First of all, it would appear to us that if any real difficulties had arisen during the 31 years in which this exemption has existed, illustrations would be available. The lack of such a history belies the suggested regulation deficiency. We think it should be pointed out that Congress did not leave the Commission powerless with respect to any portion of its interstate responsibility; rather it merely determined that the burden of filing tariffs at the national level would not be imposed on the small independent company, which did not itself provide interstate services except by connections. Congress required the large communication carriers to file tariffs, not only for their own services, but for services provided jointly with connecting carriers. Because of the obligations placed upon carriers who were fully subject to title II. interstate tariffs covering almost every service of these small independents in fact have been filed with the Commission, whether or not the filings were encompassed in the obligations of those fully subject carriers. As to that small portion of interstate services for which tariffs have not in fact been filed, it would appear to us that the lack of complaint as to these services or rates is the best proof that there has been no need in these isolated instances to have tariffs covering them filed with the Commission.

It must be recognized that even though connecting carriers are not required to file tariffs, the provisions of section 201 through 205 of the Communications Act are applicable to the interstate services of those carriers, except to the extent specifically exempted therein. The only exemption contained in these five sections is that under section 203 with respect to the filing of the tariffs. The obligations to provide services upon reasonable request under just and reasonable charges as contained in section 201 is clearly applicable to connecting carriers. Similarly, the prohibitions against unjust and unreasonable discrim ination contained in section 202 applies to connecting carriers. Perhaps most important, the Commission's authority to determine what are just and reasonable charges or classifications, regulations, or practices set forth in 205 is exactly the same with respect to connecting carriers as to other common carriers.

Thus, the only difference in the Commission's authority would be that, since the tariffs of connecting carriers do not have to be filed by the connecting carriers, the Commission does not have an opportunity to pass upon whether any tariff will go into effect when filed. Nevertheless, other perhaps than the power to suspend, the Commission still has exactly the same right, after notice and hearing, to prescribe the maximum, minimum, and just and reasonable rates, charges, classifications, regulations, and practices as it does for any other interstate services. It is clear that the powers contained in section 205 have been available and the very fact that the Commission has not needed to utilize the powers appears to be a strong indication that the exemption which Congress enacted for the benefit of the small carriers has not handicapped the Commission in carrying out its obligations.

Moreover, the fact is that the basic Bell tariffs, particularly those relating to the charges for toll telephone services, encompass the interstate services not only between points served by the Bell and associated Bell companies alone and between points served by Bell and the connecting or concurring independent companies, but between points served by independent connecting carriers. The interstate charges between every pair of points receiving telephone service in the United States appears to be encompassed in this tariff. It may be argued that Bell is not obligated to file a tariff which encompasses interstate services between connecting carriers not utilizing Bell facilities but it would appear that the tariff actually filed covers such services. Thus, from a realistic and practical standpoint, the instances in which a tariff for interstate or foreign services is not in fact on file are extremely isolated. It is difficult to see any justification for a burden being placed upon independent companies to file tariffs on their own behalf even if it is assumed that tariffs relating to these services are not filed under an obligation of the Bell company but merely as an accommodation.

Finally, even if it is assumed that some minuscule, but unknown, quantity of interstate service is being provided without in fact any tariff being lodged with the FCC, it has not resulted in any known abuse or harm to the public which could not easily be disposed of under the Commission's rate powers under section 205. If anyone has complained, and we do not know of any, the Commission has ample power to determine the justness of the complaint and correct any abuse which may have occurred. Certainly nothing has been submitted which would warrant the imposition of an additional burden being placed on the small telephone companies solely to obtain some theoretical complete

ness of tariff filings. Surely the burden, if imposed on the small companies to file tariffs in every case where another carrier is not obligated to file such tariff, will be borne by the subscribers of the local exchange services of these companies. Without there being shown any need from the public standpoint of this rejection of Congress original intent 31 years ago, the burden should not be imposed.

To conclude, we believe there is no good reason for the bill. The public is adequately protected under existing law. Regulatory authority should not be expended solely for regulation's sake. We believe the bill should not be enacted.

I thank the committee for its courtesy in extending this opportunity to present our views.

Mr. BAKER. I would like, then, to merely summarize a few points with respect to it and comment on what already has been stated by both the Chairman of the Federal Communications Commission and Mr. Fullarton.

First of all, the basic thing which we have pointed out in our statement is that Congress in its wisdom when it passed the Communications Act defined or set up different kinds of regulation in relation to the total operations of individual companies.

It made a very, very complete regulation of common carriers that provided, themselves, interstate communication. This covered A.T. & T. and related companies and some, at the present time, approximately 40 of the larger independent companies.

It then specified that a portion of the common carriers who provided interstate services solely by connection would not have to be covered by all of the provisions of the act.

It defined what connecting carriers were, and it made them subject only to sections 201 through 205 of the act, thereby leaving them out from many of the multiple burdens of regulation at the Federal level, on the judgment, we assume, that as a small company it would have been a burden that was unnecessary to protect the public interest.

In addition, they made a further exemption from the provisions of 201 through 205 by allowing in section 203 that they did not have to file. That is, connecting carriers did not have to file their tariffs with the FCC.

In that same section they made a further burden on the major companies, requiring them to file tariffs covering not only the service they provided by themselves but the services they provided jointly with connecting and other carriers.

Senator PASTORE. Do you come under that?

Mr. BAKER. Yes.

Senator PASTORE. You answered me rather quickly. I mean you do come under that?

Mr. BAKER. Yes. We do come under that. The Commission has pointed out that because of the language here there appear to be some small instances in which neither carrier is obligated to file a tariff with the Commission. The Commission suggested that this is a gap in the law which should be corrected.

We suggest that it was a gap which was intended, and, more important, it has operated for 31 years without the Commission being able to point to any abuse under it.

The Congress when it adopted the act, in fact, decided not to place a greater burden on the carriers whose principal business was not interstate but is almost entirely intrastate exchange or local business. All of that is regulated by the State.

The little amount of interstate business that they do is regulated by the FCC. I would say 99 94100 percent of this must be covered by tariffs already on file by other people. And the small amount that is left we do not believe is shown to be any handicap.

Senator PASTORE. In other words, when the larger carrier connects up with you and you go beyond the limits of your own State, your tariff becomes part of an obligation upon them to file with the FCC? Is that correct?

Mr. BAKER. They file it.

Senator PASTORE. Under the law they are obliged not only to state their own but to include you as well? Is that correct?

Mr. BAKER. That is correct.

Senator PASTORE. But in instances where, let's assume, they come in to your State and you get out of it before you go out of your State, in that particular instance, you are not obliged to file a tariff?

Mr. BAKER. In the small instances in which some portion of your service is provided by several connecting carriers and it does not involve the lines of A.T. & T. or one of the major independents, that tariff might not have to be filed.

Now, I wanted to say "might not have to be filed" because, as a matter of fact, we believe that in most instances it is, in fact, filed. even though the carriers are not obligated to.

Senator PASTORE. Now, what would be the harm in obliging you in that particular case? Where, in fact, your transmission lines are interstate, why shouldn't there be a filing?"

Mr. BAKER. Well, if our lines are interstate, we are obligated. It is only where, because of a connection with someone else, both of us being connecting carriers-neither one of them goes across the State lines itself--that there can arise a situation where it is not obligated to file. These are an extremely minute situation.

Now, we have pointed out that these, first of all, are a small number of instances. Second, we believe that the actual requirement of every connecting carrier to not only file but to be sure that it has searched out every service which it participates in which no one else is obligated to file, and therefore file it, would be a burden.

We don't think that burden is justified, because abuses have not arisen. Most important, the Commission has authority to handle any abuse that arises. All of the provisions of sections 201 through 205 are there.

If any customer or any person who considers that it has been abused with respect to an interstate service brings the matter to the attention. of the Commission, the Commission has exactly the same power as if the tariff were on file.

The only difference is that, the tariff not having been filed initially, they have not examined it initially and had the power to suspend it.

But under section 205 they have the power, after notice and hearing with respect to services provided that are not filed, exactly the same as they would if the tariff were on file-to examine what the just and reasonable rate would be and set it.

So what we have here is: Shall there be a burden on small carriers with small revenues to search out the instances in which they might be providing some service that nobody else provides a tariff for and file it with the burden-I mean the economic burden-solely for the

purpose of making sure that there is a piece of paper on file at the Commission which they can in advance look at?

Because, in the ultimate, if anybody has been discriminated against, if anybody has had a rate which is not reasonable, all they have to do is bring it to the Commission's attention and the Commission acts just as before.

Senator PASTORE. Now, on that very point, of course, you were a former associate of the FCC in a very important capacity. Let me ask you this question: Do you think that the obligation or the responsibility of any Federal agency is to wait for a complaint to be made before they promote the public interest?

Mr. BAKER. No, I do not. What I am really saying is that before Congress should impose an economic burden on any small entity of industry they ought to have some reason to believe that something is there that is contrary to the public interest that needs correction.

We say that for 31 years there has apparently been nothing which needed correction here.

To place a burden on these carriers

Senator PASTORE. How do we know that? They don't have the tariffs on file to make a study to find out what the rates are all over the country.

They have the right to regulate, but they have no basis upon which to decide at this moment whether or not the rates are high or low or whether they compare well all over the country.

That is what they are driving at. Am I right, Mr. Henry?

Mr. HENRY. Yes, sir.

Senator PASTORE. They have a responsibility under the law to promote the public interest and to see that on a nationwide basis these rates are in line with one another.

There may be reasons why in some instances they ought to be higher or lower. But how do they know that unless there is a filing of a tariff?

Must they wait until a complaint is made?

Mr. BAKER. What I am saying is that if in a particular instance there is something wrong, they are going to know it regardless of whether tariffs are being filed. Someone is going to bring a complaint.

If what we are talking about is finding general levels of rates, they have the same power of investigating generally that they have with respect to anything else.

As I said, I wanted to make one point. That is, the particular language which is proposed here proposes to take the exemption which is now an absolute one on a connecting carrier and change it to one in which an obligation arises if no other carrier is obligated to file a schedule.

Now, at the present time many, if not all, of the kinds of instances which we are talking about here are, in fact, contained in the tariff's filed by the A.T. & T. We think that A.T. & T.'s tariff application is broader than they are obligated to file.

In other words, if you look at the total telephone service in this country, most of the illustrations that have been given as not being required to be filed by a connecting carrier or anyone else are, in fact,

rates which are in the tariffs filed by A.T. & T. for connecting and concurring carriers.

Between any two points in this country if you want to get toll telephone service and it's interstate, a charge is applied, and that charge is the one which is in the tariff.

If this law were changed at the present, then, irrespective of whether or not A.T. & T. had filed, as a matter of accommodation, rates which it was not obligated to do, you as a connecting carrier would be obligated to search that out and yourself file a tariff for that.

Along with Mr. Fullarton we suggest that if there is any need to close the gap, it should not be in removing any connecting carrier's exemption but should be in enlarging A.T. & T.'s obligation.

Senator PASTORE. All right, Mr. Henry, what do you have to say? Mr. HENRY. Well, Mr. Chairman, I think you have appropriately stated the basic aim of the FCC in suggesting this legislation-that is, that we should not be required to sit back and wait until we have a complaint.

I for one would not want to be in the position, if you received a complaint from a constituent alleging a discriminatory practice, of having to answer you that we had no requirement to know what these were and therefore had no responsibility to find out what they were on our own and had not come to you seeking that legislation.

Second, if my understanding is correct-and I understand it is from what Mr. Baker says-that these smaller connecting carriers do file tariffs for these rates with the States on a voluntary basis, then certainly it would be very little if any extra burden to file such rates with us.

And, third, I think that we have to have someone responsible for filing the tariff. And it should be the person that is legally responsible or that we may hold legally responsible for making the rate.

In other words, the fact that A.T. & T. or some other carrier may file a tariff now-it is done on a voluntary basis. If we find a problem, they have no legal responsibility to correct that problem.

Often, if the A.T. & T. tariff does cover the situation, it doesn't say so on the face of the tariff. Therefore, we are not sure as to what it covers.

So, in general, we think it is just a much more healthy statutory scheme to require these connecting carriers to file their rates.

Senator PASTORE. A telephone communication comes from the Dulles Airport to Washington, does that come under an independent carrier?

Mr. HENRY. I think "partially" is the answer.

Senator PASTORE. Partially?

Mr. HENRY. Yes, sir.

Senator PASTORE. Do they have to file?

Mr. HENRY. Well, the question is: Are they legally

Mr. LESHER. This is one that A.T. & T. is legally responsible for, because it is a joint service.

Mr. HENRY. It is a joint service.

I suppose if A.T. & T. were not involved they wouldn't have to file. Senator PASTORE. I think from a practical point of view you make sense to me. On the other hand, there is a tremendous amount of