FCC Requests Comments on Whether § 271 InterLATA Services Includes Information Services

(November 16, 2000) The FCC issued a request for comments on whether the term "interLATA services" as used in Section 271 of the Communications Act includes "information services". Regional Bells want to provide information services across LATA boundaries without first satisfying the FCC that they have complied with the Section 271 checklist. The issue also goes to the FCC's power to regulate Internet services.

The Federal Communications Commission (FCC) issued its Public Notice titled "Comments Requested in Connection with Court Remand of Non-Accounting Safeguards Order" on November 15.

Section 271 is a key provision of the 1996 Telecom Act's scheme to promote competition in local telephone service. It prevents RBOCs from providing interLATA (long distance) telephone service until the FCC has determined that they have opened up their facilities to their telecommunications competitors.

The FCC has only just begun to grant such permissions. The RBOCs now do not want § 271 to prevent them from providing interLATA data services. The FCC determined in its 1996 Non-Accounting Safeguards Order that "interLATA services" includes information services.

Bell Atlantic (now Verizon) and USWest (now Qwest) filed a Petition for Review in the U.S. Court of Appeals for the District of Columbia Circuit seeking to overturn that part of the Order. On October 27, at the request of the FCC, the Court of Appeals remanded the matter to the FCC for the purpose of conducting this inquiry.

The RBOCs have also lobbied Congress to pass legislation to provide them this interLATA data relief. Many Members of Congress support them, and have introduced legislation to provide this result. For example, HR 2420, the Internet Freedom and Broadband Deployment Act of 1999, is sponsored by over half of the House.

Opponents of this legislation argue that the RBOCs will eventually migrate most of their services from old fashioned PSTN telecommunications services, to Internet protocol, and thus make an "end run" around Section 271.

This matter specifically addresses the ability of the RBOCs, including Verizon, BellSouth, and SBC, to offer information services across LATA boundaries. However, this matter more generally goes to the FCC's ability to expand its regulatory authority over old economy telephone services to new economy information services.

The Communications Act defines "information services," which include Internet services, as "a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications." The Act also defines "telecommunications" as "the transmission ... of information of the user’s choosing, without change in the form or content of the information as sent and received." See, 47 U.S.C. § 153.

Section 271 prevents the RBOCs from providing "interLATA services" without permission from the FCC. It further defines "interLATA services" as "telecommunications" between LATAs.

Hence, the RBOCs argued in their brief for the Court of Appeals that "information services" are different from, and not a part of, either "telecommunications" or "interLATA services". Furthermore, the RBOCs argue, the part of the FCC's Order that concluded that "interLATA services" includes "information services" violates the statute, and should be vacated by the Court of Appeals.

The RBOCs summarized their argument as follows:

Although the 1996 Act plainly declares that "the term 'interLATA service' means telecommunications" between points in two different LATAs, the FCC interpreted that term in the Non-Accounting Safeguards Order to subsume "information services." But under the 1996 Act, as the Commission correctly determined in its 1997 Universal Service Order and its 1998 Report to Congress, "telecommunications" and "information services" are mutually exclusive categories. "Telecommunications" is limited by definition to the transmission of information without change in form or content. In contrast, an "information service," provided "via telecommunications," necessarily alters the format of the transmitted information. There is no hint in the 1996 Act that Congress expected the categories of telecommunications and information services to be anything other than mutually exclusive. Consequently, as the Commission made clear in its Report to Congress, information service providers do not provide telecommunications; they use telecommunications. Because an "information service" cannot qualify as "telecommunications," neither can it qualify as an "interLATA service."