Telecom Stories: February - June 1998

Nader Pans AT&T/TCI Merger. (6/29/98) Ralph Nader, in a letter to FCC Commissioner William Kennard dated today, criticized yet another telecommunications merger.  Nader asserts that the merger of AT&T and TCI would provide new opportunities for AT&T to bundle products and services to the detriment of consumers.

E-Rate Debate Continues. (6/22/98) The FCC's announcement on June 12 that it would modify its "E-Rate" or "Gore Tax" subsidies for schools and libraries has not quelled the debate over the future of the program. AT&T announced Friday that it would charge its residential customers 93 cents per month to support universal service programs. Also, legislators will likely introduce two bills in Congress this week that would transfer control of the program to the Department of Education, and fund it with an already existing federal excise tax on telephones.

Spamming, Slamming, and Billing Legislation. (6/18/98) The Senate held a hearing on anti-spamming legislation. It has already passed the Senate, but is pending in the House. The measure would require junk e-mailers to identify themselves on messages, and honor requests from recipients to be removed from mailing lists. This provision is part of a larger bill banning slamming, and regulating the content of phone companies' monthly bills to customers.

House Holds Hearing on Y2K in Telecommunications. (6/17/98) The House Ways and Means Committee, Subcommittee on Oversight, held a hearing on Tuesday on Year 2000 problems in telecommunications systems.  In what has become an almost weekly ritual on Capital Hill, an oversight committee called in several government officials and industry leaders to report on the status of Y2K conversion efforts.

FCC Modifies Schools and Libraries Program. (6/15/98) The FCC decided on Friday to modify the way it implements Section 254(h) of the Telecommunications Act of 1996, which mandates universal service support for telecommunications services for schools and libraries.  However, the changes fell far short of what the FCC's critics in Congress wanted, and set the stage for further conflict, and/or Congressional legislation.

Judge Denies Cable & Wireless' Request to Enjoin MCI. (6/15/98) U.S. District Court Judge Thomas Jackson denied a motion of Cable & Wireless to enjoin MCI from negotiating to sell its Internet business to any other company.  MCI and WorldCom are under pressure from U.S. and E.U. regulators to divest some Internet assets.   On May 27, MCI agreed to sell certain assets to British telecommunications company Cable and Wireless. Last Wednesdy Cable and Wireless filed its breach of contract lawsuit. See, HTML Copy of Complaint.

FCC Requires Retail Sale of Set Top Boxes. (6/12/98) The Federal Communications Commission Thursday announced new rules allowing retail sales of set top boxes.  Cable companies now have a monopoly on these hardware devices, which usually sit on top of TVs and act as an interface between the TV and the cable company. The decision was expected.

Senate Communications Subcommittee Berates FCC. (6/11/98) The Senate Communications Subcommittee held a hearing on reauthorization of the Federal Communications Commission Wednesday morning, at which most Senators scolded the FCC Commissioners for their handling of universal service support for high cost rural areas and for schools and libraries. FCC Commissioners said little to mollify their Senate critics.

Schools and Libraries Corporation in Trouble on Hill. (6/8/98) The Federal Communications Commission's handling of the schools and libraries universal service subsidy program, also know as the "e-rate," has come under strong criticism on Capitol Hill. Several key Congressmen would like to shut down the Schools and Libraries Corp. and its funding mechanism.

Schools & Libraries Corporation Supporters Fight Back. (6/8/98) The supporters of the beleagured Schools and Libraries Corporation met Friday in Washington to organize their campaign to preserve the "e-rate" program in its current form.  Congressional supporters also held a press conference to announce that they would take their case to the public. See, Transcript of Press Conference.

Education Dept. Waits in the Wings to Run the E-Rate. (6/8/98) The Department of Education might soon administer a reformed federal program for subsidizing school and library computer networking and connections to the Internet. The program, known as the "e-rate," is now administered by the Federal Communications Commission and its Schools and Libraries Corporation. However, the FCC has incurred the wrath of many members of Congress for the manner in which it has constituted the program.

Clinton Condemns "Digital Divide" in America. (6/8/98) President Bill Clinton delivered an address at the Massachusetts Institute of Technology on Friday in which he condemned the racial "digital divide" in America, and re-affirmed his support for the "e-rate" subsidy for school and library computer networking, Internet access, and phone service. See, Complete Text of Clinton Speech.

Debate Over 'Gore Tax' Heats Up. (6/4/98) Battle lines are being drawn over the "Gore Tax" -- a charge on phone bills used to pay for the Federal Communications Commission's expanding universal service programs. The controversy is not presently over whether there should be a tax, but rather, whether the public should be informed about the tax on their phone bills. Fearing that such information could erode public support for the Schools and Libraries fund (the "e-rate"), FCC Chairman Kennard wants to stop phone companies from revealing such information.

FCC Asks for Rehearing in Lutheran Church Case. (6/1/98) The Federal Communications Commission filed a Petition for Rehearing with the U.S. Court of Appeals for the District of Columbia on Friday in the Lutheran Church v. FCC case. Last month a three judge judge panel of the same Court struck down on equal protection grounds the FCC EEO regulations which mandate racial hiring preferences by broadcasters.

AT&T Announces New Universal Service Charges and IP Telephony and Wireless Data Services. (5/29/98) AT&T announced plans to collect a new universal service charge and to notify customers of the reason for the charge in monthly bills. AT&T also announced plans to offer IP telephony services in three cities, and flat rate wireless data services. The universal service charge will recover the about $1.6 Billion that the FCC requires AT&T to contribute to universal service programs, including its new $2.2 Billion per year Schools and Libraries Fund. The announcements do not sit well with the FCC and some proponents of universal service subsidies.

MCI Plan to Sell Internet Backbone Doesn't Placate GTE. (5/29/98) MCI announced on Thursday that it plans to sell much of its Internet backbone infrastructure to the British telecommunications company, Cable & Wireless. The proposed merger of MCI and WorldCom has raised concerns that the new entity would concentrate Internet backbone service. The merger is under review by the Department of Justice, Federal Communications Commission, and European Union. Both GTE and Sprint claim that the proposed divestiture does not go far enough.

FCC to Hold Hearing on 25/75 Universal Service Rule. (5/26/98) The Federal Communications Commission will hold a day long public hearing in Washington DC on June 8 on its much criticized "25/75" universal service decision.  See, HTML Copy of FCC Public Notice.

FCC to Hold Public Forum on § 271. (5/21/98) The Federal Communications Commission will host a day long public forum in Washington DC on June 4 to discuss the methods by which Bell operating companies may satisfy the Section 271 requirement that they provide access to unbundled network elements.  See, Schedule.

Brown to Replace Metzger at Common Carrier Bureau. (5/18/98); Kathleen Brown will replace Richard Metzger as head of the Federal Communications Commission's Common Carrier Bureau, which regulates "common carrier" telephone companies.  Under Metzger, CCB made controversial decisions regarding deregulation, §271 applications, universal service, the schools and libraries "e-rate" program, and IP Telephony.

ITFA Limits FCC Control over Internet. (5/15/98) The consensus version of the Internet Tax Freedom Act passed by the House Commerce Committee overwhelmingly on Thursday morning would not only protect the Internet from a myriad of potential new taxes from thousands of state and local taxing authorities -- it would restrict the Federal Communications Commission's ability to fix prices and assess regulatory fees in connection with the Internet.

FCC and CATO Debate Internet Universal Service. (5/13/98) FCC Chief of Staff John Nakahata and CATO Institute VP David Boaz presented sharply contrasting visions of the government's role in providing universal service and Internet access for schools and libraries at the Policy '98 Conference in Washington on Tuesday.

Divided FCC Reports to Congress On SLC Plans. (5/11/98) The Federal Communications Commission, in a partisan vote on Friday, issued a report to Congress on universal service and the Schools & Libraries Corporation.  The FCC proposed to merge the SLC and RHCC into the FCC's Universal Service Administration Company.  The Report also claimed that only $1.67 Billion of the planned $2.25 Billion would be raised this year without further increases in universal service contributions.  See, HTML Copy of the Report to Congress.

GTE Files Antitrust Suit Against WorldCom and MCI. (5/11/98)  GTE filed an antitrust suit in federal district court in Washington DC on Thursday to enjoin the merger of WorldCom and MCI, claiming that it would create a monopoly in the national market for Internet backbone service in violation of § 7 of the Clayton Act.  See: HTML Copy of the Complaint.

House E-Commerce Hearing on Internet Bottlenecks. (5/8/98) The House Telecommunications Subcommittee held a hearing on Thursday on Internet bottlenecks and electronic commerce.  Most the testimony dealt with regulatory and technological matters pertaining to bandwidth bottlenecks, but the hearing also covered IP telephony, the Internet Protection Act, encryption, and Internet taxation.  Vint Cerf and other industry representatives testified.

Senate Holds Hearing on FCC Common Carrier Bureau. (5/7/98) The Senate Telecommunications Subcommittee held an oversight hearing on the Federal Communications Commission's Common Carrier Bureau. Both Senators and witnesses complained about FCC handling of various universal service issues. Richard Metzger, the head of the Bureau, also testified, but made no commitments regarding future FCC actions affecting universal service.

Schools & Libraries Fund Has $2 Billion in Requests. (5/6/98) The Federal Communication Commission's Schools and Libraries Fund has received applications totaling somewhere around $2 Billion, fund administrators estimate. The FCC created the fund to subsidize telecommunications services, Internet access, and some computer hardware and software, for schools and libraries. See, HTML Copy of Schools and Libraries Report.

Senate Addresses Year 2000 Problems. (4/29/98) The Senate Commerce Committee held a hearing on Tuesday on the Year 2000 problem. FCC Chairman William Kennard provided testimony on Y2K problems in telecommunications. Also, the Senate formed a new committee to deal with Y2K problems, which will be headed by Sen. Robert Bennett (R-UT).

Y2K Candidate Gore Hypes Internet with Union Bosses. (4/29/98) Vice President Al Gore met with union leaders, and held a ceremonial online session with school children, on Tuesday to publicize his support for subsidized Internet access for public schools, and related programs.

Cell Phone Groups Sue FBI Over CALEA. (4/28/98) Two cellular phone industry associations filed suit Monday against the FBI in U.S. District Court in Washington DC alleging that the FBI enacted a regulation pursuant to CALEA that is arbitrary and capricious.  The Plaintiffs argue that the improper regulation would force recent market entrants to bear the brunt of development costs associated with CALEA compliance, while incumbent carriers and the government would avoid expense. See, HTML Copy of Plaintiffs' Complaint.

Senate Holds Hearing on §706 and Bandwidth. (4/23/98) The Senate Communications Subcommittee held a sometimes stormy hearing on Section 706 of the Telecommunications Act of 1996 and related bandwidth issues on Wednesday morning, April 22.  Industry representatives discussed competing versions of why broadband service is not widely available, and various technologies for bringing broadband service to all users.

Kennard Speech on Schools and Libraries Corp. (4/17/98) William Kennard, Chairman of the Federal Communications Commission, gave a speech on Thursday, April 16, to an education group about the Schools and Library Corp., the controversial entity created by the FCC to give up to $2.25 Billion per year to schools and libraries for Internet and telecommunications services, at the expense of phone users.

Lutheran Church Wins Appeal Against FCC. (4/16/98) The U.S. Court of Appeals for the D.C. Circuit held unconstitutional the FCC's Equal Employment Opportunity program requirements in Lutheran Church-Missouri Synod v. FCC.  The decision reversing and remanding the case to the FCC was released on April 14.  The FCC and Department of Justice have not yet announced whether they will ask the Supreme Court to review the decision.

IP Telephony Companies React to FCC Report. (4/15/98) Companies involved in providing IP telephony had mixed reactions to the FCC Report to Congress released last Friday concerning telecommunications "universal service" and Internet services. Some were pleased that it is merely a tentative report, and pleased that it continues to treat most forms of Internet access as "information services" rather than "telecommunication services." However, company representatives expressed varying degrees of disappointment over the FCC suggestion that "phone-to-phone" IP telephony should be regulated.

FCC Claims Authority to Tax Internet Telephony. (4/13/98) The Federal Communications Commission released a lengthy report to Congress late on Friday that argues that "phone-to-phone" Internet telephony services constitute "telecommunications services" and should therefore be taxed to subsidize phone services in rural and low income areas, and other "universal service" programs.  The FCC Report also argues that self providers of Internet backbone are "telecommunications services."

Congressmen Decry the 'Federal Computer Commission'. (3/31/98) The House Subcommittee on Telecommunications, Trade, and Consumer Protection met today to question and hear testimony from all five Commissioners of the Federal Communications Commission. Congressmen strongly criticized the FCC's recent handling of providing universal internet access to schools and libraries.

FCC Illegally Formed Schools and Libraries Corp. (3/31/98) The General Accounting Office issued a lengthy legal opinion today in which it stated the the Federal Communications Commission's formation of two corporations was without legal authority. The report was welcomed by many Representatives and Senators who have long complained about the FCC's handling of universal service subsidies for school and library internet hookup.

FCC Criticized on Long Distance Competition. (3/31/98) The House Subcommittee on Telecommunications, Trade, and Consumer Protection held a hearing today on reauthorization of the FCC which gave members the opportunity to either condemn or praise the FCC for denying the applications from regional Bell companies to provide in  region long distance services under Section 271 of the 1996 Telecommunications Act.

Appellants' Brief: § 271 Is Not A Bill of Attainder. (3/27/98) Attorneys for phone companies, AT&T, MCI, and Sprint, and related entities, filed a massive brief with the 5th Circuit Court of Appeals, arguing that District Court Judge Joe Kendall erred in ruling that § 271-275 constitute an unconstitutional Bill of Attainder. § 271 of the Telecom Act of 1996 bars Bell Operating Companies (BOCs), like SBC, from providing in region long distance service without prior FCC approval.  Kendall's New Years Eve opinion in SBC v. FCC, if affirmed, would unravel a major component of the 1996 Act.

Text of Kennard Statement to Senate Committee. (3/19/98) William Kennard, Chairman of the Federal Communications Commission, testified today before the Commerce, Justice, and State Subcommittee of the Senate Appropriations Committee regarding the FCC budget.

Judge Stays Order in SBC Case. (2/11/98) U.S. District Court Judge Joe Kendall granted the defendants' motion for a stay of his December 31 order, pending disposition of defendants' appeal. Kendall ruled on the last day of 1997 that Sections 271-275 of the Telecommunications Act of 1996 are unconstitutional. These sections bar Bell Operating Companies (BOCs) from offering long distance telephone services until the FCC agrees that they have opened their local markets to competition.