FACT SHEET: TELECOMMUNICATIONS ACT OF 1996
(Legislation opens competition) (1100)
By Edmund F. Scherr USIA Staff Writer

The Telecommunications Act of 1996, passed overwhelmingly by both houses of Congress, will break down monopolies in the telecommunications field and allow companies to compete in areas they formerly could not by regulation or by law.

A nation-wide market place for telecommunication services is created by the bill, replacing the segmented market place of local and long-distance telephone service and cable television, The legislation also replaces a decades old system based on federal and state laws and a court order that broke up AT&T, a monopoly telephone company, into a long-distance carrier and regional (Baby Bell) telephone companies.

The Senate and House had passed separate versions of the bill last year, and after a long delay, a compromise version worked out by the two houses, was approved February 1 by the House in a 414-16 vote and then one hour later by the Senate, 91-5. The 1996 Act replaces a Depression-era, 62 year-old-law.

Some industry observers believe the act will likely encourage a new wave of mergers throughout the telecommunications industry and allow a much greater concentration of ownership.

"I believe this bill means American companies will dominate the field of global telecommunications, said Representative Jack Fields, chairman of the House Commerce Subcommittee on Telecommunications and Finances.

If the legislation works as envisioned, American consumers in the future might receive local telephone service from their cable television company. Local phone service could come from a long-distance carrier, and local phone companies could provide television programming. And all these services possibly could be provided by a single company, which, might be a local public utility company.

Here are the highlights of the far reaching Telecommunications Act of 1996: -- A complicated set of provisions is detailed that must be followed by local telephone companies to open their networks to competition. In return, the legislation would let the local phone companies into the long-distance market, if they can get the consent of the Federal Communications Commission.

-- Charges for cable television service beyond the most basic offerings are dergulated and the ban on telephone companies providing cable and other video programming is removed. The federally mandated rate cap would be removed on March 31, 1999 for all types of cable services except the "basic tier" -- this includes local TV channels and public and educational channels. Rate controls in small communities can be removed immediately.

-- New televisions sets must have built-in "v-chips" allowing parents to block objectionable shows. The idea is to give parents control over what their children watch. The chip would be placed in new television sets that are 33-centimeters (diagonal) or larger. The legislation does not mandate that broadcasters tag shows with signals that the v-chip can block. There will be different levels of rating of programs for violent, sexual or indecent content. The FCC is required to set up an industry and community advisory committee to rate TV programs, if the industry fails to act.

-- The number of television stations that a single company can own is greatly expanded, as long as they don't reach more than 35 per cent of the U.S. population. Owners of radio stations would still face limits in local broadcast markets.

-- Dissemination of indecent material on the Internet and on-line information services is banned. The law says that anyone who "knowingly" transmits information considered "indecent to minors" on a computer network available to children could face prison and fines.

The legislation defines indecency as any communication "that, in context, depicts or describes, in terms patently offensive as measured by contemporary community standards, sexual or excretory activities of organs."

The legislation guards on-line companies from prosecution, if their services are only the means by which someone transmits indecent material.

-- The measure does not contain any provisions relating to foreign ownership, maintaining the current limitation against foreign investors owning more than 25 per cent of the shares of a U.S. broadcasting entity.

-- A portion of the broadcast spectrum will be reserved for digital television services.

COMMENTS ON THE ACT: PRESIDENT CLINTON: "For the past three years, my administration has promoted the enactment of a telecommunications reform bill to stimulate investment, promote competition, provide open access for all citizens to the Information Superhighway, strengthen and improve universal service and provide families with technologies to help them control what kind of programs come into their homes over television. As a result of this (act), consumers will receive the benefits of lower prices, better quality and greater choice in their television and cable services, and they will continue to benefit from a diversity of voices and viewpoints in radio, television and the print media."

VICE PRESIDENT GORE: "Passage (of the Act)...is a historic event that will change forever the way every American lives, works, learns and communicates. The overwhelming bipartisan support for this legislation demonstrates America's commitment to ensuring that all citizens benefit from the Information Superhighway."

REED HUNDT, CHAIRMAN OF THE FEDERAL COMMUNICATIONS COMMISSION: "This bill creates the promise of good, high-paying jobs for millions of Americans and the promise of competition and its benefits of lower prices, higher quality and better service to us all. The bill vests serious responsibilities in the FCC to make competition a reality in as many markets as possible."

The full text of the Telecommunications Act of 1996 can be found on the World Wide Web home page of the "Thomas," the legislative information service of Congress maintained by the Library of Congress.

The Web address for Thomas is: http://thomas.loc.gov To find the act, get the heading "full text of legislation" and click on the link to the 104th Congress. Then run a query for the Telecommunications Act of 1996.

In the list of legislation that then appears look for and click on "Telecommunications Act of 1996 (Enrolled Bill (Sent to President) (S652)."