The first time the FCC considered a policy for the Internet was 1966.  Yes, 1966.  Three years before the first packets were sent on the ARPANET and six years before Vint Cerf and Bob Kahn introduced their paper on the Internet Protocol.

Okay, this is a bit of an embellishment designed to get your attention.  On the other hand, it really isn’t.  In 1966, the FCC initiated the Computer Inquiries.  Computers were relatively new phenomena in telecommunications networks.  Some computers facilitated the operations of the telecommunications networks; other computers were interacted with over the network.  What was the FCC to make of these computers? What jurisdiction did the FCC have?

The Computer Inquiries consisted of three major proceedings: Computer I (1966); Computer II (1976); and Computer III (1985).  Throughout all of these proceedings, FCC policy remained consistent while the agency revisited and revised the implementation in order to more effectively achieve its goals.

The FCC consistently distinguished between the computers that ran the telecommunications networks and computers that were used over the telecommunications networks.  The FCC concluded that there was no public interest in regulating computers used over the telecommunications network:

[T]here is ample evidence that data processing services of all kinds are becoming available in larger volume and that there are no natural or economic barriers to free entry into the market for these services. The number of data processing bureaus, time sharing systems, and specialized information services is steadily increasing and there are no indications that any of these markets are threatened with monopolization.
Computer I Tentative Agreement ¶ 20.

The FCC recognized that computer services promised great economic opportunity and innovation for the country, and that these services were 100% dependent on the underlying telecommunications networks.  The FCC wanted to ensure that carriers were offering the telecommunications services necessary in order for computer services to thrive and that the telecommunications networks could not use their market power to engage in anti-competitive behavior:

There is virtually unanimous agreement by all who have commented in response to our Inquiry, as well as by all those who have contributed to the rapidly expanding professional literature in the field, that the data processing industry has become a major force in the American economy, and that its importance to the economy will increase in both absolute and relative terms in the years ahead. There is similar agreement that there is a close and intimate relationship between data processing and communications services and that this interdependence will continue to increase. In fact, it is clear that data processing cannot survive, much less develop further, except through reliance upon and use of communication facilities and services.
Computer I, Final Order, ¶ 7 (1971).

In Computer II, the FCC came up with the Enhanced Services (aka “information services”) / Basic Services dichotomy.  Basic services were the telecommunications services (the network infrastructure) that moved voice, information, and data – without processing, altering, or changing that data.  Safeguards were imposed on basic services in order to ensure that telecommunications networks were open to any computer service.

Information services were the services that did not have market power and were not subject to FCC safeguards.  They were the services provided over the telecommunications network that offered some level of interactivity, processing, or alteration.  While the Computer Inquiries did not regulate information services, the Computer Inquiries were designed to directly benefit information services.

The Computer Inquiries contained safeguards which included structural separation, accounting rules, information sharing rules, disclosure rules, and bundling rules.  These were specific rules that ensured that Internet networks and computer networks could be built.  They were designed to open up the telecommunications networks for use by the computer networks, while safeguarding the computer networks from anticompetitive behavior by the telecommunication networks.  The Computer Inquiries have been described as “wildly successful.” Prof. Jonathan Weinberg p. 40; Robert Cannon, The Legacy of the FCC’s Computer Inquiries, 55 FCLJ 167 (2003).

What lessons can be taken from the Computer Inquires?  What do they say about the FCC’s approach to the Internet and open networks?  The Computer Inquiries assumed that Internet networks would have underlying common carrier infrastructure over which they could be built; what are the implications where the Internet has been transformed from a service provided over the common carrier infrastructure, to the network infrastructure itself with no underlying common carriage?  How has the Internet service market changed since the time of the Computer Inquiries?

How is the Internet like printing, the steam engine, the factory system, railways, electricity, and the computer?  According to economists Richard Lipsey, Kenneth Carlaw and Clifford Bekar, the Internet has joined these and a handful of other technologies on a select list: the twenty-four “transforming general purpose technologies” developed over the entire span of human history.  The Internet is in good company.  These are all technologies with a broad range and variety of uses, extensive spillovers, susceptibility to improvement through the development of complementary technologies, and the ability to transform economic, political, and social structures.

In light of the Internet’s importance, its custodians – our generation in general and organizations like the FCC in particular – have a responsibility to preserve its dynamic character and maximize its potential for improving our lives.  As I think about the FCC’s role, I see four key economic issues.  One is the implications of possible market failures that might limit innovation in applications complementary to the network.  These might include the transaction costs of contracting, spillover benefits of applications innovation, and perhaps the market power of Internet service providers or applications providers.  The second is evaluating the social welfare effects of price discrimination on both sides of two-sided platforms.  How do these effects depend on the extent to which mobile Internet service substitutes for fixed service for different types of customers?  Or on the number of fixed and wireless providers available in a region?  The third issue is ensuring adequate incentives for investment and innovation in the network – or the platforms, if wireless and wireline service are viewed as imperfect substitutes.  The fourth is providing incentives for efficient network operation, perhaps through congestion pricing or network management.

Economists: this is your opportunity to educate me and the Commission.  Am I thinking about our task in a productive way?  What other economic issues should be on my list?

There are many important public safety and homeland security issues that are being examined by the FCC right now as part of the development of the National Broadband Plan, as well as in open FCC proceedings. These areas range from ensuring that broadband communications is available to the public safety community for their day to day communications, helping to ensure America’s cyber security, developing Next Generation 9-1-1 and of course, ensuring that emergency alerting is brought into the twenty first century. All of these issues can be affected by open internet rules. Accordingly, one of the areas we are actively exploring is how best to address the needs of law enforcement, public safety, and homeland and national security.

It is important that the public safety and homeland security community, and other interested parties have a voice in this debate. It could impact the next generation technologies that are being rolled out to the public safety and homeland security communities already and will only increase in proliferation. Accordingly, interested parties are urged to file comments, providing data and other evidence of how the FCC should look at these very important issues.

The first full-time job I had was opening and sorting mail in my Congressman’s office one summer in high school, years before websites and email were widespread. Every day hundreds of letters would arrive, and every day I’d open them, read them, and sort them into different piles to be answered. I was impressed by how many constituents cared enough to write a letter, but looking back, I wonder how many more had a stake in those issues and would have shared their views if it had been cheaper and easier to do so.

One of the great benefits of the open Internet is that it makes it easier to learn about and express our views on public issues and to engage with our government, wherever we are. Earlier this year the FCC launched blog.broadband.gov, the official blog of the National Broadband Plan, and last month we launched OpenInternet.gov as a place to discuss issues related to the future of the open Internet.

If the Commissioners approve a Notice of Proposed Rulemaking regarding the open Internet at the FCC’s open meeting next week, we will use the Internet to enable you to engage in the rulemaking process. Anyone will be able to participate by commenting on posts on this blog, attending (in person or via webcast) and asking questions at public workshops we’ll be holding, suggesting and rating policy ideas on an online collaboration platform we’ll be setting up, or submitting formal comments through our Electronic Comment Filing System.

What else could we do to help you participate in the rulemaking process? What information and tools would be helpful? I can’t promise that we’ll be able to accommodate all requests, but we’d like your ideas on what we could do.