FCC and the Internet: FCC and the Internet: 30 Years of “Un-Coordination”30 Years of “Un-Coordination”

Part 1Part 1

Robert Cannon

Senior Counsel for Internet Issues

Office of Plans and Policy

US Federal Communications Commission

Standard DisclaimerStandard Disclaimer

Views expressed are my own and do not necessarily represent those of the FCC, the Commissioners, or its staff.

Problem:Problem:

Conduit

Enhancement

• Communication facility• Incumbent monopoly• Traditionally regulated• Built based on regulatory sanctioned monopoly, rate payer fees• Provide basic service

• Enhancement to basic service• Dependent upon communications facility - potential bottleneck• Competitive market• Innovative• Accounts for economic expansion

Historical ContextHistorical ContextMessage Switched Network (Store and Forward)Message Switched Network (Store and Forward)

(i.e., Western Union)(i.e., Western Union)

TTY

TTY

TTY

Switch Switch

TTY TTYTTY

MX

MX

Historical ContextHistorical ContextAutomatic Data Processing (Store and Forward)Automatic Data Processing (Store and Forward)

(i.e., IBM)(i.e., IBM)

TTY

TTY

TTY

Computer

TTY TTYTTY

MX

MX

TTY

Computer I Computer I 19661966

First packets sent on ARPANet Oct 29, 1969. First crash of ARPANet Oct 29. 1969

In th

e B

egin

ning

…In

the

Beg

inni

ng…

In th

e B

egin

ning

…In

the

Beg

inni

ng…

Issues Before the FCC...Issues Before the FCC...

• Computers that facilitate communications versus computers with which users interact?

• Jurisdiction of FCC• Entrance of Carriers into data processing

market• Regulatory treatment of data processing• Communication needs of data processing

industries

1966

A World Divided:A World Divided:

Telecom

ATM Frame Relay

TCP / IP

Applications

HTML Telephony Mail RealHTTP Media

Enhanced ServicesUnregulated

Basic TelecomRegulated

1980

Computer II (1980)Computer II (1980)

Basic Service

the offering of a pure transmission capability over a communications path that is virtually transparent in terms of its interaction with customer supplied information

Enhanced Service

services, offered over common carrier transmission facilities used in interstate communications, which employ computer processing applications that act on the format, content, protocol or similar aspects of the subscriber's transmitted information; provide the subscriber additional, different, or restructured information; or involve subscriber interaction with stored information

USENET Established 1979Term “Internet” coined 1982 1980

Enhanced ServicesEnhanced Services(data processing services)(data processing services)

• Find market to be competitive– no natural or economic barriers to free

entry into the market for these services – no indications that any of these markets

are threatened with monopolization

• In view of all of the foregoing evidence, we see no need to assert regulatory authority over data processing services

1971

Basic Telecom ServicesBasic Telecom Services

• Concerns– Cross subsidization of data processing

services with communications revenue• Bad for data processing competition• Unfair to rate payers• Impair provision of communications service by

carriers

– Potential for Discrimination and anti competitive behavior

1971

SafeguardsSafeguards

1980

General SafeguardsGeneral SafeguardsAlways ApplicableAlways Applicable

• Bundling

• Customer Proprietary Network Information (privacy)

• Network Information Disclosure

• Cross Subsidization

• Accounting Safeguards

• Anti-Discrimination

BundlingBundling

• Enhanced Services– All facilities based carriers that offer

enhanced services – must unbundle basic from enhanced

service and offer basic telecommunications service to other ISPs on same tariffed basis

1980

Computer IIComputer IIStructural SeparationStructural Separation

• Separate Subsidiary Requirements (47 CFR 64.702). – Sep sub must

• obtain all services pursuant to tariff

• Operate independently

– Carrier shall not engage in joint marketing

– Must receive FCC approval of Cap plan

BOC

Bell.net

Non Affiliated

ISP

Non Affiliated

ISP

1980

Computer IIIComputer IIINon-Structural SeparationNon-Structural Separation

• Offer Enhanced Services on an Integrated Basis

• Comparatively Efficient Interconnection (CEI) (interim)

• Open Network Architecture (ONA) (permanent)

BOC

Bell.net

Non Affiliated

ISP

Non Affiliated

ISP1986

NSFNET CreatedFirst IETF meeting

Computer Inquiries Computer Inquiries LegacyLegacy

• Separation of Basic and Enhanced– Unregulation of Enhanced– Affirmative regulation of carriers

• to meet the needs of data processing• to promote innovation and competition in the data

processing market• to assure equal access for computer service to

essential communications services • to prevent anticompetitive behavior

• Open communications platform

Post-Computer IIIPost-Computer III

1987

Competitive ISP MarketCompetitive ISP Market

0

1000

2000

3000

4000

5000

6000

7000

8000

Source: Boardwatch Magazinewww.ispworld.com

ISP

s in

Nor

th A

mer

ica

Brazil

Wash, DC

TimelineTimeline

1970 1980 1990 2000

TCP/IPInvented

DNS

IAB

W3C

TCP/IP

Comp III

Thank You . . .Thank You . . .

Robert CannonSenior Counsel for Internet Issues

FCC Office of Plans and Policyrcannon@fcc.gov

Internet NumberingInternet Numbering

A R IN R IP E A P N ic S A m erica A frica

IA N A

BOC Entrance Into ISP MarketBOC Entrance Into ISP Market

Computer IIStructural Separation

Computer IIINon-Structural Separation

BOC BOC

ISP

ISP

or

BackgroundBackground

1966

BundlingBundling

• CPE & Basic Service– Prohibit carriers from bundling telecom

service and CPE– No packaged discounts– 47 C.F.R. § 64.702(e)

– Bundling Rules currently under review

1980

BackgroundBackground

• Data Processing Industry– Major and expanding force in American

economy– Market competitive– Dramatic innovation– Dependent upon communications network– substitutability of computer networks for

regulated communications networks

1966

BackgroundBackground

• Large in-house computer systems with excess capacity being sold

• Computer industry provides computer service bureaus along with data banks for public use

• Specialized data services such as stock services being offered

• Carriers capable of using their network computers for data processing

1966

Further Resources...Further Resources...

• The Computer Museum History Center www.computerhistory.org

• ISOC, A Brief History of the Internet www.isoc.org/internet/history/brief.html

• PBS: Nerds 2.0 Brief History of the Internet www.pbs.org/opb/nerds2.0.1/

• Hobbes' Internet Timeline v5.2 www.zakon.org/robert/internet/timeline/