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All of these restrictions remain essential to ensure

against repetition of past predation by the Bell Companies. This fact is self-evident upon a brief examination of their

continuing misconduct.

Since entry of the MFJ, the Bell

Companies have launched an all-out campaign against cable

companies seeking to expand into non-video services.

Numerous

regulatory proceedings as well as forms of Bell Company

"self-help" have been instituted to impede innovative services by cable. One particularly graphic illustration involved a

Bell telephone company actually trying to have cable company employees arrested for attempting to string fiber on telephone

company poles. 7

To date, unfair competition by Bell Companies has

encompassed facilities and non-video services competition.

But

there can be no doubt that if the restrictions on content were

lifted, the Bell Companies' campaigns would be extended to

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7

See Comments of New England Cable Television Association, submitted to the Federal Communications Commission, CC Docket No. 87-266 (filed December 16, 1988).

these restrictions prevent video distribution competition

and/or that they prohibit the availability of new technologies,

such as fiber optics, to consumers.

But the truth is that the

Bell Companies are free to deploy fiber, or any other

distribution technology.

They are also free to provide video

transport, construction, and maintenance services, such as

Pacific Bell provides in Palo Alto and C&P provides here in the

District of Columbia.

What they are not allowed to do is to provide content. Whether that content happens to be television or the electronic word, this policy remains ultimately sound. The central

importance of diversity to our society has always made

enforcement of Sherman Act principles all the more critical

when competition in First Amendment activities is threatened.

In such cases, the Sherman Act protects not only economic efficiency, it preserves the broad availability of information

from a multitude of speakers.

The consent decree and its line-of-business

restrictions have well served U.S. consumers, and they should

not be altered.

There have been no changes in the competitive

or regulatory environment that would warrant removal of the

line-of-business restrictions. Although there is a lot of talk

about "new" safeguards, there is little basis for believing

that regulatory solutions can be effective.

It bears emphasis

that 1989's so-called new safeguards are really not

significantly different from those that failed miserably in the 1960's and 1970's.

And as the Justice Department explained

during the Tunney Act proceedings:

At the heart of the government's case in United
States v. AT&T was the failure of regulation to
safeguard competition in the face of the powerful
incentives and abilities of a firm engaged in the
provision of both regulated monopoly and
competitive services.

Neither of these
problems (of discrimination and
cross-subsidization) has thus far proven amenable
to successful regulatory solution

Thus,
permitting BOC entry into competitive markets
would undermine the rationale of divestiture

8

BOC entry into electronic publishing generally, and

cable TV specifically, would thus be an open invitation to the

types of anticompetitive behavior that resulted in the

divestiture.

Only if and when the Bell Companies lose their

monopoly in local distribution or circumstances otherwise

dramatically change, will it be appropriate to consider modifying the Decree. In the meantime, the MJ provides the only effective way of promoting and protecting the growth of

information services markets in the United States.

If I may, I would like to submit for the record an

NCTA paper which reviews the documented abuses committed by the

Bell Companies since divestiture.

I would be pleased to answer

any questions you may have.

8

Response of the United States, 47 Fed. Reg. 23,320, 23,336 (1982).

THE COSTS OF TELEPHONE COMPANY ENTRY INTO THE TELEVISION BUSINESS:

A REVIEW OF TELEPHONE COMPANY ANTICONSUMER

AND ANTICOMPETITIVE BEHAVIOR

NCTA Position Paper

March 1989

Research and Policy Analysis Department
National Cable Television Association
1724 Massachusetts Ave., N.W.
Washington, DC 20036

(202) 775-3680

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