Preserving Good Jobs and Quality Universal Service in a Competitive Environment

CWA Executive Board Resolution

January 31, 1997

CWA supported the Telecommunications Act of 1996 based on the premise that the Act would expand access to advanced telecommunications services through lower prices, stimulate investment in new facilities and equipment, improve service quality, speed deployment of new telecommunications technologies, and promote the growth of good jobs in the industry.

The 1996 Act opens the local exchange market to competition. It permits local exchange company entry into information services, and, upon the Bell Companies' meeting a competitive checklist, into in-region long distance markets. The FCC in implementing the Act is seeking to jumpstart local exchange competition by encouraging resale opportunities.

CWA represents more than 500,000 workers who work in long distance, local exchange, and information services. As regulatory barriers come down, we must insist upon policies that assure a level playing field so that all parties have an opportunity to compete fairly in order to advance the goals of the Act. We must also insist upon policies that ensure that competition is based on technological efficiency, service offerings, and quality, not on low wages nor abuse of labor law. The 1996 Telecommunications Act requires Bell Companies to provide long distance, manufacturing, and electronic publishing through separate subsidiaries. This requirement sunsets after three years for long distance and manufacturing and after four years for electronic publishing. We will not tolerate companies using these requirements to deny employees their right to representation and career opportunities.

The FCC and state regulatory and legislative bodies are now in the process of adopting rules to implement the 1996 Telecommunications Act. CWA should actively participate in these proceedings at the federal and state levels in support of policies that promote:

Quality, universal service
Network investment
Competitive neutrality ⁽¹⁾
Growth of union jobs

Progress toward these goals depends on the rules that federal and state regulators are now writing in three inter-related areas: local competition, universal service, and access charge reform. Following these decisions there will be rulings on whether regional Bell companies have met the " competitive checklist" requirements to enter in-region long distance and state price setting dockets for local rates. These proceedings provide opportunities to present more detailed, nuanced facts specific to different regions and states.

Local Competition

The 1996 Act requires incumbent carriers to resell local exchange service at "cost" to competitors either as a complete service on a wholesale basis (RBOC costs less avoided retail costs) or as unbundled network elements. CWA believes that the pricing methodology to determine "cost" must be based on actual costs. Such design will assure that the cost of labor as determined in the collective bargaining process is not undercut, will fairly compensate incumbent exchange carriers for network investment made prior to the advent of competition, and will provide incentives to encourage network investment to improve service quality and network upgrading.

Universal Service

To support and promote universal, quality service, the FCC and state policymakers must create a new framework of explicit support mechanisms to replace the implicit subsidies that are no longer tenable in a competitive environment. Such a framework should include a universal service fund that is sufficiently large to replace implicit subsidies with explicit support and to provide discounts to schools, libraries, and rural health care providers; that is financed through a broad-based mechanism of contributions from all providers of telecommunication services. All carriers receiving universal service support should meet service quality standards. Finally, labor law violators should not be eligible for support.

Access Reform

Federal and state access charges paid by long distance companies for local access have provided more than $10 billion annually in implicit subsidies to support affordable universal service in the local exchange. These subsidies are not sustainable in competitive markets as access becomes available at cost from competing local exchange carriers.

The challenge before the FCC and state regulators is to reform access charges in a manner that is competitively neutral and promotes universal service goals. Such reform should include pricing flexibility for regulated incumbent local exchange carriers so they can compete on an equal basis with unregulated carriers for high-revenue customers. To minimize disruption to universal service and employment, a transition period and methodology must be put in place to enable incumbent local exchange carriers to recoup past investments made to meet public policy goals. Finally, Internet Service Providers must also pay access charges.

Conclusion

As telecommunications markets move from monopoly to competition, CWA must ensure that the public's interest in universally available, quality service and high-wage job creation is maintained. Union representation is essential to ensure that competition takes place at a level of rising living standards and career opportunities for workers in the industry.

Adopted by CWA Executive Board 1/19/97

1. Competitive neutrality means a level playing field for all organized employers.