Cybertelecom Federal Internet Law & Policy An Educational Project

Computer II Reference

In Computer I, the FCC established the difference between computers that facilitate communications and computers with which people communicate or interact.  This is the basic verses enhanced service provider (ESP) distinction (ISPs fall within the enhanced services category). 

In Computer II, the FCC set forth a regulatory regime that would permit Bell Telephone companies (BOCs) to enter the enhanced services market while protecting the enhanced services from unfair competition by the dominant telephone monopolies.  The Computer II rules came to be known as structural separation.  Currently BOCs can enter the ESP market pursuant to Computer II or Computer III (although they must select and adhere to one regime).

The requirements of Computer II can be found at 47 C.F.R. § 64.702(c).  These rules indicate that BOCs may enter the ESP market if 

• It is done through a separate corporate entity that obtains all telecommunications facilities and services pursuant to tariff and may not own its own telecommunications facilities;
• The separate subsidiary operates independently in the furnishing of enhanced services and customer premise equipment;
• The separate subsidiary deals with any affiliated manufacturer on an arm's length basis;
• Any joint research and development must be done on a compensatory basis; and 

All transactions between the separate subsidiary and the carrier or its affiliates must be reduced to writing. 
BOCs electing to provide enhanced services through a separate subsidiary must also comply with the following requirements:

• The BOC cannot engage in the sale or promotion of the enhanced services or customer premise equipment on behalf of the separate enhanced services subsidiary (ie., Bell can not promote the services of the separate subsidiary Bell.net);
• The BOC cannot provide to its separate enhanced services subsidiary computer services that are used in any way for the provision of its common carrier services; and
• The BOC's capitalization plan for the separate corporation must be approved by the FCC. 

Note that some of the provisions of Computer II not mentioned here have been superseded by the Telecommunications Act of 1996.  These include Network Information Disclosure and possibly Customer Proprietary Network Information.

- Final Decision, In re Amendment of Section 64.702 of the Commission's Rules and Regulations (Second Computer Inquiry), 77 FCC2d 384 (1980) (Computer II Final Decision)

"1980 - AT&T introduces the DataSpeed 40, a forerunner of the current generation "smart terminals" having the capability of doing various forms of data processing rather than serving solely as input terminal to a computer. This led to the Computer II Decision which came up with a binary test: Was the device for "basic" service; or was it for "enhanced" service? Enhanced services had three subdivisions: Protocol conversion, data processing, and information retrieval. All of this led to the Computer III Decision and the Open Network Architecture concept in 1989. Digital local offices and optical fiber transmission being deployed. Switching System #7 is being gradually deployed." William von Alven, Bill's 200 Year Condensed History of Telecom, CCL 1998

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Computer II

• Bell Operating Cos.’ Joint Petition for Waiver of Computer II Rules, Memorandum Order and Opinion, 10 F.C.C.R. 1724, 76 Rad. Reg.2d (P & F) 1536 (1995) [hereinafter BOC’s Joint Petition]
• Computer and Comm. Indus. Ass’n v. FCC, 693 F.2d 198 (D.C. Cir. 1982) [CCIA]
• Amendment of Section 64.702 of the Comm’n’s Rules and Regs. (Second Computer Inquiry), Memorandum Opinion and Order, 79 F.C.C.2d 953 (1980).
  • Amendment of Section 64.702 of the Commission's Rules and Regulations (Second Computer Inquiry) (“Computer II Final Decision”), CC Docket No. 20828, Final Decision, 77 FCC 2d 384 (1980), on reconsideration, Memorandum Opinion and Order, 84 F.C.C. 2d 50 (1980) and Memorandum Opinion and Order on Further Reconsideration, 88 F.C.C. 2d 512 (1981), aff'd sub nom. Computer and Commun. Indus. Ass'n v FCC, 693 F.2d 198 (D.C. Cir. 1982), cert. denied, 461 U.S. 938 (1983)
• Second Computer Inquiry, Final Decision, 77 FCC2d 384, para. 19, 47 Rad. Reg.2d (P & F) 669 (1980) [Computer II Final Decision] ("The First Computer Inquiry was a vehicle for identification and better understanding of problems spawned by the confluence of computer and communications technologies taking place at that time.").
• Second Computer Inquiry, Tentative Decision and Further Notice of Inquiry and Rulemaking, 72 FCC2d 358, paras. 6-7, 17, 45 Rad. Reg.2d (P & F) 1485 (1979) [CII Tentative]
• Amendments of Section 64.702 of the Comm’n’s Rules and Regs. (Computer Inquiry), Supplemental Notice of Inquiry and Enlargement of Proposed Rulemaking, 64 F.C.C.2d 771 (1977) [Computer II Supplemental Notice of Inquiry]
• Second Computer Inquiry, Notice of Inquiry and Proposed Rulemaking, 61 FCC2d 103 (1976)

Computer II Related Proceedings

• In the matter of New England Telephone and Telegraph Company Technical Trial of Asynchronous to X.25 Protocol Conversion MEMORANDUM OPINION AND ORDER October 5, 1988
• In the Matter of PACIFIC BELL Request for Authority to Provide Asynchronous/X.25 Protocol Conversion for its "Victoria" Technology on an Unseparated Basis for a One-year Trial Period  AAD 6-1463 MEMORANDUM OPINION AND ORDER 3 FCC Rcd. 3082 May 26, 1988
• In the Matter of American Information Technologies, Inc. BellSouth, Bell Atlantic, NYNEX, Pacific Telesis, Southwestern Bell, U S West, Capitalization Plans for the Furnishing of Customer Premises Equipment and Enhanced Services ENF No. 84-25, ENF No. 84-26, ENF No. 84-27,  ENF No. 84-28, ENF No. 84-29, ENF No. 84-30, ENF No. 84-31, MEMORANDUM OPINION AND ORDER, Adopted:  November 2, 1987;  Released:  December 3, 1987
• In the Matter of AT & T COMMUNICATIONS, INC. Revisions to Tariff FCC Nos. 4, 9 and 10 To Establish Rates and Regulations for ACCUNET Packet Service CC Docket No. 84-906 Transmittal No. 474 MEMORANDUM OPINION AND ORDER Adopted:  August 14, 1987;  Released:  August 21, 1987
• In the Matter of Procedures for Implementing The Detariffing of Customer Premises Equipment and Enhanced Services (Second Computer Inquiry) AMERICAN TELEPHONE AND TELEGRAPH COMPANY, Request for Approval To Supplement the Capitalization of AT & T Information Systems in Connection with the Transfers of Embedded Customer Premises Equipment CC Docket No. 81-893 File No. ENF 83-18  MEMORANDUM OPINION AND ORDER Adopted:  April 9, 1987;  Released:  August 17, 1987
• In the Matter of American Telephone and Telegraph Company Provision of Basic Services via Resale by Separate Subsidiary CC Docket No. 83-1375 MEMORANDUM OPINION AND ORDER May 1, 1987
• In the Matter of PACIFIC BELL Request for Authority to Provide Asynchronous/X.25 Protocol Conversion for its  "Victoria" Technology on an Unseparated Basis For a One-Year Trial Period AAD 6-1463 MEMORANDUM OPINION AND ORDER 2 FCC Rcd. 4411 March 30, 1987
• In the Matter of BELLSOUTH CORPORATION on behalf of SOUTH CENTRAL BELL TELEPHONE COMPANY Petition for Waiver of Section 64.702 of the Commission's Rules and Regulations to Authorize Protocol Conversion Offerings  AAD-7-1594  MEMORANDUM OPINION AND ORDER Adopted:  March 16, 1987;  Released:  March 27, 1987
• In the Matter of WISCONSIN BELL INC. Petition for Waiver of Section 64.702 of the Commission's Rules (Computer II) to Provide Protocol Conversion as an Adjunct to a Basic Packet Switched Network AAD 7-1586 MEMORANDUM OPINION AND ORDER 2 FCC Rcd. 1414  March 3, 1987
• In the Matter of SOUTHWESTERN BELL TELEPHONE COMPANY Petition for Waiver of Section 64.702 of the Commission's Rules to Provide and Market Asynchronous Protocol Conversion on an Unseparated Basis AAD 6-1473 MEMORANDUM OPINION AND ORDER 2 FCC Rcd. 20 January 5, 1987
• In the Matter of INTERNATIONAL BUSINESS MACHINES CORPORATION Petition for Declaratory Ruling that the Southern Bell Telephone and Telegraph Company Offer its Local Area Data Transport Service on an Unbundled and Detariffed Basis Pursuant to Section 64.702 of the Commission's Rules ENF 83-34 FCC 86-122. MEMORANDUM OPINION AND ORDER ON RECONSIDERATION Adopted March 18, 1986;  Released March 25, 1986 (GTE Telenet Motion for Reconsideration)
• Nov 22, 1982 Letter from Chief, CCB, to Marilyn A Moses, CO, Productions by Phone, Inc (1982) (dismissing petition for BOCs to provide "dial it" services as part of their basic services.")
• Nov 15, 1982 Letter from Chief, CCB, to Sara Cristol, Staff Attorney, Public Utility Commission of Texas (1982) (explaining that Computer II is not limited to BOCs and encompasses all telephone companies, including those that provide intrastate services.)
• Nov 12, 1982 Computer and Communications Industry Association v. Federal Communications Commission, 693 F.2D 198, 224 U.S.APP.D.C. 83 (D.C. Cir. 1982), cert. denied, 461 U.S. 938 (1983). Affirms Computer II rules.
• Nov 10, 1982 AT&T Request for approval to supp cap of American Bell Inc to provide new CPE, Request for approval to cap a sep sub to provide enhanced services pursuant to Sec 64.702(d)(4), 91 FCC 2d 578, FCC 82-496 (1982) (approves AT&T CPE cap plan and releases staff report)
• Nov 4, 1982 Inside Wiring Second Notice of Proposed Rulemaking
• Oct 22, 1982 AT&T requests waiver to permit divested BOCs to provide CPE to disabled persons on a non-separated basis."
• Oct 13, 1982 AT&T files mod to shared admin service plan
• Sep 30, 1982 AT&T files supp cap plan for picturephone meeting room service
• Aug 31, 1982 AT&T files additional detains on jt installation and maintenance accounting."
• Aug 30, 1982 Letter from Chief, CCB, to Alfred A Green, AT&T (1982) approves most of AT&T accounting for jt installation and meantenance.")
• Aug 30, 1982 AT&T files first monthly report on expenses associated w shared admin services."
• Aug 26, 1982 AT&T files reponse to info request regarding CPE cap plans
• Aug 24, 1982 US v ATT (1982) MFJ
• Aug 23, 1982 ATT, Tariff FCC No 270 Rates and Reg for Bell Packet Switching Service, et al 92 FCC 2d 48, FCC 82-355 (1982) (rejecting tariff)
• Aug 13, 1982 ATT files para 105 report regarding preop expenses."
• Aug 12, 1982 Letter from Chief, CCB, to Alfred A Green ATT ( ruling on confidentiality request)
• US v ATT, 552 FSupp 131 (DDC 1982)
• Aug 10, 1982 Monitoring Complaince w Conditions Underlying GTE Acquisition of Telenet, 91 FCC 2d 215, CC Docket No. 80-197, FCC 82-352 (1982) (approving merger)
• Aug 6, 1982 ATT files report w Bureau in installation and maintenance of business CPE"
• June 26, 1982 Letter from Chief, Common Carrier Bureau, to Alfred A green ATT (joint installation and maintenance, partially approving the plan, directing some changes, requesting info, and intiating a staff audit")
• June 16 AT&T files plan to allocate basic research expenses and files est of preop exponses associated w Custom Calling Services II
• Jun 15, 1982 Cincinnati Bell files contingency cap plan
• June 13, 1982 SNET files contingency cap plan
• Jun 1, 1982 Letter from Gary Epstein to Bless Stritar, ATT approving some conditions of AT&T's interim accounting system."
• Jun 1, 1982 "AT&T files new CPE cap plan"
• June 25, 1982 Letter from Bless Stritar, ATT to FCC re MO&O on admini services.
• June 16, 1982 Matter of Motion of SNET for Declaratory Ruling to Remove the Uncertainty of Status Under the Commission's Decisions in the Computer II (Docket No 20828), 90 FCC 2d 233, FCC 82-263 (1982) (denies motion to staty Computer II as they apply to SNET)
• June 16, 1982 AT&T Report on Services to Be Shared Between Fully Sept Subsidiary and Affiliated Companies and Associated Costing Methodology, 90 FCC 2d 184, FCC 82-262  Memorandum Opinion and Order (1982)
• ATT, Request for Approval to Capitalize a Separate Subsidiary to Provide Enahnced Services Pursuant to Section 64.702(d)(4) of the Commissions Rules, 90 FCC 2d 404, FCC 82-261 Memorandum Opinion and Order (Jun 16 1982) (approving ATT's cap plan).
• May 14, 1982 Letter from Bless J Stritar to FCC (technical change to report on admin services to be shared)
• Procedures for Implementing the Detariffing of CPE and Enhanced Services (Computer II), 89 FCC 2d 694, CC Docket 81-893, FCC 81-576, Notice of Inquiry (1982)
• Mar 22, 1982 Letter from Chief, Common Carrier Bureau, to Alfred A green, AT&T (March 22, 1982) (info request on AT&T's plan to share admin services).
• Mar 15, 1982 "AT&T files supp to the enhanced services capitalization plan to cover all additional enhanced services."
• Feb 3, 1982: Letter from Chief, Common Carrier Bureau, to Alfred A Green ATT (Feb 3, 1982 ) (questioning ATT capitalization plan and requesting information on "mechanisms for BOC allocation of costs for providing I&M for AT&T-IS's business systems.")
• Jan 29, 1982: GAO Report to Congress on Computer II "GAO questions whether the FCC has the resources to successfully carry out required tasks."
• Jan 13, 1982: "AT&T files plan for sharing admin services with its sep subsidiary, and for accounting the costs of these services."   and "files plan for providing installation and maintenance services for subsidiary CPE, and for accounting the costs of these services."
• Dec 30, 1981: "FCC files brief with US Court of Appeas in DC Circuit in support of Computer II rules"
• Nov 30, 1981: "AT&T Files capitalization plan for XYZ, Inc., which would offer enhanced services"
• Memorandum Opinion and Order on Further Reconsideration, In re Amendment of Section 64.702 of the Commission's Rules and Regulations (Second Computer Inquiry), 88 FCC2d 512 (Oct 30, 1981) (Computer II Further Reconsidered Decision)
• Matter of ATT Petition for Waiver of Section 64.702 of the Commissions Rules and Regs, 88 FCC 2d 1, FCC 81-483 (Oct 20 1981) ("denies ATT petition to provide custom calling services II on an unseparated bases).
• In re Motion of Cincinnati Bell, Inc. for Declaratory Ruling to Remove Uncertainty of Status under the Commission Decisions in Computer II, Motion of Southern New England Telephone Company for Declaratory Ruling to Remove the Uncertainty of Status Under the Commission's Decisions in Computer II, Docket No. 20828, 88 FCC 2d 33, FCC 81-482, Memorandum Opinion and Order (Oct 20, 1981) ("Commission denies motion to relieve SNET and CBI of structural separation rules).
• In re Petition Requesting the Commission to Establish the Terms and Conditions under Which Communications Common Carriers May Engage Directly in the Unregulated Sale of Terminal equipment and Systems Connected to the Nationwide Telecommunications Network, FCC 81-482, RM 3308 Memorandum Opinion and Order, (May 28, 1991) ("Commission denies petitions to impose structural separation conditions on non-ATT common carriers")
• License Contract Agreements and Other Intrasystem Arrangements of the Major Telephone Systems, 84 FCC 2d 259, CC Docket No. 80-742, FCC 80-700, Notice of Inquiry (1981)
• Associated Telephone Answering Exchanges, Inc, Petition for Declaratory Ruling, No. 06225, Order  (Mar 12, 1981) (motion for declaratory ruling dismissed)
• Associated Telephone Answering Exchanges, Inc, Petition for Declaratory Ruling, No. 06225, Order  (Jan 23, 1981) (denied motion for expedited treatment of ATAE's petition for declaratory ruling that Custom Calling Services II are enhanced)
• In re Amendment of Section 64.702 of the Commission's Rules and Regulations (Second Computer Inquiry), Memorandum Opinion and Order, 84 FCC2d 50 (Dec 30 1980) (Computer II Reconsidered Decision)
• May 7, 1980 Final Decision, Computer 2, 77 FCC 2d 384, FCC 80-189
• Jul 2, 1979  Tentative Decision, Computer 2, 77 FCC 2d 358, FCC 79-307 (1979)
• Tentative Decision and Further Notice of Inquiry and Rulemaking (Tentative Decision), 72 FCC 2d 358
• Supplemental Notice of Inquiry and Enlargement of Proposed Rulemaking (Supplemental Notice), 64 FCC 2d 771
• The Notice of Inquiry and Proposed Rulemaking (Notice), 61 FCC 2d 103

Computer II - AT&T Interspan FrameRelay

• In the Matter of MOUNTAIN STATES TELEPHONE AND TELEGRAPH COMPANY, NORTHWESTERN BELL TELEPHONE COMPANY, PACIFIC NORTHWEST BELL TELEPHONE COMPANY Petition for Waiver of Section 64.702 of the Commission's Rules and Regulations to Provide Protocol Conversion as an Adjunct to a Basic Packet Switched Network File No. AAD 6-1552 MEMORANDUM OPINION AND ORDER 3 FCC Rcd. 3135 June 1, 1988
• In Re BellSouth Corporation on Behalf of Southern Bell Telephone and Telegraph Company Petition for Waiver of Section 64.702 of the Commission's Rules and Regulations To Authorize Protocol Conversion Offerings 1988 WL 488939 (FCC), 65 Rad. Reg. 2d (P & F) 1015, 3 FCC Rcd. 6961 December 6, 1988
• In the Matter of NEW ENGLAND TELEPHONE and TELEGRAPH COMPANY Petition for Waiver of Section 64.702 of the Commission's Rules (Computer II) to Provide Protocol Conversion on an Unseparated Basis AAD 7-1890 MEMORANDUM OPINION AND ORDER 3 FCC Rcd. 6167  October 13, 1988
• In the Matter of MOUNTAIN STATES TELEPHONE AND TELEGRAPH COMPANY, NORTHWESTERN BELL TELEPHONE COMPANY, PACIFIC NORTHWEST BELL TELEPHONE COMPANY Petition for Waiver of Section 64.702 of the Commission's Rules and Regulations to Provide Protocol Conversion as an Adjunct to a Basic Packet Switched Network AAD 6-1552 MEMORANDUM OPINION AND ORDER 2 FCC Rcd. 2040 April 8, 1987
• Order Feb 7, 1996 (granting motion for extension of time to file) | Wordperfect | Text |
• Public Notice Jan 16 1996 Pleading Cycle for Replies Due During Federal Government Shutdown
• Public Notice: Pleading Cycle Established ATT Petition for Reconsideration  Nov 28, 1995
• October 18, 1995, Frame Relay Order Released - IDCMA Petition for Declaratory Ruling Regarding AT&T's InterSpan Frame Relay Service, DA 95-2190 (Com. Car. Bur. rel. Oct. 18, 1995)