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1) that they have available to them a modern, efficient,

cost-effective national telecommunications network which enables

them to be competitive in both domestic and world markets;

2) that they have a reasonable opportunity to compete in current and emerging product and service markets; and

3) that national policy in this critical area includes an element of certainty upon which logical planning and allocations

of resources can be undertaken.

As this Subcommittee knows, CCIA has a long history of strong

support for the vigorous enforcement of antitrust law. We were early proponents of passage of the Tunney Act, active participants in the National Commission for Review of Antitrust

Law and Procedure's consideration of techniques to manage complex

antitrust litigation and, I believe, the first to suggest to

Judge Greene the applicability of the Tunney Act to the proceedings to modify the 1956 AT&T Consent Decree. Given this history, CCIA does not view the current debate

the

over

continuation of the lines of business restrictions in the MFJ

lightly

We have the utmost respect for Judge Greene as

a jurist and

believe that his management of the AT&T antitrust litigation set

a new benchmark against which the administration of all future complex antitrust cases will be measured. As a result we believe current MFJ restrictions are inextricably tied together; that either they must all be left in place or all rescinded; that the

that it is both unfortunate and inappropriate that the debate surrounding the future of the MFJ's lines of business

restrictions has focused to such a large extent on being "for" or "against" Judge Greene. It might be useful in this context to

consider for a moment how the terms of the debate might change if

the administration of the MFJ were in the hands of another

jurist. Judge Greene is, after all, mortal.

The point is simply that ad hoc decision-making, no matter how

skilled the decision-maker, has its limitations. It certainly can

never be a long-term substitute for the setting of national policy. By the same token, an antitrust court cannot be a

successful micro-manager of the future direction of an industry. This is not to suggest that decisions based on antitrust

considerations can or should be removed from the oversight of the antitrust court. It does, however, raise the question of where decisions based on "public interest" considerations ought to be

made and suggests that in

at least

Some

are as

of

telecommunications policy, the line between the two is blurring.

The Subcommittee will hear from numerous parties in these hearings and some will undoubtedly advocate the view that the The Congress has a very wide variety of options before it. Congress could decide to provide policy guidance which would serve to eliminate the uncertainties of the conflicting jurisdiction of the District Court and the FCC and the possibilities of differing and changing interpretations of the terms and conditions of the MFJ. To effectuate a considered

time tables on which they are acted upon must be the same.

CCIA

does not believe that this is the case.

national telecommunications policy, Congress need not choose initially to pass de novo on each and every provision of the

Consent Decree, but to consider instead whether interpretations

given the Decree are consistent with its view of national policy.

For example, in its March 1989 assessment of the manufacturing

restriction of the AT&T consent Decree, the National

Telecommunications and Information Administration concluded that the uncertainties and ambiguities surrounding the current interpretation of the manufacturing restriction "likely has had a

negative effect on both domestic and international competition in

telecommunications."

The troubling interpretation of the

manufacturing restriction arose when in December 1987 Judge

Greene broadly interpreted the term "manufacture" to include

design, research and development, and, some would argue, even detailed product procurement specification. Thus the scope of the term "manufacture," as interpreted by the District Court,

appears to be at variance with the common acceptance and use of

the term in the industry. In this instance, the Congress might opt, as a first step, to clarify its view of this interpretation and thus allow the RBOCs considerably more freedom of action while continuing to bar them for some longer period of time from

the actual fabrication of equipment.

Another approach which CCIA would also support is for the Congress to leave decisions based on strict antitrust considerations to the court but take jurisdiction over those decisions which are based primarily on public interest

considerations.

An example of this distinction would be in the

area of BOC provision of information services.

In his "gateway" decision, Judge Greene ruled that the public

interest in the availability of a wide range of information services outweighed other concerns about BoC participation in Congress also has the option to choose a much more difficult course and undertake a complete review of national telecommunications policy. CCIA believes that there is a need

this market yet he interpreted the "public interest" to stop

short of full BOC entry into this market not withstanding the

changed circumstances of the FCC's Computer III rules and the

established entry of many large, well-funded firms into the market. And, in a recent ruling on a waiver request, Judge Greene also interpreted the MFJ as prohibiting BOC participation

in this line of business even in geographic areas where they have

no transmission facilities. Clearly this decision was not based

on traditional antitrust theory and, we believe, gives rise to

legitimate consideration by the Congress of what the public

interest in this area is.

for a coherent national telecommunications policy supported by a

specific congressional mandate which will direct the implementation of necessary regulation, deregulation, or change in policy direction. And, although it may be viewed as politically unpopular, we would strongly suggest if such a review is made it not be limited to consideration of the MFJ but extended to serious questions about the continued efficacy of rate of return regulation and the desirability of continued division of regulatory jurisdiction over telecommunications

between the Federal Government and the states.

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