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The following documents are reprinted solely as items of interest, 
for the independent evaluation by members of ATSU. The opinions, 
statements of fact, or conclusions expressed herein are not those 
of the Association of Time-Sharing Users. ATSU will reprint se¬ 
lected letters or articles expressing alternative viewpoints in 
future editions of this section. 



CallData Systems, Inc. 

20 Crossways Park North 
Woodbury, Now York 11797 
(516) 575-3262 


August 16, 1976 

"CONSUMER COMMUNICATIONS REFORM ACT OF 1976" 

(H.R. 12323, S.3192, at al.) 


As you may know, an Increasing number of bills, often bearing the designation 
"Consumer Communications Reform Act of 1976," have been Introduced by various 
members of Congress at the behest of AT&T, Bell System member companies, and 
certain telephone company associations. 

The Remote Processing Services Section (RPSS) of the Association of Data Pro¬ 
cessing Services Organisations, Inc* (ADAPSO), believe that this legislation 
poses serious adverse consequences for the users of remote access data 
processing and timesharing services. For this reason, RPSS is forwarding to 
you a copy of its position statement on this legislation. 

This "Reform" legislation would, if enacted, reform us right out of our present 
nation-wide and highly competitive (and, therefore, highly efficient) data 
communications system. 

How? Most versions of this legislation provide that - 

o Computer station and terminal equipment, never regulated before, 
would be put under the control of state regulatory agencies. 

o Competition between telephone common carriers, in particular 
specialised carriers, would be eliminated. 

With respect to computer station and terminal equipment, it is strange that this 
Industry, the very exemplar of a highly efficient and competitive industry, need 
be regulated at all. The proposal to have it regulated state by state, with all 
the inevitable Inefficiencies (to say the least) that this implies, is stranger 
still. As for the proposal to eliminate competition between telephone common 
carriers, one need only note its proponents to form an opinion. ' 

The immediate consequence of such legislation is obvious — someone must pay the 
Inexorably Increased equipment and communications costs, and that "someone" is 
unavoidably you, the user. And then, in the not-very-long run, the entire Industry 
will be forced to concentrate more on compliance with a multitude of often-conflicting 
regulations than on providing the best equipment and communications at minimum cost. 
This, too, is a highly significant cost element, and again, there is no one to pay 
for it but the user. 


(Continued...) 










- 2 - 


These and other points are discussed in more detail in the enclosed RPSS position 
statement. I urge you, as a user of remote computing services, to inform your 
Representatives and Senators in Congress of your views, and also to write to the 
House and Senate Chairmen of the Subcommittees on Communications (addresses are 
listed below). 


I would not presume to offer a form letter for your use, but you may wish to 
consider the following points in any communication you may choose to make: 

1. Is reform necessary? - The computer station and terminal industry 
is now highly competitive, highly efficient. Legislation can only 
diminish these assets. As for specialized communications carriers, 
these compete with the present "natural monopoly" carriers, keep their 
prices low, and act as a private-enterprise "yardstick" to measure their 
performance. 


2. Will reform work? - Both the equipment and communications industries 
offer their services nation-wide, and state-by-state regulation will 
impose far greater immediate and long-term costs than any probable 
benefits could justify. 


3. Do improvements in residential and rural telephone service have any 
technical or logical link to regulation of the computer station and 
terminal equipment industry or to specialized common carriers? 

Not at all! Rather, these improvements are a bone tossed to the public 
while the proponents of this legislation make off with the carcass — 
you and me. 

There’s an old proverb that silence is acquiescence. If we object, we must speak 
up to those whose duty it is to listen. 


DCD:rm 



Vice President 
(President of RPSS) 


In addition to writing to your U. S. Representatives and Senators, your views also 
should be made known to: 


The Honorable Lionel’ Van Deer 1 in 
Chairman, House Subcommittee on 
Communications 

House Committee on Interstate 
and Foreign Commerce 
Room B-331, Rayburn House Office Bldg. 
Washington, DC 20515 


The Honorable John 0. Pastore 
Chairman, Senate Subcommittee on 
Communications 

Senate Committee on Commerce 

Room 126A, Russell Senate Office Bldg. 

Washington, DC 20510 


ASSOCIATION OF 
DATA PROCESSING SERVICE ORGANIZATIONS, INC 

210 Summit Avenue/Montvale, NJ 07645/(201) 391-0870 



July 21, 1976 


Statement of the Position of the Remote Processing Services Section 
(RPSS) of the Association of Data Processing Service Organizations, 
Inc. (ADAPSO) On the "Consumer Communications Reform Act of 1976" 

(H.R. 12323, S. 3192, et al.)1 

Legislation which poses serious adverse consequences for users of 
remote access data processing and timesharing services has been introduced 
in both houses of Congress by over 150 sponsors as a result of the efforts 
of American Telephone and Telegraph Company (AT&T), Bell System companies, 













and various telephone company associations. If enacted this legislation 
would have the following results: (1) the elimination of competition between 
telephone common carriers, in particular specialized common carriers; (2) 
computers, station and terminal equipment would be brought under regulatory 
control for the first time. Such control, which is also conducive to regula¬ 
tion of data processing activities, would be relegated to the various state 
regulatory agencies such that fragmentation of regulation would be inevitable; 
(3) provision by statute that the Federal Communications Commission must 
accept AT&T’s favorite incremental cost methodology as being appropriate in 
the rate making context before issuance of final reports by state and federal 
agencies concerning that costing methodology; and (4) anti-trust immunity for 
acquisitions by telephone companies. 

RPSS believes that this legislation, if enacted, would have a 
devastating impact upon the use of computers in remote access applications 
from the standpoint of companies using such applications as well as from the 
standpoint of the public. On the basis of past experience, it is clear 
that some states would totally bar the interconnection of non-carrier equip¬ 
ment to telephone company facilities. However, the record is also clear that 
the telephone company should not have a monopoly in the provision of equipment 
that: (a) is, and was designed to be, an integral part of a computer system; 

(b) must be available in a wide variety of types which often have limited 
total demand; and (c) is subject to technological obsolescence in a short 
period of time. The user has obviously benefited from having available, 
through the medium of competition, a wide variety of innovative devices at 
reasonable prices. 

Relegation of jurisdiction over station and terminal equipment to 
state regulatory•commissions would eliminate any possibility of uniform 
nationwide technical standards for multi-state networks now in operation. 

The consequences of non-uniform regulation are easily traced. Each state 
could decide for itself what computer terminal equipment could or could not 
be interconnected with telephone company facilities. Thus, existing systems 
might be rendered impractically expensive because of the necessity to recon¬ 
figure those networks with duplicative equipment necessary to meet the dictates 
of various jurisdictions. Further, existing computer networks might no 
longer be operational should state regulatory commissions decide as North 
Carolina and Nebraska have already attempted, to bar interconnection of 
customer-provided equipment. Therefore, at the very minimum the viability 
of existing multi-state networks is threatened while at the worst the continued 
existence of such networks is endangered. 

It is relatively easy to see that this legislation if enacted 
would lead to increased computer system costs. For one thing, the necessity 
to reconfigure existing networks would, as previously pointed out, inevitably 
lead to the need to maintain duplicative facilities necessary only for purposes 
of complying with the conflicting dictates of various jurisdictions. These 
increased costs would necessarily have to be passed along to the consumer 
in the form of increased prices for the goods or services provided by the 
industries which have incurred higher computer system costs. In those indus¬ 
tries where the cost to price relationship is particularly sensitive, 
decreased sales for existing products would follow. Decreased sales inevitably 
would lead to fewer jobs in an economic situation that is already marked 
by high unemployment. 

Another consequence which follows is an undesirable alteration of 
the balance of trade. With increased computer system costs having to be 
passed along to the consumer of domestically manufactured products, the com¬ 
petitive position of foreign goods would be enhanced by the fact that such 
goods would not have to bear the added costs resulting from diminished 
competition in the provision of computer system services. 


(Continued...) 






Further, it is possible that current computer system applications 
that are socially desirable, such as medical data banks and law enforcement 
systems, would have to be discontinued. This result would stem from the 
fact that the existence of many such systems is dependent upon the decreased 
costs which have resulted from competition in the provision of such services. 
In addition, many of these systems are operational because of technological 
breakthroughs which have been made by non-Bell equipment that enable increased 
utilization of existing telecommunications resources at substantial savings. 
Thus, it can been seen that substantial technological advances resulting from 
competition between telephone company and independently manufactured equipment 
that in many instances has led to the upgrading of telephone company provided 
facilities would be eliminated. Further, any incentive for continued tech¬ 
nological innovation would be substantially lessened if not eliminated were 
the telephone company’s monopoly control to be extended to aLl aspects of 
data transmission. 

Congressional sponsors of the AT&T bill have been led to believe 
that such legislation will inure to the benefit of the residential and rural 
telephone user. AT&T and various telephone company associations are devoting 
substantial amounts of time, money and effort to creating this impression. 
Indeed, it appears that AT&T is utilizing its size and existing monopoly 
power to mount a massive legislative campaign to force a hurried decision by 
Congress before all the facts are known. This campaign is taking the form 
of lobbying, the enlistment of AT&T employees and stockholders and the efforts 
of AT&T executives who are making widespread local speeches in addition to 

engaging in other public relation activities on behalf of the legislative 
proposal. In so doing, AT&T is attempting to downplay studies which show 
that competition in the provision of data services has inured to the public 
benefit in the form of innovative services and optimum usage of existing 
telecommunications resources. 

Remote Processing Services 
Section of ADAPSO 



A bill for Bell 


Sometime in the next session. Congress will have to 
decide how much competition the U. S. wants and needs 
in the $35 billion telephone and telecommunications 
industry. In doing so, the legislators may find it neces¬ 
sary to redesign the whole intricate structure of 
corporate and financial relations in one of the world’s 
biggest and most complex businesses. 

The giant American Telephone & Telegraph Co. has 
been pushing hard for adoption of the bill titled 
“Consumer Telephone Reform Act of 1976.” The so- 
called Bell bill would widen AT&T’s antitrust immunity, 
now being challenged by the Justice Dept. And it would, 
in effect, turn off the efforts of the Federal Communi¬ 
cations Commission to admit new competitors in such 
fast-growing markets as computers, data services, 
satellite communications, and office equipment. 

In principle, a strong case can be made against any 


bill that strengthens a monopoly, and the fcc as well as 
Bell’s competitors and potential competitors have been 
busy making it. Among other things, they have pointed 
out that competition is the way to stimulate innovation 
and customer service (page 116). 

But if Congress refuses to pass' any version of the Bell 
bill, another sticky problem will face the industry. The 
telephone rate structure, devised through years of poli¬ 
tical compromises and corporate negotiations, depends 
on a complex system of sharing the revenue from toll 
calls. Independent companies, which serve about 18% of 
the residential market, deposit their tolls in a 
“settlements pool” run by Bell. They then draw out 
according to a formula that often gives them more than 
they put in. Without this cushion, the independents 
serving high-cost rural markets would have to charge 
higher rates. 

If Congress decides that more competition is what 
the industry needs, it should consider what competition 
might do to the settlements pool. This raises the ques¬ 
tion of what sort of system might be set up to replace it. 
And suddenly Congress may find itself doing what it 
should have done in the first place—beginning a 
comprehensive review of communications policy. 


Reprinted from Business Week, October 18, 1976