WASHINGTON-Congress last week passed a bill to repeal the century-old federal telephone tax, while Sen. Ernest Hollings (D-S.C.) sent out conflicting signals about foreign-ownership legislation he is sponsoring that would kill the proposed $50.7 billion merger between Deutsche Telekom AG and Voice-Stream Wireless Corp.
Congress, negotiating with the White House to complete spending bills three weeks after the start of the new fiscal year, is expected to wrap up work by the end of this week. With the House and, to a lesser degree, the Senate in play, Republicans who control both chambers are anxious to hit the campaign trail in the remaining weeks before the Nov. 7 election.
The chaotic flurry of legislative activity in recent weeks made for a wild ride for a `tax on talking bill’ that eliminates the 3-percent federal excise tax on wireless and wireline phone calls. The strongly supported bipartisan measure had been bouncing around in recent weeks for reasons sometimes unrelated to the legislation itself.
But with time running out in the 106th Congress and the telecom industry lobbying nonstop for its passage, the bill found its way into a fiscal 2001 spending bill funding the Treasury Department, Legislative Branch and General Government Services.
While consumers are expected to save $5 billion annually as a result of the repeal, the cost savings will come at the expense of the U.S. Treasury. For that reason, the Clinton administration generally has been lukewarm to overturning the `tax on talking.’
Nonetheless, President Clinton is expected to sign the bill. Indeed, the remainder of appropriations bills being fashioned by congressional and White House negotiators are designed to avoid vetoes.
“This legislation will benefit every consumer, wireless and wireline, by reducing their phone bills every month,” said Thomas Wheeler, president of the Cellular Telecommunications Industry Association.
Still unresolved is appropriations legislation that funds the Federal Communications Commission, the National Telecommunications Industry Association and other agencies. The same bill includes a provision penned by Hollings that would forbid the FCC from spending any funds in fiscal 2001 to approve any merger involving the purchase of an American telecom firm by a company more than 25-percent owned by a foreign government. The German government has twice that interest in Deutsche Telekom. Thus, the Hollings legislation would doom the deal.
Some on Wall Street had their hopes raised that the Hollings factor had disappeared, following comments given by the influential South Carolina senator to The Financial Times. “I don’t think we’re going to hold up everything on account of that. I don’t think I can,” Hollings told a Financial Times reporter.
Senate Majority Leader Trent Lott (R-Miss.), the White House and others say they want the foreign-ownership language dropped in the Commerce-Justice-State appropriations bill.
However, some suspect Lott wants to keep the Hollings measure in the Commerce appropriations bill as long as possible to retain some leverage in negotiations with the White House.
Andy Davis, a Hollings spokesman, denied that the lawmaker had thrown in the towel.
“He has certainly not backed off and continues to push for this,” said Davis late Thursday. “As of right now, he insists it [the foreign ownership] be part of” the legislation.
