The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight: A summary of the news; perspectives on the widening gap between the United States and some European nations over Iraq; a report on an important struggle over telephone lines; and a look at Pres. Bush's proposal to help in the fight against AIDS in Africa.

NEWS SUMMARY

JIM LEHRER: The divisions in Europe and NATO grew worse today over war with Iraq. In Brussels, NATO deadlocked again on giving military aid to Turkey, a fellow alliance member. The U.S. had made the request, to help Turkey defend itself if there's war. France, Germany, and Belgium objected. They said to start military planning now would undermine any chance of a diplomatic solution. In Washington, Defense Sec. Rumsfeld said France, Germany and Belgium are now isolated.

DONALD RUMSFELD: It's unfortunate that they are in stark disagreement with the rest of their NATO allies. There's three countries, there are 19 countries in NATO. So it's 16 to 3. I think it's a mistake, and what we have to do for the united states is make sure that that planning does go forward.

JIM LEHRER: Rumsfeld said the U.S. might work directly with Turkey if NATO did not reach a consensus. Later, at Turkey's request, NATO held emergency consultations, but they also failed to resolve the dispute. Another session is scheduled for tomorrow. Russia formally joined France and Germany today, in a joint appeal to disarm Iraq peacefully. Russian Pres. Putin joined French Pres. Chirac in Paris, after weekend talks in Berlin. They called for beefing up the inspections effort in Iraq. The full plan may go before the U.N. Security Council on Friday, the same day the chief inspectors make their next report. Iraq announced today it would meet a key demand of the inspectors, and allow U-2 surveillance flights. The Iraqis also promised to outlaw weapons of mass destruction. The offers followed weekend talks in Baghdad with the lead inspectors Hans Blix and Mohammed ElBaradei. Today in Vienna, ElBaradei reported progress, and appealed for time.

MOHAMED ELBARADEI: I agree that that's a more active Iraqi cooperation, that the more speedy we can complete the process. People have to understand that the expectation, I keep repeating, if it takes a few additional weeks and we can avoid a war, that is time well spent.

JIM LEHRER: The Iraqi ambassador to the U.N. said the offer allowing U2 flights was unconditional. But later, Saddam Hussein issued a statement saying allied planes should stop firing on targets in the Iraqi no-fly zones, while the surveillance flights are under way. In response, a White House spokesman dismissed the Iraqi offer. He said, "The president is interested in disarmament. This does nothing to change that." The top Islamic cleric in Saudi Arabia warned Muslims today against enemies of the faith. He addressed more than two million worshippers gathered for the Hajj, the annual pilgrimage to Islam's holiest sites. The Saudi cleric said: "The enemy has exposed its fangs and is fighting our religion, with its vast troops and equipment." He did not directly mention the U.S. confrontation with Iraq. Iran has begun mining uranium, and building a plant to process the ore into fuel. The government announced that today, and insisted the program is only for generating energy. In Washington, a State Department spokesman said the U.S. has "very grave concerns" that Iran's real goal is to build nuclear weapons. South Korea cast doubt today on U.S. claims that North Korea already has nuclear weapons. The South Korean prime minister said there's been no confirmation. The Seoul government also urged the U.S. to hold direct talks with North Korea. The Bush administration today underscored the threat behind the new terror alert. The secretary of homeland security, Tom Ridge, told CBS: "This is the most significant set of warnings that we've had since before Sept. 11." On Friday, the government raised the nation's alert status to orange, signifying a high risk. The head of an Islamic charity in Chicago pleaded guilty today to funding Muslim fighters overseas. The Syrian-born man said he funneled money to buy uniforms and boots for fighters in Chechnya and Bosnia. In Washington, Attorney General Ashcroft said it was a victory in the war on terror.

JOHN ASHCROFT: He operated the Benevolence International Foundation incorporated as a scheme to use fraudulently the charitable contributions of Muslim Americans, U.S. corporations, and other donors to support violence overseas. With today's plea agreement the government has secured the cooperation of Arnot in the critical investigation into the funding of violence and violent acts overseas.

JIM LEHRER: The defendant did not admit aiding al-Qaida, but prosecutors said they believe he did. NASA confirmed today it has recovered a piece of the left wing of the space shuttle "Columbia." That section is thought to have played a major part in the shuttle's break-up and destruction. The piece is now at Barksdale Air Force Base in Louisiana. A top official at NASA said today it's still unclear where it fit in the wing.

MICHAEL KOSTELNIK: They thought they had identified the section. I don't know exactly which section that is along the wing, and there wasn't certainty among the people who had recovered it as to for sure which piece it was. These are the kind of things that are getting back to the collection areas, and for the key pieces that are coming in, the engineers are doing analysis are sending representatives to the collection site at Barksdale to take a much closer look at the pieces that we're recovering.

JIM LEHRER: Later in the day, the space agency announced one of "Columbia's" general purpose computers was found Sunday, east of Fort Worth, Texas. It could give vital clues to what happened. On Wall Street today, the Dow Jones Industrial Average gained more than 55 points to close at 7920.The NASDAQ rose 14 points to close above 1296. That's it for the News Summary tonight. Now it's on to the Iraq divide, a tangle over telephone lines, and going after AIDS in Africa.

FOCUS - DEEPENING DIVIDE

JIM LEHRER: The growing divisions over Iraq, between the U.S. and some nations of Europe and within NATO. Kwame Holman begins.

KWAME HOLMAN: In Brussels this morning, NATO Sec.-Gen. Lord Robertson said efforts by Germany, France, and Belgium to block defensive military preparations in Turkey raise a problem, but not an insurmountable one.

LORD GEORGE ROBERTSON: We have a serious problem, and therefore it has to be resolved. Where there are deadlocks in the alliance, we usually arrive at a consensus solution in due course and that is what will happen here again today. But I don't underestimate the seriousness of the division that there is within the alliance, but that division is still about the timing of the tasking and not over whether the tasking is going to take place.

KWAME HOLMAN: In Washington, administration officials immediately criticized the decision of Belgium, France, and Germany. At a press conference with Australia's prime minister, Defense Sec. Donald Rumsfeld vowed Turkey will get defensive military help.

DONALD RUMSFELD: The planning's going to go forward outside of NATO if necessary, the plan to see that Turkey's circumstance is as it should be. It's an important ally in NATO. It's a moderate Muslim state. And it seems to me that those three countries taking that position prevents NATO from fulfilling its obligation to a NATO ally.

KWAME HOLMAN: Separately, Russian Pres. Vladimir Putin met with French President Jacques Chirac in Paris. Afterward, they announced Russia would join France and Germany in a declaration calling for enhanced U.N. weapons inspections as a way to avoid war in Iraq.

PRES. VLADIMIR PUTIN (Translated): We demanded that Iraq let in inspectors. They are working there. The international community trusts them. What are they saying? Are they saying Iraq is refusing to comply? No, indeed, only just now, Blix and Baradei, announced that Iraq is going further to satisfy the U.N. Inspectors.

PRES. JACQUES CHIRAC ( Translated ): The use of force could only be a last resort. France, Germany and Russia are determined to give every chance for a peaceful disarmament of Iraq.

KWAME HOLMAN: The rift over the urgency of military action also cropped up this weekend at a security conference in Munich attended by top defense officials from the U.S., Europe, and Russia. The debate drew this from Sec. Rumsfeld.

DONALD RUMSFELD: It's difficult to believe that there still could be questions in the minds of reasonable people open to the facts before them. The threat is there to see and if the worst were to happen and if we had nothing to stop it, not one of us here today could honestly say that it was a surprise. It will not be a surprise. We are on notice, each of our nations, each of us individually, and really the only question is what will we do about it. We all hope for a peaceful solution, but the one chance for a peaceful solution is to make clear that free nations are prepared to use force if necessary, that the world is united, and, while reluctant, is willing to act.

KWAME HOLMAN: Germany's foreign minister, Joschka Fischer, responded.

JOSCHKA FISCHER ( Translated ): We owe the Americans our democracy. They are very important for stability and peace especially. We Germans would never have been able to free ourselves from the Nazi regime without America. The Americans allowed us to build up our democracy, but in this democracy my generation has learnt... ( in English ) You have to make the case, and to make the case in a democracy, you have to be convinced yourself, and excuse me, I am not convinced. This is my problem and I cannot go to the public and say, "well, let's go to war because there are reasons and so on," and I don't believe in that.

KWAME HOLMAN: Reporter: On Friday, the chief U.N. weapons inspectors will report to the Security Council, setting the stage for the next test of U.N and NATO solidarity on military action against Iraq.

JIM LEHRER: Margaret Warner takes the story from there.

MARGARET WARNER: For more on the splits between the U.S. and its traditional European allies on Iraq, we get three perspectives. Richard Holbrooke was U.S. Ambassador to the U.N. in the Clinton administration. He also served as U.S. Ambassador to Germany from 1993 to 1994, and then as assistant secretary of state for European affairs from 94 to 96. James Woolsey served 12 years in government for both Republican and democratic administrations. He was director of central intelligence under Pres. Clinton, and currently sits on the defense policy board which advises Defense Sec. Donald Rumsfeld. Charles Kupchan was a director for European affairs on the national Security Council in the last administration. He's now a senior fellow at the council on foreign relations, and an associate professor of international relations at Georgetown University. Welcome to you all. Jim Woolsey, how serious is this rift over Iraq? Does it represent a significant roadblock for the Bush administration?

JAMES WOOLSEY: I think it's a serious rift. But I don't think it blocks the administration from doing what they want to do. Sec. Rumsfeld pointed out, it's 16 to 3 in NATO, and Sen. McCain chided this last weekend the French and German as little bit for being unilateralist. It's an accurate charge, they are being that way. But they're important countries. And I think that the situation is one in which we need to watch the British very closely. If by acting the way they are, the French particularly are essentially threatening to veto a resolution in the Security Council, that could make things somewhat more difficult for Tony Blair, who has been, to put it mildly, a standup guy in all of this, showing a lot of political courage. And that could make it tougher for the administration. I think the administration will get through this, but this is not a good development.

MARGARET WARNER: Richard Holbrooke, how significant to you find this?

RICHARD HOLBROOKE: I think what happened today in NATO was a disgrace. Turkey is a critical country. All this was was a planning effort. The principle one for all and all for one in NATO was fractured today by the French, the Belgians and Germans, but as Lloyd Robertson and Don Rumsfeld both said in your setup piece, things are going to go on. You and Jim Woolsey and you were all in Munich together over the weekend listening to that exchange between the German foreign minister and Sec. Rumsfeld. And the healthy thing was that the critical alliance was having a public dialogue. The sorry thing is that we're not going to be able to get our act together at this time over this issue. Now, is this a crisis? No. It isn't. It's a serious mess. But the situation vis- -vis Iraq will proceed without any reference to what happens in NATO if NATO refuses to go along, because the U.S. And its allies and 18 nations in Europe have now publicly endorsed the U.S. stand. Basically the French, Germans, Luxembourg and Belgium are isolated. The foreign minister was standing with Rumsfeld in your piece just now. As for the U. N., there doesn't need to be another Security Council resolution. 1441, one of the best resolutions ever crafted in the U. N. and hats off to Colin Powell and his colleagues for their diplomatic achievement, plus the preceding resolutions going back to 1991 are all the authority that's needed to take military action. So one way or another, it's my view that the events of the last three days, in Brussels and Paris, in Munich, and in the U. N. have actually accelerated the timetable towards a military conflict rather than slowed it down.

MARGARET WARNER: Charles Kupchan, do you see it this way, these events, a, will not be a set back for what the Bush administration wants to do and may have accelerated the timetable?

CHARLES KUPCHAN: I think I have a somewhat more sobering view than my colleagues, Jim Woolsey and Richard Holbrooke, in the sense that I don't think the U.S. has quite as much support as they do. This was as Richard Holbrooke rightly pointed out not a question of should we attack Iraq, it was simply a question of should we prepare to defend Turkey if the war were to threaten Turkey's security. You couldn't even get NATO to agree on that, and that's really an ancillary issue. But I think that even the big issue, should the United States lead a coalition against Iraq, is still a question for which there is not a great deal of support in Europe. The letter that was circulated that eight members signed did not endorse the war, it simply said let's not let the war against Iraq set back the Trans-Atlantic Alliance, let's seek unity in the U.N. So, I fear that we are seeing a widening gap between the United States and Europe. I agree with my colleagues that this will not prevent the bush administration from going to war. But I think the fallout will be very, very consequential. Essentially NATO will have been called into question. The idea that European and American security is indivisible I think will basically be exposed to be untrue. So I do see this as a historical turning point of sorts. And I think if the U.S. goes to war without the support of France, Germany and Russia, it will deal a serious blow to the infrastructure of the international system.

MARGARET WARNER: Why has this rift developed, James Woolsey, why are the Europeans at least the French and Germans taking this position?

JAMES WOOLSEY: Well, there are two different reasons. I think a lot of the French interest is economic, they have a lot of deals with Saddam Hussein, oil deals and others. And also France for many years has historically seen its essence in part in these international forays as thwarting the United States. Germany is new and different here. This I think derives in part from the chancellor, heavily from the chancellor's election strategy back in the fall in which he was in desperate straits and he pulled out the anti-Americanism as a way of trying to solidify the left wing of his party and the associated greens, and pull the election out by a small margin. But what is really damaging here, I think, is their approach toward Turkey, because Turkey is a moderate Muslim state, as the secretary said it's a model in a lot of ways for what we would like much of the rest of the Middle East to budget and to thwart even contingency planning, which is what they're doing, is a remarkable thing.

MARGARET WARNER: Charles Kupchan, your view on why this rift has developed and why the Europeans are, keep saying the Europeans, of course it's not all the European leadership, but the French and German, along with the U.S. seems to be willing to push this to a confrontation.

CHARLES KUPCHAN: I think there are two different issues at play. One of them is a substantive objection to whether or not an attack against Iraq will improve joint security or diminish it. I think the Europeans are concerned that an attack will radicalize the Muslim world in the Middle East as well as Muslim populations in Europe. I think they fear that far from aiding the war on terrorism, it could increase the number of people who feel disaffected and may gravitate toward al-Qaida and other groups. So I think they're simply not convinced that even if Saddam Hussein has weapons of mass destruction, that the best way to deal with the situation is to attack. Then there's a separate issue that has much more to do with the United States. I think that to many Europeans, the key question here is not Iraq but America, and there is a sense that the United States is perhaps too powerful and too unilateralist for its own good and needs to be reigned in. And in that sense the European position is in part about checking the United States, trying to tell the Bush administration that it thinks it's "go it alone" proclivities are undermining international order, undermining multilateralism, and I think that's one of the main reasons we've seen the French, the Germans and as of today the Russians dig in their heels against the American position.

RICHARD HOLBROOKE: Can I make a comment on this? I think we are in, we're wildly overstating the problem here. I'm not here to defend the administration, I think they are handling the U.S. alliance relations from Korea to Europe has been flawed from the beginning of the conceptual level. But we are not in a crisis with Europe. There are three things going on here. First of all, there's a U.S. disagreement with several European countries. But 18 countries have come out in support of us, and Charlie Kupchan way understates the importance of that letter by reading the actual words as though they were the key. The key thing is first eight major countries including three of the five biggest, Britain, Spain and Italy, came out and in a letter that they didn't even tell the Germans and the French about defended us, and then the smaller countries in eastern and central Europe,. So 18 countries all E. U. and NATO members, or about to become members, came out in support of us. So that's number one. A U.S. problem with some European governments. The second thing that's going on is an internal European dispute. The one that's clear when over two thirds of the European countries are still supporting us, and this is notwithstanding diplomacy which is in my mind not been very deft on the part of the administration. And finally, a tremendous division inside the countries themselves. Margaret, you and I and Jim Woolsey also saw that right after the two sections from Fisher and Rumsfeld you showed, the head of the C DU opposition -

MARGARET WARNER: In Germany -

RICHARD HOLBROOKE: -- whose party lost by a tiny amount, came out and said very clearly in the same conference that if her government were in power they would have supported us. So let's not overdo this. There is a problem in U.S.-European relations, yes, but it will all be settled one way or the other not by the debate we're having now or what happened in Munich over the weekend or what happened in Brussels today, all of which is lamentable. It will be settled by the war itself. If the war is quick and relatively clean, then success will have 100 fathers. If it's a long protracted mess, all of us, the United States, the Europeans, everyone is going to participate in the consequences, and we will be starting afresh after the war. And one last thing: In the corridors of this conference I spoke to many German parliamentarians, several of the most influential in the governing party told me they have already begun private discussions themselves on how to repair relations between the U.S. and Germany after the war, because they are very upset that Chancellor Schroeder and Pres. Bush are not on speaking terms.

MARGARET WARNER: Let me get briefly from all of you, before we get to the end of the war, what do you think will happen the rest of this week, Jim Woolsey, do you think we're headed toward a confrontation between competing resolutions from France and Germany versus the Britain and U.S., do you think we'll have threats of mutual vetoes, how important is Hans Blix and ElBaradei's report coming Friday for determining all this?

JAMES WOOLSEY: The report will be important. And if, especially if the administration decides that it really needs to press for an 18th resolution, as Sec. Rumsfeld said last weekend, I think the key thing is that the French and Germans are pushing for something which is essentially nonsensical, which is to try to turn these auditor inspectors, by adding, doubling them, into detectives. Colin Powell, who's not a man of hyperbole, called the inspectors a bunch of Inspector Clouseaus, sort of stumbling around Europe, Peter Seller's figure from the Pink Panther. This is not a serious proposal they are making, and that's in a lot of ways the stunning aspect of this.

MARGARET WARNER: Charles Kupchan, how do you expect it to play out this week at the U. N., do you think we're heading to a situation where the U.S. may decide to go ahead without a second resolution because of this standoff?

CHARLES KUPCHAN: Well, I think that the standoff has pretty deep roots in the sense that it's not just about Iraq, it is about the bigger picture. A Europe that's at peace and that no longer needs its American protector as much, an America whose strategic priorities are shifting away from Europe to the Middle East and Asia. And therefore, I don't think this is going to go away. I think the gap between the U.S. And many European countries is going to stay around, particularly if Saddam Hussein continues doing what he's doing, and that is offer up little bones. Like today he said yes, I'll let the U2 flights operate. That's going to strengthen the European position, those who are calling for a lengthening of the timetable. So I think short of a report from Blix on the 14th that says I can't do any more, I've done my best I'm getting no cooperation, it's time for serious consequences to kick in, short of something with that clarity from the U.N. Security, to the U.N. Security Council, I think we're going to probably see the Bush administration move toward war without a second resolution, without the court of world opinion on its side. My own view is that we will probably do more damage to the international system than we will gain security by attacking Saddam Hussein.

MARGARET WARNER: Richard Holbrooke briefly if I may ask, what do you think will happen at the end of this week, will France hold firm and the U.S. hold firm?

RICHARD HOLBROOKE: It doesn't really matter, Margaret. The United States does not need a second resolution. My personal recommendation to them would be not to seek a second resolution, because 1441 and the previous resolutions going back to 1991 are all they need. And they're going to get caught up at the U.N. in a very messy debate with the French and the Russians over wording. However, Tony Blair needs the appearance of an effort to get a second resolution in order to solidify support for himself. So my guess is this: Blix will report on Friday, the British will then circulate a very short resolution saying that the Iraqis have violated 1441 or in material breach or something. If at any point in this process, and the U.S. will give a very short notice, I would think 48 hours, if at any point in those 48 hours the French, the Russians or anyone else says we're going to muster strong opposition, the U.S. and the British will pull that resolution and the war will start within a matter of days or a handful of weeks. I would also add one last critical point, as Charlie Kupchan surely remembers,. In Bosnia, in Kosovo, and in December of 1998 with Operation Desert Fox in Iraq, the Clinton administration used air power without any new Security Council resolution for Iraq and none at all in Kosovo and Bosnia, and we did that because we knew we couldn't get it through the Security Council. I think the U. N. is a flawed but nonetheless indispensable institution. But if it comes down to this, Margaret, act without the Security Council or don't act at all, and that's going to be the choice, the administration will have no alternative but to go forward. And the French are going to be trapped by the problem they themselves have created.

MARGARET WARNER: I have no alternative but to end this. Richard Holbrooke, Charles Kupchan, and Jim Woolsey, thank you all.

JIM LEHRER: Still to come on the NewsHour tonight, an important telecom issue, and fighting AIDS in Africa.

FOCUS - WHOSE CALL?

JIM LEHRER: Now competition and controversy over local phone service. Tom Bearden reports.

TOM BEARDEN: San Francisco area resident Alison Ten Cate is part of a small but growing trend. She left her local phone company, and took her business elsewhere.

ANNOUNCER: AT&T has big news for California.

TOM BEARDEN: She wouldn't have had that choice a few years ago, but changes to state and federal policy now allow companies like AT&T and WorldCom-- the parent of M.C.I.-- To offer local service. They're marketing aggressively in several states to lure consumers like Ten Cate.

ALISON TEN CATE: We decided to switch carriers, and saw a special that AT&T was offering local service. We already had AT&T for long distance, so we swapped over and chose AT&T for both.

TOM BEARDEN: Ten Cate is one of ten million phone customers who have abandoned the so-called "baby bells"-- the four major carriers that are the survivors of the breakup of the original AT&T monopoly in 1984. Those companies are Verizon, Qwest, Bellsouth, and SBC. SBC is the baby bell in northern California, and one of the "NewsHour's" underwriters. The Bell rivals have captured an 11 percent market share, and that share is growing quickly. But there's debate as to whether they're playing fair, a debate that's playing out in a TV ad war.

ANNOUNCER: Ten million Americans and growing are saving millions of dollars every month...

TOM BEARDEN: The new entrants say SBC And other incumbents are trying to tilt the playing field.

ANNOUNCER: SBC Continues to pressure the government to end competition.

TOM BEARDEN: But SBC And the other bells say the current rules give the rivals an advantage.

ANNOUNCER: At SBC, We have multibillion dollar plans to develop new technologies. Most of our competitors have marketing plans.

TOM BEARDEN: They want the Federal Communications Commission, which is reviewing those rules, to change them. At issue is a key provision of the landmark 1996 Telecommunications Act. It forced the Bell companies to lease their hardware to competitors at wholesale prices. The idea was to let other companies piggyback on the existing infrastructure. Reed Hundt, who chaired the FCC when the '96 act passed, says the system is working. Hundt is now a telecom consultant.

REED HUNDT: It's because of that, that regulatory system, that it's possible to have these choices being offered now by WorldCom and AT&T against the Bells. There is a lot of choice, a lot of competition, and a lot of chaos and confusion in board rooms as people try to figure out how to deal with the new competition and the new technologies. That's creative destruction, that's ferment. That's what a competitive economy is supposed to have.

TOM BEARDEN: Under the act, each state sets the wholesale price the baby Bells are allowed to charge rivals to use their lines. Those prices are meant to reimburse the Bells for the cost of the network, plus a reasonable profit. In the last two years, several state utility commissions cut rates sharply, effectively enticing new competitors.

REED HUNDT: You could generally say that an awful lot of the state commissions would like to see competitors offer a price break to the consumers in the residential market, who traditionally have paid pretty high prices for local phone service, and that's the outcome that they are getting.

TOM BEARDEN: California's public utility commission was among the most aggressive. Last May, it lowered the rental price SBC may charge competitors from $23 a month per line to $14. AT&T, for example, then charges each customer $20, less than SBC'S retail price. Ken McNeely is president of AT&T California. His company is attracting 50,000 SBC customers a month.

KEN McNEELY: For the first time, the residents here of San Francisco, the citizens here are able to have competitive choice, competitive options. The Telecom Act of '96 is working. It's working as it was intended to work. Unfortunately, it has taken a significant amount of time for that to happen. And I think SBC, for the first time, sees a competitive threat.

TOM BEARDEN: McNeely wants state regulators to keep the wholesale price low, but SBC Says those prices amount to subsidies to competitors, and says it's getting squeezed. William Daley, former commerce secretary in the Clinton administration and campaign manager for Al Gore in 2000, is now SBC President.

WILLIAM DALEY: What we are saying is the holy grail of low price is having a serious consequence and potentially very serious consequence to the consumers and our telecommunications infrastructure to the nation.

TOM BEARDEN: SBC says the low prices could endanger the network that it's required by law to maintain. That includes everything from large switching facilities-- essentially giant digital switchboards-- to neighborhood phone poles and cables, to the wires connecting each home to the phone network.

WILLIAM DALEY: We're in a very capital- extensive business. The needs are enormous to keep a network going that's very complicated. We take for granted picking up the phone, and within seconds being connected anywhere in the world with clarity at a level that is pretty impressive, and nobody thinks twice about how that all happens.

TOM BEARDEN: This fight is just one of the new competitive challenges the Bells are facing. More and more Americans communicate by e-mail instead of the phone. Two million Americans get local phone service through their television cable companies. And an estimated 150 million people use cellular phones as supplements, or even substitutes, to home phones. Ruby LaGrandeur of San Francisco has joined the cell-phone-only club. She says it's because she's always on the move, and is hardly ever home.

RUBY LaGRANDEUR: I originally started using a cell phone for cost effectiveness. I moved down here from Seattle, and you have free night and weekends and long distance... free long distance, which was the big seller for me.

TOM BEARDEN: And that's cheaper than having a landline at home?

RUBY LaGRANDEUR: Um-hmm. Um-hmm. It really is. And I move a lot, so it's much easier for me to just put my cell phone in my pocket instead of having to, you know, disconnect the landline, and have it reconnected.

TOM BEARDEN: One result of the changing marketplace: Last fall, SBC announced it would eliminate 11,000 jobs, blaming its problems in part on state regulators. Also last year, Verizon planned to cut 8,000 jobs, and BellSouth laid off 5,000. The casualties included Kevin Neal, who repairs and upgrades phone lines for SBC His wife, Heidi, is a stay-at- home mom. Something happened to him today.

HEIDI NEAL: Yes.

TOM BEARDEN: Tell me about that.

HEIDI NEAL: He got surplused today.

TOM BEARDEN: What does that mean?

HEIDI NEAL: Surplus means he has 90 days to find a job in the company. We may have to pack up our family and move. We like the company, great health care benefits, and I have a disabled daughter, and that's something important to us.

TOM BEARDEN: So Neal began a crusade on behalf of her husband. She started a web site, momsavesjobs.Org, arguing that unfair competition was hurting SBC Neal says she's not paid by SBC

TOM BEARDEN: What's the message you want to transmit to people?

HEIDI NEAL: That 11,000 families are going to lose their jobs if unfair regulations aren't redone.

TOM BEARDEN: Neal sends letters to public officials, and updates her site almost every day. The debate over local competition is also underway in Arizona, where state regulators also slashed the prices that the incumbent, Qwest, can charge competitors. Qwest is challenging the pricing structure in federal court. In part, the providers are fighting over small business clients like Slimline in Phoenix, which makes parts for high-end model airplanes. Slimline transmits large computer design files to overseas factories, and it needs a large capacity connection to do so. The company pays a Qwest competitor, Allegiance Telecom, $270 a month for a bundled package of phone and high-speed Internet access. That's $70 less than a similar Qwest product. Allegiance leases the copper wires connecting Slimline's building to the phone system from Qwest. The arrangement provides Slimline CEO Bill Leonard with a product that's faster and cheaper than he'd ever imagined.

BILL LEAONRD: We got a completely integrated broad band, voice, and, you know, voice mail, and we have all kinds of great features that they give you with this, and we use them all, you know? And I think we're at 512 speed, I don't know, it goes fast.

TOM BEARDEN: Allegiance CEO Royce Holland says products like these are the offspring of true competition. He says preserving consumer choice is what's really at stake in this debate.

ROYCE HOLLAND: The government protected these monopolies for 80 years. Now they've opened it to competition. It's taken several years to really turn the tide to where the Bells are actually losing share. It did in long distance with AT&T as well. But now it is happening, as we saw with the long distance industry, with the railroads, other industries that have been opened up and ultimately deregulated, competition. You can't put that genie back in the bottle once it's out.

TOM BEARDEN: But from Qwest's viewpoint, the very future of thetelecom industry is at stake. Since 2000, scores of telecom firms have gone under, liquidating their equipment at auctions like these. Some had accounting problems, others overbuilt their high- speed Internet lines. Ultimately, investors lost confidence in the whole sector, and 500,000 jobs disappeared. One executive likens the situation to nuclear winter. Qwest vice president Steve Davis says to revive the industry, companies like his need reasons to invest -- to buy from equipment providers like Cisco and corning. Davis took us to new home development outside Phoenix, where Qwest is required by law to connect each home. Under the current leasing system, Davis says rivals will simply piggyback on his pipes instead of installing their own.

STEVE DAVIS: The new entrant doesn't really provide anything new, just repackages what Qwest sells. And the way to do that is to charge a very, very low price for Qwest's wholesale components.

TOM BEARDEN: Is this what congress intended?

STEVE DAVIS: No, it's not. What congress intended that I receive a fair rent when I provide my facilities to someone else, and I'm happy to provide facilities, to provide services to anyone, wholesale customer, retail customer. I just want to recover my costs for doing so.

TOM BEARDEN: In recent weeks, both the Bell competitors and SBC Have aggressively made their cases on the airwaves, with ads targeting state regulators and the FCC.

ANNOUNCER: But now we find out SBC Is bragging to wall street about huge profits in the billions.

ANNOUNCER: Some people have been saying some nasty stuff about SBC What they aren't saying is that we are a company of nearly 190,000 employees who live and work here just like you.

TOM BEARDEN: The FCC will soon issue revisions to the rules of local competition. Heidi Neal of momsavesjobs.Org, flew to Washington to make her case alongside the corporate executives. Published reports suggest the commission is considering phasing out the sharing system that many Bell competitors rely on. Both sides are lobbying the FCC fiercely. The commission will announce its changes as early as Thursday.

FOCUS - FIGHTING AIDS

JIM LEHRER: Finally tonight, the president's new Africa AIDS initiative. We begin with some background from Susan Dentzer of our health unit, a partnership with the Henry J. Kaiser Family Foundation.

SUSAN DENTZER: Pres. Bush's recent announcement in his state of the union address of a new initiative on HIV And AIDS, signaled a marked increase in American assistance to fight the global pandemic.

PRES. GEORGE W. BUSH: Ladies and gentlemen, seldom has history offered a greater opportunity to do so much for so many. We have confronted, and will continue to confront, HIV/AIDS in our own country. And to meet a severe and urgent crisis abroad, tonight I propose the emergency plan for AIDS relief, a work of mercy beyond all current international efforts to help the people of Africa.

SUSAN DENTZER: An estimated 42 million people worldwide are now infected with HIV. More than 20 million have already died, and as many as 68 million more deaths are forecast by 2020. To help fight the pandemic, Pres. Bush proposes spending a total of $15 billion over the next five years, $10 billion more than his administration had previously planned on the effort. The money would be used in part for prevention programs to stem new infections from HIV, the virus that causes AIDS. It would also help speed anti-viral drugs and other treatment to AIDS sufferers. Under the president's plan, 12 out of 48 sub-Saharan African nations would benefit, and to two Caribbean nations, Haiti and Guyana.

PRES. GEORGE W. BUSH: There are whole countries in Africa where more than one-third of the adult population carries the infection. More than four million require immediate drug treatment. Yet across that continent, only 50,000 AIDS victims, only 50,000, are receiving the medicine they need. Many hospitals tell people, you've got AIDS, we can't help you. Go home and die. In an age of miraculous medicines, no person should have to hear those words. (Applause)

SUSAN DENTZER: Far and away the largest share of the money would be contributed directly by the U.S. to other countries, such as through programs sponsored by the U.S. Agency for International Development. The president signaled that much of that money would go to purchase generic versions of the so-called anti-retroviral drugs that have drastically cut AIDS deaths in developed nations.

PRES. GEORGE W. BUSH: Anti-retroviral drugs can extend life for many years. And the cost of those drugs has dropped from $12,000 a year to under $300 a year, which places a tremendous possibility within our grasp.

SUSAN DENTZER: But analysts say that broader use of generics also raises the possibility of conflict with U.S. trade policies; those have traditionally been aimed at protecting the patents of us pharmaceutical manufacturers. By contrast to the large sums of money the president wants to spend on direct bilateral assistance to other countries, he proposes to channel just $1 billion over the five-year period through the so-called global fund to fight AIDS, tuberculosis, and malaria. That's a multinational arrangement created two years ago to make grants supporting prevention and treatment plans put forward by affected countries themselves. The fund had earlier asked the U.S. for a much larger contribution of $2.2 billion over a two-year period. Separately, the Global Fund announced recently that U.S. Health and Human Services Secretary Tommy Thompson had been elected to head the fund's board of directors.

JIM LEHRER: And to Gwen Ifill.

GWEN IFILL: Joining me to analyze the details of the president's AIDS proposal are Dr. Joseph O'Neill, the director of the White House office of national AIDS policy. Stephen Lewis, the United Nations special envoy for HIV/AIDS in Africa. And Salih Booker, the director of Africa Action, an organization which works for human rights in Africa. Dr. O'Neill, as Susan Dentzer just report d, $10 billion in new money the president talked about in his state of the union speech, one billion of it to the global full for AIDS. Why is that, how did you decide to split it up that way?

DR. JOSEPH O'NEILL: The global fund is an important tool for solving this problem globally. The one billion dollars that the president announced as new money is actually an enormous increase in our contribution to the fund. Now that that money is added in, the U.S. will contribute now 44 percent of all the committed money to the global fund. So the global fund is a very very important tool, but it was never intended to be the sole means by which the U.S. would respond to this epidemic.

GWEN IFILL: Salih Booker in addition to this money that's going through the global fund, the money that's going through USAID, this is also to twelve African countries, two Caribbean countries, what do you think about that there's countries they have chose to help and the ones they haven't/

SALIH BOOKER: Well, it's not entirely clear what the criteria was for the selection of the countries and that does represent some problem. AIDS is a global pandemic, Africa is the epicenter, and it's important that the United States start providing the kind of leadership that the president has signaled. It's important, however, if we're going to call it an emergency plan that we treat it as the emergency that it is, meaning we need this funding this year, 2003 and 2004. That's when millions of people will be dying if they don't have access to these medicines, and the global fund to fight AIDS is in fact the best mechanism, a vehicle that the United States helped establish two years ago but which is now almost bankrupt because the wealthy countries that should be providing the leadership and financing this simply haven't been coming for with the kind of contributions needed. So that's something wee also like to see changed in the president's initiative to get more funding to the global fund now this year.

GWEN IFILL: Stephen Lewis, are you pleased with the president's, the decision to spend this money on AIDS in Africa, and is there something else you would have liked to see him do?

STEPHEN LEWIS: How can you not be pleased. It's a dramatic break with the past. The staggering indifference towards the needs of Africa in the wake of the pandemic over the last ten years from the developed word has now been reversed, apparently, by the president's announcement. I think there are two things which have worried a lot of international observers. One is that it's phased in, that as Salih Booker said it's not really coming into play in 2003, and in 2004 only in modest installments, growing over the years. And listening to the president's word, he said four million people are in need of treatment now. And only 50,000 are getting it, and he repeated that dramatically. Well, if four million people are in need of treatment now and the American money doesn't begin to trigger significantly until the latter half of 2004, then a very great percentage of those four million will be dead, and not in any number of years would the president wish that. So obviously the money has to come forward into 2003.

GWEN IFILL: We have the president's representative here, let him respond to that.

DR. JOSEPH O'NEILL: We're talking fiscal year, as you know, the 2004 fiscal years begins in October of 2003. So we're prepared to get money out and to get money out quickly. But the important point to take home here is that the United States has taken bold leadership under Pres. Bush to do something about this global epidemic. And we're calling on the rest of the world to join news this effort. We can't do it alone. But if the rest of the world, the developed world that has resources joins with us, and puts money out there, be it in the global fund or by lateral initiatives, we'll be able to solve this problem.

GWEN IFILL: A lot of this plan is to make drugs more affordable. Yet because you're administering it through USAID are generic drugs which aren't manufactured in the United States eligible for this program?

DR. JOSEPH O'NEILL: It's a difficult question. There's no generic answer to the generic drug question. We've tabled in the last trade negotiations in Geneva a proposal that would allow countries once they've negotiated with and gotten the best price to see what the best price is they could get from the pharmaceutical industry -- if the negotiations are done properly, yes -- to allow the purchase of generic drugs. But I wanted to remind us all that the pharmaceutical industry has taken deep, deep, deep cuts in their own cost making these drugs available. In fact, some drug are been made available free of charge inAfrica and other part of the world. So this is an important question; we're committed to getting the lowest possible price and using these dollars in the most efficient way to help them. But we also have to keep our eye on quality. I'm a practicing physician and I know very well that the quality of the drugs that we give to people are also very important. Complicated question.

GWEN IFILL: Salih Booker, are the decisions being made, these are complicated questions beautiful, but are the priorities being set correctly?

SALIH BOOKER: In order for the president to meet the targets he's laid out, treating two million people now, the only way to do that is through the purchase of the lowest price version of the anti-retroviral drugs, and it's only generics through the competition introduced by generic producers that the price has been brought down to $300 a year for a full course of treatment that the President referred to. In order to do that we have to purchase generics. The pharmaceutical industry, spends only about 11 percent in research and development of its revenues, but 26 percent goes to marketing and public relations. So the pharmaceutical industry has to back off. The president's plan to be true to his words is going to have to provide a mechanism for the bulk purchase of generic versions, because it doesn't make sense when you can buy the cheapest version a drug and treat therefore many more people to go for patented drugs, and the U.S. Trade representative Bob Zelig is off to the intellectual property rights discussions tomorrow, the TRIPS Council, and unfortunately the U.S. position there still at odds with the president's proposal.

GWEN IFILL: Steve Lewis.

STEPHEN LEWIS: May I make that back to the president's own word? The president said that the drugs had been reduced to $300 per person per year. That is a generic price. And the generic drugs are not a matter of quality with great respect, they are listed on the World Health Organization list of anti-retroviral drugs which can be used. If the money, if a greater amount of money, one hopes over a billion dollars a year, were channeled through the global fund for AIDS, then the purchase of those generic drugs would be possible and acceptable and I point out that it is board chaired by Tommy Thompson.

GWEN IFILL: Let's talk about the president's own words. Did he make the commitment to using generic drugs, and is there more money in the offing for the global fund?

DR. JOSEPH O'NEILL: The president made several commitments; one was to essentially triple the U.S. Investment in global HIV And AIDS. He made a commitment to focus his efforts and focus our efforts on the parts of the world where the epidemic is the most severe, the countries in Africa and central America and in the Caribbean that were mentioned and finally made a focus on doing everything we can do to get people interest treatment and to support them in treatment. This means that we are committed to finding way itself to get high quality medications to people that need them. We have made a probe in the trade talks to find ways for countries that are particularly needy. And in particular situations if it's not possible to get the medication from the pharmaceutical -- from the manufacturers, the U.S. manufacturers, or the non-generic manufacturers to work with countries so these drugs can be made available.

GWEN IFILL: How did you decide which countries would benefit under this program?

DR. JOSEPH O'NEILL: The countries were picked on several bases, one is obviously the need for the size of the epidemic; the second is the level of poverty: What are the scarcity of resources? And finally and very importantly the absorptive capacity, which is development talk, how quickly can the money be put to work. I'll tell you that with these countries pick, 50 percent of the cases of HIV in the world are in these 14 countries that we've picked and 70 percent of the cases of HIV in Africa. Again, the United States has said we're going to try to take care of half the people in the world that have HIV Disease, but the call is to the rest of the developed world to say you got to help with the other half, help us do this.

GWEN IFILL: Stephen Lewis, is that enough?

STEPHEN LEWIS: Well, it's certainly an important and significant start. I'm not going to take issue with it. The point that is being mail is very valid. There simply has to than an equivalent response from the other rich countries of the world, and if the United States has opened the door, them the other countries must policemen equivalent amounts relative to their own treasury capacities, and the target for that would be the meg of the G 7 in June in France so, they an at the up the money, I hope, a rather greater percentage through the global fund.

GWEN IFILL: Salih Booker, are you confident that with this commitment of new funds that the Bush administration is making that other international health care programs will not be paying the price?

SALIH BOOKER: That's one of the key concerns and members of Congress something have voiced this as well. We don't want to be robbing Peter to pay Paul --also because a lot of the commitments to health issues and health infrastructure issues are important to continue those investments because of the need to strengthen that infrastructure, to strengthen programs, to combat, for example, tuberculosis, people who have AIDS often die of tuberculosis. So it doesn't make sense to de-fund existing programs in order to fund this initiative.

GWEN IFILL: Quickly, will there be robbing of Peter to pay Paul?

DR. JOSEPH O'NEILL: Absolutely not. Since this administration has taken over, through the Millennium Challenge Grants have effectively doubled the amount of foreign assistance available. Before this initiative was even announced, this administration had nearly doubled the amount of assistance to global HIV AIDS over with what it was handed when it came into the White House. And finally here's this new initiative. So there's a great opportunity to do great work here, but we're asking the rest of the world to join us.

GWEN IFILL: Dr. Joseph O'Neill, Salih Booker, Stephen Lewis, thank you all for joining us.

RECAP

JIM LEHRER: Again the major developments of the day. France, Germany, and Belgium again blocked NATO from giving military aid to Turkey to protect it against Iraq. Late today Pres. Bush said he was disappointed in France. He said NATO had been affected in a negative way. Mr. Bush also said Iraq is stalling for time, by allowing, offering to allow U2 surveillance flights. And that s confirmed it has recovered part of a left wing of space shuttle "Columbia", and a key piece of electronics. We'll see you online, and again here tomorrow evening. I'm Jim Lehrer. Thank you and good night.