[Pages S3143-S3145]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

By Mr. LEAHY:
S. 1928. A bill to protect consumers from overcollections for the use
of pay telephones, to provide consumers with information to make
informed decisions about the use of pay telephones, and for other
purposes; to the Committee on Commerce, Science, and Transportation.

the consumer pay telephone protection act

Mr. LEAHY. Mr. President, I have voiced my great disappointment many
times with how the Telecommunications Act of 1966 is costing consumers
millions of dollars.

I complained about this at the time that Act passed, and continue to
be concerned that Vermonters are being taken to the cleaners.
I was one of five Senators to vote against that bill. I thought it
was clear then, and it should be clear by now to everyone, that the
Telecommunications bill means higher costs for consumers.
As other hi-tech industries, such as computer technology, offer lower
and lower prices over time--the telephone and cable TV industries are
presenting consumers with higher and higher charges.
For example, I am mad as heck that pay phone charges in Vermont went
up to 35 cents--from 10 cents.
But what annoys me more is that if I do not have exact change--if I
use two quarters--the change the phone company keeps is more than the
ten cents the call used to cost.
I have been know to say ``keep the change'' in restaurants, or when I
buy a newspaper.
But I do not like phone companies taking my change. I am fed up with
pay phone service providers nickel and diming consumers.
This bill will make phone companies provide change to consumers at
the pay phone--or provide a credit in the amount of the lost change to
the consumer or to states to be used to help consumers.
My bill will also give the FCC broad powers to give states authority
to control pay phone rates, if necessary.
The bill permits pay phone providers in Vermont to issue a credit
when

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change is not provided to the consumer which would go to Vermont. This
means that Vermont could provide better pay phone service for public
safety or health reasons.
For example, this fund could be used by states to provide better pay
phone service to those with disabilities, or those living in nursing
homes. It would provide funding for pay phones to be placed in remote
areas in case of emergencies.
I would rather this change go directly to the consumer, and believe
when this bill is fully implemented that most consumers will not be
overcharged for calls.
In the meantime, however, I would rather have the change used to
benefit Vermonters than go to the phone companies.
There are over 2 million pay phones in the United States. The
Washington Post explained on Monday that if 75 percent of those pay
phones charge 35 cents for a local call and if just one person a day
overpays 15 cents at each of those phones, companies would get more
than $230,000 extra a day, or about $7 million a month.

My guess is that this hugely underestimates the size of this
windfall.
Keep in mind this windfall, in Vermont, is on top of the raise from
10 cents to 35 cents. I have also noticed fewer and fewer phone booths
except at places such as airports or train stations where consumers are
in a hurry and may not have time to track down change.
My bill goes beyond just keeping phone companies from getting
windfall profits. It calls for a national investigation of monopoly
pricing and price gouging in the pay telephone markets.
It goes further than that--it then gives the Federal Communications
Commission the tough new authority to deal with this problem. It allows
them to give states the right to establish rates for local calls if
necessary to stop this overcharging. Remember, when Vermont was in
charge before the Telecommunications Act passed the pay phone rates
were a dime.
My bill will also encourage the development of new technologies so
that consumers are not overcharged for local phone calls to begin with.
My bill also provides funding--and the money comes from telephone
companies not consumers--for public interest pay phones. These are
phones which the FCC has determined each state should provide to its
citizens in areas where there otherwise might not be a phone. They did
this in a decision issued on October 7, 1996.
This was a good idea--but there is no federal funding to implement
the decision.
In addition, it is uneconomic for a phone company to provide a pay
phone in remote areas of Vermont. But in a roadside emergency these
phones could be vital. My bill would provide for this program using
money that now just goes out of your pockets to the phone companies.
Also, public interest pay phones could be placed in nursing homes,
emergency homeless shelters, emergency rooms in hospitals, and other
similar places.
Emergency 911 calls would be free from these phones, and other calls
would cost but at least there would be a phone in a location where
there otherwise might not be one.
What is best about this approach is that Vermont would decide how to
use this funding that now goes directly into the coffers of phone
companies.
I have also designed the bill in a way that prevents phone companies
from trying to take advantage of this situation.
The bill gives the FCC board powers to ensure that the pay phone
providers ``do not pass any costs relating to such compliance to
consumers.''
It also mandates that the FCC monitor this situation and ensure that
implementation does not result in any reduction in pay phone service.
The bill requires that pay phone companies which charge more than 10
cents for local phone calls provide either cash change or other
alternatives to consumers, or credits to states equal to the value of
the unpaid change.
These credits to states would be used by states for
telecommunications activities that promote the public interest, such as
safety, health, emergency services, or education and promote public
interest pay phones in hospitals, schools, emergency homeless shelters,
facilities for the disabled, and at similar types of locations.
The bill directs the FCC, within one year of the bill's enactment, to
issue proposed rules that apply to pay phone providers that charge more
than 10 cents for local pay phone calls. Companies would have to
provide for cash change or automatically credit the appropriate public
service agency in the respective states to account for instances in
which change is not provided at the pay phone.
The bill requires that the FCC ensure that pay phone providers do not
pass any costs of compliance with this bill on to consumers and that
pay phone providers in no way reduce or limit service based on this
anti-windfall requirement.
The FCC is given major new powers to take action to prevent any price
gouging including giving states back the authority to regulate the
price of local calls.
The bill requires that small stickers or other notice be posted on
pay phones for the purpose of advising consumers when cash change will
not be provided.
The bill directs the FCC to reconsider its rules under which the FCC
removed authority from states to regulate the charge for local calls
made over pay phones. The FCC would reexamine the need for states to
have greater decision making roles where local competition between pay
phone providers is not present.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 1928

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Consumer Pay Telephone
Protection Act of 1998''.

SEC. 2. FINDINGS AND PURPOSE.

(a) Findings.--Congress makes the following findings:
(1) Some payphone service providers have increased the
charge for the use of a coin-operated pay telephone for a
local call to 35 cents but have not put into place a system
for providing change to users of such telephones for amounts
deposited in such telephones in excess of such charge.
(2) Payphone service providers should charge pay telephone
users only for the actual time of use of pay telephones.
(3) Most consumers, if given a choice, would prefer that
any amount of such excess deposits that are not refunded to
consumers be used for pay telephones for public health,
safety, and welfare purposes rather than have such excess
deposits accrue to the financial benefit of payphone service
providers.
(4) There are approximately 2,000,000 pay telephones in the
United States, and payphone service providers accrue
substantial revenue at the expense of Americans who do not
have the exact amount of the charge for their use.
(5) A decision of the Federal Communications Commission to
deregulate the provision of payphone service was premature
and did not address adequately the need for local competition
that would benefit users of pay telephones.
(6) The decision of the Commission does not promote the
widespread deployment of affordable payphone service that
would benefit the general public, nor does the decision
promote the widespread deployment of public interest
telephones.
(7) The use of coin-operated pay telephones represents an
increasing commercial activity that substantially affects
interstate commerce.
(8) Public interest telephones should be maintained in each
State and should be provided to promote the public safety,
health, and welfare.
(b) Purpose.--The purpose of this Act is--
(1) to require payphone service providers--
(A) to provide cash change to pay telephone users who
deposit amounts for local telephone calls in excess of the
amounts charged for such calls; or
(B) in the event that such providers do not provide such
change, to transfer amounts equal to such change to
appropriate State entities for public interest purposes
related to telephone service;
(2) to encourage such changes in pay telephone technology
as are needed to assure that payphone service providers--
(A) do not overcharge pay telephone users who do not have
the exact amount of the charge for local pay telephone calls;
and
(B) do not charge pay telephone users for any time in which
pay telephones are not actually in use; and
(3) to require the Federal Trade Commission to determine--
(A) whether dysfunctions exist in the market for payphone
service including locational monopolies in which the size of
the market concerned results in the availability of payphone
service from a single provider; and

[[Page S3145]]

(B) whether rates for coin-operated pay telephones for
local telephone calls are market based.

SEC. 3. PUBLIC INTEREST PAY TELEPHONES.

Section 276(b)(2) of the Communications Act of 1934 (47
U.S.C. 276(b)(2)) is amended to read as follows:
``(2) Public interest pay telephones.--
``(A) Sense of congress.--It is the sense of Congress
that--
``(i) in the interest of the public health, safety, and
welfare, public interest pay telephones should be available
and maintained in locations where there would not otherwise
likely be a pay telephone; and
``(ii) such public interest pay telephones should be fairly
and equitably supported.
``(B) Use of funds.--In accordance with such regulations as
the Commission shall prescribe, each State agency that
receives amounts under subsection (c)(2)(A) shall use such
amounts to promote or otherwise support the installation,
maintenance, and use of public interest pay telephones,
including specially designed payphones for the disabled and
the provision of payphone service in remote locations,
nursing homes, emergency homeless shelters, hospitals,
facilities that assist the disabled, schools, and other
appropriate locations determined by the State agency
concerned.''.

SEC. 4. REQUIREMENT FOR CHANGE AT PAY TELEPHONES.

(a) Requirement.--Section 276 of the Communications Act of
1934 (47 U.S.C. 276), as amended by section 3 of this Act, is
further amended--
(1) by redesignating subsections (c) and (d) as subsections
(d) and (e), respectively; and
(2) by inserting after subsection (b) the following new
subsection (c):
``(c) Change at Pay Telephones.--
``(1) Requirement.--
``(A) In general.--Except as provided in paragraph (2), a
payphone service provider shall provide any individual using
a pay telephone of such provider to make a telephone call
described in subparagraph (B) an amount of cash change equal
to the amount (if any) by which the amount deposited by the
individual for the call exceeds the charge for the call.
``(B) Covered telephone calls.--Subparagraph (A) applies to
any local telephone call the charge for which exceeds 10
cents.
``(2) Alternative use of excess collections.--
``(A) Transfer.--In accordance with such regulations as the
Commission shall prescribe, a payphone service provider may,
in lieu of providing cash change under paragraph (1)--
``(i) transfer any excess amounts collected by the provider
at pay telephones to the State agency in the State in which
the telephones are located that is responsible for the
support of public interest pay telephones under subsection
(b)(2); or
``(ii) if the State has no such agency by reason of a
determination under subparagraph (B), transfer such excess
amounts to the Commission for use under subparagraph (D).
``(B) State option.--
``(i) State option.--The chief executive officer of each
State may determine whether or not to permit the transfer of
funds to an agency of such State under subparagraph (A).
``(ii) Revocation.--The chief executive officer of a State
may revoke any previous decision with respect to the State
under this subparagraph.
``(iii) Notice.--The chief executive officer of a State
shall notify the Commission, in writing, of any determination
or revocation of a determination under this subparagraph.
``(C) Use by states.--
``(i) In general.--A State agency receiving amounts under
subparagraph (A) shall utilize such amounts for purposes of
promoting and supporting public interest pay telephones in
the State under subsection (b)(2).
``(ii) Additional use.--In the event that amounts received
by a State agency under subparagraph (A) exceed the amounts
determined by the agency to be required to properly promote
and support public interest pay telephones in the State, the
agency shall utilize the excess amounts for purposes relating
to providing universal service or improving telephone service
in the State under section 254.
``(D) Use by commission.--
``(i) Deposit.--The Commission shall deposit any amounts
received by the Commission under subparagraph (A) in an
account in the Treasury established for that purpose.
``(ii) Availability.--Under such regulations as the
Commission shall prescribe, the Commission shall utilize
amounts in the account under clause (i) to assist States that
receive amounts under subparagraph (A) with additional
assistance to promote and support public interest pay
telephones under subsection (b)(2).
``(E) Notice to consumers.--
``(i) In general.--In the event a payphone service provider
decides to transfer excess amounts deposited at any given pay
telephone under subparagraph (A) for purposes of supporting
public interest pay telephones under subsection (b)(2), the
provider shall post at such pay telephone a notice informing
potential users of such pay telephone that any such excess
amount shall not be returned as cash change or credit but
shall be utilized for such purposes.
``(ii) Additional notice.--Nothing in clause (i) shall be
interpreted to limit a State from requiring additional
notices with respect to the matters set forth in that clause.
``(3) Regulations.--
``(A) Requirement.--Not later than one year after the date
of enactment of the Consumer Pay Telephone Protection Act of
1998, the Commission shall prescribe the regulations required
under this subsection.
``(B) Additional elements.--The regulations shall--
``(i) provide for the monitoring of the compliance of
payphone service providers with the provisions of this
subsection;
``(ii) ensure that such providers do not pass any costs
relating to such compliance to consumers; and
``(iii) ensure that the implementation of such provisions
do not result in any reduction in payphone service, including
the imposition of time limits on local telephone calls or
other reductions or limitations in such service.
``(C) Effective date.--The regulations shall provide that
the provisions of the regulations take effect not earlier
than 6 months after the date of the final issuance of the
regulations and not later than 12 months after that date.''.
(b) Study of Alternative Technologies.--
(1) In general.--Not later than 18 months after the date of
enactment of this Act, the Federal Communications Commission
shall submit to Congress a report on the availability of
technologies or systems that permit persons who do not have
exact change to utilize pay telephones for local telephone
calls without being overcharged for such calls.
(2) Elements.--The report shall address the use of tokens,
cash debit cards, systems for crediting the monthly telephone
bills of individuals who use pay telephones, and such other
technologies and systems as the Commission considers
appropriate.

SEC. 5. STUDY OF COMPETITIVENESS OF PAY TELEPHONE MARKET.

(a) Study.--
(1) In general.--The Federal Trade Commission shall, in
consultation with the Federal Communications Commission,
carry out a study of competition in the market for intrastate
payphone service, including--
(A) whether or not locational monopolies in such service
exist by reason of the size of particular markets for such
service;
(B) whether or not potential users of such service are
effectively barred from choice in such service in particular
markets by reason of difficulties in identifying a variety of
payphone service providers in such markets;
(C) whether or not rates for local pay telephone calls are
market-based; and
(D) whether or not there is evidence of monopoly pricing in
such service.
(2) Scope of comment.--In carrying out the study, the
Federal Trade Commission shall seek comment from a variety of
sources, including State and local public entities, consumers
and consumer representatives, and payphone service providers
and their representatives.
(b) Report.--Not later than one year after the date of
enactment of this Act, the Federal Trade Commission shall
submit to Congress a report on the results of the study
carried out under subsection (a). The report shall include
the findings of the Commission with respect to the matters
set forth under paragraph (1) of that subsection.
(c) Federal Communications Commission Action.--
Notwithstanding any provision of the Communications Act of
1934 (47 U.S.C. 151 et seq.), the Federal Communications
Commission may, as a result of the study under subsection
(a), conduct a rule-making proceeding in order to accomplish
any of the following:
(1) To set limitations on rates for local pay telephone
calls.
(2) To permit the States to establish rates for such calls
on a cost basis.
(3) To set limitations on the commissions that payphone
service providers may pay to persons who lease space to such
providers for pay telephones.
(4) To prohibit payphone service providers from entering
into exclusive contracts with persons who lease space to such
providers for pay telephones which contracts cover multiple
locations.
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