Where Internet Service Providers and Telephone Companies Compete: A Guide to the Computer Inquiries, Enhanced Service Providers and Information Service Providers

Abstract

In 1966, the FCC launched the first of the Computer Inquiries, asking about the difference between computers that run telecommunications networks and computers with which we interact. Even in the late 60s, the FCC perceived the tremendous potential that computer networks promised for economic growth, the highly competitive nature of the computer network market, and the dependency of computer networks upon the underlying telecommunications network monopoly. The end product of the Computer Inquiries has been to distinguished between computer networks classified as enhanced services and basis telecommunications services. The FCC found no need to regulate enhanced services. The Internet falls within this category of enhanced services, with everything above layer 2 in the IP stack falling within this category. However, recognizing the dependency of enhanced services on basic services and the ability of telecommunications monopolies to anticompetitively impact the enhanced services market, the FCC created a series of progressive safeguards.

But there is a problem. Some of the Computer Inquiry rules have been codified in the Code of Federal Regulation; some have not. Some rules have been reconsidered by the Commission, appealed in federal court, and reviewed by the Supreme Court. Some rules are currently in effect, some have been vacated, and some are the subject of current open proceedings before the Commission. This makes these rules difficult to comprehend, particularly to a small Internet business. Thus, this paper embarks upon the modest project of setting forth the Computer Inquiries rules as they exist today.

All facilities based carriers fall under Computer Inquiry obligations. Facilities based carriers who offer enhanced services must unbundle their basic service from their enhanced services and offer the basic service to independent enhanced services providers (ESPs) on the same terms and conditions. Bell Operating Companies (BOCs), with their greater market power and incentives, have stronger separation safeguards. BOCs who elect to provision enhanced services may do so through a separate subsidiary pursuant to Computer II, or without a separate subsidiary pursuant to Computer III. Computer III requires the posting of a Comparably Efficient Interconnection plan detailing what the BOC is providing to itself and how these elements shall be made available to independent ESPs. Computer III also requires that BOCs, regardless of whether they provision enhanced services (they all do), create Open Network Architecture plans that break their networks down into basic building blocks available for use by ESPs. BOCs are required to file regular reports with the Commission detailing their compliance with these rules.

Beyond the separation rules, the FCC created additional safeguards generally aimed at all carriers. These rules included Customer Propriety Network Information (restricting the use of a customer's telecommunications information for non-telecommunications purposes), restrictions on discrimination against independent ESPs, Network Information Disclosure (ensuring that information concerning upgrades to the network is provided to all equally), restrictions against cross subsidization, and accounting safeguards. Service Providers

Keywords: Computer inquiries, enhanced services, Internet, Federal Communications Commission, federal regulation, Internet