COMMITTEE ON ENERGY AND COMMERCE CARLOS J. MOORHEAD, California MATTHEW J. RINALDO, New Jersey WILLIAM E. DANNEMEYER, California Ackley, Lorinda, president, Taconic Telephone Corp.... Appleby, Jerry, chairman, Tele-Communications Association and vice Collins, A. Gray, Jr., senior vice president, external affairs, Bell Atlantic.. Easterling, Barbara, executive vice president, Communications Workers Fogel, Bruce J., chairman, Phone Programs, Inc..... Frischkorn, Allen R., president, Telecommunications Industries Associa- Glaser, Robert H., vice president, strategic planning, Southwestern Bell Kilpatric, Jim G., senior vice president, law, AT&T. Kimmelman, Gene, legislative director, Consumer Federation of America. Marks, Herbert E., counsel, Independent Data Communications Manufac- Moir, Brian, on behalf of International Communications Association. 170 174 267 7 Skrzypczak, Casimir F., vice president, science and technology, NYNEX.... Wade, Winston, president, information, technologies group, U.S. West, 190 343 Responses to questions submitted by Hon. Edward J. Markey Responses to questions submitted by Hon. Edward J. Markey 413 Mickey Leland, dated June 29, 1989, from John R. Gunter.. Consumer Federation of America, letter dated June 7, 1989, from Gene 71 Material submitted for the record by-Continued McGraw-Hill, Inc.: Letter dated July 12, 1989, from Richard H. Shriver to Hon. Edward Responses to questions submitted by Hon. Edward J. Markey Phone Programs, Inc., responses to questions submitted by Hon. Edward Prodigy Services Co., letter dated July 12, 1989, from George M. Perry to Regional Holding Companies, responses to questions submitted by Hon. Southwestern Bell Corp., letter dated June 12, 1989, from Robert H. Telecommunications and Finance Subcommittee: Statements submitted Association of Telemessaging Services International, Joseph Laseau, 47 BellSouth Corp., John R. Gunter, vice president, information services 63 McGraw-Hill, Inc., Richard H. Shriver, senior vice president, infor- 71 Prodigy Services Co., George M. Perry, vice president and general Pacific Bell, Lee G. Camp, vice president and general manager, infor- 103 116 Telecommunications Industries Association, responses to questions submitted by Hon. Edward J. Markey 409 United Telecommunications, Inc., responses to questions submitted by 371 MODIFIED FINAL JUDGMENT WEDNESDAY, JUNE 7, 1989 HOUSE OF REPRESENTATIVES, COMMITTEE ON ENERGY AND COMMERCE, SUBCOMMITTEE ON TELECOMMUNICATIONS AND FINANCE, Washington, DC. The subcommittee met, pursuant to notice, at 2:05 p.m., in room 2322, Rayburn House Office Building, Hon. Edward J. Markey [chairman] presiding. Mr. MARKEY. We are conducting these sessions in a less formal manner in that we are waiving members' opening statements. Without objection, I will introduce the witnesses and let them briefly outline what their major points are and then we can get quickly to the point of asking questions. Today we have Mr. A. Gray Collins, Jr., senior vice president of external affairs, Bell Atlantic; Mr. Robert Glaser, vice president, strategic planning, Southwestern Bell Corp.; Mr. Warren Prince, chairman, Tymnet-McDonnell Douglas Network Systems Co., from San Jose, CA; Mr. Bruce Fogel, chairman, Phone Programs, Inc., from New York City; and Mr. Warner Sinback, manager for telecommunications policy, General Electric Information Services, General Electric Co., Rockville, MD. Let us begin with Mr. Fogel. We will go from my left to right. Each one of you will have no more than 5 minutes, which we will very strictly enforce, to lay out your major points, and then we will turn to the subcommittee members for questions. Mr. Fogel. STATEMENTS OF BRUCE J. FOGEL, CHAIRMAN, PHONE PROGRAMS, INC.; A. GRAY COLLINS, JR., SENIOR VICE PRESIDENT, EXTERNAL AFFAIRS, BELL ATLANTIC; WARREN F. PRINCE, CHAIRMAN, TYMNET-MCDONNELL DOUGLAS NETWORK SYSTEMS CO.; WARNER SINBACK, ON BEHALF OF ADAPSO; AND ROBERT H. GLASER, VICE PRESIDENT, STRATEGIC PLANNING, SOUTHWESTERN BELL CORP. Mr. FOGEL. Thank you. I am appearing before you today in my role as chairman of Phone Programs, which is an information provider of short duration programs made available over the telephone around the United States. I only have a few minutes. Therefore, would you please refer to my submitted written testimony as to who we are and what our function is? Contrary to the hopes and expectations of Congressmen who may have been persuaded by the BOC's, the direct entry of the domi (1) nant telcos into the content provision will predictably stifle competition and diversity in the fledgling audiotex industry. Prior to the dovetailed regulatory and antitrust prohibitions against the BOC's there were no information providers in mass announcement services as we know them today. That's right. None. Zero. Just no information providers. Prior to 1983, the old Bell System was responsible for all telephonic mass announcement programming and its content. Until 1983 mass announcement, 976 or dial-it services had crept along in development at a snail's pace. Thus, for over 50 years, since the first such programming in the late 1920's, the Bell system permitted relatively few types of services and programs to reach the public through plain old telephone service. For our company, Phone Programs, the rules which went into effect in 1983 seemed simple and straightforward. The dominant telephone companies of America were to be limited in my business to their traditional roles as common carriers. For presumably reasonable and nondiscriminatory fees, they would provide the transport of our programs through their telecommunications networks and perform billing services in conjunction with their existing facilities for billing local consumers. We the providers would be responsible for all programming content. We would take the risks inherent in free enterprise and reap the rewards of success or suffer the consequences of business failure. Looking back upon what I viewed in 1983, I now see that I was extremely naive. În practice, the BOC's have stunted the growth of the kinds of information services with which Phone Programs is familiar. I make this point and emphasize it for a couple of reasons. First, since 1983 a lack of development in mass announcement services of which the BOC's complain is directly attributable to their own repressive and monopoly induced actions. Second, inasmuch as the BOC's have not played by existing rules, I ask rhetorically, how can the Congress believe that the BOC's would adhere in good faith to any future rules, especially where they would be direct competitors of information providers utilizing their own network facilities along with and in competition with us? I can state categorically that the local exchanges still enjoy a natural meaningful monopoly in the provision of local mass announcement services. It is this monopoly power that enables them in various jurisdictions to control the number of information providers, to manipulate or veto the content of local programming, to dictate advertising guidelines, to share in the revenues of providers while sharing none of the risks, to create various arbitrary requirements upon providers who have no competitive choices on the local level. Please bear in mind that I refer to current, ongoing facts. This is not something that may happen in the future. It is not my speculation. Let me give you a few examples. Look at New Jersey Bell's local 976 service. Today if one of your staff were to telephone the marketing section of New Jersey Bell which deals with mass announcement services to ask for information about becoming an information provider of that system, the New Jersey Bell representative would explain that New Jersey per |