Comments about this article should be sent to mttlr@umich.edu.
{1} Historically, the rights and responsibilities
vested in common carriers tempered their market power in exchange for reduced
liability or insulation from commercial and personal damages caused by
the content carried.[1]
Providers of neutral and transparent conduits did not have to monitor the
content carried, nor could they typically refuse access[2]
to their bottleneck[3]
facilities on the basis of content.[4]
Non-common carriers, on the other hand, could operate as private carriers
when transporting content whether over spectrum, e.g., satellite operators,[5]
or via closed circuit media, e.g., cable television operators.[6]
Their regulatory status derived from the manner in which they carried content
and to whom such carriage services were made available: non-common carriers
did not operate essential facilities and did not serve as gatekeepers who
could affect the price and availability of content. Having chosen to select
and monitor content, they had to assume the greater risk of liability for
the content carried, published or distributed.[7]
The potential for civil and criminal liability justified their active assessment
whether to carry a particular message, or type of content.[8]
{2} Recently, regulators and courts have considered the extent to which carriers can decide what content to carry, e.g., as electronic publishers whose editorial discretion includes the decision whether and how to carry particular content. The distinction between common carriers and private carriers has grown murky, because of:
(1) legislative and regulatory tinkering with the common carrier model;[9]
(2) technological innovations;
(3) a growing body of cases articulating robust First Amendment speaker rights for common carriers; and
(4) court cases imposing quasi-common carrier obligations on private carriers (e.g., the duty of cable television operators to carry broadcast television signals),[10] and quasi-publisher duties on common carriers (e.g., the duty to inquire and disclose whether content is obscene or indecent).
{3} This article will examine court cases and actions
by the Federal Communications Commission (FCC) that distort the traditional
concepts of common and private carriage by establishing new rights and
responsibilities previously applicable to the other category of carrier.
This article will also consider the feasibility of (a) maintaining the
traditional common carrier regulatory model and (b) continuing the application
of that model to basic services provided by local exchange carriers (LECs).
This is especially important as LECs qualify to become private carriers
tapping new market opportunities, even within the same geographical region
where they provide basic services. Finally, this article examines the circumstances
that continue to require application of the "pure" common carrier model
(e.g., the FCC currently regulates the telecommunication transport operations
of Comsat Corporation, but does not regulate its non-carrier ventures).
{4} Modifications to the common carrier model have
made it difficult, if not impossible, to maintain conventional common carrier
regulation of basic communication services. Some commentators view this
development as inevitable,[11]
or as an outcome that would eliminate a less desirable policy option.[12]
This article argues that the difficulty in applying the common carrier
model[13]
may prevent government from creating effective incentives for carriers
to provide ubiquitous access to the developing broadband digital telecommunication
infrastructure.[14]
{5} Common carriers have opportunities to, and legitimate
business reasons for pursuing non-common carrier markets. Even if it is
regulated as a common carrier for one line of business, an enterprise is
not precluded from pursuing ventures outside the scope of common carrier
regulation. However, the option of pursuing non-common carrier markets
should not impede government agencies from engaging in ongoing common carrier
regulation, because such entry may require structural and other regulatory
safeguards to ensure that new ventures do not adversely impact a company's
ongoing common carrier obligations.[15]
In short, the freedom to enter new markets under a different regulatory
status by itself should not exempt the enterprise from ongoing common carrier
regulation in previously-served markets.
{6} Government does need to refine the common carrier
model to eliminate aspects of "command and control" that create substantial
barriers to market entry and impede the ability of incumbents to compete.
But in refining the model to emphasize flexibility and reduced regulation
where possible, government should not render the core concept unsustainable
for existing and prospective services still warranting basic common carrier
regulation.
{7} Courts provide a key forum for determining whether and how changed circumstances support tinkering with the common carrier model. Recent cases include determinations of:
(1) local exchange carriers' First Amendment rights to diversify into cable television and information services;[16]
(2) the extent of liability applicable to on-line information services that have distributed allegedly defamatory[17]or copyright infringing material;[18]
(3) cable television operators' duties to carry broadcast television signals;[19] and
(4) the statutory and regulatory duties imposed on common carriers that the FCC can eliminate[20] as part of its deregulatory campaign to achieve a level competitive playing field among common carriers subject to different degrees of rate regulation, and between regulated common and unregulated private carriers.[21]
{8} Common carriers have recently acquired some
of the rights and responsibilities of private carriers, including the easily
invoked option of refusing carriage, and the duty to pre-qualify certain
"candidates" for carriage to determine that they will not disseminate obscenity,
make indecent content readily accessible to minors, or tarnish the reputation
of the carrier.[22]
Private carriers eagerly seek the immunity from civil and criminal liability
historically accorded common carriers, but wish to avoid the accompanying
regulatory oversight and duties to provide universal and non-discriminatory
service.[23]
The convergence of markets and technologies encourages both incumbents
and newcomers to object to any barriers to market entry.[24]
Non-common carriers have whittled away at regulations that reserved markets
to common carriers[25]
while common carriers have pursued legislative[26]
and judicial remedies[27]
to eliminate any barriers to their market entry and provision of other
types of telecommunication or information service even in markets where
they provide common carrier services.[28]
Market diversification by common carriers makes it difficult to sustain
divergent regulatory regimes and interpretations of First Amendment freedoms
dependent on the medium involved.[29]
Diversification also may prevent regulators from applying the common carrier
model to new technologies or services that warrant such government involvement,
because they involve a novel definition of basic telecommunications. Despite
the clamor for deregulation and open market entry, there is little support
for abandoning regulation of basic telecommunication services involving
the common carrier transmission of voice, data, and video programming generated
either by unaffiliated customers or corporate affiliates.
{9} A key challenge in telecommunication regulation
lies in balancing the need to retain essential common carrier regulation
(whether provided by a monopolist or under competitive conditions) with
the need to adjust to changing circumstances (e.g., evolving competition
and technological innovations). Incumbent common carriers claim that a
"level competitive playing field" can exist only if regulators abandon
common carrier obligations (e.g., filing tariffs),[30]
or reclassify some functions into private carriage (e.g., substituting
private contracts for public tariffs).[31]
These carriers have bolstered their economic and regulatory rationale with
First Amendment arguments that commercial speech rights prohibit government
foreclosure of market access.[32]
{10} By emphasizing First Amendment concerns, these
advocates want government decision-makers to view cross-ownership restrictions
(e.g., the ban on the common ownership of cable and telephone companies
in the same geographical area and other limits on market access) as an
infringement of the right to free and diverse speech. They assume the absence
of bottlenecks, essential facilities, and the lack of centralized gatekeepers
with the market power to affect the price or supply of service. If these
things do exist and impede competition or restrict the marketplace of ideas,
then content-neutral, narrowly drawn time, place, and manner restrictions
remain legitimate conditions. On the other hand, the government needs to
recognize that private carriers welcome any opportunity to capitalize on
an artificial competitive advantage created by the refusal of regulators,
legislators, and courts to modify traditional common carrier burdens placed
only on incumbent carriers.
{11} Much of the existing LEC infrastructure provides
the functionality needed to access either basic common carrier and enhanced,
private carrier services such as cable television and on-line information
services. LECs provide essential "first and last mile" services that link
customers (at their businesses or residences) with companies providing
long distance and information services. While proliferating access options
(e.g., satellite, wireless, and wireline terrestrial facilities) may abate
or eliminate bottleneck control, the vast majority of business and residential
subscribers to information and entertainment services currently rely on
a limited set of largely one-way channels for access to the mass media,[33]
and a single twisted wire pair (provided exclusively by an LEC) for access
to two-way voice and data services.
{12} The AT&T divestiture decree established
a market demarcation between local exchange and interexchange services.[34]
It also established a distinction between (1) permissible basic exchange
access and exchange telecommunications,[35]
and (2) other lines of business, like information and interexchange services.[36]
The FCC's Computer Inquiries have maintained a similar regulatory
distinction between basic services (which LECs provide on a common carrier
basis) and enhanced services (provided by LECs and competitors alike on
a private carrier basis). Both the Modification of Final Judgment (MFJ)
and the FCC's Computer Inquiries assume that LECs will operate as
common carriers, providing (a) essential building blocks for the enhancement
of plain vanilla transmission lines, and (b) access to and from users who
may have no other viable access option. Presumably, regulatory oversight
can ensure both the continuing non-discriminatory availability of basic
transmission capacity and a level competitive playing field between unaffiliated
private carriers and corporate affiliates securing basic transport.
{13} The opportunity to provide enhanced services (e.g., cable television and on-line information services) create the incentive for LECs to upgrade the telecommunication infrastructure's ability to support broadband, digital transmission streams. However, some industry observers have expressed concern that in the absence of rigorous common carrier regulatory oversight, LECs may ignore the primary task of improving ubiquitous, low-priced Plain Old Telephone Service (POTS), and instead concentrate on higher margin, Pretty Advanced New Stuff (PANS) targeted to "redlined" neighborhoods likely to generate a high subscription rate in view of ample discretionary income and prior purchases of required ancillary equipment like personal computers and modems.[37] When providing PANS, LECs typically do not incur the traditional common carrier duties of:
(1) providing non-discriminatory, universal access; and
(2) operating as a quasi-public enterprise offering "transparent" capacity, i.e., carriage of content selected by the subscriber.[38]
{14} A variety of new economic and legal rationales
allow common carriers to avoid providing non-discriminatory access to some
services. The FCC can simply decide that a particular activity constitutes
a non-common carrier activity, even if it involves signal transport (e.g.,
enhanced services) or provides ancillary functions (e.g., LEC billing and
collecting payment for services provided by an unaffiliated company that
also may use LEC common carrier services). Or a court may consider transport
services performed by a common carrier something other than common carriage.
Additionally, the Telecommunications Act of 1996 provides a powerful deregulatory
option allowing the FCC to "forbear from applying any regulation or any
provision of this Act" if the Commission declares that (a) enforcement
is unnecessary to ensure just and reasonable rates and practices, (b) enforcement
of such regulation is unnecessary to protect consumers, and (c) forbearance
is consistent with the public interest.[39]
{15} In Carlin Communications, Inc. v. Mountain States Telephone and Telegraph Co., the Ninth Circuit concluded that an LEC could refuse to carry all sexually-oriented audio programming, regardless of whether such programming constituted obscenity, or whether the carrier could provide transport services without liability.[40] The court drew a parallel to the adjudicated right of telephone companies operating as non-common carrier publishers of Yellow Page directories to refuse to carry a particular listing.[41] The court could draw such a parallel only if it equated Yellow Page advertising (a non-common carrier activity) with the transport of messages from one point to another (traditionally considered common carriage). The court made such a link by refusing to define the ability of local exchange telephone companies to deliver the same message simultaneously to thousands of subscribers as common carriage, stating:
[W]e question whether state public utility law in its traditional form makes sense as applied to Mountain Bell's 976 network. The technology of that network differs fundamentally from that of basic phone service. As pointed out above, individuals do not speak to each other on the 976 lines. Instead, "over 7,900 callers can be connected simultaneously to the same recorded message." Under these circumstances the telephone is serving as a medium by which Carlin broadcasts its messages. The phone company resembles less a common carrier than it does a small radio station.[42]
{16} In an increasing number of scenarios, common
carriers select where to provide service and whom to serve on variable,
market-based terms and conditions.[43]
Government officials have not fully come to grips with the consequences
of having a business enterprise that has historically been regulated as
a common carrier also operating in some market segments under a significantly
different regulatory and legal regime. Where content involves obscenity,
indecency, libel, defamation, or otherwise might render the carrier liable
for damages or fines, common carriers can assume the role of electronic
publishers free to determine the worthiness of material for carriage. Some
courts have extended the non-carrier, publisher status to carriers who
refuse to provide tariffed transport services to certain types of service
providers, based on the nature of the content. If the carrier can characterize
the service as public, even though content originates at one point and
disseminates to many in a closed network environment, then it can refuse
carriage on the grounds that providing service would adversely affect its
business.
{17} In Carlin Communications, the Ninth Circuit endorsed the view that a common carrier can avoid traditional common carrier responsibilities, even for tariffed services, if it can characterize the service as public, rather than private communications:
Once the telephone company becomes a medium for public rather than private communication, the fit of traditional common carrier law becomes much less snug. Arizona may, of course, decide to make the phone company operate the 976 network as a content-neutral public forum open to any and all speakers. We are very reluctant, however, to infer such a principle from traditional public utility law.[44]
{18} Professor Jerome A. Barron argues that "[b]usiness
judgment in these cases sounds suspiciously like editorial judgment,"[45]
a common right of broadcasters and newspaper publishers, but one that does
not accord with the traditional non-discrimination, neutral conduit definition
of common carriage.[46]
Professor Barron perceives "a disturbing willingness to grant exemptions
from the common carrier principle when that principle proves troublesome
to the carrier" - particularly in light of carriers' direct involvement
in information and video services."[47]
{19} Can LECs operate under different regulatory
regimes without abusing their increasingly ample discretion whether to
accept common carrier responsibilities? Will those common carriers qualified
to also operate as private carriers refrain from commingling costs or misallocating
investments for anticompetitive and predatory purposes, particularly in
view of the reluctance of the FCC to impose structural separation between
basic and enhanced corporate affiliates?[48]
The risk and consequences of anticompetitive or even well-intentioned,
but erroneous cost allocation grows more acute as LECs aggressively diversify.
In the quest for new profit centers and market access opportunities, the
LECs have successfully invoked a First Amendment publishers' right to access
markets and to use editorial discretion in determining how to serve them
profitably.
{20} Implicit in the willingness of courts and legislators to endorse non-common carriage in lieu of common carriage is the assumption that competition and low barriers to market entry will ensure ample capacity and a variety of speakers. Yet in the case of cable television, a non-common carrier function,[49] the Supreme Court rejected the view that cable television operators lack bottleneck or gatekeeper control. The Court held that quasi-common carrier, economic regulation was essential to safeguard the ongoing viability of broadcast television.[50] Even as it acknowledged that cable television operators have legitimate First Amendment rights, including editorial discretion in program selection and channel assignment, the Court endorsed the mandatory carriage of broadcast television signals to ensure a degree of program diversity and the opportunity for television broadcasters to reach audiences increasingly reliant on cable television bottleneck delivery:
When an individual subscribes to cable, the physical connection between the television set and the cable network gives the cable operator bottleneck, or gatekeeper, control over most (if not all) of the television programming that is channeled into the subscriber's home. Hence, simply by virtue of its ownership of the essential pathway for cable speech, a cable operator can prevent its subscribers from obtaining access to programming it chooses to exclude. A cable operator, unlike speakers in other media, can thus silence the voice of competing speakers with a mere flick of the switch.[51]
{21} The Turner case emphasized a functional analysis
of market access, rather than simply concluding that once having qualified
for non-common carrier status, cable television operators cannot be required
to perform any function analogous to common carriage. By extension, such
an analysis might confer some of the liability exculpation benefits of
common carriage in instances where private carriers operate in a manner
analogous to common carriage. Such flexible and incremental responses to
changed circumstances, like inchoate competition and technological innovations,
maintain the viability of the core models.
{22} For example, an incremental approach respecting
the common/private carrier dichotomy could support the ability of electronic
bulletin boards to provide a quasi-public forum for the expression of views
on a two-way interactive basis, with greater diversity and lower cost than
what it currently available.[52]
Electronic bulletin board systems operators and commercial information
service providers like CompuServe, Prodigy and America On-Line have a keen
interest in limiting or eliminating liability for what they carry. By serving
as an electronic forum, library, newsstand, or distributor,[53]
these companies can avoid having to monitor and censor the content of messages
carried over their networks, thereby creating an environment more conducive
to robust debate and generous contributions to the marketplace of ideas.[54]
They need not be reclassified as common carriers or vested with the rights
and responsibilities properly conferred on only bona fide common carriers
to avoid the risk of liability for defamation or serving as unintentional
conduits for the transmission of obscenity, indecency, or copyrighted material.[55]
{23} In Cubby, Inc. v. CompuServe, Inc., a court gladly exempted an on-line information services provider from liability by choosing a "hands-off" approach to content:
CompuServe has no more editorial control over such a publication than does a public library, book store, or newsstand, and it would be no more feasible for CompuServe to examine every publication it carriers for potentially defamatory statements than it would be for any distributor to do so . . ..
Technology is rapidly transforming the information industry. A computerized database is the functional equivalent of a more traditional news vendor . . . .[56]
{24} Such immunity did not accrue to a bulletin-board operator who chose to monitor the content of messages, thereby moving him closer to the private carrier role of editor. In Stratton Oakmont, Inc. v. Prodigy Services Co., a New York court held that the Prodigy commercial on-line information services company rendered itself liable for defamatory statements carried over one of its electronic bulletin boards, because it actively assumed the task of monitoring the messages and held itself out as exercising editorial control:
By actively utilizing technology and manpower to delete notes from its computer bulletin boards on the basis of offensiveness and "bad taste," for example, Prodigy is clearly making decisions as to content and such decisions constitute editorial control. . . . Based on the foregoing, this Court is compelled to conclude that for the purposes of Plaintiffs' claims in this action, Prodigy is a publisher rather than a distributor. . . . Prodigy's conscious choice, to gain the benefits of editorial control, has opened it up to a greater liability than CompuServe and other computer networks that make no such choice.[57]
{25} Congress has come to the rescue of private
carriers in search of quasi-common carrier insulation from liability while
at the same time retaining its private carrier/publisher status. The Telecommunications
Act of 1996 provides legal protection for "Good Samaritan" blocking and
screening of offensive material, defined as "any action voluntarily taken
in good faith to restrict access to or availability of material that the
provider or user considers to be obscene, lewd, lascivious, filthy, excessively
violent, harassing, or otherwise objectionable, whether or not such material
is constitutionally protected."[58]
{26} Congressional legislation has the ironic impact
of providing the same kind of insulation from liability for modern day
private carriers who monitor, censor, and restrict the flow of messages
that was available when common carriers of prior years operated as neutral,
transparent conduits. Prior legislation designed to protect minors from
indecent programming requires both modern day common carriers and their
private carrier competitors to exercise a degree of editorial control and
content review.[59]
{27} The Telecommunications Act of 1996 provides
local exchange carriers with three options when distributing video programming:
the local carrier can be (1) a cable television franchisee; 2) a common
carrier; or 3) a quasi-common carrier provider of an "Open Video System."[60]
When providing an Open Video System ("OVS"), the LEC must operate somewhat
like a common carrier: it must not discriminate unjustly or unreasonably,
and it must endeavor to make two-thirds of its capacity available to third
parties when demand outstrips capacity. However, it can avoid many non-common
carrier cable television regulations, including the need to obtain local
franchises or comply with rate regulation.
{28} Government tinkering with the common carrier model has made it all but impossible to apply core principles. This presents two significant problems:
(1) the telecommunication marketplace is not so competitive that the common carrier model should no longer apply to basic services like local and long distance services for residences and small businesses; and
(2) the FCC and reviewing courts are obligated to apply the common carrier model, absent liberalization of the responsibilities of common carriers set out in Title II of the Communications Act of 1934 (which the Congress did not undertake in its massive rewrite in 1996).[61]
{29} Common carriers do have First Amendment rights[62] and opportunities to operate in non-common carrier markets. However, such market diversification cannot diminish their ability to perform common carrier duties, or of regulatory agencies to perform legislatively mandated duties. For example, Comsat Corporation, the sole United States investor in the world's primary satellite cooperative, the International Telecommunications Satellite Organization (Intelsat), can pursue non-common carrier business ventures only to the extent that they do not impede its ability to meet responsibilities[63] established by the Communications Satellite Act of 1962:[64]
We believe that Comsat should not be foreclosed as a matter of policy from applying its corporate technology and expertise to the development of new lines of business which will result in public benefit. . . . However, notwithstanding prospective public benefits, Comsat's involvement in diversified lines of business raises significant public policy problems involving Comsat's continued ability to carry out its original statutory mission and fulfill the obligations and responsibilities associated with this mission. These problems are reflected within the four areas of concern which we have discussed in detail: (1) the scope of Comsat's authority as it relates to non-INTELSAT/INMARSAT lines of business; (2) conflict of interest and other related problems resulting from involvement in such activities; (3) competitive advantages in non-INTELSAT/INMARSAT markets, flowing from Comsat's unique status as the U.S. Signatory in INTELSAT and INMARSAT; and, (4) cross-subsidization and related problems resulting from the misallocation of common costs.[65]
{30} Comsat can pursue such diverse non common
carrier businesses as professional sports, hotel room video programming,
and satellite equipment manufacturing, provided the government agency with
regulatory authority can maintain effective oversight of Comsat's core,
common carrier business lines.
{31} Regulatory agencies and Congress typically
resort to structural separation between corporate subsidiaries involved
in core common carrier and non-common carrier ventures.[66]
Such segregation establishes a "bright line" of demarcation between common
carrier and non-common carrier activities. However, the FCC has grown reluctant
to use structural safeguards because of the real or perceived loss of benefits
from economies of scale provided by a single, consolidated company.[67]
{32} The FCC has proceeded with aggressive deregulation
of common carriers without regard to maintaining the common/private carrier
distinction. On several occasions, courts have rejected these FCC initiatives
as unilaterally abrogating statutorily mandated common carrier duties.
In a series of Competitive Carrier proceedings commencing in 1979[68]
the Commission sought to forbear from regulating an increasingly large
category of non-dominant carriers (i.e., carriers "not possessing the market
power necessary to sustain prices either unreasonably above or below costs").[69]
The Commission's rationale for substantial deregulation was that a strict
interpretation of Section 203(a) of the Communications Act would impose
unnecessary expense and burden on non-dominant carriers that could retard
service innovation, inhibit price competition, and facilitate collusion
among carriers.[70]
{33} Two portions of the FCC's forbearance policy
generated major appellate court reversals. In MCI Telecomms. Corp. v.
FCC, the D.C. Circuit found that the FCC acted arbitrarily and in violation
of its statutory authority when (in its Sixth Report and Order in the Competitive
Carrier proceeding) it required all carriers subject to regulatory
forbearance to cancel their filed tariffs within six months.[71]
The court ruled that the FCC's shift from permissive forbearance of the
tariff filing requirement for non-dominant carriers, to a prohibition on
tariff filing, violated the clear language of Section 203 requiring every
common carrier (except connecting carriers) to file tariffs. The court
stated that the FCC could use its discretion only to modify tariff filing
requirements and that a modification could not result in the "wholesale
abandonment or elimination of a requirement."[72]
{34} In 1992 the D.C. Court of Appeals considered the legality of the FCC's Fourth Report and Order in the Competitive Carrier proceeding in the context of whether the FCC could accord some carriers the option not to file tariffs at all. On the substantive issue of whether the FCC had properly interpreted Section 203 to grant such tariff filing flexibility, the court held that it "is simply not defensible in this court" to modify the clear requirements imposed by the Communications Act.[73] The court held that the FCC lacked authority to eliminate the tariff filing requirement for a class of carriers, on either a permissive or mandatory basis:
Whether detariffing is made mandatory, as in the Sixth Report, or simply permissive, as in the Fourth Report, carriers are, in either event, relieved of the obligation to file tariffs under section 203(a). That step exceeds the limited authority granted the Commission in Section 203(b) to "modify" requirements of the Act.[74]
While "understand[ing] fully why the FCC wants the flexibility to apply
the tariff provisions . . . differently"[75]
based on market power, the court had to apply the clear language in Section
203 of the Communications Act that makes no distinction between carrier
types for purposes of the tariff filing requirement.[76]
{35} Even though the FCC can argue that tariff filing by some common carriers is unnecessary and counterproductive, the Commission cannot unilaterally ignore Congressional directives: [77]
[O]ur estimations, and the Commission's estimations, of desirable policy cannot alter the meaning of the Federal Communications Act of 1934. For better or worse, the Act establishes a rate-regulation, filed-tariff system for common-carrier communications, and the Commission's desire "to 'increase competition' cannot provide [it] authority to alter the well-established statutory filed rate requirements." . . . "[S]uch considerations address themselves to Congress, not to the courts."[78]
{36} In Southwestern Bell Corp. v. FCC,
the D.C. Circuit vacated the FCC's order proposing to allow nondominant
carriers the option of filing a range of rates, instead of specific rates.[79]
In undertaking a statutory analysis, the court also deemed irrelevant whether
the law supports currently predominant economic policy. The court held
that Section 203(a), which requires every common carrier to file schedules
showing all charges, does not permit the FCC to allow some common carriers
to file a range of charges. The court referred to the clear language of
the Act and cases interpreting parallel provisions in the Interstate Commerce
Act, which served as the template for the Communications Act.
{37} The Telecommunications Act of 1996 now affords
the FCC the option of abandoning common carrier tariff filing requirements.
The Commission can accelerate its abandonment of regulations that maintain
a common carrier/private carrier dichotomy. Ironically, such abandonment
will make it harder for the FCC and state public utility commissions to
promote universal access to a broader array of services considered an essential
part of the national information infrastructure. The Act accords the FCC
discretion to abandon common carrier regulation at the same time that it
expands the definition of universal service and the obligations of all
carriers to promote or provide such access.[80]
{38} Congress, courts, and the FCC have worked
aggressively to revise, revamp, and rewrite the definition of common carriage.
In deregulating and liberalizing incumbent common carriers, they have created
a variety of new and fact-specific privileges, immunities, and options.
The straightforward model of common carriage has evaporated.
{39} Technological innovations and First Amendment
interpretations do not require abandonment of the common carrier model.
Rather than starting where the last reformation of common carriage left
off, policy makers and courts should return to the core concept of common
carriage.[81]
Proceeding from this core concept, they can respond to changed circumstances
and need, just as government frequently applies different time, place,
and manner restrictions to First Amendment rights as conditions change.
{40} Common carrier duties should continue to dominate
the corporate culture and practices of companies providing basic local
exchange telecommunication services. Government should permit non-common
carrier market entry only if such ventures are subordinate to the primary
common carrier mission, do not adversely affect the ability to perform
this mission, and are provided by separate subsidiaries. Likewise, government
should not accept bold assertions that infrastructure development can only
occur if the common carrier is allowed to load the expanded bandwidth with
content it created or acquired.
{41} The manner in which the FCC regulates Comsat
Corporation provides a blueprint for ensuring that a monopoly common carrier
serves the public interest even as it pursues a variety of private carrier
and non-communication markets. Comsat files tariffs, follows government
instructions on matters relating to INTELSAT and INMARSAT and does not
examine content generated by its customers. On those occasions the FCC
has considered it necessary to scrutinize the allocation of costs between
Comsat's common carriage and other activities, and the task has been made
easier by the structural separation between jurisdictional activities and
other ventures. Like most common carriers, Comsat does not desire these
structural safeguards or the burdens of common carriage. These restrictions
on its corporate flexibility, however, are a small price to pay for a preferential
position in the telecommunication marketplace, in Comsat's case, the opportunity
to serve as the exclusive wholesaler of INTELSAT and INMARSAT satellite
capacity.[82]
{42} Separating content and carriage may somewhat
impede the economic benefits of convergence and vertical integration. But
such separation ensures that the transporter of content will concentrate
on carriage without regard to content and without preoccupation with finding
ways to target and serve new profit centers in programming markets. The
United States needs such dedication to improving the telecommunication
infrastructure and building networks as a function of demand. Where a business
enterprise pursues both content and carriage markets without structural
safeguards, it may shape network expansion plans to capture current demand
for certain types of content, rather than build to meet the nation's diverse,
future telecommunication requirements.
{43} Visions of a National Information Infrastructure
contemplate universal access[83]
to a network capable of handing large digital bitstreams supporting countless
applications. Providers of the underlying facilities providing bit transport
need to concentrate on upgrading networks rather than determining how network
deployment can favor their non-common carrier market forays. The NII completes
the migration from a narrowband, primarily point-to-point telecommunication
network, to a diverse system capable of providing services that some consider
broadcasting, or at least outside the realm of conventional common carriage.
Yet the very common carrier functions that have promoted universal service
and cost averaging may be necessary to secure universal access to an even
more robust and expensive array of common carrier services and facilities.
{44} At the very least, the carriers responsible for building the first and last mile access to the NII should not have the opportunity to pursue programming interests in derogation of the traditional view that such operators not discriminate, engage in unreasonable practices, or favor corporate affiliates. The common carrier model creates these requirements, and it remains incumbent on regulatory agencies to enforce them.