"connecting carrier" classification successfully limits regulation

In 1934, the U.S. Communications Act established a class of common carriers subject to only a subset of common-carrier (Title II) regulation.  This class of common carriers, called “connecting carriers”, included:

any carrier engaged in interstate or foreign communication solely through physical connection with the facilities of another carrier not directly or indirectly controlling or controlled by, or under direct or indirect common control with such carrier[1]

Connecting carriers were subject to only Sections 201 to 205 of Title II of the Communications Act.[2] These Title II provisions authorize the U.S. Federal Communications Commission (FCC) to require telephone company interconnection, to prohibit anti-competitive practices, and to ensure that telephone rates are just and reasonable.  Connecting carriers were exempted from Title II regulation outside of regulation associated with these core concerns about interconnection, competition, and consumer protection.

Telephone companies classified as connecting carriers were a significant component of the U.S. telephone industry in 1934.  When it was established, the FCC carefully reviewed a poorly maintained list of 6,500 telephone companies that it received from the Interstate Commerce Commission.[3]  The FCC collected relevant facts, established classificatory rules, and, when necessary, held hearings.[4]  In its 2’nd Report to Congress in 1936, the FCC reported on its classificatory determinations:

Approximately 250 companies from the three classes [size classes based on gross revenue] are fully subject to the act; a very large number of companies are subject to sections 201-205 only [connecting carriers]; and a substantial number of companies are outside the jurisdiction of the Commission.[5]

From its beginnings, the U.S. telephone industry has had a large number of telephone companies.  Connecting-carrier classification limited the burden of Title II regulation on many telephone companies.  The classification scheme also allowed the FCC to focus its regulatory efforts under Title II on key concerns and on the telephone companies most relevant to the FCC’s national regulatory responsibilities.

Telephone companies that the FCC classified as connecting carriers were not required to file statistical reports with the FCC.  Nonetheless, some connecting carriers, apparently recognizing the value of the FCC’s compilation of industry data, voluntarily filed reports with the FCC.  In 1942, connecting carriers voluntarily filing statistical reports with the FCC accounted for 37% of the revenue of all non-Bell-System telephone companies that filed reports.  Connecting carriers included telephone companies that were among the largest non-Bell-System companies.  For example, Associated Telephone Co., a California-based operating company under General Telephone, later to become GTE, was classified as a connecting carrier.  Associated Telephone in 1942 was the third-largest non-Bell-System telephone operating company.  It had annual operating revenue equivalent to about $88 million in 2009 dollars.[6]

Limited Title II regulation for connecting carriers was a stable, relatively uncontroversial regulatory structure.  In 1910, the Mann-Elkins Act extended federal Interstate Commerce Commission jurisdiction to telephone companies engaged in sending messages interstate.  About that year, individual states rapidly enacted laws authorizing state commissions to regulate telephone companies.  Subsequent changes in judicial interpretations of the Commerce Clause allowed federal telephone regulation of intrastate messages and all other aspects of the telephone business.  Despite this significant change in constitutional law, neither Congress nor the FCC changed the limited Title II regulation of connecting carriers.  A number of connecting carriers continued to file voluntarily statistical reports at the FCC at least through 1951.[7] While some minor proceedings at the FCC have addressed the definition of connecting carriers, limited Title II regulation for connecting carriers has largely been a well-understood, well-settled, regulatory certainty at the FCC for the past seventy-six years.

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Data:  connecting carriers voluntarily filing statistical reports in 1942; years in which state commission regulation of telephone companies was established (Excel version)


[1] Communications Act of 1934, Sess. 2, ch. 652, 48 Stat. 1064, Section 2(b)(2).  In Section 3(u), a “connecting carrier” is specified to be a carrier described under Section 2(b)(2).  Here’s the original text of the Communications Act of 1934 (starts at pdf page 1090).

[2] For a recent proposal to limit Title II regulation, see FCC, Framework for Broadband Internet Service, GN Docket No. 10-127, Notice of Inquiry (June 17, 2010), Section II.B.2.

[3] The FCC’s 2’nd Report to Congress observed:

When the Federal Communications Commission was organized July 11, 1934, it received from the Interstate Commerce Commission a mailing list of some 6,500 telephone companies. It was soon ascertained that many of these companies had long since gone out of existence.

See p. 23.

[4] On the collection of facts, see id., and FCC, 1’st Report to Congress, p. 14.  The early FCC order Classification of Telephone Companies, 3 FCC 37 (1935), established the classificatory rules. For only about 25 companies did disputes arise.  The disputes mainly concerned questions of corporate control.  See FCC, 2’nd Report, p. 23.

[5] Id.

[6] Associated Telephone’s operating revenue in 1942 was $6.7 million, much more than the operating revenue threshold for the largest class of telephone companies (Class A telephone companies, which were defined to be telephone companies with more than $100,000 in operating revenue). Using the increase in the Consumer Price Index from 1942 to 2009 (13.2) gives the equivalent 2009 dollars.

[7] After 1951, the FCC’s annual Statistics of the Communications Industry did not indicate any connecting carriers filing statistical reports.

COB-48: bureaucratic character

Portrait of Feng Ping, China, Northern Song dynasty, ca. 1056In China in 958, Zhai Fengda’s wife, “the mother of our family,” died.  To benefit her spirit, Zhai, then a seventy-five-year-old man, carefully and accurately followed the instructions of the Buddhist text, The Scripture on the Ten Kings.  These instructions required Zhai to make copies of Buddhist scriptures at specific time intervals following his wife’s death.  In a colophon to the first scripture copied, Zhai wrote:

“On the night of the first day of the third month of the fifth year of the Hsien-te era, designated wu-wu in the sequence of years [23 March 958], the body of our mother, the lady Mrs. Ma, passed away.  On the seventh day [29 March 958] we hold the feast of the opening seven.  The Acting Vice Director of the Ministry of Public Works in the Department of States Affairs, Zhai Fengda, in remembrance reverently copied The Scripture on Impermanence on one scroll and reverently painted one picture of the Thus Come Buddha Pao-chi.  For every week until the third full year, on each feast one scroll of scripture will be copied as a posthumous blessing.  We pray that Mother’s shadow be entrusted and her spirit roam to be reborn in a fine place, and that she not fall into the calamities of the three paths.  Offered fully and forever.”[1]

This and other colophons to subsequently copied scriptures include colloquial terms for mother.[2]  Yet amidst his personal grief and concern, Zhai wrote in his lengthy, formal bureaucratic title. Moreover, even in this document for eternity, Zhai acknowledged his “Acting” status, a transitional status that he nonetheless endured for more than three years. These actions indicate an exceptionally well-developed bureaucratic character.

Zhai showed relatively little bureaucratic promise as a young man.  While he had scribal training, he also composed poetry.  In a poem Zhai composed when he was twenty years old, he asserted:

The lad who studies not the reading of poetry and rhapsodies
Resembles most the gnarled roots of flowering trees.[3]

This is a fine poem. But bureaucrats should not write poetry, even bad poetry.

Zhai subsequently developed a more refined bureaucratic sense. At age forty, Zhai appended below this poem his new feelings, “seeing this poem by chance, I am simply mortified with shame.”[4]  Zhai then had been describing himself in documents as “Lackey, Acting Attendant Officer and Counselor.”  By age sixty, Zhai had worked his way to a much higher bureaucratic level. His title, as he wrote it, was then:

Lackey to the Military Commissioner, Acting Attendant Officer and Counselor, Grand Master of Imperial Entertainments with Silver Seal and Blue Ribbon, Chancellor of the Directorate of Education, Concurrently Vice Censor-in-Chief, Supreme Pillar of State.[5]

In bureaucratic corporations, almost all the Senior Vice Presidents probably would strangle their own mothers to acquire a title this long and impressive. Nonetheless, they probably would lack sufficient bureaucratic character to include their titles in invitations to their mothers’ funerals.

Other notable bureaucratic items this month:

The Spy Blog (Watching Them, Watching Us) states that UK Police and Home Office bureaucrats are not rubber-stamping adequately.  Rubber stamping is a key bureaucratic competence.  This problem should be investigated immediately.

Terry Heaton at the PoMo Blog explains that top-line Budget Rental Car insurance doesn’t include an important risk.  You have to read the full, obscure details of the insurance form to understand this.  Most persons still do not receive sufficient bureaucratic education. Until the educational system is sufficiently bureaucratized, I think Budget Rental Car’s insurance policy is totally unfair.

Laurent De Muyter at the European Telecommunications Law Blog reports that the office of the Body of European Regulators for Electronic Communications (BEREC) will be located in Riga.  From a bureaucratic perspective, BEREC is a quite sexy body.  This Body should spur bureaucratic travel and tourism to Latvia.

Gizmodo examines the criminal justice system criminalizing persons taking photos of on-the-job police officers. Such photos might show police engaging in illegal activities.  This creates immense bureaucratic problems, because police officers’ job description requires them to stop persons engaged in illegal activities.  Moreover, ordinary citizens are not police officers, hence its not their job to stop persons, including police officers, engaging in illegal activities. Protecting citizens from illegal actions of persons carrying guns is a fundamental purpose of government.  We recommend the formation of a commission to study whether citizens should be able to take photos of on-the-job police officers, including those who follow them into their home.

That’s all for this month’s Carnival of Bureaucrats. Enjoy previous bureaucratic carnivals here. Nominations of posts to be considered for inclusion in next month’s carnival should be submitted using Form 376: Application for Bureaucratic Recognition.

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[1] Trans. from Teiser (1994) pp. 102-3.  In the Wade-Giles romanization system, Zhai’s name is written as Chai Feng-ta.  In the quoted text, I have changed that name to Zhai Fengda.  Id.  ft. 2 convincingly argues that Lady Ma was Zhai’s wife, not his mother.

[2] Id. pp. 102-3, ft. 2.

[3] Trans, id. p. 117. Despite not being able to read medieval Chinese, I have replaced “withered” with “gnarled” in the above translation.  The latter word seems to me much more poetically appropriate and is plausibly within the semantic range of the original Chinese character.  On the translation, see id. p. 117, ft. 41.  In a dedication to a copy of Hymns Extolling the Scripture and A Record of the Verifications and Merit to Be Gained, Zhai wrote that he hoped, for his parents and for everyone following Buddha,”blessings will be the same as spring grasses, and sins be like autumn sprouts.”  See id. p. 119.  Zhai wrote that in 908.  It’s a poetic sentiment totally inappropriate for a bureaucrat.

[4] Id. p. 118.

[5] See id. p. 243, title written ca. 940.  The previous title is from id.  p. 242, written ca. 924.


Teiser, Stephen F. 1994.  The scripture on the ten kings and the making of purgatory in medieval Chinese Buddhism.  Honolulu, HI: University of Hawaii Press.