Common Carrier Regulation of Telecommunications Contracts and the Private Carrier Alternative

The Communications Act of 1934 requires, among other things, that telephone companies as common carriers make their services available to the general public at affordable rates. The Federal Communications Commission (FCC) has the authority to classify telephone services as common carriers as well as the ability to remove common carrier regulation to promote competition, satisfy consumer demand for individually tailored offerings, and avoid unnecessary regulatory costs. The Authors of this Article believe that the FCC should remove the common carrier regulation from certain long-distance service contracts and that such regulation is consistent with the deregulatory aims of the recent Telecommunications Act of 1996. The Article first reviews the judicial development of the common carrier definition which finds that a communications service is acting as a carrier if it either (1) actually holds out its service indiscriminately to the public or (2) is required to hold itself out because the public interest requires it. The Authors discuss the relatively broad application of this definition to new and existing telephone services in a series of cases. Part I concludes with an examination of recent instances where the FCC has used this definition to reclassify various telecommunications services as private or noncommon carriers/carriage. These instances fall into five categories: (1) satellite transponders, (2) broadcast-related services, (3) private land mobile services, (4) private microwave services, and (5) certain communications services, such as enhanced services and inside wiring. In Part II the Authors describe the growth and importance of individually negotiated telecommunications service contracts to the business operations of many customers. The Article then discusses the application of the private carrier alternative to these contracts. The Authors argue that there is nothing inherent in these contracts which requires that they be designated as common carrier services. The Authors offer several reasons why the FCC should no longer require that the contract services indiscriminately be held out to the public, including some of the potential benefits of removing this regulation. The Authors feel that classifying the service contracts as private would promote competition and innovation, as well as reduce regulatory costs