Hollings Introduces Bill to Force Compliance with Section 271

(July 6, 1999) Sen. Ernest Hollings introduced a bill on July 1 that would provide harsh penalties for the regional Bell operating companies that do not satisfy the Federal Communications Commission that they have opened their networks to competitors.

Many other Senators and Representatives have recently introduced bills that would provide the regional Bell operating companies (RBOCs), such as BellSouth and U S West, with regulatory relief regarding high speed data services. These bills would reduce existing regulatory burdens on ILECs imposed by Section 251 of the 1996 Telecom Act when they provide ADSL service.

Sen. Hollings' bill, S 1312 IS, the Telecommunications Competition Enforcement Act, provides no such relief. Instead, it seeks only to compel the RBOCs to interconnect with and provide network access to new entrants. Those that do not would be fined $100,000 per day, and eventually, be forced to divest their network facilities.

The Telecom Act of 1996 took an incentive approach to opening up local markets to competition. The RBOCs are not allowed to provide interLATA long distance telephone service in their service region until they open their networks, as measured by compliance with the 14 point checklist of Section 271. RBOCs claim that they have met the Section 271 requirements. However, the Federal Communications Commission has denied all 271 applications, and the federal courts have upheld these denials.

The RBOCs have also tried to get around the 271 requirements by challenging the constitutionality of Sections 271 through 275 of the Act. A federal district court judge agreed, but was reversed 2 to 1 by the Fifth Circuit. The Supreme Court then refused to hear the case.

Sen. Hollings

Sen. Ernest Hollings (D-SC) is the ranking member of the Senate Commerce Committee, which has jurisdiction over telecommunications legislation. "Since passage of the Telecommunications Act, the Baby Bells have been consolidating and litigating instead of opening the local markets to competition and preparing to enter the long-distance market. Ignoring the 14-point checklist to stop fair competition in the local market will no longer be tolerable," Sen. Hollings said in a press release. "In fact, it won't be only intolerable but costly -- to the tune of $100,000 a day for non-compliance."

"In the three years since enactment, however, the BOCs have pursued a strategy of stonewalling and litigation that has delayed implementation of the critical interconnection, unbundling, collocation, and resale requirements of the Act, which is unacceptable," Sen. Hollings said.

S 1312 provides, in part, that "If the Commission finds that a Bell operating company has not fully implemented the competitive checklist in section 271(c)(2)(B) for all telecommunications (including voice, video, and data) for at least one-half of the States in its region by February 8, 2001 ... the Commission shall assess on such company a forfeiture penalty of $100,000 for each day of the continuing violation until the Commission determines that the Bell operating company has fully implemented section 271(c)(2)(B)."

Then, "If the Commission finds that a Bell operating company has not fully implemented the competitive checklist in section 271(c)(2)(B) for all telecommunications (including voice, video, and data) in all States in its region by February 8, 2003, ...  the Commission shall order the Bell operating company to divest itself of its telecommunications network facilities within 180 days ..."

Recently, the RBOCs have been seeking relief from regulatory burdens on broadband data services through new Congressional legislation. Sen. Hollings criticized efforts by the RBOCs to obtain regulatory relief regarding broadband services in a statement in the Congressional Record.

"Since the beginning of this Congress, many of the Bell companies have been meeting with Senators and Representatives, often accompanied by the same lawyers who helped write the Telecommunications Act. But this time their message is different. They are asking us to change the rules of the game. They now want to offer lucrative high-speed data services for long distance customers without first having to open their local markets to competition. They maintain that they should be permitted to continue their hold on the local customer as they provide data services because the 1996 Act did not contemplate the provision of such services. To state it plainly--they are wrong."

On the same day that Sen. Hollings filed S 1312, Rep. Billy Tauzin (R-LA) and Rep. John Dingell (D-MI) filed a bill (HR 2420) in the House to incent RBOCs to deploy high speed data services. Their bill would both reduce existing regulatory burdens on ILECs imposed by Section 251, and amend Section 271 of to exempt high speed data services and Internet access services from the prohibition on RBOC's provision of interLATA telecommunications services without prior FCC approval. Similarly, Rep. Rick Boucher (D-VA) and Rep. Bob Goodlatte (R-VA) also filed a pair of bills (HR 1685 and HR 1686) in May pertaining to Section 251 requirements.

Finally, Sen. John McCain (R-AZ), the Chairman of the Senate Commerce Committee, introduced S 1043, and Sen. Sam Brownback (R-KS) introduced S 877.

Of course, these legislators are addressing a different problem. Hollings is trying to increase competition in local phone service, increase consumer choice, and bring down basic phone bills. While the others no doubt share these goals, their bills address something else -- the desire to see the rapid deployment of broadband Internet services all over the country.

Telephone wire runs into almost every home and business. In contrast, cable penetration is less widespread. Wireless broadband Internet access technologies are way down the road. The only way to get broadband Internet service in the short run in many areas is to deploy ADSL via phone lines. The theory behind many of these bills is that the RBOCs will not have the financial incentive to deploy ADSL unless they receive regulatory relief.

The RBOCs maintain that they have complied with the 14-point checklist of Section 271, and have opened their networks to competitors. For example, David Markey, VP for Governmental Affairs of BellSouth, asserted on July 1 that "BellSouth believes its network is open to competition, but is nevertheless continuing to invest in system improvements and participate in tests that will demonstrate this even more clearly to regulators."

Markey added in his press release that "this legislation should have no impact on BellSouth because we expect to have our network certified as open and to be approved regionwide for entry into the long-distance business well before the beginning of 2001."