by Michael K. Kellogg, John Thorne, and Peter W. Huber
Table of Contents
1 AN INDUSTRY IN TRANSITION
1.1 Introduction
1.2 The Rise of Monopoly: Technology
1.2.1 Telephones and Wires
1.2.2 The Telephone Exchange
1.2.3 Interexchange Connections
1.2.4 The Development of Radio
1.3 The Rise of Monopoly: Regulation
1.3.1 Common Carriage
1.4 The Fall of Monopoly: Technology
1.4.1 Broadband Communications
1.4.2 The New Switch
1.5 The Fall of Monopoly: Regulation
1.5.1 Customer Premises Equipment (CPE)
1.5.2 Enhanced Services
1.5.3 Long Distance
1.5.4 Wireless Services
1.6 The Fall of Monopoly: Antitrust
1.6.1 Customer Premises Equipment
1.6.2 Enhanced Services
1.6.3 Long Distance
1.7 The Fall of Monopoly: The Bell System Divestiture
1.8 The Fall of Monopoly: Fragmentation and Convergence
1.9 The End of Monopoly: The 1996 Telecom Act
1.9.1 The Transitional Regulatory Paradigm: Regulating Interconnection in the Unexclusive Franchise
1.9.2 The Rise of Competition
1.10 The Network of the Future: Going Digital
1.11 The Network of the Future: The Internet
1.12 The Market of the Future: Customer Segmentation
1.13 The Market of the Future: Bundled Services
1.14 The Market of the Future: Industry Structure
1.15 The Market of the Future: Global Trends
1.16 Conclusion
2 TELEPHONE ECONOMICS AND PRICE REGULATION
2.1 Introduction
2.1.1 Basic Economics of Local Telephony
2.1.2 Yesterday's Regulatory Paradigm: "Natural Monopoly"
2.1.3 Today's Regulatory Paradigm: Interconnection, Unbundling, and the Transition to Competition
2.1.4 Tomorrow's Regulatory Paradigm: Regulatory Forbearance
2.2 Monopoly: Cost Separation and Regulation
2.2.1 Common Costs
2.2.2 Separations and Cost Accounting
2.2.3 Rate-of-Return Regulation and Price-Caps
2.3 Vertical Links to the Local Exchange
2.3.1 Connecting Customer Premises Equipment and Inside Wiring to the Local Exchange
2.3.2 Connecting "Enhanced Services" to the Local Exchange
2.3.3 Connecting Long-Distance to Local Carriers.
2.3.4 Connecting the Internet to the Local Exchange
2.3.5 Lessons in Price Misregulation
2.4 Horizontal Connections to Local Exchange Carriers
2.4.1 Reciprocal Compensation: Local-to-Local Traffic Hand-Offs in the Old Days
2.4.2 Competitive Access Providers
2.4.3 Wireless Carriers
2.4.4 Competitive Local Exchange Carriers
2.5 Universal Service
2.6 Constitutional Limits
2.6.1 Equal Protection
2.6.2 Due Process and Takings
2.7 Conclusion
3 THE POWERS OF THE FCC
3.1 Introduction
3.2 Regulation Prior to 1934
3.2.1 1877-1910
3.2.2 1910-1934
3.2.3 The Shreveport Rate Case
3.2.4 Smith v. Illinois Bell Telephone Co.
3.2.5 Genesis of the 1934 Act
3.3 The Jurisdiction of the FCC
3.3.1 FCC Authority
3.3.2 State Authority
3.3.3 Dividing the Indivisible
3.3.4 Jurisdiction under the 1996 Act
3.4 Preemption in the Era of Uncontested Monopoly
3.5 The Rise of FCC Preemption Power
3.7 Preemption After Louisiana PSC
3.8 Preemption of State Barriers to Entry
3.9 Other Forms of Preemption Authority under the 1996 Act
3.10 Regulating through the Back Door?
3.10.1 Section 252(e)(5)
3.10.2 The Section 208 Complaint Process
3.10.3 The Section 271 Process
3.11 The Obligations of Common Carriers
3.11.1 Service on Demand
3.11.2 At Tariffed Rates
3.11.3 Just and Reasonable Rates
3.11.4 Without Unreasonable Discrimination
3.11.5 Private Contracts
3.12 FCC Control over Ratemaking
3.12.1 FCC Control Over Competition
3.12.2 FCC Procedures for Reviewing Rates
3.12.3 FCC Prescription of Rates
3.12.4 Ratemaking under the 1996 Act
3.13 Industry Oversight Provisions
3.13.1 Transactions
3.13.2 Internal Management
3.13.3 Depreciation
3.13.4 Mergers and Consolidations
3.13.5 Transfer of Licenses
3.14 Procedural and Administrative Provisions
3.14.1 Review of FCC Decisions
3.14.2 Enforcement
3.14.3 Private Rights of Action
3.15 Forbearance: The Authority Not to Regulate
4 ANTITRUST
4.1 Introduction
4.2 Principles
4.2.1 Essential Facilities Doctrine
4.2.2 Tying
4.2.3 "Leveraging" and Refusals to Deal
4.2.4 Predatory Pricing and Cross-Subsidies
4.2.5 Transfer Pricing and Self-Dealing
4.3 The Implications of Regulation
4.3.1 Abuse of the Regulatory Process
4.3.2 General Immunity
4.3.3 Primary Jurisdiction
4.3.4 Regulation as a "Fact of Market Life"
4.3.5 The Filed Rate Doctrine
4.3.6 State Action
4.3.7 Tenth Amendment
4.4 A Brief History of Government Cases
4.4.1 The 1914 Bell Decree
4.4.2 The 1956 Bell Decree
4.4.3 The 1982 Bell Decree
4.4.4 The GTE Decree
4.4.5 The AT&T/McCaw Decree
4.5 Common Law Standards and Procedures for Decree Modification
4.6 Access, Interconnection, and Essential Facilities
4.6.1 Evolution of the Essential Facilities Doctrine in the Telecommunications Industry
4.6.2 Essential Facilities Aspects of the 1974 Government Case
4.7 Cross-Subsidy and Predatory Pricing
4.7.1 Pricing Aspects of the 1974 Federal Case: Services
4.7.2 Pricing Aspects of the 1974 Federal Case: Equipment
4.7.3 Discussion
4.8 Conclusion
5 EQUAL ACCESS, UNBUNDLING, AND INTERCONNECTION
5.1 Introduction
5.1.1 Interconnection Law: Historical Antecedents
5.1.2 Interconnection under Monopoly
5.2 Vertical Links to the Local Exchange
5.2.1 Customer Premises Equipment and Inside Wiring
5.2.2 Pay Phones
5.2.3 Pole Attachments
5.2.4 Enhanced Services: Interconnection, Open Network Architecture, Comparably Efficient Interconnection, and Unbundling
5.2.5 Interconnecting Long Distance to Local Wireline Carriers
5.2.6 Interconnecting Local Toll Networks to the Local Exchange
5.3 Horizontal Connections to Local Exchange Services
5.3.1 Wireless-Wireline Interconnection
5.3.2 Competitive Access Providers
5.4 Unbundling the Local Exchange: Developments 1984-1996
5.4.1 Open Network Architecture
5.4.2 Comparably Efficient Interconnection
5.4.3 Nonstructural Safeguards
5.4.4 Carriers to Whom the ONA Proceedings Applied
5.4.5 Judicial Response to the ONA Proceedings
5.4.6 ONA and CEI after the 1996 Act
5.4.7 State Unbundling Initiatives: 1984-1996
5.4.8 The Department of Justice’s Unbundling Initiative
5.5 Unbundling the Local Exchange under the 1996 Act
5.5.1 General Duties of Telecommunications Carriers
5.5.2 General Duties of All Local Exchange Carriers
5.5.3 Duties of Incumbent LECs
5.5.4 Antitrust Litigation in the Wake of the 1996 Act
5.6 Conclusion
6 UNIVERSAL SERVICE
6.1 Introduction
6.1.1 Defining Universal Service
6.1.2 The Case for More
6.1.3 The Case for Less
6.2 Universal Service Prior to the 1996 Act
6.2.1 Implicit Subsidies
6.2.2 Explicit Subsidies
6.3 The 1996 Act
6.3.1 Definition of Universal Service
6.3.2 Phasing In Explicit Subsidies
6.3.3 Phasing Out Implicit Subsidies
6.3.4 State-Level Regulation of Universal Service
7 MERGERS AND ACQUISITIONS
7.1 Introduction
7.2 Unpredictable Markets
7.3 Jurisdictional and Procedural Overview
7.3.1 The Department of Justice and the FCC
7.3.2 Federal and State Authority
7.3.3 Presumptions, Procedures, and Burdens of Proof
7.3.4 Conditional Approvals
7.4 Substantive Merger Standards
7.4.1 Media-Specific Standards Codified by Congress and the FCC
7.4.2 The Merger Guidelines and Antitrust Case Law
7.5 Merger Review by the FCC
7.5.1 The Public Interest Standard
7.5.2 Small Conglomerate Mergers
7.5.3 Large Conglomerate Mergers
7.5.4 The "Analytical Framework" Applied
7.6 Conclusion
8 TELECOMMUNICATIONS EQUIPMENT
8.2.1 Customer Premises Equipment (CPE)
8.2.2 Inside Wiring
8.2.3 Manufacturing
8.2.4 Providing CPE
8.3 Jurisdiction and Federal Preemption
8.4.1 The Slow Demise of Protective Tariffs
8.4.3 Beyond Part 68: Unbundling and Non-Structural Safeguards
8.4.4 Payphone Interconnection
8.5 Privacy and Law Enforcement – Equipment Issues
8.6 Equipment Pricing Issues and Payphone Compensation
8.7.1 The Origin of Manufacturing Restrictions
8.7.2 The 1996 Act Restrictions
8.7.3 Concentration in the Central Office Equipment Market and Lock-In
9 LONG DISTANCE SERVICES
9.1 Introduction
9.2 Jurisdiction: The Advent of Regulation
9.3 Early Competitive Entry
9.3.1 Technological Advances
9.3.2 Microwave
9.3.3 Satellite Common Carriage
9.3.4 Cable, Mobile, and Broadcast Services
9.3.5 License Conditions and the Right to Compete
9.4 Interconnection and Equal Access
9.4.1 Execunet II
9.4.2 The Right to Resell
9.4.3 Market-Opening Litigation
9.4.4 Equal Access Regulation
9.4.5 Expanded Interconnection and Exchange Access Services
9.5 Carriage and Rate Regulation
9.5.1 Regulation of Nondominant Carriers
9.5.2 Regulation of Dominant Carriers
9.5.3 From Public Tariffs to Private Contracts
9.6 Structural Regulation: Bell Company Entry
9.6.1 The Divestiture Decree
9.6.2 Bell Company Entry Under the 1996 Act
9.7 Regulation of IntraLATA Toll Services
9.7.1 IntraLATA Toll Access under the Bell Divestiture Decree
9.7.2 IntraLATA Toll Equal Access under the 1996 Act
9.8 Industry Outlook: The Limits of Competition
10 WIRELESS SERVICES
10.2 Jurisdiction: Federal versus State
10.3 Spectrum Allocation: General Considerations
10.3.1 License Terms and Renewal Expectancy
10.3.2 Geographic Area Licensing
10.3.3 Zoning
10.3.5 "Public" and "Private" Carriers: Parity Among Comparable Wireless Providers
10.3.7 Administrative Law Constraints on Spectrum Allocations
10.3.8 Constitutional Constraints on Spectrum Allocations
10.4 Spectrum Allocation: Specific Bands and Applications
10.4.1 Allocation of Spectrum for Paging
10.4.2 Allocation of Spectrum for Cellular
10.4.3 Allocation of Spectrum for PCS – Narrowband, Broadband, and Unlicensed
10.4.4 Allocation of Spectrum for Specialized Mobile Radio
10.4.5 Allocation of Spectrum for Mobile Satellite Service
10.4.6 Allocation of Spectrum for Other Wireless Services
10.5.1 Interconnecting Wireless Providers with Local Landline Networks
10.5.2 Interconnecting Wireless Switches with Long-Distance Networks
10.5.3 Wireless-to-Wireless Interconnection
10.5.4 Interconnection and Equal Access Requirements in Perspective
10.6.1 Resale of Wireless Services
10.6.3 Wireless Number Portability
10.6.4 Unbundling Wireless Networks
10.7.2 Wireless Contribution to Universal Wireline Service
10.8.1 Joint Ownership of Wireline and Wireless Properties
10.8.2 Separate Affiliate Requirements for Wireline-Wireless Conglomerates
10.8.3 Wireless-Wireline Competition
10.8.4 Ownership of Multiple Wireless Licenses in a Single Geographic Market
10.8.5 Geographic Consolidation
11 DATA SERVICES AND THE INTERNET
11.1 Introduction
11.2 Data Networks and The Internet
11.2.1 Origins of the Internet
11.2.2 Data Networks: The Internet’s Physical Infrastructure
11.2.3 Protocols and Links: The Internet’s Virtual Structure
11.2.4 The Meaning of "Inter" in "Internet"
11.2.5 Voice/Data Gateways
11.3 Jurisdiction
11.3.1 "Basic" vs. "Enhanced" Services
11.3.2 Federal Regulation of "Basic" LEC Data Services
11.3.3 Federal Jurisdiction over Cable and Wireless Data Services
11.4 Common Carriage
11.4.1 Resale
11.4.2 Unbundling and Interconnection
11.4.3 Local Data Services Offered by LECs through Separate Affiliates
11.4.4 Interstate Access Services
11.4.5 BOC Obligations to Offer Equal Access to Interstate Data Carriers
11.4.6 BOC Provision of Basic InterLATA Data Services
11.4.7 Deregulation of Internet Access Providers and Backbone Carriers
11.5 Rate Regulation
11.5.1 LEC Pricing of All-You-Can-Eat Voice Circuits
11.5.2 Access Charges Paid by ISPs to LECs
11.5.3 LEC Pricing of High-Speed ADSL Services
11.5.4 Reciprocal Compensation
11.5.5 Charges Paid by ISPs to Connect to Internet Backbone Services
11.6 Universal Service
11.7 Deregulating Data: Section 706 Petitions
11.7.1 Deregulating Data
11.7.2 Accounting Safeguards for Deregulated Data Services
11.8 Non-Telco Data Services
11.8.1 Interactive Cable Services
11.8.2 Broadcast Data Services
11.8.3 Other Wireless Data Services
11.9 Structural Regulation of the Industry
11.9.1 Voice and Data: One Market or Two?
11.9.2 Open Access to High-speed Cable Networks
11.10 Conclusion
12 INFORMATION SERVICES
12.1 Introduction
12.2 Definitions
12.2.1 "Enhanced" and "Information" Services
12.2.2 "Basic" and "Telecommunications" Services
12.2.3 "Information" versus "Telecommunications" Services under the 1996 Act
12.2.4 Protocol Processing Services
12.2.5 Mixed or Hybrid Services
12.2.6 None of the Above
12.3 Jurisdiction and Federal Preemption
12.4 Federal Deregulation of Information Services
12.4.1 Origins of the FCC’s Policy to Deregulate Information Services: Computer I
12.4.2 Preemption of State Regulation of Information Services: Computer II
12.4.3 Deregulation of Information Services Confirmed: Computer III and the 1996 Act
12.5 Delivering Information Services Over Phone Lines: Interconnection, Open Networks, Comparably Efficient Interconnection, and Unbundling
12.5.1 Federal Jurisdiction Over Interconnection Regulation
12.5.2 Open Networks and Comparably Efficient Interconnection Before 1996
12.5.3 Open Networks and Comparably Efficient Interconnection After 1996
12.6 Rate Regulation and Access Charges
12.6.1 State vs. Federal Jurisdiction
12.6.2 Access Charges for Enhanced Service Providers
12.6.3 Contribution to Universal Service
12.7 Structural Regulation: Companies Trying to Walk Both Sides of the Line
12.7.1 Federal Preemption of Structural Regulation
12.7.2 The Fear of Vertical Integration
12.7.3 Excluding Phone Companies from Information Service Markets: The "Maximum Separation" Policy of Computer I
12.7.4 Maximum Separation Continued: Computer II
12.7.5 The Information-Services Ban in the Bell Divestiture Decree
12.7.6 The Collapse of Computer II
12.7.7 Computer III Emerges
12.7.8 The Ninth Circuit Vacates Computer III
12.7.9 The FCC’s Response on Remand
12.7.10 The Ninth Circuit's Second Decision and the FCC’s Response
12.7.11 Structural Separation Under the 1996 Act
12.8 Outlook
13 VIDEO SERVICES
13.1 Introduction
13.2 FCC Jurisdiction
13.3 Common Carriage of Video Signals
13.3.1 Telco Provision of Common Carrier Transport for Video
13.4 Telco-Cable Interconnection
13.4.1 Pole Attachments
13.4.2 Equal Access under the Divestiture Decree
13.4.3 Telco-Cable Interconnection Under the 1996 Act
13.5 Price Regulation
13.5.1 Price Regulation of Telco Provision of Video Services
13.5.2 Price Regulation of Cable Operator Provision of Telecom Services
13.6 Universal Service
13.7 Industry Structure
13.7.1 Telco Entry into Cable
13.7.2 Telco Entry into Cable: Video Content
13.7.3 Cable Entry into Telephony
13.7.4 Telco-Cable Mergers
14 PRIVACY, INTELLECTUAL PROPERTY, AND FREE SPEECH
14.2 Wiretapping
14.2.1 Government Wiretaps and The Fourth Amendment
14.2.2 Section 605 of the 1934 Communications Act
14.2.3 The Wiretap Act of 1968
14.2.4 The Electronic Communications Privacy Act of 1986
14.2.5 Carrier Obligations to Assist Law Enforcement Officials in Conducting Wiretaps
14.2.6 Communications Assistance for Law Enforcement Act of 1994
14.2.7 Regulation of Snooping and Anti-Snooping Equipment
14.2.8 The Anti-Terrorism Act of 1996
14.2.9 Foreign Intelligence Surveillance Act
14.3.1 Piracy of Cable Signals
14.3.2 Piracy of Wireless "Broadcasts"
14.3.3 Piracy of Scrambled Wireless Transmissions
14.3.4 Regulation of Scrambling and Decoding Equipment
14.4 Misappropriation of Intellectual Property
14.4.2 Passive Secondary Transmissions
14.4.4 Would-be "Carriers" Who Are Not
14.4.6 Internet Service Providers
14.5.1 Government Disclosure of Private Information
14.5.2 Carrier Disclosure of Information about Customers
14.5.3 Caller ID and Other Call Management Services
14.5.5 Credit Bureaus, Cable Companies, and Video Stores
14.5.6 The European Directive
14.6.1 First Amendment Background: Gutenberg, Marconi, and Bell
14.6.3 Mandatory Blocking of the Content of Others
14.6.4 The Communications Decency Act of 1996
14.6.5 Federal Defenses to and Immunities from Federal Criminal Liability Under Section 223
14.6.6 A Carrier’s Right to Censor the Content of its Customers
14.6.7 Federal Immunities for Private Censorship
14.6.9 Implications of an Exclusive Franchise
14.7.1 Federal Telephone Harassment Laws
14.7.2 Federal Constitutional Immunities
14.7.4 Federal Constitutional Immunities
14.8 Privacy, Property and Free Speech: A Synthesis Based on Consent
14.8.1 A Search for Consistent Legal Principle
Glossary
Table Of Cases
Table of Secondary Authorities
Index