THE TELECOMMUNICATIONS COMPETITION AND DEREGULATION ACT

Senate - June 12, 1995

Mr. LEAHY. Mr. President, I favor the Dorgan amendment, and I wish to commend Senator Dorgan and Senator Thurmond for what they have done. I believe, and I have stated before, here and in the Judiciary Committee, that we have to allow the Department of Justice, our most expert competition agency, to play a more significant role, not just consulting, in deciding whether a Bell company entry into long distance or manufacturing threatens competition in those markets.

Go back to the 1982 consent decree that broke up Ma Bell and separated the Bell companies from AT&T. That took 10 years to litigate and conclude. The decree, the modified final judgment, took all these years of antitrust litigation, required a restructuring of the market, and led to significant consumer confusion.

Rather than relegate the Justice Department to a consulting role, if we design a proper role for that expert agency up front, we can avoid this kind of costly and time-consuming litigation from happening again. Let us handle it right from the start and not come in after the fact when the cure can sometimes create a new set of problems.

What this bill does, unless amended, is say, `We hope the checklist of unbundling and interconnection requirements works to unlock the local loop to competition.' We all hope that. But what if it does not work? What if the checklist is not long enough to ensure that the local monopoly power of the Bell companies is broken and competition can develop?

If the checklist does not work, under the bill the Justice Department has to clean up the mess. They have to clean it up after the fact, instead of having any say before the fact--after the Bell company has already gotten into long distance and used its monopoly power to stifle potential competitors who need the Bell companies' pipeline to our homes and businesses.

The cleanup after the fact could take years of litigation, just as the prior case that ended with the MFJ took years. The cleanup may require a restructuring of companies, just as the prior case against Ma Bell resulted in spinning off AT&T from the Bell companies. Then, of course, the cleanup could well confuse consumers. I well recall the press and the outrage in the public when they questioned the wisdom of what Judge Greene did in 1982 and whether the breakup would hurt the public and our telephone service.

We have the opportunity to avoid the mess.

As former appellate judge, Robert Bork, recently pointed out, without a Justice Department role in applying a `standard with teeth,' allowing the Bell companies into long-distance service and equipment manufacturing, taking the course envisioned by this bill `would result in even more litigation and regulatory disputes than there were prior to the decree.'

We are sometimes accused of passing a lawyers relief act in some of these pieces of legislation which we consider. This bill, if passed without the amendment, would certainly be a bonanza for lawyers and economists as regulatory disputes proliferated before State and Federal agencies and lawsuits were filed charging discrimination, theft of intellectual property and predation in violation of section 2 of the Sherman Act. I think Judge Bork is right on this.

We should minimize this litigation quagmire by having the Justice Department, with its 25 years of expertise, look at the competitive impact of Bell company entry into the long-distance and manufacturing markets.

The MFJ left the Bell companies with local exchange monopolies, which persist today. To protect consumers, those Bell company monopolies are regulated. Line-of-business restrictions were imposed on the Bell companies. This was to make sure they did not use their controlling monopoly over the local phone service and the pipeline to the home to harm consumers or to gain unfair advantage over the competitors in the long-distance, manufacturing, and information services markets. Any of those regulations could be removed upon a showing by the Bell company that there is no substantial possibility that it could use its monopoly power to impede competition in the particular market it is seeking to enter. This is the so-called test.