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Telecommunications Regulation: Domestic and International US Regulatory History MSIS 5600

Telecommunications Regulation: Domestic and International US Regulatory History MSIS 5600. Charles G. Gray. Why Regulation?. “Natural monopoly” services Essential services for public welfare One organization can serve the market most efficiently Substitute for competition

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Telecommunications Regulation: Domestic and International US Regulatory History MSIS 5600

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  1. Telecommunications Regulation:Domestic and InternationalUSRegulatory HistoryMSIS 5600 Charles G. Gray (c) 2003 Charles G. Gray

  2. Why Regulation? • “Natural monopoly” services • Essential services for public welfare • One organization can serve the market most efficiently • Substitute for competition • Exclusive (franchised) service areas without competitors • Serve the “public interest, convenience and necessity” (c) 2003 Charles G. Gray

  3. Regulatory Process • Monitor and control providers to insure • Service on demand • Uniform policies to all users • High quality service • Fair rates to customers • Fair return to stockholders • US Regulators • Federal - FCC/NTIA • State - PUC/PSC, etc. (c) 2003 Charles G. Gray

  4. History of Regulation in US Telecommunications • 1856 - Western Union Telegraph founded • 1866 – Post Roads Act • 1878 - Commerce Clause interpreted to include telegraph • 1876 - A. G. Bell filed patent for “Improvement to telegraphy” • Elisha Gray was 4 hours later • 1877 - Bell Telephone Co. formed - with Hubbard (c) 2003 Charles G. Gray

  5. History of Regulation in US Telecommunications • 1878 - Western Union formed the American Speaking Telephone Company • 1890 – Sherman Anti-trust Act • 1907 – First state agencies in NY and WI • 1910 – Mann-Elkins Act (Strengthened the ICC) • 1912 – Act to Regulate Radio Communications (c) 2003 Charles G. Gray

  6. History of Regulation in US Telecommunications • 1913 - First threat of anti-trust action by the DOJ (Kingsbury Commitment) • 1921 – Willis-Graham Act • 1927 – “The Radio Act” • Federal Radio Commission (FRC) • Applies only to the United States • Philippines and Panama controlled by Secretary of State (c) 2003 Charles G. Gray

  7. History of Regulation in US Telecommunications • 1934 - Communications Act of 1934 • FCC established • Consolidated FRC and ICC functions • 1949 - DOJ antitrust suit filed against AT&T • 1956 - AT&T “Consent Decree” signed with DOJ (c) 2003 Charles G. Gray

  8. History of Regulation in US Telecommunications • 1956 - Hush-a-phone decision (action first filed in 1948) • 1959 – FCC “Above 890” Decision • 1961 – AT&T TELPAK Tariff • 1968 - Carterfone decision (action first filed in 1961) • 1968 – AT&T PCA Requirement (c) 2003 Charles G. Gray

  9. History of Regulation in US Telecommunications • 1969 - MCI decision (FCC voted 4-3 in favor) • 1969 – Private Lines opened to competition • 1970 – “Ozark Plan” • 1971- Specialized Common Carrier (SCC) Decision • 1971 - “Open Skies” Policy (c) 2003 Charles G. Gray

  10. History of Regulation in US Telecommunications • 1973 – FCC approved 3 “value added carriers” • 1974 - DOJ antitrust suit filed against AT&T • 1976 – Unlimited shared use and resale of private lines • 1977 – MCI Execunet Decision (Judge S. Wright) (c) 2003 Charles G. Gray

  11. History of Regulation in US Telecommunications • 1981 – Resale/shared use of all interstate service • 1982 - “Modified Final Judgment” is agreed 1/1/84 – Breakup of AT&T (The Bell System) • 1984 – LATAs implemented • 1995 - FCC begins auctions of PCS frequencies • 1996 - New Telecommunications Law signed (Amendment to TA 34) (c) 2003 Charles G. Gray

  12. History of Regulation in US Telecommunications • 1997-2000 - Flurry of mergers and acquisitions • 2000 – EU prohibits MCIWorldcom takeover of Sprint • 2000-2002 – Bankruptcies, failures, suspected criminal activity Note that the telephone industry has a long history of litigation and government regulation (c) 2003 Charles G. Gray

  13. US Regulation of the Computer Industry • 1971 - Computer Inquiry I (CI-I) • 1981 – CI-II • 1986-7 – CI-III “Enhanced Services” are not regulated (c) 2003 Charles G. Gray

  14. Common Carriers • Supplier who “carries” goods, services or people from one point to another for the public • Airlines, trucking companies, bus companies, telephone companies, etc. • Accountable to a regulatory agency (c) 2003 Charles G. Gray

  15. Tariffs Defined • Published rates, regulations and descriptions of services • Defines the services offered • Establishes the rate the customer will pay • States the obligation of the provider and the customer in the provision and use of service (c) 2003 Charles G. Gray

  16. Tariff Filing • When new services are to be offered • Rates for existing services are to be increased or decreased • Changes are made in existing services • Services are to be discontinued • A “Rate Case” is the usual vehicle for filing tariff changes (c) 2003 Charles G. Gray

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