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Ffice of Telecommunications (Doc);, Washington D.C DOCO T ONE 166 573 AUTHOR Cole, Jack And Others .. !TITLE A Review of International, TelecoMdunicationsIndus Issues, Structure, and Regulatory Problems. INSTITUTION Office of TelecoMmunications (DOc);, washington D.C. VSPOPT NO CST -SP 777 16 fOB 6iTE Jun 77 VOTE 151p.; For related document,see 7 106 AVAIIABL2 0 Superintendent: of Documents, U.S. rnment Prin Office, Washington, n. c..` 20.402 '(S 0. 003-000-00522-4) MF+01/P07 Plus Postage. Broadcast Industry; *Communications1 tell tes; DeNi-v-ter Systems;.*I?ederalLegislation;*Federal ROulation; international Relations; *Mass Media' *Telecommunication; Telephone Communications Industry ABSTRACT Industry stru1cture studies priorto 1960 are briI fly eyed, and an over iev of industrialand technological lopments up to the present is providedthrough synopses of more nt studies. Areas covered includeoverseas telephone anrecord Carri4rs; the eatfon of the Comunm ications Satellite Cooratloa;ff the current r q iatory and oversightenvironment, which includes statutory Da cflukgr ad, the FCC regulatoryprocess, and the executive office role; current problems existingwithin the present institutional' arrangements; Alternativeindustry arrangements for providing international telecommunicationsservices; and regulatory anti governmental-changes with impactson industry structure. The report closes vi.th. a inmary of conclusions and recommendationsfor -pogsible structural, egulatory, amd legislative changes forthe illerrational telecom unicatiorisindustry.(RAO) ** * * ** ** * ** 4 ** *** Reproductions upp ied EDRS are the best th an be'maMa from original doc ***** ******** ** OT 1)41AL PUBLICATION 7716 u PANiMiNt OF HtAL,H, 'ID(CATIONLwgoAR, mArlowLimstiTuve OF Ent/C.4110N . -nu%04.)(I)Mu NT WO fle-tH WUPRO. FROM 4.1)tp EXACT tY A. IlrCf iv ONC.ANIZA t ION ONICAN= .1.1117 pi PISOr4014 A46 IT PON TS Or virvV ON OVINIONS no 001101 NEcE.5541411.'1' NTPHF A REVIEW OFINTERNATIONAL 'AN Tor-FlriAL NATIONALIP451111)TE COkir).r ION Poll PION 014POLICY w TELECOMMUNICATIONS INDUSTRYiSSUES, STRUCTURE, REGULATORY PROBLE JAQ COLE. RICHARD J. 0' ORKE,JR. JOHN W. KETINSKI GLYNETTA,,.C.- PERRYMORE This repbrt was prepared by the Analytical Support Division, Office of Telecommunications, U.S. Department of Commerce, in support of and funded by thOffice of Telecommunications PolicExecutive.Office of the President. The vie and conclusions contained in this oocurne #o not represent the official policieor recommendations of the Office of Tel communications Policy. DE4111TMENTOF COMMERCE Juanita .M. Kreps, Secretary Jordan J. Baruch ary for Science and Technology OFFICE-OF TELECOMMUNICATIONS John M. Richardson, Director June 1977 la UNITED STATES DEPARTME OF COMMERCE ,OFFICE OF TELECOMMUNICATIONS STAIEME frT OF MISSION The mission of the Office of Telecommunications in the Depar ment of Cornrnerce is to assisr rile Department in fostering, servin6, and promoting the nation's economic development and technobgical advancement by, improving man's comprehension of teleconimuni, cation Scien nd by assuring effective use and growth of the nation `s tele rirnunlcation resources. In carrying out tpis mission, the Office Co ucts research needed in the evaluation and deve opment olicy as required by the Department of Cornnne ce Aists'other goxernrnent agencieS in the use of telec mrnuni- . ions onducts research, engineering, and analysis inthgeneral eld of telcorrimunication science to meet gaiernrri nt needs Acquires, analyzes, synthesizes; anand disseminates iriforrnation for the efficient use of the nation's telecernmun.cation re- sources. , Performs analyse engineering, andrelated adinistrative functions responsive to the needs of the Director o the Office of Telecommunications Policy, Executive Office ,the Presi- dent, in the performance of his responsibilities for he manage- ment of the radio spectrum Conducts research needed in the evaluation and v lopment of telecommunication policy as required by the ice of Tele- cOMMuniCations Policy, pursuant,to Executive q der 11556 _ \, For ale by the fluporlateadont of Docu_rnents, U.e. Goverallelni. (JW1C Wmbloglor, D.C. 20400 4)00-00522-4 PRE A United States international telecommunicationsis nerally considered to have had itsbirth in 1866 when tk e first permanent transatlanticsubmarine telegraph cable was placed into servicebetween Ireland and Newfoundland. However, like many other areas ofour world\ society, the greatest growt has been experienced during the past 20 years. ti 7oday there is a wide variety ofservices available to the user by means c f ghly sophisticated transmission, switching, and termina3.teehnology. International traffic volumes for both telephone andrecord service have been steadily rising. But no natter how impressivethe growth and the availability of serviceshave been, we must continue to ask the guptstion,-Doesthe present industry structure adequately serve the public interest? Specif- ically, has the structure of_theindustry evolved, albeit in a rather random method,to sufficiently accommodate ehangirig technology anduser needs and to provide services at reasonable charges? If not, are changes desirablein the present industry structure? Concern for the struCture-of.the U.S. --motional telecommunications industry dates backto the ate 1920'S when the industry was relatively _OMple. Since .then,:the industry has evolved into'a.rathercomplex structure, ' especially during the lAst tenyears or so. 'The purpose of this report is to presenta- synopsis- of the various- studieS that have addressedthe international telecommUni- cations industry structure after1968: Studies commissioned by the Officeof Telecommunications Policy '(OTP) during, the paSt two-years (19751976) President's Task Force on Communicatic ns Policy (1968) The report. beginsI witha review of past industry st uctur. studies.':Studies and legislativeactions prior to the 1970's yin -Only be mentiionedbriefly to establish the historical record, Chapter II is an overview of-the industrial and technological deVetopmentsup to the present including- overseas telbphone andrecord carriers, as well as the creation of tte Communications SatelliteCorporation (COMSAT). In Chapter/ III a description is.give the current regulatory, and Oversight environment ins41U ing statutory background, FCC regulatory procesa, and the executive office. role. Ohapter IV deals with the Problems existing 'within ,the present institutional.arrangementsdegcribed in the various studies. The problems are not limited to those , that may appear to lA affected by changes in the industry, Structure; rather, all ofthe major problems of tnter- national teleOommunicatiens are described to enable the reader to understand'the'complex legal- /institutional; framework involved. Chapter V presentsa summary of the altern Live indptry arrangements which were developed inhe major stud These alternatives are organiz-daccording to individual_ subject, enabling the reader to more readily compare the varying Opinions on each pertinent. category. The.authors have made no attempt to analyze theSe alter- native arrangements. Chapter VI-deals -specifically with `re4ula cry and-governmental changes-with impacts on Indus structure. The closing chapter presents an overall Y 0 he reports and the:authors'-conclusion6 and -enda-' ns on posskble stiucturat, regulatory, and leislative changes. iv TABLE OF CONTENTS e PREFACE..... 0000 **... 0.0* SO@ 000# LIST O TABLES AND FIGURES..'. 00 x " APTEA HISTORICAL REVIEW OF INDUSTRY STRUCTURE STUDIES Introduction... B. Industry Structure 'Activities Prior to 1966 AdO00000 1 C. Intragovernmcntal Committee 011 International Telecommunications (1966) . President's Task Force on Communications Policy (1968) Office of Telecommunications Policy Indutry Structure and Related Studies (17S-1976) 9 END'NOTES Ch_ ter I ...... 0. 00.09 @ed. ** 0 10 CHAPTER II: INDUSTRIAL AND TECHNOLOGICAL DEVELOPMENT IN INTERNATIONAL TELECOMMUNICATIONS 11 Introduction . 11 Development of Overseas T lephony 006 #1 11 14 Development of 'AT&T_ 11 2; Development 641,pversea Transmission Telepho 12 Developm nt of OWersea's Record Service 13 1, DeveloOment of the International Record IndustryAEarly Cable Technology. 2, Radio and the Deirelopment of International: Recordindustry009M0 .. 09 15 International Record Indpstry Today,....... .. 16 Creation of COMSAT 17 The Organizatiori of COMSAT 17 Development of Satellite TechnolOgy . ,...... 21 END Chapter II 23 TABLE OF CONTENTS cont'd) CHAPTER III: CURRENT''" REGULATORY AND OVERSIGHT ENVIRONMENT 25 A. Introduction 25 B. Statutory Background . .. 25 C. Regulatory Process.. ob. '. .. 27 1. Early Regulatory` Efforts (1928-1953).r. ,.27 2. TAT-4 Case (1964) .............. ... ..'28 3. Authorized User(1966)......'... 28 4. Thirty Circuits Case (1967) .... 00 .. 29 5. Virgin Islandscable/PuertoJ Rico Earth StatiOn Case (1967) .. ,29 '6. TAT-5 Case (1968) a.. ..- . .. ..0 6 29 7. Dataphone Order (1976) 29 8. Authorization of New Entrants (1977) . ... ..:.....-,......... ..... .....0 30 Executive Role 30 'NOTES a Chapter III .0 33 CHAPTER IV: CURRENT PROBLEMS JITHIN THE PRESENT INSTITUTJONAL ARRANdEMENTS... A. Introduction . .. 64 00....A. B. Market-Related Problems.....#.4 .... # .... 1'. Rate Base Regulation .... 35 2. Rate Structure .. 4..0,4 39 Policy-Related Problems....... 41 1. Planning and Licensing 'of Facilities..... .. ..........-. ....1.... 41 2. Relative Use of Cable and Satellite Facilities .... 64. 47 3. International Rate Setting.............. 50 4. FOreign Relations..., .,... 4. 53
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