communications services be allowed access to local exchange facilities on a nondiscriminatory basis. During the period since then, FCC has taken various actions aimed at correcting discrimination problems involving both access arrangements and charges. However, problems continue to exist. As part of its MTS/WATS market structure proceeding, FCC has proposed further actions in which it intends to improve existing access arrangements and establish an interim access charges system. FCC's actions do not, however, provide a framework from which the following questions can be resolved: --What types and levels of interconnection should telephone --What are the effects of competition on any subsidies which --Can nondiscriminatory access conditions be assured We believe that congressional action is needed to address these questions. In this regard, we believe that by amending the Communications Act of 1934 to establish the basic conditions and mechanisms to achieve nondiscriminatory access arrangements and charges, the Congress will take a necessary step toward establishing the existence of a fully competitive communications environment. While the Congress is taking the necessary steps to enact such legislation, we also believe that FCC should work in concert with State commissions, toward formulating a long-term plan which can be used to effectively discharge the responsibilities which will be assigned to it by the Congress. For example, it should work toward establishing timetables for revising jurisdictional boundaries, formulating costing principles and conducting cost studies to determine access costs for interexchange services, and making necessary changes in tariffs and accounting procedures. This should not only enable FCC to "hit the ground running," once legislation is passed, but also place it in a much better position to evaluate the desirability of proceeding further with interim actions such as it has proposed. This would be in addition to our recommendation in chapter 6 that FCC initiate a proceeding to evaluate the need for requiring dominant interexchange carriers to establish separate subsidiaries for those operations, if they are also monopoly providers of local exchange services. RECOMMENDATION TO THE CONGRESS We recommend that the Congress amend the Communications Act of 1934 to establish the basic framework necessary to create the existence of nondiscriminatory access conditions. In doing so the Congress should consider the following provisions: --FCC be given regulatory authority over all inter- --Access to local exchange facilities to be offered to --Rates charged for local exchange access be assigned to --Access services to all interexchange carriers, including affiliated companies, would be filed under tariff. --FCC be empowered to prescribe access rates to provide carriers with the strongest possible incentive to provide nondiscriminatory access as well as to take other actions necessary to end access discrimination. --Procedures to be established which could be used on an --A Federal-State Joint Board be established to assist RECOMMENDATION TO THE CHAIRMAN, FCC We recommend the Commission initiate a project within the Common Carrier Bureau to develop a long-term plan for carrying out the tasks necessary to establish an access charges system in light of the framework described in this report. It should use this plan as a basis for evaluating the need for and desirability of any interim action which it proposes. APPENDIX I APPENDIX I Section 1 KEY SECTIONS OF THE COMMUNICATIONS ACT OF 1934 RELATING TO DOMESTIC COMMON CARRIERS Subject Purpose of act Key provisions Under section 201 (a) carriers Section 202(a) bans unjust or FCC may conduct a hearing on After a hearing at which FCC determines a charge violates the act, it may prescribe a just and reasonable charge. APPENDIX I APPENDIX I Section 214(a, c and d) Subject Facilities authorizations Key provisions Under section 214(a) the construction or extension of communications lines may not take place until the carrier receives from FCC a certificate that the public convenience and necessity require the carrier's action. Section 214(c) gives FCC the power to issue the certificate as applied for, to refuse to grant it, or to attach conditions which FCC feels the public convenience and necessity require. Under section 214(d), FCC may also require carriers to provide facilities which are reasonably required by the public convenience and necessity. FCC may inquire into the management of the business of all carriers. It may also obtain from the carriers full and complete information necessary to enable it to perform its duties under the act. Under section 220 (a), FCC may prescribe all accounts After proper hearing and notice FCC may classify the property of telephone carriers and determine what property is used in interstate telephone service. APPENDIX II APPENDIX II FEDERAL, STATE, AND PRIVATE ORGANIZATIONS INTERVIEWED We obtained information from the following individuals and organizations or their legal representatives. Federal Government National Telecommunications and Information Administration Office of Technology Assessment Congressional Budget Office Federal Energy Regulatory Commission Federal Trade Commission State Government Michigan Public Service Commission State of New York Public Service Commission Common carriers American Telephone and Telegraph Company MCI Telecommunications Corporation GTE-Telenet Associations Ad Hoc Committee for Competitive Telecommunications North American Telephone Association National Association of Regulatory Utility Commissioners Organization for the Protection and Advancement of Small Public Citizens Congress Watch U.S. Independent Telephone Association Former FCC officials and academics Walter Bolter--Former Chief of FCC's Economics Division, Walter Hinchman--Former Chief of FCC's Common Carrier Bureau Harry Trebing--Director, Institute of Public Utilities, |