UPTON COULD TWEAK UPTON BILL TO MEET CALL FOR MORE DETERRENCE

Commerce Committee ranking Democrat Dingell (Mich.) said he supported Upton bill, but recommended that “significant improvement” would be to transfer fines paid by violators directly into universal service fund. “Since violators of the Communications Act ultimately harm telephone consumers, I believe it is only fair that fines paid by violators should flow back to consumers as well,” he said. “Therefore, I would propose that fines and penalties be earmarked to reduce, dollar for dollar, the amount of the universal service surcharge that is currently collected from residential customers.”

Dingell said his proposal wouldn’t reduce funds slated for e- rate program. “It would simply reduce the amount of money collected from our constituents to pay for it. In this way, monthly telephone bills would go down while still fully funding this important program.” He urged members to work together to craft amendment, which he suggested they introduce on House floor.

Subcommittee ranking Democrat Markey (Mass.) said he shared FCC Chmn. Powell’s concern that current level of fines was merely cost of doing business. He said FCC, without adequate enforcement bureau staff, would be ill-prepared to respond to alleged violations. “We can have all the fines and penalties in the world but it would do little good if we don’t have the personnel to investigate the disputes,” he said. “Slow enforcement is the same as no enforcement.” Markey suggested that FCC transfer collected fines to aggrieved competitive carriers rather than to U.S. Treasury.

Markey reiterated his opposition to data deregulation bill (HR-1542) recently introduced by Dingell and House Commerce Committee Chm. Tauzin. Tauzin-Dingell “decriminalizes” many of FCC’s rule violations and therefore would negate Upton’s enforcement bill, particularly if it were attached to HR-1542 on House floor. Upton originally had introduced HR-1765 as amendment to HR-1542, but Tauzin rejected it as “nongermane.” When Upton later introduced HR-1765 as standalone bill, Tauzin said it was possible that it could be attached to Tauzin-Dingell on floor if Rules Committee approved germanenenes waiver. “Move it separately and swiftly, rather than attach it to Tauzin-Dingell,” Markey said.

“That’s the first time I heard a deregulation bill described as decriminalization bill,” Tauzin told Markey. He said Upton bill would increase fines “far beyond the cost of business.” He described Markey’s and others’ opposition as “thinly veiled attempt to undermine the broadband bill.”

USTA Gen. Counsel Lawrence Sarjeant told Upton that Assn. didn’t “warmly welcome you and your co-sponsors’ efforts to increase penalties.” However, he said that if Congress proceeded with such action, ILECs must be given assurances of due process. He said HR-1765 wouldn’t allow for hearing before administrative law judge “and we respectfully believe that it should.” Sarjeant recommended that subcommittee clarify definition of “wilfully,” and suggested that bill provide parity in enforcement to include cable companies, broadcasters and other providers under FCC’s jurisdiction. He said “procedural fairness” was needed if greater fines were levied against violators, all testimony should be taken under oath and accused common carrier should be able to cross-examine witnesses.

Private practice attorney Albert Halprin said deregulatory legislation “must be coupled” with bill to enhance FCC’s ability to enforce regulations. He said HR-1765 was “necessary and desirable” but he recommended 3 “legislative enhancements” to boost enforcement: (1) Give FCC “right and ability” to delegate to states consumer protection authority “over rates and services involving residential and small business customers.” (2) Give FCC and states ability to levy fines “equivalent to the value or amount a carrier wrongfully or excessively received as a result of the violation.” (3) Enable FCC and states to handle “class” complaints filed by consumers and small businesses.

NARUC and Florida PSC Chm. Leon Jacobs said that as standalone bill, HR-1765 would be effective in deterring violators of FCC rules. “Florida continues to receive complaints against companies that have already been fined or had settlements accepted by the FCC for various violations,” he said. “It appears that, under certain circumstances, the current level of penalties is not adequate in removing the incentives to violate current law.”

Although Jacobs said Upton had recognized need to maintain state regulatory authority over interconnection arbitration, he said provision establishing 60-day time frame to resolve such disputes was inadequate. He said minimum of 100 days would be more appropriate. “In such cases, substantial testimony and a full discovery process may be needed to resolve these issues. Requiring that these issues be processed in just 60 days may impair our ability to address issues in a reasoned and well- informed manner.”

Allegiance Telecom CEO Royce Holland urged subcommittee to refrain from capping fines at $10 million per violation, as proposed by Upton. Instead, he recommended that fines imposed by FCC be significant enough to have impact on violators’ quarterly earnings. However, unlike most opponents of Upton and Tauzin- Dingell bills, Holland didn’t lob criticism solely at Bell companies. “AT&T’s anticompetitive conduct is just as bad as its offspring,” he said. He also recommended requiring FCC staff of 25 to focus on adjudication of enforcement matters.