Title II

The Communications Act of 1934 was established to make sure everyone in America would have access to local and long distance phone service. Title II is a section of this Act and defines the obligations and requirements of a company, known as “Common Carriers”, offering telecommunications services.

Section 202 makes sure that a common carrier does not discriminate of who can get service or that the service does not give ‘unreasonable’ preference or advantage.



CommAct1934Section202The Communications Act of 1934—Everyone Gets Wired – Common Carrier Laws Established.

State-Based Utilities:

The Communications Act of 1934 guaranteed everyone local phone service; rural or urban, rich or poor. In order to supply service to everyone, like electricity or water, state-based utilities were created, and the majority were owned by one company — AT&T. This included Pacific Bell (California), Ohio Bell, New York Telephone, and larger companies, such as New England Telephone, which controlled Massachusetts, Rhode Island, Maine, New Hampshire and Vermont.

  •  Phone Service was delivered over copper wires, which were part of the state-based utility, commonly called the PSTN, Public Switched Telephone Networks.
  • All costs were averaged (with caveats). In order to have continuous construction as well as prices balanced in rural and urban areas, the costs of services offered to customers were averaged
  • Guaranteed profits—The trade-off of this model is that the companies had a guaranteed, healthy profit margin—if it fell below a certain amount of profits, the company could apply and raise rates
  • There were two services in question—Local Service and Long Distance. The right to have phone service also gave a requirement to allow the customer to access long distance service (inter-state), which is a call that crosses state lines.
  • The state utility, such as Verizon New York, was in part  regulated by the State Public Utility Commissions.

The Public Switched Telephone Networks, (PSTN)

  • The PSTN was always all wires, equipment and “chattel” within the phone company’s state-based utilities as all services were “telecommunications”.
  • Telecom Act of 1996 Opens the Utilities to Competition.
  • Commonly called “the last mile”, the wires to homes or offices was considered a bottleneck as the utility wires were closed to all forms of competition. The Telecom Act of 1996 was hailed as a major ‘deregulatory’ bill — i.e., removed the impediments of competitors to offer competitive wireline-based local service or Internet/broadband service using ‘line sharing’, where a phone line can be used for phone service as well as DSL.
  • In exchange, the phone companies would be allowed into multiple new businesses which included long distance. Previously, they had sued the FCC to be allowed to offer video over the phone networks, commonly called “Video Dialtone”.
  • FCC Closes the Utilities to Competition.

By 2005, the FCC had essentially reversed the ‘opening-the-networks’ sections of the Act, claiming they were now ‘deregulating’ the phone companies to create “inter-modal” competition between the cable and phone companies. This reversal of the Telecom Act as well as the definition of deregulation closed down AT&T and MCI’s ability to offer local services, as well as put over 7000 small Internet Service Providers out of business as it blocked the companies’ ability to use the networks for line sharing.

  • The FCC Took 2 Related Actions to Close the Networks.
  • 1) Redefined “Broadband” and “Internet as one service, an “Information service”, “Title I” — Historically, broadband has been a ‘telecommunications service’, Title II, but the FCC decided it should now add the “Internet Service Provider” (ISP)  service– which connects the customer to the internet via their computer modem.
    • “Information Services” have none of the telecommunications obligations, and therefore combining the two made the entire wire off limits to competitors.
  • 2) “Forbearance” — Which means that the rules and laws are still in place but the FCC can choose not to enforce the laws– ie, the wire may be remain classified as “Title II”, but the telecom rules and obligations no longer apply.
  • Closing the Networks caused Net Neutrality Concerns.

Prior to 2005 a customer could choose their own Internet Service, broadband, phone or even cable provider over the copper or fiber optic wires. By 2005, once there was no longer competitive choices, it meant that there was only one provider over the wire for these services. Commonly known as “vertical integration”, where the company who owns the wires can give advantages or gain controls over all of the services, this gave Verizon, AT&T, Centurylink or Comcast or Time Warner the ability to block, degrade, slow down or control both the retail side– services offered to customers, as well as the wholesale side — companies offering services, such as Netflix

  •  “Reclassification”

Simply put, returning to “Title II” would mean that broadband was again a Title II, telecommunications service, but there is confusion about the rest. Some proposals want the Internet service to also become “Title II”, but keep networks closed to direct competition. This is commonly called “Open Internet”. Others want the networks reopened to all competition, commonly known as “Open Access”





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