Final Review

Question 1

Telecommunications Act of 1996.

Answer 1

1996 Act • An abbreviation for the This statute amended
the Communications Act of 1934 and, among other things, established most of the rules
under which the telephone industry is today regulated

Question 2

Amplitude Modulation

Answer 2

• A method of modulating information on a radio wave by
varying the strength (voltage) of some agreed-upon baseline signal. To take a simple example: the baseline strength might be 2 volts, and all parties might understand that every
time the signal increases to 5 volts the sender intends to tell the receiver that a customer
has entered the building. AM modulation is one of two common methods of encoding
typically used for radio transmission.

Question 3

analog

Answer 3

A signaling method that uses continuous changes in the amplitude or frequency
of a carrier wave to convey information

Question 4

Ancillary Jurisdition

Answer 4

This doctrine provides the FCC with authority to regulate services “ancillary” to those services within its specifically authorized jurisdiction. This doctrine is relevant to the FCC’s effort to regulate broadband communication.

Question 5

AT&T

Answer 5

An acronym for the American Telephone and Telegraph Company. The acronym
is sometimes used to refer to the firm that ran most of the nations telephone system prior
to 1982 (which in this text we refer to as “Bell”); but, in this text it is used to refer to the
subsidiary of Bell that provided long distance service after the breakup of the Bell System.
Note that, in 2006, SBC merged with AT&T and took the AT&T name; so now, once again,
AT&T refers to a company that provides local telephone service, long distance service,
and also advanced services like DSL and video programming.

Question 6

Baby Bell

Answer 6

One of several terms for the LECs that were once part of the Bell System.
The phrase sometimes refers to a single LEC, but it is more often used to refer to the Regional Holding Companies of which the LECs were a part.

Question 7

Bill and Keep

Answer 7

An arrangement between two LECs where each agrees to terminate, at no
charge, traffic that originates on the other’s network. Each LEC bills its own customers
and keeps those payments instead of sharing them with the other LEC.

Question 8

Bottleneck

Answer 8

• The point in a system or production process at which the traffic of competing
providers must flow over facilities owned by a single provider. Bottlenecks raise
concerns for competition policy because of the potential for the firm controlling the
bottleneck to discriminate against competitors in access to the facility and thereby to
exercise monopoly power over the good or service at issue

Question 9

Broadband

Answer 9

is a descriptive term for evolving technologies that provide consumers with access to high-speed services.

Question 10

Cellular Telephony

Answer 10

• Wireless telephone technology that divides spectrum into small geographic “cells” each of which contains its own transmitter and receiver. As a caller moves
from cell to cell, her call is handed off from the equipment in one cell to the equipment in
the next, allowing the first cell to handle other callers’ signals. In this way, callers moving
around the same general area can use the same frequencies without interfering with one
another

Question 11

Central Office

Answer 11

The primary place where a LEC houses its switches and other equipment
for the routing and processing of telephone calls.

Question 12

Circuit Switching

Answer 12

network is one in which the path for a particular
communication is kept open from the time the communication is initiated until the time
transmission is complete. The primary example is the telephone system, in which each voice
call has a unique channel that is kept open for that call, even during pauses at which time
nothing is traveling along the voice path. In this way communications are not interrupted
and flow smoothly from end-to-end as they are transmitted. Compare Packet Switching

Question 13

Command and Control Regulation

Answer 13

The basic term for regulatory approaches that dictate
how private actors can operate. In the case of spectrum regulation, this mode of regulation has predominated for a long time. More recently, however, criticisms of this
approach have led to regulatory reforms in this area.

Question 14

common Carrier

Answer 14

• A firm that sells its services to the general public and serves all comers for a set fee. A telephone carrier, for example, serves anyone who wishes to subscribe
and does so on non-discriminatory terms. A provider of “telecommunications services” is
subject to common carrier obligations

Question 15

competitive local exchange carrier (ILEC

Answer 15

Firms that provide local telephone service in competition with the incumbent local exchange carrier (ILEC) in a given area

Question 16

cross-ownership rules

Answer 16

• Rules that restrict ownership across different communications
services in an effort to foster competition. For example, FCC regulations restrict the number of TV stations a firms can own in a given locality. These rules can apply nationally or
locally, and they can set caps by stipulating a maximum number of licenses/franchises, a
maximum percentage of the relevant audience, or both. So, for example, the “local
television ownership rules” limit the number of broadcast licenses that a single entity can
hold in a given market; and the “national television ownership rules” limit the percentage
of the national audience that a single broadcaster can reach through stations it owns or
controls.

Question 17

Digital

Answer 17

A signal consisting of binary code (a stream of ones and zeroes) to represent
voice, video or data.

Question 18

digital subscriber line (DSL)

Answer 18

A high-speed data service provided over conventional
telephone networksrefers to the technology that allows telephone carriers to attach
certain electronics to the telephone line that can transform the copper loop that already
provides voice service into a conduit for high-speed data traffic.

Question 19

Divestiture

Answer 19

s to separate or take away, this term
refers to the breakup of the Bell System that came as a result of the Department of Justice’s 1974 antitrust prosecution.

Question 20

Frequency Modulation (FM)

Answer 20

A method of modulating information on a radio wave by
varying the frequency of some agreed-upon baseline signal. To take a simple example: the
baseline signal might reach its peak once every two seconds, and all parties might
understand that every time the signal frequency drops below this level a customer has entered the building. FM modulation is one of two common methods of modulation typically used for radio transmission. The other is AM.

Question 21

Incumbent Local Exchange Carrier

Answer 21

The established provider of local telephone

service in a given area, which until the 1996 Act usually had a monopoly franchise

Question 22

Information Service

Answer 22

• The name given, under the 1996 Act, to services that use “telecommunications” to deliver a service—ranging from “Dial-A-Joke” to Lexis-Nexis to Internet
Service—to the public. Information services, formerly called “enhanced services,” are regulated, if at all, under Tide I of the Communications Act and they are not subject to traditional common carriage regulation. These services are also exempt from access charges (i.e.,
they are treated as local and not long distance calls). This regulatory category is discussed
in connection with The FCC classifies DSL and cable modem services as information services. See also Telecommunications Services

Question 23

Inter-Carrier Compensation

Answer 23

• Payment by one local exchange carrier to another for the
additional, or marginal, costs of terminating calls that originated on the paying carrier’s
network. Reciprocal compensation is the general rule established by the Telecommunications
Act of 1996 for interconnection among competing local exchange carriers.

Question 24

Interexachange Carrier

Answer 24

a long distance telephone company. The term
comes from the fact that long distance carriers transport calls across the boundaries that
separate one local exchange area from another.

Question 25

internet service provider (ISP)

Answer 25

• provide customers with access to the Internet. is a firm that, at a minimum, receives and translates Internet-bound data.
takes data in whatever form it arrives and translates it into a form consistent with the
TCP/IP protocol of the Internet.

Question 26

Last Mile

Answer 26

The segment of a telecommunications network that connects directly to a customer’s premises. The term often refers to the twisted pair of copper wires that connects a
customer to a LEC’s switch and over which a telephone call begins and ends its journey.
Many people believe the “last mile” to be a bottleneck, although that belief is today less
strongly held than it once was

Question 27

Local Exchange

Answer 27

A geographical area in which customers receive service from a common
central office or set of central offices. Sometimes an exchange is served by a single central office switch, in which case the switch itself is referred to as the “exchange.”

Question 28

Local Exchange Carrier

Answer 28

• A provider of local telephone services

Question 29

Loop

Answer 29

The part of a local exchange network connecting the customer to the carrier’s
switch; in essence, the is the customer’s telephone line. Sometimes an entire local
exchange network is referred to as “the local loop” for a given area. See Last Mile, Natural Monopoly

Question 30

Market Failure

Answer 30

The concept of captures situations where private markets
fail to produce a socially optimal mix of resources. This situation takes place when, for
example, a monopolist controls a market and can withhold supply to raise its profits.

Question 31

Must-Carry Obligation

Answer 31

• A 1992 Cable Act term referring to the statutory requirement
that cable systems carry the signals of a certain number of commercial and noncommercial television broadcast stations that are “local” to the area served by the cable system

Question 32

Natural Monopoly

Answer 32

• A is said to exist in any market where the costs of
production are such that it is less expensive for demand to be met by one firm than it
would be for that same demand to be met by more than one firm. For example, this occurs when, over a sufficiently large range of output, the addition of each new customer
lowers the average cost of serving every other customer

Question 33

Network Effects

Answer 33

• A condition that causes the value a given consumer places on an item to increase as the number of other consumers of that product
increases. There is a network effect or network externality at work in the telephone industry
because, the more subscribers, the more people to call, and hence the more each subscriber values his or her own telephone subscription

Question 34

Network Neutrality

Answer 34

This phrase refers to a proposed regulatory regime
under which the owners of Internet infrastructure would be constrained in their ability to
charge different prices to different content or service providers, for example, based on
quality of service differences. Absolute network neutrality would require that all bits on
the network be treated exactly the same

Question 35

Open Access

Answer 35

• The term used for the concept of mandating that broadband providers, in
particular cable modem services, be required to carry multiple ISPs. The FCC does not
today require open access. See also Network Neutrality

Question 36

packet switching

Answer 36

• In networks, messages between network users are divided into units, commonly referred to as packets, frames, or cells. These individual
units are then routed from one network user to another user that has a specific destination
IP address. Unlike circuit switching, however, the path between network users is not kept
open for any particular communication. This allows for more efficient use of the
telecommunications infrastructure, but it also introduces the possibility of delays, often
undetectable, in the movement of packets from end-to-end. The switches that route packets are called “packet switches,” and the function of routing individual data packets based
on information contained in the packets is “packet switching.”

Question 37

personal communications service (PCS)

Answer 37

• A wireless communications service similar to cellular telephony, but transmitted at lower power and generally using digital rather than analog signals. The FCC licensed PCS providers in the mid-1990s to compete with the two cellular providers originally licensed in each geographic market.

Question 38

Plain old telephone service (POTS)

Answer 38

• Basic, traditional telephone service without any

enhanced features like call-waiting, caller-ID, integrated voice messaging, Internet service, and so on

Question 39

price cap regulation

Answer 39

A method of rate regulation that has largely replaced rate of return regulation for telecommunications carriers. Price cap regulation limits the prices
firms can charge rather than limiting the returns a firm can earn. The theory behind price
caps is that they give regulated firms incentives to reduce costs and become more efficient because, for at least some period of time before regulators readjust the caps, firms
can thereby increase their profits.

Question 40

public interest standard

Answer 40

The standard that the Communications Act directs the FCC to
apply in a variety of settings, ranging from licensing broadcasters to authorizing service
operations by telecommunications carriers. The phrase—”public interest, convenience,
and necessity”—appears throughout the 1934 Act

Question 41

Public Switched telephone network (PSTN)

Answer 41

Usually refers to the incumbent local exchange network that offers service to all customers in its operating area.

Question 42

public trustee

Answer 42

• This term is often attached to holders of broadcast licenses. It refers to
their obligation to operate their stations in a manner that serves the interests of the viewing public. The term incorporates the idea that holders of scarce licenses have received a
special benefit—use of the government’s precious spectrum—in return for which they
must serve the public’s, and not just their own private, objectives.

Question 43

Public Utilities commission

Answer 43

A state regulatory authority that oversees the intrastate
aspects of telephone (and usually other utility) services. PUCs are often forced to share
jurisdiction and authority with the FCC.

Question 44

rate of return regulation

Answer 44

A form of regulation under which firms are permitted to
charge prices that both cover their total costs of providing a service and, in addition, pay
a “reasonable” rate of return on their capital investments in providing the service. This form
of regulation, which was for decades the primary means of regulating telephone rates, requires the regulator to determine the regulated firm s costs and then to decide what rate of
return is reasonable for the firm to earn. See also Price Cap Regulation.

Question 45

regulatory capture

Answer 45

Phrase used to describe situations where a regulatory agency falls
under the influence of a powerful interest group. The paradigmatic case of capture arises
when an agency does the bidding of the very parties it was originally designed to regulate
and therefore stops regulating in the public’s interest and starts, instead, regulating for the
benefit of the regulated parties

Question 46

resale

Answer 46

• One of the means by which Congress and the FCC have attempted to introduce
competition into the local telecommunications market. A key example is the 1996 Act’s
mandate that ILECs make their services available at wholesale rates to new entrants such
that those new entrants can, in turn, resell those services directly to consumers.

Question 47

retransmission consent

Answer 47

A requirement that cable operators receive consent from the
relevant broadcaster before retransmitting that broadcaster’s signal to cable subscribers. A
broadcaster has a choice between demanding carriage under the 1992 Act’s must-carry provisions or demanding that a cable operator obtain its consent for carriage. Similar
obligations are also imposed on DBS providers.

Question 48

spetrum

Answer 48

• The electromagnetic radio frequencies used in the transmission of television
and other signals carrying video, sound, and data through the air. One of the Commission’s major tasks is spectrum management.

Question 49

switch

Answer 49

• The critical piece of telephone network equipment that routes calls among telephone subscribers. A switch is what enables a telephone network to operate efficiently: every
customer need not have a line to every other customer, but instead need only have a single line to the switch, which then will connect a call from any customer’s line to any other
customer’s line

Question 50

telecommunication services

Answer 50

This regulatory category governs all services provided
under Title II of the 1934 Act and subjects such services (unless otherwise deregulated
through a forbearance process) to common carrier regulation. Notably, Internet broadband access is treated as an “information service” and not classified as a
“telecommunications service” even though it does use a component of
“telecommunications.”

Question 51

total element long-run incremental cost (TELRIC)

Answer 51

• The rule that the FCC adopted in 1996
for determining the price at which an ILEC must sell unbundled network elements to
CLECs.

Question 52

Universal Service

Answer 52

• A set of policies designed to keep rates for local telephone service affordable and reasonably homogenous for subscribers. At times, the phrase refers more
broadly to any subsidy or program designed to assist low-income or otherwise disadvantaged telecommunications consumers.

Question 53

unlicensed spectrum

Answer 53

• Spectrum that is authorized for use without a license under the
FCC rules, which require merely that certain power limits are respected. The
authorization of the use of spectrum without a license allowed a number of technologies,
including cordless phones and Wi-Fi to develop.

Question 54

white space

Answer 54

• This term describes the unused parts of the wireless spectrum. It is specifically used to describe the bands of unused spectrum dedicated to over the air TV broadcasting. The FCC appropriated this term in an order enabling the unlicensed use of white
spaces in the TV bands. See also Unlicensed Spectrum.

Question 55

Internet

Answer 55

is a decentralized network of computer networks

Question 56

Financial interest and Syndication Rules (Finsyn Rules)

Answer 56

The now-repealed finsyn rules
prohibited the major TV networks from exercising certain types of control over alreadybroadcast television content. The concern motivating these rules was that the major networks could use this control to deny independent stations access to high-quality syndicated
reruns.

Question 57

Broadband Plan

Answer 57

In 2009, the Congress required the FCC to develop a plan for how the
agency and other parts of the government would approach broadband communications.
This Broadband Plan was issued in March 2010,