EFF Summary of Introductory Markup of Markey/Fields Bill

[David Farber <farber () central cis upenn edu>]

EFF SUMMARY of introductory markup OF H.R. 3636:
THE NATIONAL COMMUNICATIONS COMPETITION AND INFORMATION INFRASTRUCTURE ACT
OF 1994




        On March 1, 1994, the House Telecommunications and Finance
Subcommittee marked up H.R. 3636--the "National Communications Competition
and Information Infrastructure Act of 1994."  The original H.R. 3636 was
introduced on November 22, 1993.  At 68 pages, the markup bill contrasts in
both length and substance with the original bill's 39 pages.  The markup
bill retains EFF's open platform provisions, which won support in letters
to the Committee from 27 public interest groups and 15 corporations.


        The legislation proposes to restructure the Communications Act of
1934 in response to emerging changes in technology and market structure in
the digital information age.  Major revisions in the markup bill would
allow the Federal Communications Commission (FCC) to grant waivers from the
provision of open platform services, and would require the Commission to
study critical public network interfaces, including set-top boxes.  Common
carriers would be required to obtain FCC certification to provide channel
capacity for video programming, and consumers would be able to opt out from
subscribing to advanced digital telecommunications services.  Other changes
in the markup bill would provide a greater role for information services
and provision of advanced telecommunications services to educational
institutions, health care facilities, and public libraries.  Additionally,
the FCC and the National Telecommunications and Information Administration
(NTIA) would be required to initiate an inquiry into enhancing civic
participation by requiring common carriers to provide flat-rate service for
Internet access.


        The full House Energy and Commerce Committee is tentatively
scheduled to mark up H.R. 3636 on March 16, 1994.  Three issues likely to
be considered at the time of markup include:  (1) a cost-allocation measure
on telecommunications services, sponsored by Rep. Synar (D-Okla.) and
supported by EFF, Consumer Federation of America, and 8 other public
interest groups; (2) the potential use of spectrum for high definition
television to provide two-way, wireless, personal communications services,
sponsored by the broadcasting industry and popularly referred to as a
"spectrum grab"; and (3) the possibility of deleting the bill's provision
for an FCC/NTIA inquiry on enhancing civic participation through Internet
access.




*       OPEN PLATFORM SERVICE


        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 markup bill contains new provisions to ensure that local
exchange service providers are not locked into any particular technology.
The FCC would conduct an inquiry to consider the rules and policies
necessary to make open platform service available using either existing
facilities or, as added in the markup bill, "new facilities with improved
capability or efficiency."


        The FCC would establish rules for open platform service, as well as
a procedure for temporarily waiving open platform requirements.  The bill
would allow a carrier to obtain a waiver if meeting open platform
requirements would be "economically or technically infeasible."  The FCC
would decide waiver requests within 180 days of submission.


        The FCC and the state commissions would adopt a plan to promote
access to advanced telecommunications services and capabilities, including
open platform service, for all Americans by including access to advanced
telecommunications services and capabilities in the definition of universal
service while maintaining just and reasonable rates.  The plan would ensure
reasonably comparable services for the general public in urban and rural
areas.


        The markup bill also would revise the definition of "open platform
service" to require that switched, end-to-end digital telecommunications
services be provided based on "industry," rather than "accepted," standards
as stated in the original bill.  In contrast, the FCC would rely on
"appropriate standards-setting organizations" to establish standards for
the interconnection and interoperability of public and private networks.




*       VIDEO PLATFORM


        Telephone industry forces secured provisions to alleviate concern
that they would be forced to build capacity which independent content
providers would not purchase.  The markup bill drops the original bill's
requirement that 75% of a telephone company's video platform channels must
be reserved for competitors.


        Instead, a more detailed procedure would require common carriers to
request space by submitting to the FCC a notice of intent to establish
channel capacity for video programming.  The common carrier would be
required to establish channel capacity sufficient to provide carriage for
all bona fide requests from video programming vendors.  The FCC would
approve the request by granting a certificate under ¤ 214 of the Cable Act.
 A common carrier could provide video programming directly if it certifies
to the FCC that it is in compliance with state laws on equal access,
interconnection, and unbundling.  Additionally, the FCC would study whether
to extend video platform requirements to cable operators, in lieu of
requirements in ¤ 612 of the Cable Act.


        The FCC would require that video platforms have a suitable margin
of capacity to meet reasonable growth in demand.  If demand exceeds
capacity, video platform providers would be required to construct
additional capacity to meet excess demand and to notify the FCC of the date
by which sufficient capacity will be provided to meet demand.


        Thus, under the original bill, a common carrier that sought to
provide its own programming would have had an incentive to build bandwidth
to accommodate its own capacity, as well as to provide an additional 75%
for other providers.  In contrast, the markup version would place the
common carrier in a passive posture, because the incentive for building
capacity would be driven primarily by demand from video programmers.  The
FCC would have authority over disputes about carriage.


        The FCC would prescribe regulations to prohibit video platform
providers from imposing discriminatory rates, terms, and conditions on
video programming vendors pertaining to service, transmission,
interconnection, and interoperability for unaffiliated or independent video
programming vendors.  The markup bill drops the requirement that the FCC
formulate the nondiscriminatory regulations together with the states.




*       CRITICAL INTERFACES AND SET-TOP BOXES


        The bill would adopt a congressional finding that set-top boxes and
other interactive communications devices may be "a critical gateway" to
American homes and businesses.  Congress would explicitly find that "in
order to promote diversity, competition, and technological innovation among
suppliers of equipment and services, it may be necessary to make certain
critical interfaces open and accessible to a broad range of information
providers."  The FCC would identify "critical interfaces" that allow end
users to connect information devices to networks and information service
providers to transmit information to end users.  The FCC would identify
these interfaces in consultation with industry groups, consumer interests,
and independent experts.


        The markup bill would require the FCC to conduct an "inquiry,"
rather than a "proceeding" as stated in the draft set-top box language, to
examine the convergence of interactive technologies.  By specifying an
"inquiry," the markup bill adopts a broader scope and essentially allows
any party--e.g., independent providers, equipment manufacturers--to raise
any issue.  The FCC would examine the costs and benefits of establishing
open interfaces between, on the one hand, the network provider and the
set-top box, and on the other, between network providers and information
service providers.  The FCC would determine how to ensure the
interoperability of converter boxes with interactive networks.


        The markup bill adopts a broader approach than the original draft
language to accomplish access and ensure diversity for independent
information providers and equipment manufacturers.  The FCC would be
required to ensure that "any critical interface is available to independent
information and content providers and others who seek to design and build
interoperable devices."  The earlier draft language was more pointed in
requiring the FCC "to determine the steps that must be taken to ensure that
no suppliers have access to protocols or standards before other
competitors, thus giving them an unfair advantage in the marketplace."


        Similarly, the earlier draft language made it easier for the FCC to
delve into software network interfaces.  The markup bill omits the earlier
requirement that the FCC assess whether public interfaces should be
established between "the converter box's hardware and operating system and
between the operating system and the application, thus creating 'openness'
between 'layers' of the systems."  In this way, the markup bill focuses
more on outside interfaces than on internal interface compatibility.




*       DEFINING "UNIVERSAL SERVICE" FOR ADVANCED SERVICES


        A Joint Federal/State Board would devise policies for the
preservation of universal service and define how universal service should
be applied to advanced telecommunications services.


        Obligations for Providing Advanced Services


        In defining the scope of universal service obligations for
providing advanced telecommunications services, the bill would require the
Joint Board to consider several factors.  These include the number of
residential subscribers a service has; whether denial of access to a
service would deny individual educational and economic opportunities;
whether a service is part of a public switched network; and whether
including the advanced service within universal service obligations is
consistent with the public interest.


        Prohibition on Cross-Subsidizing Advanced Services


        The FCC would prescribe regulations which prohibit a common carrier
from including in telephone service or access rates any operating expenses,
costs, depreciation charges, capital investments, or other expenses
associated with the carrier's competing telecommunications or information
services.


        Comparable Services For Rural and Urban Areas


        The markup bill specifies that Joint Board policies adopted by the
FCC should ensure reasonably comparable services for the general public in
urban and rural areas.


        Accessibility for Disabled Individuals


        The FCC would be required to consult with representatives of
individuals with disabilities when developing regulations to ensure
accessibility to advanced telecommunications services.  The FCC would be
required to review these regulations once every three years.


        Adequacy of Support for Universal Service


        The FCC would be required to consider the adequacy of support for
universal service in its review every three years of the Act's standards
for network openness and accessibility.




*       PREFERENTIAL TARIFFS FOR EDUCATIONAL INSTITUTIONS, HEALTH CARE
FACILITIES, AND LIBRARIES


        The NTIA would undertake an inquiry into the availability of
advanced telecommunications services to educational institutions, health
care facilities, and public libraries.  Following the NTIA's inquiry, the
FCC would undertake an inquiry and a rulemaking to enhance the availability
to these entities of advanced services by 2000.  The rules would ensure
appropriate interoperability standards and would provide for tariffing
advanced telecommunications services to educational institutions, health
care facilities, and public libraries at preferential rates.




*       ABILITY TO OPT OUT OF ADVANCED SERVICES


        The bill would allow consumers to opt out of subscribing to
advanced telecommunications services.  Residential customers would be able
to receive basic voice grade telephone service equivalent to the service
generally available to residential ratepayers on the date of enactment.
Rates for this service would be capped at the rate applicable on the date
of enactment, subject to adjustments for inflation and productivity.




*       NETWORK FUNCTIONALITY


         Duty to Interconnect


        The bill specifies that common carriers would have a duty to
interconnect with the facilities and equipment of other providers of
telecommunications and information services, in accord with FCC
requirements.


        Duty to Provide Unbundled Features


        The common carrier duty to provide unbundled features, functions,
and capabilities would arise "whenever technically feasible and
economically reasonable."  The bill clarifies that this duty would apply to
rural telephone companies only when the FCC determines that compliance is
not "unduly economically burdensome."  A definition of "rural telephone
company" is added and would include a local exchange carrier that provides
service in places with fewer than 10,000 inhabitants or fewer than 50,000
access lines.


        Charges for Providing Access and Interconnection


        The FCC would establish rules requiring that exchange carriers be
compensated for providing access and interconnection.  The bill would
require that when an exchange carrier provides a telecommunications or
information service, it must impute its charges for access and
interconnection to itself.


        FCC Planning for Interoperability


        The bill clarifies that standards for network interconnectivity and
interoperability would be developed "by appropriate standards-setting
organizations" with FCC oversight.  The FCC would oversee development of
standards "that promote access" to network and information services by
individuals with disabilities and rural subscribers.


        Telecommunications Number Portability


        The FCC would prescribe regulations requiring that
telecommunications numbers be assigned by an impartial entity to ensure
portability when a customer switches from one provider to another.  The FCC
would have exclusive jurisdiction over portions of the North American
Numbering Plan that pertain to the United States.


        State Authority


        The bill clarifies the extent to which states may regulate the
terms and conditions for provision of telecommunications and information
services.  It affirms state authority to impose terms and conditions that
are necessary to protect the public interest or to ensure just rates for
intrastate services.




*       INFORMATION SERVICES


        Information services would be placed on equal footing with
telecommunications services for obtaining equal access and interconnection
from telephone companies.  The bill would define "equal access" to require
common carriers to provide access on an unbundled basis to any person
seeking to provide information or telecommunications services.




*       STUDY OF CIVIC PARTICIPATION ON THE INTERNET


        The FCC and the NTIA would be required to initiate an inquiry into
enhancing civic participation through the Internet.  The inquiry would seek
public comment on whether common carriers should be required to provide
citizens with a flat rate service for gaining access to the Internet.




*       BROADCAST STATION OWNERSHIP RESTRICTIONS


        The FCC would be required to modify, maintain, or remove the
ownership rules on radio and television broadcast stations to ensure that
broadcasters are able to compete with other information providers.




*       COMMERCIAL MOBILE SERVICES


        The bill would define "local exchange carrier" to exempt the
provision of commercial mobile services.  It would allow an exception when
the FCC finds that commercial mobile services replace a substantial portion
of the landline telephone exchange service within a state.