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EFFector - Volume 6, Issue 7 - EFF Statement on Markey Infrastructure Bill

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EFFector Online Volume 6 No. 7       Dec. 10, 1993        editors@eff.org
A Publication of the Electronic Frontier Foundation        ISSN 1062-9424

In This Open Platform Special Issue:

EFF Statement on Markey Infrastructure Bill 
EFF Analysis of Brooks-Dingell Antitrust Reform Bill
NTIA Announces Universal Service Hearing
Late Breaking News - Digital Telephony Threat Returns
What You Can Do

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Subject: EFF Statement on Markey Infrastructure Bill

EFF Position Statement on and Summary of Bill HR-3636
National Communications Competition and Information Infrastructure Act of 1993
Introduced by Reps. Markey, Fields and Boucher

On Monday, November 22, 1993,  House Telecommunications and Finance
Subcommittee Chairman Edward Markey (D-Mass.), Minority Chairman Jack
Fields (R-Tex.), and other cosponsors introduced the "National
Communications Competition and Information Infrastructure Act of 1993." 
The legislation, which incorporates EFF's Open Platform philosophy, is
built on four concepts: open platform services, the entry of telephone
companies into video cable service, universal service, and competition in
the local telephone market. 

Of all pending telecommunications legislation, Markey's bill is the only
one with a vision of an open, accessible network which supports a true
diversity of information sources.  The legislation proposes a major
restructuring of the Communications Act of 1934 in order to account for
changes in technology, market structure, and people's increasingly advanced
information access needs.  

EFF recommends strong support for the bill.  For the bill to realize its
goals however, the following key changes are necessary:

*   Require Open Platform Services to be tariffed at reasonable, affordable
    rates;
*   Strengthen non-discriminatory video dialtone access rules and eliminate
    current five year sunset provision;
*   Add information infrastructure access to the definition of universal
    service, and ensure public interest participation in redefinition of
    universal service obligations;
*   Ensure that all telecommunication providers pay a fair share of
    universal service costs.

These are EFF's primary concerns about the bill.  We hope to broaden our
position and understanding of the bill based on the views of other
interested groups.  This is a summary of the main points of the legislation
along with EFF positions and comments.


OPEN PLATFORM 

Open platform service is designed to give residential subscribers
access to voice, data, and video digital telephone service on a switched,
end-to-end basis.  With Open Platform service widely available, individuals
and organizations would have ready access to a variety of important
applications on the information highway, including distance learning,
telemedicine, telecommuting, the Internet, and many more.  The bill directs
the Federal Communications Commission to investigate the policy changes
needed to provide open platform service at affordable rates, but fails to
require telecommunications carriers to tariff the service.

ACTION NEEDED:  The Open Platform concept should be enthusiastically
supported, but the bill as written fails to ensure that Open Platform
service will be widely available at affordable rates.  Those who care about
affordable, equitable access to new information media should demand that
local telephone companies be required to tariff Open Platform services
within a specific timeframe.

ENTRY OF TELEPHONE COMPANIES INTO VIDEO PROGRAMMING

The bill promotes the entry of telephone companies into video cable
service and seeks to benefit consumers by spurring competition in the cable
television industry. The bill would rescind the ban on telephone company
ownership and delivery of video programming that was enacted in the Cable
Act of 1984.  Telephone companies would be allowed to provide video
programming, through a separate subsidiary, to subscribers in its telephone
service area. 

Telephone companies would be required to provide video services
through a  "video platform," that would be open, in part, to all video
programming providers.  The bill adopts a set of regulations originally
proposed by the Federal Communications Commission (FCC) called "Video
Dialtone."  Under video dialtone rules, telephone companies would be
required to allow other content providers to offer video programming to
subscribers using the same video platform as used by the telephone company,
on a non-discriminatory basis.  Other providers would be allowed to use up
to 75 percent of the video platform capacity.  To encourage telephone
companies to actually invest in new information infrastructure, they would
be prohibited from buying existing cable systems within their telephone
service territory, with only tightly drawn exceptions.

However, the video dialtone requirement would end in five years, after
which telephone companies would have no requirement at all to provide
non-discriminatory access to their video platform.

ACTION NEEDED:  Video dialtone is a useful starting point for structuring
non-discriminatory video access, but its provisions must be strengthened. 
First, there should be no fixed expiration date for the video dialtone
requirements.  An open platform for video information is critical to the
free flow of information in society.  These requirements should be relaxed
only when it is clear than there are sufficient alternatives throughout the
country for distribution of video and multimedia information  Alternatives
would include widely available, affordable Open Platform service capable of
carrying full-motion, video programming.   Second, stronger safeguards
against anti-competitive behavior are necessary.

Finally, more explicit provisions assuring access for third party video
servers are needed to ensure the all programmers can use video dialtone to
disseminate their video programs.  Video dialtone rules fail to consider
how to guarantee third party access to interactive functions of a video
dialtone platform.  Interactive technology is so new and untested that it
has hard to legislate about it at this point.  The FCC should, however, be
instructed to study this issue as new interactive capabilities become
available.

UNIVERSAL SERVICE 

One of the goals of the bill is to "preserve universal
telecommunications at affordable rates."  To achieve this goal, the bill
would establish a joint Federal-State Board (made up of FCC members and
state regulators) to devise a framework for ensuring continued universal
service.  The Board would be required to define the nature and extent of
the services encompassed within a telephone company's universal service
obligation.  The Board also would be charged with promoting access to
advanced telecommunications technology. 

The FCC is required to prescribe standards necessary to ensure that
advances in network capabilities and services deployed by common carriers
are designed to be accessible to individuals with disabilities, unless an
undue burden is posed by such requirements.  Additionally, within one year
of enactment, the bill requires the FCC to initiate an inquiry to examine
the effects of competition in the provision of both telephone exchange
access and telephone exchange service furnished by rural carriers. 

ACTION NEEDED:  Include an explicit requirement that advanced digital
access services be included in the universal service definition as soon as
is practical.  Create a mechanism for public interest participation in the
process of defining the components of universal service in the information
age.  

VIDEO PLATFORM AND FRANCHISE REQUIREMENTS

Any telephone company that establishes a video platform would be required
to meet 1992 Cable Act standards concerning customer privacy rights,
consumer protection, and customer service.  Telephone companies would be
required to meet the same standards as cable companies for diversity in
commercial programming, to assure that the broadest possible information
sources are made available to the public.  Like cable companies, telephone
companies would be required to comply with public, educational, and
governmental (PEG) access rules.  Telephone companies also would be
required to meet standards concerning re-transmission consent for cable
systems. 

Some Cable Act requirements concerning cable companies would expressly not
be applicable to telephone companies. These include: general franchise
requirements; franchise fees; regulation of rates; regulation of services,
facilities, and equipment; consumer electronics equipment compatibility;
modification of franchise obligations; renewal proposals; conditions of
sale; unauthorized reception of cable service; equal employment; limitation
on franchising authority liability; and coordination of federal, state, and
local authority. 

Instead of Cable Act compliance, the legislation provides that a video
programming affiliate of any telephone company that establishes a video
platform would be subject to the payment of fees imposed by a local
franchising authority. The rate at which these fees would be imposed cannot
exceed the rate at which franchise fees are imposed on any operator
transmitting video programming in the same service area. 

LOCAL COMPETITION

In order to promote competition in local telecommunications
service, the bill requires that local telephone companies open their
networks to competitors who wish to interconnect with the public switched
telephone network.  These interconnect rules will enable any other network
operator to offer basic telephone service as well as advanced data services
in direct competition with the local phone company.  The FCC would be
required to establish rules for compensating local telephone companies for
providing interconnection and equal access.

ACTION NEEDED:  Local competition can be a benefit to consumers and spur
the development of innovative new services, as long as all interconnecting
networks pay their fair share of the cost of using the public telephone
network.  All who interconnect should be required to support the cost of
basic universal service.

For More Information Contact:

Daniel J. Weitzner, Senior Staff Counsel
202-347-5400
djw@eff.org

Copies of the legislation and this summary are available on EFF's Internet
FTP site: ftp.eff.org, in the directory pub/eff/legislation/hr3636 and
hr3636.summary.

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Subject: EFF Analysis of Brooks-Dingell Antitrust Reform Bill

EFF Analysis of Bill HR-3626
Antitrust Reform Act of 1993
Introduced by Reps. Brooks and Dingell

On Tuesday, November 23, 1993, House Judiciary Chair Brooks (D-Tex.)
and House Commerce Committee Chair Dingell (D-Mich.) introduced major
antitrust reform legislation, H.R. 3626.  This bill would phase out the
limitations placed on the Bell Companies under the modified consent decree
that resulted in the antitrust agreement that broke up AT&T in 1982 (the
"MFJ" or "Modification of Final Judgment").  The MFJ currently precludes
Bell Companies from providing long distance service and manufacturing
telephone equipment.  Until two years ago, the Bell Companies were
precluded from offering electronic publishing. 
       
The MFJ imposes long distance and manufacturing restrictions on Bell
Companies to prevent them from using monopoly control to disadvantage
their consumers and competitors in two principal ways.  First, under the
MFJ the Bell Companies cannot use profits earned from rates paid for
monopoly local telephone operations to subsidize their long distance and
equipment businesses.  Monopolistic control over local telephone service
makes it nearly impossible to prevent cross-subsidization of a variety of
other telecommunications services with captive ratepayer dollars.  Second,
under the MFJ the Bell Companies cannot prevent competing long distance
carriers and equipment manufacturers from gaining access to the local
network, or to delay that access, thus placing them in an inferior
competitive position.  The local telephone network is key to the Bell
Companies' potential monopoly over telephone service.  It functions as the
gateway to individual telephone subscribers, and must be used by long
distance carriers to connect one caller to another.  The immense cost of
wires, cables, switches, and other transmission facilities which comprise
the local network could insulate Bell Companies from competition.

The Brooks/Dingell Antitrust Reform Act of 1993 would ensure that Bell
Companies compete freely in new telecommunications markets.  The bill
was introduced on the same day as the Markey/Fields telecommunications
infrastructure bill, H.R. 3636, which incorporates EFF's open platform
proposal.  EFF's open platform proposal is designed to give residential
subscribers access to voice, data, and video digital telephone service on a
switched, end-to-end basis. Unlike the Markey/Fields bill, the Brooks/
Dingell antitrust bill does not focus on infrastructure and competition
issues. 

LONG DISTANCE 

The bill gives the Attorney General and the Federal Communications
Commission (FCC) the authority to make a public interest determination
before a Bell Company could offer competitive services.  The bill requires
the Attorney General, when granting a Bell Company application to provide
interexchange telecommunications, to make a finding that there is no
substantial possibility that the Bell Company or its affiliates could use
monopoly power, for example by preventing access to networks or using
profits earned, to impede competition in the market it seeks to enter.  The
Attorney General could make such a finding only if the evidence clearly and
convincingly supports it, and the FCC could grant the request only if it is
consistent with the public interest, convenience, and necessity.  The FCC
would be required to consider whether granting the request would affect
consumers' rates and expedite delivery of new services and products to
consumers, and whether the applicant will be precluded from engaging in
coercive economic practices such as predatory pricing and collusion. The
bill extends the right of judicial review in the U.S. Court of Appeals for
the District of Columbia to companies aggrieved by the Attorney General and
FCC determinations.

The bill vests responsibility at the federal level for making a public
interest determination before a Bell Company could offer competitive
services, but it does not require a state finding that the public interest
is served if the Bell Company gains access to the market.  

H.R. 3626 segments the long distance market into several submarkets:
intrastate; interstate/regional; interstate resale; and nationwide networks.

1. Intrastate:  The provision of intrastate long distance service was
regulated by the states until the breakup of AT&T.  Under H.R. 3626, state
laws or regulations would no longer pose a barrier to a Bell Company
seeking to offer in-state long distance service.

2. Interstate/Regional:  The Bell Companies currently operate networks
throughout their regions, which are made up of many states, but they are
restricted from using them for interstate long distance service.  Under
H.R. 3626, the Bell Companies could petition the Department of Justice and
the FCC to use their own telephone networks to provide long distance
service.  

3. Interstate Resale: Resale services involve reselling bulk capacity from
networks owned by carriers such as AT&T, MCI, and Sprint, to regional
telephone companies on a "retail" basis.  H.R. 3626 would allow Bell
Companies to petition the Department of Justice and the FCC to provide
interstate resale services 18 months after the date of enactment. Downward
pressure on rates from the entry of new competitors into resale services
potentially could cause a reduction in long distance telephone costs for
residential customers.

4. Nationwide Networks: H.R. 3626 would allow Bell Companies to petition
the Department of Justice and the FCC to build and operate interstate
networks outside of their regions 5 years after enactment. 

MANUFACTURING

Within a year of enactment, H.R. 3626 would lift MFJ restrictions
and allow a Bell Company to submit an application to the Department of
Justice to engage in manufacturing of telephone equipment.  The Bell
Company would then be free to engage in manufacturing unless, within the
following year, the Attorney General enjoins the company from going forward.

H.R. 3626 would allow a Bell Company to engage in manufacturing activities
through a separate subsidiary, and would be prohibited from cross-
subsidizing its manufacturing.  H.R. 3626 would require the Bell Company to
conduct all manufacturing in the United States, but some components not
available from U.S. sources could be used.  The bill would require a Bell
Company to provide functionally equivalent equipment to competing
manufacturers, but leaves undefined the term "functional equivalent."

The bill would require Bell Companies to maintain and file with the FCC
information on protocols and technical requirements for connection and
use of its telephone exchange service facilities.  It does not, however,
mandate full digital interconnectivity, which is the minimum standard
necessary to achieve democratic, open platform goals.

BURGLAR ALARM SERVICES

H.R. 3626 would allow Bell Companies to apply to the Department of Justice
to offer burglar alarm services 5 1/2 years after enactment.  The Attorney
General and the FCC would be required to make determinations that the entry
of a Bell Company into the burglar alarm business is appropriate. Provision
of burglar alarm services would be subject to post-entry restrictions,
designed to ensure that Bell Companies compete faily in the new markets.

ELECTRONIC PUBLISHING

H.R. 3626 provides that Bell Companies could engage in electronic 
publishing only through separate affiliates or electronic publishing joint
ventures.  By increasing the visibility of electronic publishing business
transactions, these safeguards are designed to alleviate the risk that Bell
Companies could stifle the efforts of other electronic publishers or
acquire a substantial monopoly over the generation of news.  The bill would
allow a Bell Company or affiliate that participates in an electronic
publishing joint venture, with non-Bell Companies or affiliates, to
maintain up to a 50 percent direct or indirect equity interest in the joint
venture.  For joint electronic publishing ventures with small, local
electronic publishers, a Bell Company may have, for "good cause," an
ownership interest up to 80 percent. The statutory restrictions in the
legislation would sunset in four years.

To prevent anticompetitive behavior, the bill would require a Bell
Company to provide the same information to its competitors as it uses
itself.  The bill also would allow inbound telemarketing or referral
services by the Bell Companies for electronic publishing affiliates. As a
matter of privacy, however, the bill does not provide protection for
customers who do not want to make information gathered about them by the
Bell Companies available for marketing or other purposes.  

NETWORK ACCESS FOR DISABLED COMMUNITY

H.R. 3626 also includes provisions designed to ensure that
equipment and network services are accessible and usable to disabled
individuals, unless the costs of making equipment accessible and usable
would result in an undue burden or an adverse competitive impact.

  *****

The Brooks-Dingell bill is available online from EFF by anonymous ftp to
ftp.eff.org, pub/eff/legislation/hr3626.

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Subject: NTIA Announces Universal Service Hearing

December 2, 1993

WASHINGTON D.C -- Assistant Secretary for Communications and
Information Larry Irving announced today that the National
Telecommunications and Information Administration (NTIA) and the New
Mexico State Corporation Commission (NMSCC) will hold a public
hearing on "Communications and Information for All Americans:
Universal Service for the 21st Century" on December 16, 1993.  The
hearing will take place from 8:00a.m. to 5:30p.m. at the Technical
Vocational Institute's Smith Brasher Hall, 717 University, S.E.
(Room SB-100), Albuquerque, New Mexico.

The Administration's initiative on the National Information
Infrastructure (NII) seeks to extend the Universal Service policy to
reflect the information needs of the United States and its citizens
in the 21st Century. Traditionally, in the United States, Universal
Service of telecommunications has centered on achieving widespread
availability of basic telephone service at affordable rates.  As
telecommunications and information technologies have converged and
advanced, the need to redefine the concept of Universal Service has
increased significantly. Through this hearing, NTIA and the NMSCC
seek public comment on:

* the effectiveness of today's Universal Service policy as it
  relates to basic telephone service;
* how the present Universal Service policy may be improved and
  expanded;
* who should pay to support a broader, more modern Universal
  Service policy;
* what information and network services should be included in a
  modernized definition of basic services; and
* how the government and the private sector can work together to
  inform the public about and prepare for the new Information Age.

This hearing will be the first of a series of universal service and
universal access hearings sponsored by NTIA to be held across the
United States seeking public input and discussing government
telecommunications policy. The hearing is open to the press and
public at no charge, but space is limited.  To register in advance,
please contact NTIA at:

Voice 202/273-3366, BBS 202/482-1199, Internet nii@ntia.doc.gov
Contacts: James McConnaughey, Joann Anderson, or Alfred Lee at 202/482-1880
Press Contact:  Larry Williams 202/482-1551    FAX: 202/482-6173

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Subject: Late Breaking News - Digital Telephony Threat Returns

According to FBI Dir. Louis Freeh, the development of sophisticated digital
telecom and networking technology threatens the ability of the Feds to
wiretap.  In a Dec. 8 speech at Washington's National Press Club, Freeh
annouced a renewal of the FBI's 'Digital Telephony' legislation scheme:
the return of the controverial 'Wiretap Bill'.  The bill is strongly
opposed by organizations and individuals concerned about privacy, as well
as the telecommunications and computing industries at large.  The FBI's
'need' for this legislative action is under review by the Administration
as part of its examination of security and encryption issues.

The reappearance of this Bureau effort contradicts statements by Special
Agent Barry Smith of the FBI's Congressional Affairs Office, who stated
less than a month ago that the 'Wiretap Bill' had been tabled.

According to classified documents released under the Freedom of  
Information Act (FOIA), the FBI and the Electronic Communications Service
Provider Committee or ECSPC (an ad hoc industry working group) are
working on technical solutions to satisify law enforcement. According to
a Nynex rep co-chairing the group, Kenneth Raymond, no solution has yet
been found, and the FBI has yet to prove any solution is needed at all. 
Raymond likened Freeh's tactics to "yelling out the window" - an
attention-getting move that needs some sort of clarifying followup.

Though the ECSPC claims to be attempting to evaluate the problem and to
solve it in a way "consistent with cost and demand", Raymond indicated that
the group considers one 'solution' to be building wiretap access into
future telecom hardware - like the  Clipper chip backdoor, but a 'feature'
of all switch specifications for phone and data lines.

This news was just received, and a more detailed analysis and statement
from EFF will follow soon.

[summarized from Communications Daily]

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Subject: What You Can Do

Did you know ...
Congress is currently making decisions that will affect your ability
to communicate in the future?  Who's protecting your interests?

The Electronic Frontier Foundation (EFF) is working with legislators to
make sure that principles guaranteeing free speech, privacy and affordable
service to consumers are written into new communications legislation.  Rep.
Edward Markey (D-MA) has already incorporated much of EFF's Open Platform
vision into his NII proposal (bill H.R. 3626).  But the fight is not yet won. 
The only way to make sure that future networks will serve *you* is to
become involved.  Join EFF and receive regular updates on what's happening
and action alerts when immediate action becomes critical.

Blind trust in the system won't help you.  Take control of your future. 
Join EFF today.

--==--==--==-<>-==--==--==--

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