The Computer Inquiries

1. The Computer Inquiries • A series of proceedings undertaken by the FCC • Goal to keep telephone companies (specifically the Bell System) from dominating the computer industry

2. Computer Inquiry I • 1966 FCC issued a Notice of Inquiry • Lengthy list of questions about the relationship between computers and communications • 1971 FCC Decision • Communication; data processing; hybrid services • “maximum separation” rule (separate subsidiaries) • Telephone companies to provide data processing only through subsidiaries with separate books, officers, etc. • Didn’t apply to Bell System (remember this is before the MFJ) because FCC felt that the 1956 Consent Decree took care of keeping the Bell System out of any unregulated activity, including data processing

3. Computer Inquiry II • 1980 FCC Decision • “basic” versus “enhanced” services • Enhanced services and CPE should not be regulated as common carrier services under the Communication Act • Preempted the states on these issues • Common carriers should be able to offer both enhanced services and CPE, except the Bell System (AT&T and the BOCs—it’s still before the MFJ) could do so only through a separate subsidiary. • American Bell, later AT&T Information Systems formed

4. CI, II (continued) • “Basic” service—like “plain old telephone service” • A basic transmission service is one that is limited to the common carrier offering of transmission capacity for the movement of information—this is regulated

5. More on CI, II • “Enhanced” service (not regulated)—employ computing to: • Act on the format, content, code, protocol or similar aspects of the subscriber’s transmitted information • Provide the subscriber additional, different, or restructured information • Involve subscriber interaction with stored information

6. More on CI, II • CPE to be detariffed January 1, 1983 • New CPE to be unbundled from basic services and detariffed on 1/1/83 • Embedded CPE, including inventories, would remain tariffed until either sold to customers or written off the books over a specified time period.

7. Computer Inquiry III • 1985 FCC started CI,III; issued order in 1987-8 • Realized that the maximum separation requirement of CI,II had hurt public access to enhanced services • Began a new approach—competition and access • Allowed end of separate subsidiaries for AT&T and the now separate BOCs IF: • Filed Open Network Architecture plans • Development of Cost Accounting Manual (Replaced structural separation with accounting separation)

8. Some complications • The MFJ restricted the BOCs from offering information services—restriction not lifted till 1991 • Interesting case of the MFJ court and the FCC disagreeing • The Ninth Circuit court sent the CI,III back to the FCC twice, saying the FCC had not adequately explained why it was changing its mind

9. More on CI,III • FCC passed an Interim Order that let the BOCs provide intraLATA information services without a separate subsidiary, pending further consideration • Then came the 1996 Act • FCC interprets the Act as requiring the BOCs to prove their local networks are open to competition before letting them into interLATA information services

10. Why is CI,III important? • It sets the stage for the principles of the Telecom Act of 1996 • CI,III was concerned with competition in information services; the Telecom Act is concerned with competition in basic local service

11. Five Competitive Safeguards • CI,III required: • Identification of basic service elements that are the network’s building blocks (Basic Service Elements) • Accounting rules to prevent cross-subsidization • Open Network Architecture so the configuration of the telco network can be known to other companies • Comparably Efficient Interconnection (CEI) so can attach to essential facilities as easily as the telco does • Customer Proprietary Network Information (CPNI)