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# FCC's Computer Inquiries Drew An Early Line on Information Services
- URL: https://broadbandbreakfast.com/fccs-computer-inquiries-drew-an-early-line-on-information-services/
- Published: 2026-11-12T13:52:00.000Z
- Updated: 2026-11-12T14:52:29.000Z
- Description: From a 1956 court decision to the 1996 Telecom Act
- Author: Broadband Breakfast
- Tags: Telecom 150, FCC Computer Inquiries, Jason Oxman., Modems, IBM, Mainframes, 1956 Bell Antitrust, James Pelkey, Online Services, #with-siderail, #no-flux

*This article summarizes several of the key points in* [*Lesson 11\. Information Services and the FCC’s Computer Inquiries*](https://broadbandbreakfast.com/lesson-11-information-services-and-the-fccs-computer-inquiries/)*, which is part of Broadband Breakfast's online course, "*[*150 Years of American Telecommunications*](https://chat.broadbandbreakfast.com/c/section-a-of-150-years-of-telecommunications?ref=broadbandbreakfast.com)*." A new lesson will be released every Monday.*

On April 7, 1980, the Federal Communications Commission, the agency that regulates interstate telephone service, sorted every service on the telephone network into two kinds. Pure transmission over phone lines stayed regulated, while computer processing carried over the wire was left unregulated.

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Businesses had been sending computer data over phone lines for years by then. American Airlines' reservation system, for one, had linked ticket agents nationwide to central IBM computers since 1964.

Companies that owned mainframe computers and charged other businesses to use them, known as service bureaus, earned an estimated $650 million in 1966\. The figure comes from an [online history of computer networking](https://historyofcomputercommunications.info/section/2.23/Timesharing-Project-MAC-1962-1968/?ref=broadbandbreakfast.com) by the networking historian **James Pelkey**, who interviewed the industry's engineers.

Most of that traffic ran on AT&T's network, but AT&T was barred from selling computing itself. A 1956 antitrust settlement with the Justice Department, approved by a federal court, limited AT&T to regulated communications.

On Nov. 9, 1966, the FCC opened a proceeding to determine whether computer services counted as regulated communications. That proceeding, later called Computer I, ended in 1971 with a decision that left data processing unregulated but sorted "hybrid" services, which mixed processing and transmission, case by case.

Telling processing apart from transmission grew harder as computers and phone networks merged, and in 1976 the commission opened its second inquiry. Computer II replaced the hybrid category with a two-way split.

A basic service was "transmission capacity for the movement of information," regulated as common carriage, which requires a carrier to serve every customer at published rates. An enhanced service added computer processing that changed or stored the customer's information, such as electronic mail, but the commission left it unregulated.

"The absence of traditional public utility regulation of enhanced services offers the greatest potential for efficient utilization and full exploitation of the interstate telecommunications network," the commission wrote.

The same order also removed telephones, modems and other customer equipment from carriers' tariffs, extending the 1968 Carterfone ruling.

### *Online services escaped per-minute charges*

Starting in 1983, the commission also treated online services as ordinary local business customers, according to an [FCC fact sheet](https://transition.fcc.gov/Bureaus/Common%5FCarrier/Factsheets/ispfact.html?ref=broadbandbreakfast.com). That spared them access charges, the per-minute fees long-distance companies paid local phone companies to reach callers.

Flat-rate dial-up internet access cost less than $20 a month, according to a [1999 FCC staff working paper](https://transition.fcc.gov/Bureaus/OPP/working%5Fpapers/oppwp31.pdf?ref=broadbandbreakfast.com) by the then-agency lawyer **Jason Oxman**., now CEO of the tech industry trade group Information Technology Industry Council.

A 1996 rewrite of federal communications law, the Telecommunications Act, renamed the two categories. Basic service became telecommunications service, and enhanced service became information service, carrying the 1980 line between the wire and the computer into federal law.

[*Lesson 11*](https://broadbandbreakfast.com/lesson-11-information-services-and-the-fccs-computer-inquiries/) *also examines Computer III's Open Network Architecture, the 1987 "modem tax" fight and two readings of why the FCC left computing alone. Lesson 9 explains how Congress gave cable television its own category in 1984, Lesson 12 covers the breakup of the Bell System and Lesson 27 returns to universal service.*[](https://broadband-breakfast.ghost.io/ghost/?ref=broadbandbreakfast.com#/posts)