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Second Computer Inquiry, Amendment of Section 64.702 of the Commission's Rules and Regulations (Second Computer Inquiry): Tentative Decision, 72 F.C.C.2d 358 (1979), Final Decision, 77 F.C.C.2d 384 (1980), reconsideration, Memorandum Opinion and Order 84 F.C.C.2d 50 (1981), further reconsideration, Order on Further Reconsideration, 88 F.C.C.2d 512 (1981), aff'd sub nom. Computer and Comms. Indus. Ass'n. v. Federal Comm'ns Comm'n, 693 F.2d 198 (D.C. Cir. 1982) (full-text), cert. denied, 461 U.S. 938 (1983), aff'd on second further reconsideration, Memorandum Opinion and Order, 56 Rad. Reg. 2d (P&F) 301 (1984).


"Even as the Computer I rules were being implemented, technological developments rendered them nearly obsolete as it became harder to distinguish communications from data processing or computing. To respond to the confluence of technology in the offering of communications and data processing services and to give greater regulatory certainty than that afforded by a case-by-case review based on the nature of the processing performed, the Commission created a framework in Computer [Inquiry] II that defined and distinguished between 'basic services' and 'enhanced services.' It determined that enhanced services were not within the scope of its Title II jurisdiction but rather were within its ancillary jurisdiction under Title I.

"Pursuant to its ancillary jurisdiction, the Commission required facilities-based common carriers to provide the basic transmission services underlying their enhanced services on a nondiscriminatory basis pursuant to tariffs governed by Title II of the Act. These carriers thus offered the underlying basic service at the same prices, terms, and conditions, to all enhanced service providers, including their own enhanced services operations.

"For AT&T, which at the time owned the local BOCs, the Commission adopted additional measures. In particular, it determined that the same type of structural separation requirement imposed in Computer I (i.e., the requirement to offer enhanced services only through a separate corporate entity) was necessary to protect the ratepayers against being charged rates for regulated services that cross subsidized the parent corporation's competitive enhanced services operations. The Commission also determined that structural separation was necessary to protect the public against such anticompetitive activities as denial of access and predatory pricing by these 'monopoly telephone companies exercising significant market power on a broad geographic basis.' It concluded that other facilities-based carriers should not be subject to this 'maximum separation' requirement. In addition, in its Computer II Reconsideration Order, the Commission approved a process whereby parties could request waiver relief from the structural separation rules.

In its October 7, 1981, Decision on Further Reconsideration in Computer II, the FCC established a January 1, 1983, deadline for deregulating new customer-premises equipment and enhanced services, although it stated that carriers and regulators could carry out its order at an earlier date.

Customer-premises equipment offered by carriers on a regulated basis prior to January 1, 1983, generally referred to as 'embedded' customer-premises equipment, would continue to be regulated until the FCC had resolved various problems surrounding its deregulation, such as how its value should be determined and how it should be transferred out of regulated service.


  • In the Matters of Appropriate Framework for Broadband Access to the Internet Over Wireline Facilities, 20 FCC Rcd. 14853, 14867-69 (2005).

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