< Back to H.R. 3609 (103rd Congress, 1993–1994)

Text of the Telecommunications Equipment Research and Manufacturing Competition Act of 1993

This bill was introduced on November 21, 1993, in a previous session of Congress, but was not enacted. The text of the bill below is as of Nov 21, 1993 (Introduced).

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HR 3609 IH

103d CONGRESS

1st Session

H. R. 3609

To improve the competitiveness of American industry in the markets for telecommunications equipment and customer premises equipment, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

November 21, 1993

Mr. SLATTERY introduced the following bill; which was referred jointly to the Committees on Energy and Commerce and the Judiciary


A BILL

To improve the competitiveness of American industry in the markets for telecommunications equipment and customer premises equipment, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ‘Telecommunications Equipment Research and Manufacturing Competition Act of 1993’.

SEC. 2. FINDINGS.

    The Congress finds that--

      (1) universal access to advanced telecommunications services through the public switched telephone network by all persons, including persons with disabilities and public educational institutions, would be advanced, and

      (2) the continued economic growth and the international competitiveness of American industry, would be assisted,

    by permitting the Bell Telephone Companies, through their affiliates, to manufacture (including design, development, and fabrication) telecommunications equipment and customer premises equipment, and to provide telecommunications equipment, and to engage in research with respect to such equipment.

SEC. 3. AMENDMENTS TO THE COMMUNICATIONS ACT OF 1934.

    Title II of the Communications Act of 1934 (47 U.S.C. 201 et seq.) is amended by adding at the end the following new section:

‘SEC. 228. REGULATION OF MANUFACTURING BY BELL TELEPHONE COMPANIES.

    ‘(a) GENERAL AUTHORITY- Subject to the requirements of this section and the regulations prescribed thereunder, but notwithstanding any restriction or obligation imposed before the date of enactment of this section pursuant to the Modification of Final Judgment on the lines of business in which a Bell Telephone Company may engage, a Bell Telephone Company, through an affiliate of that company, may manufacture and provide telecommunications equipment and manufacture customer premises equipment, except that neither a Bell Telephone Company nor any of its affiliates may engage in such manufacturing in conjunction with a Bell Telephone Company not so affiliated or any of its affiliates.

    ‘(b) SEPARATE MANUFACTURING AFFILIATE- Any manufacturing or provision authorized under subsection (a) shall be conducted only through an affiliate that is separate from any Bell Telephone Company.

    ‘(c) COMMISSION REGULATION OF MANUFACTURING AFFILIATE-

      ‘(1) REGULATIONS REQUIRED- The Commission shall prescribe regulations to ensure that Bell Telephone Companies and their affiliates comply with the requirements of this subsection.

      ‘(2) BOOKS, RECORDS, ACCOUNTS- A manufacturing affiliate required by subsection (b) shall maintain books, records, and accounts separate from its affiliated Bell Telephone Company which identify all financial transactions between the manufacturing affiliate and its affiliated Bell Telephone Company and, even if such manufacturing affiliate is not a publicly held corporation, prepare financial statements which are in compliance with Federal financial reporting requirements for publicly held corporations, file such statements with the Commission, and make such statements available for public inspection.

      ‘(3) IN-KIND BENEFITS TO AFFILIATE- Consistent with the provisions of this section, neither a Bell Telephone Company nor any of its nonmanufacturing affiliates shall perform sales, advertising, installation, production, or maintenance operations for a manufacturing affiliate, except that--

        ‘(A) a Bell Telephone Company and its nonmanufacturing affiliates may sell, advertise, install, and maintain telecommunications equipment and customer premises equipment after acquiring such equipment from their manufacturing affiliate; and

        ‘(B) institutional advertising, of a type not related to specific telecommunications equipment, carried out by the Bell Telephone Company or its affiliates, shall be permitted if each part pays its pro rata share.

      ‘(4) DOMESTIC MANUFACTURING REQUIRED-

        ‘(A) GENERAL RULE- A manufacturing affiliate required by subsection (b) shall conduct all of its manufacturing within the United States and, except as otherwise provided in this paragraph, all component parts of customer premises equipment manufactured by such affiliate, and all component parts of telecommunications equipment manufactured by such affiliate, shall have been manufactured within the United States.

        ‘(B) EXCEPTION- Such affiliate may use component parts manufactured outside the United States if--

          ‘(i) such affiliate first makes a good faith effort to obtain equivalent component parts manufactured within the United States at reasonable prices, terms, and conditions; and

          ‘(ii) for the aggregate of telecommunications equipment and customer premises equipment manufactured and sold in the United States by such affiliate in any calendar year, the cost of the components manufactured outside the United States contained in the equipment does not exceed 40 percent of the sales revenue derived from such equipment.

        ‘(C) CERTIFICATION REQUIRED- Any such affiliate that uses component parts manufactured outside the United States in the manufacture of telecommunications equipment and customer premises equipment within the United States shall--

          ‘(i) certify to the Commission that a good faith effort was made to obtain equivalent parts manufactured within the United States at reasonable prices, terms, and conditions, which certification shall be filed on a quarterly basis with the Commission and list component parts, by type, manufactured outside the United States; and

          ‘(ii) certify to the Commission on an annual basis that for the aggregate of telecommunications equipment and customer premises equipment manufactured and sold in the United States by such affiliate in the previous calendar year, the cost of the components manufactured outside the United States contained in such equipment did not exceed the percentage specified in subparagraph (B)(ii) as adjusted in accordance with subparagraph (G).

        ‘(D) REMEDIES FOR FAILURES- (i) If the Commission determines, after reviewing the certification required in subparagraph (C)(i), that such affiliate failed to make the good faith effort required in subparagraph (B)(i) or, after reviewing the certification required in subparagraph (C)(ii), that such affiliate has exceeded the percentage specified in subparagraph (B)(ii), the Commission may impose penalties or forfeitures as provided for in title V of this Act.

        ‘(ii) Any supplier claiming to be damaged because a manufacturing affiliate failed to make the good faith effort required in subparagraph (B)(i) may make complaint to the Commission as provided for in section 208 of this Act, or may bring suit for the recovery of actual damages for which such supplier claims such affiliate may be liable under the provisions of this Act in any district court of the United States of competent jurisdiction.

        ‘(E) ANNUAL REPORT- The Commission, in consultation with the Secretary of Commerce, shall, on an annual basis, determine the cost of component parts manufactured outside the United States contained in all telecommunications equipment and customer premises equipment sold in the United States as a percentage of the revenues from sales of such equipment in the previous calendar year.

        ‘(F) USE OF INTELLECTUAL PROPERTY IN MANUFACTURE- A manufacturing affiliate may use intellectual property created outside the United States in the manufacture of telecommunications equipment and customer premises equipment in the United States. A component manufactured using such intellectual property shall not be treated for purposes of subparagraph (B)(ii) as a component manufactured outside the United States solely on the basis of the use of such intellectual property.

        ‘(G) RESTRICTIONS ON COMMISSION AUTHORITY- The Commission may not waive or alter the requirements of this paragraph, except that the Commission, on an annual basis, shall adjust the percentage specified in subparagraph (B)(ii) to the percentage determined by the Commission, in consultation with the Secretary of Commerce, as directed in subparagraph (E).

      ‘(5) INSULATION OF RATE PAYERS FROM MANUFACTURING AFFILIATE DEBT- Any debt incurred by any such manufacturing affiliate may not be issued by its affiliated Bell Telephone Company, and such manufacturing affiliate shall be prohibited from incurring debt in a manner that would permit a creditor, on default, to have recourse to the assets of its affiliated Bell Telephone Company’s telecommunications services business.

      ‘(6) RELATION TO OTHER AFFILIATES- A manufacturing affiliate required by subsection (b) shall not be required to operate separately from the other affiliates of its affiliated Bell Telephone Company, but if an affiliate of a Bell Telephone Company becomes affiliated with a manufacturing entity, such affiliate shall be treated as a manufacturing affiliate of that Bell Telephone Company and shall comply with the requirements of this section.

      ‘(7) AVAILABILITY OF EQUIPMENT TO OTHER CARRIERS- A manufacturing affiliate required by subsection (b) shall make available, without discrimination or self-preference as to price, delivery, terms, or conditions, to all regulated local telephone exchange carriers for use with the public telecommunications network, any telecommunications equipment, including software integral to the functioning of telecommunications equipment (including upgrades), manufactured by such affiliate so long as each such purchasing carrier--

        ‘(A) does not either manufacture telecommunications equipment, or have an affiliated telecommunications equipment manufacturing entity, or

        ‘(B) agrees to make available, to the Bell Telephone Company affiliated with such manufacturing affiliate or any of the regulated local exchange telephone company carrier affiliates of such company, any telecommunications equipment, including software integral to the functioning of telecommunications equipment (including upgrades), manufactured for use with the public telecommunications network by such purchasing carrier or by any entity or organization with which such purchasing carrier is affiliated.

      ‘(8) SALES PRACTICES OF MANUFACTURING AFFILIATES-

        ‘(A) PROHIBITION OF DISCONTINUATION OF EQUIPMENT FOR WHICH THERE IS REASONABLE DEMAND- A manufacturing affiliate required by subsection (b) shall not discontinue or restrict sales to other regulated local telephone exchange carriers of any telecommunications equipment, including software integral to such telecommunications equipment, including upgrades, that such affiliate manufactures for sale as long as there is reasonable demand for the equipment by such carriers; except that such sales may be discontinued or restricted if such manufacturing affiliate demonstrates to the Commission that it is not making a profit, under a marginal cost standard implemented by the Commission by regulation, on the sale of such equipment.

        ‘(B) DETERMINATIONS OF REASONABLE DEMAND- Within 60 days, the Commission shall reach a determination as to the existence of reasonable demand as referred to in subparagraph (A), and in doing so, the Commission shall consider--

          ‘(i) whether the continued manufacture of the equipment will be profitable;

          ‘(ii) whether the equipment is functionally or technologically obsolete;

          ‘(iii) whether the components necessary to manufacture the equipment continue to be available;

          ‘(iv) whether alternatives to the equipment are available in the market; and

          ‘(v) such other factors as the Commission deems necessary and proper.

      ‘(9) JOINT PLANNING OBLIGATIONS- Each Bell Telephone Company shall, consistent with the antitrust laws, engage in joint network planning and design with other regulated local telephone exchange carriers operating in the same area of interest; except that no participant in such planning shall delay the introduction of new technology or the deployment of facilities to provide telecommunications services, and agreement with such other carriers shall not be required as a prerequisite for such introduction or deployment.

    ‘(d) INFORMATION REQUIREMENTS-

      ‘(1) FILING OF INFORMATION ON PROTOCOLS AND TECHNICAL REQUIREMENTS- Each Bell Telephone Company shall, in accordance with regulations prescribed by the Commission, maintain and file with the Commission full and complete information with respect to the protocols and technical requirements for connection with and use of its telephone exchange service facilities. Each such company shall report promptly to the Commission any material changes or planned changes to such protocols and requirements, and the schedule for implementation of such changes or planned changes.

      ‘(2) FILING AS PREREQUISITE TO DISCLOSURE TO AFFILIATE- A Bell Telephone Company shall not disclose to any of its affiliates any information required to be filed under paragraph (1) unless that information is immediately so filed.

      ‘(3) ACCESS BY COMPETITORS TO INFORMATION- The Commission may prescribe such additional regulations under this subsection as may be necessary to ensure that manufacturers in competition with a Bell Telephone Company’s manufacturing affiliate have access to the information with respect to the protocols and technical requirements for connection with and use of its telephone exchange service facilities required for such competition that such company makes available to its manufacturing affiliate.

      ‘(4) PLANNING INFORMATION- Bell Telephone Companies shall provide, to other regulated local telephone exchange carriers operating in the same area of interest, timely information on the planned deployment of telecommunications equipment, including software integral to such telecommunications equipment, including upgrades.

    ‘(e) ADDITIONAL COMPETITION REQUIREMENTS- The Commission shall prescribe regulations requiring that any Bell Telephone Company which has an affiliate that engages in any manufacturing authorized by subsection (a) shall--

      ‘(1) provide, to other manufacturers of telecommunications equipment and customer premises equipment that is functionally equivalent to equipment manufactured by the Bell Telephone Company manufacturing affiliate, opportunities to sell such equipment to such Bell Telephone Company which are comparable to the opportunities which such Company provides to its affiliates;

      ‘(2) not subsidize its manufacturing affiliate with revenues from its regulated telecommunications services; and

      ‘(3) only acquire equipment from its manufacturing affiliate at the open market price.

    ‘(f) COLLABORATION PERMITTED- A Bell Telephone Company and its affiliates may engage in close collaboration with any manufacturer of customer premises equipment or telecommunications equipment during the design and development of hardware, software, or combinations thereof related to such equipment.

    ‘(g) ACCESSIBILITY REQUIREMENTS-

      ‘(1) MANUFACTURING- The Commission shall, within 1 year after enactment of this section, prescribe such regulations as are necessary to ensure that telecommunications equipment and customer premises equipment designed, developed, and fabricated pursuant to the authority granted in this section shall be accessible and usable by individuals with disabilities, including individuals with functional limitations of hearing, vision, movement, manipulation, speech, and interpretation of information, unless the costs of making the equipment accessible and usable would result in an undue burden or an adverse competitive impact.

      ‘(2) NETWORK SERVICES- The Commission shall, within 1 year after enactment of this section, prescribe such regulations as are necessary to ensure that advances in network services deployed by a Bell Telephone Company shall be accessible and usable by individuals whose access might otherwise be impeded by a disability or functional limitation, unless the costs of making the services accessible and usable would result in an undue burden or adverse competitive impact. Such regulations shall seek to permit the use of both standard and special equipment and seek to minimize the need of individuals to acquire additional devices beyond those used by the general public to obtain such access.

      ‘(3) COMPATIBILITY- The regulations prescribed under paragraphs (1) and (2) shall require that whenever an undue burden or adverse competitive impact would result from the manufacturing or network services requirements in such paragraphs, the manufacturing affiliate that designs, develops, or fabricates the equipment or the Bell Telephone Company that deploys the network service shall ensure that the equipment or network service in question is compatible with existing peripheral devices or specialized customer premises equipment commonly used by persons with disabilities to achieve access, unless doing so would result in an undue burden or adverse competitive impact.

      ‘(4) DEFINITIONS- As used in this subsection:

        ‘(A) UNDUE BURDEN- The term ‘undue burden’ means significant difficulty or expense. In determining whether an activity would result in an undue burden, factors to be considered include--

          ‘(i) the nature and cost of the activity;

          ‘(ii) the impact on the operation of the facility involved in the manufacturing of the equipment or deployment of the network service;

          ‘(iii) the financial resources of the manufacturing affiliate in the case of manufacturing of equipment, for as long as applicable regulatory rules prohibit cross-subsidization of equipment manufacturing with revenues from regulated telecommunications service or when the manufacturing activities are conducted in a separate subsidiary;

          ‘(iv) the financial resources of the Bell Telephone Company in the case of network services, or in the case of manufacturing of equipment if applicable regulatory rules permit cross-subsidization of equipment manufacturing with revenues from regulated telecommunications services and the manufacturing activities are not conducted in a separate subsidiary; and

          ‘(v) the type of operation or operations of the manufacturing affiliate or Bell Telephone Company, as applicable.

        ‘(B) ADVERSE COMPETITIVE IMPACT- In determining whether the activity would result in an adverse competitive impact, the following factors will be considered--

          ‘(i) whether such activity would raise the cost of the equipment or network service in question beyond the level at which there would be sufficient consumer demand by the general population to make the equipment or network service profitable; and

          ‘(ii) whether such activity would, with respect to the equipment or network service in question, put the manufacturing affiliate or Bell Telephone Company, as applicable, at a competitive disadvantage in comparison with one or more providers of one or more competing products and services. This factor may only be considered so long as competing manufacturers and network service providers are not held to the same obligation with respect to access by persons with disabilities.

        ‘(C) ACTIVITY-

          ‘(i) the research, design, development, deployment, and fabrication activities necessary to comply with the requirements of this section; and

          ‘(ii) the acquisition of the related materials and equipment components.

      ‘(5) EFFECTIVE DATE- The regulations required by this subsection shall become effective 18 months after the date of enactment of this section.

      ‘(6) IMPACT OF ADA- Nothing in this section will be interpreted to limit or otherwise affect the application of the Americans with Disabilities Act or its implementing regulations.

    ‘(h) PUBLIC NETWORK ENHANCEMENT- A Bell Telephone Company manufacturing affiliate shall, as a part of its overall research and development effort, establish a permanent program for the manufacturing research and development of products and applications for the enhancement of the public switched telephone network and to promote public access to advanced telecommunications services. Such program shall focus its work substantially on developing technological advancements in public telephone network applications, telecommunication equipment and products, and access solutions to new services and technology, including access by (1) public institutions, including educational and health care institutions; and (2) people with disabilities and functional limitations. Notwithstanding the limitations in subsection (a), a Bell Telephone Company and its affiliates may engage in such a program in conjunction with a Bell Telephone Company not so affiliated or any of its affiliates. The existence or establishment of such a program that is jointly provided by manufacturing affiliates of Bell Telephone Companies shall satisfy the requirements of this section as it pertains to all such affiliates of a Bell Telephone Company. Notwithstanding any other provision of this Act, the manufacturing affiliate may engage in close collaboration with its Bell Telephone Company Operating Company affiliate for the purpose of identifying public switched network requirements and solutions under this subsection.

    ‘(i) ACCESS NEEDS OF INDIVIDUALS WITH DISABILITIES- A Bell Telephone Company and its affiliates that engage in any manufacturing authorized by subsection (a) shall accommodate the alternate access needs of individuals with disabilities, including individuals with functional limitations of hearing, vision, movement, manipulation, speech, and interpretation of information, unless such Company or affiliate can demonstrate that the accommodation would impose an undue hardship on such Company or affiliate. For purposes of this subsection, the term ‘undue hardship’ has the meaning provided in section 101(10) of the Americans With Disabilities Act (42 U.S.C. 12112).-

    ‘(j) ADDITIONAL RULES AUTHORIZED- The Commission may prescribe such additional rules and regulations as the Commission determines necessary to carry out the provisions of this section.

    ‘(k) ADMINISTRATION AND ENFORCEMENT AUTHORITY-

      ‘(1) COMMISSION REGULATORY AUTHORITY- For the purposes of administering and enforcing the provisions of this section and the regulations prescribed thereunder, the Commission shall have the same authority, power, and functions with respect to any Bell Telephone Company as the Commission has in administering and enforcing the provisions of this title with respect to any common carrier subject to this Act.

      ‘(2) PRIVATE ACTIONS- Any regulated local telephone exchange carrier injured by an act or omission of a Bell Telephone Company or its manufacturing affiliate which violates the requirements of paragraph (7) or (8) of subsection (c), or the Commission’s regulations implementing such paragraphs, may initiate an action in a district court of the United States to recover the full amount of damages sustained in consequence of any such violation and obtain such orders from the court as are necessary to terminate existing violations and to prevent future violations; or such regulated local telephone exchange carrier may seek relief from the Commission pursuant to sections 206 through 209.

    ‘(l) EFFECTIVE DATE; RULEMAKING SCHEDULE- The authority of the Commission to prescribe regulations to carry out this section is effective on the date of enactment of this section. The Commission shall prescribe such regulations within 180 days after such date of enactment, and the authority to engage in the manufacturing authorized in subsection (a) shall not take effect until regulations prescribed by the Commission under subsections (c), (d), and (e) are in effect.

    ‘(m) EXISTING MANUFACTURING AUTHORITY- Nothing in this section shall prohibit any Bell Telephone Company from engaging, directly or through any affiliate, in any manufacturing activity in which any Bell Telephone Company or affiliate was authorized to engage on the date of enactment of this section.

    ‘(n) DEFINITIONS- As used in this section:

      ‘(1) The term ‘affiliate’ means any organization or entity that, directly or indirectly, owns or controls, is owned or controlled by, or is under common ownership with a Bell Telephone Company. The terms ‘owns’, ‘owned’, and ‘ownership’ mean an equity interest of more than 10 percent.

      ‘(2) The term ‘Bell Telephone Company’ means those companies listed in appendix A of the Modification of Final Judgment, and includes any successor or assign of any such company, but does not include any affiliate of any such company.

      ‘(3) The term ‘customer premises equipment’ means equipment employed on the premises of a person (other than a carrier) to originate, route, or terminate telecommunications.

      ‘(4) The term ‘manufacturing’ has the same meaning as such term has in the Modification of Final Judgment as interpreted in United States v. Western Electric Civil Action No. 82-0192 (United States District Court, District of Columbia) (filed December 3, 1987).

      ‘(5) The term ‘manufacturing affiliate’ means an affiliate of a Bell Telephone Company established in accordance with subsection (b) of this section.

      ‘(6) The term ‘Modification of Final Judgment’ means the decree entered August 24, 1982, in United States v. Western Electric Civil Action No. 82-0192 (United States District Court, District of Columbia).

      ‘(7) The term ‘telecommunications’ means the transmission, between or among points specified by the user, of information of the user’s choosing, without change in the form or content of the information as sent and received, by means of an electromagnetic transmission medium, including all instrumentalities, facilities, apparatus, and services (including the collection, storage, forwarding, switching, and delivery of such information) essential to such transmission.

      ‘(8) The term ‘telecommunications equipment’ means equipment, other than customer premises equipment, used by a carrier to provide telecommunications services.

      ‘(9) The term ‘telecommunications service’ means the offering for hire of telecommunications facilities, or of telecommunications by means of such facilities.’.

SEC. 4. ACCESSIBILITY STANDARDS.

    Section 710 of the Communications Act of 1934 (47 U.S.C. 610) is amended by adding at the end the following new subsection:

    ‘(i) Network capabilities to be deployed by common carriers shall be designed to accommodate the needs of individuals whose access might otherwise be impeded by a disability or functional limitation, unless such carrier can demonstrate that the accommodation would impose an undue hardship on such carriers. Such capabilities shall seek to permit the use of both standard and special equipment, and seek to minimize the need for individuals to acquire expensive devices to obtain such access. For purposes of this subsection, the term ‘undue hardship’ has the meaning provided in section 101(10) of the Americans With Disabilities Act (42 U.S.C. 12112).’.

SEC. 5. EFFECTIVE DATE.

    (a) IN GENERAL- Section 228 of the Communications Act of 1934 (as added by this Act) shall be effective 30 days after the Federal Communications Commission prescribes final regulations pursuant to such section.

    (b) RULEMAKING AUTHORITY EFFECTIVE ON ENACTMENT- Notwithstanding subsection (a) of this section, the authority of the Federal Communications Commission to prescribe regulations pursuant to such section 228 is effective upon enactment of this Act.