Second Computer Inquiry/Final Decision/4

by Federal Communications Commission

77 F.C.C.2d 384, 415

V. Discussion

A. Introduction

83. The history of this proceeding lends perspective to the issues before us. The First Computer Inquiry was initiated in 1966. Five years later in 1971, after receiving thousands of pages of comments and having an independent contractor evaluate them, the Commission issued a Final Decision, supra at n. 1. Litigation over our decisions in the First Computer Inquiry ended in 1973. A mere three years later, this proceeding, the Second Computer Inquiry , was initiated and now, after almost four more years, we are again issuing a final decision on issues raised by the confluence of technology in the offering of communications and data processing services. The significant difference now is that the evolution of a distributed processing environment makes the issues more complicated, and the resulting regulatory

77 F.C.C.2d 384, 416

uncertainty greater. We believe the time has come to address these matters in a manner which gives clear direction to the marketplace, but without restricting the types of services that may be offered to consumers. We will thus clearly set forth those offerings, resulting from market applications of computer processing technology, that will not be regulated by this Commission.

84. Voluminous comments have been filed in this proceeding addressing the public interest considerations affecting each of the various options. In weighing the comments and reaching a final decision we are guided by the mandate entrusted to us by Congress as set forth in Section 1 of the Communications Act, i.e., "... to make available ... to all people of the United States a rapid, efficient Nation-wide, and world-wide wire and radio communications service with adequate facilities at reasonable charges ..." 47 U.S.C. § 151. The exercise of our regulatory authority under this mandate is analyzed in the context of rapid technological and market developments affecting communications and data processing services, the ever-increasing reliance upon common carrier transmission facilities in the movement of all kinds of information, and the need to tailor communications-related services to individual user requirements.

85. The Tentative Decision set forth various options for addressing regulation and the role of common carriers in the provision of enhanced computer services and customer-premises equipment. In considering these options we shall treat network services separately from terminal equipment issues as was done in the Tentative Decision. Insofar as network services are concerned, the options set forth for consideration in the Tentative Decision and the comments of the parties essentially focus on (a) whether the basic/enhanced dichotomy is appropriate, (b) whether there should be a distinction between enhanced services based on their communications or data processing nature, (c) whether Title II regulation should be imposed over any enhanced service, and (d) whether the resale structure should be applicable to all carriers owning transmission facilities, i.e., whether such carriers should be required to form a separate subsidiary for the provision of unregulated enhanced services and acquire the necessary transmission facilities pursuant to tariff. As to customer-premises equipment (CPE) the comments focus on a) whether all CPE should be treated the same, b) whether CPE should be deregulated, and c) the structure under which communications common carriers should be permitted to market CPE in conjunction with their transmission services. We must now weigh the public interest considerations relevant to these issues in light of our overall statutory mandate. After delineating the regulatory scheme in these two areas, we will address common carrier participation in the provision of enhanced services and customer-premises equipment.