"Unofficial" copy of ACTA Petition
from the Federal Communications Commission
BEFORE THE
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554
In the Matter of
THE PROVISION OF INTERSTATE AND
INTERNATIONAL INTEREXCHANGE
TELECOMMUNICATIONS SERVICE VIA THE
"INTERNET" BY NON-TARIFFED, UNCERTIFIED
ENTITIES
AMERICA'S CARRIERS TELECOMMUNICATION
ASSOCIATION ("ACTA"),
Petitioner
PETITION FOR DECLARATORY RULING,
SPECIAL RELIEF, AND
INSTITUTION OF RULEMAKING AGAINST:
VocalTec, Inc.; Internet Telephone
Company; Third Planet Publishing Inc.;
Camelot Corporation; Quarterdeck
Corporation; and Other Providers
of Non-tariiffed, and Uncertified
Interexchange Telecommunications
Services,
Respondents.
To the Commission:
SUMMARY OF FILING
America's Carriers Telecommunication Association ("ACTA"), a
trade association of interexchange telecommunications companies,
submits this Petition for Declaratory Ruling, for Special Relief,
and for Institution of Rulemaking Proceedings. This petition
concerns a new technology: a computer software product that
enables a computer with Internet access to be used as a long
distance telephone, carrying voice transmissions, at virtually no
charge for the call.
ACTA submits that the providers of this software are tele-
communications carriers and, as such, should be subject to FCC
regulation like all telecommunications cations carriers. ACTA also
submits that the FCC has the authority to regulate the Internet.
ACTA submits that it is not in the public interest to permit
long distance service to be given away, depriving those who must
maintain the telecommunications infrastructure of the revenue to
do so, and nor is it in the public interest for these select
telecommunications carriers to operate outside the regulatory
requirements applicable to all other carriers.
ACTA asks the Commission to issue a declaratory ruling
confirming its authority over interstate and international
telecommunications services using the Internet.
ACTA asks the Commission, as special relief. to order the
Respondents to immediately stop their unauthorized provisioning
of telecommunications services pending their compliance with 47
U.S.C. Sections 203 and 214. and in order to give the Commission time
for appropriate rulemaking.
ACTA asks the Commission to institute rulemaking to govern
the use of the Internet for providing telecommunications ser-
vices.
PETITION FOR DECLARATORY RULING,
SPECIAL RELIEF, AND INSTITUTION OF RULEMAKING
America's Carriers Telecommunication Association ("ACTA").
by its attorneys, submits this Petition for Declaratory Ruling,
for Special Relief, and for Institution of Rulemaking Proceed-
ings. In support of this petition, the following is shown.
STANDING
ACTA is a national trade association of competitive
interexchange, non-dominant telecommunications companies. Its
members provide interexchange telecommunications services on an
intrastate, interstate and international basis to the public at
large.
Some of its members also act as underlying (or wholesale)
carriers providing network facilities, equipment and service to
other member carriers which permits telecommunications services
to be resold to the public. Other ACTA members supply facilities
and equipment to member and non-member wholesale and resale
carriers.
ACTA's carrier members must be certificated and tariffed
before the FCC and most state regulatory commissions in order to
render their telecommunications service to the public. In
addition, ACTA carrier members are subject to the requirements of
the Communications Act of 1934, as amended (the "Act"), and
various state laws and regulations which prohibit engaging in
unreasonable practices and/or unduly discriminatory conduct.
ACTA carrier members are required to pay, directly, or
indirectly, various fees and charges in order to render their
services to the public. Filing fees and annual fees are levied
by the FCC and most states.
In addition, the FCC and most states require interexchange
carriers to assess and collect from the using public specific
charges to support various regulatory policies and programs used
to sustain and advance national and state goals for telecommuni-
cations.
Entities, like those which are described hereinafter, which
do not comply with or operate subject to the same statutory and
regulatory requirements as ACTA's carrier members, distort the
economic and public interest environment in which ACTA carrier
members and nonmembers must operate. Continuing to allow such
entities to operate without complying with or being subject to
the same legal and regulatory requirements as ACTA carrier
members threatens the continued viability of ACTA's members and
their ability to serve the public and acquit their public inter-
est obligations under federal and state laws.
As the appointed representative of its members charged with
advancing their economic interests and assisting in achieving and
maintaining their legal and regulatory compliance, ACTA has
standing to file and prosecute these petitions.
STATEMENT OF FACTS AND BACKGROUND
A growing number of companies are selling software for the
specific purpose of allowing users of the Internet to make free
or next to free local, interexchange (intraLATA, interLATA) and
international telephone calls using the user's computer (Attach
ment 1). One of the Respondents, VocalTec, Inc., advertises the
ability of its software called "Internet Phone," to connect any
user of "Internet Phone" with any other user of "Internet Phone"
anywhere in the world. The software enables users to audibly
talk with one another in real-time. Respondents make a one-time
charge for the software, but users incur no other charges for
making local or long distance telephone calls to any other
"Internet Phone" user in the world (except for whatever the user
already pays monthly to whomever provides them Internet access).
ASSERTION AND ENFORCEMENT OF JURISDICTION
ACTA submits that it is incumbent upon the Commission to
exercise jurisdiction over the use of the Internet for unregu-
lated interstate and international telecommunications services.
As a first step, ACTA submits that the Commission may deem it
appropriate to issue a declaratory ruling officially establishing
its interest in and authority over interstate and international
telecommunications services using the Internet.
Secondly, ACTA submits that the Commission has an obliga
tion, heightened by the recent enactment of the Telecommunica-
tions Act of 1996, to address on a focused basis the on-going,
unregulated and unauthorized provisioning of telecommunications
services. The Commission should, as special relief, issue an
order to the Respondents to immediately stop arranging for,
implementing, and marketing non-tariffed, uncertified telecommu-
nications services without complying with applicable provisions
of the Act, particularly Sections 203 and 214, codified at 47
U.S.C. Sections 203 and 214.
Further, ACTA submits that it is incumbent upon the Commis-
sion to examine and adopt rules, policies and regulations govern
ing the uses of the Internet for the provisioning of telecommuni-
cations services. The use of the Internet to provide telecommu-
nications services has an impact on the traditional means,
methods, systems, providers, and users of telecommunications
services. The unfair competition created by the current unregu-
lated bypass of the traditional means by which long distance
services are sold could, if left unchecked, eventually create
serious economic hardship on all existing participants in the
long distance marketplace and the public which is served by those
participants. Ignored, such unregulated operations will rapidly
grow and create a far more significant and difficult to control
"private" operational enclave of telecommu nications providers
and users. Such development will clearly be detrimental to the
health of the nation's telecommunications industry and the
maintenance of the nation's telecommunications infrastructure.
ARGUMENT
Commission's Authority to Regulate the Internet. ACTA
submits that the Commission has the authority to regulate the
Internet under the provisions of 47 U.S.C. Section 151, which created
the Commission:
[for the purpose of regulating interstate and foreign
commerce in communication by wire and radio so as to make avail
able, so far as possible, to all the people of the United States
a rapid, efficient, Nation-wide, and world-wide wire and radio
communication service with adequate facilities at reasonable
charges, for the purpose of the national defense. for the purpose
of promoting safety of life and property, through the use of wire
and radio communication. . . .
The Internet is a unique form of wire communication. It is a
resource whose benefits are still being explored and whose value
is not fully realized. Its capacity is not, however, infinite.
The misuse of the Internet as a way to bypass the traditional
means of obtaining long distance service could result in a
significant reduction of the Internet's ability to handle the
customary types of Internet traffic. The Commission has histori-
cally protected the public interest by allocating finite communi-
cations resources/frequencies and organizing communications
traffic. ACTA submits that here also it would be in the public
interest for the Commission to define the type of permissible
communications which may be effected over the Internet.
Commission's Authority to Regulate Respondents as Interstate
Telecommunications Carriers. ACTA submits that by both estab-
lished precedents defining "common carriage" or public utility"
type of operations for purposes of regulatory jurisdiction, and
by statutory enactment, the Respondents, as purveyors of Internet
long distance services, are interstate telecommunications carri-
ers, subject to federal regulation. Section 3 of the new
"Telecommunications Act of 1996," Pub. L. No. 104-104, 110
Stat. 56 (1996), to be codified at 47 U.S.C. Section 153, includes the
following definitions:
(48) Telecommunications.--The term "telecommunications"
means the transmission, between or among points specified by the
user, of informa tion of the user's choosing, without change in
the form or content of the information as sent and received.
(49) Telecommunications Carrier.--The term "telecommunica-
tions carrier" means any provider of telecommunications services,
except that such term does not include aggregators of telecommu-
nications services (as defined in section 226). A telecommunica-
tions carrier shall be treated as a common carrier under this Act
only to the extent that it is engaged in providing telecommunica-
tions services, except that the Commission shall determine
whether the provision of fixed and mobile satellite service shall
be treated as common carriage.
(51) Telecommunications Service.--The term "telecommunica-
tions service" means the offering of telecommunications for a fee
directly to the public, or to such classes of users as to be
effectively available directly to the public, regardless of the
facilities used.
It would appear that Respondents are currently operating without
having complied with the requirements of the Communications Act
of 1934, as amended, applicable to providing interstate and
international telecommunications services. e.g., Sections 203 and
213, codified at 47 U.S.C. Sections 203 and 214.
Case law also supports the Commission's authority to regu-
late the Respondents. In 1968, the Supreme Court was presented
the issue of the Commission's authority to regulate the cable
television industry, or CATV, then still in its infancy but
growing quickly. In United States v. Southwestern Cable Co.,
392 U.S. 157 (1968), the Supreme Court had to decide whether the
Federal Communications Commission 1) had the authority under the
Communications Act of 1934, as amended, to regulate CATV systems,
a new technology and therefore not specifically discussed in the
Act, and 2) if the Commission had such authority, whether it also
had the authority to issue the particular prohibitory order that
it had: one designed generally to preserve the status quo pending
further investigation and proceedings, and not issued pursuant to
the cease and desist rules of Section 312 of the Act (47 U.S.C.
Section 312).
The Supreme Court answered both questions in the affirma-
tive. The Supreme Court stated that "the [Federal Communications]
Commission has reasonably concluded that regulatory authority
over CATV [was] imperative if it [was] to perform with appropri-
ate effectiveness certain of its other responsibil ities." Id. at
173. At that time, cable television characteristically neither
produced its own programming nor paid producers or broadcasters
for use of the programming which CATV redistributed. Id. at 162.
The Court noted the Commission's concern that competition by CATV
might destroy or degrade the service offered by local broadcast
ers and exacerbate the financial difficulties of UHF and educa-
tional television broadcasters.
Commission's Authority to Grant Special Relief to Maintain
the Status Quo. With regard to the procedural issue, the Court
in Southwestern Cable upheld the authority of the Commission to
issue an order maintain the status quo. The argument was made
that the Commission could only issue prohibitory orders under the
Act's Section 312 cease and desist provisions which, the Court
assumed without finding, were only proper after a hearing or the
waiver of the right to a hearing. The Court rejected that
argument. stating:
The Commission's order was thus not, in form or function, a
cease-and- desist order that must issue under Sections 312(b),
(c). The Commission has acknowledged that, in this area of rapid
and significant change, there may be situations in which its
generalized regulations are inadequate, and special or additional
forms of relief are imperative. It has found that the present
case may prove to be such a situation, and that the public
interest demands "interim relief limiting further expansion,"
pending hearings to determine appropriate Commission action.
Such orders do not exceed the Commission's authority. This Court
has recognized that "the administrative process [must] possess
sufficient flexibility to adjust itself' to the "dynamic aspects
of radio transmission," F. C. C. v. Pottsville Broadcasting Co.,
supra, at 138, and that it was precisely for that reason that
Congress declined to "stereotype the powers of the Commission to
specific details......... National Broadcasting Co. v. United
States, supra, at 219.
The Commission should take the same action in 1996 with regard to
the new technology of long distance calling via Internet as it
did thirty years ago in 1966 with regard to the then-new technol-
ogy of cable television: grant special relief to maintain the
status quo so that it might carefully consider what rules are
required to best protect the public interest and to carry out Its
statutory duties.
Other Issues Necessitating the Commission's Regulation of
Long Distance via the Internet. The Commission has a duty to
oversee and effect the Telecommunications Act of 1996 as well as
its long-standing duties under 47 U.S.C. Section 151. The Commission
should take action in order to preserve fair competition and the
health of the Nation's telecommunications industry. Absent a
healthy industry, with users paying telecommunications companies
a fair price for telecommunica tions services, the Commission's
duty to effectively promote universal service cannot be achieved.
Absent action by the Commission, the new technology could be used
to circumvent restrictions traditionally found in tariffs con
cerning unlawful uses, such as gambling, obscenity, prostitution,
drug traffic, and other illegal acts.
INFORMATION REGARDING RESPONDENTS
ACTA does not possess a listing of all the companies provid
ing free long distance calls via computer software. However,
Attachment I contains some information regarding the following
Internet telephone software companies and products:
a. Company: VocalTec, Inc.
157 Veterans Drive
Northvale, NJ 07647
Telephone: (201) 768-9400
Product: Internet Phone
Distributors: VocalTec, Inc.; and
Ventana Communications Group
Research Triangle Park, NC
b. Company: Internet Telephone Company
Boca Raton, FL
Telephone (407) 989-8503
Product: WebPhone
c. Company: Third Planet Publishing Inc.
a division of Camelot Corporation
Product: Digiphone
d. Company: Quarterdeck Corporation
13160 Mindanao Way, 3rd Floor
Marina Del Ray, CA 90292
Telephone (310) 309-3700
Product: WebTalk
e. Company: Unknown
Product: CyberPhone
CONCLUSION
Permitting long distance service to be given away is not in
the public interest. Therefore, ACTA urges the Federal Communi-
cations Commission ("the Commission") to exercise its jurisdic-
tion in this matter and: issue a declaratory ruling establishing
its authority over interstate and international telecommuni-
cations services using the Internet; grant special relief to
maintain the status quo by immediately stop the sale of this
software; and institute rulemaking proceedings defining permissi-
ble communications over the Internet.
Respectfully submitted,
AMERICA'S CARRIERS
TELECOMMUNICATIONS ASSOCIATION
Charles H. Helein
General Counsel
Of Counsel:
Helein & Associates, P.C.
8180 Greensboro Drive
Suite 700
McLean, Virginia 22102
(703) 714-1300 (Telephone)
(703) 714-1330 (Facsimile)
Dated: March 4, 1995
Footnotes:
1 47 U.S.C. 201 et seq.
2 The user must hook up a microphone to his computer and
either a headset or speakers.
3 ACTA asserts that Respondents are also intrastate
telecommunications carriers, subject to regulation by state
public utility commissions.
4 The Commission had ordered that respondents, a cable
company, generally restrict their carriage of Los Angeles signals
to areas served by them on February 14, 1966, pending hearings to
determine whether the carriage of such signals into San Diego
contravened the public interest. The order did not prohibit the
addition of new subscribers within areas served by respon dents
on February 15, 1966; it did not prevent service to other sub
scribers who began receiving service or who submitted an ac-
cepted subscription request" between February 15, 1966, and the
date of the Commission's order; and it did not preclude the
carriage of San Diego and Tijuana, Mexico, signals to subscribers
in new areas of service. United States v. Southwestern
Cable Co., 392 U.S. 157, 180 (1968).
5 Id. a