H. Rept. 105-801 - 105th Congress (1997-1998)
October 08, 1998, As Reported by the Commerce Committee

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House Report 105-801 - TELECOMMUNICATIONS COMPETITION AND CONSUMER PROTECTION ACT OF 1998




[House Report 105-801]
[From the U.S. Government Printing Office]



105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     105-801
_______________________________________________________________________


 
   TELECOMMUNICATIONS COMPETITION AND CONSUMER PROTECTION ACT OF 1998

_______________________________________________________________________


October 8, 1998.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

  Mr. Bliley, from the Committee on Commerce, submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 3888]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Commerce, to whom was referred the bill 
(H.R. 3888) to amend the Communications Act of 1934 to improve 
the protection of consumers against ``slamming'' by 
telecommunications carriers, and for other purposes, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.


                                CONTENTS
                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................    10
Background and Need for Legislation..............................    10
Hearings.........................................................    19
Committee Consideration..........................................    20
Roll Call Votes..................................................    20
Committee Oversight Findings.....................................    20
Committee on Government Reform and Oversight.....................    20
New Budget Authority, Entitlement Authority, and Tax Expenditures    20
Committee Cost Estimate..........................................    21
Congressional Budget Office Estimate.............................    21
Federal Mandates Statement.......................................    26
Advisory Committee Statement.....................................    27
Constitutional Authority Statement...............................    27
Applicability to Legislative Branch..............................    27
Section-by-Section Analysis of the Legislation...................    27
Changes in Existing Law Made by the Bill, as Reported............    37
Additional Views.................................................    47

                               Amendment

  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Telecommunications Competition and 
Consumer Protection Act of 1998''.

                           TITLE I--SLAMMING

SEC. 101. IMPROVED PROTECTION FOR CONSUMERS.

  (a) Consumer Protection Practices.--Section 258 of the Communications 
Act of 1934 (47 U.S.C. 258) is amended to read as follows:

``SEC. 258. ILLEGAL CHANGES IN SUBSCRIBER SELECTIONS OF CARRIERS.

  ``(a) Alternative Modes of Regulation.--
          ``(1) Industry/commission code.--Within 180 days after the 
        date of enactment of the Telecommunications Competition and 
        Consumer Protection Act of 1998, the Commission, after 
        consulting with the Federal Trade Commission and 
        representatives of telecommunications carriers providing 
        telephone toll service and telephone exchange service, State 
        commissions, and consumers, and considering any proposals 
        developed by such representatives, shall prescribe, after 
        notice and public comment and in accordance with subsection 
        (b), a Code of Subscriber Protection Practices (hereinafter in 
        this section referred as the `Code') governing changes in a 
        subscriber's selection of a provider of telephone exchange 
        service or telephone toll service.
          ``(2) Obligation to comply.--No telecommunications carrier 
        (including a reseller of telecommunications services) shall 
        submit or execute a change in a subscriber's selection of a 
        provider of telephone exchange service or telephone toll 
        service except in accordance with--
                  ``(A) the Code, if such carrier elects to comply with 
                the Code in accordance with subsection (b)(2); or
                  ``(B) the requirements of subsection (c), if--
                          ``(i) the carrier does not elect to comply 
                        with the Code under subsection (b)(2); or
                          ``(ii) such election is revoked or withdrawn.
  ``(b) Minimum Provisions of the Code.--
          ``(1) Subscriber protection practices.--The Code required by 
        subsection (a)(1) shall include provisions addressing the 
        following:
                  ``(A) In general.--A telecommunications carrier 
                (including a reseller of telecommunications services) 
                electing to comply with the Code shall submit or 
                execute a change in a subscriber's selection of a 
                provider of telephone exchange service or telephone 
                toll service only in accordance with the provisions of 
                the Code.
                  ``(B) Negative option.--A telecommunications carrier 
                shall not use negative option marketing.
                  ``(C) Verification.--A telecommunications carrier 
                shall verify the subscriber's selection of the carrier 
                in accordance with procedures specified in the Code.
                  ``(D) Unfair and deceptive acts and practices.--No 
                telecommunications carrier, nor any person acting on 
                behalf of any such carrier, shall engage in any unfair 
                or deceptive acts or practices in connection with the 
                solicitation of a change in a subscriber's selection of 
                a telecommunications carrier.
                  ``(E) Notification and rights.--A telecommunications 
                carrier shall provide timely and accurate notification 
                to the subscriber in accordance with procedures 
                specified in the Code.
                  ``(F) Slamming liability and remedies.--
                          ``(i) Required reimbursement and credit.--A 
                        telecommunications carrier that has improperly 
                        changed the subscriber's selection of a 
                        telecommunications carrier without 
                        authorization, shall at a minimum--
                                  ``(I) reimburse the subscriber for 
                                the fees associated with switching the 
                                subscriber back to their original 
                                carrier; and
                                  ``(II) provide a credit for any 
                                telecommunications charges incurred by 
                                the subscriber during the period, not 
                                to exceed 30 days, while that 
                                subscriber was improperly 
                                presubscribed.
                          ``(ii) Procedures.--The Code shall prescribe 
                        procedures by which--
                                  ``(I) a subscriber may make an 
                                allegation of a violation under clause 
                                (i);
                                  ``(II) the telecommunications carrier 
                                may rebut such allegation;
                                  ``(III) the subscriber may, without 
                                undue delay, burden, or expense, 
                                challenge the rebuttal; and
                                  ``(IV) resolve any administrative 
                                review of such an allegation within 75 
                                days after receipt of an appeal.
                  ``(G) Recordkeeping.--A telecommunications carrier 
                shall make and maintain a record of the verification 
                process and shall provide a copy to the subscriber 
                immediately upon request.
                  ``(H) Quality control.--A telecommunications carrier 
                shall institute a quality control program to prevent 
                inadvertent changes in a subscriber's selection of a 
                carrier.
                  ``(I) Independent audits.--A telecommunications 
                carrier shall provide the Commission with an 
                independent audit regarding its compliance with the 
                Code at intervals prescribed by the Code. The 
                Commission may require a telecommunications carrier to 
                provide an independent audit on a more frequent basis 
                if there is evidence that such telecommunications 
                carrier is violating the Code.
          ``(2) Election by carriers.--Each telecommunications carrier 
        electing to comply with the Code shall file with the Commission 
        within 10 days after the adoption of the Code, or within 10 
        days after commencing operations as a telecommunications 
        carrier, a statement electing the Code to govern such carrier's 
        submission or execution of a change in a customer's selection 
        of a provider of telephone exchange service or telephone toll 
        service. Such election by a carrier may not be revoked or 
        withdrawn unless the Commission finds that there is good cause 
        therefor, including a determination that the carrier has failed 
        to adhere in good faith to the applicable provisions of the 
        Code, and that the revocation or withdrawal is in the public 
        interest. Any telecommunications carrier that fails to elect to 
        comply with the Code shall be deemed to have elected to be 
        governed by the subsection (c) and the Commission's regulations 
        thereunder.
  ``(c) Regulations of Carriers Not Complying With Code.--
          ``(1) In general.--A telecommunications carrier (including a 
        reseller of telecommunications services) that has not elected 
        to comply with the Code under subsection (b), or as to which 
        the election has been withdrawn or revoked, shall not submit or 
        execute a change in a subscriber's selection of a provider of 
        telephone exchange service or telephone toll service except in 
        accordance with this subsection and such verification 
        procedures as the Commission shall prescribe.
          ``(2) Verification.--
                  ``(A) In general.--In order to verify a subscriber's 
                selection of a telephone exchange service or telephone 
                toll service provider under this subsection, the 
                telecommunications carrier submitting the change to an 
                executing carrier shall, at a minimum, require the 
                subscriber--
                          ``(i) to affirm that the subscriber is 
                        authorized to select the provider of that 
                        service for the telephone number in question;
                          ``(ii) to acknowledge the type of service to 
                        be changed as a result of the selection;
                          ``(iii) to affirm the subscriber's intent to 
                        select the provider as the provider of that 
                        service;
                          ``(iv) to acknowledge that the selection of 
                        the provider will result in a change in 
                        providers of that service; and
                          ``(v) to provide such other information as 
                        the Commission considers appropriate for the 
                        protection of the subscriber.
                  ``(B) Additional requirements.--The procedures 
                prescribed by the Commission to verify a subscriber's 
                selection of a provider shall--
                          ``(i) preclude the use of negative option 
                        marketing;
                          ``(ii) provide for a complete copy of 
                        verification of a change in telephone exchange 
                        service or telephone toll service provider in 
                        oral, written, or electronic form;
                          ``(iii) require the retention of such 
                        verification in such manner and form and for 
                        such time as the Commission considers 
                        appropriate;
                          ``(iv) mandate that verification occur in the 
                        same language as that in which the change was 
                        solicited; and
                          ``(v) provide for verification to be made 
                        available to a subscriber on request.
                  ``(C) Notice to subscriber.--Whenever a 
                telecommunication carrier submits a change in a 
                subscriber's selection of a provider of telephone 
                exchange service or telephone toll service, such 
                telecommunications carrier shall clearly notify the 
                subscriber in writing, not more than 15 days after the 
                change is submitted to the executing carrier--
                          ``(i) of the subscriber's new carrier; and
                          ``(ii) that the subscriber may request 
                        information regarding the date on which the 
                        change was agreed to and the name of the 
                        individual who authorized the change.
          ``(3) Liability for violations.--
                  ``(A) Notification of change.--The first bill issued 
                after the effective date of a change in a subscriber's 
                provider of telephone exchange service or telephone 
                toll service by the executing carrier for such change 
                shall--
                          ``(i) prominently disclose the change in 
                        provider and the effective date of such change;
                          ``(ii) contain the name and toll-free number 
                        of any telecommunications carrier for such new 
                        service; and
                          ``(iii) direct the subscriber to contact the 
                        executing carrier if the subscriber believes 
                        that such change was not authorized and that 
                        the change was made in violation of this 
                        subsection, and contain the toll-free number by 
                        which to make such contact.
                  ``(B) Automatic switch-back of service and credit to 
                consumer of charges.--
                          ``(i) Obligations of executing carrier.--If a 
                        subscriber of telephone exchange service or 
                        telephone toll service makes an allegation, 
                        orally or in writing, to the executing carrier 
                        that a violation of this subsection has 
                        occurred with respect to such subscriber--
                                  ``(I) the executing carrier shall, 
                                without charge to the subscriber, 
                                execute an immediate change in the 
                                provider of the telephone service that 
                                is the subject of the allegation to 
                                restore the previous provider of such 
                                service for the subscriber;
                                  ``(II) the executing carrier shall 
                                provide an immediate credit to the 
                                subscriber's account for any charges 
                                for executing the original change of 
                                service provider; and
                                  ``(III) if the executing carrier 
                                conducts billing for the carrier that 
                                is the subject of the allegation, the 
                                executing carrier shall provide an 
                                immediate credit to the subscriber's 
                                account for such service, in an amount 
                                equal to any charges for the telephone 
                                service that is the subject of the 
                                allegation incurred during the period--
                                          ``(aa) beginning upon the 
                                        date of the change of service 
                                        that is the subject of the 
                                        allegation; and
                                          ``(bb) ending on the earlier 
                                        of the date that the subscriber 
                                        is restored to the previous 
                                        provider, or 30 days after the 
                                        date the bill described in 
                                        subparagraph (A) is issued.
                          ``(ii) Obligations of carriers not billing 
                        through executing carriers.--If a subscriber of 
                        telephone exchange service or telephone toll 
                        service transmits, orally or in writing, to any 
                        carrier that does not use an executing carrier 
                        to conduct billing an allegation that a 
                        violation of this subsection has occurred with 
                        respect to such subscriber, the carrier shall 
                        provide an immediate credit to the subscriber's 
                        account for such service, and the subscriber 
                        shall, except as provided in subparagraph 
                        (C)(iii), be discharged from liability, for an 
                        amount equal to any charges for the telephone 
                        service that is the subject of the allegation 
                        incurred during the period--
                                  ``(I) beginning upon the date of the 
                                change of service that is the subject 
                                of the allegation; and
                                  ``(II) ending on the earlier of the 
                                date that the subscriber is restored to 
                                the previous provider, or 30 days after 
                                the date the bill described in 
                                paragraph (1) is issued.
                          ``(iii) Time limitation.--This subparagraph 
                        shall apply only to allegations made by 
                        subscribers before the expiration of the 1-year 
                        period that begins on the issuance of the bill 
                        described in subparagraph (A).
                  ``(C) Procedure for carrier remedy.--
                          ``(i) In general.--The Commission shall, by 
                        rule, establish a procedure for rendering 
                        determinations with respect to violations of 
                        this subsection. Such procedure shall permit 
                        such determinations to be made upon the filing 
                        of (I) a complaint by a telecommunications 
                        carrier that was providing telephone exchange 
                        service or telephone toll service to a 
                        subscriber before the occurrence of an alleged 
                        violation, and seeking damages under clause 
                        (ii), or (II) a complaint by a 
                        telecommunications carrier that was providing 
                        services after the alleged violation, and 
                        seeking a reinstatement of charges under clause 
                        (iii). Either such complaint shall be filed not 
                        later than 6 months after the date on which any 
                        subscriber whose allegation is included in the 
                        complaint submitted an allegation of the 
                        violation to the executing carrier under 
                        subparagraph (B)(ii). Either such complaint may 
                        seek determinations under this paragraph with 
                        respect to multiple alleged violations in 
                        accordance with such procedures as the 
                        Commission shall establish in the rules 
                        prescribed under this subparagraph.
                          ``(ii) Determination of violation and 
                        remedies.--In a proceeding under this 
                        subparagraph, if the Commission determines that 
                        a violation of this subsection has occurred, 
                        other than an inadvertent or unintentional 
                        violation, the Commission shall award damages--
                                  ``(I) to the telecommunications 
                                carrier filing the complaint, in an 
                                amount equal to the sum of (aa) the 
                                gross amount of charges that the 
                                carrier would have received from the 
                                subscriber during the violation, and 
                                (bb) $500 per violation; and
                                  ``(II) to the subscriber that was 
                                subjected to the violation, in the 
                                amount of $500.
                          ``(iii) Determination of no violation.--If 
                        the Commission determines that a violation of 
                        this subsection has not occurred, the 
                        Commission shall order that any credit provided 
                        to the subscriber under subparagraph (B)(ii) be 
                        reversed, or that the carrier may resubmit a 
                        bill for the amount of the credit to the 
                        subscriber notwithstanding any discharge under 
                        subparagraph (B)(ii).
                          ``(iv) Speedy resolution of complaints.--The 
                        procedure established under this subparagraph 
                        shall provide for a determination of each 
                        complaint filed under the procedure not later 
                        than 6 months after filing.
                  ``(D) Maintenance of information.--
                          ``(i) In general.--The Commission shall, by 
                        rule, require each executing carrier to 
                        maintain information regarding each alleged 
                        violation of this subsection of which the 
                        carrier has been notified.
                          ``(ii) Contents.--The information required to 
                        be maintained pursuant to this paragraph shall 
                        include, for each alleged violation of this 
                        subsection, the effective date of the change of 
                        service involved in the alleged violation, the 
                        name of the provider of the service to which 
                        the change was made, the name, address, and 
                        telephone number of the subscriber who was 
                        subject to the alleged violation, and the 
                        amount of any credit provided under 
                        subparagraph (B)(ii).
                          ``(iii) Form.--The Commission shall prescribe 
                        one or more computer data formats for the 
                        maintenance of information under this 
                        paragraph, which shall be designed to 
                        facilitate submission and compilation pursuant 
                        to this subparagraph.
                          ``(iv) Monthly reports.--Each executing 
                        carrier shall, on not less than a monthly 
                        basis, submit the information maintained 
                        pursuant to this subparagraph to the 
                        Commission.
                          ``(v) Access to information.--The Commission 
                        shall make the information submitted pursuant 
                        to clause (iv) available upon request to any 
                        telecommunications carrier. Any 
                        telecommunications carrier obtaining access to 
                        such information shall use such information 
                        exclusively for the purposes of investigating, 
                        filing, or resolving complaints under this 
                        section.
          ``(4) Civil penalties.--Unless the Commission determines that 
        there are mitigating circumstances, violation of this 
        subsection is punishable by a forfeiture of not less than 
        $40,000 for the first offense, and not less than $150,000 for 
        each subsequent offense.
          ``(5) Recovery of forfeitures.--The Commission may take such 
        action as may be necessary--
                  ``(A) to collect any forfeitures it imposes under 
                this subsection; and
                  ``(B) on behalf of any subscriber, to collect any 
                damages awarded the subscriber under this subsection.
  ``(d) Application to Wireless.--This section does not apply to a 
provider of commercial mobile service.
  ``(e) Commission Requirements.--
          ``(1) Semiannual reports.--Every 6 months, the Commission 
        shall compile and publish a report ranking telecommunications 
        carriers by the percentage of verified complaints, excluding 
        those generated by the carrier's unaffiliated resellers, 
        compared to the number of changes in a subscriber's selection 
        of a provider of telephone exchange service and telephone toll 
        service.
          ``(2) Investigation.--If a telecommunications carrier is 
        listed among the 5 worst performers based upon the percentage 
        of verified complaints, excluding those generated by the 
        carrier's unaffiliated resellers, compared to its number of 
        carrier selection changes in the semiannual reports 3 times in 
        succession, the Commission shall investigate the carrier's 
        practices regarding subscribers' selections of providers of 
        telephone exchange service and telephone toll service. If the 
        Commission finds that the carrier is misrepresenting adherence 
        to the Code or is willfully and repeatedly changing 
        subscribers' selections of providers, it shall find such 
        carrier to be in violation of this section and shall fine the 
        carrier up to $1,000,000.
          ``(3) Code review.--Every 2 years, the Commission shall 
        review the Code to ensure its requirements adequately protect 
        subscribers from improperchanges in a subscriber's selection of 
a provider of telephone exchange service and telephone toll service.
  ``(f) Actions by States.--
          ``(1) In general.--Whenever an attorney general of any State 
        has reason to believe that the interests of the residents of 
        that State have been or are being threatened or adversely 
        affected because any person has violated the Code or subsection 
        (c), or any rule or regulation prescribed by the Commission 
        under subsection (c), the State may bring a civil action on 
        behalf of its residents in an appropriate district court of the 
        United States to enjoin such violation, to enforce compliance 
        with such Code, subsection, rule, or regulation, to obtain 
        damages on behalf of their residents, or to obtain such further 
        and other relief as the court may deem appropriate.
          ``(2) Notice.--The State shall serve prior written notice of 
        any civil action under paragraph (1) upon the Commission and 
        provide the Commission with a copy of its complaint, except 
        that if it is not feasible for the State to provide such prior 
        notice, the State shall serve such notice immediately upon 
        instituting such action. Upon receiving a notice respecting a 
        civil action, the Commission shall have the right (A) to 
        intervene in such action, (B) upon so intervening, to be heard 
        on all matters arising therein, and (C) to file petitions for 
        appeal.
          ``(3) Venue.--Any civil action brought under this section in 
        a district court of the United States may be brought in the 
        district wherein the defendant is found or is an inhabitant or 
        transacts business or wherein the violation occurred or is 
        occurring, and process in such cases may be served in any 
        district in which the defendant is an inhabitant or wherever 
        the defendant may be found.
          ``(4) Investigatory powers.--For purposes of bringing any 
        civil action under this section, nothing in this Act shall 
        prevent the attorney general from exercising the powers 
        conferred on the attorney general by the laws of such State to 
        conduct investigations or to administer oaths or affirmations 
        or to compel the attendance of witnesses or the production of 
        documentary and other evidence.
          ``(5) Effect on state court proceedings.--Nothing contained 
        in this subsection shall prohibit an authorized State official 
        from proceeding in State court on the basis of an alleged 
        violation of any general civil or criminal statute of such 
        State.
          ``(6) Limitation.--Whenever the Commission has instituted a 
        civil action for violation of this section or any rule or 
        regulation thereunder, no State may, during the pendency of 
        such action instituted by the Commission, subsequently 
        institute a civil action against any defendant named in the 
        Commission's complaint for violation of any rule as alleged in 
        the Commission's complaint.
          ``(7) Actions by other state officials.--In addition to 
        actions brought by an attorney general of a State under 
        paragraph (1), such an action may be brought by officers of 
        such State who are authorized by the State to bring actions in 
        such State for protection of consumers.
  ``(g) State Law Not Preempted.--
          ``(1) In general.--Nothing in this section or in the 
        regulations prescribed under this section shall preempt any 
        State law that imposes requirements, regulations, damages, 
        costs, or penalties on changes in a subscriber's selection of a 
        provider of telephone exchange service or telephone toll 
        service that are less restrictive than those imposed under this 
        section.
          ``(2) Effect on state court proceedings.--Except as provided 
        in subsection (f)(6), nothing contained in this section shall 
        be construed to prohibit an authorized State official from 
        proceeding in State court on the basis of an alleged violation 
        of any general civil or criminal statute of such State or any 
        specific civil or criminal statute of such State not preempted 
        by this section.
  ``(h) Rules of Construction.--
          ``(1) Change includes initial selection.--For purposes of 
        this section, the initiation of service to a subscriber by a 
        telecommunications carrier shall be treated as a change in a 
        subscriber's selection of a provider of telephone exchange 
        service or telephone toll service.
          ``(2) Action by unaffiliated reseller not imputed to 
        carrier.--No telecommunications carrier may be found in 
        violation of this section solely on the basis of a violation of 
        this section by an unaffiliated reseller of that carrier's 
        services or facilities.
  ``(i) Definitions.--For purposes of this section:
          ``(1) Subscriber.--The term `subscriber' means the person 
        named on the billing statement or account, or any other person 
        authorized to make changes in the providers of telephone 
        exchange service or telephone toll service.
          ``(2) Executing carrier.--The term `executing carrier' means, 
        with respect to any change in the provider of local exchange 
        service or telephone toll service, the local exchange carrier 
        that executed such change.
          ``(3) Attorney general.--The term `attorney general' means 
        the chief legal officer of a State.''.
  (b) NTIA Study of Third-Party Administration.--Within 180 days of 
enactment of this Act, the National Telecommunications and Information 
Administration shall report to the Committee on Commerce of the House 
of Representatives and the Committee on Commerce, Science, and 
Transportation of the Senate on the feasibility and desirability of 
establishing a neutral third-party administration system to prevent 
illegal changes in telephone subscriber carrier selections. The study 
shall include--
          (1) an analysis of the cost of establishing a single national 
        or several regional independent databases or clearinghouses to 
        verify and submit changes in carrier selections;
          (2) the additional cost to carriers, per change in carrier 
        selection, to fund the ongoing operation of any or all such 
        independent databases or clearinghouses; and
          (3) the advantages and disadvantages of utilizing independent 
        databases or clearinghouses for verifying and submitting 
        carrier selection changes.

                           TITLE II--SPAMMING

SEC. 201. SENSE OF THE CONGRESS.

  It is the sense of the Congress that--
          (1) in order to avoid interference with the rapid development 
        and expansion of commerce over the Internet, the Congress 
        should decline to enact regulatory legislation with respect to 
        unfair or intrusive practices on the Internet that the private 
        sector can, given a sufficient opportunity, deter or prevent; 
        and
          (2) it is the responsibility of the private sector to use 
        that opportunity promptly to adopt, implement, and enforce 
        measures to deter and prevent the improper use of unsolicited 
        commercial electronic mail.

              TITLE III--AUCTION RESCISSION AND RE-AUCTION

SEC. 301. RE-AUCTION OF C-BLOCK LICENSES.

  (a) Option To Elect Rescission.--Upon the election of a C-block 
licensee, the Commission shall rescind such licensee's authority to 
utilize frequencies in the C-block in accordance with the provisions of 
subsection (b), and such action by the Commission shall cancel the debt 
obligations the licensee assumed under the C-block installment payment 
program.
  (b) Requirements.--In carrying out the provisions of this section, 
the Commission shall--
          (1) require any licensee making an election under subsection 
        (a) to do so with regard to all its C-block licenses;
          (2) permit all licensees that returned C-block licenses to 
        the Commission prior to the effective date of this section 
        (including those who elected a C-block restructuring option on 
        June 8, 1998, pursuant to WT Docket No. 97-82) to reconsider 
        their decision prior to making the election specified in 
        subsection (a);
          (3) grant each licensee that makes an election pursuant to 
        subsection (a) of this section a full bidding credit in an 
        amount equal to the sum of all down payments, installment 
        payments, and interest payments made prior to the effective 
        date of this section, with such credit to be available to the 
        licensee to use in bidding on any license in a subsequent re-
        auction of C-block frequencies that the Commission shall 
        commence prior to March 24, 1999;
          (4) permit such bidding credit to be freely transferable, in 
        whole or in part, to any entity that is eligible to participate 
        in the re-auction in accordance with paragraph (7);
          (5) not refund any unused bidding credit;
          (6) not utilize installment payments in C-block re-auctions;
          (7) limit eligibility to participate in any re-auction of C-
        block spectrum to entities that (A) participated in the C-block 
        auction which began on December 18, 1995, or the C-block 
        auction which began on July 3, 1996; and (B) any entitythat 
would have been eligible to participate in either of those auctions 
under Commission rules in effect as of those dates; and
          (8) take final action within 60 days following the end of a 
        C-block re-auction on license applications filed by entities 
        the Commission has named as winning bidders in the re-auction.
  (c) Operational Licensees.--The Commission shall restructure the 
indebtedness of any C-block licensee that has commenced offering 
service to the public in any BTA prior to the start of the re-auction 
required by this section so that the amount that such licensee owes the 
Commission for the license for such BTA is approximately equal to the 
winning amount bid at such re-auction for BTA's with comparable 
populations.
  (d) Rulemaking Required.--The Commission shall adopt a final order in 
WT Docket 97-82 implementing the requirements of this section within 30 
days of its enactment.
  (e) Suspension of Payments.--The Commission shall suspend all 
payments due under the C-block restructuring rules (pursuant to WT 
Docket 97-82) until completion of the re-auction required by this 
section.
  (f) Definitions.--As used in this section--
          (1) the term ``Commission'' means the Federal Communications 
        Commission;
          (2) the term ``C-block'' has the same meaning as under the 
        Commission's rules;
          (3) the term ``BTA'' has the same meaning as under the 
        Commission's rules; and
          (4) the term ``licensee'' means any entity the Commission 
        named a high bidder in C-block auctions that began on December 
        18, 1995, or July 3, 1996, and who thereafter was authorized to 
        utilize C-block frequencies, regardless of whether such entity 
        subsequently returned such licenses to the Commission in whole 
        or in part.

                    TITLE IV--GWCS AUCTION DEADLINE

SEC. 401. ELIMINATION OF ARBITRARY AUCTION DEADLINE.

  Section 309(j)(9) of the Communications Act of 1934 (47 U.S.C. 
309(j)(9)) is amended by striking ``, not later than 5 years after the 
date of enactment of this subsection,''.

              TITLE V--REINSTATEMENT OF CERTAIN APPLICANTS

SEC. 501. REINSTATEMENT OF APPLICANTS AS TENTATIVE SELECTEES.

  (a) In General.--Notwithstanding the order of the Federal 
Communications Commission in the proceeding described in subsection 
(b), the Commission shall--
          (1) reinstate each applicant as a tentative selectee under 
        the covered rural service area licensing proceeding; and
          (2) permit each applicant to amend its application, to the 
        extent necessary to update factual information and to comply 
        with the rules of the Commission, at any time before the 
        Commission's final licensing action in the covered rural 
        service area licensing proceeding.
  (b) Proceeding.--The proceeding described in this subsection is the 
proceeding of the Commission In re Applications of Cellwave Telephone 
Services L.P, Futurewave General Partners L.P., and Great Western 
Cellular Partners, 7 FCC Rcd No. 19 (1992).

SEC. 502. CONTINUATION OF LICENSE PROCEEDING.

  (a) Award of Licenses.--The Commission shall award licenses under the 
covered rural service area licensing proceeding within 90 days after 
the date of the enactment of this title.
  (b) Service Requirements.--The Commission shall provide that, as a 
condition of an applicant receiving a license pursuant to the covered 
rural service area licensing proceeding, the applicant shall provide 
cellular radiotelephone service to subscribers in accordance with 
sections 22.946 and 22.947 of the Commission's rules (47 CFR 22.946, 
22.947); except that the time period applicable under section 22.947 of 
the Commission's rules (or any successor rule) to the applicants 
identified in subparagraphs (A) and (B) of section 504(1) shall be 3 
years rather than 5 years and the waiver authority of the Commission 
shall apply to such 3-year period.
  (c) Educational and Public Safety Infrastructure.--Upon the grant of 
a license by the Commission to an applicant under the covered rural 
service area licensing proceeding, the applicant shall provide to each 
public school, library, and public safety entity (including police, 
fire, and emergency medical service entities) located within the rural 
service area of the grantee, at the option of each such entity and free 
of charge--
          (1) 1 cellular telephone; and
          (2) not less than 200 minutes of local service per month for 
        each such cellular telephone.
A telephone and local service for the telephone provided pursuant to 
this subsection may be used only while the telephone is in the rural 
service area of the grantee and may be used only for official business 
of the school, library, or public safety entity for which it is 
provided.
  (d) Enhanced Emergency Services.--After the grant of a license by the 
Commission to an applicant under the covered rural service area 
licensing proceeding, the applicant shall provide free of charge, 
during each emergency that requires activation of the Emergency Alert 
System (as referred to in section 11.1 of the Commission's rules (47 
CFR 11.1) or any successor rule) within the rural service area of the 
grantee, to public safety personnel (including police, fire, and 
emergency medical services personnel)--
          (1) at least 50, but not more than 100, cellular telephones; 
        and
          (2) service for each cellular telephone provided pursuant to 
        paragraph (1).
A telephone and service for the telephone provided pursuant to this 
subsection may be used only for official business of public service 
personnel during the emergency for which it is provided.
  (e) Privacy Safeguards.--Except as otherwise provided under Federal 
law and the Commission's rules, an applicant that is granted a license 
by the Commission under the covered rural service area licensing 
proceeding shall not disclose to any third party any location 
information generated through a subscriber's use of a cellular 
telephone in the service area of the applicant.
  (f) Auction Authority.--If, after the amendment of an application 
pursuant to section 501(a)(2) of this title, the Commission finds that 
the applicant is ineligible for grant of a license to provide cellular 
radiotelephone services for a rural service area or the applicant does 
not meet the requirements under subsection (b) of this section, the 
Commission shall grant the license for which the applicant is the 
tentative selectee (pursuant to section 501(a)(1)) by competitive 
bidding pursuant to section 309(j) of the Communications Act of 1934 
(47 U.S.C. 309(j)).

SEC. 503. PROHIBITION OF TRANSFER.

  During the 5-year period that begins on the date that an applicant is 
granted any license pursuant to section 501, the Commission may not 
authorize the transfer or assignment of that license under section 310 
of the Communications Act of 1934 (47 U.S.C. 310). Nothing in this 
title may be construed to prohibit any applicant granted a license 
pursuant to section 501 from contracting with other licensees to 
improve cellular telephone service.

SEC. 504. DEFINITIONS.

  For the purposes of this title, the following definitions shall 
apply:
          (1) Applicant.--The term ``applicant'' means--
                  (A) Great Western Cellular Partners, a California 
                general partnership chosen by the Commission as 
                tentative selectee for RSA #492 on May 4, 1989;
                  (B) Monroe Telephone Services L.P., a Delaware 
                limited partnership chosen by the Commission as 
                tentative selectee for RSA #370 on August 24, 1989 
                (formerly Cellwave Telephone Services L.P.); and
                  (C) FutureWave General Partners L.P., a Delaware 
                limited partnership chosen by the Commission as 
                tentative selectee for RSA #615 on May 25, 1990.
          (2) Commission.--The term ``Commission'' means the Federal 
        Communications Commission.
          (3) Covered rural service area licensing proceeding.--The 
        term ``covered rural service area licensing proceeding'' means 
        the proceeding of the Commission for the grant of cellular 
        radiotelephone licenses for rural service areas #492 (Minnesota 
        11), #370 (Florida 11), and #615 (Pennsylvania 4).
          (4) Tentative selectee.--The term ``tentative selectee'' 
        means a party that has been selected by the Commission under a 
        licensing proceeding for grant of a license, but has not yet 
        been granted the license because the Commission has not yet 
        determined whether the party is qualified under the 
        Commission's rules for grant of the license.

                          Purpose and Summary

    H.R. 3888, the Telecommunications Competition and Consumer 
Protection Act of 1998, has two overarching purposes. First, 
the legislation enacts a non-regulatory solution to the problem 
of ``slamming,'' which is the unauthorized changing of a 
consumer's provider of telephone exchange service or telephone 
toll service. Second, the legislation promotes intense and 
efficient use of the electromagnetic spectrum by resolving two 
matters that have been mired in regulatory and legal disputes 
for several years, thus denying consumers the benefit of 
additional competition in the commercial mobile services 
market.

                  Background and Need for Legislation

Eliminating ``slamming''

    Slamming is a problem that affects thousands of consumers 
across the country, and it is a problem that will continue to 
plague consumers if strong anti-slamming measures are not put 
in place. With the advent of ``equal access'' and customer 
choice among competing long distance carriers following the 
Bell System divestiture, consumers of interLATA voice service 
(i.e., long distance telephone service) were first exposed to 
slamming. Within a few years, slamming became and has remained 
among the leading sources of customer complaints to the Federal 
Communications Commission (FCC or the Commission), State public 
utility commissions (PUCs) and other consumer protection 
agencies. The Committee is particularly concerned that the 
scourge of slamming may potentially worsen as competition 
spreads to other telecommunications services markets. In 
particular, because the Telecommunications Act of 1996 removed 
all barriers to competition in all telecommunications services 
markets, consumers of local and short-haul toll services may be 
exposed to slamming of their chosen providers of these 
additional telecommunications services.
    The Committee believed that it had addressed the problem of 
slamming in the Telecommunications Act of 1996. There, the 
Committee added to section 101 of the Telecommunications Act a 
provision (now codified at 47 U.S.C. Sec. 258) that gave the 
Commission ample authority to protect consumers against 
slammers. Section 258 to the Communications Act directs the FCC 
to establish rules against unauthorized changes in a consumer's 
chosen provider of telecommunications service. However, much to 
the Committee's dismay, the FCC to date has failed to implement 
section 258, thus requiring Congress to revisit this important 
issue.
    While seeking to find meaningful solutions for consumers in 
fighting slammers, the Committee also is mindful of its 
commitment to promoting competition in all telecommunications 
markets. It is clear that unnecessary restrictive regulation of 
the carrier selection process would inhibit the development of 
a robustly competitive telecommunications services marketplace. 
The introduction of effective carrier choice in the 
interexchange services market following the Bell System 
divestiture has provided consumers lower prices and a wide 
range of services and features for long distance calling. The 
Telecommunications Act of 1996 was enacted to provide these 
same consumer benefits in the intraLATA toll and local exchange 
services markets which are now overwhelmingly served by 
incumbent local exchange carriers. Regulation of slamming that 
impairs the ability of new market entrants to compete fairly 
and effectively for consumers' business in these newly emerging 
markets is therefore contrary to the objectives of the 
Telecommunications Act.
    The Committee has thus endeavored to find a solution that 
not only addresses the need to limit consumers' exposure to 
slammers but also promotes competitive entry into all 
telecommunications services markets. The Code of Subscriber 
Practices, delineated in Title I of H.R. 3888, achieves the 
necessary balance. The Code will provide a powerful incentive 
for carriers to regulate themselves and protect the interests 
of consumers. To the extent a carrier chooses not to 
participate, or otherwise fails to comply with the Code, then 
the carrier falls into the net of FCC regulation that is 
substantially more stringent. The Committee finds that this 
bifurcated regulatory regime best serves the interests of 
consumers and the cause of competition.

The critical role of spectrum management

    Because of the increasingly important role spectrum plays 
in providing the American people with communications services 
they value, the Federal government's role in managing the 
allocation and assignment of spectrum takes on added 
significance. Growing demand for spectrum-based services has 
been most evident in the area of mobile telecommunications. In 
recent years, technological advances have woven into the fabric 
of everyday life a wide range of mobile services, such as 
pocket-sized mobile telephones, pagers, portable fax machines, 
wireless personal computers, and Internet access services.
    Congress created the FCC in 1934 for the principal purpose 
of managing spectrum used by commercial entities, as well as 
spectrum used by non-Federal government agencies. (The National 
Telecommunications and Information Administration (NTIA) 
manages spectrum used by Federal agencies.) Congress'' 
principal mandate to the FCC has been to license services 
quickly and efficiently so as to further the public interest, 
convenience, and necessity. Congress has emphasized the 
importance of the licensing process because, where spectrum 
management is concerned, licensing ensures the deployment of a 
wide array of services from multiple providers, which in turn 
promotes competition and lower prices for consumers. Congress 
therefore has provided the FCC with administrative authority to 
ensure quick and efficient licensing.
    But recently, notwithstanding Congress' direction to the 
FCC to implement reliable licensing procedures, numerous FCC 
licensing proceedings have become embroiled in unrelated or 
secondary issues. Some argue that the FCC has been focusing too 
much on means, rather than ends, and as a result, a substantial 
amount of spectrum lies fallow in numerous administrative and 
legal proceedings. One witness at a recent spectrum management 
hearing before the Subcommittee on Telecommunications, Trade, 
and Consumer Protection made the following observation:

          The [FCC's refusal, over a 10-year period, to award 
        three permanent cellular licenses serving three rural 
        markets] arose as a result of a fundamental misstep in 
        FCC licensing policy--specifically, a confusion between 
        ends and means that resulted in an effort to find 
        reasons not to grant licenses rather than to find 
        reasons to grant them. [Title V of H.R. 3888] offers a 
        solution to this problem that, if emulated, would help 
        assure that spectrum is put to its highest, best, and 
        fullest use. * * * Regardless of the mechanism the FCC 
        uses, the most important aspect of its licensing 
        activities is assigning licenses quickly and securely. 
        It is only after that has happened that the market can 
        produce the important social benefits of competition, 
        innovation, and economic growth. All of this is too 
        well understood to require much elaboration.

Spectrum Management Oversight: Hearings Before the Subcomm. on 
Telecommunications, Trade, and Consumer Protection, 105th 
Cong., 2d Sess. (1998) (Testimony of Philip L. Verveer).
    The extent of regulatory delay appears to be quite large. 
The FCC recently informed Congress that ``approximately 63,909 
[wireless] matters * * * have been pending for one year or 
more''--some of which have been pending for longer than a 
decade. Letter from The Honorable William E. Kennard, Chairman, 
Federal Communications Commission, to The Honorable John 
McCain, Chairman, Committee on Commerce, Science, and 
Transportation, United States Senate, at 4 (July 9, 1998). 
Those matters include spectrum allocated for:
          (1) broadband C-block PCS, in which more than 80 
        percent of the spectrum lies fallow as bankruptcy court 
        and administrative proceedings plod along;
          (2) narrowband PCS, where after four years of 
        administrative proceedings and more than a billion 
        dollars in auction payments, only a single nationwide 
        licensee is providing service on a meaningful scale;
          (3) rural cellular service, where permanent service 
        has yet to be authorized in many rural areas, some with 
        populations approaching 500,000;
          (4) paging service, where an FCC-initiated freeze on 
        spectrum licensing is now in its third year;
          (5) 220 MHz service, where complex and formalistic 
        licensing rules have thwarted efforts to deploy 
        service;
          (6) interactive video and data services (IVDS), which 
        the FCC began licensing in 1993, but no viable service 
        has emerged; and
          (7) multiple address systems, where more than 50,000 
        license applications have remained on file for more 
        than six years, without any service being provided.
    Given the amount of spectrum that now lies fallow, the 
Committee is necessarily concerned that the Commission has 
deviated from its statutory responsibility to promote 
``efficient and intensive use of the electromagnetic 
spectrum.'' 47 U.S.C. Sec. 309(j)(3)(D). Titles III and V of 
H.R. 3888 are intended to address two of the more critical 
instances where consumers are being denied the benefits of 
additional competition from multiple wireless providers. 
Through Titles III and V, the Committee intends to begin the 
process of ensuring that the Commission re-focuses its 
resources to promoting efficient and intensive use of the 
electromagnetic spectrum, rather than further embroiling itself 
in regulatory and legal disputes that serve no one, except the 
communications bar. Indeed, the Committee has learned that, in 
FY 1997 alone, the FCC paid the law firm of Sidley & Austin 
$765,775.00 to serve as a ``bankruptcy consultant for matters 
relating to actual and potential bankruptcies of FCC licensees 
that owe funds arising from installment payment financing of 
spectrum auctions.'' Letter from The Honorable William E. 
Kennard, Chairman, Federal Communications Commission, to The 
Honorable Tom Bliley, Chairman, Committee on Commerce, United 
States House of Representatives, at 9 (August 28, 1998).

Resolving the growing C-block crisis

    As part of the Omnibus Budget Reconciliation Act of 1993 
(OBRA '93), Congress instructed the FCC to promote the 
interests of small businesses and rural telephone companies in 
licensing new spectrum-based services. The FCC implemented this 
provision, in part, by setting aside a ``block'' of spectrum 
for personal communications services (PCS) that would be 
licensed exclusively to small businesses. And in early 1996, 
after much deliberation, the FCC eventually auctioned this 
block of spectrum (commonly referred to as the ``C-block'' 
auction) and received winning bids of $10.2 billion. The FCC 
also established that auction receipts from the C-block auction 
would be collected through an installment plan that permitted 
the winning bidders to pay their debt obligations over a ten-
year period.
    At the time, the C-block auction was viewed as a huge 
success. The winning bids for the C-block auction eclipsed the 
winning bids for other PCS auctions that were open to large 
incumbent carriers, like AT&T, Sprint, and the regional Bell 
operating companies. The winning bids from these other PCS 
auctions (commonly referred to as the ``A-block'' and ``B-
block'' auctions) totaled $7.7 billion--nearly three billion 
less than the total from the C-block auction. In contrast to 
the rules from the C-block auction, the FCC required winning 
bidders from the A- and B-block auctions to pay their debt 
obligations shortly after the close of the auction.
    The luster from the C-block auction, however, has since 
faded. Several of the largest C-block licensees have declared 
bankruptcy, and many others have returned to the FCC a portion 
or all of the 30 MHz originally assigned to them. As a result, 
less than 10 percent of spectrum issued pursuant to the C-block 
auction is currently intact, with the remainder either tied up 
in bankruptcy court proceedings or returned to the FCC for re-
auction. (See Chart I showing current status of all C-block 
licensees).
    With the benefit of hindsight, some have argued that the C-
block licensees bid too much for their licenses. But, it is 
indisputable that the FCC's handling of licensing-related 
issues greatly contributed to the C-block debacle. To begin 
with, after collecting hundreds of millions of dollars of down 
payments from winning bidders, the FCC failed to act on even 
uncontested license applications for several months, and failed 
to complete action on all license applications until 18 months 
after the auction. This delay stands in stark contrast to the 
relative speed with which the Commission licensed the C-block 
licensees' biggest competitors. For example, the A- and B-block 
licensees (i.e., large, well-financed carriers like Sprint and 
PrimeCo) received their licenses from the FCC in little more 
than three months after the close of the A- and B- block 
auctions. More importantly, the A- and B-block licensees 
achieved a substantial ``head start'' over their C-block 
competitors given that the FCC issued the A- and B-block 
licenses nearly two years before it granted the bulk of the C-
block licenses.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>

    Then, only weeks after it issued most of the C-block 
licenses, the FCC in April 1997 suspended all payments on the 
C-block licenses, effectively signaling to capital markets that 
the C-block was financially imperiled. In fact, the Small 
Business Administration formally advised the FCC that its 
decision to suspend payments ``created a misperception that all 
C-block licensees are in trouble, causing further uncertainty 
about the viability of C-block licensees to compete.'' Letter 
from Jere Glover, Chief Counsel, United States Small Business 
Administration, et al., to The Honorable Reed E. Hundt, 
Chairman, Federal Communications Commission, at 4-5 (Sept. 8, 
1998). The availability of private financing was essential to 
the licensees because, by definition, participation in the C-
block auction was limited by the Commission to truly ``small 
businesses;'' thus, the only way participating companies could 
pay for licenses was by accessing the capital markets. The FCC 
in June 1997 launched a proceeding to address how best to 
restructure the licensees'' debt. The FCC eventually adopted 
four options, none of which the C-block licensees viewed as 
commercially reasonable.
    Meanwhile, at approximately the same time the FCC was 
attempting to forge a unified administrative solution, events 
in the C-block bankruptcy proceedings created even more 
instability and uncertainty. The FCC, for example, intervened 
in the bankruptcy proceeding for Pocket Communications, and 
offered to reduce Pocket's debt obligations by approximately 60 
percent, or approximately $640 million. And in a separate C-
block bankruptcy proceeding involving General Wireless Inc. 
(GWI), the bankruptcy court reduced GWI's obligation by 
approximately 84 percent, or roughly $900 million. United 
States v. GWI PCS 1, Inc., Civ. Action No. 3:97-CV-2504-L (N.D. 
Tex. filed Sept. 30, 1998). In both cases, the terms offered to 
Pocket and GWI were widely viewed as superior to the 
administrative options the FCC had offered non-bankrupt C-block 
licensees. Indeed, shortly after the terms in both cases became 
public, NextWave (the largest C-block licensee) declared 
bankruptcy.
    With less than 10 percent of the spectrum from the C-block 
auction currently intact, (See again Chart I showing current 
status of all C-block licensees) and with the bulk of the 
spectrum either tied up in bankruptcy court or returned to the 
FCC for re-auction, it is apparent that the Federal government 
will never collect the total $10.2 billion from the auction. In 
fact, the Congressional Budget Office (CBO) issued a report in 
September 1997 estimating that the government will collect no 
more than 60 percent of the winning bids in light of the 
``growing likelihood of default.'' CBO Memorandum, Impending 
Defaults by Winning Bidders in the FCC's C-block Auction, at vi 
(Sept. 1997).
    The Commission ignored entreaties by the Committee to avoid 
the quagmire of bankruptcy litigation. The consequence has been 
unnecessary delay in bringing service from C-block licensees to 
the public--a result that is fully at variance with the 
explicit goals of the statute. Indeed, the record from the 
Subcommittee on Telecommunications, Trade, and Consumer 
Protection hearing on spectrum management demonstrates that the 
Commission is unwilling, or unable, to implement Congress' goal 
of administering C-block spectrum in ways that assure it will 
be deployed rapidly to the productive use of delivering service 
to the public without administrative or judicial delay. The 
record further demonstrates that the FCC is presently committed 
to an alternative, and thoroughly ill-considered, program of 
spending itslimited resources on expensive and lengthy 
litigation to drag out the C-block fiasco, rather than working with 
licensees to restructure debt so as to bring competitive new service to 
the public as expeditiously as possible.
    The FCC's testimony before the Committee concerning the C-
block bankruptcy litigation in which it currently is embroiled 
reflects a fundamental misunderstanding of the manner in which 
Congress originally intended and continues to intend that 
auctions must be administered in order to fulfill congressional 
intent. Spectrum Management Oversight: Hearings Before the 
Subcomm. on Telecommunications, Trade, and Consumer Protection, 
105th Cong., 2d Sess. (1998) (Testimony of Daniel B. Phythyon, 
Chief, Wireless Telecommunications Bureau, FCC). The statute 
contemplates that an auction and the evaluation of the 
qualifications of a higher bidder to hold a spectrum license 
shall be conducted as contemporaneously as possible. As the 
bidder does not have a license or the use of the spectrum until 
the license is granted, interposing the delay between these two 
events invites the possibility that market forces may alter the 
assumptions on which bids were made in ways that neither 
bidders nor the Commission could have anticipated. That is why 
the statute requires the Commission to license spectrum 
``without administrative or judicial delays,'' 47 U.S.C. 
Sec. 309(j)(3)(A) (as cited in In re GWI PCS 1, Inc., Bk. No. 
397-39676-SAF-11, (Bankr. N.D. Tex. April 24, 1998)).
    It is unfortunate indeed that a Texas bankruptcy judge has 
a better appreciation of the Congressional mandate to foster 
the rapid deployment of spectrum-based services without 
administrative or judicial delay than does the FCC. The 
consequences of the Commission's approach are painfully evident 
when compared to the bankruptcy proceedings of GWI. There, the 
bankruptcy judge completed all of the reorganization 
proceedings to allow GWI to commence use of its spectrum in 
less than a year. The FCC has not achieved anywhere near the 
same result: after two and one-half years, less than 10 percent 
of the spectrum from the C-block auction is intact. The 
commercial reasonableness of the GWI decision is evidenced by 
the financial commitments and support made available to GWI 
from leading equipment vendor immediately following the court's 
ruling.
    By contrast, the Commission's failure in the C-block 
licensing process to heed the clear statutory directive to 
license spectrum ``without administrative or judicial delay'' 
after the conclusion of the C-block auctions created the mess 
the C-block finds itself in today. It is for this reason that 
the Committee is compelled to put forward its legislative 
proposal to unwind the C-block auction and try again.
    H.R. 3888 will put the C-block program back on track as 
quickly as possible. Too much time and energy has been devoted 
to finger pointing and recriminations. Everyone has suffered as 
a result. The public has been denied the benefits of new 
services and competition. Licensees have suffered financial 
harm, and that harm has rippled out to ensnare hundreds of 
small business, and thousands of individual workers, whose 
enterprises are tied to the build-out of C-block networks. A 
multitude of interested parties has struggled in good faith 
through the Commission's C-block restructuring proceedings. And 
the FCC has allowed far too many of its limited resources to be 
consumed by consideration of commercial financing issues that 
are secondary to its responsibilities under the Communications 
Act to promote efficient and intensive use of the 
electromagnetic spectrum.
    It is time to put all of that aside and start anew. This 
legislation achieves that by providing for a rescission of the 
C-block auction, in recognition of the fact that the best 
course of action at this point is to unwind the initial auction 
and begin over. Rescission is the classic remedy made available 
in contracts cases where the goods delivered (in this case, PCS 
licenses) are not what was contracted for (bid for at auction). 
The amendment directs the FCC to permit licensees to return 
their licenses to the Commission, terminate their indebtedness, 
obtain bidding credits for amounts already paid to the 
government, and participate in a re-auction of C-block 
spectrum. It also requires that the Commission re-auction the 
licenses by March 24, 1999, (the date already selected by the 
FCC to re-auction licenses turned in or defaulted on by 
licensees) and consequently, will get new licenses issued as 
quickly as possible.
    This legislation will avoid the years of delay that 
otherwise would result from bankruptcy litigation and will 
considerably accelerate the day when the public starts 
receiving the spectrum-based services Congress contemplated 
when it enacted the auction statute. The goal is to provide a 
fresh start, and all who participated in the initial C-block 
auction will have the same opportunity to participate again. 
Overall, the purpose of the legislation is to ensure that 
Congress'' goals of service to the public, economic 
opportunity, and competition are achieved in a reasonable 
timeframe.

Promoting rural cellular service

    In 1986, having assigned licenses in the Nation's largest 
markets, the Commission established geographic boundaries for 
over 400 rural service areas (RSAs). The Commission created two 
frequency allocations for each of these RSAs: the B-block 
frequencies for incumbent wireline carriers (i.e., the local 
telephone providers), and A-block frequencies for other 
applicants. The Commission employed a lottery system in these 
markets in order to award licenses as quickly as possible. In 
1992, the FCC disqualified the 1988 applications submitted by 
three lottery-winning partnerships in three RSAs located in 
parts of Minnesota, Florida, and Pennsylvania. The Commission 
concluded that the partnerships had not complied with foreign 
ownership restrictions under its interpretation of the 
Communications Act of 1934. The Commission did not allow the 
companies to amend their applications and bring themselves into 
compliance, in contrast to similarly situated applicants who 
had also participated in the same lotteries but were permitted 
to correct foreign ownership interests.
    Today, 12 years after it first established RSAs, the 
Commission still has not awarded permanent cellular licenses in 
the three RSAs. Citizens residing in these areas are not 
reaping the benefits of competition between permanently 
licensed multiple cellular service providers. In the 
Pennsylvania RSA, the Commission has not awarded an interim 
license, leaving the local telephone company with a cellular 
monopoly. In the Minnesota and Florida RSAs, the Commission has 
awarded interim licenses, but has not yet awarded permanent 
licenses. The situation in these RSAs is contrary to Congress' 
intention that two cellular providers--both with permanent 
licenses--compete vigorously for customers in every RSA across 
the U.S.
    At a recent spectrum management hearing, the Subcommittee 
on Telecommunications, Trade, and Consumer Protection heard 
testimony explaining the FCC's apparently arbitrary treatment 
of the applicants in these three RSAs. Testimony was also 
provided which characterized the difference in service between 
the permanent licensee and the interim licensee in the 
Minnesota and Florida markets. In the Pennsylvania market, the 
record confirms that cellular service is only being provided by 
one carrier.
    H.R. 3888 will address the problem of these three rural 
areas that have received less than optimal cellular service for 
almost a decade. The problem arose because the Commission took 
a series of actions which placed its adherence to procedure 
ahead of achieving results that are in the public interest--
procedures which the FCC now recognizes were not mandated by 
this Congress. In the end, the Commission failed in its duty to 
issue licenses so that valuable spectrum is being used, and is 
serving the public interest, rather than sitting idle or in the 
hands of interim licensees for extended periods of time. H.R. 
3888 offers a solution to a problem that has persisted for ten 
years by helping to ensure that spectrum is put to its highest, 
best, and fullest use.
    This legislation would improve service to the public in the 
three RSAs and rectify the unfair treatment of the 
partnerships, consistent with current law and policy, by 
directing the Commission to reinstate the three partnerships as 
tentative selectees with the opportunity to amend their 
applications. The FCC would then review the amended 
applications under its regulations. If the partnerships did not 
amend their applications to comply with the FCC's existing RSA 
service requirements, the Commission would auction the licenses 
pursuant to the Communications Act of 1934.

                                Hearings

    The Subcommittee on Telecommunications, Trade, and Consumer 
Protection held related hearings on June 23, 1998 (Protecting 
Consumers Against Slamming), and September 18, 1998 (Spectrum 
Management Oversight). The Subcommittee received testimony for 
the slamming hearing from: The Honorable Bob Goodlatte, U.S. 
House of Representatives, Sixth District, Commonwealth of 
Virginia; The Honorable Charles F. Bass, U.S. House of 
Representatives, Second District, State of New Hampshire; The 
Honorable Christopher H. Smith, U.S. House of Representatives, 
Fourth District, State of New Jersey; Mr. Lawrence E. 
Strickling, Deputy Bureau Chief, Common Carrier Bureau, Federal 
Communications Commission (FCC); Mr. Ernie Kelly, Executive 
Director, Telecommunications Resellers Association (TRA); Mr. 
Otto Schultz, Member, Board of Directors, American Association 
of Retired Persons (AARP); Mr. Riley M. Murphy, Executive Vice 
President, e.spire Communications Inc; Mr. Robert M. McDowell, 
Deputy General Counsel, American Carriers Telecommunications 
Association (ACTA); Mr. Jerry Cerasale, Senior Vice President, 
Government Affairs, Direct Marketing Association (DMA); Ms. 
Deirdre Mulligan, Staff Counsel, Center for Democracy 
andTechnology; Ms. Susan Grant, Vice President for Public Policy, 
National Consumers League; and Ms. Barbara A. Dooley, Executive 
Director, Commercial Internet Exchange Association.
    The Subcommittee received testimony for the spectrum 
management hearing from: Mr. Dan Phythyon, Chief, Wireless 
Telecommunications Bureau, Federal Communications Commission 
(FCC); Mr. Michael W. Green, President and Chief Executive 
Officer, Carolina PCS Corporation; and Mr. Philip L. Verveer, 
Esquire, Wilkie, Farr & Gallagher (representing Great Western 
Cellular Partners, Monroe Telephone Services, and Futurewave 
General Partners).

                        Committee Consideration

    On August 6, 1998, the Subcommittee on Telecommunications, 
Trade, and Consumer Protection met in open markup session and 
approved H.R. 3888 for Full Committee consideration, amended, 
by a voice vote. On September 24, 1998, the Full Committee met 
in open markup session and ordered H.R. 3888, the 
Telecommunications Competition and Consumer Protection Act of 
1998, reported to the House, amended, by a voice vote, a quorum 
being present.

                             Rollcall Votes

    Clause 2(l)(2)(B) of rule XI of the Rules of the House 
requires the Committee to list the recorded votes on the motion 
to report legislation and amendments thereto. There were no 
recorded votes taken in connection with ordering H.R. 3888 
reported. An Amendment in the Nature of Substitute offered by 
Mr. Tauzin was adopted by a voice vote. A motion by Mr. Bliley 
to order H.R. 3888 reported to the House, amended, was agreed 
to by a voice vote, a quorum being present.

                      Committee Oversight Findings

    Pursuant to clause 2(l)(3)(A) of rule XI of the Rules of 
the House of Representatives, the Committee held a legislative 
and oversight hearings and made findings that are reflected in 
this report.

              Committee on Government Reform and Oversight

    Pursuant to clause 2(l)(3)(D) of rule XI of the Rules of 
the House of Representatives, no oversight findings have been 
submitted to the Committee by the Committee on Government 
Reform and Oversight.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 2(l)(3)(B) of rule XI of the 
Rules of the House of Representatives, the Committee finds that 
H.R. 3888, the Telecommunications Competition and Consumer 
Protection Act of 1998, would result in no new or increased 
budget authority, entitlement authority, or tax expenditures or 
revenues.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 2(l)(3)(C) of rule XI of the Rules of 
the House of Representatives, the following is the cost 
estimate provided by the Congressional Budget Office pursuant 
to section 402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, October 7, 1998.
Hon. Tom Bliley,
Chairman, Committee on Commerce,
House of Representatives, Washington, DC
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3888, the 
Telecommunications Competition and Consumer Protection Act of 
1998.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Kathleen 
Gramp and Kim Cawley (for federal costs), Pepper Santalucia 
(for the state and local impact), and Jean Wooster (for the 
private-sector impact).
            Sincerly,
                                              James L. Blum
                                   (For June E. O'Neill, Director).
    Enclosure.

H.R. 3888--Telecommunications Competition and Consumer Protection Act 
        of 1998

    Summary: H.R. 3888 would amend existing law and change 
current policies regarding licenses for use of the 
electromagnetic spectrum. It would modify the terms of the 
Federal Communication Commission's (FCC's) financing of 
licenses awarded pursuant to the C-block auction of spectrum. 
(The C-block refers to 30 megahertz of the electromagnetic 
spectrum allocated to personal communications services in each 
of 493 subdivisions of the nation and its territories.) The 
bill also would repeal the statutory deadline for auctioning 
certain frequencies and would direct the commission to grant 
three cellular licenses without compensation, subject to 
certain conditions. Other provisions would amend the 
Communications Act of 1934 to prohibit telecommunications 
carriers or service resellers from submitting or executing 
changes in a subscriber's selection of a provider of telephone 
exchange or toll service except in accordance with procedures 
prescribed by the FCC.
    CBO estimates that enacting H.R. 3888 would increase direct 
spending by $600 million in fiscal year 1999 and by an 
additional $1 million in 2000. Provisions establishing new 
penalties could affect receipts, but CBO estimates that such 
receipts would not be significant. This bill also would affect 
discretionary spending, but CBO estimates that the net impact 
would be negligible. Because the bill would affect direct 
spending and receipts, pay-as-you-go procedures would apply.
    The bill contains an intergovernmental mandate as defined 
in the Unfunded Mandates Reform Act (UMRA) because it would 
preempt some state laws governing changes in a subscribers's 
choice of telecommunications carriers. CBO estimates that the 
cost to states to comply with this mandate would not exceed the 
threshold established in UMRA ($50 million in 1996, adjusted 
for inflation).
    H.R. 3888 would impose a private-sector mandate, as defined 
in UMRA, on telecommunications carriers, including resellers of 
telecommunication services. CBO estimates that the cost of this 
mandate would not exceed the annual threshold for private-
sector mandates ($100 million in 1996, adjusted for inflation).
    Description of the bill's major provisions: Title I would 
prohibit telecommunications carriers or service resellers from 
submitting or executing changes in a subscriber's selection of 
a provider of telephone exchange or toll service except in 
accordance with procedures prescribed by the FCC.
    Title III would modify the terms of the FCC's financing of 
licenses awarded in the 1996 auction of the C-block 
frequencies. In that auction, winning bids of $10 billion were 
recorded on the budget, and the winners paid 10 percent of that 
amount as a down payment. Licenses agreed to pay the remaining 
90 percent to the FCC in installment payments over a 10-year 
period. The FCC is unlikely to recover the amounts due under 
the original notes, however. The FCC recently granted C-block 
licenses various forms of financial relief if they agree to 
return the license to the FCC, or to give up the right to use 
half of the frequencies covered by the initial license, or to 
resume the original payment schedule. In those elections, which 
were made in June 1998, licenses chose to return licenses that 
accounted for $1.5 billion of the $10 billion bid in 1996. 
Payments are expected to resume on another $1.1 billion, and 
another $30 million was prepaid. Three licenses, which together 
account for the remaining $7.2 billion of the original bids, 
have filed for bankruptcy protection and their elections were 
conditioned on the outcome of those proceedings.
    Title III would offer C-block licenses two additional forms 
of relief. Under one option, licensees who are willing to 
return all of their licenses to the FCC would have all of their 
debt obligations to the FCC canceled and would receive bidding 
credits equal to the sum of all down payments, interest, and 
installment payments made by the licensee prior to the date of 
enactment. These bidding credits could only be used in bidding 
on licenses in a reauction of C-block frequencies but would be 
trnaferrable in whole or in part to other entities eligible to 
participate in that auction. Under this bill, that reauction 
must take place no later than March 24, 1999, which is when the 
FCC expects to conduct a reauction of returned C-block 
frequencies under current law.
    The second option for relief would affect the debt 
obligations of licensees that choose to retain their licenses. 
The bill would require that, after the reauction takes place in 
March 1999, the FCC write down the debt obligation of any 
licensee that has ``commenced offering service to the public'' 
in a basic market area. The debts associated with that market 
area would be reduced so that the amounts owed by the licensee 
would be comparable to the winning bids in the March 1999 
reauction.Title V would repeal the September 1998 deadline for 
the auction of 5 megahertz of frequencies formerly used by federal 
agencies. This spectrum was to be auctioned as part of 25 megahertz to 
be used for general wireless communications services (GWCS). The FCC 
has postponed that auction for technical and market reasons.
    Title V would designate certain companies as tentative 
selectees for the award of cellular licenses in three rural 
service areas (RSAs): one in the Florida Keys, one in 
northeastern Pennsylvania, and one in southeastern Minnesota. 
These companies would be allowed to amend their license 
applications, which the FCC had rejected when they were 
originally filed. If the revised applications conform to the 
FCC's current guidelines, the companies would be awarded the 
licenses within 90 days after enactment of the bill. If the 
commission determines that the companies are ineligible, the 
FCC would be required to grant the licenses through competitive 
bidding.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 3888 is shown in the following table. 
The costs of this legislation fall within the budget functions 
370 (commerce and housing credit) and 950 (undistributed 
offsetting receipts).

----------------------------------------------------------------------------------------------------------------
                                                                 By fiscal years, in millions of dollars--
                                                          ------------------------------------------------------
                                                              1999       2000       2001       2002       2003
----------------------------------------------------------------------------------------------------------------
                                         CHANGES IN DIRECT SPENDING \1\
Estimated budget authority...............................        600          1          1          0          0
Estimated outlays........................................        600          1          1          0         0
----------------------------------------------------------------------------------------------------------------
\1\ H.R. 3888 also would affect revenues and discretionary spending, but CBO estimates that those effects would
  be less than $500,000 a year.

Basis of estimate

            Direct Spending
    CBO estimates that enacting the provisions in H.R. 3888 
that apply to the C-block auction would increase direct 
spending by about $600 million in fiscal year 1999. Awarding 
licenses to certain RSA applicants would result in a loss of 
offsetting receipts of about $1 million in 2000. Other 
provisions in the bill could affect direct spending, but CBO 
estimates that the costs would not be significant.
    C-block Licenses. CBO expects that the modifications 
authorized by title III would increase the subsidy for the C-
block licenses relative to current law. Under title III, the 
FCC would retain the original down payments, but those using 
the bidding credits in the reauction would reduce their cash 
payments by the amount of the credit. Hence, granting these 
bidding credits would eliminate the possibility, under current 
law, that the FCC would retain the original down payment and 
collect the full market value of the licenses at the time of 
the reauction. Being able to reauction most of the C-block 
licenses in 1999 might accelerate the receipt of payments from 
licenses that otherwise would be tied up in bankruptcy courts, 
but CBO estimates that such savings would not offset the cost 
of providing the bidding credits. Likewise, writing down the 
debt obligations of licenses ``offering service to the public'' 
who otherwise would pay the amounts scheduled under their 
existing agreements with the FCC would further reduce the 
proceeds expected under current law.
    The budgetary effects of title III are measured on a 
credit-reform basis because, by accepting payments over time 
for the C-block licenses, the FCC has made direct loans to the 
licensees. Under credit reform procedures, the government 
recorded auction receipts of about $10 billion from the C-block 
auction and created a separate account to record the subsidy 
for the loans, which in this case involves an allowance for 
defaults. By the end of fiscal year 1998, the Office of 
Management and Budget had recorded subsidies totaling $5.6 
billion, suggesting that the net proceeds from the C-block 
auction will not exceed $4.4 billion (on a present-value basis) 
under current law. Legislative actions such as those in title 
III that would change the terms (and hence the subsidy costs) 
of existing loans are classified as loan modifications under 
credit reform. Any costs or savings resulting from such 
modifications are estimated on a discounted, cash-flow basis 
and are recorded in the fiscal year in which the legislation is 
enacted.
    Estimates of the changes in subsidy costs must account for 
legal, regulatory, and market uncertainties. The FCC maintains 
that spectrum licenses should not be considered property 
protected by bankruptcy law. The issue remains before the 
courts, and the FCC continues to press its case. In addition, 
the response of licensees to new options provided by the bill 
cannot be known with certainty and is complicated by its 
interaction with developments in the bankruptcy courts. 
Finally, the market value of the licenses in any future 
reauction is also uncertain. CBO's estimate takes account of 
those uncertainties by assigning a 50-percent chance that the 
courts will ultimately uphold the FCC's position, which would 
allow the FCC to keep the original down payment, recover the 
licenses, and reauction the licenses for their full market 
value. We also assume that most, but not all, of the licensees 
that elected in June to resume payments will fulfill their 
current obligations.CBO estimates that enacting title III would 
reduce the expected value of the net proceeds from C-block licensees by 
about $600 million. We assume that Next Wave, which accounts for nearly 
half of the value of all C-block licenses and has filed for bankruptcy 
protection, would be among those choosing to return their licenses in 
exchange for bidding credits. Our estimate of the costs associated with 
writing down the debt of licensees is based on information regarding 
licensees that are already providing service to the public (which 
represent loan obligations of about $300 million) and an assumed 
reduction of about 75 percent from the current level of scheduled 
payments.
    GWCS deadline. CBO estimates that repealing the September 
30, 1998, deadline for this auction would have no budgetary 
impact because the FCC was unable to conduct the auction under 
current law for technical and economic reasons. Based on the 
FCC's current plans, CBO expects this auction to occur sometime 
in the next four years.
    RSA cellular licenses. CBO expects that, under current law, 
the FCC will award licenses in these three RSAs through a 
competitive auction and that the proceeds of these auctions 
will be comparable to the amounts paid for similar licenses in 
the past. Assuming that the three companies designated by the 
bill would satisfy the FCC's current guidelines, these licenses 
would instead be awarded without compensation. Therefore, CBO 
estimates that enacting title V would result in forgone 
offsetting receipts of about $1 million in fiscal year 2000.
            Revenues
    Title I would establish new penalties for 
telecommunications carriers that make unauthorized changes to 
subscriber's selection of a carrier (frequently called 
``slamming''). This new penalty could increase receipts, but 
CBO estimates that any additional amounts collected would not 
be significant.
            Spending subject to appropriation
    Based on information from the FCC, CBO estimates that the 
commission would spend about $3 million annually to implement 
this bill, assuming appropriation of the necessary amounts. The 
FCC's administrative costs would increase because it would be 
required to issue and enforce two new rules dealing with 
unauthorized changes in a subscriber's provider of telephone 
services. Under the bill, providers of telephone service would 
have an incentive to settle disputes among themselves and with 
customers concerning unauthorized changes in service, without 
FCC intervention. This estimate assumes that formal commission 
orders would not be required to resolve those cases in which 
the FCC is called upon to resolve disputes. Because the 
commission is authorized under current law to collect fees from 
the telecommunications industry sufficient to offset the cost 
of its enforcement program, CBO expects that the costs of title 
I would be offset by an increase in collections credited to 
annual appropriations for the FCC. Hence, we estimate that the 
net effect on discretionary spending would be negligible in 
each year.
    Pay-as-you-go-considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go-procedures 
for legislation affecting direct spending or receipts. The net 
changes in outlays and governmental receipts that are subject 
to pay-as-you-go procedures are shown in the following table. 
For purposes of enforcing pay-as-you-go procedures, only the 
effects in the budget year and the succeeding four years are 
counted.

----------------------------------------------------------------------------------------------------------------
                                                          By fiscal years in millions of dollars--
                                           ---------------------------------------------------------------------
                                             1999   2000   2001   2002   2003   2004   2005   2006   2007   2008
----------------------------------------------------------------------------------------------------------------
Changes in outlays........................    600      1      0      0      0      0      0      0      0      0
Changes in receipts.......................      0      0      0      0      0      0      0      0      0      0
----------------------------------------------------------------------------------------------------------------

    Estimated impact on state, local, and tribal governments: 
The bill contains an intergovernmental mandate as defined in 
UMRA, because it would preempt state anti-slamming laws that 
impose more restrictive requirements than those imposed by the 
bill. According to the National Conference of State 
Legislatures, at least 10 states have anti-slamming laws. If 
their laws prescribe penalties or fines that are higher than 
those in the bill, these states would collect less than they 
would under current laws. Based on information about states' 
recent collections of fines, CBO estimates that costs to states 
would not exceed the threshold established in UMRA.
    Estimated impact on the private sector: H.R. 3888 would 
impose a private-sector mandate, as defined by UMRA, on 
telecommunications carriers, including resellers of 
telecommunication services. CBOestimates that the cost of this 
mandate would not exceed the annual threshold for private-sector 
mandates ($100 million in 1996, adjusted for inflation).
    H.R. 3888 would require carriers to comply with practices 
to prevent slamming (the changing of a consumer's provider of 
telephone service without his or her knowledge or consent) 
prescribed by either an industry-led council or the FCC. Based 
on information provided by a telecommunications trade 
association, CBO estimates that because requirements imposed by 
an industry-led council probably would be less costly and 
burdensome than FCC regulations, most carriers would choose to 
comply with the council's requirement. Since many carriers 
currently require, either voluntarily or because of state and 
federal law, some type of verification and notification of a 
subscriber's selection, the cost, if any, to those carriers 
would be minor. The aggregate direct cost of new rules to 
carriers that do not currently meet the likely standards also 
would not be great, although some such carriers may lose 
revenues if fewer customers subscribe to their service, but 
total industry revenues should not be affected. Furthermore, 
enactment of H.R. 3888, which would preempt some state 
regulations, would be less costly and onerous to the carriers 
than complying with a variety of state laws. Thus, CBO 
estimates that the aggregate cost to the carriers of compliance 
with anti-slamming practices would be well below the cost 
threshold for private-sector mandates.
    Previous CBO estimate: On April 7, 1998, CBO prepared an 
estimate for S. 1618, a bill to amend the Communications Act of 
1934 to improve the protection of consumers against 
``slamming'' by telecommunications carriers, and for other 
purposes, as ordered reported by the Senate Committee on 
Commerce, Science, and Transportation on March 12, 1998. The 
``slamming'' provision in title I of H.R. 3888 is similar to S. 
1618, but CBO estimated a higher FCC cost of about $6 million a 
year for S. 1618 because that bill would require the commission 
to issue formal orders to resolve disputes.
    Estimate prepared by: Federal Costs: Kathleen Gramp and Kim 
Cawley. Impact on State, Local, and Tribal Governments: Pepper 
Santalucia. Impact on the Private Sector: Jean Wooster.
    Estimate approved by: Robert A. Sunshine, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 2(l)(4) of rule XI of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional authority for this legislation is provided in 
Article I, section 8, clause 3, which grants Congress the power 
to regulate commerce with foreign nations, among the several 
States, and with the Indian tribes.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation

Section 1. Short title

    Section 1 of H.R. 3888 states that the legislation may be 
cited as the ``Telecommunications Competition and Consumer 
Protection Act of 1998.''

                           TITLE I--SLAMMING

Section 101. Improved protection for consumers

            (a) Consumer protection practices
    Subsection 101(a) re-writes section 258 of the 
Communications Act to promote industry self-regulation of 
changes in subscriber selections of carriers. While self-
regulation is common practice in many industries, it has yet to 
be adopted by telecommunications providers in the context of 
protecting consumers from slamming. The Committee therefore has 
decided to take the lead and direct the FCC to implement a Code 
of Subscriber Protection Practices. Through the Code, the FCC 
shall serve as a ``backstop,'' ensuring that the Code is 
implemented and,where appropriate, regulating those carriers 
that choose not to participate and punishing those that otherwise 
violate its requirements. In order to preserve the Code's appeal as an 
alternative to government regulation, the Committee expects that the 
FCC will implement a Code that is far less stringent and cumbersome 
than the FCC's own rules (as delineated in new subsection 258(c)).
    The slamming legislation has two other key elements. First, 
the Committee recognizes that some telecommunications providers 
may decide not to opt to abide by the code, or may have their 
ability to adhere to the code withdrawn by the Commission for 
failure to abide by its provisions. For these providers, the 
Committee has retained the approach adopted by the 
Subcommittee, whereby the Commission engages in strict and 
complete regulatory oversight. Second, States continue to have 
an important role in preventing slamming, and, to the maximum 
extent feasible, the Committee has retained their role.
    New subsection 258(a) sets forth the new regulatory 
paradigm. In paragraph (a)(1), the FCC, within 180 days of the 
date of enactment of this Act, is directed to prescribe a Code 
of Subscriber Protection Practices governing changes in a 
subscriber's selection of a provider of telephone toll or 
exchange service. In prescribing this Code, the Commission is 
required to issue a public notice and seek comment from the 
Federal Trade Commission, telecommunications carriers, State 
commissions, and consumers. The Committee expects that the 
Commission will give great deference to any consensus proposal 
submitted by the groups with which the FCC is required to 
consult pursuant to paragraph (a)(1). As previously stated, the 
Committee expects that the Code resulting from this 
collaborative process will be significantly less stringent and 
cumbersome than the mandatory provisions of subsection (c), 
while effectively protecting consumers from the illegal 
practice of slamming.
    In paragraph (a)(2), telecommunications carriers are 
required to choose between either participating in the Code, as 
delineated in subsection (b), or subjecting themselves to the 
regulatory requirements set forth in subsection (c). A carrier 
may also be subject to the regulatory requirements of 
subsection (c) if the FCC revokes or withdraws the carrier's 
election to abide by the Code as provided for in paragraph 
(b)(2). It should be noted that the requirements of new section 
258 apply to resellers of telecommunications services because 
of their direct contact with subscribers, and because they can 
and do directly seek changes in subscriber selection. If a 
reseller is the party involved, then the underlying carrier is 
not to be held liable, as stated in subsection 258(h).
    New paragraph 258(b)(1) sets forth the minimum requirements 
in the Code. Subparagraph (A) states that a telecommunications 
carrier electing to comply with the Code shall submit or 
execute a change in a subscriber's selection of a telephone 
exchange or toll service only in accordance with the provisions 
of the Code. Subparagraph (B) precludes a telecommunications 
carrier from using negative option marketing. Subparagraph (C) 
requires a telecommunications carrier to verify subscriber 
selections in accordance with the Code. Subparagraph (D) states 
that no telecommunications carrier or person acting on behalf 
of such carrier shall engage in unfair or deceptive acts or 
practices when soliciting a change from a subscriber. 
Subparagraph (E) requires telecommunications carriers to 
provide timely and accurate notification to the subscriber of a 
change in carrier selection.
    Subparagraph (F) identifies carrier liabilities and 
consumer remedies for violations of the Code. Specifically, if 
a telecommunications carrier improperly changes a subscriber's 
selection of a telecommunications carrier, it shall at a 
minimum reimburse the subscriber for fees associated with 
switching the subscriber back to the original carrier, and 
provide a credit for any telecommunications charges incurred by 
the subscriber during the period, not to exceed 30 days, while 
the subscriber was improperly subscribed. The Code shall 
provide for procedures for subscribers to allege violations; 
for telecommunications carriers to rebut allegations; for 
subscribers without undue delay or expense to challenge a 
rebuttal; and for the resolution of any administrative review 
within 75 days after the receipt of an appeal.
    Subparagraph (G) requires telecommunications carriers to 
maintain a record of the verification process and to provide a 
copy to a subscriber immediately upon request. Subparagraph (H) 
directs telecommunications carriers to institute quality 
control programs to prevent inadvertent changes in a 
subscriber's selection. And subparagraph (I) mandates that 
telecommunications carriers shall provide the FCC with 
independent audits demonstrating their compliance with the 
Code. If the FCC finds there is evidence that a carrier is 
violating the Code, it may require more frequent audits for the 
offending carrier.
    New paragraph 258(b)(2) sets forth the election process a 
telecommunications carrier must follow in notifying the FCC 
that it will comply with the Code. Either within 10 days after 
the Commission adopts rules implementing the Code or within 10 
days of commencing operations as a telecommunications carrier, 
a carrier shall provide the FCC with a statement that it is 
electing to abide by the Code to govern its submission or 
execution of changes in customers' selections of providers of 
telephone exchange or toll service. A carrier's election may 
not be withdrawn unless the Commission finds there is good 
cause for doing so and that the withdrawal of such election is 
in the public interest. The Commission may revoke an election 
if it determines that a carrier has failed to adhere in good 
faith to the Code and that the revocation is in the public 
interest. Finally, any carrier that fails to elect to comply 
with the Code, including through withdrawal or revocation, 
shall have its subscriber selection process governed by 
subsection (c) and the Commission's regulations adopted to 
implement that subsection.
    New subsection 258(c) contains the requirements for 
carriers that either elect not to comply with the Code, or that 
have otherwise had their election withdrawn or revoked. 
Paragraph (1) requires these carriers to comply with the 
provisions in subsection (c), and the Commission's regulations 
adopted pursuant thereto, whenever submitting or executing a 
change in a subscriber's selection of a provider of telephone 
exchange or toll service.
    Paragraph (2) identifies the verification procedures to be 
used by carriers not complying with the Code. Under 
subparagraph (2)(A), a telecommunications carrier submitting 
the change to an executing carrier shall, at a minimum, require 
the subscriber to: (i) affirm that the subscriber is authorized 
to select the provider of that service for the telephone number 
inquestion; (ii) acknowledge the type of service to be changed; 
(iii) affirm the intent to select the provider for that particular 
service; (iv) acknowledge that a change in providers will occur; and 
(v) provide such other information as the Commission considers 
appropriate for subscriber protection.
    Subparagraph (2)(B) requires the Commission to ensure 
proper verification by: (i) precluding the use of negative 
option marketing; (ii) requiring the carrier to provide a 
complete copy of verification of a change in service provider 
in oral, written, or electronic form; (iii) requiring the 
retention of such verification in a form and manner the 
Commission determines to be appropriate; (iv) mandating that 
verification occur in the same language as that in which the 
change was solicited; and (v) providing for verification to be 
made available to the subscriber upon request. Subparagraph 
(2)(C) states that when a carrier submits a change in a 
subscriber's selection, the carrier shall notify the subscriber 
clearly and in writing, not more than 15 days after the change 
is submitted to the executing carrier. Such notification shall 
include (i) the subscriber's new carrier, and (ii) the 
subscriber's right to request information about the date of the 
change and the name of the individual authorizing the change.
    Paragraph (3) sets forth the liability provisions for 
changes made in violation of subsection (c). Subparagraph 
(3)(A) sets forth the written notification procedure the local 
exchange carrier must follow in the first bill issued after the 
effective date of the change. It requires that the executing 
carrier, in this bill, (i) prominently disclose the change in 
provider and the effective date of the change, (ii) display the 
name and toll-free number of any telecommunications carrier for 
such new service, and (iii) direct the subscriber to contact 
the executing carrier if the subscriber has reason to believe 
the change was not authorized and provide the toll-free number 
for such carrier.
    Subparagraph (3)(B) directs an executing carrier, upon 
notification by a subscriber orally or in writing that a 
violation has occurred, to make an immediate change--without 
charge--in the subscriber's selection of provider for the 
service that is the subject of the allegation and restore the 
previous provider. The executing carrier shall also make an 
immediate credit to the subscriber's account for any charges 
for executing the original change. Finally, the executing 
carrier shall provide, if conducting the billing for the 
carrier that is the subject of the allegation, a credit to the 
subscriber's account for such service, in an amount equal to 
any charges for the telephone service that is the subject of 
the allegation during the period beginning on the date of the 
change and ending on the earlier of the date that the previous 
service is restored or 30 days after the date when the first 
bill was issued.
    In cases where a telecommunications carrier does not use an 
executing carrier to conduct billing, subparagraph (3)(B) 
directs a carrier, upon notification by a subscriber orally or 
in writing that a violation has occurred, to provide an 
immediate credit to the subscriber's account for such service. 
The carrier shall (except as provided in clause (C)(iii)) 
discharge the subscriber from liability for an amount equal to 
any charges incurred for the service that is the subject of the 
allegation during the period that begins on the date of the 
change of service and that ends on the earlier of the date that 
the previous service is restored or 30 days after the date when 
the first bill was issued.
    Subparagraph (3)(C) sets forth the procedures where 
telecommunications carriers that were the originally authorized 
providers of service can file a complaint and obtain relief. 
The Commission is directed to adopt procedures to implement 
this subparagraph and determine whether violations have 
occurred. These procedures shall permit a telecommunications 
carrier that was providing telephone exchange or toll service 
to a subscriber before the occurrence of the alleged violation 
to file a complaint seeking damages under clause (ii). They 
shall also permit the filing of a complaint seeking damages by 
a telecommunications carrier that was providing services after 
the alleged violation and seeking a reinstatement of charges 
under clause (iii). In both instances, the complaint shall be 
filed not later than 6 months after the date on which the 
relevant subscriber submitted an allegation of a violation to 
the executing carrier. In addition, parties that file 
complaints may seek determinations with respect to multiple 
alleged violations.
    Clause (ii) provides that if the Commission finds in favor 
of a telecommunications carrier that was providing service and 
determines that a violation has occurred, other than an 
inadvertent or unintentional violation, the Commission shall 
award damages to the complaining carrier in an amount equal to 
the sum of the gross amount of the charges that the carrier 
would have received from the subscriber during the violation 
plus $500 per violation, and it shall award the subscriber that 
was the subject of the violation $500. Clause (iii) provides 
that if the Commission finds that no violation has occurred, it 
shall order that any credit provided to the subscriber under 
clause (B)(ii) be reversed or that the carrier may resubmit a 
bill for the amount of the credit to the subscriber 
notwithstanding any discharge under clause (B)(ii). Clause (iv) 
requires the Commission to resolve complaints filed under the 
procedure not later than 6 months after filing.
    Subparagraph (3)(D) directs the Commission to adopt rules 
requiring executing carriers to maintain information regarding 
each violation of subsection (c) for which the carrier has been 
notified. The information that shall be maintained includes: 
the effective date of the change of service involved in the 
alleged violation, the name of the provider of the service to 
which the change was made, the name, address, and telephone 
number of the subscriber who was the subject of the alleged 
violation, and the amount of any credit provided under clause 
(B)(ii). The FCC shall prescribe the computer formats for the 
maintenance of the information, and each executing carrier 
shall, on not less than a monthly basis, submit this 
information. Finally, the information submitted shall be made 
available upon request to any telecommunications carrier, and 
such carrier shall use such information solely for the purpose 
of investigating, filing, or resolving complaints under this 
section.
    Paragraph (c)(4) sets forth the civil penalties for 
violations of subsection (c). Unless it finds mitigating 
circumstances, the Commission shall find that a first offense 
is punishable by a forfeiture of not less than $40,000 and for 
each subsequent offense the amount shall be not less than 
$150,000. The Commission has the discretion to determine the 
appropriate amount of theforfeiture and should base its 
determination upon the specific acts involved, for instance, by 
imposing the maximum forfeiture on carriers that act fraudulently with 
intent to profit. Paragraph (c)(5) gives the FCC the authority to take 
such action as may be necessary to collect on any forfeitures it 
imposes and, on behalf of any subscriber, to collect any damages 
awarded the subscriber under this subsection. Accordingly, the 
Commission may collect forfeitures directly, without having to go 
through the Department of Justice.
    New subsection 258(d) states that this section does not 
apply to any provider of commercial mobile services (as 
currently defined in paragraph 332(d)(1) of the Communications 
Act). Given the absence on the record of a substantial number 
of slamming incidents in the commercial mobile service sector, 
the Committee has concluded that it is not necessary to extend 
H.R. 3888's anti-slamming requirements to wireless carriers.
    New subsection 258(e) requires the FCC to oversee industry 
compliance with H.R. 3888. In particular, paragraph (e)(1) 
directs the Commission, every 6 months, to compile and publish 
a report ranking telecommunications carriers by the percentage 
of verified complaints (which shall exclude those generated by 
the carrier's unaffiliated resellers), compared to the number 
of changes in a subscriber's selection of a provider of 
telephone exchange and toll service. In addition, paragraph 
(e)(2) directs the Commission to investigate carriers that are 
listed among the five worst performers in its semiannual 
reports three times in succession. If the Commission finds that 
the carrier is misrepresenting adherence to the Code or is 
willfully and repeatedly changing subscribers' selections of 
providers, it shall find such carrier to be in violation of 
this section and shall fine the carrier up to $1 million. 
Finally, paragraph (e)(3) directs the Commission, every two 
years, to review the Code of Subscriber Protection Practices to 
ensure its requirements adequately protect subscribers from 
improper changes in a subscriber's selection of a provider of 
telephone exchange or toll service.
    New subsection 258(f) deals with actions by States. 
Paragraph (f)(1) provides that State attorneys general may 
bring a civil action against a carrier for a violation of the 
Code or subsection (c) in an appropriate district court of the 
United States to enjoin such violation, to enforce compliance 
with the Code, to obtain damages on behalf of their residents, 
or to obtain such further or other relief as the court may deem 
appropriate. Under paragraph (f)(2), the State shall notify the 
Commission before filing its complaint, unless that is not 
feasible, and provide the FCC with a copy of the complaint. The 
Commission may intervene in such action, shall be heard on all 
matters arising therein, and shall have the right to file 
petitions for appeal. Paragraph (f)(3) requires that the venue 
for actions brought by the State be in the district where the 
defendant is found or is an inhabitant or transacts business or 
where the violation is alleged to have occurred or be 
occurring. Process in such cases may be served in any district 
in which the defendant is an inhabitant or wherever the 
defendant may be found.
    Paragraph (f)(4) notes that, when bringing a civil action, 
a State attorney general may exercise any powers conferred on 
the attorney general by the laws of such State to conduct 
investigations or to administer oaths or affirmations or to 
compel the attendance of witnesses or the production of 
documentary and other evidence. Paragraph (f)(5) provides that 
nothing in subsection (f) shall prohibit an authorized State 
official from proceeding in State court on the basis of an 
alleged violation of any general civil or criminal statute of 
such State. Pursuant to paragraph (f)(6), whenever the FCC has 
instituted a civil action for a violation of this section, no 
State may, during the pendency of such action, subsequently 
institute a civil action against any defendant named in the 
Commission's complaint for violation of any rule as alleged in 
the Commission's complaint. Finally, paragraph (f)(7) 
recognizes that, in addition to actions brought by a State 
attorney general under paragraph (1), such an action may be 
brought by other authorized officers of such State.
    New subsection 258(g) also addresses the role of the 
States. The Committee recognizes the important role that State 
commissions and attorneys general can play in thwarting 
slamming, and thus intends not to limit their duties 
unreasonably. At the same time, the Committee recognizes that 
carriers may incur increased and unnecessary costs if they are 
compelled to abide by a balkanized statutory and regulatory 
regime. Thus subsection (g) provides that nothing in this 
section or in the regulations prescribed under this section 
shall preempt any State law that imposes requirements, 
regulations, damages, costs, or penalties on changes in a 
subscriber's selection of a provider of telephone exchange or 
toll service that are less restrictive than those imposed under 
this section. In addition, except as provided in paragraph 
(f)(6), nothing contained in this section shall be construed to 
prohibit an authorized State official from proceeding in State 
court on the basis of an alleged violation of any general or 
specific statute of such State not preempted by this section.
    New subsection 258(h) states that for purposes of this 
section, the initiation of service to a subscriber shall be 
treated as a change in a subscriber's selection of a provider. 
Moreover, a carrier may not be found in violation of this 
section solely on the basis of a violation of this section by 
an unaffiliated reseller of that carrier's services or 
facilities.
    New subsection 258(i) lists several key definitions. 
Paragraph (i)(1) defines a ``subscriber'' as a person named on 
the billing statement or account or any other person authorized 
to make changes in the providers of telephone exchange or toll 
service. Paragraph (i)(2) defines an ``executing carrier'' as, 
with respect to any change in the provider of telephone 
exchange or toll service, the exchange carrier that executed 
such change. And paragraph (i)(3) states that the term 
``attorney general'' means the chief legal officer of a State.
            (b) NTIA study of third-party administration
    Within 180 days of the enactment of this Act, the National 
Telecommunications and Information Administration shall report 
to the House Committee on Commerce and the Senate Committee on 
Commerce, Science, and Transportation on the feasibility and 
desirability of establishing a neutral third-party 
administration system to prevent illegal changes in telephone 
subscriber carrier selections. The study shall include: an 
analysis of the cost of establishing independent databases or 
clearinghouses, either nationally or regionally, to verify and 
submit changes in carrier selections; the additional cost to 
carriers, per change in carrier selection, tofund the ongoing 
operation of such databases or clearinghouses; and the advantages and 
disadvantages of utilizing such databases or clearinghouses.

                           TITLE II--SPAMMING

Section 201. Sense of the Congress

    Section 201 sets forth a sense of the Congress resolution 
regarding the practice of sending consumers unsolicited 
commercial electronic mail (or ``e-mail''), often in bulk. This 
practice, commonly referred to as ``spamming,'' has been a 
serious concern to the Committee because spam congests the 
Internet and other electronic networks. In addition, some 
Internet Service Providers (ISPs) charge users based on time 
spent on using their network. Time spent by consumers deleting 
and preventing spam costs consumers money.
    Thus, the Committee, for now, seeks to reduce the practice 
of spamming without imposing government mandates on the 
Internet and other electronic networks. Accordingly, the sense 
of Congress outlined in section 201 calls on the private sector 
to adopt, implement, and enforce measures that prevent and 
deter spam. The Committee expects that the private sector will 
view Congress' charge as a useful opportunity to reduce spam 
voluntarily.

              TITLE III--AUCTION RESCISSION AND RE-AUCTION

Section 301. Re-auction of C-block licenses

    Subsection 301(a) unwinds the C-block auctions that began 
on December 18, 1995, and July 3, 1996, by directing the 
Commission, in accordance with the provisions of subsection 
(b), to rescind a licensee's (as that term is defined in 
paragraph (f)(4)) authority to utilize frequencies assigned 
pursuant to the C-block auction, and cancel the associated debt 
obligations the licensee assumed under the C-block installment 
payment program, upon the election of that licensee.
    Subsection 301(b) sets out specific requirements to which 
the Commission must adhere in implementing the rescission 
policy embodied in subsection (a). In particular, paragraph 
(b)(1) provides that any licensee making an election pursuant 
to subsection (a) must do so with regard to all of its licenses 
or none of them. An exception is provided that permits 
licensees that have commenced service to the public in one or 
more business trading areas (BTAs) to retain such licenses, 
while surrendering non-built-out BTAs, and have the 
indebtedness associated with the retained licenses adjusted 
pursuant to subsection (c).
    Paragraph (b)(2) provides all persons initially authorized 
to utilize 30 MHz C-block frequencies an opportunity to reverse 
actions they have taken concerning their licenses in response 
to the FCC's orders in WT Docket No. 97-82 for purposes of 
making the election specified in subsection (a). Paragraph 
(b)(2) is designed to provide persons who have responded to the 
Commission's C-block restructuring orders by taking actions 
that have affected their authorizations or their status under 
the FCC's C-block rules an opportunity to restore their 
previous status in order to make the election permitted under 
subsection (a). Such persons include, for example, those who 
have surrendered licenses in whole or part by making an 
election pursuant to one of the FCC's C-block restructuring 
orders in WT Docket No. 97-82, or who are currently in 
bankruptcy proceedings and have not yet made an election. This 
is central to achieving the legislative intentions to extend 
everyone a fresh start. The Committee intends that the FCC will 
interpret the term ``all licensees'' literally; ``all 
licensees'' means all licensees, without exception.
    Paragraph (b)(3) provides that licensees that elect to have 
their frequency authorizations and indebtedness rescinded shall 
be granted a full bidding credit in an amount equal to the sum 
of all down payments, installment payments and interest 
payments made prior to the effective date of this legislation. 
Such credits may be utilized in bidding on the right to apply 
for any C-block license, including a license a bidder may have 
held previously. The FCC must commence the reauction of C-block 
licenses no later than March 24, 1999.
    Paragraph (b)(4) provides that bidding credits shall be 
freely transferable, in whole or in part, among entities that 
meet the eligibility standards for participating in C-block 
auctions pursuant to paragraph (b)(7). Paragraph (b)(5) 
provides that bidding credits are not refundable. Paragraph 
(b)(6) provides that installment payments are not to be 
utilized in C-block reauctions. Such auctions shall be 
conducted on a ``cash-on-the-barrel'' basis.
    Paragraph (b)(7) limits eligibility to participate in C-
block spectrum auctions undertaken pursuant to this legislation 
in order to preserve the ``small business'' nature of the 
initial C-block auction. This paragraph accommodates the 
possibility that entities that participated in the initial C-
block auctions that began on December 18, 1995, and July 3, 
1996, may have since grown to the point where they may no 
longer qualify under the eligibility rules in effect for those 
auctions. Paragraph (b)(8) requires the Commission to take 
final action within 60 days after the C-block re-auction on 
license applications filed by entities the FCC has named as 
winning bidders. This paragraph is designed to avoid a repeat 
of the lengthy delays in license processing that characterized 
the aftermath of the initial C-block auctions.
    Subsection 301(c) is designed to ensure fair treatment of 
the small number of C-block licensees that have been able to 
commence commercial operations, notwithstanding the problems 
confronting the C-block as a whole. Under subsection (c), such 
licensees may retain licenses in any BTA in which they have 
begun offering service to the public prior to the start of the 
reauction. This subsection requires the Commission, following 
the C-block reauction, to restructure the indebtedness 
associated with such licenses, upon the request of the 
licensee, so that such debt is approximately equal to the 
winning bids for BTA's with comparable populations. The 
adjustment would take into account all amounts such licensees 
already have paid for their licenses prior to the reauction.
    Subsection 301(d) requires the Commission to adopt a final 
order in WT Docket No. 97-82 implementing the requirements of 
this section within 30 days of its enactment. Subsection 301(e) 
directs the Commission to suspend all payments due in 
connection with the C-blockauctions that began on December 18, 
1995, and July 3, 1996, until completion of the reauction required by 
this section. Subsection 301(f) contains definitions used in Title III 
of H.R. 3888.

                    TITLE IV--GWCS AUCTION DEADLINE

Section 401. Elimination of arbitrary auction deadline

    The Omnibus Budget Reconciliation Act of 1993 (OBRA '93) 
required the FCC to auction and license at least 10 MHz of 
transferred government spectrum by August 10, 1998. The 
Commission partially fulfilled its statutory requirement in 
1997 when, pursuant to the Omnibus Consolidated Appropriations 
Act of 1997, it auctioned and licensed five MHz of transferred 
government spectrum for so-called ``wireless communications 
service.'' The FCC had intended to fulfill its responsibility 
to auction the remaining five MHz through an auction of 25 MHz 
for so-called ``general wireless communications service'' 
(GWCS).
    The FCC, however, never held its GWCS auction because of an 
apparent lack of demand for the frequencies allocated for GWCS 
(i.e., 4660-4685 MHz). See letter from The Honorable William E. 
Kennard, Chairman, Federal Communications Commission, to The 
Honorable Tom Bliley, Chairman, United States House of 
Representatives, at 1 (April 23, 1998) (noting that ``[t]he 
public provided no written responses'' to FCC request for 
public comment in preparation for GWCS auction). Consequently, 
as of August 11, 1998, the FCC was in violation of OBRA '93. 
Section 401 of H.R. 3888 rectifies the FCC's legal status by 
eliminating the deadline established by OBRA '93.

              TITLE V--REINSTATEMENT OF CERTAIN APPLICANTS

Section 501. Reinstatement of applicants as tentative selectees

    Section 501 provides for the issuing of permanent licenses 
in three rural service areas (RSAs) by directing the FCC to 
reinstate each applicant it had originally selected as 
tentative selectees for a license, and to permit each applicant 
to amend its application to update factual information and to 
comply with the rules of the Commission.

Section 502. Continuation of license proceeding

    Subsection 502(a) requires the Commission to award licenses 
in the three RSAs that are the subject of Title V within 90 
days of enactment. Subsection 502(b) provides that the 
Commission's cellular service rules are applicable to the 
applicants as they initiate cellular service. Subsection 502(b) 
also accelerates the offering of service in the Minnesota and 
Florida RSAs by requiring the applicants to build-out their 
cellular systems in three years, rather than five years as 
required by the FCC's rules. Finally, subsection 502(b) 
confirms that the Commission's waiver authority is applicable 
to the accelerated build-out schedule.
    Subsection 502(c) directs the applicants, upon grant of the 
licenses by the FCC, to provide each public school, library, 
police, fire, and emergency medical service entity in their 
license area with free local cellular service. Subsection 
502(c) provides that the free service may be used only in 
connection with the official business of these public safety 
and educational entities when they are using the cellular 
service in the applicant's license area. Subsection 502(d) 
directs the applicants to provide cellular service free of 
charge to public safety personnel during emergencies which 
require the activation of the Emergency Alert System in their 
service areas.
    Subsection 502(e) prohibits applicants from disclosing any 
location information which may be generated through a 
subscriber's use of a cellular telephone, except as otherwise 
provided under Federal law. This prohibition will protect the 
privacy of the applicants' subscribers but is not intended to 
supersede any other Federal law which may govern the disclosure 
of a cellular user's location, such as, but not limited to, the 
Commission's E911 regulations.
    Subsection 502(f) provides that if an applicant is 
ineligible for the grant of a license after the FCC has 
provided the applicant with the opportunity to amend its 
application, the Commission may auction these RSA licenses 
pursuant to the Communications Act of 1934. This section will 
ensure that these RSA licenses are being utilized to provide 
service to the public as rapidly as possible.

Section 503. Prohibition on transfer

    Section 503 prohibits the applicants from transferring 
ownership in the licenses they are awarded pursuant to this 
Title for five years. This section will not restrict the 
ability of the applicants from entering into agreements or 
partnerships which will improve cellular telephone service in 
these rural license areas, provided that such agreements 
conform with the Commission's transfer of control rules.

Section 504. Definitions

    Section 504 defines certain terms used in Title V of H.R. 
3888.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3 of rule XIII of the Rules of the 
House of Representatives, changes in existing law made by the 
bill, as reported, are shown as follows (existing law proposed 
to be omitted is enclosed in black brackets, new matter is 
printed in italic, existing law in which no change is proposed 
is shown in roman):

COMMUNICATIONS ACT OF 1934

           *       *       *       *       *       *       *


TITLE II--COMMON CARRIERS

           *       *       *       *       *       *       *


PART II--DEVELOPMENT OF COMPETITIVE MARKETS

           *       *       *       *       *       *       *


[SEC. 258. ILLEGAL CHANGES IN SUBSCRIBER CARRIER SELECTIONS.

  [(a) Prohibition.--No telecommunications carrier shall submit 
or execute a change in a subscriber's selection of a provider 
of telephone exchange service or telephone toll service except 
in accordance with such verification procedures as the 
Commission shall prescribe. Nothing in this section shall 
preclude any State commission from enforcing such procedures 
with respect to intrastate services.
  [(b) Liability for Charges.--Any telecommunications carrier 
that violates the verification procedures described in 
subsection (a) and that collects charges for telephone exchange 
service or telephone toll service from a subscriber shall be 
liable to the carrier previously selected by the subscriber in 
an amount equal to all charges paid by such subscriber after 
such violation, in accordance with such procedures as the 
Commission may prescribe. The remedies provided by this 
subsection are in addition to any other remedies available by 
law.]

SEC. 258. ILLEGAL CHANGES IN SUBSCRIBER SELECTIONS OF CARRIERS.

  (a) Alternative Modes of Regulation.--
          (1) Industry/commission code.--Within 180 days after 
        the date of enactment of the Telecommunications 
        Competition and Consumer Protection Act of 1998, the 
        Commission, after consulting with the Federal Trade 
        Commission and representatives of telecommunications 
        carriers providing telephone toll service and telephone 
        exchange service, State commissions, and consumers, and 
        considering any proposals developed by such 
        representatives, shall prescribe, after notice and 
        public comment and in accordance with subsection (b), a 
        Code of Subscriber Protection Practices (hereinafter in 
        this section referred as the ``Code'') governing 
        changes in a subscriber's selection of a provider of 
        telephone exchange service or telephone toll service.
          (2) Obligation to comply.--No telecommunications 
        carrier (including a reseller of telecommunications 
        services) shall submit or execute a change in a 
        subscriber's selection of a provider of telephone 
        exchange service or telephone toll service except in 
        accordance with--
                  (A) the Code, if such carrier elects to 
                comply with the Code in accordance with 
                subsection (b)(2); or
                  (B) the requirements of subsection (c), if--
                          (i) the carrier does not elect to 
                        comply with the Code under subsection 
                        (b)(2); or
                          (ii) such election is revoked or 
                        withdrawn.
  (b) Minimum Provisions of the Code.--
          (1) Subscriber protection practices.--The Code 
        required by subsection (a)(1) shall include provisions 
        addressing the following:
                  (A) In general.--A telecommunications carrier 
                (including a reseller of telecommunications 
                services) electing to comply with the Code 
                shall submit or execute a change in a 
                subscriber's selection of a provider of 
                telephone exchange service or telephone toll 
                service only in accordance with the provisions 
                of the Code.
                  (B) Negative option.--A telecommunications 
                carrier shall not use negative option 
                marketing.
                  (C) Verification.--A telecommunications 
                carrier shall verify the subscriber's selection 
                of the carrier in accordance with procedures 
                specified in the Code.
                  (D) Unfair and deceptive acts and 
                practices.--No telecommunications carrier, nor 
                any person acting on behalf of any such 
                carrier, shall engage in any unfair or 
                deceptive acts or practices in connection with 
                the solicitation of a change in a subscriber's 
                selection of a telecommunications carrier.
                  (E) Notification and rights.--A 
                telecommunications carrier shall provide timely 
                and accurate notification to the subscriber in 
                accordance with procedures specified in the 
                Code.
                  (F) Slamming liability and remedies.--
                          (i) Required reimbursement and 
                        credit.--A telecommunications carrier 
                        that has improperly changed the 
                        subscriber's selection of a 
                        telecommunications carrier without 
                        authorization, shall at a minimum--
                                  (I) reimburse the subscriber 
                                for the fees associated with 
                                switching the subscriber back 
                                to their original carrier; and
                                  (II) provide a credit for any 
                                telecommunications charges 
                                incurred by the subscriber 
                                during the period, not to 
                                exceed 30 days, while that 
                                subscriber was improperly 
                                presubscribed.
                          (ii) Procedures.--The Code shall 
                        prescribe procedures by which--
                                  (I) a subscriber may make an 
                                allegation of a violation under 
                                clause (i);
                                  (II) the telecommunications 
                                carrier may rebut such 
                                allegation;
                                  (III) the subscriber may, 
                                without undue delay, burden, or 
                                expense, challenge the 
                                rebuttal; and
                                  (IV) resolve any 
                                administrative review of such 
                                an allegation within 75 days 
                                after receipt of an appeal.
                  (G) Recordkeeping.--A telecommunications 
                carrier shall make and maintain a record of the 
                verification process and shall provide a copy 
                to the subscriber immediately upon request.
                  (H) Quality control.--A telecommunications 
                carrier shall institute a quality control 
                program to prevent inadvertent changes in a 
                subscriber's selection of a carrier.
                  (I) Independent audits.--A telecommunications 
                carrier shall provide the Commission with an 
                independent audit regarding its compliance with 
                the Code at intervals prescribed by the Code. 
                The Commission may require a telecommunications 
                carrier to provide an independent audit on a 
                more frequent basis if there is evidence that 
                such telecommunications carrier is violating 
                the Code.
          (2) Election by carriers.--Each telecommunications 
        carrier electing to comply with the Code shall file 
        with the Commission within 10 days after the adoption 
        of the Code, or within 10 days after commencing 
        operations as a telecommunications carrier, a statement 
        electing the Code to govern such carrier's submission 
        or execution of a change in a customer's selection of a 
        provider of telephone exchange service or telephone 
        toll service. Such election by a carrier may not be 
        revoked or withdrawn unless the Commission finds that 
        there is good cause therefor, including a determination 
        that the carrier has failed to adhere in good faith to 
        the applicable provisions of the Code, and that the 
        revocation or withdrawal is in the public interest. Any 
        telecommunications carrier that fails to elect to 
        comply with the Code shall be deemed to have elected to 
        be governed by the subsection (c) and the Commission's 
        regulations thereunder.
  (c) Regulations of Carriers Not Complying With Code.--
          (1) In general.--A telecommunications carrier 
        (including a reseller of telecommunications services) 
        that has not elected to comply with the Code under 
        subsection (b), or as to which the election has been 
        withdrawn or revoked, shall not submit or execute a 
        change in a subscriber's selection of a provider of 
        telephone exchange service or telephone toll service 
        except in accordance with this subsection and such 
        verification procedures as the Commission shall 
        prescribe.
          (2) Verification.--
                  (A) In general.--In order to verify a 
                subscriber's selection of a telephone exchange 
                service or telephone toll service provider 
                under this subsection, the telecommunications 
                carrier submitting the change to an executing 
                carrier shall, at a minimum, require the 
                subscriber--
                          (i) to affirm that the subscriber is 
                        authorized to select the provider of 
                        that service for the telephone number 
                        in question;
                          (ii) to acknowledge the type of 
                        service to be changed as a result of 
                        the selection;
                          (iii) to affirm the subscriber's 
                        intent to select the provider as the 
                        provider of that service;
                          (iv) to acknowledge that the 
                        selection of the provider will result 
                        in a change in providers of that 
                        service; and
                          (v) to provide such other information 
                        as the Commission considers appropriate 
                        for the protection of the subscriber.
                  (B) Additional requirements.--The procedures 
                prescribed by the Commission to verify a 
                subscriber's selection of a provider shall--
                          (i) preclude the use of negative 
                        option marketing;
                          (ii) provide for a complete copy of 
                        verification of a change in telephone 
                        exchange service or telephone toll 
                        service provider in oral, written, or 
                        electronic form;
                          (iii) require the retention of such 
                        verification in such manner and form 
                        and for such time as the Commission 
                        considers appropriate;
                          (iv) mandate that verification occur 
                        in the same language as that in which 
                        the change was solicited; and
                          (v) provide for verification to be 
                        made available to a subscriber on 
                        request.
                  (C) Notice to subscriber.--Whenever a 
                telecommunication carrier submits a change in a 
                subscriber's selection of a provider of 
                telephone exchange service or telephone toll 
                service, such telecommunications carrier shall 
                clearly notify the subscriber in writing, not 
                more than 15 days after the change is submitted 
                to the executing carrier--
                          (i) of the subscriber's new carrier; 
                        and
                          (ii) that the subscriber may request 
                        information regarding the date on which 
                        the change was agreed to and the name 
                        of the individual who authorized the 
                        change.
          (3) Liability for violations.--
                  (A) Notification of change.--The first bill 
                issued after the effective date of a change in 
                a subscriber's provider of telephone exchange 
                service or telephone toll service by the 
                executing carrier for such change shall--
                          (i) prominently disclose the change 
                        in provider and the effective date of 
                        such change;
                          (ii) contain the name and toll-free 
                        number of any telecommunications 
                        carrier for such new service; and
                          (iii) direct the subscriber to 
                        contact the executing carrier if the 
                        subscriber believes that such change 
                        was not authorized and that the change 
                        was made in violation of this 
                        subsection, and contain the toll-free 
                        number by which to make such contact.
                  (B) Automatic switch-back of service and 
                credit to consumer of charges.--
                          (i) Obligations of executing 
                        carrier.--If a subscriber of telephone 
                        exchange service or telephone toll 
                        service makes an allegation, orally or 
                        in writing, to the executing carrier 
                        that a violation of this subsection has 
                        occurred with respect to such 
                        subscriber--
                                  (I) the executing carrier 
                                shall, without charge to the 
                                subscriber, execute an 
                                immediate change in the 
                                provider of the telephone 
                                service that is the subject of 
                                the allegation to restore the 
                                previous provider of such 
                                service for the subscriber;
                                  (II) the executing carrier 
                                shall provide an immediate 
                                credit to the subscriber's 
                                account for any charges for 
                                executing the original change 
                                of service provider; and
                                  (III) if the executing 
                                carrier conducts billing for 
                                the carrier that is the subject 
                                of the allegation, the 
                                executing carrier shall provide 
                                an immediate credit to the 
                                subscriber's account for such 
                                service, in an amount equal to 
                                any charges for the telephone 
                                service that is the subject of 
                                the allegation incurred during 
                                the period--
                                          (aa) beginning upon 
                                        the date of the change 
                                        of service that is the 
                                        subject of the 
                                        allegation; and
                                          (bb) ending on the 
                                        earlier of the date 
                                        that the subscriber is 
                                        restored to the 
                                        previous provider, or 
                                        30 days after the date 
                                        the bill described in 
                                        subparagraph (A) is 
                                        issued.
                          (ii) Obligations of carriers not 
                        billing through executing carriers.--If 
                        a subscriber of telephone exchange 
                        service or telephone toll service 
                        transmits, orally or in writing, to any 
                        carrier that does not use an executing 
                        carrier to conduct billing an 
                        allegation that a violation of this 
                        subsection has occurred with respect to 
                        such subscriber, the carrier shall 
                        provide an immediate credit to the 
                        subscriber's account for such service, 
                        and the subscriber shall, except as 
                        provided in subparagraph (C)(iii), be 
                        discharged from liability, for an 
                        amount equal to any charges for the 
                        telephone service that is the subject 
                        of the allegation incurred during the 
                        period--
                                  (I) beginning upon the date 
                                of the change of service that 
                                is the subject of the 
                                allegation; and
                                  (II) ending on the earlier of 
                                the date that the subscriber is 
                                restored to the previous 
                                provider, or 30 days after the 
                                date the bill described in 
                                paragraph (1) is issued.
                          (iii) Time limitation.--This 
                        subparagraph shall apply only to 
                        allegations made by subscribers before 
                        the expiration of the 1-year period 
                        that begins on the issuance of the bill 
                        described in subparagraph (A).
                  (C) Procedure for carrier remedy.--
                          (i) In general.--The Commission 
                        shall, by rule, establish a procedure 
                        for rendering determinations with 
                        respect to violations of this 
                        subsection. Such procedure shall permit 
                        such determinations to be made upon the 
                        filing of (I) a complaint by a 
                        telecommunications carrier that was 
                        providing telephone exchange service or 
                        telephone toll service to a subscriber 
                        before the occurrence of an alleged 
                        violation, and seeking damages under 
                        clause (ii), or (II) a complaint by a 
                        telecommunications carrier that was 
                        providing services after the alleged 
                        violation, and seeking a reinstatement 
                        of charges under clause (iii). Either 
                        such complaint shall be filed not later 
                        than 6 months after the date on which 
                        any subscriber whose allegation is 
                        included in the complaint submitted an 
                        allegation of the violation to the 
                        executing carrier under subparagraph 
                        (B)(ii). Either such complaint may seek 
                        determinations under this paragraph 
                        with respect to multiple alleged 
                        violations in accordance with such 
                        procedures as the Commission shall 
                        establish in the rules prescribed under 
                        this subparagraph.
                          (ii) Determination of violation and 
                        remedies.--In a proceeding under this 
                        subparagraph, if the Commission 
                        determines that a violation of this 
                        subsection has occurred, other than an 
                        inadvertent or unintentional violation, 
                        the Commission shall award damages--
                                  (I) to the telecommunications 
                                carrier filing the complaint, 
                                in an amount equal to the sum 
                                of (aa) the gross amount of 
                                charges that the carrier would 
                                have received from the 
                                subscriber during the 
                                violation, and (bb) $500 per 
                                violation; and
                                  (II) to the subscriber that 
                                was subjected to the violation, 
                                in the amount of $500.
                          (iii) Determination of no 
                        violation.--If the Commission 
                        determines that a violation of this 
                        subsection has not occurred, the 
                        Commission shall order that any credit 
                        provided to the subscriber under 
                        subparagraph (B)(ii) be reversed, or 
                        that the carrier may resubmit a bill 
                        for the amount of the credit to the 
                        subscriber notwithstanding any 
                        discharge under subparagraph (B)(ii).
                          (iv) Speedy resolution of 
                        complaints.--The procedure established 
                        under this subparagraph shall provide 
                        for a determination of each complaint 
                        filed under the procedure not later 
                        than 6 months after filing.
                  (D) Maintenance of information.--
                          (i) In general.--The Commission 
                        shall, by rule, require each executing 
                        carrier to maintain information 
                        regarding each alleged violation of 
                        this subsection of which the carrier 
                        has been notified.
                          (ii) Contents.--The information 
                        required to be maintained pursuant to 
                        this paragraph shall include,for each 
alleged violation of this subsection, the effective date of the change 
of service involved in the alleged violation, the name of the provider 
of the service to which the change was made, the name, address, and 
telephone number of the subscriber who was subject to the alleged 
violation, and the amount of any credit provided under subparagraph 
(B)(ii).
                          (iii) Form.--The Commission shall 
                        prescribe one or more computer data 
                        formats for the maintenance of 
                        information under this paragraph, which 
                        shall be designed to facilitate 
                        submission and compilation pursuant to 
                        this subparagraph.
                          (iv) Monthly reports.--Each executing 
                        carrier shall, on not less than a 
                        monthly basis, submit the information 
                        maintained pursuant to this 
                        subparagraph to the Commission.
                          (v) Access to information.--The 
                        Commission shall make the information 
                        submitted pursuant to clause (iv) 
                        available upon request to any 
                        telecommunications carrier. Any 
                        telecommunications carrier obtaining 
                        access to such information shall use 
                        such information exclusively for the 
                        purposes of investigating, filing, or 
                        resolving complaints under this 
                        section.
          (4) Civil penalties.--Unless the Commission 
        determines that there are mitigating circumstances, 
        violation of this subsection is punishable by a 
        forfeiture of not less than $40,000 for the first 
        offense, and not less than $150,000 for each subsequent 
        offense.
          (5) Recovery of forfeitures.--The Commission may take 
        such action as may be necessary--
                  (A) to collect any forfeitures it imposes 
                under this subsection; and
                  (B) on behalf of any subscriber, to collect 
                any damages awarded the subscriber under this 
                subsection.
  (d) Application to Wireless.--This section does not apply to 
a provider of commercial mobile service.
  (e) Commission Requirements.--
          (1) Semiannual reports.--Every 6 months, the 
        Commission shall compile and publish a report ranking 
        telecommunications carriers by the percentage of 
        verified complaints, excluding those generated by the 
        carrier's unaffiliated resellers, compared to the 
        number of changes in a subscriber's selection of a 
        provider of telephone exchange service and telephone 
        toll service.
          (2) Investigation.--If a telecommunications carrier 
        is listed among the 5 worst performers based upon the 
        percentage of verified complaints, excluding those 
        generated by the carrier's unaffiliated resellers, 
        compared to its number of carrier selection changes in 
        the semiannual reports 3 times in succession, the 
        Commission shall investigate the carrier's practices 
        regarding subscribers' selections of providers of 
        telephone exchange service and telephone toll service. 
        If the Commission finds that the carrier is 
        misrepresenting adherence to the Code or is willfully 
        and repeatedly changing subscribers' selections of 
        providers, it shall find such carrier to be in 
        violation of this section and shall fine the carrier up 
        to $1,000,000.
          (3) Code review.--Every 2 years, the Commission shall 
        review the Code to ensure its requirements adequately 
        protect subscribers from improper changes in a 
        subscriber's selection of a provider of telephone 
        exchange service and telephone toll service.
  (f) Actions by States.--
          (1) In general.--Whenever an attorney general of any 
        State has reason to believe that the interests of the 
        residents of that State have been or are being 
        threatened or adversely affected because any person has 
        violated the Code or subsection (c), or any rule or 
        regulation prescribed by the Commission under 
        subsection (c), the State may bring a civil action on 
        behalf of its residents in an appropriate district 
        court of the United States to enjoin such violation, to 
        enforce compliance with such Code, subsection, rule, or 
        regulation, to obtain damages on behalf of their 
        residents, or to obtain such further and other relief 
        as the court may deem appropriate.
          (2) Notice.--The State shall serve prior written 
        notice of any civil action under paragraph (1) upon the 
        Commission and provide the Commission with a copy of 
        its complaint, except that if it is not feasible for 
        the State to provide such prior notice, the State shall 
        serve such notice immediately upon instituting such 
        action. Upon receiving a notice respecting a civil 
        action, the Commission shall have the right (A) to 
        intervene in such action, (B) upon so intervening, to 
        be heard on all matters arising therein, and (C) to 
        file petitions for appeal.
          (3) Venue.--Any civil action brought under this 
        section in a district court of the United States may be 
        brought in the district wherein the defendant is found 
        or is an inhabitant or transacts business or wherein 
        the violation occurred or is occurring, and process in 
        such cases may be served in any district in which the 
        defendant is an inhabitant or wherever the defendant 
        may be found.
          (4) Investigatory powers.--For purposes of bringing 
        any civil action under this section, nothing in this 
        Act shall prevent the attorney general from exercising 
        the powers conferred on the attorney general by the 
        laws of such State to conduct investigations or to 
        administer oaths or affirmations or to compel the 
        attendance of witnesses or the production of 
        documentary and other evidence.
          (5) Effect on state court proceedings.--Nothing 
        contained in this subsection shall prohibit an 
        authorized State official from proceeding in State 
        court on the basis of an alleged violation of any 
        general civil or criminal statute of such State.
          (6) Limitation.--Whenever the Commission has 
        instituted a civil action for violation of this section 
        or any rule or regulation thereunder, no State may, 
        during the pendency of such action instituted by the 
        Commission, subsequently institute a civil action 
        against any defendant named in the Commission's 
        complaint for violation of any rule as alleged in the 
        Commission's complaint.
          (7) Actions by other state officials.--In addition to 
        actions brought by an attorney general of a State under 
        paragraph (1), such an action may be brought by 
        officers of such State who are authorized by the State 
        to bring actions in such State for protection of 
        consumers.
  (g) State Law Not Preempted.--
          (1) In general.--Nothing in this section or in the 
        regulations prescribed under this section shall preempt 
        any State law that imposes requirements, regulations, 
        damages, costs, or penalties on changes in a 
        subscriber's selection of a provider of telephone 
        exchange service or telephone toll service that are 
        less restrictive than those imposed under this section.
          (2) Effect on state court proceedings.--Except as 
        provided in subsection (f)(6), nothing contained in 
        this section shall be construed to prohibit an 
        authorized State official from proceeding in State 
        court on the basis of an alleged violation of any 
        general civil or criminal statute of such State or any 
        specific civil or criminal statute of such State not 
        preempted by this section.
  (h) Rules of Construction.--
          (1) Change includes initial selection.--For purposes 
        of this section, the initiation of service to a 
        subscriber by a telecommunications carrier shall be 
        treated as a change in a subscriber's selection of a 
        provider of telephone exchange service or telephone 
        toll service.
          (2) Action by unaffiliated reseller not imputed to 
        carrier.--No telecommunications carrier may be found in 
        violation of this section solely on the basis of a 
        violation of this section by an unaffiliated reseller 
        of that carrier's services or facilities.
  (i) Definitions.--For purposes of this section:
          (1) Subscriber.--The term ``subscriber'' means the 
        person named on the billing statement or account, or 
        any other person authorized to make changes in the 
        providers of telephone exchange service or telephone 
        toll service.
          (2) Executing carrier.--The term ``executing 
        carrier'' means, with respect to any change in the 
        provider of local exchange service or telephone toll 
        service, the local exchange carrier that executed such 
        change.
          (3) Attorney general.--The term ``attorney general'' 
        means the chief legal officer of a State.

           *       *       *       *       *       *       *


                TITLE III--PROVISIONS RELATING TO RADIO

PART I--GENERAL PROVISIONS

           *       *       *       *       *       *       *


SEC. 309. ACTION UPON APPLICATIONS; FORM OF AND CONDITIONS ATTACHED TO 
                    LICENSES.

  (a) * * *

           *       *       *       *       *       *       *

  (j) Use of Competitive Bidding.--
          (1) * * *

           *       *       *       *       *       *       *

          (9) Use of former government spectrum.--The 
        Commission shall[, not later than 5 years after the 
        date of enactment of this subsection,] issue licenses 
        and permits pursuant to this subsection for the use of 
        bands of frequencies that--
                  (A) in the aggregate span not less than 10 
                megahertz; and
                  (B) have been reassigned from Government use 
                pursuant to part B of the National 
                Telecommunications and Information 
                Administration Organization Act.

           *       *       *       *       *       *       *


                ADDITIONAL VIEWS OF HON. JOHN D. DINGELL

    Title I of H.R. 3888 is a good bipartisan compromise that 
will end the slamming epidemic. H.R. 3888 is a novel, two-
pronged approach that provides telecommunications companies 
with an alternative to traditional regulation. The industry, in 
conjunction with consumer groups and state regulators, will 
have the opportunity to develop and submit its own voluntary 
``Code of Subscriber Protection Practices'' to the Federal 
Communications Commission for approval. The concept of an 
industry ``code'' is designed to reward good actors with less 
regulations. If companies choose not to adopt the code, or act 
in bad faith, they will be subject to a higher regulatory 
burden. Members of the industry are free to choose their own 
destiny under the bill. Consumers will be the winners in any 
event.
    I still harbor serious concerns about the absence of a 
consumer protection provision that was dropped from the bill in 
the final hours before Full Committee markup. The Primary 
Interexchange Carrier (``PIC'') freeze provision would have 
prevented the FCC from interfering with the ability of a 
consumer to freeze his or her local or long distance carrier. 
That means that slammers would have significantly less 
opportunity for wrongdoing. More importantly, it would give 
consumers the most effective tool available to combat slamming: 
self-prevention.
    At the consumer's option, he or she could specify that no 
changes be made to his or her service without first giving 
affirmative permission to the local telephone company that 
makes such switches. It empowers the consumer to protect 
himself, without undue regulation by the government.
    Why the strongest available measure to combat slamming is 
now absent from a bill designed to put an end to this illegal 
practice is a bewilderment to me.
    I also have serious concerns that the rights of the States 
to protect their citizens are being trampled upon by this 
legislation. Title I preempts States from enacting laws that 
provide any more protection against slamming than is contained 
within the four corners of this bill. This encroachment on 
State authority is unnecessary and unwise, because it will 
impede States from taking aggressive action in places where 
slamming is at its worst. I am not convinced that a one size 
fits all solution is the ultimate answer, if State lawmakers 
wish to protect their own citizens as they see fit.

                                                   John D. Dingell.