CIS 361 Data Communications and Networks

Chapter 2: External Influences on Telecommunications in the Enterprise



This chapter introduces the impact of laws and regulation on telecommunications. The objectives important to this chapter are:

  • describe major forces changing telecommunications
  • understand the history of regulation in the United States
The history of telecommunications in the United States is different from most other countries. In the U.S., the industry is dominated by private companies, combining into systems. In most other countries it it run by a branch of the government.

There are reasons that an industry of this sort would benefit from laws and regulation. Some are discussed on page 52:

  1. To ensure compatibility between systems in different localities.
  2. To protect companies that might not make a profit in areas of low customer density.
  3. To prevent interference with the signals on a given medium.
  4. To provide a common carrier, a set of cables that might be used by multiple companies.

On page 53, you see a chart of the major legal events affecting telecommunications in the U.S. These events are described on the following pages. To summarize a few:

  • 1910, the Mann-Elkins Act created the Interstate Commerce Commission to oversee the many competitive communications companies.
  • 1913, the Kingsbury Commitment was an agreement that allowed AT&T to grow in spite of government worries about monopoly
  • 1921, the Graham Act exempted the telecommunications industry from antitrust action
  • 1934, the Communications Act of 1934 created the FCC to oversee communications and create tariffs
  • 1948, the Hush-a-Phone case gave a third party the legal right to attach their products to phone equipment
  • 1949 and 1956, the AT&T Consent Decree limited Bell to telephone business, not computers.
  • 1968, the Carterfone decision allowed third parties to make and sell phones for use with existing networks.
  • 1969, the MCI Decision allowed new companies to transmit intercity communications
  • 1971, the Open Skies Policy said that any company could enter the satellite communications business.
  • 1982, the Bell System was broken up into the seven Regional Bell Operating Companies
This history has been a series of swings toward and away from regulation. More regulation has meant more competition, while less regulation has meant more approval of certain monopolies. Sometimes a monopoly is a good thing, such as in the case of a public utility.

On page 68, you see a list of the RBOCs, as created by the ruling of Judge Green. The book notes that this list of seven is obsolete, as NYNEX and Bell Atlantic have reunited. In fact, Pacific Telesys and Southwestern Bell have reunited as well, taking us to a list of five. SBC (the parent company of Southwest Bell and Pacific Telesys) is in the process of merging with Ameritech, which will take the list to four. Any bets on the date for one?

As a guide to reading this chapter, check the vocabulary list on page 76. You should have an idea what each term in the list means.