Mr. BROOKS. Mr. Robins.

STATEMENT OF WAYNE ROBINS, CHAIRMAN, THE COMPETITIVE TELECOMMUNICATIONS ASSOCIATION, AND PRESIDENT, ITT COMMUNICATIONS SERVICES, INC.

Mr. ROBINS. Thank you, Mr. Chairman and members of the subcommittee. Thank you for the opportunity to present our views on the historic AT&T antitrust consent decree.

My name is Wayne Robins. I am chairman of the Competitive Telecommunications Association, or Comptel, and I am also president of ITT Communications Services, Inc.

Comptel is the trade association of the competitive long distance carriers. We have about 130 members, and our members represent something less than an 8-percent share of the total market. In the aggregate, we serve millions of customers and our member companies employ some 20,000 people.

The MFJ has been enormously important to the development of the competitive long distance industry. It singularly created the market conditions that allowed today's competitive environment to develop. It requires the Bell operating companies to provide equal access connections to all long distance companies, and I would underscore the equality in that requirement.

Finally, the line-of-business restrictions contained in the MFJ prevent the BOC's from exploiting their continuing monopoly positions.

There are four points I would like to summarize for the subcommittee this morning.

The first is that antitrust jurisdiction over the Bell monopolies should remain with the Department of Justice and the courts.

The DOJ has an antitrust staff of legal and economic experts, and the MFJ applies the basic antitrust principles to the Bell operating companies in their ongoing operations.

The FCC's historic failure to police monopoly abuses is what led to the MFJ and absent that judgment, control of the seven RBOC's would today be even more difficult than we know it. Vigorous DOJ enforcement of the decree, therefore, remains vital.

The factual situation concerning the Bell operating company monopolies has not changed substantially. They still hold monopoly control over the local access and the local exchange bottleneck.

The DOJ and court waiver process has provided flexibility in the decree for new services and new technologies, and indeed, over 100 waivers have been granted by the court since the decree was entered.

Congress and the FCC can, and should, develop and update a comprehensive national telecommunications policy, and this can be done without disturbing the essential provisions of the MFJ.

The second point I would like to stress is that the interexchange line-of-business restriction should apply so long as the BOC's retain their bottleneck control of the local exchange monopoly.

The BOC's monopoly access charges levied upon the long distance carriers comprise about 40 percent of the aggregate revenues the long distance carriers take in.

The interexchange restriction promotes competition innovation and lower long distance rates for consumers by the long distance carriers.

Recent hearings by the House Telecommunications Subcommittee produced absolutely no support for elimination of the interexchange line-of-business restriction from anyone other than the Bell operating companies themselves.

The third point I would like to stress is that Congress should provide stronger oversight of the decree and of the FCC.

There remains significant, uncompleted work relating to the provision of equal access by the BOC's to the competitive interexchange carriers. Those needs particularly fall into the area of signaling arrangements which will provide call setup times fully comparable to AT&T's call setup times. They relate to provisions for providing 800 number routing and translation services and they relate to providing calling card validation and billing services.

And continued regulation of AT&T as the dominant carrier, given the existence of these unfinished elements of equal access, remains an important consideration for our industry.

Finally, I would suggest, if I may, that the information services line-of-business restriction should not be altered further for the time being. The BOC's should focus on the provision of access gate

ways.

Extensive interLATA transport services, as they relate to the provision of information services, are widely available today and there is really no need to broaden that exception for the BOC's presently.

Allowing the BOC's to provide interLATA information services could become a guise for entering into and fashioning long distance exceptions to the MFJ.

In conclusion, antitrust jurisdiction over the BOC's belongs with the Department of Justice and the courts. The MFJ's interexchange restriction comprises the very basis of the competitive long distance market as we know it today, and stronger congressional oversight of the FCC and its regulation of dominant and monopoly carriers could yield further consumer benefits.

Thank you, Mr. Chairman.

Mr. BROOKS. Thank you very much, Mr. Robins. [Mr. Robins' prepared statement follows:]

TESTIMONY OF

WAYNE ROBINS

CHAIRMAN, THE COMPETITIVE TELECOMMUNICATIONS ASSOCIATION
PRESIDENT, ITT COMMUNICATIONS SERVICES

Mr. Chairman, Members of the Subcommittee Thank you for this opportunity to present our views on the historic AT&T antitrust consent decree.

My name is Wayne Robins. I am Chairman of the Board of Directors of the Competitive Telecommunications Association or COMPTEL. am also President of ITT Communications Services.

I

COMPTEL is the national trade association for the long distance industry, representing about 130 member companies. Our members serve millions of business and residential customers throughout the United States. Long distance companies other than the three represented on yesterday's panel serve about 8 percent of the market and employ about 20,000 people in the United States.

One cannot underestimate the daily challenge of competing with the dominant carrier AT&T, a giant American institution some 10 times larger than all of our members combined. Nevertheless, we completely agree with AT&T, MCI and Sprint that the Consent Decree or "MFJ" forms the very best foundation for competition and consumer choice in long haul data and voice communications services into the next century. While AT&T is the dominant competitor, the Bell Companies are sole source, monopoly supplier: of local access for us all.

In our view, the value of the MFJ is that it both requires the Bell Companies to provide equal access connections and prevents them from exploiting their monopolies in our markets. If allowed to compete with their captive customers, the Bell Companies would be able to do drastic harm to their competition through access discrimination (favoring their own operations) and cross-subsidization.

This is exactly the type of abuse that led to the break-up of AT&T and that would inevitably happen again if the Bells were allowed to integrate vertically. The MFJ line of business provisions are the only thing standing in the way of history repeating itself.

I. ANTITRUST JURISDICTION OVER THE BELL MONOPOLIES SHOULD REMAIN WITH THE DEPARTMENT OF JUSTICE AND THE FEDERAL COURTS

The Justice Department, through its Antitrust Division staff of legal, economic and telecommunications experts, and the Federal Courts have the resources and responsibility to interpret and enforce the nation's antitrust laws as enacted by Congress. The "MFJ" applies basic principles of antitrust law to the Bell Companies; it imposes reasonable and necessary restraints on vertical reintegration by regional monopolies. To repeal the decree would, in effect, provide seven huge healthy companies a wholly unjustified exemption from the antitrust laws.

Repeated failure of the FCC to control monopoly abuses by AT&T led to Justice Department intervention in the 1950s and again in the 1970s. Absent the MFJ, regulatory control of seven diversified regional monopolies would only be more difficult and invite further litigation. Instead the current competitive industry structure limits the disputes to the fringes.

The MFJ recognizes the need for flexibility and the possibility of future changes in the monopoly position of the Bell Companies. The decree provides that upon a legal and factual showing that competition will no longer be harmed, the line of business restrictions may be waived. In fact, the Bell Companies have been granted over a hundred waivers since the decree was entered in 1984.

On the other hand, the most basic factual situation has not changed since divestiture; the Bell Companies still hold monopoly control over the local exchange bottleneck. The new Bush-appointed Justice Department just last month confirmed the continued existence of local telephone monopoly in comments filed with the FCC on the subject of its proposed rate deregulation. The Department stated that "alternatives to the local exchange carriers are simply not economically viable at this time." The Department pointed out that current economic conditions of natural monopoly and state regulatory barriers to entry combine to perpetuate these monopolies.

Enforcement of the antitrust laws that promote competition in adjacent markets and development of a modern telecommunications policy are complementary, not conflicting goals. The Congress and the FCC can and should update laws and rules to govern new technologies and services. Legislative development of a

comprehensive national telecommunications policy for the information age can be accomplished prudently and effectively without disturbing the MFJ.

II. THE INTEREXCHANGE LINE OF BUSINESS RESTRICTION SHOULD APPLY AS LONG AS THE BELL COMPANIES CONTROL SWITCHED ACCESS CONNECTIONS IN THEIR REGIONS

The Bell Companies have maintained their bottleneck control of access to virtually all homes and businesses in their regions. Even the very largest U.S. corporations that may use private facilities for direct links with branch offices or with a major customer or supplier, have no alternative for regular switched local phone service or inbound long distance service. Because the Bell Companies maintain this monopoly, the antitrust decree prevents them from expanding into traditional long distance or interexchange services. Even with this restriction, they control almost all intra-LATA or short-haul toll calling in their regions,

and they charge long distance companies an amount equal to some 40% of all retail long distance revenues for access to the local exchange.

New

The MFJ interexchange restriction is successfully promoting competition in the bulk of the long distance industry. Long distance rates have fallen substantially since divestiture and are still being cut in response to competitive pressures. and innovative services are being rolled out constantly. Given this healthly trend toward lasting competition, its hard to see what benefit the Bell Companies could add. Without demonstration of any compelling benefit from Bell entry, and with the serious risks of abuse of monopoly bottleneck facilities, a five year old antitrust decree should not be thrown out simply because the seven companies to which it applies do not like it.

Hearings conducted this spring by the House Commerce Subcommittee on Telecommunications and Finance produced absolutely no non-Bell support for elimination of the interexchange restriction.

III. CONGRESSIONAL OVERSIGHT OF THE DECREE AND THE FCC SHOULD EMPHASIZE EQUAL ACCESS AND REGULATION OF DOMINANT CARRIERS Despite the progress by the Bell Companies toward the availability of equal access for all long distance carriers, significant disparities remain that still translate into major technical and market advantages for AT&T. Bell Companies have proposed use of alternative technologies to provide quasi "equal access" rather than install computer-based switching to provide true equal access. Any use of alternate technologies to meet "equal access" requirements should be viewed as an interim solution only. Congress should not allow the FCC to deal some of the more remote or dated local exchange telephone switching centers out of full access to information age services.

The FCC should also be directed to ensure that equal access is made available in interexchange submarkets such as 800 service and number assignment, calling card billing and validation, and signalling interconnection.

Furthermore, AT&T should continue to be classified and regulated by the FCC as the dominant interexchange carrier due to both its continuing access advantages and its overwhelming market power. Where the FCC has relaxed regulation of the dominant carrier, there is evidence of extremely lax enforcement: waivers, lack of economic support data, and major exceptions for special discount contracts with AT&T's largest corporate customers. In its FCC oversight capacity, Congress should ensure that the Commission actually enforces the competitive safeguards contained in its price cap rules which just took effect last month.