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Notes: Computer Inquiries


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  • Definitions

  • 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)

    Computer II

    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