The following is an excerpt from an article The FCC and the Unregulation of the Internetby Jason Oxman, Counsel for Advanced Communications, Office of Plans and Policy of the Federal Communications Commission (July 1999; pages 14-16).
This information shows how one Federal Communications Commission “short order” (rulemaking or interpretation of a “rule”) changed the direction of telecommunications. Thomas Carter invented a wireless telephone that was able to interface with a hard-wired telephone. If the FCC had ruled the opposite in the Carterfone case, the entire wireless communications industry might not have been possible!
Competitive Customer Premises Equipment
At about the same time the [Federal Communications] Commission launched its first Computer Inquiry, it released a short order addressing the complaint of Thomas F. Carter and his company, the Carter Electronics Corporation, against AT&T. [Footnote: In the Matter of Use of the Carterfone Device in Message Toll Telephone Service, 13 FCC 2nd 420 (1968).]
In 1959, Carter invented a device (which he named for himself [the Carterfone]) that permitted users of mobile radio systems to interconnect their landline telephone with a radio system, to permit mobile and fixed users to communicate with each other. AT&T advised its customers that the Carterfone, if used in conjunction with an AT&T telephone, would subject the end user to penalties pursuant to AT&T’s FCC tariff number 132, which provided that: No equipment, apparatus, circuit or device not furnished by the telephone company shall be attached to or connected with the facilities furnished by the telephone company, whether physical, by induction, or otherwise...
Carter filed a private antitrust suit against AT&T, and the District Court referred the matter to the FCC.
The Commission concluded that AT&T’s tariff was unreasonable and discriminatory and ordered the restrictive tariff provisions stricken. The Commission was troubled by the tariff provision that would have permitted end users to install AT&T-manufactured equipment -with exactly the same functionality offered by the Carterfone- but not the Carterfone itself. The Commission determined that a customer desiring to improve the functionality of the telephone network by interconnecting a piece of equipment not manufactured by the phone company, should be permitted to do so, so long as that equipment does not harm the network.
The principle of consumer usage of non-telephone company manufactured equipment, with the public switched telephone network, outlined by the Commission in Carterfone, would be later codified as Part 68 of the FCC’s rules. Part 68 was first adopted in 1975 as part of the Commission’s WATS rulemaking [Proposals for New or Revised Classes of Interstate and Foreign Message Tolls Telephone Service (MTS) and Wide Area Telephone Service (WATS), 56 FCC 2d 593 (1975)].
Part 68 addresses connection of terminal equipment [telephones, answering machines, modems, etc. attached to the customer end of a telephone line] to the public telephone network and permits consumers to connect equipment from any source to the network, if such equipment fits within the parameters outlined (in Part 68).
Competitive manufacturers of equipment were able, by means of the Commission’s equipment registration and certification procedures, to build and deploy an incredible variety of voice and data equipment for use with the public network, without seeking prior permission from either the Commission, or more importantly, the monopoly telephone companies.
Through Carterfone and Part 68, the Commission opened the door to manufacturers of devices that interconnected with the telephone network and offered value-added services and capabilities. Most important for the growth and development of the Internet, the FCC’s deregulation of customers premises equipment, or CPE, cleared the way for the rapid deployment of the modem.
The modem allows any consumer with a computer and a telephone line to access data service, requiring no network alterations by the telephone company. Residential modem use, in turn, has driven the growth of the Internet applications, as consumer use of the Internet has increased. In fact, without Part 68, users of the public switched network would not have been able to connect their computers and modems to the network, and it is likely that the Internet would have been unable to develop.
As the application of Moore’s law to computer processing speeds witnessed an exponential growth in computing capabilities, the modem followed suit. [Moore’s law holds that the processing speed of computers doubles approx. every 18 months. The “law” is named for Gordon Moore, a co-founder of Intel.]
Analog modem speeds rose from 300 baud to 28.8 kilobits/second, and then to today’s nearly standard 56 kilobits/second. [Note that very few 56 kbps modem users actually attain such a high speed in actual usage].
Digital modems and codecs [Modem= modulator/demodulator; Codec= coder/decoder], using such technologies as digital subscriber line (DSL), promise multiple increases in speed that will create demand for even more innovative Internet-based resources and tools. As a result, consumers will continue to be exposed to an endless variety of Internet-based applications that met their increased band capabilities.
The Carterfone decision enabled consumers to purchase modems from countless sources, to install and use the modem without permission from the telephone company, and to use those modems to take advantage of an array of data services offered by a diverse assortment of service providers over their home telephone service.
Without easy and inexpensive consumer access to modems, the Internet would not have become the global medium that it is today.
- This article is reproduced with permission from the author, Jason Oxman.
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