Computer underground Digest Sun Jan 30 1994 Volume 6 : Issue 11 ISSN 1004-042X Editors: Ji

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Computer underground Digest Sun Jan 30 1994 Volume 6 : Issue 11 ISSN 1004-042X Editors: Jim Thomas and Gordon Meyer (TK0JUT2@NIU.BITNET) Archivist: Brendan Kehoe (Improving each day) Acting Archivist: Stanton McCandlish Shadow-Archivists: Dan Carosone / Paul Southworth Ralph Sims / Jyrki Kuoppala Ian Dickinson Coppice Editor: P. Bunyan CONTENTS, #6.11 (Jan 30 1994) File 1--Brendan Update and his "thanks" File 2--Changes in SUBBING/UNSUBBING to CuD File 3--CuD -- The "SECRET LIST" and other listserv information File 4--Policy on Distributing CuDs File 5--cDc GD Update #14 File 6--CPSR--not so bad after all File 7--Soliciting Articles for New Journal File 8--Leading Cryptologists Oppose Clipper File 9--1994-01-26 Irving Testimony on Telecommunications Legislation Cu-Digest is a weekly electronic journal/newsletter. Subscriptions are available at no cost electronically. To subscribe, send a one-line message: SUB CUDIGEST your name Send it to LISTSERV@UIUCVMD.BITNET or LISTSERV@VMD.CSO.UIUC.EDU The editors may be contacted by voice (815-753-0303), fax (815-753-6302) or U.S. mail at: Jim Thomas, Department of Sociology, NIU, DeKalb, IL 60115. Issues of CuD can also be found in the Usenet news group; on CompuServe in DL0 and DL4 of the IBMBBS SIG, DL1 of LAWSIG, and DL1 of TELECOM; on GEnie in the PF*NPC RT libraries and in the VIRUS/SECURITY library; from America Online in the PC Telecom forum under "computing newsletters;" On Delphi in the General Discussion database of the Internet SIG; on the PC-EXEC BBS at (414) 789-4210; and on: RIPCO BBS (312) 528-5020 (and via internet). CuD is also available via Fidonet File Request from 1:11/70; unlisted nodes and points welcome. EUROPE: from the ComNet in LUXEMBOURG BBS (++352) 466893; In ITALY: Bits against the Empire BBS: +39-461-980493 ANONYMOUS FTP SITES: AUSTRALIA: ( in /pub/text/CuD. EUROPE: in pub/doc/cud. (Finland) UNITED STATES: ( in /pub/eff/cud ( in /pub/CuD/cud ( in /pub/Publications/CuD in mirror2/cud in pub/cud (United Kingdom) KOREA: ftp: in /doc/eff/cud COMPUTER UNDERGROUND DIGEST is an open forum dedicated to sharing information among computerists and to the presentation and debate of diverse views. CuD material may be reprinted for non-profit as long as the source is cited. Authors hold a presumptive copyright, and they should be contacted for reprint permission. It is assumed that non-personal mail to the moderators may be reprinted unless otherwise specified. Readers are encouraged to submit reasoned articles relating to computer culture and communication. Articles are preferred to short responses. Please avoid quoting previous posts unless absolutely necessary. DISCLAIMER: The views represented herein do not necessarily represent the views of the moderators. Digest contributors assume all responsibility for ensuring that articles submitted do not violate copyright protections. ---------------------------------------------------------------------- Date: Sat, 29 Jan 94 21:09:22 PST From: smlieu@CYGNUS.COM(Sun Ming Lieu) Subject: File 1--Brendan Update and his "thanks" ((MODERATORS' NOTE: The following update on Brendan Kehoe, author of ZEN AND THE ART OF THE INTERNET, CuD ftp archmeister, and cyberdenizen, is great news. We've also received two posts from him, and he sends along "THANKS" for all the posts. We mailed off the collection of e-wishes this week, and thanks to all those who contributed)). Brendan continues to make phenomenal progress in the last few days. His neurologist says that she has not seen a case like this in 12 years of practice. The hospital is letting Brendan out on extended passes, and so he has been visiting the hotel where his mother and brother are staying, eating out, and other outings. He will be moving to the Spaulding Center at Mass General in Boston on Tuesday (Feb 1). The injury to his ear was not as serious as originally expected - he can hear from it and it is okay for him to fly. I talked with Brendan for about 10 minutes by phone today. He and Jeff sprung it on me when Jeff called and was I surprised! Brendan just came on the line saying "This friend of mine who is working in California thinks you would like to talk to me" and started to talk up a storm. He's been reading his mail and kept talking about how much g++ traffic there has been and how eager he is to go back to work. He sounded happy and excited. We talked about the weather in Philadelphia, flying first class, living closer to the office so he wouldn't have to commute from Santa Cruz, the earthquake in Southern California, and so on... Brendan wants to be done with the 2-3 weeks in Spaulding and be back in California as soon as possible - he says end of February, although everyone is telling him to hold his horses and not count on it quite so soon. Does he know something we don't? Sun Ming ------------------------------ Date: Fri, 28 Jan 1994 18:19:22 CST From: CuD Moderators Subject: File 2--Changes in SUBBING/UNSUBBING to CuD Less than three percent of the total CuD readership comes from the listserv mailing list (excluding feeds), but the list continues to grow rapidly. Because of the dramatically increased size of the mailing list we are making an important change in how readers subscribe or to CuD. The mailing list has roughly doubled each year, and the time of maintaining the list semi-manually is no longer possible. Therefore, we're moving to full automation of the mailing list. TO SUBSCRIBE, readers should type the following in the Subject header and first line of the message: SUB CUDIGEST your name TO UNSUBSCRIBE, use the following: UNSUB CUDIGEST your name Send the message to LISTSERV@UIUCVMD.BITNET This change will have NO EFFECT on those read CuD from, public access systems, or other sources. ------------------------------ Date: Fri, 28 Jan 1994 18:19:22 CST From: CuD Moderators Subject: File 3--CuD -- The "SECRET LIST" and other listserv information 1. CUD--THE SECRET LIST (heh): We've begun receiving inquiries asking why CuD is "secret" and why we don't want the list known outside of a small group of people. The reason for the inquiry comes from the automatic message that the listserv site sends to new subscribers: > IMPORTANT: This list is confidential. You should not >publicly mention its existence, or forward copies of >information you have obtained from it to third parties. First, CuD obviously isn't "secret," at least not with over 100,000 readers on BBSes, Usenet, the mailing list, public access systems, and elsewhere. The "confidential" note is automatically sent by the listserv to all mailing lists that have settings that limit distribution. So, the notice may be safely ignored. CuD can be mentioned, discussed, and forwarded to others. 2. USING LISTSERV COMMANDS: Users can set parameters for their own addresses (such as suspending mail while on vacation, concealing their address, or leaving the list) with conventional listserv commands: > More information on LISTSERV commands can be found in the >LISTSERV reference card, which you can retrieve by >sending an "INFO REFCARD" command to >LISTSERV@UIUCVMD.BITNET (or LISTSERV@VMD.CSO.UIUC.EDU). 3. LEAVING THE LIST: Readers on the mailing list can leave at any time with the command: UNSUB CUDIGEST your name and sending it to We're appreciative for the help and space that Mark, Eric, and Charlie have provided at the UIUC site. True saints, all of 'em. ------------------------------ Date: Fri, 28 Jan 1994 18:51:45 CST From: CuD Moderators Subject: File 4--Policy on Distributing CuDs We're continually asked about our policy on distributing or disseminating CuDs. The policy is fairly simple: CuDs may be freely distributed in their entirety as long as they are unaltered. This means that they may be uploaded to bulletin boards or placed on public access systems, or zeroxed and sent, at no cost, to others. In general, individual articles may be extracted in their entirety as long as the the text, author identity and source are included. However, some authors do retain copyright, and the authors should be contacted. Some articles are printed on condition by the author that they may not be extracted and distributed. A notice will appear at the start or conclusion of the article. In these cases, the authors *MUST* give their consent. There are some important qualifications: CuDs may not be sold or other distributed for commercial gain. It's fully acceptable to place CuDs on commercial BBSes, of course, but it is unacceptable, for example, to make CDs or hardcopies and sell them. Because authors hold the presumptive copyright to their own works, individual articles may be reproduced commercially IF AND ONLY IF the authors give explicit permission. CuDs and their contents may be cited, extracted, quoted, or other used within fair-use guidelines, but students (and some media folk) should bear in mind that plagiarism is considered unethical. Our general philosophy is that CuDs should be free. Authors contribute their works at no cost, we assemble and distribute them at no cost, and we would take a rather dim view of anyone attempting to profit from the altruistic voluntary labors of others. We hope that the rumors that CuD is being sold commercially on CD are untrue. ------------------------------ Date: Sat, 29 Jan 94 12:23:26 EST From: sratte@MINDVOX.PHANTOM.COM(Swamp Ratte) Subject: File 5--cDc GD Update #14 _ _ ((___)) [ x x ] cDc communications \ / Global Domination Update #14 (' ') December 30th, 1993 (U) Est. 1986 New gNu NEW gnU new GnU nEW gNu neW gnu nEw GNU releases for December, 1993: +________________________________/Text Files\_________________________________ 241: "Cell-Hell" by Video Vindicator. In-depth article on modifying the Mitsubishi 800 cellular phone by Mr. Fraud himself. Rad. 242: "The Darkroom" by Mark Vaxlov. Very dark story about a high school rape in the photography lab at school. Disturbing. 243: "Fortune Smiles" by Obscure Images. Story set in the future with organized crime and identity-swapping. 244: "Radiocarbon Dating Service" by Markian Gooley. Who would go out with Gooley? YOUR MOM! 245: "The U.S. Mercenary Army" by Phil Agee. Forwarded by The Deth Vegetable, this file contains a speech by former CIA agent Agee on the Gulf War. Interesting stuff. 246: "The Monolith" by Daniel S. Reinker. This is one of the most disgusting files we've put out since the infamous "Bunny Lust." I don't wanna describe this, just read it. 247: "Post-Election '92 Cult Coverage" by Omega. Afterthoughts on Tequila Willy's bid for the U.S. Presidency. 248: "The Lunatic Crown" by Matthew Legare. Wear the crown. Buy a Slurpee. Seek the adept. Do not pass 'Go.' 249: "Yet Another Suicide" by The Mad Hatter. Guy gets depressed over a girl and kills himself. 250: "State of Seige" by Curtis Yarvin. The soldiers hunt the dogs hunt the soldiers. Like, war, ya know. Hell! +_________________________________/cDc Gnuz\__________________________________ "cDc: We're Into Barbie!" cDc mailing list: Get on the ever-dope and slamagnifiterrific cDc mailing list! Send mail to and include some wonderlessly elite message along he lines of "ADD ME 2 DA MAILIN LIZT!!@&!" NEW Official cDc Global Domination Factory Direct Outlets: The Land of Rape and Honey 502/491-6562 Desperadoes +61-7-3683567 Underworld 203/649-6103 Airstrip-One 512/371-7971 Ministry of Death 516/878-1774 Future Shock +61-7-3660740 Murder, Inc 404/416-6638 The Prodigal Sun 312/238-3585 Red Dawn-2 Enterprises 410/263-2258 Cyber Neurotic Reality Test 613/723-4743 Terminal Sabotage 314/878-7909 The Wall 707/874-1316,2970 We're always taking t-file submissions, so if you've got a file and want to really get it out there, there's no better way than with cDc. Upload text to The Polka AE, to, or send disks or hardcopy to the cDc post office box in Lubbock, TX. cDc has been named SASSY magazine's "Sassiest Underground Computer Group." Hell yeah! Thanks to Drunkfux for setting up another fun HoHoCon this year, in Austin. It was cool as usual to hang out with everyone who showed up. Music credits for stuff listened to while editing this batch of files: Zapp, Carpenters, Deicide, and Swingset Disaster. Only text editor worth a damn: ProTERM, on the Apple II. So here's the new cDc release. It's been a while since the last one. It's out because I fucking felt like it, and have to prove to myself that I can do this crap without losing my mind and having to go stand in a cotton field and look at some dirt at 3 in the morning. cDc=cDc+1, yeah yeah. Do you know what this is about? Any idea? This is SICK and shouldn't be harped on or celebrated. This whole cyberdweeb/telecom/'puter underground scene makes me wanna puke, it's all sick and dysfunctional. Eat my shit, G33/ Subject: File 8--Leading Cryptologists Oppose Clipper More than three dozen of the nation's leading cryptographers, computer security specialists and privacy experts today urged President Clinton to abandon the controversial Clipper encryption proposal. The letter was coordinated by Computer Professionals for Social Responsibility (CPSR), which has long sought to open the issue of cryptography policy to public debate The group cited the secrecy surrounding the proposal, widespread public opposition to the plan and privacy concerns as reasons why the initiative should not go forward. The letter comes at a crucial point in the debate on cryptography policy. An internal Administration review of the issue is nearing completion and the National Security Agency (NSA) is moving forward with efforts to deploy Clipper technology in civilian agencies, including the Internal Revenue Service. CPSR has sponsored several public conferences on cryptography and privacy and has litigated Freedom of Informa- tion Act cases seeking the disclosure of relevant government documents. In one pending FOIA case, CPSR is challenging the secrecy of the Skipjack algorithm which underlies the Clipper proposal. For additional information, contact Dave Banisar, CPSR Washington, DC, (202) 544-9240, . ============================================================= January 24, 1994 The President The White House Washington, DC 20500 Dear Mr. President, We are writing to you regarding the "Clipper" escrowed encryption proposal now under consideration by the White House. We wish to express our concern about this plan and similar technical standards that may be proposed for the nation's communications infrastructure. The current proposal was developed in secret by federal agencies primarily concerned about electronic surveillance, not privacy protection. Critical aspects of the plan remain classified and thus beyond public review. The private sector and the public have expressed nearly unanimous opposition to Clipper. In the formal request for comments conducted by the Department of Commerce last year, less than a handful of respondents supported the plan. Several hundred opposed it. If the plan goes forward, commercial firms that hope to develop new products will face extensive government obstacles. Cryptographers who wish to develop new privacy enhancing technologies will be discouraged. Citizens who anticipate that the progress of technology will enhance personal privacy will find their expectations unfulfilled. Some have proposed that Clipper be adopted on a voluntary basis and suggest that other technical approaches will remain viable. The government, however, exerts enormous influence in the marketplace, and the likelihood that competing standards would survive is small. Few in the user community believe that the proposal would be truly voluntary. The Clipper proposal should not be adopted. We believe that if this proposal and the associated standards go forward, even on a voluntary basis, privacy protection will be diminished, innovation will be slowed, government accountability will be lessened, and the openness necessary to ensure the successful development of the nation's communications infrastructure will be threatened. We respectfully ask the White House to withdraw the Clipper proposal. Sincerely, Public Interest and Civil Liberties Organizations Marc Rotenberg, CPSR Conrad Martin, Fund for Constitutional Government William Caming, privacy consultant Simon Davies, Privacy International Evan Hendricks, US Privacy Council Simona Nass, Society for Electronic Access Robert Ellis Smith, Privacy Journal Jerry Berman, Electronic Frontier Foundation Cryptographers and Security Experts Bob Bales, National Computer Security Association Jim Bidzos, RSA Data Security Inc. G. Robert Blakley, Texas A&M University Stephen Bryen, Secured Communications Technologies, Inc. David Chaum, Digicash George Davida, University of Wisconsin Whitfield Diffie, Sun Microsystems Martin Hellman, Stanford University Ingemar Ingemarsson, Universitetet i Linkvping Ralph C. Merkle, Xerox PARC William Hugh Murray, security consultant Peter G. Neumann, SRI International Bart Preneel, Katolieke Universiteit Ronald Rivest, MIT Bruce Schneier, Applied Cryptography (1993) Richard Schroeppel, University of Arizona Stephen Walker, Trusted Information Systems Philip Zimmermann, Boulder Software Engineering Industry and Academia Andrew Scott Beals, Telebit International Mikki Barry, InterCon Systems Corporation David Bellin, North Carolina A&T University Margaret Chon, Syracuse University College of Law Laura Fillmore, Online BookStore Scott Fritchie, Twin-Cities Free Net Gary Marx, University of Colorado Ronald B. Natalie, Jr, Sensor Systems Inc. Harold Joseph Highland, Computers & Security Doug Humphrey, Digital Express Group, Inc Carl Pomerance, University of Georgia Eric Roberts, Stanford University Jonathan Rosenoer, CyberLaw & CyberLex Alexis Rosen, Public Access Networks Corp. Steven Zorn, Pace University Law School (affiliations are for identification purposes only) ------------------------------ Date: Fri, 28 Jan 1994 12:12-0500 From: The White House <75300.3115@COMPUSERVE.COM> Subject: File 9--1994-01-26 Irving Testimony on Telecommunications Legislation TESTIMONY OF LARRY IRVING ASSISTANT SECRETARY FOR COMMUNICATIONS AND INFORMATION U.S. DEPARTMENT OF COMMERCE ON TELECOMMUNICATIONS REFORM LEGISLATION BEFORE THE SUBCOMMITTEE ON ECONOMIC AND COMMERCIAL LAW COMMITTEE ON THE JUDICIARY HOUSE OF REPRESENTATIVES JANUARY 26, 1994 Mr. Chairman and Members of the Subcommittee: INTRODUCTION Good morning. Thank you for this opportunity to testify before you today on issues related to the development of a national telecommunications and information infrastructure -- and, specifically, on Administration legislative proposals to promote the advancement of this infrastructure in a procompetitive manner that benefits all Americans. I am pleased to join Assistant Attorney General Bingaman, who will focus on the Administration's reform proposals bearing on the AT&T Consent Decree. I will discuss more generally the changes in the competitive landscape that make the passage of telecommunications legislation this year a top Administration priority, and, in the context of that discussion, highlight elements of the Administration's proposals not covered by Assistant Attorney General Bingaman. Vice President Gore and Secretary Brown unveiled the Administration's National Information Infrastructure (NII) initiative in September of last year, setting forth an agenda for a public-private partnership to help bring about this revolution. This includes support for innovative applications that will use the NII, improving access to government information, protecting individual privacy and intellectual property rights, and the passage of telecommunications legislation -- the subject of today's hearing. Before proceeding further, let me underscore, Mr. Chairman, the profound debt of gratitude the Administration owes you and Chairman Dingell for seizing the initiative in developing H.R. 3626. Our proposals for reform of the AT&T Consent Decree substantially build upon your efforts. The Administration also wishes to salute the creative bipartisan legislative initiatives undertaken by Representatives Markey and Fields, and by Senators Hollings, Inouye, and Danforth, among others. We have closely studied their proposals. Aspects of our set of legislative proposals, which I will touch on today, also build in large part upon the foundation they have established. The Administration looks forward to working closely with Congress to arrive at a final telecommunications legislative product that will stand the test of time. THE NEED FOR LEGISLATION There is a national consensus that an advanced information infrastructure will transform life for every person in the United States in the near future. We have all heard of countless examples of how broadband, interactive communications will connect and empower all people in this country. Vice President Al Gore recently said that the word "revolution" by no means overstates the changes ahead. The newspapers bring us daily examples of the ways in which the development of the NII will revolutionize American life. The January 19 Washington Post reported how interactive dial-up computer network services allowed individuals to communicate with friends and relatives in the Los Angeles area immediately after last week's disastrous earthquake, and to spread vital news to other interested subscribers within a matter of minutes. On January 19 Secretary of Health and Human Resources Shalala announced a contract that will provide by the end of this decade for the electronic payment of nearly all of the $1 billion annual Medicare bills. The Mountain Doctor Television Project (MDTV) in West Virginia brings high quality care to rural residents by allowing rural physicians to link to medical specialists at the University of West Virginia. Likewise, the Texas Telemedicine Project offers interactive video consultation to primary care physicians in rural hospitals as a way of alleviating the shortage of specialists in rural areas. Also, the Texas Education Network serves over 25,000 educators and is making the resources of the Internet available to classrooms, so that students in small school districts can access NASA and leave messages for the astronauts, browse around in libraries larger than they will ever be able to visit, and discuss world ecology with students in countries around the world, among other things. These and countless other examples attest to the rapid rate at which the American public is entering the information age. It would be a mistake, however, simply to "let nature take its course" and allow change to proceed under the existing legal regime, whose underlying structure was established 60 years ago. This is true for three essential reasons. First, in an increasingly competitive world trade environment -- which will become even more open with the implementation of NAFTA and the GATT Uruguay Round -- we simply must ensure that our telecommunications capabilities remain the best in the world. Because information transmission increasingly is the life's blood of all our industries, archaic rules that inappropriately retard innovation by telecommunications firms have a negative impact on the international competitiveness of the private sector in general by inhibiting industrial productivity and job creation. Legislation that lifts these outdated structures will enhance competitiveness and spur the creation of good new jobs. Second, the existing regulatory structure has been altered on an ad hoc basis over six decades to meet perceived problems of the moment. This has created an uneven playing field that artificially favors some competitors over others, and that in some instances unnecessarily discourages investment and risk- taking. These effects, in turn, inappropriately skew the growth of industry sectors and retard the development of the NII itself. Accordingly, legislation is needed to eliminate these unwarranted regulatory disparities. Third, we need to be sure that our telecommunications policies are fully responsive to the needs of the American people as a whole, and, in particular, poorer and disadvantaged Americans. As Secretary Brown stated in a January 5 address, we cannot "become a nation in which the new information age acts as a barrier, rather than a pathway, between Americans" -- a nation divided between the information rich and the information poor. Yet, while the universal provision of "plain old telephone service" has long been a national goal, the existing regulatory structure may not be sufficient to ensure that all Americans benefit from the broader range of information services that will become available under the NII. Accordingly, legislative reform is urgently needed to address this shortcoming. As Secretary Brown stated on January 5, "the Administration will propose a renewal and re-invention of the concept of universal service." I will have more to say about the Administration's views on universal service below. THE ADMINISTRATION'S PROPOSAL The Administration, as promised last fall, has developed a comprehensive set of legislative proposals setting forth the principles under which we believe the advanced infrastructure should operate. As I have already indicated, the Administration's proposals further the visions set forth in House and Senate legislative initiatives. We build upon innovative regulatory reforms and other dramatic steps taken by various states, and we will work closely with the states in promoting an advanced telecommunications and information infrastructure. Together we can encourage competition, infrastructure modernization, and advanced NII applications in health care, education, and government services. Underlying the Administration's proposals are five fundamental principles that Vice President Gore and Secretary Brown have outlined. These principles are: * Encouraging private investment in the NII; * Promoting and protecting competition; * Providing open access to the NII by consumers and service providers; * Preserving and advancing universal service to avoid creating a society of information "haves" and "have nots"; * Ensuring flexibility so that the newly-adopted regulatory framework can keep pace with the rapid technological and market changes that pervade the telecommunications and information industries. ENCOURAGING PRIVATE INVESTMENT AND PROMOTING COMPETITION The Administration believes it is time to act decisively to lift the artificial regulatory boundaries that separate telecommunications and information industries and markets. Those clear, stable boundaries served us well in the past. They enabled regulators to establish separate regulatory regimes for firms in different industries. They also prompted regulators to address the threat of anticompetitive conduct on the part of some telecommunications firms by barring them from certain industries and markets. Technological and market changes are now blurring these boundaries beyond recognition, if not erasing them entirely. As Vice President Gore emphasized on January 11, we are moving away from a world where technologically valid regulatory distinctions may be made among local telephone, long distance telephone, cable, and other purveyors of information transmission. Digital technology enables virtually all types of information, including voice, video, and data, to be represented and transmitted as "bits" -- the ones and zeros of computer code. Thus, rules which artificially distinguish among different types of "bit transmitters" based on old historical understandings will no longer serve a socially useful purpose. Accordingly, regulatory change is necessary to fully realize the benefits of private investment and greater competition in the information infrastructure. Regulatory policies predicated on the old boundaries can harm consumers by impeding competition and discouraging private investment in networks and services. The Administration is therefore committed to removing unnecessary and artificial barriers to participation by private firms in all communications markets, while making sure that consumers remain protected and interconnected. These reforms are necessary in order for people in the United States to "win" the information revolution as soon as possible. To this end, the Administration supports the initiation by the Federal Communications Commission (FCC) of a review of current broadcast policies. Broadcasters remain the principal source of free, universally available electronic information in the United States, and it is important to ensure full participation by that industry in the NII. LOCAL TELECOMMUNICATIONS SERVICES The Administration supports removal of those barriers preventing competition in the provision of local telecommunications services. Competition already has generated substantial benefits for consumers in a host of communications and information service markets. For example, the varieties of customer premises equipment have expanded dramatically since deregulation. In addition, the price of interstate long distance telephone services for the average residential user has declined more than fifty percent in real dollars since 1984, due to competition and regulatory reform. At the same time, the infrastructure used to provide long distance service has been substantially upgraded. There are now four digital, fiber-based national networks serving this market, and many more interconnected regional networks. Consumers will realize similar benefits in service innovation, declining prices, and infrastructure enhancement from the expansion of competition in the local telephone market. Such competition will reduce the ability of any telephone company to harm competition and consumers through monopoly control and will encourage investment and innovation in the "on and off ramps" of the NII. Current policies regarding interconnection and service bundling, as well as specific barriers erected by individual states, inhibit competition -- and the low prices, service choices, and other benefits such competition brings to consumers. The Administration proposes to ensure that competing providers have the opportunity to interconnect their networks to local telephone company facilities on reasonable, nondiscriminatory terms. Local telephone companies will also be required to unbundle their service offerings so that alternative providers can offer similar services using a combination of, for example, telephone company-provided switching and their own transmission facilities. Finally, in order to ensure a consistent, procompetitive environment for telecommunications services, the Administration proposes to preempt state entry barriers and rate regulation of new entrants and other providers found by the FCC to lack market power. Competition in local telecommunications markets should generally lower prices and increase innovation in the services offered users. Nevertheless, we are aware of concerns that repricing of some local services may result in rate increases in some cases in an increasingly competitive environment. Accordingly, in order to guard against any possible "rate shock" for users, the FCC and state regulators will be directed, in implementing network interconnection and unbundling, to prevent undue rate increases for any class or group of ratepayers. MODIFIED FINAL JUDGMENT (MFJ) RESTRICTIONS The Modified Final Judgment (MFJ) in the AT&T Consent Decree helped unleash an era of competition and innovation that brought low prices and new service choices for consumers. In short, it has been a tremendous success. The Administration acknowledges the great public service the judiciary has performed in overseeing the breakup of that monopoly. But twelve years have passed since the basic framework of the MFJ was established, and it has been ten years since the breakup took place. Technologies and markets are changing rapidly. A judicial decree may at some point become a barrier to a more comprehensive, far-reaching approach to an advanced information infrastructure. Reform of the MFJ goes hand-in-glove with opening up local competition, which I described above. The development of full- fledged competition in the local provision of telecommunications services will alleviate the competitive concerns that prompted the strictures placed by the MFJ on the activities of the Regional Bell Operating Companies (RBOCs). Thus, comprehensive legislative procedures for loosening the MFJ restrictions as competition develops are appropriate. Implementation of these procedures in the wake of enhanced local competition will allow the RBOCs to compete in markets for goods and services now closed to them. This will further enhance innovation in the American economy and benefit consumers. Assistant Attorney General Bingaman will address the MFJ reform provisions. I wish to note, however, that while Assistant Attorney General Bingaman will describe the Administration's MFJ position, the Departments of Commerce and Justice have worked together closely in developing our position in this area. This position represents not only the joint efforts of our two Departments, but also the work of others in the Administration who have joined in this policy initiative. CABLE TELEVISION-TELEPHONE COMPANY CROSS-OWNERSHIP The Administration supports repeal of the current cable television-telephone company cross-ownership restriction in the 1984 Cable Act. We believe that telephone companies should be allowed to provide video services in their local exchange areas, subject to effective safeguards to protect consumers and competition. OPEN ACCESS AND PROGRAMMING DIVERSITY The public benefits of the information revolution would be severely diminished without a wide range of diverse programming. An advanced information infrastructure, to be truly useful, must offer a potpourri of educational material, health information, home and business services, entertainment, and other programming matter, both passive and interactive. Barriers to open access and widespread availability of programming serve only to harm users. The Administration's legislative proposals are designed to further the goals of promoting a diversity of programming and open access to distribution of this programming. ENSURING REGULATORY FLEXIBILITY AND FAIRNESS As barriers to an advanced information infrastructure fall, the regulatory regime must adapt to the changing environment. In the rapidly changing telecommunications and information industries, the only certainty is uncertainty. A new regulatory framework is required that will stand the test of time, without the need for continual upheaval in the nation's overall approach to telecommunications and information policy. At the same time, in the interest of fairness, similarly situated services should be subject to the same regulatory requirements. The Administration proposes to address these concerns by granting the FCC flexibility to reduce regulation for telecommunications carriers that lack market power. The Administration also proposes a new Title VII to the Communications Act, that will encourage firms to provide broadband, interactive, switched, digital transmission services. The Administration's Title VII proposal will provide the FCC with broad regulatory flexibility while maintaining key public policy goals, including open access, interconnection, and interoperability requirements, and obligations to support universal service. UNIVERSAL SERVICE The Administration is committed to developing a new concept of universal service that will serve the information needs of the American people in the 21st century. Indeed, the full potential of the NII will not be realized unless all Americans who desire it have easy, affordable access to advanced communications and information services, regardless of income, disability, or location. In his January 5 speech, Secretary Brown challenged the private sector "to expand universal service to the National Information Infrastructure." He pointed out that promotion of universal service advances American competitiveness, stating: "Just as progressive businesses have increasingly recognized that their fate is tied to education and good schools, so the businesses that will take advantage of the new information marketplace must realize that our national fortune is dependent on our national competitiveness -- on ensuring that no talent goes to waste." CONCLUSION In conclusion, enactment of telecommunications reform legislation will promote the development of the NII in a flexible, procompetitive fashion that creates incentives for desirable investment, economic growth, and the widescale availability to all Americans of new, highly valued information services. The Administration looks forward to close collaboration with Congress to enact a set of legislative proposals that achieves these desired ends. This concludes my testimony. I would be pleased to respond to any questions you may have. ------------------------------ End of Computer Underground Digest #6.11 ************************************


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