Cybertelecom
Federal Internet Law & Policy
An Educational Project

Bundling: CPE & Basic Service

Computer Inquiries
- Computer I
- Computer II
- - Computer II Ref
- Computer III
- - Computer III Ref
- Information Service / ESP
- Timeline
- Net over Cable
- Net over DSL
- Net over Wireless
- Layered Model Regulation
- Access Charges
- Accounting
- Bundling
- - CPE
- - Info Services
- CPNI
- Network Info Disclosure
- Enforcement
- Notes
- Network Neutrality
- Common Carriage
- Broadband

Customer Premises Equipment (ie., modems)

The CPE bundling rule was eliminated on March 31, 2001. In re Policy And Rules Concerning The Interstate, Interexchange Marketplace/Implementation Of Section 254(G) Of The Communications Act Of 1934, As Amended/In 1998 Biennial Review -- Review Of Customer Premises Equipment And Enhanced Services Unbundling Rules In the Interexchange, Exchange Access and Local Exchange Markets, CC Docket No. 98-183; CC Docket No. 96-61, Report and Order (March 31, 2001). The new rule reads:

Except as otherwise ordered by the Commission, the carrier provision of customer premises equipment used in conjunction with the interstate telecommunications network may be offered in combination with the provision of common carrier communications services, except that the customer premises equipment shall not be offered on a tariffed basis.

47 CFR 64.702(e).

Eliminated Rule: Promulgated as a part of Computer II, the Commission’s bundling rules apply to all carriers all the time. These rules prohibit carriers from bundling customer premises equipment (i.e., modems ) with the provision of telecommunications services. See In re Review Of Customer Premises Equipment And Enhanced Services Unbundling Rules In the Interexchange, Exchange Access and Local Exchange Markets, CC Docket No. 98-183; CC Docket No. 96-61, Notice of Proposed Rulemaking (October 9, 1998) .

47 C.F.R. § 64.702(e):

Except as otherwise ordered by the Commission, after March 1, 1982, the carrier provision of customer-premises equipment used in conjunction with the interstate telecommunications network shall be separate and distinct from provision of common carrier communications services and not offered on a tariffed basis.

The rationale for the old rule were as follows:

Our action today is only another in a series of steps to isolate terminal from transmission offerings, increase consumer choice, and to open equipment markets to full and fair competition. By striking down carrier-imposed restrictions on requiring equipment interconnection over a decade ago, we foreclosed carriers from offering only the single option of end-to-end communications service. In implementing a registration program applicable both to carrier provided and customer provided equipment, we sought to isolate the technical standards for transmission and terminal offerings and assure competitive parity among all suppliers of customer provided equipment. In the same manner, in today requiring equipment to be made available to interstate users on a cost-based non-usage sensitive basis with equipment investment fully isolated from transmission investment and from the separations process we hope to strengthen further the prospects for comparing competitive equipment offerings in the market. [Computer II Final Decision para 180]

Basic and Enhanced Services

All “carriers that own common carrier transmission facilities and provide enhanced services must unbundle basic from enhanced services and offer transmission capacity to other enhanced service providers under the same tariffed terms and conditions under which they provide such services to their own enhanced service operations.” In re Amendment of Section 64.702 of the Commission's Rules and Regulations (Second Computer Inquiry), Docket No. 20828, Final Decision, 77 FCC 2d 384, 231 (May 2, 1980); Frame Relay, para. 13. See also In re Review Of Customer Premises Equipment And Enhanced Services Unbundling Rules In the Interexchange, Exchange Access and Local Exchange Markets, CC Docket No. 98-183; CC Docket No. 96-61, Notice of Proposed Rulemaking, para 33 (October 9, 1998) .

Note that this requirement is currently the subject of several open proceedings. The FCC has asked whether this unbundling obligation should be expanded from coverage of “enhanced services” to include all “information services.” Computer III FNPRM 1998, supra note 33, 42. The FCC has also asked whether this obligation ought to be removed in the context of “interstate, domestic, interexchange services offered by non dominant interexchange carriers. See In re Review Of Customer Premises Equipment And Enhanced Services Unbundling Rules In the Interexchange, Exchange Access and Local Exchange Markets, CC Docket No. 98-183; CC Docket No. 96-61, Notice of Proposed Rulemaking, para 35 (October 9, 1998).

Federal Regulatory Activity

CC Docket No. 98-183; CC Docket No. 96-61

Policy And Rules Concerning The Interstate, Interexchange Marketplace/Implementation Of Section 254(G) Of The Communications Act Of 1934, As Amended/In 1998 Biennial Review -- Review Of Customer Premises Equipment And Enhanced Services Unbundling Rules In the Interexchange, Exchange Access and Local Exchange Markets

Express your views! Comments can be filed with the FCC's Electronic Comment Filing System (remember the Docket Number) FAQ: How to participate in FCC Proceedings.

In this proceeding, we eliminate the bundling restriction, adopted in the Commission's Computer II proceeding, that limits the ability of common carriers to offer consumers bundled packages of telecommunications services and customer premises equipment (CPE) at a discounted price. We also clarify that under our rules, all facilities-based carriers may offer bundled packages of enhanced services and basic telecommunications at a single price, subject to existing safeguards. Our decision furthers the three goals that we identified in the Further Notice of Proposed Rulemaking in this docket: it will benefit consumers by enabling them to take advantage of innovative and attractive packages of services and equipment; foster increased competition in the markets for CPE, enhanced, and telecommunications services; and allow us to repeal regulatory requirements that no longer make sense in light of current technological, market, and legal conditions. Moreover, the actions we take in this order further Congress' directive in the Telecommunications Act of 1996 Act (1996 Act) that we repeal or modify any regulation we determine to be no longer in the public interest.

Report and Order 03/31/01 Text | Word

Copies of Comments can be viewed on the FCC's Electronic Comment Filing System (remember the docket number)

Further Notice of Proposed Rulemaking Text. Released: 10/13/1998. Comment period closed 12/23/1998

In the Matter of Furnishing of Customer Premises Equipment by the Bell Operating Telephone Companies and the Independent Telephone Companies CC Docket No. 86-79 ORDER 3 FCC Rcd. 412 Adopted: December 29, 1987; Released: December 30, 1987
In the Matter of Furnishing of Customer Premises Equipment by the Bell Operating Telephone Companies and the Independent Telephone Companies CC Docket 86-79 MEMORANDUM OPINION AND ORDER ON RECONSIDERATION 3 FCC Rcd. 22 Adopted: December 15, 1987; Released: December 17, 1987
Public Notice COMMENT CYCLE ESTABLISHED REGARDING NTIA PETITION FOR DECLARATORY RULING THAT THE PROVISION OF INFORMATION SERVICES BY THE BOCS IS IN THE PUBLIC INTEREST DA 87-1726 Released: December 1, 1987
In the Matter of Furnishing of Customer Premises Equipment by the Bell Operating Telephone Companies and the Independent Telephone Companies Petition of the Bell Atlantic Telephone Companies for Interim Joint Marketing Relief MM Docket No. 86-79 MEMORANDUM OPINION AND ORDER 2 FCC Rcd. 2107 April 10, 1987
In the Matter of Furnishing of Customer Premises Equipment and Enhanced Services by American Telephone & Telegraph Company CC Docket 85-26 MEMORANDUM OPINION AND ORDER 2 FCC Rcd. 1214 February 26, 1987
In the Matter of Furnishing of Customer Premises Equipment by the Bell Operating Telephone Companies and the Independent Telephone Companies CC Docket No. 86-79 REPORT AND ORDER 2 FCC Rcd. 143 January 12, 1987

Notes

Basic Requirement: Transmission service must be offered separately from information service.
77 FCC 2d 384, 475 (1980); 16 RCC Rcd 7418 para 39 (2001); 47 CFR s 64.702
Description:
Facilities-based common carriers must offer to competitive ISPs underlying transmission capacity on the same terms and conditions as to affiliated ISPs

Transport separate from content; no content control

Requirement is grounded in Title II, Section 202; FCC's resale requirements also mandate that wireline common carriers provide telecom services to competitors (60 FCC2d 261 (1976); 83 FCC 2d 167 (1980))

Common Carriers may provide information services through a separate corporate entity.
Basic Requirement: Unbundling of basic service
Description
The BOC must offer basic transmission service separately from the information service under tariff (ie same as Computer II rule above)

Also, basic service features of transmission service used by carriers ISP must also be offered separately and pursuant to tariff

Ensured that an ISP can purchase the underlying telecom services
104 FCC 2d 958, 1036, 1040 (1986); 14 FCC Rcd 4289, 4298 (1999)
- Ex Parte Presentation of Earthlink, MCI and AOLTW, Summary of FCC's Computer Inquiry Requirements, CC Docket Nos 02-33, 95-30, 98-10 (April 30, 2003)

Papers

David Alan Nall, Cable Television Subscriber Equipment: Lessons from the Common Carrier Experience 46 FCLJ