Resolution on MFJ Restrictions on Manufacturing and IntraLATA Information Services Exposed

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The Resolution on MFJ Restrictions on Manufacturing and IntraLATA Information Services was adopted by ALEC's Telecommunications Task Force on May 18, 2001 in Orlando, FL, and included in the 1995 ALEC Sourcebook of American State Legislation. ALEC has attempted to distance itself from this piece of legislation after the launch of in 2011, but it has done nothing to get it repealed in the states where it previously pushed for it to be made into law.

ALEC Resolution Text


ALEC and its members must lead the “charge” to effect the changes that are necessary for America’s future. At all levels, and in all branches of government, ALEC actively supports any actions that would, with proper safeguards, lift the MFJ restrictions on manufacturing and IntraLATA information services upon the former Bell Operating Companies. Why should any U.S. company continue to be bound by restrictions that weaken the United States’ standing in a truly internationally competitive telecommunications marketplace? Considering the importance of rapid deployment of new technologies to all of its citizens, and of improving the U.S. balance of trade position with other foreign countries in the world marketplace, we must take full advantage of all our potential in these critical areas.

Model Resolution

WHEREAS advances in technology have brought our society into the information age; and

WHEREAS the national welfare will be greatly enhanced by bringing about the universal availability of the information age to the American people through the development and deployment of innovative technologies; and

WHEREAS the provision of IntraLATA information services, and the removal of judicially imposed restrictions on the development and availability of such services, will stimulate and encourage use of information age technology by the American people, and the extension of advanced network capability throughout the nation; and

WHEREAS it is the responsibility of Congress, rather than the courts, to determine communications public policy including its effect on economic competitiveness, national security, and foreign trade which are essential elements of a sound national telecommunications policy; and

WHEREAS the continued economic growth and international competitiveness of American industry are dependent upon permitting all American companies to provide IntraLATA information services, to conduct research and to design, develop, manufacture, and market software, firmware, telecommunications equipment and customer premises equipment for all American residential, business, and governmental telecommunications users; and

WHEREAS it is imperative that American industry provide new and innovative telecommunications services and an efficient, reliable, state-of-the-art, and internationally competitive public telecommunications network to serve the growing needs of the people of the United States in both rural and urban communities; and

WHEREAS Congress should ensure that adequate accounting and structural safeguards exist to prevent cross-subsidization and other anti-competitive behavior, including but not limited to:

  • Federal and state open network architecture (ONA) requirements that will ensure information service providers equal access to local telephone networks;
  • Fully allocated cost accounting rules and a revised uniform system of accounts to prevent cross-subsidization by regulated carriers;
  • Implementation of price cap regulation at the federal level and other forms of incentive regulation in many states that eliminate or reduce incentives to cross-subsidize and include extensive service quality and network investment monitoring; and
  • Equal network access requirements that prevent the ROBC’s from discriminating against US Sprint and other inter-exchange carriers in favor of AT&T;

WHEREAS the Federal Communications Commission is the appropriate federal agency, in conjunction with appropriate state regulatory agencies and the courts, to ensure fair competition in the telecommunications industry, while protecting the interests of customers; and

WHEREAS the court order, referred to as the “Modification of Final Judgement” (MFJ) that broke up the former Bell System, prohibits the divested regional Bell companies from participating in certain telecommunications markets, namely, manufacturing and information services and interLATA long distance services; and

WHEREAS the MFJ has prevented some two-thirds of America’s domestically owned telecommunications industry from competing with foreign telecommunications firms in the United States; and

WHEREAS removal of MFJ restrictions on the provision of IntraLATA information services and on the manufacturing of telecommunications equipment and customer premises equipment would foster American competitiveness because:

  • Removal would facilitate competitiveness with foreign telecommunications companies which are free to compete in markets in the United States;
  • Removal would help bring needed telecommunications technologies that are already in existence, but which the regional Bell companies are prohibited from providing by the MFJ, to all consumers including hearing impaired persons, rural schools and hospitals, and others who might benefit from improved and affordable telecommunications;
  • Removal would help stimulate the invention of new innovative telecommunications technologies and facilitate access of said innovations to rural Americans; and
  • Removal would encourage investment in research, development, design, and manufacture of telecommunications and customer premises equipment.

NOW, THEREFORE, BE IT RESOLVED that the American Legislative Exchange Council calls upon the United States Congress to vigorously support legislation that would, with appropriate consumer and industry safeguards, allow all local telephone companies, including the Regional Bell Companies, to engage in the provision of IntraLATA information services and the research, design, development, and manufacture of software and telecommunications equipment; and be it further resolved that the staff of the American Legislative Exchange Council transmit copies of this resolution to the President and Vice President of the United States, the Speaker of the House of Representatives, the President of the Senate and every member of the Congress of the United States.

As unanimously adopted by the American Legislative Exchange Council Task Force on Telecommunications, May 18, 1991, Orlando, Florida