From: "E. ALLEN SMITH" <EALLENSMITH@ocelot.Rutgers.EDU>
Date: Mon, 13 May 1996 18:18:58 +0800
To: cypherpunks@toad.com
Subject: Administration letter vs ACTA petition
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From:	IN%"rre@weber.ucsd.edu" 12-MAY-1996 23:22:09.31
From: Phil Agre <pagre@weber.ucsd.edu>

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Date: Wed, 8 May 1996 21:13:48 -0400
From: "Thomas A. Kalil" <KALIL_T@a1.eop.gov>
To: Multiple recipients of list <com-priv@lists.psi.com>
Subject: Administration opposes ACTA petition


       
                                   May 8, 1996


The Honorable Reed Hundt
Chairman
Federal Communication Commission
Room 814
1919 M Street, N.W.
Washington D.C. 20554

                                   Re: RM 8775

Dear Chairman Hundt:

     This letter addresses the petition for rulemaking filed before the
Commission by America's Carriers Telecommunication Association (ACTA) in
March 1996.  ACTA asks the Commission to:  (1) order Internet software
providers to "immediately stop their unauthorized provisioning of
telecommunications software"; 2)  confirm the Commission's authority over
interstate and international telecommunications services offered over the
Internet; and 3) institute rules to govern the use of the Internet for
providing telecommunications services.

     On behalf of the Administration, NTIA strongly urges the Commission
to deny the ACTA Petition.  The Petition not only mischaracterizes the
existing law, but also reflects a fundamental misunderstanding of the way
in which the Internet operates and of the services now making use of the
Internet.

     ACTA requests that the Commission stop firms such as the Respondents
from selling software 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 Petition at i]. ACTA asserts that
such firms are common carrier providers of telecommunications services
that should not be allowed to operate without first obtaining a
certificate from the Commission [ACTA Petition at 6-7].

     That argument is wrong.  The Respondents provide their customers with
goods, not services.  Although the software that those firms sell does
enable individuals to originate voice communications, all of the actions
needed to initiate such communications are performed by the software
users, rather than the vendors.  At no time do the Respondents engage in
the "transmission" of information, which, according to the
Telecommunications Act of 1996, is the sine qua non of both a
telecommunications service and a telecommunications carrier. [See
Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat.  56, 3(a)
amending Section 153 of the Communications Act of 1934 to add new
definitions of "telecommunications,"  "telecommunications service," and


"telecommunications carrier."] In that critical sense, the Respondents are
no more providing telecommunications services than are the vendors of the
telephone handsets, fax machines, and other customer premises equipment
that make communications possible.
     ACTA also asks the Commission for a declaratory ruling "confirming
its authority over interstate and international telecommunications
services using the Internet." [ACTA Petition at 6.  While ACTA claims the
Commission has jurisdiction to regulate the Internet pursuant to Section 1
of the Communications Act, citing United States v. Southwestern Cable Co.,
392 U.S. 157 (1968), ACTA also acknowledges that such jurisdiction is
limited to actions ancillary to the effective performance of its specific
responsibilities under other parts of the Act.  Id. at 5,7-8.  ACTA
suggests that unregulated growth of the Internet presents "unfair
competition" to Title II regulated interexchange carriers that "could, if
left unchecked, eventually create serious economic hardship on all
existing participants in the long distance marketplace" and could be
"detrimental to the health of the nation's telecommunications industry and
the maintenance of the nation's telecommunications infrastructure."  Id.
at 4, 5. Voice telephony via the Internet, however, is still a limited and
cumbersome capability:  both parties to the call need computers and must
have compatible software.  Moreover, there is no assurance that a call
placed will be completed or not interrupted.  While the technology
involved may improve rapidly, presently there is no credible evidence to
justify Commission regulation of the Internet.] In fact, as the Federal
Networking Council pointed out in comments filed on May 4, there are no
telecommunications services currently being offered via the Internet.  The
services that now involve the Internet are more likely to be "enhanced,"
or information services over which the Commission has disclaimed
jurisdiction under the Communications Act.  The Commission decision in the
1980's not to regulate enhanced services was a wise one that has conferred
substantial benefits on American consumers.  The Telecommunications Act of
1996 in no way requires a change in that decision.

     The Internet now connects more than 10 million computers, tens of
millions of users, and is growing at a rate of 10-15 percent a month.
This growth has created opportunities for entrepreneurs to develop new
services and applications such as videoconferencing, multicasting,
electronic payments, networked virtual reality, and intelligent agents.
Perhaps more importantly, it creates a growing number of opportunities for
consumers to identify new communication and information needs and to meet
those needs.  The Commission should not risk stifling the growth and use
of this vibrant technology in order to prevent some undemonstrated harm to
long distance service providers.  If Internet-based services eventually
develop to an extent that raises concerns about harm to consumers or the
public interest, the Commission would have ample time to more fully
address the issue.  Now is not that time.

     NTIA, therefore, urges the Commission to reject the ACTA petition
without delay.



                                   Larry Irving




                                   Assistant Secretary for
                                   Communications and Information

cc:  The Honorable James H. Quello
     The Honorable Rachelle B. Chong
     The Honorable Susan Ness