Federal subsidies flow to rural phone firms that have lots of cash; major companies often take them over, then borrow at 5% under 1949 law; Congress kills reform moves

Article Abstract:

The US Congress, in 1949, gave the Rural Electrification Administration (REA) a responsibility to make subsidized loans to bring telephone services into thinly populated rural regions. Now, many REA borrowers, such as Dell Telephone Cooperative Inc in West Texas, are doing well, paying off REA loans at subsidized interest rates while investing profits into high-interest brokered deposits and mutual funds. Many nonprofit co-ops and small telephone companies are in a financial situation similar to Dell's, and some are using excess cash to branch into sidelines such as cable television of cellular telephone franchises. In some cases, large telephone companies are absorbing small rural companies, taking on the benefits of low-interest loans and going back to the REA for more. Previously, the REA's policy was to deny loans to companies with excessive 'general funds. Congress rescinded the policy in 1987 and forbid the REA from distinguishing rich companies from small ones. The REA now gives out loans on a 'first come, first served' basis.

Finance, National Government, Government Funding, Telecommunications Services Industry, Government aid

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Congress closer to restricting auto-dialing

Article Abstract:

A compromise legislation that is waiting for Senate approval will disallow the use of auto-dialers to send faxes to more than two business lines at a time and to make sales pitches to homes without the homeowner's prior consent. The legislation will severely limit the activities of the $60 billion telemarketing industry. According to congressional figures, 18 million telephone calls a day are made by 300,000 solicitors. Auto-dialers can reach 20 million telephone numbers and have tied up hospital and emergency station lines with random calls and pre-recorded messages. About 30 million pages of faxes of unsolicited advertising are sent annually. Under the bill, all fax machines to be manufactured should require the name and phone number of the sender. Auto-dialed calls to hospitals and other institutions dealing with emergencies will be prohibited, while those to homes will be allowed only under emergency circumstances.

Business services, not elsewhere classified, Marketing industry, Telemarketing, Automatic Dialing

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REA lists rich phone concerns assisted by U.S

Article Abstract:

The US Rural Electrification Administration (REA) has identified for Congress 100 rural telephone companies that might have 'excessive amounts of cash.' This action comes consequent to an article in the Wall Street Journal, which appeared on May 23, 1991, that revealed that action by Congress in 1985, forbidding the REA from differentiating between rich and poor borrowers, has led to increased borrowing by large companies. At a hearing of the House Agriculture subcommittee, on Thursday, Jun 20, 1991, Rep Glenn English (D-OK) said he is ready to take 'corrective action' if excessive funds are being used in inappropriate ways. According to Gary Byrne, representing the REA, the telephone industry has done well in recent years, borrowing money from the government at a five percent annual interest rate. Mr Byrne declined to define 'excessive.'

Legislative process, Legislation, United States. Congress. House. Subcommittee on Agriculture

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