Order Code RL32949
CRS Report for Congress
Received through the CRS Web
Communications Act Revisions:
Selected Issues for Consideration
Updated July 19, 2006
Angele A. Gilroy
Coordinator
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress

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Communications Act Revisions: Selected Issues for
Consideration
Summary
The passage of the 1996 Telecommunications Act (P.L.104-104) resulted in a
major revision of the Communications Act of 1934 (47U.S.C. 151 et seq.) to address
the emergence of competition in what were previously considered to be monopolistic
markets. Although less than a decade has passed, a consensus has grown that existing
laws that govern the telecommunications and broadcasting sectors have become
inadequate to meet the Nation’s changing telecommunications environment.
Technological changes such as the advancement of Internet technology to supply
data, voice, and video, the transition to digital television, as well as the growing
convergence in the telecommunications sector have, according to many
policymakers, made it necessary to consider another “rewrite” or revision, of the
laws governing these markets.
What role the 109th Congress may play in such a revision remains unclear.
While there seems to be a growing consensus for reform, there are some, who
question the need for a significant revision. While the House passed a
telecommunications reform measure (H.R. 5252) on June 8, 2006, it is unclear
whether a comprehensive telecommunications bill passed by the Senate Commerce
Committee will make it to floor for consideration prior to the close of the 109th
Congress. Regardless of the final outcome, Congress has taken and is expected to
continue to pursue an active role in examining and debating the issues related to a
possible revision of existing telecommunications law.
This report provides an overview of selected topics which the 109th Congress
may address in its examination of telecommunications issues. While far from a
definitive list, the issues selected are wide-ranging and touch upon topics central to
the telecommunications reform debate. The issues included in this report cover:
broadband Internet regulation and access; broadcast indecency; digital television
transition; Federal Communications Commission structure and reform; intercarrier
compensation; media ownership rules; municipal deployment of broadband; public
safety communications, the “savings clause” and monopoly issues; spectrum
auctions; and universal service fund reform.
This report addresses major issues, rather than addressing specific legislative
activity. The underlying references to CRS products, included at the end of each
issue, should be used to expand upon the issue, update relevant events and, where
appropriate, track Congressional activity. This report will be updated occasionally.

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Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Broadband Internet Regulation and Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Broadcast Indecency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Digital Television Transition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Federal Communications Commission Structure and Reform . . . . . . . . . . . . . . . 5
Intercarrier Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Media Ownership Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Municipal Deployment of Broadband . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Public Safety Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
The “Savings Clause” and Monopoly Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Spectrum Auctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Universal Service Fund Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

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Communications Act Revisions: Selected
Issues for Consideration
Introduction
The Telecommunications Act of 1996 (the 1996 Act), signed into law on
February 8, 1996 (P.L.104-104), represented the first major rewrite of our nation’s
telecommunications policy. The 1996 Act redefined and recast the Communications
Act of 1934(1934 Act) (47U.S.C.151et.seq.) to address the emergence of competition
in what were previously considered to be monopolistic markets. Despite its relatively
recent enactment, however, a consensus has been growing that the 1996 Act fails to
adequately address the convergence and technological changes now facing the
telecommunications and broadcasting sectors. Although many policymakers (as
well as the popular and trade press) have labeled efforts to revise existing
telecommunications law “the rewrite or revision of the 1996 Act,” in actuality the
revisions being considered are likely to go beyond what is included in the 1996 Act
and will add to and modify the underlying statute which is the 1934 Act.
What role the 109th Congress may play in such a revision has yet to be
determined. While the House passed a telecommunications reform measure (H.R.
5252) on June 8, 2006, it is unclear whether a comprehensive telecommunications
bill passed by the Senate Commerce Committee will make it to the floor for
consideration prior to the close of the 109th Congress. It is uncertain whether a
consensus can be formed to pass a comprehensive telecommunications reform
measure, however, it is possible that more narrowly focused incremental revisions
may be passed in conjunction with other legislative vehicles. Regardless of the
outcome of legislative proposals, however, Congress has taken, and is expected to
continue to take, an active role in examining and debating the issues that such a
revision may entail.
This report provides an introduction to selected issues which might be
considered if Congress chooses to revise telecommunications law. While far from an
exhaustive list, the following issues have been selected for discussion due to their
relevance and prominence in the current telecommunications reform debate:
broadband Internet regulation and access; broadcast indecency; digital television
transition; Federal Communications Commission structure and reform; intercarrier
compensation; media ownership rules; municipal deployment of broadband; public
safety communications; the “savings clause” and monopoly issues; spectrum
auctions; and universal service fund reform. Other issues such as taxation, privacy,
and copyright, to name a few, while of equal importance, go beyond the scope of this
report and may be found in other CRS products. This report is not a tool for tracking
legislation. The underlying references to CRS products included, if available, at the

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end of each issue, should be used to update relevant events and, to track
Congressional activity. This report will be updated occasionally.
Broadband Internet Regulation and Access1
Broadband Internet access gives users the ability to send and receive data at
speeds far greater than conventional “dial up” Internet access over existing telephone
lines. Broadband technologies — cable modem, digital subscriber line (DSL),
satellite, and fixed wireless Internet — are currently being deployed nationwide
primarily by the private sector. While President Bush has set a goal of universal
broadband availability by 2007, some areas of the nation, particularly rural and
low-income communities, continue to lack full access to high-speed broadband
Internet service. In order to address this problem, the 109th Congress is considering
the scope and effect of federal broadband financial assistance programs (including
universal service), and the impact of telecommunications regulation and new
technologies on broadband deployment.
Some policymakers, believing that disparities in broadband access across
American society could have adverse economic and social consequences on those left
behind, assert that the federal government should play a more active role to avoid a
“digital divide” in broadband access. One approach is for the federal government to
provide financial assistance to support broadband deployment in underserved areas.
Others, however, question the reality of the “digital divide,” and argue that federal
intervention in the broadband marketplace would be premature and, in some cases,
counterproductive. The regulatory treatment of broadband technologies, whether
offered by traditional or emerging providers, or incumbents or new entrants, has also
become a major focal point in the debate. Whether present laws and subsequent
regulatory policies are necessary to ensure the development of competition and its
subsequent consumer benefits, or are overly burdensome and only discourage needed
investment in and deployment of broadband services, continues to be at issue. The
policy debate focuses on a number of issues including the extent to which legacy
regulations should be applied to traditional providers as they enter new markets; the
extent to which legacy regulations should be imposed on new entrants as they
compete with traditional providers in their markets; and, the appropriate treatment
of new and converging technologies.
Finally, emerging broadband technologies — such as wireless (including “3G”,
“wi-fi” and “Wimax”) and broadband over power lines (BPL) — continue to be
developed and/or deployed and have the potential to affect the regulatory and market
landscape of broadband deployment. Congress and the FCC will likely consider
policies to address the emergence of these and other new broadband technologies.
For Further Information
CRS Report RL33542, Broadband Internet Regulation and Access: Background
and Issues, by Angele A. Gilroy and Lennard G. Kruger.
1 Lennard G. Kruger, Specialist in Science and Technology, and Angele A. Gilroy,
Specialist in Telecommunications Policy, Resources, Science, and Industry Division

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Broadcast Indecency2
Two prominent television events in recent years have placed increased attention
on the Federal Communications Commission (FCC) and its broadcast indecency
regulations. The airing of an expletive during the 2003 Golden Globe Awards and
the subsequent ruling of the FCC’s Enforcement Bureau, coupled with the
controversy surrounding the 2004 Super Bowl half-time show, have brought
broadcast indecency to the forefront of the congressional agenda. During the 109th
Congress, several bills have been introduced to increase the penalties imposed for
broadcast indecency and prohibit the broadcast of certain words and phrases.
Legislation to apply the broadcast indecency regulations to cable television is also
being considered.
Title 18 of the United States Code makes it unlawful to utter “any obscene,
indecent, or profane language by means of radio communication”(18 U.S.C. 1464).
Violators of this provision are subject to fines or imprisonment of up to two years.
The FCC has the authority to enforce this provision by forfeiture or revocation of
license. The Commission’s authority to regulate material that is indecent, but not
obscene, was upheld by the Supreme Court in Federal Communications Commission
v. Pacifica Foundation. Pursuant to the Court’s decision, whether any such material
is “patently offensive” is determined by “contemporary community standards for the
broadcast medium.” The Court noted that indecency is “largely a function of context
— it cannot be judged in the abstract.”
In 1995, the FCC modified its indecency regulations to prohibit the broadcast
of any material which is indecent on any day between 6 a.m. and 10 p.m. These
regulations have been enforced primarily with respect to radio broadcasts and thus
have been applied to indecent language rather than to images. However, the
Commission has recently initiated more enforcement actions against broadcast
television. Broadcasts deemed indecent are subject to a forfeiture of up to $32,500
per violation. In 2004, the FCC has started to consider each utterance of an indecent
word as a separate violation, rather than viewing the entire program as a single
violation, which could lead to fines in excess of $32,500. Legislation being
considered could increase the penalties to up to $500,000 per violation, and would
also apply the increased penalties to performers as well as broadcast licensees.
While the FCC has increased its enforcement of the broadcast indecency
regulations in recent years, some argue that the fines levied are so small that the
broadcasters simply consider them a cost of doing business. Increased penalties
imposed on broadcasters and performers are viewed as the only way to deter the
airing of indecent programming. Others argue that the indecency regulations
themselves have no constitutional justification, that imposing the regulations on cable
television would violate the First Amendment, and that imposing the increased fines
on performers could have a chilling effect on free speech. They also cite optional
measures, such as the use of the V-chip, as a more appropriate way to protect the
public from what they may feel is inappropriate material.
2 Angie A. Welborn, Legislative Attorney, American Law Division.

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For Further Information
CRS Report RL32222, Regulation of Broadcast Indecency: Background and Legal
Analysis, by Angele A. Wellborn and Henry Cohen.
Digital Television Transition3
Digital television (DTV) is a new service representing the most significant
development in television technology since the advent of color television in the
1950s. DTV can provide sharper pictures, a wider screen, CD-quality sound, better
color rendition, multiple video programming or a single program of high definition
television (HDTV), and other new services currently being developed. The
Telecommunications Act of 1996 (P.L. 104-104) provided that initial eligibility for
DTV licenses issued by the Federal Communications Commission (FCC) would be
limited to existing broadcasters. Because DTV signals cannot be received through
existing analog televisions, the FCC decided to phase in DTV over a period of years,
so that consumers would not have to immediately purchase new digital television sets
or converters. Broadcasters were given new spectrum for digital signals, while
retaining their existing spectrum for analog transmission so that they could
simultaneously transmit analog and digital signals to their broadcasting market areas.
In 1997, Congress and the FCC set a target date of December 31, 2006 for
broadcasters to complete their transition to DTV, cease broadcasting their analog
signals, and return their existing analog television spectrum licenses to be auctioned
for commercial services (such as broadband) or used for other purposes, such as
public safety telecommunications. The Balanced Budget Act of 1997 (P.L. 105-33)
required the FCC to grant extensions for reclaiming the analog television licenses in
the year 2006 from stations in television markets where at least 15% of television
households do not receive digital signals. Given the slower-than-expected pace at
which digital televisions have been introduced into American homes, virtually no
observers believed that the goal of digital televisions in 85% of American homes by
2006 would be reached, with the result that television stations would continue to
broadcast both analog and digital signals past the 2006 deadline for an indefinite
period of time. The key issue for Congress and the FCC has been: what steps should
be taken by the government to further facilitate a timely, efficient, and equitable
transition to digital television?
Paramount in this debate has been setting a “hard” and “date-certain” deadline
for the digital transition and addressing the millions of American over-the-air
households whose existing analog televisions will require converter boxes in order
to receive television service after analog signals are turned off. The Deficit Reduction
Act of 2005 (P.L. 109-171), signed by the President on February 8, 2996, resets the
digital transition deadline at February 17, 2009, and allocates up to $1.5 billion for
a digital-to-analog converter box subsidy program, to be administered by the
Department of Commerce. Remaining digital transition issues, not addressed by the
3 Lennard G. Kruger, Specialist in Science and Technology, Resources, Science, and
Industry Division.

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Deficit Reduction Act of 2005, include whether Congress should mandate or permit
“must carry” requirements for digital multicasts, “downconversion” of broadcasted
digital to analog signals for cable and satellite households, and copyright protection
technologies such as the “broadcast flag” and the “analog hole.”
For Further Information
CRS Report RL31260, Digital Television: An Overview, by Lennard G. Kruger.
Federal Communications Commission Structure
and Reform4
The Federal Communications Commission (FCC), an independent Federal
agency directly responsible to Congress, is charged with regulating interstate and
international communications by radio, television, wire, satellite, and cable. Since
it was established by the Communications Act of 1934, Congress has periodically
called for varying degrees and types of FCC reform. The FCC has taken internal
actions, most recently in 2002, to restructure itself in an attempt to improve its ability
to oversee and regulate the changing telecommunications sector. However, some
policymakers believe that the FCC has not met the needs of a changing
telecommunications industry. If Congress undertakes a significant effort to revise
existing telecommunications law, it could consider addressing provisions to further
modify the FCC’s structure and duties.
Suggestions for reform have ranged from modest reorganization to total agency
abolishment. Other proposals include replacing the five commissioners with a single
“telecommunications czar” and downsizing the agency by eliminating its regulatory
functions and transforming it into an enforcement agency. More recently, the
proposals for reform that have been suggested can be broadly grouped into two
categories: (1) procedural changes made within the FCC or through Congressional
action that would affect the agency’s day-to-day operations, or (2) substantive policy
changes requiring Congressional action that would affect how the agency regulates
different services and industry sectors.
Some experts have suggested a number of procedural changes. One suggestion
is to limit the time between the adoption and actual public release of an order. For
example, the FCC often adopts orders and issues press releases with a summary of
the order weeks or even months prior to releasing the order itself. Such a delay,
critics claim, often results in confusion among the affected industry segments. Some
policymakers are discussing instituting a “shot clock,” which would require the FCC
to issue the actual order within a set time frame once the order is adopted and a press
release issued. Another procedural change which has gained support from a variety
of policymakers, calls for the amendment of the Sunshine Act (P.L 94-409)
requirements for meetings among commissioners. Current law limits to two the
4 Patricia Moloney Figliola, Specialist in Telecommunications and Internet Policy,
Resources, Science, and Industry Division.

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number of commissioners that may meet outside the construct of an “official open
meeting.” While the intent of the law is to promote open discussion of issues, some
contend that it may actually hinder discussion and inhibit the ability to forge
compromises. Other procedural changes include limiting the time allowed to
complete actions on license transfers for mergers/sales and license renewals and
developing new and stronger enforcement mechanisms.
Even with what appears to be strong Congressional interest in FCC reform at
this time, the substantive changes which some believe are needed to enable the FCC
to effectively regulate the converged telecommunications industry may remain
difficult to achieve. Without a congressional mandate for change, the FCC may find
it difficult to conduct its work under the current structure and restrictions of the 1934
Act. If Congress chooses to revise the 1934 Act it may wish to consider what
changes, if any, are needed to enable the FCC to perform its duties in a changing
telecommunications environment.
For Further Information
CRS Report RL32589, The Federal Communications Commission: Current Structure
and its Role in the Changing Telecommunications Landscape, by Patricia
Moloney Figliola.
Intercarrier Compensation5
Intercarrier compensation refers to the payments that carriers make to one
another when more than one carrier’s network is used to complete a telephone call
or other electronic communication. Under current statutory requirements and
regulatory rules, these payments vary widely (from 0.1 cents to 5.1 cents per minute),
even though in each case basically the same transport and switching functions are
provided. Payments depend on two factors: the classification of the interconnecting
party (i.e., whether the entity is a local exchange carrier, a long distance carrier, a
wireless carrier, or an information service provider); and the classification of the
service (i.e., whether the service is telecommunications or information, local or long
distance, or interstate or intrastate). The Federal Communications Commission
(FCC) is currently examining proposals to modify the intercarrier compensation
system and Congress may also wish to address this issue and provide guidance as part
of its review of existing telecommunications law.
As markets move from a regulated monopoly towards a competitive model,
nondiscriminatory intercarrier compensation reform is considered to be vital to the
development of a competitively neutral regulatory regime. There is general
agreement that in today’s competitive environment, such reform is needed, but the
details of how this should be accomplished remain open to debate. There is
consensus, however, that the system as currently designed tends to have the
following negative effects: distorts investment and undermines efficient competition
5 Charles B. Goldfarb, Specialist in Industrial Organization and Telecommunications Policy,
Resources, Science, and Industry Division.

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by providing artificial advantages/disadvantages to service providers; stifles
innovation by causing uncertainty about the intercarrier compensation regime to
which new services will be subject; encourages providers to make business decisions
based on the artificial rates set for intercarrier compensation, rather than on true
underlying costs; discourages carriers from offering large baskets of minutes or
unlimited calling at a fixed price, contrary to the preference of many consumers;
requires carriers to expend millions of dollars and scarce information technology
resources developing systems to identify, or dispute, the classification of traffic; and
undermines the stability of universal service subsidy funds.
At the same time, in some quarters, there is resistance to comprehensive
intercarrier compensation reform because of concerns that some carriers and some
consumers may be harmed by the changes. Reform is likely to result in an increase
in end-user subscriber line charges, (i.e., the fixed charges that all subscribers pay on
a monthly basis to connect to the telecommunications network). Various consumer
groups argue that the shifting of such costs from carriers to consumers would unfairly
burden low-usage and low-income customers. Reform also is likely to reduce the
intercarrier compensation revenues of rural local exchange carriers, placing further
pressure on the Universal Service Fund (USF), a mechanism which is currently
facing its own issues. (See section on Universal Service Fund Reform, below.)
Furthermore, reform is likely to require modification of intrastate intercarrier
compensation rates, which lie within the jurisdiction of state regulatory commissions.
Some observers have questioned whether the FCC can undertake such reform
without active state involvement.
For Further Information
CRS Report RL32889, Intercarrier Compensation: One Component of Telecom
Reform, by Charles B. Goldfarb.
Media Ownership Rules6
The Federal Communications Commission’s (FCC’s) media ownership rules
are intended to foster the three primary goals of U.S. media policy — competition,
diversity of voices, and localism. These rules set restrictions on the number of
broadcast television or radio stations an entity can own or control in a single market;
the “cross-ownership” of newspapers and broadcast stations or of television and radio
stations within a single market; and the number of broadcast television stations a
single network can own nationally. The assumption underlying these rules is that
undue consolidation of media ownership could harm competition, diversity, or
localism. In 2003, the FCC adopted new rules that generally relaxed multi-
ownership restrictions. The 108th Congress modified the national television
ownership rule reducing the 45% ownership cap adopted by the FCC to 39%. The
U.S. Court of Appeals for the Third Circuit stayed and remanded the other FCC
rules. In June 2005 the U.S. Supreme Court declined to consider an industry appeal
6 Charles B. Goldfarb, Specialist in Industrial Organization and Telecommunications Policy,
Resources, Science, and Industry Division.

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of a case that overturned the FCC’s rules. On June 21, 2006, the FCC adopted, but
did not release, a Further Notice of Proposed Rulemaking seeking comment on how
to address the issues raised by the Third Circuit and initiating a statutorily required
quadrennial review of all of its media ownership rules. Congress may choose to
provide guidance as the FCC rewrites its rules to meet the requirements of the
Appeals Court.
Some parties have argued that the rules now in place are not in the public
interest because they block mergers that might be beneficial. For example, there may
be situations in which a small-market television station could not afford to provide
in-depth news coverage on its own, but could do so if it were allowed to combine its
news gathering facilities and staff with a newspaper in the same market. More
broadly, these parties claim that greater consolidation than is allowed under current
rules would yield a more financially stable media sector better able to serve local
communities. They argue that the Internet, cable television, satellite television, and
satellite radio now provide enough independent media outlets in most locations to
ensure competition, diversity of voices, and localism even if further consolidation
were to occur.
Others have argued that loosening current media ownership restrictions would
result in mergers that would directly reduce the number of independent voices, lessen
competition, and reduce local programming. They claim that the new technologies
— Internet, cable, and satellite television and radio — provide very little local
programming.
One key aspect of this debate is whether it is better to review proposed media
mergers by using a “bright-line” rule that allows a combination to occur so long as
the merged entity would not exceed the maximum number of media outlets an entity
may own or control in a market; or by performing a case-by-case analysis of the
market impact of each proposed merger. Proponents of a bright-line rule argue that
such an approach provides certainty to the merging parties, as opposed to the
uncertainty associated with a lengthy regulatory review. Proponents of case-by-case
analysis claim that today’s media marketplace is characterized by very large,
vertically integrated companies that may own or control broadcast stations and
networks, cable channels, program production studios, and even satellite or cable
distribution networks. They argue that a simple bright line test fails to identify the
unique impact on competition, diversity, and localism of a merger involving a large
vertically integrated company.
Since there are other public policies also intended to foster competition,
diversity, and localism — for example, utilizing the spectrum more efficiently to
create additional voices, fostering the development and deployment of new
technologies that may provide additional voices, maintaining public interest
obligations on existing broadcast licenses to foster localism — one part of the debate
has been how the ownership rules and these other policies can work to reinforce,
supplement, or substitute for one another.

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For Further Information
CRS Report RL31925, FCC Media Ownership Rules: Current Status and Issues
for Congress, by Charles B. Goldfarb.
Municipal Deployment of Broadband7
One purpose of the 1996 Telecommunications Act of 1996 was to foster and
encourage competition among providers of telecommunications services. In the 1996
Act, Congress barred states from “prohibiting the ability of any entity to provide any
interstate or intrastate telecommunications service.” (47 U.S.C. 253 (a)). Some states
have in recent years passed laws that prohibit or limit local governments from
providing telecommunications services. An effort to challenge such a law in Missouri
by municipalities offering local communications services in the state was heard
before the U.S. Supreme Court in 2004 (Docket Number 02-1238). The Court ruled
that “entity” was not specific enough to include state political divisions. If Congress
wished to specifically protect both public and private entities, they could do so by
amending the language of the law. This decision, plus the steady improvement in
broadband communications technologies that municipalities wish to have available
in their communities, have provided fuel for a policy debate about access to
broadband services. The central debate is whether municipal broadband services are
part of essential infrastructure — like electrical power or water — with many
benefits, including stimulus to the local economy, or whether they provide unfair
competition that distorts the marketplace and discourages commercial companies
from investing in broadband technologies.
The two main broadband technologies that are particularly attractive to
communities (in part because they support existing community services such as
Internet access for schools and communications for public safety) are fiber-optic-
based networks and wireless access. The spread of wireless access to the Internet,
commonly referred to as Wi-Fi, and anticipated advances in wireless technology are
modifying the business case for broadband. Networks that depend on a fiber-optic
cable backbone are capital-intensive and usually most profitable in high-density
urban areas. A number of rural communities have used their resources to install
fiber-optic broadband services in part because they were too small a market to
interest for-profit companies. The technology for Wi-Fi costs less and has a wider
geographic reach, broadening the size of potential markets for broadband. Most of
the discussion about the municipal provision of broadband applies generally to all
types of broadband services. However, it is the long-term profit potential of Wi-Fi
and its successor technologies that are apparently spurring commercial wireless
service providers to lobby against municipal competition. In particular, the fact that
municipalities in urban areas are creating Wi-Fi networks and providing, among
other services, free access to HotSpots (wireless links to the Internet) is viewed as a
threat to commercial companies and a form of unfair competition. Many
municipalities have installed free Wi-Fi zones (including New York and Chicago;
7 Linda K. Moore, Analyst in Telecommunications and Technology Policy, Resources,
Science, and Industry.

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one is planned for the entire city of Philadelphia). The cities argue that generally
available access to the Internet through wireless connections has become an urban
amenity, arguably a necessity, in sustaining and developing the local economy.
Municipal Wi-Fi also provides the opportunity to improve social services and
Internet access in disadvantaged communities that often are not served by fiber optic
networks.
The fierce debate around public-sector provision of what some consider to be
a private-sector service is expected to continue. Increasingly, Congress can expect
pressure from advocates from both sides to clarify the language of Section 243 or to
take some other action that addresses the issue.
For Further Information
CRS Report RS20993, Wireless Technology and Spectrum Demand: Advanced
Wireless Services, by Linda K. Moore.
Public Safety Communications8
The lack of communications interoperability for first responders at the World
Trade Center on September 11, 2001 has been widely recognized as a possible
contributing cause of unnecessary deaths. The 9/11 Commission urged that Congress
take prompt action to assure the release of spectrum at 700 MHz — allocated for
public safety, but not released — to support needed interoperable networks. To meet
the needs for increased spectrum for public safety and to facilitate the clearing of
spectrum for revenue-generating auctions, Congress included measures in the Deficit
Reduction Act of 2005 (P.L. 109-171) that release spectrum at 700 MHz by 2009.
New and emerging technologies have positioned wireless companies as equal
competitors to broadcasters and cable companies, among others, in providing
communications, information, and other services. The allocation and effective
management of spectrum has become an essential component of telecommunications
policy as well as public safety policy. Congress could consider plans for future
spectrum allocations that meet public safety needs as well as other uses such as
commercial applications, defense, aviation, maritime activity, and medical telemetry.
Congress might also consider the extent to which the current regulatory framework
for telecommunications and other media helps or hinders social goals associated with
public safety. Social benefits might include assuring access to wireline or wireless
lifeline telecommunications, supporting 911 call centers, or expanding emergency
alert networks. Broader-based policy decisions can also have an impact. For
example, call centers and emergency alert systems can benefit from web-enabled
communications capability; interoperability at all levels of communications benefits
from digital technologies.
8 Linda K. Moore, Analyst in Telecommunications and Technology Policy, Resources,
Science, and Industry.

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The long-term goal for public safety communications is to create a seamless
network of emergency communications that integrates every level of emergency
response from the initial warning or call for help, through the process of rescue, and
during the recovery stages. Congress currently tends to treat these aspects as discrete
problems, with different policies. For example, at the federal level, some of the
technical requirements for 911 calls are regulated by the Federal Communications
Commission (FCC) and some 911 programs receive funding from the Department
of Transportation; federal planning for emergency alert systems occurs primarily
within the Department of Homeland Security, with key technology provided by the
National Oceanic and Atmospheric Administration (NOAA); federal planning and
funding for emergency communications is the responsibility of different directorates
within the Department of Homeland Security; and spectrum planning is managed by
the National Telecommunications and Information Administration (NTIA), at the
Department of Commerce, and by the FCC. Spectrum policy for public safety is in
turn bifurcated with the NTIA handling federal spectrum use and the FCC dealing
with state and local public safety spectrum needs
For Further Information
CRS Report RL32594, Public Safety Communications Policy, by Linda K. Moore.
The “Savings Clause” and Monopoly Issues9
The 1996 Telecommunications Act contains an antitrust “savings clause” that
specifically states that neither the 1996 Act nor any amendment to it should “be
construed to modify, impair, or supercede the applicability of any of the antitrust
laws” (section 601(b)(b), codified at 47 U.S.C. § 152, note). In Verizon
Communications, Inc. v. Law Offices of Curtis V. Trinko (540 U.S. 398 2004), the
Supreme Court denied the antitrust claim advanced by a consumer of
telecommunications services against a local exchange carrier (Verizon) that had
previously been subject to regulatory discipline by both the Federal Communications
Commission and the New York Public Service Commission. According to the Court,
the fact that Verizon had been found to have breached its duty under the
Telecommunications Act of 1996 to adequately share its network with
telecommunications companies — including AT&T, which provided service to
Trinko — wishing to provide competitive local exchange services did not provide
sufficient basis for finding a violation of the antitrust laws. Despite the existence of
the “antitrust-specific savings clause,” the Court said, “the act does not create new
claims that go beyond existing antitrust standards.”
Trinko was received unfavorably by both the chairman and ranking minority
member of the House Judiciary Committee, and by numerous commentators and
members of the so-called “competitive telecom industry.” The ruling has also led to
questions about its impact on the antitrust law’s prohibition against monopolization,
creating particular apprehension about the fate of the “essential facilities”
(“bottleneck,”with reference to telecommunications) doctrine. That doctrine, whose
9 Janice E. Rubin, Legislative Attorney, American Law Division.

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validity was seemingly questioned by the Trinko Court, has been thought to require
that the proprietor of a facility deemed essential to a competitor’s ability to compete
share that facility with the competitor, assuming that such sharing is feasible and the
competitor is not reasonably able to duplicate the facility.
On the other hand, the chairman of the House Energy and Commerce
Committee, who at that time was Representative Tauzin, received the decision with
approval. In addition, there are those who believe that Trinko did no violence to the
saving clause: they reason, as the Court appeared to, that absent the 1996 Act’s
imposition on local exchange carriers of the obligation to deal favorably with
competitors, Verizon violated no existing obligation under the antitrust laws. In a
statement to the Senate Judiciary Committee, made just prior to the decision, R.
Hewitt Pate, Assistant Attorney General, Antitrust Division, Department of Justice,
noted that “passage of the 1996 Act did not have the effect of increasing any party’s
obligations under the antitrust laws,” and that it is “important to preserve the
distinction between a violation of the Telecommunications Act and a violation of the
Sherman Act.”
If Congress chooses to address this issue as part of a possible revision of
existing telecommunications law there are at least four options available. Congress
could choose to allow the current law to remain unchanged with respect to the
savings clause; it could amend the savings clause to clarify that the phrase, “the
antitrust laws,” means the literal words of the statutory provisions but excludes any
judicial interpretation of them; it could amend the enforcement provisions of the act
so that even if there had already been regulatory action, certain provisions of the act
would remain enforceable by private individuals who are not competitors of LECs;
or, it could characterize a violation of any (or some) mandatory, competitive
obligation(s) of the act as prima facie evidence of violation of the antimonopoly
provision of the antitrust laws (15 U.S.C. § 2). The last three might have the effect
of providing the breadth of private action some members apparently thought they had
assured in the 1996 Act.
For Further Information
CRS Report RS20241, Monopoly and Monopolization — Fundamental But
Separate Concepts in U.S. Antitrust Law, by Janice E. Rubin.
Spectrum Auctions10
The Communications Act of 1934, as amended primarily by the
Telecommunications Act of 1996 and by the Balanced Budget Act of 1997, gives the
Federal Communications Commission (FCC) the authority to allocate spectrum and
to conduct auctions.
10 Linda K. Moore, Analyst in Telecommunications and Technology Policy, Resources,
Science, and Industry Division.

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The Balanced Budget Act of 1997 (47 U.S.C. 153) contained several spectrum
management provisions. It amended Section 309(j) of the Communications Act to
expand and broaden the FCC’s auction authority and to modify other aspects of
spectrum management. Whereas previous statutes gave the FCC the authority to
conduct auctions, the Balanced Budget Act required the FCC to use auctions to
award ownership in mutually exclusive applications for most types of spectrum
licenses. The Telecommunications Act of 1996 contains provisions about spectrum
policies for broadcasters (47 U.S.C 336) and provides for the creation of a
Telecommunications Development Fund to receive interest earned on spectrum
auction escrow accounts (47 U.S.C. 309 (j) (8) (C)).
Spectrum policy issues before Congress are characterized by economic,
technological, and regulatory complexity. An increasing number of public comments
have criticized the effectiveness of spectrum management and policy in the United
States. Proceeds from spectrum sales are presently attributed to general revenue in
the U.S. Budget (47 U.S.C 309(j) (8) (A)). The 108th Congress asked the
Government Accountability Office (GAO) to prepare a study regarding the allocation
of spectrum licenses, due by October 2005 [P.L. 108-494, Title II, Sec. 209 (a)]. The
study (Strong Support for Extending FCC’s Auction Authority Exists, but Little
Agreement on Other Options to Improve Efficient Use of Spectrum, December 2005,
GAO-06-236) concluded that auctions were generally perceived as a desirable way
to allocate spectrum. The GAO could not find evidence that market participants that
had bought spectrum were at a disadvantage in competing with service providers who
had been assigned spectrum. It found that the high cost of developing infrastructure
was a barrier to market entry and that this cost was more significant in shaping
competition and pricing decisions than the cost of spectrum. Many findings were
inconclusive and the GAO recalled that in an earlier study it had recommended the
creation of an independent commission to examine spectrum management.
For Further Information
CRS Report RL31764, Spectrum Management: Auctions, by Linda K. Moore.
Universal Service Fund Reform11
The universal service concept, as originally designed, called on the Federal
Communications Commission (FCC) to establish policies to ensure that
telecommunications services are available to all Americans, including those in rural,
insular, and high cost areas, at reasonable rates. The Telecommunications Act of
1996 (P.L.104-104) not only codified this long standing commitment, but also
expanded the concept to include, among other principles, that universal service
support be made available to qualifying schools, libraries, and rural healthcare
providers, and other nontraditional providers known as eligible telecommunications
carriers (ETCs.). Over the years the universal service concept fostered the
development of various FCC policies and programs, and in 1983 an explicit
11 Angele A. Gilroy, Specialist in Telecommunications Policy, Resources, Science, and
Industry Division.

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Universal Service Fund (USF) was established to provide the necessary funding.
There is a growing consensus, however, that the USF as presently designed, is no
longer sustainable and universal service policies are threatened absent significant
USF reform.
Section 254 of the 1934 Communications Act requires the FCC to ensure that
there be “specific, predictable and sufficient ... mechanisms to preserve and advance
universal service.” However, the growth of competition in the telecommunications
marketplace coupled with technological advances have had a negative impact on the
health and viability of the USF, as presently designed. While often leading to
positive benefits to consumers and providers, these changes have led to a growing
imbalance between the entities and revenue stream contributing to the fund and the
growth in the entities and programs eligible to receive funding. The current policy
debate has focused on three major concerns: who should contribute to and what
methodology should be used to fund the program; eligibility criteria for benefits; and
concerns over possible program fraud, waste, and abuse. One additional, but more
narrowly focused issue, is the application of the Antideficiency Act (ADA) to the
USF program. ADA compliance requires that agencies have cash on hand to cover
all obligations, causing a conflict with the way some USF commitments are currently
treated.
While few question the commitment to the universal service concept, how this
concept is currently defined, how these policies are funded, who should receive the
funding, and how to ensure proper management and oversight of the fund remain
open to discussion. While the FCC has taken (and will continue to take) action to
sustain the USF, there is a growing consensus that legislation will be needed to fully
address the modifications needed to not only ensure the viability of the USF, but also
address the myriad issues surrounding USF reform. Members in both the House and
Senate have expressed a desire to address this issue and it is likely that USF reform
will play a key role in any telecommunications reform policy debate.
For Further Information
CRS Report RL30719, Broadband Internet Access and the Digital Divide: Federal
Assistance Programs, by Lennard G. Kruger and Angele A. Gilroy.
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