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Notes: Computer Inquiries
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Definitions
Computer
I
38. It was prior to the
development of these very different legal, technological
and market circumstances that the Commission initiated its Computer
Inquiry
line of cases. In Computer I, the Commission addressed the
questions
of whether data processing services should be subject to regulation
under
Title II of the Act, and whether, and under what conditions, all common
carriers should be permitted to compete in the market for data
processing
services. Finding that the computer data services industry "is
one
characterized by open competition and relatively free entry," the
Commission
concluded that it "should not, at this point, assert regulatory
authority
over data processing as such." Moreover, the Commission
found
that allowing common carriers to provide computer data services would
likely
benefit the public through "new and improved services and lower
prices."
Yet the Commission also recognized that common carriers might be able
to
"favor their own data processing activities by discriminatory services,
cross-subsidization, improper pricing of common carrier services, and
related
anticompetitive practices and activities." Thus, the
Commission
required common carriers to furnish data processing services through a
separate corporate entity that could not use regulated communications
facilities
to provide unregulated services. Finally, the Commission
prohibited
common carriers from discriminating in favor of their data processing
affiliates.
--In Re Appropriate Framework for Broadband Access to the Internet
over Wireline Facilities, CC Docket No. 02-33, CC Dockets Nos. 95-20,
98-10,
NPRM (February 15, 2002)
http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-02-42A1.doc
"the Commission distinguished between communications
services using computers to perform message or circuit switching, which
were regulated, and data processing services, which were left to
marketplace
competition" Computer and Communications Industry Association v.
Federal
Communications Commission, 693 F.2d 198, 203, 224 U.S.APP.D.C. 83
(D.C.
Cir. 1982).
The Commission defined data processing as the "use
of a computer for the processing of information as distinguished from
circuit
or message- switching." Computer I Tentative Decision, 28 FCC2d at
295.
"Message-switching" was defined as "[t]he computer-controlled
transmission
of messages, between two or more points, via communications wherein the
content of the message remains unaltered." Id. at 296. Computer and
Communications
Industry Association v. Federal Communications Commission, 693 F.2D
198,
203 n. 6, 224 U.S.APP.D.C. 83 (D.C. Cir. 1982)
In Computer II the Commission found it increasingly
difficult to distinguish between communications and dataprocessing.
Computer
and Communications Industry Association v. Federal Communications
Commission,
693 F.2D 198, 224 U.S.APP.D.C. 83 (D.C. Cir. 1982) ("It therefore
became
increasingly difficult to classify terminals and services as either
communications
or data processing")
17. Regulatory forbearance with respect
to data processing services made it necessary to distinguish regulated
communications services from unregulated data processing
services.
Accordingly, in the First Computer Inquiry a set of definitions was
adopted
to assist in making such determinations. See 47 CFR s
64.702.
The thrust of this definitional approach was to distinguish between
unregulated
data processing and permissible carrier utilization of computers by
establishing
a dichotomy between data processing and message or circuit
switching.
We recognized that entities would offer 'hybrid' services combining
both
communications and data processing functions. We stated that
where
message-switching is offered as an incidental feature of an integrated
service offering that is primarily data processing, there would be
total
regulatory forbearance with respect to the entire service.
However,
where the package offering is oriented to satisfy the communications or
message-switching requirements of the subscriber, and the data
processing
function is incidental to the message-switching performance, we
concluded
that the entire integrated service would be treated as a communications
service. We also stated that in making such determinations we
would
look to whether the service, by virtue of its message-switching
capability,
has the attributes of the point-to-point services offered by
conventional
communications common carriers and is basically a substitute therefor.
. . . . .
22. As a result of the Dataspeed 40/4
decision, a Supplemental Notice was issued. We proposed to
enlarge
the scope of the proceeding to include all processing activities,
whether
performed at a central location, at the customer's premises, or at
intermediate
locations within or interconnected with a telecommunications
network.
A modified definition of data processing was proposed to render our
computer
rules applicable to the distributed processing environment and to
determinations
as to the nature of a carrier's processing activities--regardless of
location
or system structure. We proposed that 'data processing' be
defined
as:
the
electronically automated processing
of information wherein: (a) the information content, or meaning, of the
input information is in any way transformed, or b) where the output
information
constitutes a programmed response to input information.
Supplemental Notice at para.
8. Recognizing that
various computer processing functions are performed in the provision of
both data processing and communications services, the new definition
was
structured in a manner so as to focus on processing activities.
[FN5] Under the new definition the determination as to whether a
communications
or data processing service is being offered would depend on the nature
of the processing activity involved.
--In re Amendment of Section 64.702 of the Commission's Rules and
Regulations
(Second Computer Inquiry), Docket No. 20828, Final Decision, 77
FCC2d
384 (May 2, 1980) (Computer II Final Decision)
Commission's
classification of complex
of small machines with communicative capacity to send and receive
messages
from central computer as "communications" as opposed to "data
processing," enabling common carrier to offer service at lower rate,
was not improper. International
Business Machines Corp. v. FCC, 570 F.2d 452 (2nd Cir. 1972).
45. Several parties expressed concern that
the definitions and concepts we adopted for purposes of this decision
be
neither fixed nor immutable, and that recognition be accorded the fact
that they may change with developing technology. We concur. As was
indicated
in paragraph 15 of the Tentative Decision, the definitions therein were
for purposes 'of providing clarity and precision of definition and
application'.
They were, as was pointed out, 'for our immediate purposes' and
consequently
do not apply, nor do we necessarily urge their application, beyond this
proceeding and the rules promulgated herein.
--In The Matter Of Regulatory And Policy Problems Presented By The
Interdependence Of Computer And Communication Services And Facilities,
Docket No. 16979, Final Decision and Order, 1971 WL
22948
(FCC), 21 Rad. Reg. 2d (P & F) 1591 (March 18, 1971) (Computer
I).
15. In our First
Report, we noted
that before these issues could be resolved, it would be necessary to
define
as precisely as possible the terms we shall employ so that they could
be
understood and uniformly applied by all interested parties. In this
highly
technical and rapidly growing industry, new terms, many of which may
overlap
in meaning, have proliferated. However useful these terms may be to the
data processing community, or any segment thereof, we have concluded
that,
for our immediate purposes, we need to establish definitions that are
as
free from ambiguity as language permits. The task of definition is no
simple
one. This is because computers and communications have become so
interdependent
and interactive in the transmission and processing of data that sharp
delineation
of these functions is hardly possible except in somewhat generalized
terms.
Since our purpose is uniquely that of government regulation, we shall
define
only those basic terms indispensable to our objective of providing
clarity
and precision of definition and application. The specific terms which
we
shall employ are set forth below with their respective definitions:
(a) Data Processing -- The use of
a computer for the processing of information as distinguished from
circuit
or message-switching. 'Processing' involves the use of the computer for
operations which include, inter alia, the functions of storing,
retrieving,
sorting, merging and calculating data, according to programmed
instructions.
(b) Message-Switching -- The computer-controlled
transmission of messages, between two or more points, via
communications
facilities, wherein the content of the message remains unaltered.1
(c) Local Data Processing Service
-- an offering of data processing wherein communications facilities are
not involved in serving the customer.
(d) Remote Access Data Processing
Service -- an offering of data processing wherein communications
facilities,
linking a central computer to remote customer terminals, provide a
vehicle
for the transmission of data between such computer and customer
terminals.
(e) Hybrid Service -- an offering
of service which combines Remote Access data processing and
message-switching
to form a single integrated service.
--In The Matter Of Regulatory And Policy
Problems Presented By The Interdependence Of Computer And Communication
Services And Facilities, Docket No. 16979, Tentative Decision, 28
FCC 291 (April 3, 1970)
Hybrid
6. When these
definitions were
adopted, it was recognized that there might be instances where an
entity
might find it desirable to offer a service which represents a
combination
of communications and data processing. Not wishing to foreclose
such
opportunities, we embodied the regulatory ground rules for such
operations
in Section 64.702 by defining hybrid services and establishing the
conditions
under which the offering of such services would be subject to
regulation.
[FN6] Where message-switching is offered as an incidental feature
of an integrated service offering that is primarily data processing, we
stated there would be total regulatory forbearance with respect to the
entire service. Where the package offering is oriented to satisfy
the communications or message-switching requirements of the subscriber,
and the data processing feature or function is incidental to the
message-switching
function, we concluded that the entire integrated service would be
treated
as a communications service.
7. The criterion offered here
is that of 'incidental.' Thus, if a service has been found to be
hybrid, and the communications portion is 'incidental to the data
processing
function or purpose,' the service constitutes hybrid data
processing.
If the data processing portion is incidental, there is a hybrid
communications
service. We also stated that in making such determinations we
would
look to: (a) whether the service, by virtue of its
message-switching
capability has the attributes of the point-to-point services offered by
conventional communication common carriers and is basically a
substitute
therefor; and (b) the extent to which the message-switching feature of
the service facilitates or is related to the data processing
component. Thus it was determined that we would look to the facts
surrounding a package
offering with a view toward determining the primary thrust of the
service
offered.
--In re Amendment of Section 64.702 of
the Commission's Rules and Regulations (Second Computer Inquiry),
Docket
No. 20828, Tentative Decision And Further Notice Of Inquiry And
Rulemaking,
72 FCC2d 358 (July 2, 1979)
86. We recognize the inadequacy of the hybrid service
definitions
in the existing rule.71 We have also taken note of the
comments by parties to this proceeding which addressed the inadequacy
of
our treatment of services which would have formerly fallen within the
hybrid
category. Since it was generally felt that mutually exclusive
categories
would result in too rigid a definitional structure, we have retained
the
'hybrid' concept through reliance on a primary purpose test.
Section
64.702(a)(4) defines a 'hybrid data processing service' to be the
offering
of a data processing service which is dependent upon the use of
communication
facilities. Section 64.702(b) is a statement of the processing
which
a carrier may utilize in the provision of a communications
service. This section states:
Communications common carriers may utilize computer processing,
including data processing, in the provision of a communications
service;
provided, however, that any data processing performed by a carrier as
part
of a tariffed service must directly relate to and be for the purpose of
providing a communication service, or for meeting the carrier's own
internal
operational and financial management needs.
87. Under this section a carrier may perform data
processing
as part of a communications offering as long as the data processing
directly
relates to and is for the purpose of providing a communications service
or meeting its own in- house needs. This recognizes that there
are
legitimate uses of data processing in the provision of a communications
service. Under this structure the need for a 'hybrid
communications'
category is eliminated. By stating that carriers may engage in
data
processing and communications processing in the provision of a
communications
service, explicit recognition is given to the previous classification
of
a 'hybrid communications service.' However, where the data
processing
performed does not result in the offering of a 'data processing
service'
(as defined) and, at the same time, is not directly related to or for
the
purpose of providing a communications service, then a carrier may not
engage
in such data processing as part of a regulated communications offering.
--In re Amendment of Section 64.702 of
the Commission's Rules and Regulations (Second Computer Inquiry),
Docket
No. 20828, Tentative Decision And Further Notice Of Inquiry And
Rulemaking,
72 FCC2d 358 (July 2, 1979)
13. In commenting on CBEMA's motion TELENET also states
its concern over the multiple interpretations that are possible
regarding
the proposed amendment to Section 64.702 as contained in our original
Notice. With the proposed elimination of the hybrid concept,
TELENET states that
it appears that the net effect of the proposed amendment would be 'to
render
not subject to regulation any communications service which contained
within
it a non-separable data processing function.'17 On the
other hand, it states that when the proposed amendment of Section
64.702
is read in conjunction with Paragraph 22 of the Notice, it appears that
the Commission 'intends to preclude any hybrid services--to require
that
carriers eliminate any data processing functions from their current
communications
offerings, and to prevent data processing service entities from
including
within their offerings even incidental communications functions.'18
TELENET suggests that any ambiguity be removed with respect to whether
hybrid services could be offered under our proposed definition.
14. In our Notice we proposed to delete the hybrid concept
as a method of classifying services under the present structure of
Section
64.702. Further elaboration may be called for to the extent that
uncertainty may exist as to what is being proposed in its place.
As Section 64.702 is currently structured, the processing functions of
storing, retrieving, merging, and calculating establish the criteria
for
determining whether a particular offering constitutes data
processing. Recognizing that these processing functions can be
employed in the provision
of either data processing or communications services, the new
definition
is structured in a manner so as to focus on processing activities.19
In addition to proposing a definition for data processing, we have set
forth certain processing activities which by their nature would
constitute
data processing within the meaning of the proposed definition.20
Examples of processing activities which would not fit within the ambit
of the data processing definitions, and which, therefore, might be
utilized
in the provision of either data processing or communications have also
been put forth.21 Under this proposed standard it
would
be inconsistent to talk in terms of a communications service having
non-separable
data processing functions, since communications and data processing now
would be considered mutually exclusive activities.22
The
nature of the processing employed would determine whether
communications
processing or data processing is being engaged in. To the extent
that a carrier is offering a communications service, data processing
could
not be offered as part of that service except if offered in accordance
with the requirements imposed by our maximum separation policy.
With
the elimination of the hybrid concept, however, ad hoc determinations
may
still be necessary, but the specific determination to be made becomes
whether
the processing activity under consideration constitutes a data
processing
activity. To the extent that the processing performed is data
processing
under our definition, a carrier's offering would be subject to our
maximum
separation requirements.
-- In re Amendment Of Section 64.702 Of The Commission's Rules And
Regulations (Computer Inquiry), Docket No. 20828, Supplemental Notice
Of
Inquiry And Enlargement Of Proposed Rulemaking, (March 8, 1977)
6. Consideration was also
given to those 'hybrid service' offerings which combined data
processing
and message-switching to form a single integrated service. One
question
was under what circumstances should a message-switching capability,
when
offered in combination with data processing services, be treated as a
sale
of communications for hire subject to regulation. We stated
general
principles applicable in determining this question. Where
message-
switching is offered as an incidental feature of an integrated service
offering that is primarily data processing, we stated there would be
total
regulatory forebearance with respect to the entire service. Where
the package offering is oriented to satisfy the communications or
message-switching
requirements of the subscriber, and the data processing feature or
function
is incidental to the message-switching function, we concluded that the
entire integrated service would be treated as a communications
service.
We further set forth the criteria for such a determination: (a)
whether
the service, by virtue of its message-switching capability, has the
attributes
of the point-to-point services offered by conventional communication
common
carriers and is, basically, a substitute therefor; (b) the extent to
which
the message-switching feature of the service facilitates or is related
to the data processing component, or whether such message-switching is
essentially independent of such data processing. Thus we
determined
that we would look to the facts surrounding a package offering with a
view
toward determining the primary thrust of the service offered.
. . . . .
11. In the original inquiry
we posited a set of definitions in order to implement the fundamental
regulatory
policies we had established.9 The pivotal definition is the
one for data processing. We stated:
'Data Processing is the use of
a computer for the processing of information as distinguished from
circuit
or message-switching. 'Processing' involves the use of computer for
operations
which include, inter alia, the functions of storing, retrieving,
sorting,
merging and calculating data, according to programmed instructions.
The distinction between data processing
service and the permissible use of computers by carriers was thus made
by establishing a dichotomy between data processing, on one hand, and
message
and circuit switching on the other. We then went on to define
message-switching
as:
'Message-Switching' is the computer-controlled
transmission of messages, between two or more points, via
communications
facilities, wherein the content of the message remains unaltered.
. . . . .
13. When the original rules
were adopted, we recognized that there might be instances where an
entity
might find it desirable to offer a combination of communications and
data
processing service. We did not wish to foreclose such opportunities for
carriers or unregulated entities. We therefore embodied the
regulatory
ground rules for such operations in Rule 64.702 by defining hybrid
services
and the conditions under which they can be offered by carriers or
unregulated
entities. For a service to be hybrid, 64.702(a)(5) invokes the
condition
that remote access data processing and message-switching be combined
'to
form a single service.' Otherwise these would be considered to be
separate services.
14. Once a service has been
found to be hybrid it becomes necessary to further classify it as
hybrid
data processing or hybrid communications in order to determine whether
or not Title II jurisdiction applies. Subsections 64.702(a)(5)(i)
and (ii), respectively, attempt to make this distinction. The
criterion
offered here is that of 'incidental.' Thus if a service has been
found to be hybrid, and the communications portion is 'incidental to
the
data processing function or purpose,' the service can be found to be
hybrid
data processing. If the data processing portion is incidental, we
have a hybrid communications service. The unambiguous resolution
of this matter is of critical importance in establishing a regulatory
boundary
since we have ruled that hybrid communications services are subject to
our jurisdiction.
-- In re Amendment Of Section 64.702 Of
The Commission's Rules And Regulations, Docket No. 20828, Notice Of
Inquiry
And Proposed Rulemaking, 61 FCC2d 103 (August 9, 1976)
These two statutory classifications originated in the late 1970’s,
as the Commission developed rules to regulate data-processing services
offered over telephone wires. That regime, the “Computer II” rules,
distinguished between “basic” service (like telephone service) and “enhanced” service (computer-processing
service offered over telephone lines). In re Amendment of Section
64.702 of the Commission’s Rules and Regulations (Second Computer
Inquiry), 77 F. C. C. 2d 384, 417–423, ¶¶86–101 (1980)
(hereinafter Computer II Order). The Computer II rules defined both
basic and enhanced services by reference tohow the consumer perceives
the service being offered.
NCTA v. BrandX, No. 04-277, 545 U.S. __, Slip at 4 (S.Ct.
June 27, 2005)
2. In 1980, the Commission
released its Computer II Order in which it addressed regulatory issues
associated with the convergence of telecommunications and "computer and
data processing."4 The cornerstone of the
decision is that it distinguished between the common carrier offering
of basic transmission service, which provides a communications path for
the movement of information, and the offering of enhanced services, which then consisted
primarily of data processing services.5 Enhanced
services are now referred to as "information services"
in the 1996 Act and comprise services such as voice mail, e-mail and
other Internet services, interactive voice response, audiotext
information services, and protocol processing, among others. 6
4
Computer
II Order, 77 FCC 2d at 386, para. 2. The Commission stated that
it
must promulgate rules addressing this convergence "in the context of
rapid
technological and market developments affecting communications and data
processing services, the ever-increasing reliance upon common carrier
transmission
facilities in the movement of all kinds of information, and the need to
tailor communications-related services to individual user
requirements." Id. at para. 84.
5
Computer II Order, 77 FCC 2d at 418-28, paras. 92-113. The
Commission
stated that enhanced service "combines basic service with computer
processing
applications that act on the format, content, code, protocol or similar
aspects of the subscriber's transmitted information or provide the
subscriber
additional, different, or restructured information, or involve
subscriber
interaction with stored information." Id. at para. 5. See
also
47 C.F.R. § 64.702(a).
6 Implementation
of the Non-Accounting Safeguards of Section 271 and 272 of the
Communications
Act of 1934, as amended, CC Docket No. 96-149, First Report and Order
and
Further Notice of Proposed Rulemaking, 11 FCC Rcd 21905, 21955-56,
para.
102 (1996) (Non-Accounting Safeguards Order). To avoid confusion,
and to be consistent with the terminology in the Further Notice, we
will
continue to use the term "enhanced services" to refer to the
restrictions
adopted in Computer II. Further Notice, 13 FCC Rcd at 21549,
para.
32. The Commission has concluded that Congress sought to maintain
the basic/enhanced distinction in its definition of "telecommunications
services" and "information services," and that "enhanced services" and
"information services" should be interpreted to extend to the same
functions.
See Federal-State Joint Board on Universal Service, CC Docket No.
96-45,
Report to Congress, 13 FCC Rcd 11501, 11516-17, 11520, 11524,
paras.
33, 39, 45-46 (1998).
-- In re Policy And Rules
Concering The Interstate,
Interexchange Marketplace/Implementation Of Section 254(G) Of The
Communications
Act Of 1934, As Amended/In 1998 Biennial Review -- Review Of Customer
Premises
Equipment And Enhanced Services Unbundling Rules In the Interexchange,
Exchange Access and Local Exchange Markets, CC Docket No. 98-183; CC
Docket
No. 96-61, Report and Order, ¶ 2 (March 31, 2001) <www.fcc.gov/Bureaus/Common_Carrier/Orders/2001/fcc01098.doc>.
"Beginning with the
Computer II proceeding
in the 1970s, we have distinguished between basic and enhanced
communications
services. "
--In re Access Charge Reform, NPRM, Third
Report and Order, and NOI, CC Docket 96-262 ? 284 (Dec 24, 1996)
We initiated the Computer
III proceeding
in the summer of 1985 to undertake a broad reexamination of the
regulatory
framework for enhanced services adopted in Computer II and related
proceedings.21
The Phase I Order concluded that, relative to nonstructural safeguards,
structural separation requirements for the enhanced service operations
of the BOCs and AT & T impose significant costs on the public in
decreased
efficiency and innovation that outweigh their benefit in limiting the
ability
of these carriers to engage in anticompetitive behavior. We
retained,
however, the two fundamental regulatory categories for
telecommunications
services established in Computer II: basic services, which are
subject
to common carrier regulation under Title II of the Act, and enhanced
services,
which are not subject to such regulation.22
-- In the Matter of Filing and Review
of Open Network Architecture Plans, CC Docket No. 88-2, Phase I,
MEMORANDUM
OPINION AND ORDER 16 (December 22, 1988)
10. After Computer I
took effect, technological
and competitive developments in the telecommunications and computer
industries
exposed shortcomings in its definitional structure, and in particular
its
ad hoc approach to evaluating the "hybrid" category.21
In light of such shortcomings, we conducted an extensive examination in
the Computer II proceeding to determine the most appropriate regulatory
framework for the provision of data processing services by carriers and
others. In the Final Decision, we found that because of
technological
change and consumer demand, communications and data processing
technologies
had become so intertwined in new service offerings that it was
impossible
to draw an "enduring line of demarcation" between them. 22
Accordingly,
we adopted a new regulatory definitional scheme with two service
categories: basic and enhanced. 23 We defined
basic service as limited
to "the common carrier offering of transmission capacity for the
movement
of information." 24 Data processing, computer memory
or
storage, and switching techniques can be components of a basic service
if they are used solely to facilitate the movement of
information.
We further determined to continue to regulate basic services under
Title
II of the Act, since such services are "wholly traditional common
carrier
activities." 25
--In the Matters of: Amendment of Sections 64.702 of the Commission's
Rules and Regulations (Third Computer Inquiry); and Policy and
Rules
Concerning Rates for Competitive Common Carrier Services and Facilities
Authorizations Thereof Communications Protocols under Section 64.702 of
the Commission's Rules and Regulations, CC Docket No. 85-229, Report
and
Order (June 16, 1986)
"5. In our Final Decision we determined that network services provided
to consumers should be classified as either basic or enhanced. Basic
transmission
services would be regulated under Title II while enhanced services
would
not."
-- In the Matter of Amendment of Section 64.702 of the
Commission's
Rules and Regulations (Second Computer Inquiry), Docket No.
20828, MO&O, 79 FCC2d 953 p/ 5 (July 22, 1980)
(resolving
requests for partial stays of final decision)
5. Although more
simplified terminology is employed, this basic/enhanced
dichotomy for network services is consistent with the approach taken in
the Tentative Decision. We find that basic service is limited to the
common
carrier offering of transmission capacity for the movement of
information,
whereas enhanced service combines basic service with computer
processing
applications that act on the format, content, code, rotocol or similar
aspects of the subscriber's transmitted information, or provide the
subscriber
additional, different, or restructured information, involve
subscriber
interaction with stored information.
. . . .
86. The structure set forth in the Tentative Decision
focused
on the separation of common carrier transmission services from those
computer
services which depend on common carrier services in the transmission of
information. We proposed a resale structure for those computer
processing
services which would be subject to a regulatory delineation between
communications
and data processing. A distinction was made between basic common
carrier
transmission services and enhanced services; enhanced services were to
be provided on a resale basis such that the requisite common carrier
facilities
would be acquired pursuant to tariff. Moreover a set of
definitions
was proposed for distinguishing the regulated or non-regulated status
of
enhanced services based on the communications or data processing nature
of the service.
-- In the Matter of Amendment of Section 64.702 of the Commission's
Rules and Regulations (Second Computer Inquiry), Docket No. 20828,
Final
Decision (May 2, 1980)
12. In the Notices released in this proceeding we proposed
to amend Section 64.702 in light of the technological and market
developments that have taken place since the First Computer
Inquiry.
In the proposed revisions to Section 64.702 we sought to define data
processing
positively, in terms of what it is, rather than by exception as had
previously
been done. The following definition was proposed in the
Supplemental
Notice:
'Data processing' is the electronically automated processing
of information wherein: (a) the information content, or meaning,
of the input information is in any way transformed, or (b) where the
output
information constitutes a programmed 9 response to input
information.10
This definition was formulated with two related regulatory objectives
in mind: (1) an objective identification of those use of
computers
by carriers which require a separate subsidiary, and (2) the
stimulation
of economic activity in the regulated communications sector by removing
ambiguities in the existing definitions. It was stated that by
defining
data processing positively a carrier would be able to use computers for
any purpose which is not data processing. All processing
activities,
whether performed at a central location, at the customer's premises, or
at intermediate locations within or interconnected with a
telecommunications
network would be encompassed within the proposed definition.
13. Given this definition certain processing activities
would be considered data processing and could not be offered by a
carrier
except under the maximum separation conditions of Section 64.702.
Processing
activities which would constitute data processing under this definition
were stated to include, among others:
arithmetic processing--applications include: general
commercial
accounting, inventory control, banking and point-of-sale processing,
financial
and econometric modeling, scientific calculations, etc.
word processing--applications include: interactive
information
retrieval systems, management information systems, text editing,
translation,
typesetting, etc.
process control--applications include the use of electronic
equipment to monitor and control some process which is occurring on a
continuous
basis--such as nuclear-powered generating stations, an electric power
distribution
grid, an automatic machine tool, or a fire detection and control
system.
14. We also stated that certain processing activities may
be involved in the provision of both communications and data processing
services without necessarily changing the nature of the communications
or data processing service being offered. Among the processing
activities
stated to be included in this category were, among others:
network control and routing--applications include: message
and circuit switching,11 speed and code conversion, pulse
format
conversion, analog to digital and digital to analog conversion, signal
processing,12 and time division multiplexing.
input/output processing--this category comprises the uses of
processing capability resident in a carrier network facility for the
purpose
of making disparate information sources and receptors compatible with
the
transmission system and with each other. Such processing
activities
include those necessary for formatting, editing, and buffering of
information
to make it compatible with the electrical characteristics of different
transmission media.
15. By defining data processing in this manner the 'hybrid
service' categories contained in the existing Section 64.702 were
deleted,
and the offering of communications and data processing, in effect, were
established as mutually exclusive activities for regulatory
purposes.
As Section 64.702 is currently structured, the processing functions of
storing, retrieving, merging, and calculating establish the criteria
for
determining whether a particular offering constitutes data
processing. Recognizing that these processing functions can be
employed in the provision
of either data processing or communications services, the new
definition
was structured in a manner so as to focus on processing activities.13
Under the new definition the determination as to whether a
communications
or data processing service is being offered would depend on the nature
of the processing activity involved.
-- In re Amendment of Section 64.702 of the Commission's Rules and
Regulations (Second Computer Inquiry), Docket No. 20828, Tentative
Decision
And Further Notice Of Inquiry And Rulemaking, 72 FCC2d 358 (July 2,
1979)
61. Upon review of the comments filed in this proceeding,
we have concluded that the definitional structure as proposed in the
Notices
is an inadequate means of accomplishing our stated objectives.
Moreover,
it has become increasingly apparent that any solution to the regulatory
concerns raised by the merging of communications and data processing
applications,
short of a stop-gap measure, must address the structure under which
competitive
services are provided. A structure has been set forth under which
various communications common carrier services must be provided.
In this regard we distinguish between three categories of
services--'voice',
'basic non-voice', and 'enhanced non-voice' services. We conclude
that 'voice' and 'basic non- voice' services are divorced from the
communications/data
processing controversy. We require that 'enhanced non-voice'
services
be provided on a resale basis. Thus in an interstate 'enhanced
non-voice'
service, all common carrier transmission facilities are acquired
pursuant
to tariff.
62. Since an 'enhanced non-voice' service by definition
subsumes both communications and data processing services, a
definitional
structure is employed for distinguishing those 'enhanced non-voice'
services
which are communications services from those which constitute the
offering
of a data processing service. This definitional structure basically
allows
a carrier to perform 'data processing' as part of a communications
service
as long as such processing does not result in a 'data processing
service'
(as we define it) and directly relates to and is for the purpose of
providing
a communications service. We recognize that this will not
completely
eliminate the need for case-by-case determinations, but it should
substantially
minimize this need, while providing the marketplace with a greater
degree
of certainty.
63. The structural separation of 'voice' and 'basic
non-voice'
services from 'enhanced non-voice' services permits us to address in a
different manner the cross subsidization and anticompetitive concerns
of
the maximum separation policy. A carrier having an ownership
interest
in transmission facilities used in the provision of interstate voice or
'basic non-voice' services may provide an 'enhanced non-voice' service
only through a separate corporate resale entity. Moreover,
subject
to certain exemptions, the computer facilities of a carrier (including
carriers falling under Section 2(b)(2) of the Act) which are used in
the
provision of interstate 'voice' or 'basic non-voice' services may not
be
used for those additional processing requirements necessary for
'enhanced
non-voice' services. These two forms of separation provide an
adequate
substitute for the existing maximum separation requirements.
Accordingly,
a resale carrier could provide both communications services and data
processing
services through its computer facilities.
--In re Amendment of Section 64.702 of the Commission's Rules and
Regulations
(Second Computer Inquiry), Docket No. 20828, Tentative Decision And
Further
Notice Of Inquiry And Rulemaking, 72 FCC2d 358 (July 2, 1979)
65. At the time the existing computer rules were adopted
the market applications of computer technology were limited to
large-scale
centralized computer services. However, large-scale integrated
circuitry
and microprocessor technology have dramatically altered the manner in
which
services can be offered. The market applications of computer
processing
technology makes the customization of services possible, either through
equipment located on the customer's premises or within a carrier's
network.
For reasons which we discuss later, we believe that, in addressing the
regulatory problems which arise as a result of new market applications
of computer processing technology, a distinction should be drawn
between
the services which a carrier provides on a network basis and the
provision
of customer's-premises equipment which may be used in conjunction with
network services to increase the utilization of the common carrier
service. We first look at network services and the need to
address the computer
processing activities under the carrier's control.
66. A regulatory structure must be established which
adequately
addresses present and foreseeable market applications of computer
processing
technology. In this regard certain observations can be made with
respect
to current hybrid services. The confluence of communications and
data processing has developed to such a degree that the possible
combinations
and permutations of services which can be offered are limited solely by
the constraints technology imposes on the processing capabilities of
equipment
and concomitant software applications. Augmentation of
transmission
and switching services by data processing applications is enormously
beneficial
to communications users. Computer technology and computer programming
applications
render any limitation of the variety of services available to the user
merely a factor of how the information processing applications are
structured
within the computer equipment attached to a carrier's transmission
facilities.
Thus, the nature of these services are determined not by the
transmission
facilities but, rather, by the specific processing applications offered
through equipment attached to the channel of communication. The
implications
for the communications sector become readily apparent. A regulatory
scheme
which limits service that can be provided through computer facilities
imposes
a limitation on the economic use of the equipment; and, in so doing,
imposes
an artificial economic barrier to the provision of new and innovative
services
which may serve to inhibit entry into the communications field.
For
the consumer there is the potential deprivation of needed or desired
services.
Such may be the impact of our existing computer rules. It would appear
more appropriate in light of current market applications to establish a
structure under which a computer facility could be used to provide any
hybrid service. This is premised on the need to establish a
regulatory
scheme which addresses the convergence of communications and data
processing
in a manner which gives primary consideration to users needs and the
availability
of adequate services to the public in the data communications
market.
The comments of carriers and non-carriers alike amply demonstrate the
need
for flexibility in tailoring services to meet the individual
communication
needs of the user. From the user's perspective, what is important is
not
whether a service is classified as communications or data processing,
but
that regulation not inhibit the user's ability to acquire needed
communications
services and facilities in an economic and reasonable fashion.
The
comments also point out that to the extent that services must be
classified
as 'communications' or 'data processing' for regulatory purposes, such
a regulatory classification should not result in an artificial
structure
whereby less flexibility is afforded to tailor a service to
individualized
user needs.
67. After reviewing the
comments filed
in this proceeding we conclude that a revised definitional structure,
standing
alone, does not adequately address the issues before us. In this
respect the Notices were too narrowly focused. While it is
possible
to concentrate solely on the permissible processing activities that may
be engaged in by a carrier as part of a communications service, this by
itself is not sufficient. Continued reliance on a pure
definitional
approach merely accentuates the controversy over whether communications
is incidental to data processing or data processing is incidental to
communications.
Such philosophical discussions serve no useful purpose. It has
become
more than evident in reviewing the comments that any solution which
focuses
merely on the definitional boundary between data processing and
communications
is a short term solution and one which fails to recognize and take
advantage
of the potential for new and innovative competitive data communications
services. The central issue is the movement of information and
the
ability of communications common carriers to provide the services
necessary
for the electronic transmission of information in a manner dictated by
the needs of the consumer. The regulatory problems arising
because
of the interplay of data processing and communications must be
addressed
by way of a comprehensive solution and not in terms of stop-gap
measures. This is necessary if there is to be certainty in the
marketplace and avoidance
of excessive regulatory intervention as to the nature and degree of
permissible
computer processing engaged in by carriers. Moreover, a comprehensive
solution
must consider the realities of the marketplace and accommodate computer
technology and its market applications within a framework which enables
us to carry out the responsibilities entrusted to us by Congress under
the Communications Act of 1934, as amended.
68. The framework for a consistent and
forward looking regulatory policy in this area must focus on the nature
of various categories of services and the structure under which they
are
provided. This is necessary if our regulatory environment is to
accommodate
and be in harmony with the ever continuing convergence of
communications
and data processing market applications. A regulatory scheme can
be adopted which relies in part on a definitional structure for
distinguishing
regulated communication services from unregulated data processing
services
and, at the same time, addresses the structure under which certain
common
carrier communications services are provided. The vehicle which
now
makes this possible is the Commission's Resale Decision.58
This
decision established the concept of a resale entity as a common carrier
under the regulatory scheme of the Communications Act and allowed for
flexible
communications services to be offered through resale carriers utilizing
communications facilities acquired from an 'underlying' carrier.
In essence, it makes it now possible for us to establish a regulatory
structure
under which a distinction can be made between services where the market
applications of computer processing technology do not act as a
constraint
on the class of service offered and services which are inextricably
intertwined
in the convergence of communications and data processing such as to
affect
the nature of the service offered.
69. The essence of such a structure
requires the division of common carrier communications services into
three
classes. Common Carrier communications services can be classified
as 'voice', 'basic non-voice', and 'enhanced non-voice' services.
We define these three categories of services as follows: 1)
A voice service is the electronic transmission of the human voice such
that one human being can orally converse with another human
being.
2) A 'basic non-voice' service is the transmission of subscriber
inputted information or data where the carrier: (a)
electronically
converts originating messages to signals which are compatible with a
transmission
medium, (b) routes these signals through the network to the appropriate
destination, (c) maintains signal integrity in the presence of noise
and
other impairments to transmission, (d) corrects transmission errors,
and
(e) converts the electrical signals to usable form at the destination.59
3) An 'enhanced non-voice service' is any non-voice service which
is more than the 'basic' service, where computer processing
applications
are used to act on the form, content, code, protocol, etc., of the
inputted
information.
70. In establishing these three
categories
of service, computer processing applications employed within a
carrier's
network in conjunction with 'voice' and 'basic non-voice' services can
be performed without restriction on the use of data processing
applications
utilized within the framework of these two services.60
It is primarily when carriers seek to provide 'enhanced non- voice'
service
that uncertainty arises as to the nature of the service and whether
maximum
separation applies. This is because the category of 'enhanced
non-voice'
service subsumes both regulated communications and unregulated data
processing
services. Yet, it is in this area where the potential is the
greatest
for the offering of new and innovative competitive communications
services. Within this category the rendering of a communications
or a data processing
service is primarily a factor of how computer processing applications
interact
with the user's inputted information, and it is here that the
Commission's
computer rules have delineated permissible computer processing activity
by communications common carriers.
71. Our attention, therefore, is focused
upon the establishment of a regulatory structure under which carriers
can
provide 'enhanced non-voice' services free from regulatory constraints
as to the communications or data processing nature of the
service.
In so doing, we distinguish between the three categories of service,
and
distinguish between services offered by carriers owning their own
transmission
facilities and services offered by pure resale carriers who do not own
their own facilities but, rather, acquire the necessary transmission
facilities
from an underlying carrier pursuant to tariff. We see the
separation
of 'voice' and 'basic non-voice' services from 'enhanced non-voice'
services
as being essential to the establishment of an environment conducive to
the provision of 'enhanced non-voice' services on a competitive basis.
At the heart of this separation is the need to: a) protect the
quality
and efficiency of telephone service, b) insure the availability of
transparent
common carrier transmission facilities to all on an equal basis, and c)
minimize the potential for improper cross subsidization and/or anti-
competitive
behavior. In order to provide the necessary regulatory safeguards
in these areas and still foster a competitive environment where
services
can be custom tailored to the individual needs of the user, we
conclude: First, communications common carriers owning
transmission facilities 61 used in the provision of
interstate communications services may directly
provide only 'voice' and 'basic non-voice' services. Second, carriers
owning
such transmission facilities may provide 'enhanced non-voice' services
only through a separate corporate entity on a resale basis.
Third,
the computer facilities of the underlying carrier which are used in the
interstate provision of 'voice' and 'basic non-voice' services may not
be used for those computer processing applications associated with
'enhanced
non-voice' services and which would render the service more than a
'basic
non-voice' service. In essence, the basic thrust of our
regulatory
structure is the requirement that interstate 'enhanced non-voice'
services
be provided on a resale basis where all common carrier transmission
facilities
necessary for the provision of the 'enhanced non-voice' service are
acquired
pursuant to tariff.62
72. There are significant public
interest
benefits inherent in this structure which accrue to carriers,
consumers,
and this Commission alike. With respect to carriers it provides a
regulatory environment conducive to the rendering of new and innovative
competitive communications offerings by allowing resale carriers to
take
full advantage of computer technology and its market
applications.
The resale structure allows us to do away with the 'separate
facilities'
requirement of our maximum separation policy for resale carriers.
Now both communications and data processing services may be provided
through
the computer facilities of the resale carrier. A resale carrier
need
only tariff its communication service while offering a data processing
service as a non-tariffed option. Because the provision of
'enhanced
non-voice' services is primarily a factor of the equipment design and
programming
applications which take place within the equipment attached to the
channel
of communication, services can be custom tailored to individual user
needs.
Moreover, this structure is consistent with previous policy
determinations
in that it does not extend the arm of regulation to unregulated
entities
providing data processing services. At a minimum, it allows for
the
provision of customized communication services in a competitive
environment,
where new and innovative services can be provided in response to the
demands
of the marketplace.
73. From the Commission's perspective
this resale structure enables us to meet our regulatory
responsibilities
as identified in the First Computer Inquiry, 28 FCC 2d at 302, and
minimizes
the potential for cross-subsidization and anti-competitive behavior.
The
marketing of 'enhanced non-voice' services along with the computer
equipment
and programming used in the provision of such services is isolated from
the provision of the underlying more basic common carriage
offering.
In classifying that category of services which is inextricably
intertwined
with the convergence of communications and data processing, and
requiring
that only a certain class of carriers provide such services, the
Commission
is afforded flexibility in varying the nature and degree of regulation
to be exercised over resale carriers while continuing to enforce the
traditional
regulatory controls over the underlying carriers providing basic
services
to the entire population. Moreover, an environment is created
where
the licensed transmission facilities of a carrier are available to all
providers of 'enhanced' services on the same basis, i.e. in terms of
access,
interconnection, rates, etc. The common carrier transmission
facility
necessary for the provision of an 'enhanced' service becomes a separate
part of the service which must be acquired pursuant to applicable
tariff
by any carrier entity, whether that entity is the resale entity of the
underlying carrier, an existing resale carrier, or a new entrant. Since
the transmission facilities must be acquired pursuant to tariff, the
potential
for using the transmission component of the service, to subsidize a new
or innovative service is substantially minimized. The isolation
of
the transmission component enables any carrier to provide an enhanced
non-voice
communications service on the same basis, without threat of unfair
competitive
advantage accruing to a given carrier by virtue of its control over the
underlying transmission facilities. The transmission facility would be
common to all entities and removed as a competitive element of the
service. Whatever cross-subsidization exists is limited primarily
to the competitive
portion of the service, i.e., the computer equipment and the marketing
and packaging of its processing applications, which could possibly be
addressed
if need be through the use of accounting procedures which are now
undergoing
reexamination in our Uniform System of Accounts proceeding.
74. This regulatory structure has
distinct
benefits over the existing manner in which hybrid services are
provided. It is in the 'enhanced non- voice' arena where the
existing maximum separation
policy may serve to artificially constrain or structure services and
the
use of carrier computer equipment by requiring that only regulated
services
be provided via computer equipment used in the provision of such
services.63
By separating out those services which must be provided on a 'resale'
basis,
a structure is provided whereby the concerns which prompted the maximum
separation policy are substantially minimized. It permits
'enhanced'
services to be provided under a framework which does not require
communications
and data processing services to be provided through separate entities
with
separate equipment. While this structure does not negate the need
to establish a regulatory boundary between communications and data
processing
services, since both types of service are subsumed within the
'enhanced'
non-voice category, it substantially reduces the impact any
determination
as to the communications or data processing nature of an offering would
have on the availability of services to the consumer. Whereas under the
existing rules a determination that a particular service constitutes a
data processing service would foreclose a carrier from offering the
particular
service or processing application, under this structure the data
processing
service could still be offered as a non-tariffed option by the resale
carrier.64
75. In addition, this structure requires
the facilities of the underlying carrier to be transparent to the
information
transmitted and for a carrier to provide a 'pure transmission' service
which forms the basis upon which all 'enhanced' services are provided.
This should have the added benefit of minimizing the potential for
unnecessary
duplication of network systems in order to accommodate a particular
service
that might otherwise be foreclosed if the transmission facility was
conditioned
in a manner which would inhibit the provision of the service. The
underlying carrier's transmission facilities become the basic building
block upon which computer facilities can be added to perform myriad
combinations
and permutations of processing activities.
. . . .
78. The purpose of a definitional
structure
is to establish a regulatory boundary between regulated communication
offerings
and those unregulated computer processing activities which do not
result
in the offering of a common carrier communication service. The
existing
Section 64.702(a) is inadequate in this regard primarily because it was
formulated at a time when processing capabilities were limited to
large-scale
central host computers; its inherent deficiencies rest with the fact
that
it reflects this environment. For example, in order for a service to be
considered 'hybrid' remote access data processing and message switching
must be combined to form a 'single integrated service.' In certain
situations
this determination can be made, but in reality it may simply be a
factor
of how the offering entity packages the service.66 In
addition, the standard for determining whether a service is hybrid data
processing or hybrid communications is stated in terms of whether the
message
switching being performed is 'incidental' to the data processing
function
or purpose. While this standard was useful in an environment
where
processing activities were confined to centralized computers, with the
advent of distributed processing, it is insufficient to talk solely in
terms of the message switching being 'incidental' to the data
processing
since the message switching function is an essential component to any
distributed
processing system. The regulatory focus should be upon the
service
being offered and not merely upon performance of a message switching
function.
Another deficiency is in the definition of 'data processing.'
'Data
processing' is currently defined by distinguishing it from circuit or
message
switching by essentially delineating the use of a computer for the
processing
of information for purposes other than message switching as data
processing.67 While data processing may be performed as part
of a communications service,
the current definitions focus more on the presence of various
processing
functions such as storing, merging, retrieving, etc., than on the use
to
which they are put. No attempt is made to distinguish the
legitimate
uses of data processing as part of a communications service from the
provisions
of a data processing service.
79. With the advent of distributed
processing
computer processing capabilities can be placed any where within the
network.
A revised definitional structure is needed to address this
environment.
Rather than attempting to artificially construe the present Section
64.702
in a manner suitable to present day offerings, with the prospect of
ambiguity
and uncertainty, the definitional structure of Section 64.702 should be
restructured in a manner which provides carriers with a clearer
delineation
of permissible processing activity. Moreover, it is necessary to
approach the communications/data processing controversy from a
perspective
which does not merely identify the presence of a data processing
activity
but, rather, from a perspective which identifies the regulated or
non-regulated
nature of the service provided by a carrier. There are many
market
applications of data processing which do not result in the provision of
a data processing service. For these reasons we are revising the
definitional
structure of Section 64.702(a), and more clearly stating the extent to
which carriers may engage in computer processing applications as part
of
a regulated communications offering.
--In re Amendment of Section 64.702 of the Commission's Rules and
Regulations
(Second Computer Inquiry), Docket No. 20828, Tentative Decision And
Further
Notice Of Inquiry And Rulemaking, 72 FCC2d 358 (July 2, 1979)
8. Processing activities are
characteristically
involved in the provision of both communication and data processing
services.
Since Section 64.702 only addressed the processing activities which
take
place within a central computer, we propose to enlarge the scope of
Section
64.702 to include all processing activities, whether performed at a
central
location, at the customer's premises, or at intermediate locations
within
or interconnected with a telecommunications network. An
appropriately
modified definition of data processing must be set forth to take into
account
the fact that processing activities are not confined solely to a
central
computer and to render Section 64.702 applicable to determinations as
to
the nature of a carrier's processing activities--regardless of location
or system structure. We therefore propose to amend Section
64.702(a)
and to modify the definition of data processing as proposed in our
original
Notice as follows:
'Data processing' is the electronically automated
processing of information wherein: (a) the information content,
or meaning, of the input information is in any way transformed, or (b)
where the output
information constitutes a programmed11 response to input
information.12
9. Processing activities which would constitute
data processing under this new definition would include, inter alia:
arithmetic processing--applications include:
general commercial accounting, inventory control, banking and
point-of-sale processing, financial and econometric modeling,
scientific calculations, etc.;
word processing--applications include: interactive
information retrieval systems, management information systems, text
editing, translation, typesetting, etc.;
process control--applications include the use of electronic
equipment to monitor and control some process which is occurring on a
continuing basis--such as nuclear-powered generating stations, an
electric power distribution
grid, an automatic machine tool, or a fire detection and control system.
Given our new definition, these processing activities would be
considered
data processing and could not be offered by a carrier except under the
maximum separation conditions of Section 64.702.
10. The revision of our proposed
definition
also necessitates a modification of the processing categories listed in
paragraph 21 of our Notice. Two categories were set forth therein
as not being within the ambit of our definition of data
processing--'network
control and routing' and 'input/output processing.' For purposes
of clarification and in order to conform with our new proposed
definition,
a restatement of these categories is now called for:
network control and routing--applications
include: message and circuit switching,13 speed and code
conversion, pulse format conversion, transmission error detection and
correction, analog to digital and digital to analog conversion, signal
processing,14 and time division multiplexing.
input/output processing--this category comprises the uses of
processing capability resident in a carrier network facility for the
purpose of making disparate information sources and receptors
compatible with the transmission system and with each other. Such
processing activities include those necessary for formatting, editing,
and buffering of information to make it compatible with the electrical
characteristics of different
transmission media.
Since these processing activities would not constitute data
processing,
they could be incorporated into a carrier's communications offering
without
evoking the constraints imposed by the maximum separation
requirements. Moreover, the utilization of these processing
activities in the course
of providing either a communications or a data processing service would
not necessarily, in or of itself, change the nature of that service.
11 'Programmed,' as used herein,
constitutes the means of preordaining a response to given input or
stimulus regardless of whether that means is achieved through the use
of software, hardware, firmware or fundamental equipment design.
12 The second condition (b) brings services such as
process control and proprietary information retrieval within the ambit
of the definition of data processing. In the process control
case, a message or other stimulus results in a change of state in the
process which is being controlled. In the proprietary information
retrieval case, the arrival of an input message or stimulus--the
information request--is operated upon by the processing device and
results in an output which is the specific information requested.
13 The categories are meant to include packet
switching (and its variations) and time-division circuit
switching. We also would consider permissible those processing
activities utilized in the provision of ancillary network services such
as automatic call-forwarding, abbreviated dialing, and special
announcements.
14 Signal processing comprises the use of processing
operations in applications which maintain the information content of an
electrical signal. These include signal detection and regeneration and
the adaptive equalization of transmission channels.
-- In re Amendment Of Section 64.702 Of The Commission's Rules And
Regulations
(Computer Inquiry), Docket No. 20828, Supplemental Notice Of Inquiry
And
Enlargement Of Proposed Rulemaking, (March 8, 1977)
16. In the new 64.702(a) we
have sought to define data processing positively, in terms of what it
is,
rather than by exception as we had previously done. By so doing
we
expect to achieve two related policy goals: (1) an objective
identification
of those uses of computers by carriers which require a separate
subsidiary,
and (2) the stimulation of economic activity in the regulated
communications
sector by removing ambiguities in the previous definition. By
defining
data processing positively, we can also approach the carriers' role
from
a different perspective--a carrier may use computers for any purpose
which
is not data processing.
17. Our new definition is
written in recognition that any computer 12 has certain
basic
processing capabilities which include:
arithmetic computation--the basic
operations of count, add, subtract, multiply, and divide
logical computation--operations
which include: AND, OR NOT, compare, and branch
storage, retrieval, and transfer--of
alphanumeric or graphical data.
These operations may be ordered and combined
into a program13 which is capable of achieving very
sophisticated
results--which may or may not constitute data processing as we have
defined
it.
18. In our new definition
we state the generic criterion for identifying the data processing
function
as:
'the use of a computer for the
purpose of processing information wherein: (a) the semantic
content, or meaning, of input data is in any way transformed, or (b)
where
the output data constitute a programmed response to input data.'14
In contrast, the generic characteristic
of the communications function is that the semantic content of
information
is not changed at the completion of a given process. A message
entering
a network is intended to arrive at its destination unchanged. Several
computer
operations, such as message and circuit switching, may be required to
permit
the message to transit the network. In this process, individual
symbols
may be processed, as in code conversion and error correction. Or
the message may be accompanied by addressing information, such as dial
pulses or message headers, which are used by the communications network
for centralized message routing. The purpose of these computer
operations
is, nevertheless, the transmission of an unaltered message through a
network
and they do not constitute a data processing service.
19. We now cite some examples
of data processing services, or functions, which exist within the
context
of our new proposed definitions. At the time of the original
Computer
Inquiry, the preponderance of data processing applications was
addressed
to the manipulation of numerical quantities. There were
ubiquitous
applications to business and scientific data processing. These
trends
continue. On a lesser scale, there were several non-computational
applications of a data processing--to information retrieval, and
transaction
oriented systems for example. These applications are much more
significant
now than in 1971.
20. Since data processing
applications now encompass a much broader range than previously, it may
be useful to accept the concept that the term 'data processing service'
comprehends at least three reasonably distinct subclasses, which may be
commingled in specific applications:
arithmetic processing--general
commercial accounting, payroll, inventory control, banking and
point-of-sale
processing, financial and econometric modeling, scientific
calculations,
etc.
word processing--a rapidly developing
application resulting from advances in mass memory technology and word
processing software. Applications include: interactive
information
retrieval systems, management information systems, text editing,
translation,
typesetting, etc.
process control--the increased
reliability and availability of computers is leading to an expansion of
applications where a computer is used to monitor and control some
process
which is occurring continuously--such as a nuclear-powered generating
station,
an electric power distribution grid, an automatic machine tool, or a
fire
detection and control system.
Given our new definition, all of these
applications would be considered data processing and could not be
offered
by carriers except under the maximum separation conditions of Section
64.702.
21. We also wish to cite those
examples of the use of computers by carriers which would not be within
the ambit of the definition of data processing. These applications fall
into two categories:
network control and routing--applications
include: Message and circuit switching,15 speed and code
conversion,
pulse format conversion, error detection and correction, analog to
digital
and digital to analog conversion, signal processing, 16 and
time division multiplexing.
input/output processing--this category
comprises the uses of a computer capability resident in a carrier
network
facility for the purpose of making disparate computers and terminals
compatible
with each other. Typical functions are the formatting, editing,
and
buffering of data to make it compatible with the electrical
characteristics
of different transmission media.
22. The new definition provides
a demarcation between data processing services and communication
services.
By so defining data processing, we have deleted the 'hybrid service'
concept.
Henceforth a service would be characterized as either data processing
or
communications. A service or offering would be considered data
processing
if it meets the data processing criterion set forth in our new
definition.
Where such criterion is met a carrier would be required to offer the
service
subject to our maximum separation policy as enunciated in Section
64.702
of our Rules. To the extent that a service does not meet the
criterion
for data processing under our new definition then it would be
considered
a communications service or offering and subject to regulation under
Title
II.
23. Accordingly, notice is
hereby given that we propose to amend Section 64.702 of our Rules as
set
forth in Appendix A hereto by: (a) positively defining data
processing
and deleting the remaining terms and definitions contained in Section
64.702(a),
(b) deleting entirely subsections (e), (f) and (g) which deal with
hybrid
services.17 Since all references to 'hybrid' services
are being omitted, we would also delete Section 0.308 of our Rules
pertaining
to delegation of authority as to hybrid services.
12 By
the term
computer we mean any device which is capable of performing the
functions
described herein.
13 We use program in
its broadest sense, here. It includes stored programs which can
be
altered by a user as well as hard-wired or read only memory (ROM)
devices.
14 The second condition
(b) brings services such as process control and proprietary information
retrieval within the ambit of the definition of data processing (see
para.
20 below). In the process control case, a message or other
stimulus
results in a change of state in the process which is being
controlled. In the proprietary information retrieval case, the
arrival of an input
message--the information request--is operated upon by the computer and
results in an output which is the specific information requested.
15 These categories are
meant to include packet switching (and its variations) and
time-division
circuit switching. We also would consider permissible, the use of
switching computers to provide ancillary functions such as automatic
call-forwarding,
abbreviated dialing, restricted dialing, and special announcements.
16 Signal processing
comprises the use of computers in applications which maintain the
information
content of an electrical signal. These include signal detection
and
regeneration, and the adaptive equalization of transmission channels.
17 Section 64.702(g)
encompasses the discontinuance of hybrid as well as non-hybrid
services. With the deletion of 64.702(g) authorization for the
discontinuance of
tariffed service offerings must still be obtained pursuant to Section
214
of the Communications Act.
-- In re Amendment Of Section
64.702 Of The
Commission's Rules And Regulations, Docket No. 20828, Notice Of Inquiry
And Proposed Rulemaking, 61 FCC2d 103 (August 9, 1976)
Basic Service
In particular, the Commission defined “basic service” as “a pure
transmission capability over a communications path that is virtually
transparent in terms of its interaction with customer supplied
information.” Id., at 420, ¶96. By “pure” or “transparent”
transmission, the Commission meant a communications path that enabled
the consumer to transmit an ordinary-language message to another point,
with no computer processing or storage of the information, other than
the processing or storage needed to convert the message into electronic
form and then back into ordinary language for purposes of transmitting
itover the network—such as via a telephone or a facsimile. Id., at
419–420, ¶¶94–95. Basic service was subject to common-carrier
regulation. Id., at 428, ¶114.
NCTA v. BrandX, No. 04-277, 545 U.S. __, Slip at 4 (S.Ct.
June 27, 2005)
Computer II Inquiry, 77
FCC 2d 384 (1980), recon. 84 FCC 2d 50 (1980), further recon. 88 FCC 2d
512 (1981), aff'd sub nom. Computer and Communications Industry
Association v. FCC, 693 F.2d 198 (D.C. Cir. 1982), cert. denied, 461
U.S. 938 (1983). In Computer II the Commission defined "basic" services
as those that provide a "pure transmission capability over a
communications path that is virtually transparent in terms of its
interaction with customer-supplied information." Basic services are
subject to regulation
"Basic service is the offering of a pure transmission
capability over a communications path that is virtually transparent in
terms of its interaction with customer supplied information.= Id. at
419-20." Computer and Communications Industry Association v.
Federal Communications Commission, 693 F.2D 198, 204, 224
U.S.APP.D.C.
83 (D.C. Cir. 1982)
39. In Computer II, the Commission created the regulatory categories
of "basic" services and "enhanced" services in order to more clearly
distinguish
regulated common carrier services from unregulated computer-data
services. It defined basic transmission service as limited
to the Title II common
carrier offering of transmission capacity for the movement of
information.76
76 Id. at 419-20, paras. 93-96.
--In Re Appropriate Framework for Broadband Access to the Internet over
Wireline Facilities, CC Docket No. 02-33, CC Dockets Nos. 95-20, 98-10,
NPRM (February 15, 2002)
http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-02-42A1.doc
The regulatory treatment of data communications
services is governed by the basic-enhanced service dichotomy created in
the Computer II proceeding. 4 In that proceeding, the
Commission
described "basic" services as those that provide a "pure transmission
capability
over a communications path that is virtually transparent in terms of
its
interaction with customer-supplied information."5
4. Amendment
of Section
64.702 of the Commission's Rules and Regulations (Computer II), Final
Decision,
77 FCC 2d 384 (1980) (Computer II Final Decision), recon., 84 FCC 2d 50
(1980) (Reconsideration Order), further recon., 88 FCC 2d 512 (1981)
(Further
Reconsideration Order), aff'd sub nom., Computer and Communications
Indus.
Ass'n v. FCC, 693 F.2d 198 (D.C. Cir. 1982), cert. denied, 461 U.S. 938
(1983).
5. Computer
II Final Decision,
77 FCC 2d at 420. "Basic services," such as "plain old telephone
service" (POTS), are regulated transmission services that are offered
under
tariff pursuant to Title II of the Communications Act of 1934, as
amended
(the Act). In the NATA Centrex Order the Commission discussed
characteristics
of "adjunct to basic services" that facilitate the use of traditional
telephone
service but do not alter the fundamental character of telephone
service. See North American Telecommunications Association,
Petition for Declaratory
Ruling Under Section 64.702 of the Commission's Rules Regarding the
Integration
of Centrex, Enhanced Services, and Customer Premises Equipment, 101 FCC
2d 349, 359-361, paras. 23-28 (1985) (NATA Centrex Order)).
-- In re US West
Communications, Inc., Petition
for Computer III Waiver, Order, 11 FCC Rcd. 1195, para 2 (Nov 6, 1995)
92. We conclude
that the record in this proceeding supports our adopting a
basic/enhanced
dichotomy for network services. In going forward with a
regulatory
scheme that distinguishes a carrier's basic transmission services from
its enhanced services, it behooves us to make clear our perception of
what
constitutes a basic service. In so doing we are mindful of the
arguments
raised by various parties that the basic service category should be
broadly
construed so as to not limit the scope of regulated services.
However,
based on our review of the comments and our determination, infra, that
enhanced services should not be subject to regulation, we conclude that
the parameters of a basic service should be dictated by the purposes of
the Act and the statutory scheme set forth in Title II for the
regulation
of common carrier communications services.
93. A basic
transmission service is one that is limited to the common carrier
offering
of transmission capacity for the movement of information. In
offering
this capacity, a communications path is provided for the analog or
digital
transmission of voice, data, video, etc. information. Different
types
of basic services are offered by carriers depending on a) the bandwidth
desired, b) the analog and/or digital capabilities of the transmission
medium, c) the fidelity, distortion, or other conditioning parameters
of
the communications channel to achieve a specified transmission quality,
and d) the amount of transmission delay acceptable to the user. Under
these
criteria a subscriber is afforded the transmission capacity to suit its
particular communications needs.
94. Traditionally,
transmission capacity has been offered for discrete services, such as
telephone
service. With the incorporation of digital technology into the
telephone
network and the inclusion of computer processing capabilities into both
terminal equipment located in the customer's premises and the equipment
making up a firm's 'network,' this is no longer the case.
Telecommunications
service is no longer just 'plain old telephone service' to the
user. A subscriber may use telephone service to transmit voice or
data. Both
domestic and international networks allow for voice and data use of the
same communications path. 32 Thus in providing a
communications
service, carriers no longer control the use to which the transmission
medium
is put. More and more the thrust is for carriers to provide bandwidth
or
data rate capacity adequate to accommodate a subscriber's
communications
needs, regardless of whether subscribers use it for voice, data, video,
facsimile, or other forms of transmission.
95. Accordingly,
we believe that a basic transmission service should be limited to the
offering
of transmission capacity between two or more points suitable for a
user's
transmission needs and subject only to the technical parameters of
fidelity
or distortion criteria, or other conditioning. Use internal to
the
carrier's facility of companding techniques, bandwidth compression
techniques,
circuit switching, message or packet switching, error control
techniques,
etc. that facilitate economical, reliable movement of information does
not alter the nature of the basic service. In the provision of a
basic transmission service, memory or storage within the network is
used
only to facilitate the transmission of the information from the
origination
to its destination, and the carrier's basic transmission network is not
used as an information storage system. Thus, in a basic service,
once information is given to the communication facility, its progress
towards
the destination is subject to only those delays caused by congestion
within
the network or transmission priorities given by the originator.
96. In offering
a basic transmission service, therefore, a carrier essentially offers a
pure transmission capability over a communications path that is
virtually
transparent in terms of its interaction with customer supplied
information. It is clear that in defining a basic service in this
manner, we are in
no way restricting a carrier's ability to take advantage of
advancements
in technology in designing its telecommunication network. Consistent
with
our Tentative Decision, a carrier maintains its flexibility to
structure
its communications network such that the network efficiently functions
as the basic building block upon which it (in the form of a separate
subsidiary
in some cases) as well as other service vendors can add computer
facilities
to perform myriad combinations and permutations of information
processing,
data processing, process control, and other enhanced services.
--In re Amendment of Section 64.702 of the Commission's Rules and
Regulations
(Second Computer Inquiry), Docket No. 20828, Final Decision, 77
FCC2d
384 (May 2, 1980) (Computer II Final Decision)
Of the three categories of services that we have established--'voice',
'basic non-voice', and 'enhanced non-voice'--'voice and 'basic
non-voice'
services may employ any computer processing applications as long as
they
do not change the nature of the service.
-- In re Amendment of Section 64.702 of the Commission's Rules and
Regulations (Second Computer Inquiry), Docket No. 20828, Tentative
Decision
And Further Notice Of Inquiry And Rulemaking, 72 FCC2d 358 para 77
(July
2, 1979)
Moreover, because the provider of an 'enhanced non-voice' service is
dependent upon the 'basic non-voice' services of an underlying carrier,
the transmission component is isolated such that the additional
processing
applications inherent in the provision of 'enhanced non-voice' services
will not impair the quality or efficiency of voice service, or
adversely
affect the 'basic' transmission service of the underlying carrier.
-- In re Amendment of Section 64.702 of the Commission's Rules and
Regulations (Second Computer Inquiry), Docket No. 20828, Tentative
Decision
And Further Notice Of Inquiry And Rulemaking, 72 FCC2d 358 para 77
Para
126 (July 2, 1979)
81. Rather than adopting the definition
of data processing proposed in the Notices, we are revising Section
64.702(a)
taking into consideration the comments and suggestions filed in this
proceeding.
Appendix B contains the revised Section 64.702. This definitional
structure generically describes 'computer processing'. Moreover, a
distinction
is made between the use of 'data processing' and the provision of a
'data
processing service', making it clear that data processing may be
performed
as part of a regulated communications service without necessarily
resulting
in the offering of a data processing service. The concept of
'mutually
exclusive' categories as proposed in the Notice is not retained.
Instead, a primary purpose standard is incorporated which allows for ad
hoc determinations in considering the regulated or non- regulated
nature
of a carriers offering. The 'hybrid data processing'
classification
is retained, which continues to recognize the legitimate use of
communication
facilities by unregulated entities in the provision of data processing
services. The foregoing is a more flexible approach which does
not
result in a rigid definitional structure and, we believe, provides the
needed basis for determining those computer processing applications
which
may be offered as part of a common carrier service.
82. The standard for determining
permissible
carrier activity in the present computer rules is contained in the
definition
of message switching, i.e., '. . . the transmission of messages between
two or more points, via communication facilities, wherein the content
of
the information remains unaltered.' This fundamental
characteristic
of a common carrier communications service is retained as the basis of
the definitional structure we are proposing. In essence, basic
concepts
established in the First Computer Inquiry are being applied to computer
processing applications which have developed since that time to define
what market applications may be incorporated as part of a common
carrier
communications service. The function or role of communications
common
carriage is to provide the means for transmitting subscriber initiated
messages or information between two or more points and having that
information
arrive at the destination intended by the subscriber without the
content
of the message or information being altered by the carrier in the
course
of transmission.
-- In re Amendment of Section 64.702 of the Commission's Rules and
Regulations (Second Computer Inquiry), Docket No. 20828, Tentative
Decision
And Further Notice Of Inquiry And Rulemaking, 72 FCC2d 358 para 81
(July
2, 1979)
87. Under this section a carrier may perform data
processing
as part of a communications offering as long as the data processing
directly
relates to and is for the purpose of providing a communications service
or meeting its own in- house needs. This recognizes that there
are
legitimate uses of data processing in the provision of a communications
service. Under this structure the need for a 'hybrid
communications'
category is eliminated. By stating that carriers may engage in
data
processing and communications processing in the provision of a
communications
service, explicit recognition is given to the previous classification
of
a 'hybrid communications service.' However, where the data
processing
performed does not result in the offering of a 'data processing
service'
(as defined) and, at the same time, is not directly related to or for
the
purpose of providing a communications service, then a carrier may not
engage
in such data processing as part of a regulated communications offering.
--In re Amendment of Section 64.702 of
the Commission's Rules and Regulations (Second Computer Inquiry),
Docket
No. 20828, Tentative Decision And Further Notice Of Inquiry And
Rulemaking,
72 FCC2d 358 (July 2, 1979)
Functionality
Test
We are mindful that, in order
to promote equity
and efficiency, we should avoid creating regulatory distinctions based
purely on technology. Congress did not limit "telecommunications"
to circuit-switched wireline transmission, but instead defined that
term
on the basis of the essential functionality provided to
users.
Thus, for example, we have previously required paging providers to
contribute
to universal service funding, because they are providers of
"telecommunications
service." We have also required private carriers to
contribute
to federal universal service funding, even though they are not common
carriers.
- In re Federal-State Joint Board on Universal
Service, Report to Congress, FCC 98-67 98 (April 10, 1998).
This functional approach
is consistent
with Congress's direction that the classification of a provider should
not depend on the type of facilities used. A
telecommunications
service is a telecommunications service regardless of whether it is
provided
using wireline, wireless, cable, satellite, or some other
infrastructure.
Its classification depends rather on the nature of the service being
offered
to customers. Stated another way, if the user can receive nothing
more than pure transmission, the service is a telecommunications
service.
If the user can receive enhanced functionality, such as manipulation of
information and interaction with stored data, the service is an
information
service. A functional analysis would be required even were we to
adopt an overlapping definition of "telecommunications service" and
"information
service."
-- In re Federal-State Joint Board on
Universal Service, Report to Congress, FCC 98-67 59 (April 10,
1998).
Backbone
Transmission
We realize that, as
technology evolves, new
means of providing telecommunications service may emerge.
Although
we conclude that Internet access is not a "telecommunications service,"
we acknowledge that there may be telecommunications services that can
be
provisioned through the Internet. . . . . With respect to the
provision
of pure transmission capacity to Internet service providers or Internet
backbone providers, we have concluded that such provision is
telecommunications.
In re Federal-State Joint Board on Universal Service, Report to
Congress,
FCC 98-67 101 (April 10, 1998).
Test: Convenience of network vs. convenience of end
user
95. Accordingly,
we believe that a basic transmission service should be limited to the
offering
of transmission capacity between two or more points suitable for a
user's
transmission needs and subject only to the technical parameters of
fidelity
or distortion criteria, or other conditioning. Use internal to
the
carrier's facility of companding techniques, bandwidth compression
techniques,
circuit switching, message or packet switching, error control
techniques,
etc. that facilitate economical, reliable movement of information does
not alter the nature of the basic service. In the provision of a
basic transmission service, memory or storage within the network is
used
only to facilitate the transmission of the information from the
origination
to its destination, and the carrier's basic transmission network is not
used as an information storage system. Thus, in a basic service,
once information is given to the communication facility, its progress
towards
the destination is subject to only those delays caused by congestion
within
the network or transmission priorities given by the originator.
--In re Amendment of Section 64.702 of the Commission's Rules and
Regulations
(Second Computer Inquiry), Docket No. 20828, Final Decision, 77
FCC2d
384 (May 2, 1980) (Computer II Final Decision)
Adjunct
Services
13. At
least one commenter has suggested that FWD is
not an "information service" because it falls within the definition's
exception
for the "management, control or operation of a telecommunications
system
or the management of a telecommunications service."46 We disagree.
Examining
the plain language of the definition dictates a finding that the
exception
could not apply to Pulver because Pulver is not managing a
telecommunications
system or telecommunications service. Examining the history of the text
and Commission precedent supports the same result. The
telecommunications
management exception was initially included
in the definition of "information service" contained in the
Modification
of Final Judgment.47 That definition explained what services the BOCs
were
not permitted to offer while recognizing that certain computer
processing
capabilities were permitted within the provision of their regulated
services.
Thus, the telecommunications management exception permitted the BOCs to
improve their telecommunications networks without running afoul of the
restriction on providing information services.48 Prior to the MFJ and
divestiture,
the Commission had permitted certain computing capabilities to be
incorporated
into AT&T's telecommunications network to facilitate and modernize
the provision and use of basic telephone service.49 This does not mean
that when Pulver or another information services provider offers these
capabilities on a stand-alone basis that they are transformed into
telecommunications
services.50
46 See Letter from Kathleen M. Grillo, Verizon, to Marlene
H. Dortch, Secretary, Federal Communications
Commission, WC Docket No. 03-45 & 03-211 at 5 (filed Feb. 5, 2004)
(Verizon Feb. 5 Ex Parte Letter); see also supra para. 3 and n.6. In
the Non-Accounting Safeguards Order, the Commission recognized that
certain capabilities previously treated as basic services when provided
by a carrier fell within the telecommunications management exception:
adjunct-to-basic services and "no net" protocol processing.
Implementation of the Non- Accounting Safeguards of Sections 27 and 272
of the Communications Act of 1934, as amended, First Report and Order
and Further Notice of Proposed Rulemaking, 11 FCC Rcd 21905, 21957-58,
paras. 106-07 (1996) (Non- Accounting Safeguards Order), clarified in
Order on Reconsideration, 12 FCC Rcd 2297, 2298-99, para. 2 (1997).
47 See United States v. American Tel. & Tel. Co., 552 F. Supp. 131,
229 (DDC 1982) (subsequent history
omitted); Joint Managers' Statement, S. Conf. Rep. No. 104-230, 104th
Cong., 2d Sess. (1996) at 114.
48 See American Tel. & Tel., 552 F. Supp. at 227, 229.
49 See Amendment of Section 64.702 of the Commission's Rules and
Regulations (Second Computer Inquiry), Docket No. 20828, Final
Decision, 77 FCC 2d 384, 419-428 (1980) (Computer II Final Decision)
(noting those computer processing capabilities directly related to the
provision of the basic service that telephone companies were able to
provide as part of their tariffed basic service (later termed
"adjunct-to basic" services, see North American Telecommunications
Association Petition For Declaratory Ruling Under Section 64.702 of the
Commission's Rules Regarding the Integration of Centrex, Enhanced
Services, and Customer Premises Equipment, ENF 84-2, Memorandum Opinion
And Order, 101 FCC 2d 349, 358-61 (1985) (NATA Centrex)); Amendment of
Section 64.702 of the Commission's Rules and Regulations (Second
Computer Inquiry), Docket No. 20828, Memorandum Opinion And Order, 84
FCC 2d 50, 60-61 (1980) (Computer II Reconsideration Order)
(recognizing certain protocol
conversion capabilities may occur internal to a carrier's network);
Computer II Final Decision, 77 FCC 2d at 421; Communications Protocols
under Section 64.702 of the Commission's Rules and Regulations, Gen.
Docket No. 80-756, 95 FCC 2d 584, para. 29 (1983) (Protocols Order).
50 Indeed, in discussing various types of signaling that occurs within
a basic service, the Commission noted that certain protocol processing
network functions intrinsic therein "may be properly associated with
basic service without changing its nature, or with an enhanced service
without changing the classification of the latter as unregulated under
Title II of the Act." Protocols Order, 95 FCC 2d at para. 15. We note
that FWD is different from signaling networks. While FWD does provide
information that members use to initiate communications among
themselves, FWD does not manage the resulting disintermediated
communication. That is managed by the members themselves. In addition,
FWD provides many features not offered by signaling networks (e.g.,
directory look-up, voice mail, emailed responses, conferencing
capabilities,
and address repair).
-- In re Petition for Declaratory Ruling
that pulver.com's Free World Dialup
is Neither Telecommunications Nor a Telecommunications Service, WC
Docket
No. 03-45, Memorandum
Opinion And Order (FCC February 19, 2004)
73. Contrary to NYNEX's argument, we conclude that
Congress'
designation of the publishing of directories as "necessary to, or used
in" the provision of a telecommunications service does not require a
broad
reading of section 222(c)(1)(B) that encompasses all information
services.
270 We are persuaded that section 222(c)(1)(B) covers services
like
those formerly characterized as "adjunct-to-basic," in contrast to the
information services such as call answering, voice mail or messaging,
voice
storage and retrieval services, fax store and forward, and Internet
access
services, that the parties identified in the record. 271 As noted
supra, before the 1996 Act, the Commission recognized that certain
computer
processing services, although included within the literal definition of
enhanced services, were nevertheless "clearly 'basic' in purpose and
use"
because they "facilitate use of traditional telephone service."
272
Examples of adjunct-to-basic services include speed dialing, call
forwarding,
computer-provided directory assistance, call monitoring, caller ID,
call
tracing, call blocking, call return, repeat dialing, call tracking, and
certain centrex features. 273 With respect to these services, the
Commission stated that such computer processing applications were "used
in conjunction with 'voice' service" 274 and "help telephone companies
provide or manage basic telephone services," as opposed to the
information
conveyed through enhanced services. 275 Although the Commission
subsequently
recognized these adjunct-to-basic services as being telecommunications
services in the Non-Accounting Safeguards Order, their appropriate
service
classification remained unclear at the time that Congress passed the
1996
Act. Accordingly, we believe the language in section
222(c)(1)(B),
"services necessary to, or used in, the provision of such
telecommunications
service," reaches these adjunct-to-basic services, which are "used in"
the carrier's provision of its telecommunications service. On
this
basis, we agree with those parties arguing that services such as call
waiting,
276 caller I.D., 277 call forwarding, 278 SONET, 279 and ISDN 280 would
fall within the language of section 222(c)(1)(B); therefore, carriers
need
not obtain express approval from the customer to use CPNI to market
those
services. We disagree, however, that other services, now
classified
as information services, such as call answering, voice mail or
messaging,
voice storage and retrieval services, fax store and forward, and
Internet
access services, 281 would come within its meaning.
74. Our interpretation is supported by Congress' example
of the publishing of directories. The publishing of directories,
like those services formerly described as adjunct-to-basic, can
appropriately
be viewed as necessary to and used in the provision of complete and
adequate
telecommunication service. As the Commission reasoned, in
connection
with finding directory assistance to be an adjunct-to-basic
service:
"[when a customer uses directory assistance, that customer accesses
information
stored in a telephone company data base.... [Such service
provides
only that information about another subscriber's telephone number which
is necessary to allow use of the network to place a call to that other
subscriber." 282 As with directory assistance services, if
listings
are not published, many calls cannot, and will not, be made. In
this
way, the publishing of directories is likewise necessary to facilitate
call completion. This is the view taken by numerous state courts
that have explicitly found that the publishing of telephone listings is
a necessary component of the provision of basic telephone service.
283
In contrast, most information services are not "used in, or necessary
to" the provision of the carrier's telecommunications service. 284
-- In Re In The Matter Of Implementation Of The Telecommunications
Act Of 1996, CC Docket No. 96-115, Second Report and Order and Further
Notice of Proposed Rulemaking (February 26, 1998)
17. The Commission has consistently categorized a service
option or feature as adjunct to basic, and thus subject to Title II
regulation,
if that option or feature is clearly basic in purpose and use and
brings
maximum benefit to the public through its incorporation in the network.
61 For example, the Commission has addressed whether
access to a database
through directory assistance that searches for a listing by name may be
offered as an adjunct to basic telephone service. Because a
subscriber
using directory assistance retrieves information stored in a telephone
company's computer data base, directory assistance appears to fit
within
the definition of an enhanced service. The Commission, however,
found
such access to be adjunct to basic, rather than enhanced service,
because
directory assistance provides only that
information necessary for a subscriber to place a call. 62
18. OSD appear to be within the definition of adjunct
to basic services, because they are intended to facilitate the use of
traditional
telephone services for TTY-TTY calls, and do not alter the fundamental
character of TTY- TTY telephone service. The services provided by
OSD, including operator assistance with collect and third-party
billing,
emergency interrupt and busy- line verification, are intended to
facilitate
the completion of TTY-TTY calls. As discussed above, directory
assistance
is already classified an adjunct to basic service. The fact that
directory assistance is provided through OSD does not alter the nature
of the service, or, consequently, its classification as adjunct to
basic
service. We therefore conclude that the services provided through
OSD are subject to Title II regulation as adjunct to basic services. 63
61. Id. at 359.
62. Id. at 360. The Commission has also held that
electronic directory assistance is an adjunct to basic service because,
as with operator-assisted directory assistance, the purpose of the
service
is to facilitate the placement of telephone calls. Southwestern
Bell
Telephone Co., Petition for Waiver of Section 69.4(b) of the
Commission's
Rules, 5 FCC Rcd 3792, 3793 (Com. Car. Bur. 1990).
63. According to AT&T and MCI, tariffs have been filed
with the Commission for all the underlying services that are provided
through
OSD as required by Section 203(a) of the Communications Act.
--In The Matter Of Establishment Of A Funding Mechanism For Interstate
Operator Services For The Deaf, RM 8585, Memorandum Opinion and Order,
11 FCC Rcd. 6808, (February 21, 1996)
Para 2, note
5. Computer
II Final Decision, 77 FCC 2d at 420. "Basic services," such as
"plain
old telephone service" (POTS), are regulated transmission services that
are offered under tariff pursuant to Title II of the Communications Act
of 1934, as amended (the Act). In the NATA Centrex Order the
Commission
discussed