TCS Daily

Mr. Hollings' Opus

By James K. Glassman - March 4, 2002 12:00 AM

Jim Glassman: Before the passage of Tauzin-Dingell legislation in the House, Congressman Tauzin had said earlier that the bill is going to quote, "soar through this chamber, and then we will invite the Senate to take this up. I don't believe for one minute, any one senator can bottle this up." He may be referring to you.

Sen. Ernest Hollings: I don't think of it as a one man-stand. Several of us are very familiar with the enactment of the '96 [Telecommunications Act] deregulation and realize that we've been had. I mean, we had the long distance deregulated under [U.S. District] Judge Harold Greene back in '84; we were doing exceedingly well. And the Bell companies said, "Look, we tried to get into that competition, that long distance." And they finally prevailed on me.

I'm a doubting-Thomas on all this deregulation, but in any event, I said, how do you deregulate this Bell monopoly? You just can't say, "On your mark, get set, go." You've got to have it in a studied way that's fair to the Bell companies because we had the finest, and still have the finest telecommunications in the world.

And, on the other hand, if you just let them go, they'd extend the monopoly and squash all competition. It was only after all seven (regional Bell telephone companies) and all lawyers agreed that we went forward with the bill. And that's why it passed 95-to-5 in the Senate.

So we got a good bill. But heaven's above, as soon as it was enacted, (the Bells) contested the constitutionality of it, pulled every trick in the book, and have been on the stretch out of doing absolutely nothing over the past six years.

Glassman: Now, they say they need a waiver to get into broadband.

Hollings: What really occurs is they can get into broadband, have been into broadband. In fact, when an ex-CLEC [competitive local exchange carrier] went under this past week, my own BellSouth said they'll have 800,000 into broadband in their system by the end of this year. So they've had the law and everything like that, but only the competition has put them into it. They go for the big businesses -- $1,500 a month, and the little CLECs have come in for $150 a month, but they're just minnows nibbling around. The Bell companies still own 98% of that last line into the home and business, and they have refused to compete and extend. They started with Tauzin-Dingell two years ago. [The Bells said] we didn't consider in '96 data, and all they wanted to do was get data and give services to this wonderful high-tech thriving economy. And that's nonsense. We showed where it was mentioned over 400 times in the bill itself and several places in section 271. Now they've got the economy. They've always got another reason. ... They know every trick in the book. They'll delay, they'll defer, they'll go around and take the business you've asked to be connected and that kind of thing, so much so, that Verizon over the last year and half has been [fined] $223 million. I know (SBC) Illinois in the last 18 months has been (fined) $178 million -- this is by the local public service commissions, not the FCC. But we're trying to bring them, kicking and screaming, into the room of competition, and all along they keep Tauzin-Dingell out there to ruin any kind of investment market for the CLECs. I'm losing, the CLECs are losing, so March doesn't really hurt them as long as they keep the impression going that they want to get into competition and revive the economy $500 billion.

Glassman: I just wanted to talk briefly about your bill, your idea of structural or functional separation.

Hollings: At least you could follow the money, and you wouldn't get all the he-said, you-said, and when-did-you-get the call. You could keep separate accounting. I'm not trying to split up the Bells or really slow down in any way their competence or efficiency. I'm just trying to get it so we could audit it and catch it quicker, and not have all of these big fines that we've actually had. (FCC Chairman) Michael Powell come up and says, "Double the fine, make it $10 million," and that kind of thing. But fines don't determine whatever, in the sense that they charge it to the consumer.

Glassman: So in a sense, structural separation was really what you were trying to do with the '96 Act, but you did it through incentives and you did it through penalties.

Hollings: Right, but it hasn't worked, and I'm the first to say so. And I'm just dismayed by it because we did really work day in and day out. [Former Senate Majority Leader] George Mitchell had that bill in '94, if you remember the history of it, and he got irritated because he couldn't get it up. And he said, "That's the first bill I'm going to call in '96," but, of course, we lost the Senate. And they came and took my bill, it was all ready to go and was on the calendar and everybody agreed to, and then Larry Pressler started with it. We jiggered it around after another two years back to the original bill. One fellow, [former Commerce Committee Chairman] Tom Bliley, he's a good Republican, he was the chairman and he was there on every one of these negotiations.

Glassman: It was an amazing accomplishment, and it was right across party lines and people were enthusiastic about it. And, as you say, immediately after it was passed, the Bells started filing lawsuits and dragging their feet.

Hollings: Oh, good gosh, they've tried everything. I put in structural separation to get everybody's attention so they wouldn't think it's going to sail through over here, that we were going to have hearings. I also put in a drop-dead deal, that by Jan. 1, 2002, $100,000 a week fine or something like that. Anything to let them know, and the public know, and the free press to look, and wait a minute, that this thing is really a fraud because we're trying to get to competition and they're the ones who are roadblocking us.

Glassman: Let me ask you about NextWave. You've written a Dear Colleague letter about the NextWave settlement, which NextWave is going to give up its claim to licenses in return for $5 billion from the sale of licenses. You believe that they're getting a windfall here, is that correct?

Hollings: Right, and that's the big concern of my friend (Sen.) John McCain, (R-Ariz.). In fact, he's written letters and wanted to know from the (Federal Communications) Commission the list of those of the parties involved and their fees and all. Yes, it is a windfall, but more than anything else, it stands fundamental communications law on its head. Let's try it on for size. Let's assume that this NextWave settlement goes through or the Supreme Court finds for all the bankruptcy court, then they've found ownership. And the very first paragraph of the Communications Act of '34 says, "Under no circumstance is this for ownership and no right of title or interest or whatever, merely license and authority for temporary usage." Now, if they find that way, let's say NextWave will have 66 licenses on one of the auctions, they can set up their own auction -- forget about the FCC. They can wheel and deal and everybody says, "Wait a minute, I own this thing, I'll do what I want with it." That's not the law, and that's the big concern of Hollings in slow down here, stop, look, and listen, particularly with the Chairman of the Federal Communications Commission, because you're leading a total change of fundamental communications policy. And I'm not going to buy that. We've got the finest communications and broadcast and everything else in the world. We've got a regulatory body, the FCC, but Michael Powell acts like the executive assistant of the Chamber of Commerce (as if) he's supposed to promote and cheerlead rather than regulate, and he doesn't have any regard for the public interest.

Glassman: Wouldn't it possibly cost the economy more if NextWave just hangs onto these licenses and we go through a long litigation and don't get them out there into the public realm?

Hollings: They never have been in the public realm until now, and we're trying to get them there. So the world is not turned on the economy or how fast we use that particular spectrum or any of that other kind of argument or approach. ... I think the Supreme Court, frankly, is going to find for us, and we're going to get $16 billion, not 10. And we will have confirmed the law of communications in America.

Glassman: OK, thank you

Hollings: Thank you.

TCS Daily Archives