Convergence of the Internet and Telecommunications

Introduction

At the close of the 20^th century, a traditional, prototypical telecommunications company provided high quality point-to-point voice services utilizing a technology specially designed for transmitting voice signals. This wireline architecture was comprised predominantly of copper-based local loops, circuit switches, and local transport and long distance conduits that incorporated some fiber-optic technology. In such centralized phone networks, intelligence resided in the core of the network in the switch technology, not in the end devices connected to the network as it does in the decentralized Internet architecture. In such a network, the provision of the service, voice, was closely identified with the underlying physical infrastructure that provided the service. For much of the 20^th century, United States telecommunications companies were thought to be natural monopolies in the provision of voice services and thus subject to regulation in dual jurisdictions, at the state and federal levels. More generally, regulation of electronic communications networks was based on the premise that a particular service (such as voice, data, or video) was inextricably linked to a specific underlying infrastructure used to provide the service.

With technological improvements in digital and network technology and the spectacular growth of broadband technology and the Internet at the end of the 20^th century, the traditional architecture of phone networks (and other communications networks) and the scope of regulation of telecommunications companies are gradually changing. Telephone companies are transforming their provision of voice and other broadband services from copper-based networks to advanced fiber-optic networks. The purpose and scope of this research is to describe and analyze the restructuring of telecommunications networks and telecommunications companies as they respond and adapt to technological and economic changes.

As telecommunications/entertainment/information networks converge to an advanced, multifaceted architectural broadband platform that is capable of offering an integrated bundle of voice, data, and video broadband services, it is incumbent on regulatory authorities to change the nature of the regulatory approach toward these telecommunications companies. A pattern of deregulation is in process but there still exist unanswered questions regarding the appropriate regulatory response to convergence. Convergence is creating new competition/regulatory issues in a variety of formerly distinct industries. Peha, Lehr, and Wilkie (2007), three leading Internet scholars, argue that “At root, the debate is about the future of regulatory policy for the communications sector as we move toward a post-convergence world where legacy industry boundaries and regulation of cable television, broadcasting, and telecommunications need to be reconciled with the challenges of competition among broadband platform services, based on the Internet” (p. 710). For instance, as the telecommunications network converges on the Internet model, telephone companies have discussed implementation of a two-tiered (non-neutral) Internet that would replace the standard practice by Internet service providers of treating generally all kinds of packets in the same manner (i.e., neutrally) regardless of the application or provider. Observing a neutrality principle implies that broadband access providers do not favor some packets at the expense of others, that is, there exists a lack of discriminatory behavior toward applications and content utilizing the network.