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Thailand Law Journal 2009 Spring Issue 1 Volume 12

The second phase was the major development of U.S. telecommunications by “The Communications Act of 1934” which became the framework of telecommunications regulation today. The Federal Communication Commission (FCC) was established to govern the communications industry by wire and radio6, especially to nullify the ICC’s authority over intrastate telecommunications.7 At mid-20th century, AT&T was found that they exercised to eliminate their competitors from the market of consumer premises equipment (CPE). They prohibited subscribers from attaching any non-Bell equipments to the AT&T’s network, which was rejected later by the court.8 Then AT&T enjoyed in markets of attaching equipments for a while. Moreover, AT&T was filed by DOJ that they attempted to monopolize nearby industries; AT&T limits its businesses to special projects for the federal government and to operating the national telephone system. The case was settled by “AT&T consent decree” in 19569, which limited AT&T’s business to the provision of “common carrier” communication services.

The third phase was the stage that industry was developed to microwave communications and computer-related businesses. The FCC issued the “First Computer Inquiry” in 1966, separating data processing (computer-related) services from communications services, which were regulated to avoid the possibility of cross-subsidization between businesses. This barred AT&T from computer-related business according to the AT&T consent decree10, and brought the industry into a new scheme of regulated competition. FCC then allows unlimited resale and shared use of private line services and facilities in its “Resale and Shared Use decision” of 1976.11 The U.S. Court of Appeals also issued its “Execunet decision” in 1977, which opened the long distance market to full competition by reversing FCC decisions limiting MCI and other specialized carriers to private line services.12 However, in 1980, the FCC concluded the “Second Computer Inquiry” to completely deregulate all data processing services and consumer premise equipments. The commission introduced the categories of “basic” and “enhanced” services to require common carriers offering enhanced services through a separate affiliate, based on the same principle of cross-subsidization.13

The fourth phase began with the “AT&T divestiture” in 1984, which was the most impact to U.S. telecommunications due to the end of AT&T in dominating local telephony. The DOJ filed an antitrust lawsuit in 1974 that AT&T used its control over its local monopoly to preclude competition in the intercity telecommunications market and the telecommunications product market in a variety of ways in violation of the Sherman Act.14 The lawsuit had been settled by the “Modification of Final Judgment” (MFJ)15 to divest AT&T and to replace the previous consent decree of 1956, in return for AT&T to get into the computer-related industry. The divestiture was virtually the new beginning of competition of both local telephone service and long distance telephone service.

The fifth phase was the major amendment to the Communications Act of 1934 by the Telecommunications Act of 1996. The act was considered as the regulatory reform for the industry by imposing new competitive environment. This could be considered as a swing-back of policy towards the deregulation. Three main concepts are:

  1. Incumbent and New Entrants: The Telecommunication Act of 1996 has provided preemption over state and local laws on barrier of entry and interconnection. It is designed to facilitate and increase local telephone competition by forcing existing Local Exchange Carriers (LECs) to cooperate with potential competitive entrants.16
  2. Interconnection and Unbundling: As interconnection becomes an economic necessity17, The Telecommunication Act of 1996 requires incumbent LECs to provide interconnection to any requesting telecommunications carrier at any technically feasible point. The interconnection must be at least equal in quality to that provided by the incumbent LECs to itself or its affiliates, and must be provided on rates, terms, and conditions that are just, reasonable, and nondiscriminatory.18 The 1996 Act also requires incumbent LECs to provide requesting telecommunications carriers nondiscriminatory access to network elements on an unbundled basis at any technically feasible point. Unbundling provisions thus move the market towards conditions under which regulation becomes necessary.19
  3. Universal Service: The Telecommunications Act of 1996 has reformed the funding and definition of universal service by defining that Universal service is an evolving level of telecommunications services that the Commission shall establish periodically under this section, taking into account advances in telecommunications and information technologies and services.20 Moreover, the Act also established the Federal-State Joint Board to be in charge with the task of recommending to the FCC what should be included within the federal universal service standard.21

In 1998, the Commission modified certain of the requirements placed on Bell Operating Companies pursuant to “Computer III” in order to permit common carriers to offer enhanced services.22 Since then, the 1996 Telecommunications Act has been regarded as the asymmetric regulatory model in promoting competition especially by liberalized interconnection policy; however, asymmetric regulations have served not much in today market on which we will subsequently discuss

The EU Telecommunications
Originally, the telecommunications sector in each member state can be characterized by a strong public service monopoly, usually run together with postal services. Prior to that there are long histories of how had their state-owned operators evolved: some of telegraph and telephone companies had been nationalized and none of operator was privately operated for such a long period like AT&T. Since nationalization, regulations were top-down in favor of national enterprises. The brief history of competition here will begin with the market reform towards deregulation and privatization of those state-owned operators. However, we will focus on the necessity of asymmetric regulations on the level of the EU in order to see situations and conditions underlying the ultimate goal of community integration.

6 47 U.S.C. § 152
7 47 U.S.C. § 152(b)
8 Hush-A-Phone Corp. v. US., 238 F.2d 266, 268 (D.C. Cir. 1956)
9 United States v. Western Elec. Co., Civil Action No. 17-49 (D.N.J.)
10 In the Matter of Regulatory and Policy Problems Presented by the Interdependence of Computer and Communication Services and Facilities, 7 FCC 2d 11 (1966) (First Computer Inquiry).
11 See Resale and Shared Use, Docket 20097, Report and Order, 60 F.C.C.2d 261, 263 (1976), recon., 62 F.C.C.2d 588 (1977), aff'd sub nom. AT&T v. FCC, 572 F.2d 17 (2d Cir.), cert. denied, 439 U.S. 875 (1978).
12 MCI Telecommunications Corp. v. FCC, 561 F.2d 365 (D.C. Cir. 1977) (Execunet I)
13 In the Matter of Amendment of Section 64.702 of the Commission's Rules and Regulations (Second Computer Inquiry), 77 FCC 2d 384, 419 (1980) (Computer II Final Decision).
14 Benjamin, Stuart Minor, Douglas Gary Lichtman, and Howard A. Shelanski. Telecommunications Law and Policy. Durham, North Carolina: Carolina Academic Press, 2001, p.646.
15 United States v. American Tel. & Tel. Co., 1982 U.S. Dist. LEXIS 10949 (D.D.C. 1982)
16 47 U.S.C. § 253
17 Shelanski, supra note 3, p.27.
18 47 U.S.C. § 251
19 Shelanski, supra note 3, p.28.
20 47 U.S.C. § 254(c)(1)
21 47 U.S.C. § 254(a)(1)
22 In the Matter of Computer III Further Remand Proceedings: Bell Operating Company Provision of Enhanced Services, 13 FCC Rcd 6040 (1998)
 

This article is published with the kind permission of Piyabutr Bunaramrueang, Professor of Law at the School of Law, University of the Thai Chamber of Commerce. This article was presented at the 2007 ALIN International Academic Conference at Chulalongkorn University. Except where otherwise noted, content on this site is licensed under a Creative Commons Attribution 3.0 License, <http://cc.in.th/wiki/by_f>

 

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