user needs. to obtain the technologies and services necessary to meet their requirements. This caused the emergence of a new industry to develop equipment and systems to meet these new and expandings Despite the well-documented anti-competitive behavior of the Bell System to frustrate this emergent synergism, there is now a healthy competitive environment which is capable of providing state-of-the-art telecommunications equipment and information services to both business users and consumers. Business Users' Position on Consent Decree business The telecommunications and information needs of ICA's and institutional members are best served by a Consequently, the business competitive marketplace. telecommunications user community has never ádvocated the continuation of barriers to entry against any telecommunications supplier in any market if such entry would provide users with more choice. ICA continues to support that policy today. Unfortunately, as history in the telecommunications industry has taught us, the entry or presence of monopoly suppliers in some markets may actually reduce or inhibit user choice and the potential for competition. Consequently, ICA has consistently stated that it could not support the removal of the existing line-of-business restrictions on interexchange services, information services, or manufacturing until the BOCS' ability to abuse the monopoly power derived from their provision of essential local services is limited, either by actual and viable competition in the local exchange and access service markets or by effective regulation. all Because of the importance of telecommunications to American businesses, the business telecommunications user community views telecommunications issues from two rather simple perspectives: 1) any policy proposal should bring prices closer to cost, and 2) the proposal should increase user choice in a more competitive marketplace. Not surprisingly, the business user community has actively involved itself in the discussions surrounding the BOC-initiated efforts to modify the MFJ restrictions. The consequences of not participating in these policy discussions could be devastating to business user networks and the competitive edge of American business in domestic and international marketplaces. faced some and difficulties, but managers of business and institutional user telecommunications networks experienced a considerable number of problems in adjusting to the divestiture. These problems made it difficult for American businesses and institutions to plan their use of telecommunications information resources, forecast costs, prepare budgets, and implement new technologies according to recognized financial and engineering criteria. Although these problems were particularly troubling to the user community since telecommunications and information had become a heavily used tool by American businesses to reach the cutting-edge of competition within their various industries, these difficulties were tolerable because users saw the benefits that would flow from the Consent Decree. The user problems of the early days of divestiture are now a thing of the past and users are enjoying the benefits that have flowed from the Consent Decree. Before government policy makers consider changes to the underlying structure that everyone has now adjusted to, and which has helped stimulate the competitive and technological developments within various industry sectors that were already underway prior to divestiture, the members of this Subcommittee should ask what changes have occurred in the more than five and one-half years since divestiture that warrant either a change in the Consent Decree's jurisdiction or in the fundamental role established for the Regional Bell Operating Companies ("RBOCs") as monopoly suppliers of local bottleneck facilities, i.e., local telephone services. Users' Regulatory Concerns To date, all of the legislative initiatives to modify or remove the Consent Decree restrictions on the BOCS rely upon the Federal Communications Commission ("FCC") for enforcement. industry telecommunications Unfortunately, the bulk of the (outside of the monopoly providers of local telephone service and exchange access) has become concerned about the FCC's continued commitment to effective regulation of the telephone companies, in particular the BOCS. Until these concerns are reviewed and addressed by Congress through the exercise of its legislative oversight responsibilities, it is unwise for the Congress to even consider legislation that is dependent upon the FCC for its These concerns, undermine one of the cornerstones implementation. of the Consent Decree information markeplace a more competitive telecommunications and and complicate any review of the Consent Decree. While the business user community's list of concerns is quite long, a discussion of some of these concerns as they relate to the FCC's existing tariff system may serve to demonstrate the need for Congress to quickly commence detailed oversight hearings of the FCC on common carrier matters. [For a more detailed description of ICA's concerns with the FCC, please see ICA'S testimony before the subcommittee during its hearings on the FCC Telephone Price Cap Proposal, Serial No. 100-173, starting at pages 114 and 697.] Some of these concerns include: strategic pricing, rate churn, one-line dismissals of user petitions, rejection of user requests for review or stay of tariff orders, and customer proprietary network information ("CPNI"). None of these problems are insurmountable. The FCC, if it chose to do so, could readily resolve the entire ICA list of concerns. Unfortunately, however, users' fundamental concerns with the inadequacies of the FCC's administration of the existing tariff system are no closer to resolution today than when these concerns were first raised with the Commission in the early 1980's. 1. Rate Churn The Commission has yet to resolve users' concerns with the "rate churn" phenomenon. Rate churn describes the situation which exists when carriers initiate numerous rate changes (either upward or downward) within a relatively short period. When this occurs, ratepayers' ability to plan and budget for communications expenditures can be seriously and needlessly disrupted. While the Commission has made a commendable effort in the last year to modify the effective dates of various rules to reduce the number of FCC-initiated rate changes within a given period, the Commission has done little, if anything, to discourage carriers (particularly the BOCs) from periodically adjusting their rates to achieve earnings as close to the authorized rate of return ceiling as is humanly possible, effectively converting the prescribed ceiling into a guaranteed return. 2. Strategic Pricing A substantial number of existing LEC rates for high-capacity digital services crucial to the business community are targeted to earn returns of between 12 and 39 percent. The Commission has permitted these "strategic" or "market-based" rates to become effective, subject to the outcome of its strategic pricing investigation (CC Docket No. 85-166). That proceeding is now nearly four years old and appears to be evolving into a "giant regulatory wastebasket." Nader v. FCC, 520 F.2d 182 (D.C. Cir. 1975). Over a period of several years, ICA has urged the Commission |