Since the Third Computer Inquiry rules were adopted in 1986, the FCC has received multiple rounds of comments, including in an outstanding rulemaking proceeding, concerning whether the rules should be eliminated. Despite its recognition that the market has changed drastically, the FCC recently denied a US Telecom request for forbearance from these rules. Instead it once again requested comment on the rules’ elimination. The available evidence justifies that these rules should promptly be consigned to the graveyard reserved for outdated regulations.
The Computer III rules established a complex framework that was designed to enable independent “enhanced services” providers to purchase piece parts of the analog telephone network. These rules now apply only to three companies in a growing field of wired and wireless network providers of considerable size and strength.
Some rules have been streamlined (in its recent forbearance order the FCC rightfully eliminated thousands of annual pages of compliance reports) and the Computer III rules for broadband have largely been eliminated. Notwithstanding, the substantive rules remain in place for a much narrower category of so called “narrowbanding” enhanced services. The Commission specifically identified only a small number of voice mail and alarm monitoring service providers that currently rely on Computer III functionality.
US Telecom demonstrated that these “narrowbanding” services are being provided today over broadband and cable TV networks without reliance on Computer III functionality. Current evidence of competing facilities-based network platforms provide alternatives that justify eliminating the substantive Computer III rules.
Computer III was adopted when telephone service was largely a monopoly. Since then, multiple network platforms provide a communications path into the home. In 2010, Cable MVPD facilities passed 98.5 percent, and wireless services covered over 97.8 percent, of homes. Over 93 percent of Americans in 2012 could receive wireline broadband services at 3 Mbps download speeds or greater.
In its denial of US Telecom’s forbearance request, the Commission asserted that it needed evidence that alternative services were available on competitive terms. This focus was overly narrow and misplaced. The Commission should instead evaluate the technological capabilities of alternative network platforms to determine whether there is a sufficient competitive alternative to Computer III-compliant facilities. The FCC engaged in such an inquiry when it deregulated wireline broadband without looking at specific prices. The same type of inquiry for narrowbanding enhanced services would demonstrate that competitive alternatives do exist, which would promote reasonable terms. There is thus no reason to force Computer III carriers to identify irrelevant information that they may not even be able to access in the first place.
Given the existence of competing alternative platforms, there is little need to be concerned that either consumers or providers could not find “enhanced” services without the legacy rules. In the past, the Commission has solved this type of potential disruption to consumers and providers through limited grandfathering, such as it did when wireline broadband was deregulated. With a reasonable time to locate an alternative source of supply, there is no further need for continued regulation to assure consumer protection.
The FCC should not retain rules solely to protect existing business plans or services. Both the FCC and the antitrust laws have long refused to protect individual competitors rather than competition. Freezing services in place stifles innovation and unnecessarily increases carrier costs.
The Commission has admitted that the Computer III requirements are burdensome. Other public interest benefits support elimination. As the Commission found when deregulating wireline broadband, eliminating Computer III is in the public interest because it would promote innovation and investment, and reduce compliance costs. And unnecessary rules should be repealed in any event because they skew competition, harming consumers.
It is also ironic that the FCC elsewhere has announced that it needs to promote conversion to a modern network to promote broadband and meet other goals. Its stubborn retention of legacy rules applicable only to the analog PSTN, such as the Computer III rules, potentially works at cross purposes with these other goals.
In its NPRM to explore elimination of the remaining Computer III rules, the Commission should rely on available evidence to eliminate these unnecessary rules without further delay. Competition will continue to make available services consumers desire through a variety of platforms. Computer III: Rest In Peace.