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Mrs. Biddle, you seem to have a kind of-again, you're no lap dog, you're not an apologist for this industry for the regional Bell's, but you seem to think there are some problems. And let me direct you to one part of it which I think is something that's important, and that is the troubling-on page, I think your statement is on page—but in one part it says, the troubling interpretation of the manufacturing restriction arose when in December 1987, Judge Greene broadly interpreted the term "manufacturing," or "manufactured,” to include design, research and development, and some would argue even detailed product procurement specification; and that was brought up yesterday.

Why would we even countenance that kind of thing? Why wouldn't we, as a Congress, say, that's just going to inhibit a development of better products?

Mrs. BIDDLE. If the Congress is undertaking a review of restrictions, that's certainly-as we pointed out-is the first that we would look at. We were very troubled by the extension of the term. And I hasten to add, we initially supported the manufacturing ban in the decree. We are not in this testimony suggesting that all of it need go away.

What we've talked about is the R&D element, and as I tried to say briefly-

Mr. MAZZOLI. And not just R&D. If I understand, even designing specifications up, I want something 3 inches high

Mrs. BIDDLE. It has been extended to that point as we understand it-when I've asked various of the operating companies: Can you do this? Can you do that? Am I right, you can do this?

They tell me, no, they are absolutely barred from having anything more than a generic description of the product they want to procure. That is not the way most hi-tech product is dealt with.

I did want to get back to something you said earlier, though, only because

Mr. MAZZOLI. I want to go back to one more thing and then I'm finished, yes, ma'am.

Mrs. BIDDLE. Certainly.
Mr. MAZZOLI. Go ahead, I'm sorry.

Mrs. BIDDLE. I was a little concerned by your comment on crosssubsidy.

Mr. MAZZOLI. OK.

Mrs. BIDDLE. We certainly don't think that a little cross-subsidy is OK. That is not the point we were trying to make.

Mr. Mazzoli. No, that's just my point personally. In other words, I heard cross-subsidy brought up in a pejorative sense as being absolutely wrong under all circumstances. And I say that personally I'm not sure I feel that way.

Mrs. BIDDLE. I would like to add, though, that if you are contemplating going beyond the comments that we have made, which would permit the RBOC's into research, into specification, and into potentially funding other people's research in this area, to full line fabrication, we would be quite concerned that we talk in terms of standards, complete transparency of the product in the network, interface disclosure, no bundling and tying, and all of those traditional things that you on the subcommittee are so well versed in.

Mr. Mazzoli. May I ask you a couple of very quick questions?

Would you be able to send and I'm sure the chairman would put it in the record—what you said, and I don't think, it's in your statement, about the ways the gateways are being circumvented, the various different techniques-

Mrs. BIDDLE. The ways that you could deliver--
Mr. MAZZOLI. Yes.
Mrs. BIDDLE. I'd be happy to do that.

Mr. MAZZOLI. I would like that very much because I think that's core central to the other argument which I personally have more trouble with, which is the information services, because of the potential choke point or gateway.

[The information follows:]

The primary argument raised by opponents of Ball company entry into full-line provision of information services appears to rest on the contention that the RBOCS control a moottleneck" through which their competitors must pass in order to provide their own services. We find it crious that the proponents of this argument offer very little to support their assertion, and even more aurious that there has been almost no question raised about its accuracy. Included within CCIA's membership are many of the most technically sophisticated companies in the world and we have been unable to locate the bottleneck.

Perhaps the confusion derives from focusing on the concept of the "gateway" which the RBOCs are now permitted to offer. In fact, it may be the choice of the term itselt that raises the question. But as there is no mandatory requirement that information service providers avail themselves of an RBOC gateway, and cartainly very few do, it can hardly be argued that the offering of a gateway capability is in itsait the creation of a bottleneck. on this point it might be useful to examine existing alternatives to an RBOC Information gateway for the provision of Information services. In CCIA'S review of the options, which was by no means comprehensive, a number of available alternatives have bean immediately identified through which Information services can be effectively provided. For examplo, information services can be provided through the following alternative technologies, most of which do not even require passage through the local exchange facilities of the P003:

Private Networks, both terrestrial and/or satellite based are widely used by major corporations and financial institutions.

Satellite and VSAT technology, through the direct broadcast of Information services via satellite to scationary or mobile ground receiving stations -- commonly known as satellite dishes and now as VSATS (Very Small Aperture Terminals) because of the decreasing size of the terminals required for reception.

Examples of information carvia applications for which this kind of technology is currently in uso would include private and Institutional distribution of information, the intransit re-routing of trucks, the assignment of repair calls to in-the-fiald maintenance personnel and their requests for checks on parts Inventory, and the J.C. Penney application for testing of both consumers' and Individual store buyers' reaction to particular merchandise.

cable television systems which now pass some 85% of U.S. residences,

Such systems are being used for a wide range of audiotext, videotext, including classified advertising, and full video Information services,

Blanking intervals on public broadcast tulevision, that is the portion of the video signal which is transmitted but not used to form the picture which is seen on a TV screen.

An example of the use of this technology is providing the written text of words being spoken or broadcast along with the video and audio portions of the transmission to provide closed captioning for the hearing impaired.

sideband transmission on broadcast radio, which is the unused portion of a radio station's assigned spectrum which allows data to be transmitted concurrently with the audio to particular receivers,

Information applications currently offered via this technology include continual update on stock transactions for user-selected companies.

Wireless communications systems, including cellular corwmunications systems, which are increasingly all digital systems equally useful for data and voice applications and for transmission to stationary or mobile locations.

Fiber optic networks of alternative local transport (ALT) providers which are now proliferating in urban areas, these would include Teleport in New York and Metropolitan Fiber in Chicago.

Using such systems, information providers have access to capabilities through which to offer integrated voice, data, and video Information service applications.

In addition to the use of alternative technologies, information service providers can bypaso a Boll Company provided gateway by providing service offerings in ane of the two ways that most auch services are delivered today: using any dial-up telephone line in conjunction with a personal computer and a modem, or through another "gateway" like those provided by Prodigy or Compusarvo. Given the variety of alternative delivery mechanians which are available, CCIA balieves no Ball Company "ottlenecie exists for the information services market.

45-128 - 91 - 14

Mr. MAZZOLI. The other thing I would say-directing you again to an unnumbered page-in which apparently Judge Greene has. ruled that the public interest and the availability of a wide range of information services outweighed other concerns about BOC participation in this market. Yet, he interpreted the public interest to stop short of full BOC entry in this market, notwithstanding the changed circumstances since Computer III rules.

Then you go on to say, that apparently and in a recent ruling and a waiver request, Judge Greene also interpreted the MFJ has prohibiting Bell company participation in this line of business even in geographic areas where they don't have transmission facilities.

Could you just for a few seconds expand on that, and is it implicit in there, or do you feel that where the Bell companies have no transmission facilities they ought to be able to get into the information business because they would no longer have that gateway control?

Mrs. BIDDLE. Actually, we took a rather broader view of what they ought to be able to do than that. But, yes, that decision of Judge Greene's—and I hasten to say that we have a great deal of respect for the judge—but we did not understand that waiver request ruling.

We could not understand the antitrust basis for saying you can't do it where you have no bottleneck facilities even if we had a disagreement over whether the bottleneck facilities existed in other

areas.

Mr. MAZZOLI. I appreciate that.

My time has expired, but I also would say that in your statement you also suggest we look at this thing not as if Judge Greene were the judge, but Judge XYZ, which I appreciate, too. Thank you, Mr. Chairman. Mr. BROOKS. Thank you very much, Mr. Mazzoli.

Mr. Smith, is there anything else you wanted to add before we go to lunch where I'm due at 12:30?

Mr. SMITH of Florida. I would like to add that the panel has been very kind and I appreciate their being here today.

Thank you, Mr. Chairman.
Mr. BROOKS. Thank you very much.

We will recess until 1:30 when we will have the third panel. I hope you can come back.

[Recess taken.] Mr. BROOKS. The subcommittee will come to order. The members of our final panel are Brian Moir of the law firm of Fisher, Wayland, Cooper & Leader, appearing as a witness for the International Communications Association; Edwin B. Spievack, president and executive director of the North American Telecommunications Association; and Thomas F. Smith, chairman of the Alarm Industry Communications Committee, and also chairman of a Bethesda firm known as Security, Inc.

We appreciate your being here and I apologize for the delay.

You understand the general ground rules. Your statements will be made a part of the record.

We would be pleased to hear from you as you summarize your comments.

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