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STATEMENT OF BRIAN R. MOIR, PARTNER, FISHER, WAYLAND,

COOPER & LEADER, ON BEHALF OF THE INTERNATIONAL
COMMUNICATIONS ASSOCIATION
Mr. MOIR. Thank you, Mr. Chairman.

It is a pleasure to be here today. I appreciate the opportunity to have our testimony made part of the record and I will be brief with my comments.

I am here on behalf of the prospective view that has yet to be presented to the subcommittee and that is those of the business users, those people in corporate America who are dependent upon the telephone network to be involved in the highly competitive businesses that they are involved in daily dealing with the foreign competition of the four dragons and others around the world.

We share the statement you made yesterday that the consent decree has worked well and we are here to reinforce that today.

From the outset, I want to make it clear that the entire industry and in particular the business user community has been well served by the MFJ.

It served a vital role in stimulating many of the positive regulatory decisions that were made in the seventies and the court decisions that were made in the seventies that were intended to break down some of the monopoly aspects of the equipment industry and services industry.

What we have found though is that since divestiture and since we have found many positive benefits developing in the industry, there have been numerous attempts by the Bell operating companies to change the decree that they and AT&T and the Department of Justice agreed to.

It appears that a number of vital questions aren't being addressed in the forums that have occurred prior to your 2 days of hearings.

Some of those questions that haven't been asked are, what were the abuses of monopoly power that precipitated the over 70 antitrust suits against the Bell System, and do those same Bell operating companies have monopoly control today?

Another question that isn't being addressed is, what are the changes that have occurred in the 572 years since divestiture that warrant either a transfer of the decree or a change of this Nation's 1970 monopoly suppliers fundamental role?

A third question that isn't being asked is, what are the customer needs for equipment and services that are reasonably expected to be made by these Bell operating proposals to change the MFJ?

A fourth question that isn't being asked is, what are the aspects of the competitive environment fostered by the decree, the goal of this subcommittee, that would be at risk if the Bell operating companies' proposals were adopted?

A fifth question that isn't being addressed by the proceedings prior to your 2 days of hearings were to the FCC, which has been discussed by many people as a solution to the competitive issues now before Judge Greene-does the FCC have the human and technical resources to carry out the job that is being done by Judge Greene today?

The answer to most of those questions is contained in our full statement, but to be brief, there were a number of abuses which have been well documented throughout Capitol Hill and this subcommittee that American industry suffered through, and worked very hard with some of the vendors in the business to try to overturn.

While we have made some progress with regulators, it was the consent decree that accelerated those things.

It is interesting when we look at what has changed, a considerable amount has changed.

Many of the people have testified to that.

What hasn't changed is the monopoly control over the bottleneck and if you look at the ratepayer-funded investments that were, in a sense, triggered by the divestiture, that of rebuilding with billions of dollars of ratepayer funds, the central office, with high-capacity digital switching gear, fiber optics, we may have a situation where the Bell operating companies are even in a stronger monopoly position now than they were prior to divestiture.

With that, Mr. Chairman, I will close and look forward to questions.

Mr. BROOKS. Thank you.
[Mr. Moir's prepared statement follows:)

STATEMENT

OT

BRIAN R. MOIR
PISHER, MAYLAND, COOPER AND LEADER

WASHINGTON, D.C.

ON BEHALY OF THB
INTERNATIONAL COMMUNICATIONS ASSOCIATION

ICA is pleased to have been invited to submit testimony for the Subcommittee's oversight hearings on the AT&T Consent Decree ("Consent Decree"). Mr. Chairman, you and the members of the

Subcommittee, as well as the staff, are to be commended for your

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currently administered by the Federal

courts, is the most appropriate and effective vehicle for ensuring that the industry remains robust and highly competitive well into the 21st

century."

[Committee on Judiciary News Release, July 21, 1989.) that ICA'S participation in the Subcommittee's

I hope

deliberations will facilitate that examination.

ICA is the largest and most broadly-based organization of

telecommunications end users in the United States.

ICA is a not

over

for-profit league of

700 corporate, educational, and governmental users of telecommunications equipment, facilities, and services. collectively, ICA members spend approximately $18 billion per year on acquisitions in this area. ICA'S bylaws

or

exclude any firm predominantly engaged in the product on, sale,

rental of telecommunications services equipment from eligibility for membership.

or

INTRODUCTION

In the case of the AT&T Consent Decree, U.S. antitrust law

has serviced the American telecommunications industry well.

A

fundamental principle the consent Decree and the U.S. economic system recognizes is that this country's customer needs for

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positive role in that development. ICA vigorously supports that development but cautions the Subcommittee to remember that there

one

area

is

of the telecommunications industry that has not experienced this competitive development the local telephone exchange.

BACKGROUND

THE TELECOMMUNICATIONS USER PERSPECTIVE

Business Users' Dependence on Telecommunications

ICA members face competitors in both the technologically

developed countries and the low-wage, less-developed countries.

Many of those countries, such as Japan, foster practices that

impair the ability of American companies to compete. To compete in the world marketplace, large business has an absolute need for timely, accurate, cost effective information that can be made available on demand. To accomplish this, user companies must be able to obtain, operate, maintain, and fully utilize state-ofthe-art technology. In many ways, this capability has far greater and broader economic implications in terms of jobs, profits, competitive advantage, and balance of trade than the cost of telecommunications services that business users purchase.

with the development of various voice and data based systems and applications, large business users have become dependent on efficient, reliable, readily available, and reasonably priced telecommunications equipment, facilities, and services. For this

reason, ICA members are most interested in the deliberations of

this Subcommittee.

Business Users' Telecommunications Experience

The superior telecommunications system presently in

use

within the United States has evolved over many years.

Th

evolution has been almost totally funded by ratepayers-business, institutional, and residential customers not the stockholders of the dominant monopoly suppliers of telecommunications services and facilities. Although there have

been advances in the transmission of signals through the use of satellites, fiber optics, etc., and the introduction of digital technology, these advances have resulted in faster and more

reliable transmission of signals.

Beginning a little over a decade ago, it was the customer, not the monopoly suppliers, who developed new and innovative

methods of using these advances in telecommunications services.

The monopoly providers of telecommunications services had very little incentive to provide the equipment, facilities, and services necessary to fulfill the new and expanding user needs. As a consequence, users were forced to go outside the traditional providers of telecommunications service, such as the Bell System,

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