capital markets. Additionally the telecommunications industry is a declining cost industry. If free market economics are meant to control pricing, there is no reason to believe that telephone rates should increase. Clearly the Bells are very formidable players in this game and we stand to lose a lot as ratepayers if this transition is not handled wisely. Role of the Justice Department - The Justice Department has been demoted dramatically in both bills. It retained an advisory capacity but that's all. The President and, obviously, the DOJ are not happy about that. Both want the Justice Department OK to serve as a key test the Bells must pass before releasing them to "fair" market competition. Rate of Return Regulation - Both bills would prevent a state enacted rate-of-return approach to establishing price limits. Rate-of-return ties profits to expenses ensuring that the customer benefits proportionately to the company's revenues. The Bells hate ROR pricing and look forward to "flexible pricing" often in the form of "price caps". Price caps would place a ceiling on what the Bells could charge. Problem is that a recent study by four consumer groups see Bell operating costs as decreasing by as much as $14b. Using a price cap approach, consumers will likely be overcharged by that same $14b. Separate Subsidiaries - Both bills require that the local exchange portion of Bell business be put into a separate subsidiary before they are given free reign. The House bill sunsets that requirement in 18 months. The Senate bill leaves it up to the FCC. Reconciliation of this point is causing a surprisingly big problem among the conference staffs. 8. Pre-emption of state and authority - Once competition in a state has been determined adequate and the Bells are released, that state's regulatory authorities are prohibited from making rulings regarding any of the three issues listed above - eliminating local rate supervision of this very important infrastructure. The bills also prohibit states from requiring intraLATA dialing parity prior to entry the interLATA (long distance) market. IntraLATA refers to long distance calls within the LATA. The bills prohibit requiring that competition exist intraLATA prior to deregulation. HR1555 prohibit states from imposing reasonable quality standards and consumer protections on new carriers. A clause establishes an absolute requirement that all "effective" barriers to entry be removed. Therefore a new carrier could bypass state consumer protection regulations by claiming that the state prohibited it from entry. THE DEMISE OF THE 90'S CHANNEL AND CNN GETS SHY A Sign of Things to Come If we were at all unsure as to what media concentration will look like should this legislation pass, two current examples paint a fairly clear picture. In the interest of ensuring a diversity of voices, The Cable Act of 1990 provided for 15% of cable capacity to be made available for independent programming. The 90's Channel, a progressive cable TV network, has used this provision as an outlet for many independent producers - making it one of the few successful implementations of this policy. TCI, the giant cable parent of the 90's Channel has been trying for some time to force it off the air. With a giant rate increase, TCI was successful on November 1. Though the leasing mechanism in the Cable Act never really worked, it, at least, sustained the principle that our airwaves should be shared by the wide diversity that is America. The current telecom legislation will both shut down all existing diversity safeguards and add no new ones. Meanwhile, CNN refused to carry the long distance industry ads that speak out against the telecom bill. It's not a stretch to figure out whether or not Time-Warner is for passage of the bill. The discouraging aspect of CNN's refusal is the contrast to its prior willingness to air advocacy commercials and its recent claim that it should refuse to air any commercials, pro or con, on this issue due to its vested interest in the outcome. Time Warner controls 40% of what is delivered into our homes. If our broadcast industry arbitrarily decides not to air advocacy commercials we will be effectively cut off from many issues we might like to know about.