U.S. House of Representatives Subcommittee on Telecommunications and Finance of the Committee on Energy and Commerce Washington, D.C. 20515 Edward J. Markey Chairman NEWS RELEASE============================================ FOR IMMEDIATE RELEASE CONTACT: GERRY WALDRON MARCH 1, 1994 MIKE BALMORIS 202/226-2424 MARKEY PANEL CLEARS INFORMATION SUPERHIGHWAY LEGISLATION WASHINGTON, D.C. -- The House Telecommunications and Finance Subcommittee unanimously passed landmark telecommunications legislation that will overhaul national communications policy and unleash new competition between cable and telephone companies. "This is the most significant change in communications policy in 60 years," said Markey. "This legislation will pave the way for the much-anticipated information superhighway," Markey added. "After gathering excellent testimony from all interested parties, the Subcommittee has now passed on a polished piece of legislation," Markey said. "This legislation now moves on to the Energy and Commerce Committee -- strengthened, enhanced, and enriched -- with the muscle to ensure passage of comprehensive telecommunications legislation this year," Markey added. Important changes in Markey's substitute amendment to HR 3636, the "National Communications Competition and Information Infrastructure Act of 1993," include: -- a new section (103) that promotes the development of advanced telecommunications services for educational institutions, health care facilities, and public libraries by the year 2000; -- a new section (203) that promotes open and accessible "set-top" boxes for interactive communications systems; and, -- a reworked section to ensure that the video platforms constructed by phone companies to provide cable service are accessible to other providers of information. The Federal Communications Commission (FCC) would be directed to develop plans for channel capacity requirements and non-discriminatory access to the network. "This is a critical step in our efforts to build a competitive American economy for this decade and for the next century," said Markey. Experts have estimated the market for multimedia communication products could be worth $3 trillion before the end of this decade. ====================================== STATEMENT of CHAIRMAN EDWARD J. MARKEY SUBCOMMITTEE MARKUP H.R. 3636, the "National Communications Competition and Information Infrastructure Act of 1993, " and H.R. 3626, the "Antitrust Reform Act of 1993." March 1, 1994 Good afternoon, and welcome to the Subcommittee markup of H.R. 3636, the "National Communications Competition and Information Infrastructure Act of 1993," which I introduced along with Ranking Republican Jack Fields and 11 of my colleagues on the Subcommittee, and H.R. 3626, the "Antitrust Reform Act of 1993," introduced by Chairman Dingell and Brooks. Today's markup culminates a long effort to set forth a comprehensive national policy on how cable companies and telephone companies should participate in the future of the communications world. Many members have contributed to the policy we will discuss today, and I want to recognize Mr. Fields, Boucher, Oxley, and Chairman Dingell and Brooks for their commitment to moving these important pieces of legislation. We have held 7 hearings in over 3 weeks. Those hearings served as an intensive review of the communications industry. We received testimony from a total of 53 witnesses representing all facets of the communications industry and beyond: including the telephone, cable, and long distance companies; the alarm industry; small and large newspaper publishers; the electronic publishers; equipment manufacturers, both large and small; rural and alternative phone companies; the computer industry, software providers; "big thinkers," and academics; consumer and public interests groups; and the government agencies, both on the federal and state levels. We were provided with some very valuable ideas and recommendations, and I believe the Amendment in the Nature of a substitute, which I plan to offer to H.R. 3636 today, reflects those ideas. In addition, today we will mark-up H.R. 3626, a bill that reflects a careful compromise on a complex and contentious subject. Like other Members, I think the bill could be improved by responding to some of the issues raised at our hearings. But as with other Members, I hope, I will not offer any amendments, but rather vote to move the process along so that we keep both of these crucial communications bills on track. In closing, it is important to note that if one theme emerged from our recent investigation, it is that competition is the rallying cry from both the industry and consumers alike. So I say sound the trumpets because both H.R. 3636 and H.R. 3626 will create competition in this dynamic industry. I urge all Members to support both bills favorably to full Committee. I yield back the balance of my time and will reserve my remarks to when I call up the amendment in the nature of a substitute. Statement of Chairman Edward J. Markey Amendment in the Nature of a Substitute to H.R. 3636 The amendment in the nature of a substitute reflects the hard work, bright ideas and solid recommendations of all those actively working to promote the information superhighway. The amendment makes changes, some large and some small but represents some of the very important issues that were raised during the Subcommittee hearings. And I believe it is a good attempt at reconciling the interests of all those directly or indirectly affected by this legislation. As you know, H.R. 3636 promotes the information superhighway by creating competition in the local telephone loop, by rescinding the ban on telephone entry into cable, and buy preserving and enhancing the provision on universal telephone service. First, the amendment in the nature of a substitute clarifies the definition of a 'local exchange carrier' to exclude commercial mobile service providers unless such a company provides all the services and functions of a local exchange carrier. This definition mirrors that which was adopted during our consideration of the spectrum auction proposal during budget reconciliation. Also clarified in the definitions is the term 'telecommunications service' to mean service on a common carrier basis. This was changed to ensure that no other entities would be inadvertently swept in under this provision if they provide telecommunications services internally and privately. With respect to local competition, this bill will promote and accelerate access to advance telecommunications capability as well as spur competition in the local telephone exchange. Such competitors will be allowed equal access to and interconnection with the facilities of a local telephone company. Section 102 of the amendment limits ;the requirements of a common carrier when providing interconnection. The standard which is added in the amendment and carried forth throughout is "technically feasible and economically reasonable." The amendment presumes these requirements won't be imposed on rural telephone companies but grants the Commission the authority to waive these requirements if it would not be unduly economically burdensome, technologically infeasible or not in the public interest. This change shifts the responsibility from the rural telephone company to the Commission. The amendment also defines a rural telephone company. With respect to state preemption, the Subcommittee respects that the States have a role in the oversight of intrastate telecommunications policy., This substitute allows the states to impose terms and conditions to protect public safety and welfare; to ensure that business practices are consistent with consumer protection laws. H.R. 3636 establishes a Joint Board to formulate a plan to preserve universal service. The substitute amendment changes the term from "affordable rates" to "just and reasonable rates." The substitute amendment also addresses the concern Mr. Wyden raised during the hearings which would allow those consumers to continue to receive the same basic voice grade local telephone service they receive today. In defining universal service, the Subcommittee's intent was not to require any extravagant service or technology. We clarified that intent by requiring the Commission to look at varying services, the extent to which such services are subscribed by customers and where denial of those services unfairly affects educational and economic opportunities. The substitute adds a section prohibiting cross- subsidization of competing telecommunications and information services mirroring the section in Title II of this bill. The substitute recognizes that telephone number portability is a critical element in ensuring that competition will exist in the local loop, therefore, the substitute amendment requires the FCC to prescribe regulations that ensure number portability as soon as "technically feasible" and economically reasonable." H.R. 3636 directs the Commission to conduct a study on open platform service. The substitute amendment requires the Commission to look at existing facilities as well as new facilities with improved capability. This clarification will ensure that we are remaining technologically neutral in our efforts to promote the deployment of new technology and services. The substitute amendment creates a new section that seeks to promote advanced telecommunications services for educational institutions, health care facilities and public libraries. This section follows a Subcommittee inquiry on "Learning Links," and reiterates the administrations goals to have all schools hooked up to the "information superhighway" by the year 2000. Title II of H.R. 3636 promotes and accelerates competition to the cable television industry by permitting telephone companies to compete in offering video programming through a separate subsidiary. The substitute amendment adds a new paragraph which clarifies that a telephone company providing video programming in its telephone service area can be regulated as a cable operator if it does not utilize the local exchange facilities or services of its affiliate. H.R. 3636 states that the Commission may waive the separate affiliate requirements of small or rural telephone companies. The substitute amendment limits this waiver authority to small or rural telcos only, and not any other telephone companies. H.R. 3636 requires the telephone companies to establish a "video platform" upon which to offer their video programming, and imposes common carrier obligations for the video platform. The amendment deletes the 25/75% requirement that was created under the bill as originally drafted, recognizing that it is not in the ratepayers' or the telephone companies' interest to build a platform that may potentially go unused. Also recognizing the concerns raised by video programmers with respect to access to the platform, the amendment requires the telephone company to notify the Commission of its intent to build a platform and to build the platform according to the number of bona fide requests for carriage, while also allowing for room for growth. The amendment grants the Commission the authority to resolve any disputes regarding carriage to prescribe regulations that prohibit discrimination. The substitute amendment creates equal access compliance requirements. This section states that a telephone can not provide video programming until it is certified at the Commission that it is in full compliance with all the rules on equal access, interconnection and unbundling. The cable operators raised this concern during the hearings, that upon enactment of this legislation, the telephone companies could immediately engage in video programming, while those seeking to provide competition in the local loop must wait until the local telephone company provides interconnection agreements. This section seeks to close this gap. The Subcommittee heard testimony on the need for open systems in interactive services. And as we seek to break the bottleneck in the local loop, we must ensure that we do not create another bottleneck in the set-top box. As a result the amendment adds a new section that directs the Commission to commence a proceeding and to report back to Congress on the importance of open and accessible systems and the security concerns between the interface and the converter box. This section is very important in ensuring that all consumers have an on-ramp; to the information superhighway. The amendment requires that all video programming is fully accessible to individuals with disabilities through the provision of closed caption service and video descriptions. This section will ensure that those in the disability community enjoy the benefits of an advanced information age. I like most Members on the Subcommittee are disappointed at the poor showing of captioning on cable programming. Today only 4% of cable programming is captioned. The amendment recognizes the cost of captioning and video description, therefore uses the "undue burden" standard which has become synonymous with the American's with Disabilities Act. Finally, the amendment recognizes the public access concerns raised by the public television stations, and requires that appropriate capacity for the public is reserved on cable systems and video platforms. The amendments I offered in bloc to the substitute amendment is designed to reflect a consensus that was reached by the majority and the minority in the past few days. Some changes are technical and some are minor. Two in particular deserve attention. First,. we direct the FCC to do a statutory review of broadcast cross- ownership restrictions. Second, we address the in-region buy-out exceptions to clarify the language on the cable "drop" and to target those small system operators not directly in a position to compete with the large telephone companies. Under this provision, a telephone company could purchase cable systems serving communities of fewer than 35,000 persons, or if it is a solo system, up to 50,000 persons. This compromise represents sound policy and I appreciate all of those who have contributed to this formulation. I think each of these provisions improves the bill, and appreciate the work of all the Members involved. That concludes the changes in the substitute. I recognize there may still be some unresolved issues, and I ask my colleagues to continue to work with me between now and full Committee markup to keep these bills on track.