Cybertelecom
Cybertelecom
Federal Internet Law & Policy
An Educational Project

Customer Premises Equipment
Part 68 :: CPE

Navigation Links:
Computer Inquiries
- Computer I
- Computer II
- - Computer II Ref
- Computer III
- - Computer III Ref
- Information Service / ESP
- Timeline
- Net over Cable
- Net over DSL
- Net over Wireless
- Net Over Powerline
- Layered Model Regulation
- Access Charges
- Accounting
- Bundling
- - CPE
- - Info Services
- CPNI
- Network Info Disclosure
- Enforcement
- Notes
- Network Neutrality
- Common Carriage
- Broadband
:: Home ::
:: Feedback ::
:: Disclaimer ::
:: Sitemap ::

Customer Premises Equipment (CPE) is the stuff at the end of the telephone network that is attached to the network. It could be a modem or it could be as simple as a plastic scoop used to help make telephone conversations private. 

Prior to the proceedings discussed on this page, Ma Bell blocked anyone from attaching anything to its network.  [Jordaphone] [Hush a Phone] [Carterfone] Recall historically that Ma Bell started with Alexander Graham Bell's patent of CPE, the telephone, and not a patent for a telephone network or service. Ma Bell's business plan was to sell end-to-end service; Ma Bell would argue that "foreign" devices would harm the network (but then turn around and market the same device at a significantly increased price).  In North Carolina, it is reported, you could not even place a cover over the telephone directory book without AT&T claiming that it would harm the network! [Alven]

There are two important regulatory evolutions with regard to CPE:

A new regulatory issue has recently emerged in the context of Network Neutrality concerning whether wireless subscribers can attach the CPE of their choice to wireless telecommunications networks.  Reportedly, in the United States carriers lock their systems so that only their handsets can be used where in Europe subscribers simply need to switch SIM cards in order to switch handsets - and therefore the handset market is far more competitive.  SKYPE has petitioned the FCC to apply Part 68 to wireless networks.

Hush a Phone

The Hush a Phone was a scoop like thing that was attached to a telephone handset so that the speaker could talk softly into the phone and not be heard by others. It was a non electric attachment. Hush a phone had been in business since 1920. [Hush a Phone ad] [Picture of a Hush a Phone]

In the late 1940s, an AT&T lawyer saw the Hush a Phone in a store window, and decided to sue. AT&T, through its tariffs, refused to allow anyone to attach anything to their network without their permission. AT&T brought suit before the FCC, which agreed that the Hush a Phone posed a technical interference with the network. [Huber (referring to this as probably the Commission's "most comical order")]

Hush-a-Phone decided to take a then-unusual step, and appeal the FCC decision to DC Circuit Court. The court reversed the FCC, stating that AT&T's restrictive tariffs were an "unwarranted interference with the telephone subscriber's right reasonably to use his telephone in ways which are privately beneficial without being publicly detrimental." [Hush a Phone v FCC, 238 F2d 266 (1956)]

While Hush-a-Phone won, all that was permitted at this point was the attachment of non-electric devices.

Hush a Phone Corporation v US, 238 F.2d 266 (DC Cir. 1956): "The question, in the final analysis, is whether the Commission possesses enough control over the subscriber's use of his telephone to authorize the telephone company to prevent him from conversing in comparatively low and distorted tones. It would seem that, although the Commission has no such control in general, there is asserted a right to prevent the subscriber from achieving such tones by the aid of a device other than his own body. Thus, intervenors do not challenge the subscriber's right to seek privacy. They say only that he should achieve it by cupping his hand between the transmitter and his mouth and speaking in a low voice into this makeshift muffler. This substitute, we note, is not less likely to impair intelligibility than the Hush-A-Phone itself, for the Commission has found that 'whenever an enclosure is placed around the mouth of a person an intensification of frequencies below approximately 500 cycles occurs, and if the intensification is too great, a distortion or blasting effect results in the transmitter.' In both instances, the party at the other end of the line hears a comparatively muted and distorted tone because the subscriber has chosen to use his telephone in a way that minimizes the risk of being overheard. In neither case is anyone other than the two parties to the conversation affected. To say that a telephone subscriber may produce the result in question by cupping his hand and speaking into it, but may not do so by using a device which leaves his hand free to write or do whatever else he wishes, is neither just nor reasonable. The intervenors' tariffs, under the Commission's decision, are in unwarranted interference with the telephone subscriber's right reasonably to use his telephone in ways which are privately beneficial without being publicly detrimental. Prescribing what changes should be made in the tariffs to render them 'just, fair, and reasonable' and determining what orders may be required to prohibit violation of subscribers' rights thereunder are functions entrusted to the Commission."

Carterfone

Derived from From Jason Oxman, FCC Working Paper 31:  The FCC and the Unregulation of the Internet Text | Word97 | Adobe | Press Release | July 1999

At about the same time the Commission launched its first Computer Inquiry, it released a short order addressing the complaint of Thomas F. Carter and his company, the Carter Electronics Corporation, against AT&T.[Carterfone]   In 1959, Carter invented a device, which he named for himself, that permitted users of mobile radio systems to interconnect their landline telephone with the radio system to permit mobile and fixed users to communicate with each other. [Picture of a Carterfone]   AT&T advised its customers that the Carterfone , if used in conjunction with an AT&T telephone, would subject the end user to penalties pursuant to AT&T's FCC tariff number 132, which provided that:

No equipment, apparatus, circuit or device not furnished by the telephone company shall be attached to or connected with the facilities furnished by the telephone company, whether physically, by induction or otherwise . . . .

Carter filed a private antitrust suit against AT&T, and the District Court referred the matter in 1966 to the FCC.

Before the FCC, AT&T again failed to demonstrate how the competitive CPE would harm the network. The Commission concluded that AT&T's tariff was unreasonable and discriminatory and ordered the restrictive tariff provisions stricken. [1968 Order]   The Commission was troubled by the tariff provision that would have permitted end users to install AT&T-manufactured equipment with exactly the same functionality offered by the Carterfone, but not the Carterfone itself. The Commission determined that a customer desiring to improve the functionality of the telephone network by interconnecting a piece of equipment not manufactured by the phone company should be permitted to do so, so long as that equipment does not harm the network. As stated by Huber, Kellogg, and Thorne, "Unvarnished claims of threatened harm to the network would no longer suffice;" from here out, AT&T would have to demonstrate specific harm to prohibit competitive CPE. The Commission also rejected AT&T's arguments that opening the network to competitive CPE would have adverse economic impact on AT&T's telephone service.

Part 68

The principle of consumer usage of non-telephone company manufactured equipment with the public switched telephone network, outlined by the Commission in Carterfone, would later be codified as Part 68 of the FCC's rules.  In restraining the boundaries of AT&T market power and opening the network to competition, the FCC believed that it was advancing the public interest.

[W]e find the interconnect competitive marketplace has been characterized by innovation on the part of both interconnect and telephone companies, thereby affording the public a wide range of choices regarding the terminal device or private communications system which best serves their needs. Benefits include availability of new equipment features, improved maintenance, and reliability, improved installation features including ease of making changes, competitive sources of supply, option of leasing or owning, and competitive pricing and payment options. Although it is difficult to predict future innovative developments, because so much is dependent on new product lines and new marketing strategies adopted by the telephone carriers in response to competition, it appears likely that the public will continue to benefit from the competitive interconnect marketplace in terms of innovation in the immediate future [1976 Report para 246]

Part 68 was first adopted in 1975 as part of the Commission's WATS rulemaking,[WATS] in response to telephone company slowness in modifying tariffs to permit consumers to attach their own equipment to the public network.  Part 68, which addresses connection of terminal equipment  to the public telephone network,[33] permits consumers to connect equipment from any source to the public network if such equipment fits within the technical parameters outlined in Part 68.  Competitive manufacturers of equipment were able, by means of the Commission's equipment registration and certification procedures, to build and deploy an incredible variety of voice and data equipment for use with the public network, without seeking prior permission from either the Commission, or more importantly, the monopoly telephone companies.

Through Carterfone and Part 68, the Commission opened the door to manufacturers of devices that interconnected with the telephone network and offered value-added services and capabilities.  Most important for the growth and development of the Internet, the Commission's deregulation of customer premises equipment, or CPE, cleared the way for the rapid deployment of the modem.  The modem allows any consumer with a computer and a telephone line to access data services, requiring no network alterations by the telephone company.  Residential modem use, in turn, has driven the growth of Internet applications as consumer use of the Internet has increased.  In fact, without Part 68, users of the public switched network would not have been able to connect their computers and modems to the network, and it is likely that the Internet would have been unable to develop. [See Wu p 9]

As the application of Moore's law to computer processing speeds witnessed an exponential growth in computing capabilities, the modem followed suit.  Analog modem speeds rose from 300 baud to 28.8 kilobits/second, and then to today's nearly standard 56 kilobits / second.   Digital modems and codecs,  using such technologies as digital subscriber line (DSL), promise multiple increases in speed that will create demand for even more innovative Internet-based resources and tools.  As a result, consumers will continue to be exposed to an endless variety of Internet-based applications that meet their increased bandwidth capabilities.

The Carterfone decision enabled consumers to purchase modems from countless sources, to install and use the modem without permission from the telephone company, and to use these modems to take advantage of an array of data services offered by a diverse assortment of service providers over their home telephone service.  Without easy and inexpensive consumer access to modems, the Internet would not have become the global medium that it is today.

Law

  • 47 USF s 153(14) Definition: "The term “customer premises equipment” means equipment employed on the premises of a person (other than a carrier) to originate, route, or terminate telecommunications."
    • Taken from Modification of Final Judgment§ IV(E), reprinted in United States v. AT&T, 552 FSupp 131, 228 (DDC 1982) (CPE is "equipment employed on the premises of a person (other than a carrier) to originate, route, or terminate telecommunications, but [it] does not include equipment used to multiplex, maintain, or terminate access lines.")
  • 47 CFR Part 68

Proceedings

PETITION TO CONFIRM A CONSUMER'S RIGHT TO USE INTERNET COMMUNICATIONS SOFTWARE AND ATTACH DEVICES TO WIRELESS NETWORKS 
  • Skype Petition to apply Part 68 to Wireless Telecom Services Filed Feb. 20, 2007. Comments due April 30; Replies due May 15, 2007
  • PETITION TO CONFIRM A CONSUMER'S RIGHT TO USE INTERNET COMMUNICATIONS SOFTWARE AND ATTACH DEVICES TO WIRELESS NETWORKS. Granted the Joint Motion by CTIA-Wireless Association and Skype Communications S.A.R.L. for extension of time. Action by: Chief, Wireless Telecommunications Bureau. Comments Due: 04/30/2007. Reply Comments Due: 05/15/2007. Adopted: 03/14/2007 by ORDER. (DA No. 07-1318). WTB http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-07-1318A1.doc (notice the change of Bureau)  
  • Report No: 2807 Released: 02/28/2007. CONSUMER & GOVERNMENTAL AFFAIRS BUREAU REFERENCE INFORMATION CENTER PETITION FOR RULEMAKINGS FILED. CGB  DOC-270943A1.doc   DOC-270943A1.pdf   DOC-270943A1.txt (original Skype petition notice, although you would never know it from the title)
  • Skype
  • Skype Petition
    • Summary: "As the wireless industry matures, consolidation and the relationship between headset manufacturers and carriers are producing market practices that raise substantial questions about whether consumers are receiving the maximum benefits of wireless competition. For example, carriers are beginning aggressively to influence software and product design to the detriment of consumers.

      "As the wireless market has matured and wireless handsets have become an integral part of most American's lives, carriers are using their considerable influence over handset design and usage to maintain control over and limit subscribers' right to run software communications application of their choosing. Instead of carrying the subscribers' messages indifferent to content, carriers have exerted more and more control over the way consumers access the mobile Internet. In an effort to prefer their own affiliated services and exclude rivals, carriers have disabled or crippled consumer-friendly features of mobile devices. Carriers are doing so, moreover, in violation of the Commission's Carterfone principle and the strictures of the Commission's original order permitting the bundling of consumer equipment and wireless service. The Commission should act now to enforce Carterfone and unlock the full benefits of wireless price competition and innovation.

      "In light of these developments, Skype respectfully requests that the Commission make unmistakably clear that Carterfone will be enforced in the wireless industry, to initiate a proceeding to evaluate wireless carrier practices in light of Carterfone, and to create an industry-led mechanism to ensure that openness of wireless networks. Doing so will ensure both that consumers retain a right to run the applications of their choosing and attach all non harmful devices to the wireless network. Finally, Commission involvement will ensure that carriers cannot use illegitimate network management practices as an excuse for otherwise anti-consumer behavior."

  • Policy and Rules Concerning the Interstate, Interexchange Marketplace, Report and Order, 16 F.C.C.R. 7418, 23 Comm. Reg. (P & F) 641 (2001) [CPE Order 2001]
  • 1998 Biennial Reg. Review—Review of Customer Premises Equip. and Enhanced Servs. Unbundling Rules in the Interexchange, Exch. Access and Local Exch. Mkts., Further Notice of Proposed Rulemaking, 13 F.C.C.R. 21531 (1998) [hereinafter CPE Further Notice]
  • Furnishing of Customer Premises Equipment by the Bell Operating Telephone Companies and Independent Telephone Companies, Report and Order, 2 FCC Rec 143, 160 (1987), on recon, 3 FCC Rec 22 (1987), aff'd Illinois Bell Tel Co v FCC, 883 F2d 104 (DC Cir 1989) (preempting state jurisdiction to impose structural safeguards requirements on telcos for CPE offerings)
  • Computer II (1980) (holding that BOCs may not bundle CPE with telecom service, but must offer CPE through a separate subsidiary)
  • In re Implications of the Tel. Industry's Primary Instrument Concept, Report and Order , 68 FCC2d 1157 (1978).
    • "We determined in Docket No. 19528 and elsewhere that the public benefits from diversity in the supply of terminal equipment and that consumers for this further reason should have the option of furnishing their own terminals, including main stations. Among these benefits as found in Docket No. 20003 (61 FCC2d at 867), are the public's wider range of options as to terminal devices, competitive stimulus to innovation by telephone companies and independent suppliers, the availability of new equipment features, improved maintenance and reliability, improved installation features including ease of making changes, competitive sources of supply, the option of leasing or owning equipment, and competitive pricing and payment options. . . . We remain of the opinion that the proven and reasonably anticipated public benefits from the competitive supply of terminal equipment, including primary instruments, take precedence over the considerations urged by the telephone industry. If anything, this judgment is the more firm in light of potential developments in home and small business terminals and the heightened desirability of protecting the consumers' freedom of options in such circumstances. " Para 48
  • Proposals for New or Revised Classes of Interstate and Foreign Message Tolls Telephone Service (MTS) and Wide Area Telephone Service (WATS), First Report and Order, 56 FCC 2d 593 (1975) (Part 68).
    • Proposals for New or Revised Classes of Interstate and Foreign Message Tolls Telephone Service (MTS) and Wide Area Telephone Service (WATS), Memorandum Opinion and Order, 58 FCC 2d 716 (1976).
    • In re Economic Implications and Interrelationships Arising from Policies and Practices Relating to Customer Interconnection, Jurisdictional Separations and Rate Structures, First Report, 61 FCC2d 766 (1976).
    • Affirmed North Carolina Utils Commn v FCC, 552 F2d 1036 (4th Cir. 1977)
  • AT&T Co's Proposed Tariff Revisions in Tariff FCC No 263 Exempting Mebane Home Telephone Co of North Carolina from the Obligation to Afford Customers the Option of Interconnecting Customer Provided Equipment to Mebane's Facilities, Memorandum Opinion and Order, 53 FCC2d 473 (1975) (recognizing that CPE can include substitutes for telephones; that the only relevant question is whether such CPE would harm the network).
  • Telerent Leasing Corp. et. al., Petition for Declaratory Ruling on Questions of Federal Preemption of Regulation of Interconnection of Subscriber-Furnished Equipment to the Nationwide Switched Public Telephone Network, Memorandum Opinion and Order, 45 FCC2d 204 (1974) (preempting state jurisdiction over CPE)
    • North Carolina Utils Commn v FCC, 537 F2d 787 (4th Cir. 1976) (Affirmed)
  • AT&T Foreign Attachment Tariff Revisions in AT&T Tariff FCC Nos 263, 260 and 259, Memorandum Opinion and Order, 15 FCC2d 605 (1968) (upholding AT&T tariff that required a "protective connecting arrangement" between competitive CPE and the telephone network, and holding that Carterfone did not include telephones themselves were were part of the telephone network)
  • In the Matter of Use of the Carterfone Device in Message Toll Telephone Service, 13 FCC 2d 420 (1968), recon denied, 14 FCC2d 571 (1968)
    • Carter v AT&T, 250 FSupp 188 (NDTex 1966), aff'd, 365 F2d 486 (5th Cir) (finding FCC had primary jurisdiction over the issue)
  • Secra-fone v. Illinois Bell Tel Co., No 60C-1022 (ND Ill 1961), cert denied, 385 US 1008 (1967)
  • Marcom, Inc. v AT&T, No 43215 (ND Cal July 28, 1965)
  • Western States Tel Co v AT&T, No 64-175-PH (CD Cal. July 28, 1964)
  • Hush a Phone 99 U.S. App. D.C. 190; 238 F.2d 266; 1956 U.S. App. LEXIS 4023 (1956) (reversing and remanding FCC)
    • Hush-a-Phone Corp and Harry C Tuttle, Complainants, American Telephone and Telegraph Co., Defendants, Decision, 20 FCC 391 (1955) ("the unrestricted use of foreign attachments . . . may result in impairment to the quality and efficiency of telephone service, damage to telephone plant and facilities, or injury to telephone company personnel" ")
    • Hush-a-Phone Corp and Harry C Tuttle, Complainants, American Telephone and Telegraph Co., Defendants, Decision and Order on Remand, 22 FCC 112 (1957) (stating that carriers would have to distinguish in tariffs between harmful and harmless interference)
  • Jordaphone Corp of America and Mohawk Business Machines v AT&T, Decision, 18 FCC 644 (1954)
    • Issue was attachment to answering machines to network :: AT&T reportedly made no showing of harm to the network.  FCC punted to the states ~99% of telephone calls at that time were intrastate.  See Jurisdiction. Jordaphone was distinguished from recording devices in that the Jordaphone was involved in call setup, both opening and closing a circuit.
    • Image of Jordaphone
    • AT&T Tariff in this case: "No equipment, apparatus, circuit or device not furnished by the Telephone Company shall be attached to or connected with the facilities furnished by the Telephone Company, whether physically, by induction or otherwise, except as provided in this tariff. In case any such unauthorized attachment or connection is made, the Telephone Company shall have the right to remove or disconnect the same; or to suspend the service during the continuance of said attachment or connection; or to terminate the service."
  • Use of Recording Devices in Connection with Telephone Services, Report to the Commission, 11 FCC 1033 (1947) (striking down AT&T tariffs that prohibited the attachment of telephone call recording devices on the ground that the devices would not cause "any perceptible effect on the functioning of the telephone apparatus or the quality of the telephone service")
  • Pastor v AT&T, 76 FSupp 781 (SDNY 1940)
    • Inventor of autodialor, offered to license patent to AT&T but AT&T declined, with no other access to the network inventor sued claiming an antitrust violation. The district court rule against Pastor and indicated that further legal actions should be brought before regulatory commissions.

Other Govt Activity

  • Statement of Reed E. Hundt Chairman Federal Communications Commission Before the Committee on Commerce, Science, and Transportation United States Senate on S. 1822, the "Communications Act of 1994" and "Telecommunications Equipment Research and Manufacturing Competition Act of 1994" February 23, 1994

Audio

Papers

  • Timothy Wu, Wireless Net Neutrality: Cellular Carterfone and Consumer Choice in Mobile Broadband, New American Foundation Feb. 15, 2007 Full Article PDF
    • The Carterfone principle has had enormous consequences not only in telecommunications policy, but for the economic prosperity of the United States. The ability to build a device to a standardized network interface (the phone plug, known as an RJ-11) gave birth to a new market in home and business telecommunications equipment. That led, predictably, to competition in the phone market. But it also led, unpredictably, to other innovations. Those have included mass consumer versions of the fax machine, the answering machine, and perhaps most importantly, the modem. Arguably, the FCC's rules on network attachments - now known as the Part 68 rules - have been the most successful in its history. The freedom to buy and attach a modem became the anchor of the mass popularization of the Internet in the 1990s. As one observer put it, without Carterfone, the development and broad popularlization of the Internet also would not have occurred as it did. The key point of Carterfone is that it eliminated an innovation bottleneck in the form of the phone company. - page 9.
  • Bring On The Hush-A-Phone!, Technovelgy
  • Eli M Noam, The Next Frontier for Openness: Wireless Communications (TPRC 2001)
  • William von Alven (former Manager, FCC Part 68 Operations) Bill's 200-Year Condensed History of Telecommunications
  • Competition in the Telephone Equipment Industry: Beyond Telernet, 86 Yale LJ 536 (1977)
  • Ken Krechmer, A.W. Morten and H.E. Vaughan, Transmission of Digital Information over Telephone Circuits, May 1955

Books

  • Huber, Kellogg, Thorne, Federal Telecommunications Law (1999 Aspen Law & Business)

Timeline
Web services provided by Wyoming.com
: Home : About Us : Contact Us : Volunteer : Sitemap : Discussion : Newsletter :
: ADA : Broadband : Crime : Copyright : DNS : ECommerce : EGovt : First Amendment :
: Intl : Privacy : Security : SPAM : Statistics : VoIP : Vote :
: Feedback : Disclaimer : Search :
© Cybertelecom.