Order Code RL32589
CRS Report for Congress
Received through the CRS Web
The Federal Communications Commission:
Current Structure and its Role in the
Changing Telecommunications Landscape
Updated June 9, 2005
Patricia Moloney Figliola
Specialist in Telecommunications and Internet Policy
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress

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The Federal Communications Commission: Current
Structure and its Role in the Changing
Telecommunications Landscape
Summary

The Federal Communications Commission (FCC) is an independent Federal
agency directly responsible to Congress. It was established by the Communications
Act of 1934 (1934 Act) and is charged with regulating interstate and international
communications by radio, television, wire, satellite, and cable. The mission of the
FCC is to ensure that the American people have available — at reasonable cost and
without discrimination — rapid, efficient, nation- and world-wide communication
services; whether by radio, television, wire, satellite, or cable.
The agency is organized by function and is composed of six bureaus and 11
offices. This current structure was established in 2002 as part of the agency’s effort
to better reflect the industries it regulates. The bureaus process applications for
licenses and other filings, analyze complaints, conduct investigations, develop and
implement regulatory policies and programs, and participate in hearings, among other
things. The offices provide support services. Bureaus and offices often collaborate
and share expertise in addressing FCC issues.
The FCC is funded through the Science, State, Justice, Commerce (House) and
Commerce, Justice, Science (Senate) appropriations process as a single line item. On
June 7, 2005, the House Appropriations Committee approved a budget of $290
million, $9 million more than the FY2005 spending level, but $14 million less than
requested in the President's budget. The Senate has yet to consider its version of the
bill, which may contain a different funding level for the commission.
Although the FCC has restructured over the past few years to better reflect the
industry, it is still required to adhere to the statutory requirements of its governing
legislation, the Communications Act of 1934. The 1934 Act requires the FCC to
regulate the various industry sectors differently. Some policymakers have been
critical of the FCC and the manner in which it regulates various sectors of the
telecommunications industry — telephone, cable television, radio and television
broadcasting, and some aspects of the Internet. These policymakers, including some
in Congress, have long called for varying degrees and types of reform to the FCC.
Most proposals fall into two categories: (1) procedural changes made within the FCC
or through Congressional action that would affect the agency’s operations or (2)
substantive policy changes requiring Congressional action that would affect how the
agency regulates different services and industry sectors.
The evolution towards converged services and the increase in industry
consolidation have contributed to a contentious telecommunications policy
environment. The substantive changes to the 1934 Act that may be needed to enable
the FCC to regulate most effectively could remain difficult to achieve. However, the
FCC, without such a congressional mandate for change, may find it difficult to
conduct its work under the restrictions of the 1934 Act. This report will be updated
as needed.

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Contents
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
FCC Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
FCC Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
FCC Strategic Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Broadband . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Spectrum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Homeland Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
FCC Modernization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Potential Procedural Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Adoption/Release of Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Sunshine Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Timeliness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Potential Substantive Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
The Changing Telecommunications Landscape:
The Challenge to Congress and the FCC of New Technologies, Services,
and Providers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Convergence and its Impact on the Regulatory Environment . . . . . . . . . . . 10
VoIP and Convergence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Other Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
FCC-Related Congressional Action:
109th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Hearings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Additional Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
List of Figures
Figure 1. Structure of the Federal Communications Commission . . . . . . . . . . . . 3
List of Tables
Table 1: FCC Appropriations, FY1999-2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

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The Federal Communications Commission:
Current Structure and its Role in the
Changing Telecommunications Landscape
Background
The Federal Communications Commission (FCC) is an independent Federal
agency directly responsible to Congress. It was established by the Communications
Act of 1934 (1934 Act or “Communications Act)1 and is charged with regulating
interstate and international communications by radio, television, wire, satellite, and
cable.2 The mission of the FCC is to ensure that the American people have available,
“without discrimination on the basis of race, color, religion, national origin, or sex,
a rapid, efficient, Nationwide, and worldwide wire and radio communication service
with adequate facilities at reasonable charges.”3
The 1934 Act is divided into titles and sections that describe various powers and
concerns of the Commission:4
! Title I — FCC administration and powers. The 1934 Act originally
called for a commission consisting of seven members, but that
number was reduced to five in 1983. Commissioners are appointed
1 The Communications Act of 1934, 47 U.S.C. §151 et seq., has been amended numerous
times, most significantly in recent years by the Telecommunications Act of 1996, PL 104-
104, 110 Stat. 56 (1996). References in this report are to the 1934 Act, as amended, unless
indicated. A compendium of communications-related laws is available from the House
Committee on Energy and Commerce at [http://energycommerce.house.gov/108/
pubs/108-D.pdf]. It includes selected Acts within the jurisdiction of the Committee,
including the Communications Act of 1934, Telecommunications Act of 1996,
Communications Satellite Act of 1962, National Telecommunications and Information
Administration Organizations Act, Telephone Disclosure and Dispute Resolution Act,
Communications Assistance for Law Enforcement Act, as well as additional
communications statutes and selected provisions from the United States Code. The
compendium was last amended on December 31, 2002.
2 See About the FCC, available online at [http://www.fcc.gov/aboutus.html].
3 47 U.S.C. §151.
4 When Congress established the FCC in 1934, it merged responsibilities previously
assigned to the Federal Radio Commission, the Interstate Commerce Commission, and the
Postmaster General into a single agency, divided into three bureaus, Broadcast, Telegraph,
and Telephone. See Analysis of the Federal Communications Commission, Fritz Messere,
available online at [http://www.oswego.edu/~messere/FCC1.html] and the Museum of
Broadcast Communications Archive at [http://www.museum.tv/archives/etv/F/htmlF/
federalcommu/federalcommu.htm] for additional information on the history of the FCC.

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CRS-2
by the President and approved by the Senate to serve five-year terms;
the President designates one member to serve as chairman. No more
than three commissioners may come from the political party of the
President. Title I empowers the Commission to create divisions or
bureaus responsible for specific work assigned and to structure itself
as it chooses.
! Title II — Common carrier regulation, primarily telephone
regulation, including circuit-switched telephone services offered by
cable companies. Common carriers are communication companies
that provide facilities for transmission but do not originate messages,
such as telephone and microwave providers. The 1934 Act limits
FCC regulation to interstate and international common carriers,
although a joint federal-state board coordinates regulation between
the FCC and state regulatory commissions.
! Title III — Broadcast station requirements. Much existing broadcast
regulation was established prior to 1934 by the Federal Radio
Commission and most provisions of the Radio Act of 1927 were
subsumed into Title III of the 1934 Act. Sections 303-307 define
many of the powers given to the FCC with respect to broadcasting;
other sections define limitations placed upon it. For example, section
326 of Title III prevents the FCC from exercising censorship over
broadcast stations. Also, parts of the U.S. code are linked to the
Communications Act. For example, 18 U.S.C. 464 makes obscene
or indecent language over a broadcast station illegal.
! Title IV — Procedural and administrative provisions, such as
hearings, joint boards, judicial review of the FCC’s orders, petitions,
and inquiries.
! Title V — Penal provisions and forfeitures, such as violations of
rules and regulations.
! Title VI — Cable communications, such as the use of cable channels
and cable ownership restrictions, franchising, and video
programming services provided by telephone companies.
! Title VII — Miscellaneous provisions and powers, such as war
powers of the President, closed captioning of public service
announcements, and telecommunications development fund.
FCC Structure
The FCC is organized by function and is composed of six bureaus and 11 offices
(See Figure 1, p. 3). This current structure was established in 2002 as part of the
agency’s effort to better reflect the industries it regulates. The bureaus process
applications for licenses and other filings, analyze complaints, conduct
investigations, develop and implement regulatory programs, and participate in

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CRS-3
hearings, among other things. The offices provide support services. Bureaus and
offices often collaborate when addressing FCC issues.5
Figure 1. Structure of the Federal Communications Commission
Source: About the FCC: A Consumer Guide to Our Organization, Functions, and Procedures.
Available online at [http://hraunfoss.fcc.gov/edocs_public/attachmatch/ DOC-229127A1.pdf].
The Bureaus hold the following responsibilities:
! Wireline Competition Bureau — Administers the FCC’s policies
concerning common carriers — the companies that provide long
distance and local service to consumers and businesses. These
companies provide services such as voice, data, and other
telecommunication transmission services.
! Enforcement Bureau — Enforces FCC rules, orders, and
authorizations.
! Wireless Telecommunications Bureau — Handles all FCC domestic
wireless telecommunications programs and policies.6 Wireless
communications services include cellular, paging, personal
5 FCC Fact Sheet, available online at [http://www.fcc.gov/cgb/consumerfacts
/aboutfcc.html].
6 Except those involving satellite communications broadcasting, including licensing,
enforcement, and regulatory functions. These functions are handled by the International
Bureau.

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CRS-4
communications services, public safety, and other commercial and
private radio services. This bureau also is responsible for
implementing the competitive bidding authority for spectrum
auctions.
! Media Bureau — Develops, recommends, and administers the policy
and licensing programs relating to electronic media, including cable
television, broadcast television and radio in the United States and its
territories.
! Consumer & Governmental Affairs Bureau — Addresses all types
of consumer-related matters from answering questions and
responding to consumer complaints to distributing consumer
education materials.
! International Bureau — Administers the FCC’s international
telecommunications policies and obligations.
The only FCC office that conducts regulatory proceedings is the Office of
Engineering and Technology, which advises the FCC on engineering matters.
However, the Office of Administrative Law Judges also conducts hearings and issues
initial decisions. Other offices are the Office of Communication Business
Opportunities, Office of the General Counsel, Office of the Inspector General, Office
of Legislative Affairs, Office of the Managing Director, Office of Media Relations,
Office of Strategic Planning and Policy Analysis, Office of the Secretary, and Office
of Workplace Diversity.7
FCC Budget
The FCC is funded as a single line item8 through the Science, State, Justice,
Commerce appropriations process in the House and the Commerce, Justice, Science
appropriations process in the Senate. The direct appropriation to the Commission is
significantly less than its budget because the FCC derives most of its funding through
regulatory fees.
The FCC is funded through the Science, State, Justice, Commerce (House)
and Commerce, Justice, Science (Senate) appropriations process as a single line
item. On June 7, 2005, the House Appropriations Committee approved a budget of
$290 million, $9 million more than the FY2005 spending level, but $14 million less
than requested in the President's budget. The Senate has yet to consider its version
of the bill, which may contain a different funding level for the commission. The FCC
obtains the majority of its funding through the collection of regulatory fees pursuant
7 Responsibilities of each of the offices is detailed online at the FCC website at
[http://www.fcc.gov/aboutus.html].
8 For update-to-date status on the FCC section of the yearly Commerce-Justice-State
Appropriations bill, see [http://www.congress.gov/brbk/ html/apcjs64.html].

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CRS-5
to Title I, section 9 of the Communications Act of 1934; therefore, its direct
appropriation is considerably less than its overall budget.9
Table 1 lists the total appropriation, direct appropriation, and regulatory fees
offset for FY1999-2005.
Table 1: FCC Appropriations, FY1999-2005
$ in Millions
Fiscal
Total
Direct
Regulatory Fees
Year
Appropriation
Appropriation
Offset
Requested
Enacted
Requested
Enacted
Requested
Enacted
Actual
1999
212.9
192.0
40.4
19.5
172.5
172.5
172.5
2000
230.8
209.9
45.1
24.1
185.8
185.8
185.8
2001
237.1
230.0
37.0
29.9
200.1
200.1
200.1
2002
248.5
245.1
29.8
26.3
218.8
218.8
218.8
2003
278.1
271.0
29.9
2.0
248.2
269.0
265.7
2004
280.1
274.0
28.8
1.0
251.9
273.0
pending
2005
293.0
281.1
20.0
1.0
273.0
280.1
N/A
Note: This table was compiled using figures provided by the FCC Office of Legislative
Affairs.
FCC Strategic Plan
In 2003, the FCC adopted a five-year strategic plan promoting six goals relating
to broadband, competition, spectrum, media, homeland security, and FCC
modernization. The statutory authority under which the FCC has adopted these goals
is listed in brackets after the description of each.10
Broadband
Establish regulatory policies that promote competition, innovation, and
investment in broadband services and facilities while monitoring progress toward the
deployment of broadband services in the United States and abroad. [47 U.S.C. §157
and note]11
9 A full discussion of the status of the FCC budget is available online at
[http://www.congress.gov/brbk/html/apcjs64.html].
10 FCC Strategic Plan, FY2003-FY2008. The Strategic Plan is also a good general reference
for the background, mission, and general goals of the FCC. The plan is available online at
[http://www.fcc.gov/omd/strategicplan/].
11 FCC Strategic Plan, FY2003-FY2008, p. 5.

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Competition
Support the Nation’s economy by ensuring that there is a comprehensive and
sound competitive framework for communications services. Such a framework
should foster innovation and offer consumers meaningful choice in services. Such a
pro-competitive framework should be promoted domestically and overseas. [47
U.S.C. §§251, 253, 254, 271, and 309(j)]12
Spectrum
Encourage the highest and best use of spectrum domestically and internationally
in order to encourage the growth and rapid deployment of innovative and efficient
communications technologies and services. [47 U.S.C. §§301 and 303(g)]13
Media
Revise media regulations so that media ownership rules promote competition
and diversity in a comprehensive, legally sustainable manner and facilitate the
mandated migration to digital modes of delivery. [47 U.S.C. §§307(b) and 336;
Telecommunications Act of 1996 §202(h)]14
Homeland Security
Provide leadership in evaluating and strengthening the Nation’s communications
infrastructure, in ensuring rapid restoration of that infrastructure in the event of
disruption, and in ensuring that essential public health and safety personnel have
effective communications services available to them in emergency situations. [47
U.S. C. §§151, 337, and 606]15
FCC Modernization
Emphasize performance and results through excellent management. Develop
and retain independent mission critical expertise and align the FCC with the dynamic
communications markets. [47 U.S.C. §155(a)]
Potential Procedural Changes
A number of proposals for change at the FCC focus on procedural changes to
the manner in which the agency conducts its business. Some of these changes would
require new legislation (e.g., Sunshine rules), while others could be achieved through
internal FCC action.
12 Ibid.
13 Ibid.
14 Ibid.
15 Ibid.

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Adoption/Release of Orders
The FCC often adopts orders and issues press releases with a summary of the
order weeks or even months prior to releasing the order itself. For example, the
Triennial Review, which dealt with controversial issues relating to competition in the
local telecommunications market, and the 800 MHz order, which dealt with
controversial and technically complicated issues related to interference to public
safety communications, were released six months and one month, respectively, after
they were officially adopted by the Commission. Some congressional policymakers
have discussed instituting a “shot clock,” which would require the FCC to issue the
actual order within a set time frame after it adopts the order and issues a press
release.
Sunshine Rules
Under current “sunshine laws,”16 only two commissioners may meet outside the
construct of an official “open meeting.” While such a requirement, in theory,
promotes open discussion of issues under consideration, in reality, most Commission
business is conducted by circulating drafts of orders for comment. Further, the open
meeting requirement may actually hinder discussion among the commissioners,
especially in cases where the disagreement on the draft is significant. In such cases,
it might be possible for further compromise if a third or fourth commissioner could
be involved in the discussion. While the FCC cannot institute such changes without
Congressional amendment to current sunshine requirements, it could be useful to
study how other agencies, which do not employ circulation as much as the FCC,
work through contentious issues on their agendas. Senator Ted Stevens, Chairman
of the Senate Committee on Commerce, Science, and Transportation, has stated that
he believes the current sunshine requirements “push too much power to the staff, and
it does not allow more than two commissioners to be in the same room at one time.
. . it really is the sunshine law gone awry."17
Timeliness
Some of the basic work of the FCC affects the every day function of the
telecommunication industry (e.g., license transfers for mergers and sales and license
16 The Government in the Sunshine Act, PL 94-409, was passed in 1976. It requires that all
federal agencies with units that work independently of each other hold their meetings in
public session. The bill explicitly defined meetings as essentially any gathering. Many
federal agencies, most notably the independent regulatory agencies, including the FCC, are
headed by multiple commissioners. These agencies make most of their decisions through
discussions and voting by the board or commission members. This law was created so that
these meetings would be in the public domain for all to review. Additional information on
this law is available online at [http://www.everything2.com/index.pl?node_id=1161139].
17 "Stevens to Continue Listening Sessions, But Sees Telecommunications Bill by July,"
Daily Report for Executives, No. 51, March 17, 2005, Page A-1. This article is available
o n l i n e a t [ h t t p : / / i p p u b s . b n a . c o m / I P / B N A / d e r . n s f / S e a r c h A l l V i e w /
96C56942C092C93B85256FC70014F11F?Open&highlight=FCC,SUNSHINE].

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renewals). Some policymakers have expressed concern that these processes take too
long to complete. Similar to views concerning more complicated regulatory actions
such as rulemaking proceedings, these policymakers believe there should be a strict
time limit on how long these actions may take to complete. Such time limits, they
state, would provide further operational certainty within the industry.
Enforcement
Enforcement of agency rules is currently the responsibility of the FCC’s
Enforcement Bureau. Previously, enforcement responsibilities were held by a
division within each bureau. For example, enforcement of slamming was done by
a division within what was then the Common Carrier Bureau (now called the
Wireline Competition Bureau). Some policymakers have questioned whether the
current “unified” structure is more effective than the previous “diversified” structure
and have suggested studying the issue.
Potential Substantive Changes
While some of the changes discussed above could be made by the FCC absent
Congressional action, other, more significant changes would most likely require the
passage of legislation. During the 108th Congress, a number of bills have been
introduced that address individual issues related to telecommunications regulation,
but no comprehensive bill has been introduced that would resolve the conflicts that
have lingered or the unforeseen conflicts that have developed since the passage of the
1996 Act. Key members of Congress have indicated that they may develop such
comprehensive legislation during the 109th Congress. If so, Congress may wish to
survey some of the current thinking on regulatory reform and sift through the various
views from different sectors of the industry.
A common theme in the discussion about new legislation is how to address the
issue of convergence. More specifically, the discussion centers on the concept of
“regulatory parity”: regulating services based on the service itself rather than by the
type of provider. One discussion of regulatory parity for converged services is
offered in “Parity Rules: Mapping Regulatory Treatment of Similar Services,” by
Sherille Ismail.18 In that article, the author — Senior Counsel of the FCC Office of
Strategic Planning and Policy Analysis — surveys a broad range of communications
services and concludes that although “regulatory parity may be a laudable goal, it is
not an easily achievable goal.” In particular, Ismail points out the difficulty in
achieving regulatory parity from a practical standpoint. He cites a number of reasons
that disparities may exist, such as if the disparity is (1) required by statute, (2) caused
by jurisdictional differences, or (3) due to a Commission rule or policy. Ismail
believes, however, that the most significant hurdle for regulatory parity is that
providers are “rarely so alike that they must be treated in exactly the same manner.”
He believes a “better approach would be to resolve the issues on the basis of specific
18 “Parity Rules: Mapping Regulatory Treatment of Similar Services,” by Sherille Ismail,
Federal Communications Law Journal, Vol. 56, no. 3, May 2004. The views expressed in
this article are those of the author and do not necessarily represent the views of the FCC or
any of its Commissioners or staff.

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CRS-9
rules or policies, rather than seek to eliminate alleged disparities.” However, while
some may support his conclusion, it leaves policymakers still searching for a new
model upon which to base new legislation and regulations.
One model that has emerged with respect to convergence is the “Network
Layers Model.” This model looks at different network functionalities as horizontal
layers and is based on the same general concepts as the International Standards
Organization’s Open Systems Interconnection model.19 A detailed overview of the
Network Layers Model and one method for implementing it from a policy standpoint
is proposed in a paper from MCI, “A Horizontal Leap Forward: Formulating a New
Public Policy Framework Based on the Network Layers Model,” by Richard S.
Whitt.20 Whitt advocates abandoning the legal silos that divide different industries,
technologies, and services in favor of a framework that largely “unregulates” the
upper layers of the model that deal with protocols, applications, and content, and
imposing minimal common carrier-like regulation at the bottom or physical layer.
For example, voice over Internet Protocol (VoIP), which will be discussed below,
would fall into the applications layer and would therefore, for the most part, not be
regulated. The physical layer, however, which the paper cites as digital subscriber
line (DSL) loops, cable facilities, and radio and television spectrum, would remain
subject to “light touch” regulation. Such regulation might include an open access
requirement or other safeguard until Congress or the FCC determines sufficient
competition exists to warrant loosening or eliminating that regulation.21
An opposing viewpoint concerning the regulation of the physical layer is
presented by Christopher S. Yoo, an associate professor of law at Vanderbilt
University. In his paper, “The Economics of Net Neutrality,” which was published
by the Progress & Freedom Foundation, the author argues that the physical layer of
the network should not be regulated.22 Yoo argues, in short, that regulating the
physical layer would result in less competition and investment at the physical layer
and, in the long run, harm competition. Another collection of essays critiquing
MCI’s application of the Network Layers Model is available from the New
Millennium Research Council.23
19 Information about the Open Systems Interconnection Model can be found online from
Cisco Systems at [http://www.cisco.com/univercd/cc/td/doc/cisintwk/ito_doc/introint.htm].
20 “A Horizontal Leap Forward: Formulating a New Public Policy Framework Based on the
Network Layers Model,” by Richard S. Whitt. Whitt is MCI’s Vice President of Federal
Law and Policy. The paper is available online at [http://global.mci.com/
about/publicpolicy/presentations/ horizontallayerswhitepaper.pdf].
21 While Whitt’s paper offers one possible layers-based model on which to base future
regulations, policymakers should assess the application of the model advocated in the paper
as the view from one segment of the telecommunications industry, the competitive
telecommunications and Internet sector.
22 “The Economics of Net Neutrality: Why the Physical Layer of the Internet Should Not
Be Regulated,” 2004, by Christopher S. Yoo. This paper is available online at
[http://www.pff.org/ issues-pubs/pops/pop11.11yoonetneutrality.pdf]
23 This paper is available online at [http://www.newmillenniumresearch.org/news
(continued...)

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The Changing Telecommunications Landscape:
The Challenge to Congress and the FCC of New
Technologies, Services, and Providers
In the past, different modes of communication, as well as the companies that
provided them, were easily distinguishable from one another. They could, therefore,
be easily regulated according to the strict definitions included in the 1934 Act. For
example, twenty years ago, “plain old telephone service” and cable television were
easily distinguishable from each other; it would have been almost impossible to
compare them. Today, however, communications services are evolving from an
analog world to a digital world. In that digital world, all bits look the same — they
are all 1s and 0s — whether they are voice or data.
Convergence and its Impact on the Regulatory Environment
In addition to blurring the distinctions between services, the move towards an
all-digital world has allowed service providers to expand their service offerings and
also allowed entirely new service provider categories to emerge. For example, a
consumer can now receive streaming video via DSL service provided by telephone
companies and voice service provided by cable companies, blurring the distinctions
between the two types of providers. Further, since 2001, the FCC has recognized
“broadband service providers” (BSPs) as a separate category of company. These
BSPs are defined as “newer firms that are building state-of-the-art facilities-based
networks to provide video, voice, and data services over a single network”;24 in short,
BSPs are able to provide “one-stop shopping” for consumers.
The evolution of the communications industry towards an all-digital world is
often referred to as “convergence.” While convergence has made distinguishing
among types of data increasingly difficult, the FCC must continue to differentiate
among services based on the distinctions drawn in the 1934 Act. Specifically, the
FCC regulates common carrier telecommunications services25 under Title II, cable
23 (...continued)
/071304_report.pdf]. The positions advocated in the Progress & Freedom Foundation
(PFF) and New Millennium Research Council (NMRC) papers present the view of a
different industry sector, the incumbent local exchange carriers (ILECS). The PFF receives
funding from the ILEC industry (among many others): the United States Telecom
Association (USTA), which is the trade group for the industry, SBC Communications, and
Verizon. The NMRC is the research arm of Issue Dynamics, Inc., which has clients that
include USTA and Verizon.
24 See In the Matter of Annual Assessment of the Status of Competition in the Market for
the Delivery of Video Programming, MB Docket No. 03-172, Tenth Annual Report, paras.
78-79. January 5, 2004. Available online at [http://hraunfoss.fcc.gov/edocs_public/
attachmatch/FCC-04-5A1.pdf].
25 The Communications Act of 1934 defines telecommunications as “the transmission,
between or among points specified by the user, of information of the user’s choosing,
without change in the form or content of the information as sent and received.” It defines
(continued...)

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CRS-11
services under Title VI, and information services26 under Title I.27 Some have
referred to this legal framework as the “silos” approach to regulation. Additionally,
under Title I, the FCC can forbear from regulating telecommunications services and
even eliminate regulations concerning such services that it determines are no longer
in the public interest through its biennial review process.
When all data looks the same and functionally similar services are provided by
companies governed by different titles of the 1934 Act, questions of fairness and
competitive advantage may arise. As newer technologies and services are developed
and deployed, applying legacy regulations to them may begin to appear more
strained.
VoIP and Convergence. Convergence has been driven in part by the
evolution towards services based on the Internet Protocol (IP), the set of rules
governing the applications and services that are delivered via the Internet. With
respect to IP-enabled services, the one with the most legal and regulatory impact may
be IP-based voice service, usually referred to as VoIP. While some might choose to
categorize VoIP as an unregulated Internet-based service in the same category as
email, others believe that it is a substitute for traditional voice telephony and should
be regulated as such. Further, policymakers must determine whether all regulatory
requirements should be imposed, including economic regulation, or whether only
social regulation, such as universal service and law enforcement access (CALEA) is
needed.
Although it may appear to be the same to the user, VoIP is quite different from
traditional, analog telephone service in that it does not employ a single, dedicated
path between the calling parties (called circuit switching). Instead, VoIP “translates”
analog voice into digital “packets” and transmits those packets along multiple paths
(called packet switching), finally reassembling the packets at the receiving end.28
This is the same format, or protocol, used to transmit email, instant messages, video,
and other data via the Internet. Thus, voice is no longer a separate service — voice
data looks just like every other kind of data. In short, VoIP functions like traditional
25 (...continued)
telecommunications service as “ 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.”
26 The Communications Act of 1934 defines information services as “the offering of a
capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing,
or making available information via telecommunications, and includes electronic publishing,
but does not include any use of any such capability for the management, control, or
operation of a telecommunications system or the management of a telecommunications
service.”
27 However, video services offered by telephone companies and telephony services offered
by cable companies are regulated under Titles VI and II, respectively.
28 The packets, once delivered, may be converted back into an analog signal or left in digital
form depending on the receiving party’s terminal equipment (i.e, a telephone, a computer,
etc.).

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CRS-12
voice service, but the voice data is transmitted digitally as bits, undistinguishable
from other data, such as email.
VoIP also may be offered by companies that are subject to different types of
regulation by the FCC, in accordance with the 1934 Act: telephone companies (via
DSL); cable companies (via cable modem); electricity companies (via broadband
over powerlines [BPL], including companies that may lease bandwidth capacity over
BPL, such as independent Internet service providers);29 and standalone VoIP
providers who provide service via various configurations of hardware and software.
This blurring of lines between voice and other types of data has raised many
policy questions relating to VoIP, including CALEA compliance, Enhanced 911
(E911), state versus federal jurisdiction over such calls, intercarrier compensation for
call termination on the public switched network, universal service, and taxation. As
the market develops, a tension may develop over whether new entrants should be
required to adhere to existing regulations, or perhaps how existing regulations should
be changed to better reflect the current technological and competitive environment.
Other Issues. In addition to convergence as an overarching catalyst of change
for both the communications industry and the FCC, other issues are also affecting the
industry and helping shape the agenda of the FCC, among them
! Promoting broadband services30
! Promoting telephone competition in local markets,31 including how
to maintain the universal service system and intercarrier
compensation
! Promoting video competition32
29 BPL is an emerging technology/service provided by electricity companies and is just
starting to be deployed commercially. BPL challenges traditional and embedded thinking
and paradigms about telecommunications and information services because it does not fit
neatly into an existing category of service — or service provider. It has the same
capabilities as DSL and cable modem service, but since it is a new service, the FCC has not
determined how it should be regulated. How the FCC chooses to regulate it will have a
significant impact on how the technology and service develops.
30 See CRS Issue Brief IB10045, Broadband Internet Access: Background and Issues, by
Angele A. Gilroy and Lennard G. Kruger; CRS Report RL32421, Broadband over
Powerlines: Regulatory and Policy Issues, by Patricia Figliola; CRS Report 98-67, Internet:
An Overview of Key Technology Policy Issues Affecting Its Use and Growth, by Marcia S.
Smith, John D. Moteff, Lennard G. Kruger, Glenn J. McLoughlin, and Jeffrey W. Seifert.
31 See CRS Report RL31938, Local Telephone Competition: A Brief Overview, by Angele
A. Gilroy.
32 See CRS Report RL32026, Market Dynamics and Public Policy Issues in the Video
Programming Industry, by Charles B. Goldfarb; CRS Report RL32027, Market Structure
of the Video Programming Industry and Emerging Public Policy Issues, by Charles B.
Goldfarb; CRS Report RL32116, Spanish Language Media After the Univision-Hispanic
(continued...)

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! Determining the applicability of legacy requirements (e.g., CALEA,
E911) on new technologies33
! Ensuring the availability of adequate spectrum for public safety and
emergency response34
! Assessing the impact of media consolidation35
! Assessing the impact of and possibly regulating violent and indecent
programming36
! Enhancing and promoting public safety wireless communications.37
Conclusion. Although the FCC has restructured over the past few years to
better reflect the industry, it is still required to adhere to the statutory requirements
of its governing legislation, the Communications Act of 1934. The 1934 Act requires
the FCC to regulate the various industry sectors differently, according to the title that
governs them. Title I of the 1934 Act gives the FCC the authority to structure itself
in the manner it believes will allow it to best fulfill its responsibilities; however, from
a practical standpoint, the FCC may not be able to restructure to the extent needed
to implement significant changes unless changes are made to the 1934 Act itself.
Some policymakers have been critical of the FCC and the manner in which it
regulates various sectors of the telecommunications industry — telephone, cable
television, radio and television broadcasting, and some aspects of the Internet. These
policymakers, including some in Congress, and various interest group and think tank
experts, have long called for varying degrees and types of reform to the FCC. Some
have called for significantly downsizing the agency by eliminating its regulatory
functions and transforming it into an enforcement agency.38 Others have suggested
32 (...continued)
Broadcasting Merger: Issues for Congress, by Charles B. Goldfarb.
33 See CRS Report RL30677, Digital Surveillance: The Communications Assistance for Law
Enforcement Act, by Patricia Figliola; CRS Report RS21222, Implementing Wireless
Enhanced 911: Issues for Public Safety Answering Points (PSAPs), by Linda K. Moore;
CRS Report RS21028, Emergency Communications: Wireless Enhanced 911 Issues Update,
by Linda K. Moore.
34 See CRS Report RL31375, Emergency Communications: Meeting Public Safety Spectrum
Needs, by Linda K. Moore.
35 See CRS Report RL31925, FCC Media Ownership Rules: Current Status and Issues for
Congress, by Charles B. Goldfarb.
36 See CRS Report RL32222, Regulation of Broadcast Indecency: Background and Legal
Analysis, by Angie A. Welborn and Henry Cohen.
37 See CRS Report RL32408, Spectrum Policy: Public Safety and Wireless Communications
Interference, by Linda K. Moore; CRS Report RL31375, Emergency Communications:
Meeting Public Safety Spectrum Needs, by Linda K. Moore.
38 See, for example, “How to Reform the FCC”, by Randolph J. May, June 21, 2004,
(continued...)

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CRS-14
abolishing the agency and parceling out its functions to other agencies.39 Others still
call for more regulation (e.g., indecency). Most proposals, however, fall into one of
two categories: (1) procedural changes made within the FCC or through
Congressional action (e.g., Sunshine rules) that would affect the agency’s day-to-day
operations or (2) substantive policy changes requiring Congressional action that
would affect how the agency regulates different services and industry sectors.
The evolution towards converged services and the increase in industry
consolidation (often across service boundaries) have contributed to a contentious
telecommunications policy environment. In such an environment, the substantive
changes to the 1934 Act that may enable the FCC to regulate most effectively could
remain difficult to achieve. However, the FCC, without such a congressional
mandate for change, may find it increasingly difficult to conduct its work under the
restrictions of the 1934 Act.
FCC-Related Congressional Action:
109th Congress
Since the 109th Congress convened, there has been much discussion regarding
the possibility of updating the Communications Act and a number of hearings40 and
“listening sessions”41 have already been held, with more expected. In the Senate, the
Committee on Commerce, Science, and Transportation eliminated its Subcommittee
on Communications with the intention of considering any legislation to amend the
Communications Act in the full committee.
Legislation
Although members of the 109th Congress have not yet introduced legislation
specific to FCC structural change or the larger issue of a rewrite of the
38 (...continued)
available online at [http://news.com.com/20101071-5236715.html].
39 For example, under such a scenario, the FCC would no longer be responsible for
reviewing and approving mergers between companies; instead, the Department of Justice
would provide anti-trust review. See, e.g., “Why the FCC Should Die,” by Declan
McCullagh, June 7, 2004, available online at [http://news.com.com/2010-1028-
5226979.html ]; and “Law and Disorder in Cyberspace: Abolish the FCC and Let Common
Law Rule the Telecosm,” 1997, information available online at
[http://www.phuber.com/huber/cl/cl.htm].
40 A complete list of hearings, along with associated testimony, for the Senate Committee
on Science, Commerce, and Transportation is available online at
[http://commerce.senate.gov/hearings/index.cfm].
41 For further information on the listening sessions by the Senate Committee on Science,
Commerce, and Transportation, see "Stevens to Continue Listening Sessions, But Sees
Telecommunications Bill by July," Daily Report for Executives, No. 51, March 17, 2005,
P a g e A - 1 . T h i s a r t i c l e i s a v a i l a b l e o n l i n e a t
[http://ippubs.bna.com/IP/BNA/der.nsf/SearchAllView/96C56942C092C93B85256FC70
014F11F].

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CRS-15
Communications Act, they have introduced bills that would affect issues under the
purview of the FCC, including, but not limited to, broadband regulation and
deployment, indecent and violent programming, public interest obligations of
broadcasters, spectrum allocation, and universal service. Other topics likely to be
addressed during this session, either as standalone bills or as part of a larger rewrite
effort, include, but are not limited to, wireless, Enhanced 911, media concentration,
the transition to digital television, and various aspects of Internet-enabled services
(e.g., VoIP, issues related to homeland security, including the Communications
Assistance for Law Enforcement Act [CALEA]).
A timetable for developing and moving legislation through the Senate and
House remains unclear, although the leadership of both the Senate and House
committees have stated their intentions to have a bill ready for consideration this
session. For instance, in the Senate, Senator Ted Stevens has stated that he
“expect[s] to be able to go to conference with [the House] sometime this fall. . . we
expect a bill this year.” In the House, Representative Fred Upton, Chairman of the
Subcommittee on Telecommunications and the Internet, stated his intention to
develop a draft telecommunications bill by late spring or early summer, get it through
committee, and have it ready for the Senate prior to the August congressional
recess.42 However, industry representatives have expressed varying degrees of
confidence in seeing a bill signed into law during the 109th Congress.43 Regardless
of whether a bill ultimately reaches the President for signature, this session is already
seeing a lot of activity regarding a potential rewrite of current communications law.
Hearings
The House Committee on Energy and Commerce Subcommittee on
Telecommunications and the Internet has thus far held a series of four hearings
entitled, “How Internet Protocol-Enabled Services are Changing the Face of
Communications.” These hearings have focused on issues related to voice services,
video services, and the points of view of government officials and technology
companies (February 9, March 16, April 20, and April 27, 2005). Additionally, the
full Committee on Energy and Commerce held a hearing entitled, “Competition in
the Communications Marketplace: How Technology Is Changing the Structure of the
Industry” (March 2, 2005). That hearing comprised two panels, one made up of
telecommunications industry executives and another made up of representatives from
42 “Barton Determined to Slash E-Rate, 'Start From Scratch' on Telecom Bill," Daily Report
for Executives, No. 70, April 13, 2005, Page A-21. This article is available online at
[http://ippubs.bna.com/IP/BNA/DER.NSF/SearchAllView/2313F81316032B3E85256FE
2000D6185].
43 “109th Congress to Launch Comprehensive Overhaul of 1996 Act" Daily Report for
Executives, No. 7, January 11, 2005, Page S-5. This article is available online at
[http://ippubs.bna.com/IP/BNA/der.nsf/SearchAllView/85C655518A9ECD4985256F860
023C625]. See also “Sununu Sees Major Telecom Reform in '05, But Hill Staff Anticipate
Major Disagreements," Daily Report for Executives, No. 202, October 20, 2004, Page A-4.
This article is available online at [http://ippubs.bna.com/IP/BNA/der.nsf/SearchAllView/
22C23B8ECC677E3C85256F33000D7DD2].

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academia, the public interest community, and investment banking.44 Also, FCC
Chairman Kevin Martin has testified at the House Committee on Appropriations
hearing on the FCC budget (April 26, 2005).45 During the hearing, Commissioner
Martin presented the FCC’s budget request and also answered questions on
Commission plans and action on issues such as broadcast and cable indecency, the
E-Rate, and the provision and availability of emergency services via VOIP.
The Senate thus far has no open hearings planned, but Senator Stevens has
stated his intention to hold a series of closed “listening sessions” with
telecommunications industry representatives before beginning work on any potential
rewrite of current communications law.46
Additional Reading
CRS Issue Brief IB10045, Broadband Internet Access: Background and Issues, by
Angele A. Gilroy and Lennard G. Kruger.
CRS Report RS20993, Wireless Technology and Spectrum Demand: Third
Generation (3G) and Beyond, by Linda K. Moore.
CRS Report RL32126, 911 Call Center Legislation: S. 1250 and H.R. 2898, by
Linda K. Moore.
CRS Report RS21028, Emergency Communications: Wireless Enhanced 911 Issues
Update, by Linda K. Moore.
CRS Report RL30052, Telephone Bills: Charges on Local Telephone Bills, by James
R. Riehl.
CRS Report RL32018, The E-Rate Program: Universal Service Fund
Telecommunications Discounts for Schools, by Angele A. Gilroy.
CRS Report RL32222, Regulation of Broadcast Indecency: Background and Legal
Analysis, by Angie A. Welborn and Henry Cohen.
CRS Report RL31925, FCC Media Ownership Rules: Current Status and Issues for
Congress, by Charles B. Goldfarb.
44 A complete list of hearings, along with associated testimony, for the House Committee
on Energy and Commerce and its subcommittees is available online at
[http://energycommerce.house.gov/108/action.htm].
45 This testimony is available online at [http://hraunfoss.fcc.gov/edocs_public/
attachmatch/DOC-258333A1.pdf].
46 "Stevens to Continue Listening Sessions, But Sees Telecommunications Bill by July,"
Daily Report for Executives, No. 51, March 17, 2005, Page A-1. This article is available
o n l i n e a t [ h t t p : / / i p p u b s . b n a . c o m / I P / B N A / d e r . n s f / S e a r c h A l l V i e w /
96C56942C092C93B85256FC70014F11F].

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CRS Report RL32408, Spectrum Policy: Public Safety and Wireless
Communications Interference, by Linda K. Moore.
CRS Report RL31260, Digital Television: An Overview, by Lennard G. Kruger.
CRS Report RL30677, Digital Surveillance: The Communications Assistance for
Law Enforcement Act, by Patricia Moloney Figliola.

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