Telecom Glossary

Question 1

1996 Act

Answer 1

An abbreviation for the Telecommunications Act of 1996. 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 (AM)

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 Jurisdiction

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 Re-gional Holding Companies of which the LECs were a part.

Question 7

Bandwidth

Answer 7

The transmission capacity of a communications medium

Question 8

Bill-and-Keep

Answer 8

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 9

Bottleneck

Answer 9

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 10

Broadband

Answer 10

Descriptive term for evolving technologies that provide consumers with access to high-speed services.

Question 11

Broadband Plan

Answer 11

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,

Question 12

Cellular Telephony

Answer 12

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 13

Central Office

Answer 13

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

Question 14

Circuit Switching

Answer 14

A circuit-switched 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 15

Command and Control Regulation

Answer 15

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 16

Common Carrier

Answer 16

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 17

Competitive Local Exchange Carrier (CLEC)

Answer 17

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

Question 18

Cross-Ownership Rules

Answer 18

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 19

Digital

Answer 19

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

Question 20

Digital Subscriber Line (DSL)

Answer 20

A high-speed data service provided over conventional telephone networks. DSL refers 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 21

Divestiture

Answer 21

From the verb “divest” which means 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 22

Financial Interest and Syndication Rules (Finsyn Rules)

Answer 22

The now-repealed finsyn rules
prohibited the major TV networks from exercising certain types of control over already-broadcast 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 23

Frequency Modulation (FM)

Answer 23

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 24

Incumbent Local Exchange Carrier (ILEC)

Answer 24

The established provider of local telephone

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

Question 25

Information Services

Answer 25

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 Title 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 26

Inter-carrier Compensation

Answer 26

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 27

Interexchange Carrier (IXC)

Answer 27

An IXC is 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 28

Internet

Answer 28

The Internet is a decentralized network of computer networks.

Question 29

Internet Service Provider (ISP)

Answer 29

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

Question 30

Last Mile

Answer 30

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 31

Local Exchange

Answer 31

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 32

Local Exchange Carrier (LEC)

Answer 32

A provider of local telephone services.

Question 33

Loop

Answer 33

The part of a local exchange network connecting the customer to the carrier’s
switch; in essence, the loop 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 34

Market Failure

Answer 34

The concept of market failure 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 35

Must-Carry Obligation

Answer 35

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 36

Natural Monopoly

Answer 36

A natural monopoly 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 37

Network Effect or Network Externality

Answer 37

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 38

Network Neutrality or Net Neutrality

Answer 38

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 39

Open Access

Answer 39

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 40

Packet Switching

Answer 40

In packet-switched 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 41

Personal Communications Service (PCS)

Answer 41

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 42

Plain Old Telephone Service (POTS)

Answer 42

Basic, traditional telephone service without any enhanced features like call-waiting, caller-ID, integrated voice messaging, Internet service, and so on.

Question 43

Price Cap Regulation

Answer 43

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 44

Public Interest Standard

Answer 44

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 45

Public Switched Telephone Network (PSTN)

Answer 45

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

Question 46

Public Trustee

Answer 46

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 47

Public Utilities Commission (PUC)

Answer 47

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 48

Rate of Return Regulation

Answer 48

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 49

Regulatory Capture

Answer 49

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 50

Resale

Answer 50

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 51

Retransmission Consent

Answer 51

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 52

Spectrum

Answer 52

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 53

Switch

Answer 53

The critical piece of telephone network equipment that routes calls among tele-
phone 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 54

Telecommunications Services

Answer 54

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 55

Total Element Long-Run Incremental Cost (TELRIC)

Answer 55

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

Question 56

Universal Service

Answer 56

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 57

Unlicensed Spectrum

Answer 57

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 58

White Spaces

Answer 58

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.