A Comparative Study of the Regulatory Treatment of Enhanced Services in the United States and the European Community

Spaeth, Steven M. | January 1, 1988

The telecommunications industry and the data processing industry have become integral parts of the world economy. Furthermore, over the years, these services have come to complement each other. The result has been the development of services which are made up of both communications and data processing components. For the past twenty years, the FCC has struggled to develop rules that will allow common carriers in the United States to take advantage of their economies of scope while preventing or minimizing the pernicious effects of cross-subsidization and bottlenecks. As a result, complicated rules, and definitions attempting to draw a line between basic and enhanced services have evolved. In addition, the operators of bottleneck facilities have been prohibited from offering many enhanced services. More recently, the Commission of the European Economic Community (“EEC”) has published the Green Paper on Telecommunications, which proposes rules in this area, and attempts to integrate the EEC’s enhanced services and data processing markets across its Member States’ national boundaries. One of the effects of the Green Paper probably will be that the Member States will base their definitions of basic and enhanced services on characteristics of the markets for those services, such as the level of demand for the service and the availability of economies of scale and scope, rather than the FCC method of basing the definitions on characteristics of the services themselves, such as how much the services alter the form or content of the consumer’s information. The other effect of the Green Paper probably will be that the operators of bottleneck facilities will be allowed to offer most enhanced services.