<p> IN THE <enttype='ORG'>HOUSE</ent> OF REPRESENTATIVES</p>
<p> October 8, 1991</p>
<p>Mr. <enttype='PERSON'>Cooper</ent> (for himself, Mr. <enttype='ORG'>Bliley</ent>, Mr. <enttype='ORG'>Synar</ent>, Mr. <enttype='PERSON'>Schaefer</ent>, and Mr.
<enttype='PERSON'>Bryant</ent>) introduced the following bill, which was referred jointly to the
<enttype='ORG'>Com</ent>mittees on E<enttype='ORG'>ner</ent>gy and <enttype='ORG'>Com</ent>merce and the Judiciary.</p>
<p>1 Be it enacted by the Senate and <enttype='ORG'>House</ent> of Representa-2 tives of <enttype='GPE'>the United</ent> States of America in <enttype='ORG'>Congress</ent> assembled,</p>
<p> 3 (1) the national welfare will be enhanced by the
4 continued development of robust competition in the
5 provision of electronic information services and tele-6 communications services;</p>
<p> 7 (2) the widest possible availability of informa-8 tion and <enttype='ORG'>telecommunicati</ent>ons services requires an
9 open <enttype='ORG'>telecommunicati</ent>ons infrastructure that incor-10 porates market-driven advances in technology and
11 whose features and functions are available on a non-12 discriminatory and unbundled basis;</p>
<p> 13 (3) the availability of multiple and inter-14 con<enttype='ORG'>nec</ent>ted complementary <enttype='ORG'>telecommunicati</ent>ons net-15 works can enhance competition in the provision of
16 information and <enttype='ORG'>telecommunicati</ent>ons services;</p>
<p> 17 (4) the redundancy inherent in a pluralistic
<p> 20 (5) the cost-effective deployment of ad<enttype='ORG'>vanced</ent>
21 public <enttype='ORG'>telecommunicati</ent>ns networks, subject to ap-22 propriate safeguards, can further the long-standing
23 goals of universal telephone service at affordable
24 rates;</p>
<p> 25 (6) the provision of information services by di-26 vested <enttype='ORG'>operat</ent>ing companies prior to the development of</p>
<p>H.R. 3515 102nd <enttype='ORG'>Congress</ent>, 1st Session [Page 03 of 35]</p>
<p> 1 an effectively competitive <enttype='ORG'>telecommunicati</ent>ons infra-2 structure would likely lead to higher rates for tele-3 phone exchange service and jepordize the diversity
4 of information sources and services; and</p>
<p> 5 (7) current regulatory policies must be revised
6 and supplemented to ensure the universal availability
7 of telephone exchange service at reasonable rates
8 and fair competition in delivery of <enttype='ORG'>telecommunicati</ent>-9 cations and information services.</p>
<p> 10 (b) PURPOSES--The purposes of this Act are to--</p>
<p> 11 (1) ensure the continued availability of afford-12 able <enttype='ORG'>telecommunicati</ent>ons and information services
13 that are essential to full participation in the nation's
14 economic, political, and social life;</p>
<p> 15 (2) encourage the continued development of ad-16 <enttype='ORG'>vanced</ent>, reliable <enttype='ORG'>telecommunicati</ent>ons networks;</p>
<p> 17 (3) ensure that the costs of such networks and
18 the services provided over them are allocated equi-19 tably among users; and</p>
<p> 20 (4) ensure that the provision of information
21 services by divested <enttype='ORG'>operat</ent>ing companies does not
22 jepordize the universal availability of telephone ex-23 change service at reasonable rates or undermine
24 competition in the information services marketplace.</p>
<p>H.R. 3515 102nd <enttype='ORG'>Congress</ent>, 1st Session [Page 04 of 35]</p>
<p> 9 "(1) ADOPTION OF STANDARDS.-- A <enttype='ORG'>Federal</ent>-10 State <enttype='ORG'>Joint Board</ent> shall be established under <enttype='ORG'>sec</ent>tion
19 enforced by the <enttype='ORG'>Commission</ent> and the State <enttype='ORG'>Commis</ent>-20 sions as to matters within their respective jurisdic-21 tions, for measuring common carrier network qual-22 ity.</p>
24 submit to <enttype='ORG'>the Joint Board</ent> established pursuant to
25 paragraph (1) a quarterly data report, in a form re-</p>
<p>H.R. 3515 102nd <enttype='ORG'>Congress</ent>, 1st Session [Page 05 of 35]</p>
<p>1 quired by <enttype='ORG'>the Joint Board</ent>, reguarding compliance
2 with the prescribed network quality standards. The
3 <enttype='ORG'>Joint Board</ent> may require periodic independant audits
4 of common carrier compliance with the network
5 quality standards. The <enttype='ORG'>Commission</ent>, upon the rec-6 commendation of <enttype='ORG'>the Joint Board</ent>, shall establish en-7 forcement penalties and procedures, including expe-8 dited <enttype='ORG'>cus</ent>tomer complaint mechanisms, to ensure
<p>12 "(1) GENERALLY-- Each local exchange carrier
13 shall provide intercon<enttype='ORG'>nec</ent>tion, on a reasonable and
14 nondiscriminatory basis, to common carriers and
15 other providers of <enttype='ORG'>telecommunicati</ent>ons services and
16 information services who request it. An intercon<enttype='ORG'>nec</ent>t-17 ing party may physically colocate the equipment <enttype='ORG'>nec</ent>-18 essary for intercon<enttype='ORG'>nec</ent>tion at the premises of a local
19 exchange carrier, except as provided under para-20 graph (2).</p>
<p>21 "(2) VIRTUAL COLOCATION-- A local exchange
22 carrier that can demonstrate by clear and convincing
23 evidence in a particular case that the physical
24 colocation required under paragraph (1) is not pract-25 ticable for technical reasons or because of space lim-</p>
<p>H.R. 3515 102nd <enttype='ORG'>Congress</ent>, 1st Session [Page 06 of 35]</p>
<p> 1 itations shall offer an intercon<enttype='ORG'>nec</ent>ting party virtual
2 colocation with it's premises. Virtual colocation shall
3 be economically and technically comparable to inter-4 con<enttype='ORG'>nec</ent>tion that is or would be obtained through
5 physical colocation of the intercon<enttype='ORG'>nec</ent>ting party's
6 equipment at the premises of the local exchange car-7 ier. Nothing in this paragraph shall relieve a di-8 vested <enttype='ORG'>operat</ent>ing company of it's obligations under
9 <enttype='ORG'>sec</ent>tion 227(d)(12).</p>
<p>10 "(3) EXCEPTION FOR RURAL EXCHANGE CAR-11 RIERS.-- Notwithstanding any other provision of this
12 sub<enttype='ORG'>sec</ent>tion, a rural exchange carrier shall not be re-13 quired to provide intercon<enttype='ORG'>nec</ent>tion to another local ex-14 change carrier.</p>
<p>15 "(4) REGUAL<enttype='ORG'>TIONS</ent>-- Within 270 days after the
16 date of enactment of the <enttype='ORG'>Tele</ent>communications Act of
17 1991, the <enttype='ORG'>Commission</ent> shall--</p>
<p>18 "(A) adopt and make effective rules to en-19 force the oblications imposed by this sub<enttype='ORG'>sec</ent>tion;
20 and</p>
<p>21 "(B) initiate a rulemaking to require that
22 the intercon<enttype='ORG'>nec</ent>tion offered by a local exchange
23 carrier pursuant to this sub<enttype='ORG'>sec</ent>tion shall provide
<p>H.R. 3515 102nd <enttype='ORG'>Congress</ent>, 1st Session [Page 07 of 35]</p>
<p> 1 "(1) REVISIONS TO ORDER-- The <enttype='ORG'>Commission</ent>
2 shall further revise the order of the <enttype='ORG'>Commission</ent> en-3 titled '<enttype='ORG'>Filing and Review</ent> of Open Network Archetec-4 ture Plans' CC Docket 88-2, Phase I, released De-5 cember 22, 1988, and subsequently revised, to re-6 quire that--</p>
<p> 7 "(A) the plans for compliance with such
8 order offer unbundled features and functions;</p>
<p> 9 "(B) such features and functions are made
10 available on a reasonably uniform basis by all
11 of the common carriers subject to such order,
12 and that such features and functions are acces-13 sible throughout the service territory of each
14 such carrier;</p>
<p>15 "(C) such plans include a schedule for
16 timely offering of new features asnd functions;
17 and</p>
<p>18 "(D) common carriers subject to such
19 order not unreasonably discriminate between af-20 filiated and unaffiliated providers of informa-21 tion services in offering tariffed and non-22 tariffed features, functions, and capabilities.</p>
<p>23 "(2) REVIEW OF ORDER AND PLANS-- At least
24 once every three years, the <enttype='ORG'>Commission</ent> shall--</p>
<p>H.R. 3515 102nd <enttype='ORG'>Congress</ent>, 1st Session [Page 08 of 35]</p>
<p> 1 "(A) conduct a proceeding in which inter-2 ested parties shall have an opportunity to com-3 ment on whether the order described in para-4 graph (1), as further revised, and the plans
5 filed pursuant to it have opened the networks of
6 the carriers subject to such order to reasonable
7 and non-discriminatory access by providers of
8 <enttype='ORG'>telecommunicati</ent>ons services and information
9 services; and</p>
<p>10 "(B) not later than 180 days after receiv-11 ing the reply comments filed in such proceed-12 ing, revise such order as it deems <enttype='ORG'>nec</ent>essary or
13 appropiate and require the common carriers
14 subject to such order to file new plans consist-15 ent with such revisions, which new plans shall
16 also be subject to public comment and <enttype='ORG'>Commis</ent>-17 sion review prior to their becoming effective.</p>
<p>18 "(d) PRIVACY-- Personally identifiable <enttype='ORG'>cus</ent>tomer in-19 formation obtained or collected by a local exchange carrier
20 in the course of providing telephone exchange service shall
21 be used only in con<enttype='ORG'>nec</ent>tion with the provision of such serv-22 ice, and shall not be made available to any affiliate of such
23 carrier or any other person except--</p>
<p>24 "(1) as required by law; or</p>
<p>H.R. 3515 102nd <enttype='ORG'>Congress</ent>, 1st Session [Page 09 of 35]</p>
<p> 1 "(2) upon the affirmative request by the <enttype='ORG'>cus</ent>-2 tomer to which such information relates.</p>
<p> 3 "(e) TARIFFS--</p>
<p> 4 "(1) GENERALLY-- A local exchange carrier
5 shall prepare and file tariffs in accordance with this
6 Act with respect to the intercon<enttype='ORG'>nec</ent>tion and network
7 access services required under this <enttype='ORG'>sec</ent>tion. The costs
8 that a local exchange carrier incurs in providing
9 such services shall be borne solely by the users of
10 the features and functions comprising such services.
11 The <enttype='ORG'>Commission</ent> shall review such tariffs to ensure
12 that--</p>
<p>13 "(A) the charges for such services are cost-14 based; and</p>
<p>15 "(B) the terms and conditions contained in
16 such tariffs do not bundle together any sepa-17 rable elements, features, or functions.</p>
<p>18 "(2) SUPPORTING <enttype='ORG'>INFORMA</ent>TION-- A local ex-19 change carrier shall submit supporting information
20 with it's tariffs for intercon<enttype='ORG'>nec</ent>tion and network ac-21 cess services that is sufficient to enable the <enttype='ORG'>Commis</ent>-22 sion and the public to determine the relationship be-23 tween the proposed charges and the cost of provid-24 ing such services. The submission of such informa-25 tion shall be pursuant to the rules adopted by the <enttype='ORG'>Com</ent>-</p>
<p>H.R. 3515 102nd <enttype='ORG'>Congress</ent>, 1st Session [Page 10 of 35]</p>
<p> 1 mission to ensure that similarly situated carriers
2 provide such information in an uniform fashion.</p>
<p> 3 "(3) UNIVERSAL SERVICE ELEMENTS-- A local
4 exchange carrier may include in it's tariffs for inter-5 con<enttype='ORG'>nec</ent>tion services an element intended to recover
6 the amount <enttype='ORG'>nec</ent>essary to preclude any substantial in-7 creases in the rates for telephone exchange service
8 that would otherwise result from the offering of
9 intercon<enttype='ORG'>nec</ent>tion services. Such element shall be im-10 posed at a uniform rate on any person who pur-11 chases such services, and shall also be included at
12 the same rate in such carrier's charges for services
13 offered by the carrier in competition with the serv-14 ices offered by intercon<enttype='ORG'>nec</ent>ting parties. No later than
15 270 days after the date of enactment of the <enttype='ORG'>Tele</ent>-16 communications Act of 1991, the <enttype='ORG'>Commission</ent> shall
17 adopt and make effective rules governing the cal-18 culation of such element. Any amounts recovered by
19 the local exchange carrier through the imposition of
20 this additional element shall be used to defray the
21 costs of providing telephone exchange servicce.</p>
23 service (or the unbundled elements of such service) in <enttype='ORG'>conjunc</ent>-24 tion with the the furnishing of an interstate telecommuni-25 cations service or any information service shall not be pro-</p>
<p>H.R. 3515 102nd <enttype='ORG'>Congress</ent>, 1st Session [Page 11 of 35]</p>
<p> 3 "(g) <enttype='ORG'>COORDINATED</ent> PLANNING-- The <enttype='ORG'>Commission</ent>
4 shall adopt and make effective rules for the conduct of
5 coordinated network planning by common carriers, subject
6 to <enttype='ORG'>Commission</ent> supervision, to ensure (1) the effective and
7 efficient intercon<enttype='ORG'>nec</ent>tion and interoperability of common
8 carrier networks, and (2) that the design of such networks
9 does not impede access to information services by sub-10 <enttype='ORG'>scriber</ent>s to telephone exchange service furnished by a rural
11 exchange carrier.</p>
<p>12 "(h) STUDY-- No later than 270 days after the en-13 actment of the <enttype='ORG'>Tele</ent>communications Act of 1991, the <enttype='ORG'>Com</ent>-14 mission shall initiate an inquiry to examine the effects of
15 competition in the provision of telephone exchange access
16 and telephone exchange service on the availability and
17 rates for telephone exchange service furnished by rural ex-18 change carriers.</p>
<p>19 <enttype='ORG'>SEC</ent>. 102. EXPEDITED REVIEW OF CERTAIN COMPLAINTS</p>
<p>20 <enttype='ORG'>Sec</ent>tion 208 of the <enttype='ORG'>Com</ent>munications Act of 1934 is
21 amended by adding at the end thereof the following new
22 sub<enttype='ORG'>sec</ent>tion:</p>
<p>23 "(c) EXPEDITED REVIEW OF CERTAIN COM-24 PLAINTS-- The <enttype='ORG'>Commission</ent> shall issue a final order with
25 respect to any complaint arising from alleged violations</p>
<p>H.R. 3515 102nd <enttype='ORG'>Congress</ent>, 1st Session [Page 12 of 35]</p>
<p> 1 of <enttype='ORG'>sec</ent>tion 201A within 270 days after such complaint is
2 filed".</p>
<p> 3 <enttype='ORG'>SEC</ent>. 103. EXPEDITED LICENSING OF NEW TECHNOLOGIES</p>
<p> 4 AND SERVICES.</p>
<p> 5 <enttype='ORG'>Sec</ent>tion 7 of the <enttype='ORG'>Com</ent>munications Act of 1934 is
6 amended by adding to the end thereof the following new
7 sub<enttype='ORG'>sec</ent>tion:</p>
<p> 8 "(c) LICENSING OF NEW TECHNOLOGIES-- Within
9 twenty-four months after making a determination under
10 sub<enttype='ORG'>sec</ent>tion (b) that a technology or service related to the
11 furnishing of tlelcommunications services or information
12 services is in the public interest, the <enttype='ORG'>Commission</ent> shall
13 adopt and make effective rules for--</p>
<p>14 "(1) the provision of such technology or service;
15 and</p>
<p>16 "(2) the filing of applications for the <enttype='ORG'>authoriza</ent>-17 tions <enttype='ORG'>nec</ent>essary to offer such technology or service to
18 the public, and shall act on any such application
19 within twenty-four months after it is filed. Any ap-20 plication filed by a carrier under this sub<enttype='ORG'>sec</ent>tion for
21 the construcction or extension of a line shall also be
22 subject to <enttype='ORG'>sec</ent>tion 214 and to any <enttype='ORG'>nec</ent>essary approval
<p>12 "(b) ELECTRONIC PUBLISHING-- A divested <enttype='ORG'>operat</ent>-13 ing company or an affiliate thereof may not offer elec-14 tronic publishing services in any State in which such com-15 pany or affiliate provides telephone exchange service until
7 such company provides telephone exchange service
8 subscribe to services delivered over such alternative
9 facilities; and</p>
<p>10 "(3) the divested <enttype='ORG'>operat</ent>ing company or affiliate
11 thereof seeking to provide such electronic publishing
12 services has demonstrated that there is no substan-13 tial possibility that the divested <enttype='ORG'>operat</ent>ing company
14 could use it's position as a local exchange carrier to
15 (A) impede competition in the provision of electronic
16 publishing services, or (B) impose additional costs
17 upon sub<enttype='ORG'>scriber</ent>s of telephone exchange service.</p>
<p>18 "(c) WAIVER-- A divested <enttype='ORG'>operat</ent>ing company or an
19 affiliate thereof may petition the <enttype='ORG'>Commission</ent> for a waiver
20 of sub<enttype='ORG'>sec</ent>tions (b) and (h) to provide a particular elec-21 tronic publishing service. Such petition shall be granted
22 if such company or affiliate can demonstrate to the <enttype='ORG'>Com</ent>-23 mission by clear and convincing evidence that (A) such
24 service would not exist unless offered by such company
25 or affiliate, and (B) the provision of such service by such</p>
<p>H.R. 3515 102nd <enttype='ORG'>Congress</ent>, 1st Session [Page 15 of 35]</p>
<p> 1 company or affiliate would not impose additional costs
2 upon sub<enttype='ORG'>scriber</ent>s of telephone exchange service. The <enttype='ORG'>Com</ent>-3 mission shall provide notice and opportunity for public
4 comment with respect to any request for a waiver <enttype='ORG'>persu</ent>-5 ant to this sub<enttype='ORG'>sec</ent>tion. The provision of any service author-6 ized pursuant to this sub<enttype='ORG'>sec</ent>tion shall be subject to all of
7 the other provisions of this Act, including title IV and the
8 requirements of this sub<enttype='ORG'>sec</ent>tion.</p>
<p> 9 "(d) SEPARATE SUBSIDIARY--</p>
<p>10 "(1) GENERALLY-- Except as provided in sub-11 <enttype='ORG'>sec</ent>tion (e), a divested <enttype='ORG'>operat</ent>ing company or affiliate
12 thereof may provide information services only
13 through a subsidiary that is separated from the tele-14 phone exchange service <enttype='ORG'>operat</ent>ions of the divested
15 company, in accordance with the requirements of
16 this sub<enttype='ORG'>sec</ent>tion and the regualations prescribed by the
17 <enttype='ORG'>Commission</ent> to carry out this sub<enttype='ORG'>sec</ent>tion.</p>
<p>18 "(2) MINIMUM NUMBER OF OUTSIDE DIREC-19 TORS-- Any subsidiary required by this sub<enttype='ORG'>sec</ent>tion
20 shall have a board of directors not less than 33 per-21 cent of whom are not employees, officers, or direc-22 tors of any divested <enttype='ORG'>operat</ent>ing company or any affili-23 ate of such company.</p>
<p>24 "(3) TRANSACTION REQUIREMENTS-- Any
25 transaction between any divested <enttype='ORG'>operat</ent>ing company</p>
<p>H.R. 3515 102nd <enttype='ORG'>Congress</ent>, 1st Session [Page 16 of 35]</p>
<p> 1 and any other affiliate of such company (including
2 the subsidiary required by this sub<enttype='ORG'>sec</ent>tion)--</p>
<p> 3 "(A) shall not be based upon any pref-4 erence or discrimination arising out of affili-5 ation;</p>
<p> 6 "(B) shall be carried out in the same man-7 <enttype='ORG'>ner</ent> as such company or affiliate conducts such
8 business with unaffiliated persons;</p>
<p> 9 "(C) shall be pursuant to contract or tariff
10 reported to the <enttype='ORG'>Commission</ent> and made available
11 for public inspection;</p>
<p>12 "(D) shall be fully auditable and reflect all
13 costs associated with the conduct of such busi-14 ness; and</p>
<p>15 "(E) shall not have the effect of permitting
16 any violation of the requirements of sub<enttype='ORG'>sec</ent>tion
17 (f) of this <enttype='ORG'>sec</ent>tion.</p>
<p>18 "(4) SEPERATE OPERATION AND PROPERTY--
19 A subsidiary required by this sub<enttype='ORG'>sec</ent>tion may not--</p>
<p>20 "(A) enter into any joint venture or part-21 <enttype='ORG'>ner</ent>ship with the divested <enttype='ORG'>operat</ent>ing company;</p>
<p>22 "(B) have employees or a financial struc-23 ture (other than as provided in this <enttype='ORG'>sec</ent>tion) in
24 common with the divested <enttype='ORG'>operat</ent>ing company;</p>
<p>H.R. 3515 102nd <enttype='ORG'>Congress</ent>, 1st Session [Page 17 of 35]</p>
<p>3 "(D) establish any other subsidiary or af-4 filiate except after notice to the <enttype='ORG'>Commission</ent> in
5 such form and containing such information as
6 the <enttype='ORG'>Commission</ent> may require.</p>
<p>7 "(5) SEPARATE COMMERCIAL ACTIVITIES-- A
8 subsidiary required by this sub<enttype='ORG'>sec</ent>tion shall carry out
9 directly it's own marketing, sales, accounting, hiring
10 and training of personnel, purchasing, and <enttype='PERSON'>mainte</ent>-11 nance.</p>
<p> 12 "(6) BOOKS, <enttype='ORG'>RECORDS</ent>, AND REPORTS-- Any
13 subsidiary required by this sub<enttype='ORG'>sec</ent>tion shall--</p>
<p> 14 "(A) maintain books, records, and ac-15 counts in a man<enttype='ORG'>ner</ent> prescribed by the <enttype='ORG'>Commis</ent>-16 sion which shall be seperate from the books,
17 records, and accounts maintained by the di-18 vested <enttype='ORG'>operat</ent>ing company and the other affili-19 ates of the divested <enttype='ORG'>operat</ent>ing company, and
20 which shall identify any conduct of business
21 with such company and any such affiliates; and</p>
<p> 22 "(B) prepare it's own financial statements
23 (including balance sheets and the related state-24 ments of <enttype='ORG'>operat</ent>ions, stockholders' equity, and
25 cash flows) that are not consolidated with the</p>
<p>H.R. 3515 102nd <enttype='ORG'>Congress</ent>, 1st Session [Page 18 of 35]</p>
<p>1 financial statements of the divested <enttype='ORG'>operat</ent>ing
2 company and any other affiliate of such com-3 pany; and</p>
<p>4 "(C) prepare and file with the <enttype='ORG'>Commission</ent>,
5 whether or not such subsidiary is publicly trad-6 ed, the annual and periodic reports required of
7 publicly traded companies by the <enttype='ORG'>Sec</ent>urities and
8 Exchange <enttype='ORG'>Commission</ent>.</p>
<p>9 "(7) <enttype='ORG'>ADVERTISING</ent>-- A subsidiary required by
10 this sub<enttype='ORG'>sec</ent>tion may not carry out advertising with
11 the divested <enttype='ORG'>operat</ent>ing company, except that such
12 subsidiary may carry out institutional advertising
13 with such company if (A) such advertising does not
14 specifically relate to any service, and (B) the sub-15 sidiary and the divested <enttype='ORG'>operat</ent>ing comapany share
16 any costs of such advertising in proportion to their
17 revenue.</p>
<p> 18 "(8) <enttype='ORG'>SEC</ent>URITIES <enttype='ORG'>INFORMA</ent>TION-- A subsidiary
19 required by this sub<enttype='ORG'>sec</ent>tion shall submit to the <enttype='ORG'>Com</ent>-20 mission a copy of any statement or prospectus that
21 such subsidiary is required to file with the <enttype='ORG'>Sec</ent>urities
22 and Exchange <enttype='ORG'>Commission</ent>.</p>
<p> 23 "(9) OUTSIDE OWNERSHIP-- A divested <enttype='ORG'>operat</ent>-24 ing company or an affiliate thereof may not own
25 more than 90 percent of any class of outstanding</p>
<p>H.R. 3515 102nd <enttype='ORG'>Congress</ent>, 1st Session [Page 19 of 35]</p>
<p>1 capital stock of any affiliated subsidiary required by
2 this sub<enttype='ORG'>sec</ent>tion.</p>
<p>3 "(10) <enttype='ORG'>TRANSMISSION</ent> CAPACITY-- A seperate
4 subsidiary required by this sub<enttype='ORG'>sec</ent>tion may not own
5 any transmission facilities, and may obtain the use
6 of such facilities from an affiliated divested <enttype='ORG'>operat</ent>-7 ing company or affiliate thereof only pursuant to
8 tariffs of ge<enttype='ORG'>ner</ent>al applicability.</p>
<p>9 "(11) PRESERVATION OF SEPERATE SUBSIDI-10 ARY REQUIREMENTS FOR GRANDFATHERED FUNC-11 <enttype='ORG'>TIONS</ent>-- Nothing in this sub<enttype='ORG'>sec</ent>tion shall be con-12 strued to relieve a divested <enttype='ORG'>operat</ent>ing company or
13 any affiliate thereof (or any other local exchange
14 carrier or affiliate thereof) of any seperate subsidi-15 ary requirement imposed before October 1, 1991.</p>
<p> 16 "(12) PROVISION OF SERVICES AND <enttype='ORG'>INFORMA</ent>-17 TION-- A divested <enttype='ORG'>operat</ent>ing company may not pro-18 vide any services or information to a subsidiary re-19 quired by this sub<enttype='ORG'>sec</ent>tion unless such services or in-20 formation are made available to others on the same
21 terms and conditions.</p>
<p> 22 "(e) EXCEPTION TO SEPERATE SUBSIDIARY RE-23 QUIREMENT-- A divested <enttype='ORG'>operat</ent>ing company or affiliate
24 thereof shall not be required to establish a subsidiary pur-25 suant to sub<enttype='ORG'>sec</ent>tion (d) with respect to any information</p>
<p>H.R. 3515 102nd <enttype='ORG'>Congress</ent>, 1st Session [Page 20 of 35]</p>
<p>1 service provided by such company or affiliate on or before
5 Any divested <enttype='ORG'>operat</ent>ing company that provides infor-6 mation services, or which has an affiliate that is en-7 gaged in the provision of such services, shall estab-8 lish and administer, in accordance with the require-9 ments of this sub<enttype='ORG'>sec</ent>tion and the regulations pre-10 scribed thereunder, a cost allocation system that, to-11 gether with the subsidiary requirements of sub-12 <enttype='ORG'>sec</ent>tion (d), is intended to prohibit any cost of pro-13 viding such services from being subsidized by reve-14 nue from telephone exchange service or telephone ex-15 change access services.</p>
<p> 16 "(2) COST ASSIGNMENT AND ALLOCATION REG-17 ULA<enttype='ORG'>TIONS</ent>--</p>
<p> 18 "(A) GENERALLY-- The <enttype='ORG'>Commission</ent> shall
19 establish regulations to require the just and
20 reasonable assignment and allocation of all
21 costs that are in any way incurred by a divested
22 <enttype='ORG'>operat</ent>ing company or any affiliate thereof in
23 the provision of any information service.</p>
<p> 24 "(B) JOINT AND COMMON COSTS-- The
25 regulations adopted pursuant to this paragraph</p>
<p>H.R. 3515 102nd <enttype='ORG'>Congress</ent>, 1st Session [Page 21 of 35]</p>
<p>1 shall include a requirement that any costs of
2 any investment or other expenditure that can-3 not be allocated based upon direct or indirect
4 measures of cost causation shall be allocated to
5 unregulated services--</p>
<p>6 "(i) under a formula that ensures that
7 the rates for telephone exchange service
8 are no greater than they would have been
9 in the absence of such investment (taking
10 into account any decline in the real costs
11 of providing such service), or</p>
<p> 12 "(ii) based upon the highest forecast
13 unregulated usage of the investment over
14 the life of the investment,</p>
<p> 15 whichever method results in the lesser allocation
16 of such costs to telephone exchange service.</p>
<p> 17 "(3) INSULATION OF RATEPAYERS--</p>
<p> 18 "(A) ASSETS-- The <enttype='ORG'>Commission</ent> shall, by
19 regulation, ensure that the economic risks asso-20 ciated with the provision of information services
21 by divested <enttype='ORG'>operat</ent>ing companies or affiliates
22 thereof (including any increases in the divested
23 <enttype='ORG'>operat</ent>ing company's cost of capital that occur
24 as a result of the provision of such services) are
25 not borne by <enttype='ORG'>cus</ent>tomers of telephone exchange</p>
<p>H.R. 3515 102nd <enttype='ORG'>Congress</ent>, 1st Session [Page 22 of 35]</p>
<p>1 service in the event of a business loss or failure.
2 Investments or other expenditures assigned to
3 information services shall not be reassigned to
4 telephone exchange service or telephone ex-5 change access service.</p>
<p>6 "(B) DEBT-- Any divested <enttype='ORG'>operat</ent>ing com-7 pany affiliate--</p>
<p>8 "(i) which is providing information
9 services, and</p>
<p> 10 "(ii) which is required to be or is
11 structurally seperate from an affiliate en-12 gaged in the provision of telephone ex-13 change service,</p>
<p> 14 shall not obtain credit under any arrangement
15 that (I) would permit a creditor, upon default,
16 to have recourse to the assets of the divested
17 <enttype='ORG'>operat</ent>ing company, or (II) would induce a cred-18 itor to rely on the tangible or intangible assets
19 of the divested <enttype='ORG'>operat</ent>ing company in extending
20 credit.</p>
<p> 21 "(4) TRANSFERS OF ASSETS BETWEEN AFFILI-22 <enttype='ORG'>ATED</ent> COMPANIES-- The <enttype='ORG'>Commission</ent> shall prescribe
23 regulations governing the accounting for the transfer
24 of assets between a divested <enttype='ORG'>operat</ent>ing company and
25 it's affiliates. Such regulations shall protect the inter-</p>
<p>H.R. 3515 102nd <enttype='ORG'>Congress</ent>, 1st Session [Page 23 of 35]</p>
<p>1 ests of ratepayers of telephone exchange service and
2 require such transfer to be conducted by means of
3 a transaction that complies with sub<enttype='ORG'>sec</ent>tion (d)(3).
4 Such regulations shall require that--</p>
<p>5 "(A) any transfer of assets from such an
6 affiliate to it's affiliated divested <enttype='ORG'>operat</ent>ing com-7 pany be valued at the lesser of net book cost or
8 fair market value; and</p>
<p>9 "(B) any transfer of assets fromm a divested
10 <enttype='ORG'>operat</ent>ing company to it's affiliate be valued at
11 the greater of net book cost or fair market
12 value.</p>
<p> 13 "(5) ANNUAL AUTIDING REQUIREMENT--</p>
<p> 14 "(A) AUDIT <enttype='ORG'>APPLICABILITY</ent> AND PUR-15 POSE-- Each divested <enttype='ORG'>operat</ent>ing company that
16 engages in, or has an affiliate that engages in,
17 or has a financial or management interest in an
18 orginization or entity that provides information
22 exchange service, a report on the results of an
23 audit by an independant auditor conducted for
24 the purpose of determining wether the com-25 pany has--</p>
<p>H.R. 3515 102nd <enttype='ORG'>Congress</ent>, 1st Session [Page 24 of 35]</p>
<p>1 "(i) established and administered a
2 cost allocation system as required by para-3 graph (1) of this sub<enttype='ORG'>sec</ent>tion, and</p>
<p>4 "(ii) complied with the cost assign-5 ment and allocation regulations prescribed
6 under this sub<enttype='ORG'>sec</ent>tion.</p>
<p>7 "(B) <enttype='ORG'>CONDUIT</ent> OF AUDIT-- Such audit
8 shall be conducted, at divested <enttype='ORG'>operat</ent>ing com-9 pany expense, in accordance with audit proce-10 dures prescribed by the <enttype='ORG'>Commission</ent>, by regula-11 tion, which shall include approval of auditor se-12 lection by the <enttype='ORG'>Commission</ent> and rotation of audi-13 tors or other procedures to ensure the inde-14 pendence of such auditor.</p>
<p> 15 "(C) SUBMISSION OF AUDIT RESULTS;
16 CERTIFICATION-- The divested <enttype='ORG'>operat</ent>ing com-17 pany shall submit the audit to the <enttype='ORG'>Commission</ent>,
18 which shall make the audit report available for
19 public inspection. Such report shall be certified
20 by the person conducting the audit and by an
21 appropriate officer of such affiliate and shall
22 identify with particularity any qualifications or
23 limitations on such certification and any other
24 information relevant to the enforcement of the
25 requirements of this <enttype='ORG'>sec</ent>tion.</p>
<p>H.R. 3515 102nd <enttype='ORG'>Congress</ent>, 1st Session [Page 25 of 35]</p>
<p>1 "(D) ACCESS TO DOCUMENTS-- For pur-2 poses of conducting and reviewing such audit--</p>
<p>3 "(i) the auditor, the <enttype='ORG'>Commission</ent>, and
7 company or affiliate provides telephone exchange service
8 have been removed with respect to such company or affili-9 ate.</p>
<p> 10 "(i) PROVISION OF GATEWAY SERVICES-- Any di-11 vested <enttype='ORG'>operat</ent>ing company or affiliate thereof that offers
12 a gateway service shall make such service available concurr-13 ently to all it's sub<enttype='ORG'>scriber</ent>s at the same rates, terms,
14 and conditions.</p>
<p> 15 "(j) ENFORCEMENT-- A person who is injured by a
16 violation of any of the requirements of this <enttype='ORG'>sec</ent>tion may,
17 in lieu of filing a complaint under <enttype='ORG'>sec</ent>tion 208, commence
18 in a civil action for injunctive relief and monetary damages
19 in any <enttype='ORG'>Federal</ent> judicial district in which the defendant re-20 sides or has an agent. A residential <enttype='ORG'>cus</ent>tomer of telephone
21 exchange service shall have standing to commence an ac-22 tion under this <enttype='ORG'>sec</ent>tion, without regard to the amount in
23 controversy. In any action brought under this <enttype='ORG'>sec</ent>tion, the
24 court may award the costs of litigation (including reson-25 able attorneys fees).</p>
<p>H.R. 3515 102nd <enttype='ORG'>Congress</ent>, 1st Session [Page 27 of 35]</p>
<p>1 "(k) ADDITIONAL AUTHORITY-- In addition to any
2 other authority which the <enttype='ORG'>Commission</ent> may exercise under
3 this Act, the <enttype='ORG'>Commission</ent> shall take such actions as are
4 <enttype='ORG'>nec</ent>essary--</p>
<p>5 "(1) to prevent anticompetitive practicces be-6 tween a divested <enttype='ORG'>operat</ent>ing company and any affili-7 ate of the divested <enttype='ORG'>operat</ent>ing company;</p>
<p>8 "(2) to protect ratepayers of divested <enttype='ORG'>operat</ent>ing
9 companies from subsidizing the provision of informa-10 tion services by such companies or their affiliates;</p>
<p> 11 "(3) to prevent any divested <enttype='ORG'>operat</ent>ing company
12 or any affiliate thereof fromm imposing any unjust or
13 unreasonable rates or charges for any common car-14 ier services that are provided in con<enttype='ORG'>nec</ent>tion with the
15 provision of information services.</p>
<p> 16 "(m) DEFINI<enttype='ORG'>TIONS</ent>-- As used in this <enttype='ORG'>sec</ent>tion--</p>
<p> 17 "(1) AFFILIATE-- The term 'affiliate' means
18 any organization or entity that, directly or indirectly,
19 owns or controls, or is owned or controlled by, or is
20 under common ow<enttype='ORG'>ner</ent>ship or control with, a divested
21 <enttype='ORG'>operat</ent>ing company. For purposes of this paragraph,
22 the terms 'own', 'owned', and 'ow<enttype='ORG'>ner</ent>ship' means a di-23 rect or indirect equity interest (or equivalent there-24 of) of more than 10 percent of an organization or
25 entity, or the right to more than 10 percent of the</p>
<p>H.R. 3515 102nd <enttype='ORG'>Congress</ent>, 1st Session [Page 28 of 35]</p>
<p>1 gross revenues of an organization or entity under a
2 revenue sharing or royalty agreement.</p>
<p>3 "(3) DIVESTED OPERATING COMPANY-- The
4 term 'divested <enttype='ORG'>operat</ent>ing company'--</p>
<p>5 "(A) means any of the following compa-6 nies: <enttype='ORG'>Bell</ent><enttype='ORG'>Tele</ent>phone <enttype='ORG'>Com</ent>pany of Nevada, <enttype='GPE'>Illi</ent>-7 nois <enttype='ORG'>Bell</ent><enttype='ORG'>Tele</ent>phone <enttype='ORG'>Com</ent>pany, <enttype='NORP'>Indiana</ent><enttype='ORG'>Bell</ent>
9 <enttype='ORG'>Bell</ent><enttype='ORG'>Tele</ent>phone <enttype='ORG'>Com</ent>pany, New England <enttype='ORG'>Tele</ent>-10 phone and <enttype='ORG'>Tele</ent>graph <enttype='ORG'>Com</ent>pany, <enttype='GPE'>New Jersey</ent>
11 <enttype='ORG'>Bell</ent><enttype='ORG'>Tele</ent>phone <enttype='ORG'>Com</ent>pany, New York <enttype='ORG'>Tele</ent>phone
12 <enttype='ORG'>Com</ent>pany, US West <enttype='ORG'>Com</ent>munications <enttype='ORG'>Com</ent>pany,
13 South Central <enttype='ORG'>Bell</ent><enttype='ORG'>Tele</ent>phone <enttype='ORG'>Com</ent>pany, South-14 ern <enttype='ORG'>Bell</ent><enttype='ORG'>Tele</ent>phone and <enttype='ORG'>Tele</ent>graph <enttype='ORG'>Com</ent>pany,
15 <enttype='ORG'>Southwestern <enttype='ORG'>Bell</ent><enttype='ORG'>Tele</ent>phone</ent><enttype='ORG'>Com</ent>pany, the
16 <enttype='ORG'>Bell</ent><enttype='ORG'>Tele</ent>phone <enttype='ORG'>Com</ent>pany of <enttype='GPE'>Pennsylvania</ent>, the
17 <enttype='GPE'>Chesapeake</ent> and <enttype='GPE'>Poto</ent>mac <enttype='ORG'>Tele</ent>phone <enttype='ORG'>Com</ent>pany,
18 the <enttype='GPE'>Chesapeake</ent> and <enttype='GPE'>Poto</ent>mac <enttype='ORG'>Tele</ent>phone <enttype='ORG'>Com</ent>-19 pany of <enttype='GPE'>Maryland</ent>, the <enttype='GPE'>Chesapeake</ent> and <enttype='GPE'>Poto</ent>-20 mac <enttype='ORG'>Tele</ent>phone <enttype='ORG'>Com</ent>pany of <enttype='GPE'>Virginia</ent>, the
21 <enttype='GPE'>Chesapeake</ent> and <enttype='GPE'>Poto</ent>mac <enttype='ORG'>Tele</ent>phone <enttype='ORG'>Com</ent>pany
23 <enttype='ORG'>Com</ent>pany, the Ohio <enttype='ORG'>Bell</ent><enttype='ORG'>Tele</ent>phone <enttype='ORG'>Com</ent>pany,
24 the Pacific <enttype='ORG'>Tele</ent>phone and <enttype='ORG'>Tele</ent>graph <enttype='ORG'>Com</ent>pany,
25 and Wisconsin <enttype='ORG'>Tele</ent>phone <enttype='ORG'>Com</ent>pany; and</p>
<p>H.R. 3515 102nd <enttype='ORG'>Congress</ent>, 1st Session [Page 29 of 35]</p>
<p>1 "(B) includes any successor or assign of
2 any such company, but does not include any af-3 filiate of such company.</p>
<p>4 "(3) GATEWAY SERVICE-- The term 'gateway
5 service' means an information service that, at the re-6 quest of the provider of an electronic publishing
7 service or other information service, provides a sub-8 <enttype='ORG'>scriber</ent> with access to such electronic publishing
9 service or other information service, utilizing the fol-10 lowing functions: data transmission, address trans-11 lation, billing information, protocol conversion, and
12 introductory information content."</p>
<p> 13 <enttype='ORG'>SEC</ent>. 202. AUTHORIZATION OF APPROPRIA<enttype='ORG'>TIONS</ent>.</p>
<p> 14 "(a) AMENDMENT-- <enttype='ORG'>Sec</ent>tion 6 of the <enttype='ORG'>Com</ent>munica-15 tions Act of 1934 is amended by adding at the end thereof
16 the following new sub<enttype='ORG'>sec</ent>tion:</p>
<p> 17 "(d) SEPERATE SUBSIDIARY REQUIREMENTS-- Such
18 sums as may be <enttype='ORG'>nec</ent>essary are authorized to be appro-19 priated for the implementation and enforcement of the re-20 quirements of <enttype='ORG'>sec</ent>tion 208(c) and 227 of this Act. Such
21 funds shall be in addition to any appropriations authorized
22 under sub<enttype='ORG'>sec</ent>tion (a)."</p>
<p> 23 "(b) PROVISION OF <enttype='ORG'>INFORMA</ent>TION SERVICES-- A di-24 vested <enttype='ORG'>operat</ent>ing company or an affiliate thereof may not
25 provide information services until enactment of the</p>
<p>H.R. 3515 102nd <enttype='ORG'>Congress</ent>, 1st Session [Page 30 of 35]</p>
<p>1 initial appropriation of funds authorized under <enttype='ORG'>sec</ent>tion
2 6(d) of the <enttype='ORG'>Com</ent>munications Act of 1934, as added by <enttype='ORG'>sec</ent>-3 tion 202(a) of this Act.</p>
<p>6 <enttype='ORG'>Sec</ent>tion 3 of the <enttype='ORG'>Com</ent>municatins Act of 1934 is
7 amended by adding at the end thereof the following new
8 sub<enttype='ORG'>sec</ent>tions:</p>
<p>9 "(hh) 'Electronic publishing service' means the provi-10 sion of any information--</p>
<p> 11 "(1)(A) that the provider or publisher has (or
12 has caused to be) authored, originated, gathered,
13 collected, produced, compiled, edited, categorized, or
14 indexed; or</p>
<p> 15 "(B) in which the provider or publisher has a
16 direct or indirect financial or proprietary interest;
17 and</p>
<p> 18 "(2) which is disseminated to an unaffiliated
19 person through some electronic means.</p>
<p> 20 "(ii) 'Information services' means the offering of a
21 capability for ge<enttype='ORG'>ner</ent>ating, acquiring, storing, transforming,
22 processing, retrieving, utilizing, or making available infor-23 mation that may be conveyed via <enttype='ORG'>telecommunicati</ent>ons, and
24 includes electronic publishing, but does not include any
25 use of any such capability for the management, control,</p>
<p>H.R. 3515 102nd <enttype='ORG'>Congress</ent>, 1st Session [Page 31 of 35]</p>
<p>1 or <enttype='ORG'>operat</ent>ion of a <enttype='ORG'>telecommunicati</ent>ons service or the man-2 agement of a <enttype='ORG'>telecommunicati</ent>ons service.</p>
<p>3 "(jj) 'Local exchange carrier' means a provider of
4 telephone exchange service that is classified by the <enttype='ORG'>Com</ent>-5 mission as a dominant carrier.</p>
<p>6 "(kk) 'Rural exchange carrier' means <enttype='PERSON'>menas</ent> a local ex-7 change carrier serving a total of 50000 or fewer access
8 lines.</p>
<p>9 "(ll) '<enttype='ORG'>Tele</ent>communications' means the transmission,
10 between or among points specified by the <enttype='ORG'>cus</ent>tomer, of in-11 formation of the <enttype='ORG'>cus</ent>tomer's choosing, without change in
12 the form or content of the information as sent and re-13 ceived, by means of an electromagnetic transmission me-14 dium, including all instrumentalities, facilities, apparatus,
15 and services (including the collection, storage, forwarding,
16 switching, and delivery of such information) essential to
17 such transmission.</p>
<p> 18 "(mm) '<enttype='ORG'>Tele</ent>communications service' means the pub-19 lic or private offering for hire of <enttype='ORG'>telecommunicati</ent>ons facili-20 ties."</p>
6 <enttype='ORG'>Federal</ent> or State antitrust law, or to alter or restrict in
7 any man<enttype='ORG'>ner</ent> the applicability of any <enttype='ORG'>Federal</ent> or State anti-8 trust law to the actions of a divested <enttype='ORG'>operat</ent>ing company
<p> 18 (C) any law enacted after the datr of en-19 actment of this Act by the <enttype='ORG'>Congress</ent> which pro-20 hibits, or makes available to <enttype='GPE'>the United</ent> States
21 or to any person in any court of <enttype='GPE'>the United</ent>
22 States any civil remedy with respect to, any re-23 restraint upon, or monopolization of, interstate or
