The Internet and Telecommunications Policy

Selected Papers From the 1995 Telecommunications Policy Research Conference

Gerald W. Brock, Gregory L. Rosston

• Publisher: Routledge
• Year: 2020
• ISBN:
  9781000149203
• Edition: 1
• Topic: Languages & Linguistics
• Subtopic: Communication Studies
• Index: Languages & Linguistics

This book is based on the Telecommunications Policy Research Conference which reports on research into telecommunications policy issues. While the conference is now a respectable 23 years old, this is only the second printed edition of selected papers. A new law, the Telecommunications Act of 1996, accelerated the process of integration in the communication industry and made major revisions to the Communications Act of 1934 that increase the incentive for integration within the industry. Although the papers in this volume were written prior to the passage of the new law, their importance is merely enhanced by it. They deal with fundamental, complex policy problems that arise when previously separate segments of the telecommunications industry are integrated, rather than specific regulatory rules that are likely to be changed under the new law. With the passage of this law, the timeframe for developing appropriate policies for an integrated industry has been shortened. Changes expected to occur over a period of several years will now likely occur much more rapidly. These papers provide insights to help guide the transition in the industry. Divided into five parts, this volume:
* deals with problems of transforming local exchange telephone service from a monopoly in each geographical area to an interconnected competitive network of networks,
* considers the pricing problems that arise in an integrated network carrying traffic of different types across multiple service providers,
* examines the problem of achieving interoperability in complex networks,
* considers issues of intellectual property that arise in expected integrated networks of the future, and
* discusses electronic publication of scholarly journals, copyright protection, and the applicability of copyright law in the digital age.

1

Introduction

Gerald W. Brock

George Washington University

Gregory L. Rosston

Federal Communications Commission

After years of useful but obscure service, the Internet became an object of ubiquitous public discussion during 1995. The transformation of the Internet was symbolized by Mark Andreessen’s spectacular ascent from a $6.85/hour student programmer at the University of Illinois to a 24-year-old cofounder of Netscape holding stock worth over $100 million. Numerous other instant fortunes from the stock market valuation of Internet-related companies indicate great public expectations for its future. The Internet represents a method of providing communications that is outside of the established structure of telecommunication policy. Established policy emphasizes clear boundaries between various segments of the communications industry. One set of policies applies to common carriers, such as telephone companies, while a different set of policies applies to broadcasters. The Internet mixes elements of the transmission (common carrier) concerns of the telephone industry and the content concerns of the broadcast industry with a perspective from the computer industry that regulation is not needed at all.

The Internet is of great importance: It represents a new integrated approach to the telecommunication industry that raises fundamental policy problems. Steady sustained technological advances in computers and electronics have caused a shift from traditional analog methods of providing communications to digital techniques with extensive computer intelligence. The Internet was created as a system of interconnected networks of communications lines and controlling computers. Formally, the Internet is an “enhanced service” under the Federal Communications Commission (FCC) categories and is exempted from regulation. As the unregulated Internet (including the World Wide Web and commercial online services) developed, it incorporated three different kinds of integration that raise new issues for telecommunication policy.

First, the Internet is created by the integration of multiple networks provided by independent entities with no overall control other than standards for interconnection protocols. The Internet represents the fullest expression to date of the unregulated “network of networks,” which is widely expected as a model for future communications. Although the telephone industry has moved far from the old model of unified monopoly, it is still tightly controlled by regulation and central planning. Local exchange companies dominate their geographical areas. Long-distance companies and others connect to the local exchange companies with arrangements that are closely regulated. The assumption at the time of the 1984 divestiture of AT&T was that the local exchange companies would remain monopolies, and that there should be controls to guarantee access for competitive segments of the industry to the “bottleneck monopolies.” Although some competition has come to the local exchange market place in the intervening years, the basic policy framework has remained concerned with hanging competitive elements onto a core monopoly structure. The future telecommunication network is likely to be made up of many different interconnected networks without any core monopoly as its anchor. In such a network, the past practice of rigidly structured “access charges”—based on arbitrary cost-allocation formulas—is no longer viable. A significant policy problem is creating interconnection arrangements among multiple competing networks that achieve efficiency and allow competition to flourish.

Second, the Internet includes the integration of multiple types of services with substantially different technical characteristics onto a single network. The Internet is used to transmit short e-mail messages, graphics, large data files, audio files, and (very slowly) video files. The various kinds of transmissions have vastly different bandwidth requirements and time sensitivities. A short video segment may require the transmission capacity of thousands of e-mail messages. A modest delay in transmitting packets may have no significant effect on e-mail or data file transfers while the same delay in transmitting audio or video may make the transmission worthless. In contrast to the integrated nature of services offered over the Internet, past telecommunication policy has assumed (and sometimes mandated) separate facilities and policies for different kinds of transmissions. The telephone network and associated policies are built around the switched two-way voice grade circuit, with an assumption that the predominant use of that circuit is to carry the human voice. The broadcast and cable-TV networks and the associated policies are based on providing one-way nonswitched transmission of video signals. Technological advances in fiber-optic transmission of signals and in compression of digital video signals have created the possibility of future integrated networks that carry all kinds of signals as digital packets of information, breaking down the policy boundaries of the past and creating the need for new integrated policies.

Third, the Internet and commercial networks connected to it include the integration of the provision of transmission capacity with various degrees of the provision of information. Past telecommunication policies have sharply distinguished between providers of communications capacity and providers of information content. Common carriers were required to transmit all information submitted to them in a nondiscriminatory way, and therefore had no editorial control over the information transmitted or any responsibility for that information. Broadcasters were required to operate “in the public interest” with regard to the material they transmitted. They have been responsible for that material and have been required to meet a varying set of standards for appropriate material over the years: indecency restrictions, public service and news programming, limitations on advertising time, children’s programming requirements, and so forth. In the Internet, and in the expected future communications industry, those dividing lines are blurred as individual companies provide capacity to transmit communications for others and also provide their own content. For example, commercial online services provide transmission capacity (e.g., e-mail, Internet access) for their customers without regard to the information the customers are transmitting over that capacity. They also provide information over which the companies exercise editorial discretion. The fully integrated provision of content and transmission capacity raises new policy issues that have been illuminated in the debate regarding “indecent” material on the Internet and in the effort to define copyright standards for Internet material. Existing policy standards for dealing with content issues do not naturally translate into the categories needed for the Internet and other integrated providers of content and communications capacity.

The Telecommunications Act of 1996, signed by President Clinton on February 8, 1996, accelerated the process of integration in the communication industry that was already under way. The new law makes major revisions to the Communications Act of 1934 that will increase integration within the industry. The act eliminates the restrictions on activities of the Bell Operating Companies that were contained in the 1982 antitrust Consent Decree, allowing the Bell Operating Companies to enter the long-distance market. The act requires the removal of local barriers to entry, allowing long-distance companies and other potential entrants the ability to enter the local telephone market. It eliminates the statutory restrictions on the provision of cable-TV service by telephone companies, allowing them freedom to integrate the provision of telephone and video services over the same network. It also eliminates statutory restrictions limiting the ownership of cable-TV services by broadcasters, but does not require the elimination of related FCC regulatory restrictions.

The new law’s primary effect is to break down barriers to entry into various segments of the telecommunications market. Past policy has contained a complex mixture of statutory law, FCC rules, state regulatory rules, and antitrust actions, which created walls around particular segments of the telecommunication industry. Companies operating in one segment were limited in their ability to enter other segments. That system of segmentation was already gradually breaking down prior to the passage of the new law. The new law condones recent efforts to reduce those barriers, and makes sweeping reductions in the barriers among industry segments that otherwise would have required years of gradual regulatory efforts to accomplish. Under the new law, it is likely that the entire telecommunications industry will move more toward the competitive network of integrated services that are already observed in the Internet. The industry of the future will probably be characterized by competing interconnected, vertically integrated companies providing a wide range of services with digital technology over a single set of physical facilities, along with numerous smaller companies providing services in specialized niches of the market.

Although the chapters in this volume were written prior to the passage of the new law, their importance is enhanced by the new law. These chapters do not deal with specific regulatory rules that are likely to be changed under the new law. Rather, they deal with the fundamental and complex policy problems that arise when previously separate segments of the telecommunications industry are integrated. The chapters were motivated by the observed integration of the Internet and other segments of the industry prior to the passage of the new law, and the expected increased integration of the future. They were designed to provide insights for the long-term development of policy. With the passage of the new law, the time frame for developing appropriate policies for an integrated industry has been shortened. Changes that were expected to occur over a period of several years will now occur much more rapidly. These chapters provide insights to guide the transition in the industry and the many specific policies that will need to be developed as the full implications of the new law are clarified.

Part I deals with problems of transforming local exchange telephone service from a mon...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Contents
• Authors
• Acknowledgments
• Foreword
• 1. Introduction
• II Pricing Problems in Complex Networks
• III Interoperability
• IV Intellectual Property
• Author Index
• Subject Index