The Telecommunications Act of 1996: Tackling the Twists and Turns of Technology

• Publication year: 1997
• Pages: 11
• Citation: Vol. 26 No. 1 Pg. 11

26 Colo.Law. 3 Colorado Lawyer 1997.

1997, January, Pg. 11. The Telecommunications Act of 1996: Tackling the Twists and Turns of Technology

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Vol. 26, No. 1, Pg. 3

The Colorado Lawyer
January 1997
Vol. 26, No. 1 [Page 11]

Articles

The Telecommunications Act of 1996: Tackling the Twists and Turns of Technology
by Norman B. Beecher

Norman B. Beecher is Counsel to the Greater Metro Cable Consortium, a joint agency of twenty-four local jurisdictions in the greater Denver area, Of Counsel to Becker Stowe &amp Lynch P.C., and operates a private practice specializing in communications, public finance, and local government law

Progress is the exchange of one Nuisance for another Nuisance

Havelock Ellis, 1914

An apt analogy for the federal Telecommunications Act of 1996 ("1996 Act")1 springs from the industry it intends to liberate: since its passage, it has become the modern model of interactive legislation. Signed by President Clinton on February 8, 1996, the Act was immediately touted in the national press as the first thorough rewrite of communications law in more than sixty years and widely anticipated to be the genesis of a new era in the information revolution. It also was one of the first pieces of federal legislation to be available in official form on the Internet.

While ambitious in scope and certain to have a major impact on the way society shares information, the new law rests on partially resolved compromises among the various competing interests it attempts to arbitrate. Moreover, the Act's central provisions are open to interpretation, lacking the detail necessary to provide clear direction. The task of implementation was largely left to the Federal Communications Commission ("FCC"), an agency this Congress often maligns.

An early prediction that the law would lead to litigation of "Bosnian complexity"2 has, in large measure, been borne out. Several sections of the Act are in various stages of judicial review, actions contesting the constitutionality of some provisions have led to stays in enforcement, and competing interests are battling over interpretation of specific terms in courts all over the country.

Even though the FCC has successfully met most of the deadlines of the legislated implementation schedule, it has been beset with requests for rulings and interpretations, and some of the rules it has promulgated have already been challenged or suspended. Thus, while it may have been difficult when the law was first enacted to declare conclusively what each provision portended legally, it is now even more so.

Despite its interpretative difficulties, the 1996 Act will alter the ways we communicate and manage information as lawyers, and individuals, inside our offices and out, both with colleagues and clients. We may soon be accustomed to using daily services as unfamiliar now as the fax machine was in the early 1980s or the Internet just six years ago. Also, we may find ourselves buying services so differently packaged that they would hardly be recognizable today, and from sources we would never have imagined, such as high-speed Internet teleconferencing services from electric utilities. Clients involved in telecommunications, information technology, or their support industries, will want to know how the 1996 Act will affect their products. Other business clients will be struggling with the Act's impact on internal operations, since it will affect the way they do business.

This article reviews the Act's major impact in the context of existing law. However, this overview is, of necessity, only a snapshot of the new legislation in the form passed and in its current stage of evolution. Telecommunications law is continually changing, which seems peculiarly appropriate since it covers a group of industries that contain the fastest-growing companies3 in the United States and products that double in capacity in a matter of months.

A BRIEF HISTORY OF TELECOMMUNICATIONS LAW

As technology has evolved over most of this century, the colliding needs of competing communications industries have often led to legislative gridlock. Historically, the centerpiece of federal communications law was the Communications Act of 1934,4 a wide-ranging statute designed, in the words of its authors,

to make available, so far as possible, to all the people of the United States, a rapid, Nation-wide, and world-wide wire and radio communication service.5

Intervening enactments have been confined to minor tuneups; other legislative guideposts are few.

In 1984, a swiftly developing cable industry and battles between operators and local jurisdictions over public rights-of-way produced the Cable Communications Policy Act of 1984,6 which added Title VI to the 1934 Act. Then, in 1992, concerns regarding customer service, increasing cable dominance over broadcast networks, and rapidly rising cable service rates led to the Cable Television Consumer Protection and Competition Act of 1992.7 The 1992 Act was a result of the sole override of a veto by President Bush and a retreat from the 1984 Act, which was widely viewed as partial to cable interests. The 1992 Act extensively amended the 1984 Act's Title VI.

In addition to these changes to the 1934 Act, various court decisions and FCC regulations have circumscribed which companies may provide which telecommunications services, and where. For instance, the 1984 Cable Act protected cable operators by prohibiting telephone companies from providing video programming directly to subscribers in their telephone service areas. At the same time, the legislation limited the cable operators' ability to acquire broadcast stations.8 In the pivotal AT&T divestiture case,9 the long-distance telephone service business was separated from local exchange service, and the national telephone monopoly was divided into the seven Regional Bell Operating Companies ("RBOCs"), such as U.S. West and Bell Atlantic, with fixed service areas.

However, many such restrictions had begun to erode prior to the 1996 Act. The cross-ownership ban was found to be an unconstitutional infringement on the First Amendment rights of telephone companies in the Fourth and Ninth Circuits.10 Moreover, the FCC's so-called "Video Dialtone" regulations in 1993 established a mechanism by which telephone companies could provide programming in their service areas, if they opened their systems to other programmers.

Therefore, while the media statements of the 1996 Act's sponsors stake claim to new territory and herald the sweeping aside of inter-industry prohibitions, the somewhat belated effort to level the legal landscape by legislative fiat is really an outgrowth of developments in its subject industries. Rapidly converging technologies and responsive legal rulings already have made obselete many of the traditional legal distinctions between types of telecommunications offerings and companies.

Nonetheless, the 1996 Act is the most comprehensive and ambitious rewrite of the 1934 Act to date. Whether or not it will prove as far-reaching as its predecessor, it is certainly notable that, until this year, the fundamental premises of communications law had not changed significantly since before television, when the dominant media were radio and telegraph. Indeed, although many of the objectives of the 1996 Act have yet to be achieved, it seems likely that, as Bill Gates says of the Internet, ". . . people are overestimating where (it) will be in two years but underestimating where it will be in 10."11

OBJECTIVES AND STRUCTURE

The Purpose is Broadening Competition

The overall purpose of the 1996 Act is to provide for a pro-competitive, de-regulatory national policy framework designed to accelerate rapidly private sector deployment of advanced telecommunications and information technologies and services to all Americans by opening all telecommunications markets to competition.12

As the legislative history demonstrates, for most congressional sponsors perhaps the critical motivation was achieving competition in local telephone service. This impetus was further fueled by other desires:

1) The local telephone companies' (the RBOCs resulting from the AT&T breakup) desire to enter the long-distance and manufacturing market;

2) The long-distance companies' (e.g., AT&T, MCI and Sprint) and competitive access providers' (MFS, ICG) desire to obtain access to local exchanges; and

3) Cable television operators' yearning to find new sources of revenue in expanded local exchange services to maintain the income growth of cable's "golden age."

To achieve the objective of opening telecommunications markets, the Act sets out to eliminate legal barriers to intra- and inter-industry competition.

Formal Structure

The 1996 Act is structured, for the most part, as a rewrite of the 1934 Act, which initially included the following five titles: Title I created the FCC and set forth definitions, fees, and the basic system of federal regulation; Title II contained the critical provisions governing telephone and telegraph services; Title III addressed over-the-air services that ultimately came to include broadcast television; Title IV covered procedural and administrative provisions; and Title V covered enforcement. Sometime after cable television was born, the 1984 Cable Act added Title VI, entitled "Cable Communications."

The 1996 Act includes seven major titles: Title I "Telecommunications Services," mostly amends Title II of the 1934 Act. It contains critical provisions relating to local exchange competition (involving interconnection and universal service), and sets out the basis on which telephone companies may enter inter-LATA...