Federal Communications Commission

“ AT&T's proposal to allow carriers or their resale affiliates to tariff any kind of customer premises equipment "with a communications purpose" is opposed by CBEMA. It argues that, contrary to the intention of the Tentative Decision, this proposal would allow carriers to provide any type of equipment, including that which would be classified as primarily data processing under the current rules, so long as it performs any communications function. ”

“ Various commenters, such as ADAPSO, reject AT&T's economies of scale argument contending that such economies are not important in data processing technologies and that technological development is not necessarily spurred by vertical integration. As an example, they claim that AT&T, with its integrated structure and massive resources has lagged behind the data processing industry in terms of innovation. ”

“ They submit that while the imposition of the resale structure on enhanced services provided by dominant carriers is logical, it is not required for non-dominant carriers since they do not have the potential to engage in the anticompetitive practices that the resale approach is designed to prevent. For example, SBS, MCI and GTE-Telenet state that non-dominant carriers and the specialized common carriers (SCCs) operate in a competitive marketplace and have no monopoly power or profits with which to engage in anticompetitive behavior ”

“ Taking AT&T's comments to task, CCIA maintains that AT&T's market dominance in communications, and the extent to which such market dominance would allow it to confer monopoly power on a CPE subsidiary, must also be taken into consideration. Moreover, CCIA accuses AT&T of overlooking the fact that if the decree were modified to permit AT&T's entry, it would be the non-IBM segment of the data processing market which would be injured by anticompetitive AT&T practices, thereby increasing economic concentration in the two industries. ”

“ There appears to be a general consensus that a regulatory structure distinguishing between basic and enhanced services is appropriate, However, concern is expressed that in establishing the three categories of service--voice, BNV, and ENV--an artificial distinction is being made between voice and non-voice services. ”

“ Concerning carrier participation in the provision of ENV services, the comments address whether the resale structure is appropriate, whether it should be applied to all carriers owning transmission facilities, and the appropriate degree of corporate separation required for those carriers that must offer ENV services through a separate subsidiary. ”

“ Further, arguing that there are no significant economies of scale, IDCMA suggests that underlying carriers should have to establish separate subsidiaries to manufacture competitive customer-premises equipment as well as separate subsidiaries to market it. ”