COMT 2201 Regulation This Material may be found in: Cole, Chapter 1. Also in: Datapro Reports on Communications Networking Services, Report #3002, A History of Telecommunications Regulation.

COMT 2202 Public Utilities Monopolies or Near-Monopolies Having the monopoly is deemed to be in the public’s best interest Regulation provides oversight to prevent abuse Examples: –Railroads –Water, Gas, Electricity –Telecommunications

COMT 2203 Jurisdiction FCC - Interstate Communications Intrastate –PUC (Public Utilities Commission)or PSC (Public Service Commission) –unless “preempted” by the FCC

COMT 2204 Products and Services EquipmentLocal ServiceLong Distance IntrastateInterstate “The Bell System” Pricing behaviour is regulated by controlling the “Rate of Return”

COMT 2205 Carterphone EquipmentLocal ServiceLong Distance IntrastateInterstate “The Bell System” Some Competition Allowed

COMT 2206 Specialized Common Carriers EquipmentLocal ServiceLong Distance IntrastateInterstate “The Bell System” Some Competition Allowed Specialized Services

COMT 2207 After the MFJ EquipmentLocal ServiceLong Distance IntrastateInterstate Specialized Services Intra LATA Intra LATA Inter LATA Inter LATA

COMT 2208 The Telecom Act of 1996 EquipmentLocal ServiceLong Distance IntrastateInterstate Specialized Services Intra LATA Intra LATA Inter LATA Inter LATA

COMT 2209 Computer Inquiry I Deregulation of Data Processing Data Transport remains regulated

COMT Computer Inquiry II Computer Inquiry I seen as obsolete Basic data communications services are now regulated Enhanced Services are not regulated –Enhanced Services, including CPE sales, offered by Bell Operating Companies, must be moved to a separate subsidiary WHY ?

COMT Computer Inquiry III Attempts to deregulate the entire data communications arena Creates the concept of “Comparably Efficient Interconnections” Creates the ONA (Open Network Architecture) concept Never really led to regulation -- until the 1996 Act (which used different words)

COMT Technical Consequences Changes in regulation often force technical changes In 1984, deregulation changed the number of long-distance providers from 1 to 2 or more -- what are the issues?

COMT Technical Consequences of the MFJ Customer must be able to indicated via dialed digits which provider to use –Initially - Use line side access –Interim - Use Feature Group B xx Long-term: Replace all central office switches with program control switches capable of doing database lookups. –Introduce 10XXX (now 1010XXX override codes)

COMT Introduction of Competition Before: Local ServiceLong Distance All Costs are combined in the “Rate Base” Regulators set prices based on policy/politics Total provider revenue is correct

COMT Competition cont… After Local ServiceLong Distance Prices and costs are not divided equally, revenues are no longer correct. Implicit subsidies are replaced by explicit payments.

COMT Local Service Competition Rural Area ServiceUrban Area Service All Costs are combined in the “Rate Base” Regulators set prices based on Universal Service mandates/desires; cost-based rural service may not be reasonably affordable Total provider revenue is correct QUESTION: What happens if these services are deregulated and provided by multiple companies?