Normally, the tariff of the "fully subject" carrier with whom these carriers connect, for through interstate or foreign service, governs the charges and regulations under which the through service is rendered. In this case, the serivce was to be furnished without the participation of A.T. & T. or any other "fully subject" carrier. Hence, there was no tariff applicable and no carrier obligated to file such a tariff for this CADIN-SAGE service. Our member cooperatives, recognizing this situation, voluntarily filed with the FCC the charges, practices, classifications, regulations, and facilities under which they proposed to render the service for the United States and Royal Canadian Air Forces. There was no dispute about the Commission's regulatory jurisdiction over all aspects of this service. Despite the fact that no tariff was on file from these cooperatives, the FCC recommended them to provide the service, thereby acknowledging that its regulatory jurisdiction was not hampered by the lack of a tariff filing. How could the FCC have made such a recommendation if it sincerely feels, as it indicates, that tariffs are absolutely necessary to effectively regulate all services subject to its jurisdiction?

Since that day the FCC seems to have developed a preoccupation with the idea that somewhere along our State and National boundaries there are, or someday there will be, numerous but unspecified common carriers which as "connecting carriers" are linking their toll routes together to provide interstate or foreign toll communications service without the burden of filing tariffs setting forth the charges and practices relating to the rendition of such service.

The FCC's proposed legislation would lead us to believe that this is a "problem area"-a situation to be remedied in order to discharge regulatory responsibility. Since the Bell System owns better than 98 percent of the Nation's toll facilities, the view of this association is that whatever is left to "connecting carriers" would more properly be regulated by specific requests or orders made on the individual carriers whenever this problem might arise.

Our members, almost exclusively "connecting carriers," seek to avoid no obligation that would be in the public interest nor do they seek to preserve some loophole in the Communications Act. Their concern is that no further burdens as proposed here today be inflicted upon independent telephone system toll traffic. Toll business handled solely by "connecting carriers" is part of what is known as I-I traffic, a type of short-haul, light-volume toll traffic which the FCC would admit is mainly noncompensatory and generally avoided like the black plague. Our members would like nothing better than to interchange all their toll traffic with the Bell System and end the I-I toll business. However, they are forced to maintain it because the Bell System will not accept it as long as the other major independent telephone companies will not agree to relinquish it. I-I toll traffic is slow death to our members and a major reason why many independent telephone systems disappear each year.

In summary, and as developed above, NTCA objects to the proposed amendment because:

(1) Its implications are too broad and all-embracing, creating unnecessary, and perhaps unintended, burdens on noncompensatory "connecting carriers" toll traffic;

(2) It would cause great hardship for many "connecting carriers" who would be under penalty to bill their joint interstate toll messages pursuant to FCC filed tariffs. Currently, such billing is generally performed in accordance with telephone industry rate center concepts and no other method would be feasible for toll service to and from mobile radio units;

(3) Its intent to obligate under penal provisions one or two "connecting carriers" is unclear; it is, therefore, fatally defective for creating a vagueness and uncertainty of obligation;

(4) No special factual circumstances or instances have been shown to demonstrate the necessity or reasonableness of this proposed amendment; (5) It suggests that A.T. & T. is a willing tariff administrator for tariffs of "connecting carriers" engaged in toll traffic for which the Bell System in no way participates or is in no way responsible; and

(6) It attempts to impose unwise and futile tariff burdens on "connecting carriers" serving broadcasters.

For these reasons we respectfully request that S. 1284 not be recommended for passage.

8 Traffic interchanged between two independent (non-Bell System) companies. I-I toll traffic is generally noncompensatory because it is furnished at toll rate schedules that are the same as or similar to those established by the Bell System while at the same time it does not enjoy revenue support from long-haul, heavy-volume toll routes such as are operated by the Bell System.

Senator PASTORE. Now, in all these cases you are citing, does the FCC have authority to regulate your rates?

Mr. FULLARTON. Yes, but we are not required to file tariffs by specific exemption.

Senator PASTORE. All right. The point I am asking you-and I would like to have the answer to the question-is this: Where they have the authority to regulate the rates, will you tell me why you shouldn't file a tariff?

Now, you are actually coming to the argument whether or not there should be regulations. I am getting down to the point that the law already regulates you, gives them the authority to regulate you. Now, why shouldn't you file a tariff in that case?

Mr. FULLARTON. Sir, in this instance explained here, where the subscriber line drifts across a State line, it is conceivable a tariff would be required for interstate toll service strictly on the basis of a single subscriber station across a State line.

Senator PASTORE. And how much of a burden would that be to you to file a tariff?

Mr. FULLARTON. Well, the burden of filing would far exceed the revenues that we might receive from the rendition of such service. Remember that the operations are small, we do not have staff people even qualified to prepare these and must contract for them. On us it becomes a burden.

Senator PASTORE. Before you go any further, Mr. Henry, what have you got to say to this charge? He says it will cost these people more money to file than they make.

Mr. HENRY. Well, we have had no experience with these, because we have not been able to require the filing of a tariff. I would expect that our experience in dealing with these small companies would enable us to treat them in a reasonable fashion and that if we found that and found no record of abuses, we could work out something with them. But at least we would have the authority.

Senator PASTORE. But they would be at your mercy, though; wouldn't they?

Mr. HENRY. Well, our discretion is governed by law in the fixing of the rates.

Senator PASTORE. But you would have the authority to do it.

Mr. HENRY. Yes, we would.

Senator PASTORE. The discretion would all be on your side, not on their side.

Mr. HENRY. Well, we would have the power to require the filing of the rates. That's correct.

Senator PASTORE. Whether you were reasonable or unreasonable? Although you intend to be reasonable. I mean I don't mean to be unfair.

Mr. HENRY. Yes.

Senator PASTORE. The fact of the matter would be that you would have authority to impose this burden———

Mr. HENRY. Yes.

Senator PASTORE (continuing). Under law.

Mr. HENRY. We would have the power to require them to file a tariff.

As I say, I have no experience or any evidence of what the cost of filing the tariff would be. I would assume the cooperative association could help in this matter and thus cut the costs.

Senator PASTORE. Can you give me some reasons why the public interest has been defeated or injured or diminished at all for the lack of this up to now?

Mr. HENRY. No, because we don't know whether there have been any abuses. But we think we should have the authority to find out if the rates are proper.

We can't tell you because we don't know what the rates are.

Senator PASTORE. Will you tell me what facts have occurred that have brought you to this point of decision?

Mr. HENRY. Well, this has been in our legislative program for a good many years.

Senator PASTORE. I realize that, but I mean where the pressure has been.

Mr. HENRY. I can't cite you any particular case, although we might have some in our files, in which we have found overcharges or failure to render service which would have been brought to light by the filing of the tariff. And if you would like it, I would like to perhaps supplement my testimony in that respect.

Senator PASTORE. I would like to have that. We have been without this since the beginning of the act, and now you are asking for it. And I would like to know what the reasons for it are.

(The supplement to the testimony referred to follows:)

SUPPLEMENTAL STATEMENT OF E. WILLIAM HENRY, CHAIRMAN, FEDERAL COMMUNICATIONS COMMISSION, REGARDING S. 1284

In my appearance on June 23, 1965, I stated that I would like to supplement my testimony on S. 1284 by li-ting some cases in which the filing of tariffs by connecting carriers would have aided the Commission in discharging its regulatory responsibilities regarding common carrier communication services. Our files for the last 2 or 3 years show that there were at least four situations involving connecting carriers, in which the filing of tariff schedules with the Commission by such carriers would have prevented complaint or aided in the resolution of inquiries regarding applicable rates for interstate or foreign communication services.

The first situation involved the rates for United States-Canada private line services furnished in the United States by the Souris River Telephone Mutual Aid Corp., Minot, N. Dak., a connecting carrier which participates in the furnishing of the subject service through interconnection with a Canadian company at the Canadian border. The Air Force complained to the Commission regarding termination charges for certain facilities and the Federal Aviation Agency, with respect to charges for certain equipment furnished by the Souris River company. Had such charges been on file with the Commission in appropriate tariff schedules, the controversies might have been prevented, or more readily resolved, since the Commission would have had the opportunity to review such charges in advance.

The same applies to the last three situations which involve the furnishing by connecting carriers of facilities used in connection with radio broadcasting. The question in these last cases involved the rates for facilities furnished a radio broadcasting station at Bowling Green, Ohio, by the Northern Ohio Telephone Co., facilities furnished radio station WAGL by the Lancaster Telephone Co., Lancaster, S.C., and facilities furnished to radio station WRHI by the Rock Hill Telephone Co.. Rock Hill. S.C.

I also would like to comment on the position taken by the National Telephone Cooperative Association and the United States Independent Telephone Association in opposition to the proposed legislation. They are concerned that the

bill would impose an unwarranted burden on their member companies. I am attaching for the subcommittee's information a copy of the West Coast Telephone Co.'s Tariff FCC No. 6 which is filed with the Commission to govern interstate telephone service furnished between points on the system of the West Coast Telephone Co. in Oregon and points on the system of its affiliated company in California. Charges and regulations for communication services between points on the systems of the west coast companies and other places in the world are set forth in tariff schedules filed with the Commission by the American Telephone & Telegraph Co., in which the west coast companies

concur.

The attached tariff schedule is an example of the type of tariff schedule that the affected connecting carriers might be required to file if the proposed legislation were enacted. You will note that it consists of only 20 pages of which 5 pages are blank and certain other pages are less than fully occupied by tariff material. Most of the regulations in the tariff are standard ones observed by all telephone companies. Moreover, many telephone companies, who are currently required to file tariff schedules with the Commission, arrange for A.T. & T. to file charges on their behalf in the A.T. & T. tariffs, in which they concur. We do not believe that the proposed legislation would impose any substantial burden on any independent connecting telephone company. In this conection the Commission's staff will be happy to assist such companies in any way it can in meeting such requirements.