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
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
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.
- 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
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
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.
(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
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
Senate Committee on Commerce
Room 126A, Russell Senate Office Bldg.
Washington, DC 20510
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
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.
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
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
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
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