23. Privacy, particularly in the area of communications, is a well-established policy and objective of the Communications Act. Thus, any threatened or potential invasion of privacy is cause for concern by the Commission and the industry. In the past, the invasion of information privacy was rendered difficult by the scattered and random nature of individual data. Now the fragmentary nature of information is becoming a relic of the past. Data centers and common memory drums housing competitive sales, inventory, and credit information and untold amounts of personal information, are becoming common. This personal and proprietary information must remain free from unauthorized invasion or disclosure, whether at the computer, the terminal station, or the interconnecting communication link.

24. Both the developing industry and the Commission must be prepared to deal with the problems promptly so that they may be resolved in an effective manner before technological advances render solution more difficult. The Commission is interested not only in promoting the development of technology, but it is at the same time concerned that in the process technology does not erode fundamental values.

VII. Items of inquiry

25. In view of the foregoing, it is incumbent upon the Commission to obtain information, views, and recommendations from interested members of the public in order to assist the Commission in resolving the regulatory and policy questions presented by this new technology. Accordingly, such information, views, and recommendations are requested in response to the following items of inquiry:

A. Describe the uses that are being made currently and the uses that are anticipated in the next decade of computers and communication channels and facilities for :

1. Message or circuit switching (including the storage and forwarding of data);

2. Data processing;

3. General or special information services;

4. Any combination of the foregoing.

B. Describe the basis for and structure of charges to the customers for the services listed in A above.

C. The circumstances, if any, under which any of the aforementioned services should be deemed subject to regulation pursuant to the provisions of title II of the Communications Act.

1. When involving the use of communication facilities and services; 2. When furnished by established communication common carriers; 3. When furnished by entities other than established communication common carriers.

D. Assuming that any or all of such services are subject to regulation under the Communications Act, whether the policies and objectives of the Communications Act will be served better by such regulation or by such services evolving in a free, competitive market, and if the latter, whether changes in existing provisions or law or regulations are needed.

E. Assuming that any and all of such services are not subject to regulation under the Communications Act, whether public policy dictates that legislation be enacted bringing such services under regulation by an appropriate governmental authority, and the nature of such legislation.

F. Whether existing ratemaking, accounting and other regulatory procedures of the Commission are consistent with insuring fair and effective competition between communications common carriers and other entities (whether or not subject to regulation) in the sale of computer services involving the use of communications facilities; and, if not, what changes are required in those procedures.

G. Whether the rate structure, regulations, and practices contained in the existing tariff schedules of communications common carriers are compatible with present and anticipated requirements of the computer industry and its customers. In this connection, specific reference may be made to those tariff provisions relating to :

1. Interconnection of customer-provided facilities (owned or leased) with common carrier facilities, including prohibitions against use of foreign attachments;

2. Time and distance as a basis for constructing charges for services; 3. Shared use of equipment and services offered by common carriers; 4. Restrictions on use of services offered, including prohibitions

H. What new common carrier tariff offerings or services are or will be required to meet the present and anticipated needs of the computer industry .and its customers.

I. The respects in which present-day transmission facilities of common carriers are inadequate to meet the requirements of computer technology, including those for accuracy and speed.

J. What measures are required by the computer industry and common carriers to protect the privacy and proprietary nature of data stored in computers and transmitted over communication facilities, including:

1. Descriptions of those measures which are now being taken and are under consideration; and

2. Recommendations as to legislative or other governmental action that should be taken.

26. Accordingly, there is hereby instituted, pursuant to the provisions of sections 4(e) and 403 of the Communications Act of 1934, as amended, an inquiry into the foregoing matters.

27. In view of the scope and complexity of the matters involved, it appears desirable that interested persons be afforded an opportunity to suggest additions to and modifications or clarifications of the items of inquiry specified above. To this end, all interested persons are invited to submit appropriate recommendations in this regard on or before December 12, 1966. The Commission will thereupon issue such supplement to this Notice of Inquiry as may be warranted and will then specify a date by which written responses to said Notices shall be required.

28. All filings in this proceeding should be submitted in accordance with the provisions of sections 1.49 and 1.419 of the Commission's rules (47 CFR 1.49, 1.419).

APPENDIX E

ORDERS AND DECISIONS OF THE FCC RELATED TO DATA PROCESSING

Hon. JACK BROOKS,

FEDERAL COMMUNICATIONS COMMISSION,

Washington, D.V., August 4, 1967.

Chairman, Government Activities Subcommittee, House Government Operations Committee, House of Representatives, Washington, D.C.

DEAR MR. CHAIRMAN: During my testimony before your committee on July 19, 1967, we stated that we would supply you with copies of orders and decisions recently issued by the Commission in matters relevant to data processing, other than our Notice of Inquiry in F.C.C. Docket No. 16979 which was supplied at the time of my testimony.

Although most of our actions in common carrier communications matters may be said to have some bearing or impact upon data processing because of the growing significance of communications in relation thereto, we believe that there are three recent actions of the Commission that have the most direct relevance to the question you have asked. Therefore, we are enclosing herewith a copy of the following:

1. Memorandum Opinion and Order, in Docket No. 16218 and RM-533 released March 22, 1967, in which the Commission adopted new rules removing restrictions that had theretofore existed on the sharing of microwave radio systems licensed by the Commission to entities other than common carriers.

2. Memorandum Opinion and Order, in Docket No. 17457, instituting an investigation into the lawfulness of provisions in the private line TELPAK tariffs of the American Telephone & Telegraph Company and the Western Union Telegraph Co., restricting the extent to which a customer may share with other customers in the use of wideband private line channels furnished by these companies under the TELPAK tariffs.

3. A public notice (No. 2734) of July 7, 1967, announcing the Commission's intent to institute an overall study of new specialized communication developments including, among others, the transmission of data.

If we may be of further assistance, please advise.

Sincerely yours,

ROSEL H. HYDE, Chairman,

BEFORE THE FEDERAL COMMUNICATIONS COMMISSION, WASHINGTON, D.C.

[Docket No. 16218]

In the matter of amendment of parts 87, 89, 91, and 93 of the Commission's rules to permit expanded cooperative sharing of operational fixed stations.

Petition of the Central Committee on Communication Facilities of the American Petroleum Institute concerning cooperative use of private microwave systems in the petroleum radio service.

MEMORANDUM OPINION AND ORDER

By the Commission: Commissioner Bartley concurring in part and dissenting in part and issuing a statement; Commissioner Johnson not participating.

1. The Commission has before it for consideration its report and order in Docket 16218 (FCC 66-640, 4 FCC 2d 406) released July 15, 1966; petitions for reconsideration of the report and order filed by the American Telephone & Telegraph Co. (A.T. & T.) and by the Western Union Telegraph Co. on August 15, 1966; oppositions to the petitions for reconsideration filed by United Press

1 The time within which to file oppositions was extended to Sept. 17, 1966, by order released Aug. 29, 1966.

International, Inc.; American Newspaper Publishers Association (ANPA), and the Associated Press; Dow Jones & Co., Inc.; Central Committee on Communication Facilities of the American Petroleum Institute (API); National Committee for Utilities Radio (NCUR); National Retail Merchants Association (NRMA); NAM Communications Committee (NAM); the American Trucking Associations (ATA); and by the Special Industrial Radio Service Association, Inc. (SIRSA); and a reply to the oppositions filed by A.T. & T.

2. The petitions for reconsideration were directed against the report and order in the instant proceeding wherein the above-captioned rules were amended to permit wider sharing of private microwave systems. A.T. & T. requested that the Commission "set aside said report and order, and limit the proceeding thereafter to the issues presented in the petitions of the American Petroleum Institute (RM-533).” RM-533 had requested expanded sharing of microwave systems in the petroleum industry. Western Union "submitted: (1) That the report and order should be corrected so as to correctly reflect the position taken by Western Union; and (2) the report and order should be further corrected so as to include the same safeguards as were contained in the Commissioner's decision in In the Matter of Allocation of Frequencies Above 890 Mc/s* *(3) the report and order should be further corrected in that it fails to consider the impact of said report and order on the Telpak Tariff of A.T. & T. and further, the effective date of the Rules changes should be postponed at least until a firm Telpak rate structure is established." 2

3. The oppositions argued that the petitions should be denied mainly because they presented no basis for setting aside the Commission's decision in that they reargued positions previously advanced and rejected. They claimed that Western Union's argument concerning the probable effect of the Commission's decision on A.T. & T.'s Telpak tariff is inappropriate and should be made when and if A.T. & T. proposes to change the sharing provisions in that tariff.

4. We have considered all of the arguments in the petitions for reconsideration and in the oppositions and we have found nothing to require setting aside our decision or modifying it to any significant extent.3

Accordingly, the petitions for reconsideration will be denied, except to the extent indicated in footnote 3.

5. A.T. & T. argues primarily that the report and order does not deal adequately with its contention that there has been "no change of circumstances sufficient to justify a change in" the Commission's policy regarding sharing of private microwave facilities. A.T. & T. also asserted the view that an "unjustified burden of proof [was placed] on the carriers" and that any change in Commission policy required "the production of * * * record evidence by the proponents of such change." It suggests that the Commission "could have appropriately directed hearings."

6. We believe that our report and order sets forth a valid basis for the action taken and that a hearing is not required or desirable. This is a rulemaking proceeding in which there is no legal requirement for an evidentiary hearing. The fact that a hearing was held to aid the Commission in establishing its original basic policy in Docket No. 11866 does not, as A.T. & T. suggests, require that procedures for subsequent, related rule changes also include provision for evidentiary hearing. It is noteworthy that A.T. & T. has not heretofore requested that a hearing be held in this proceeding.

2 A.T. & T. also requested a stay of the "effectiveness of the [Commission's] order." This was denied by Commission Order released Aug. 23, 1966 (FCC 66-765). The new rules became effective on Aug. 22, 1966.

* *

3 We agree, however, that the report and order should be modified to reflect more accurately the comment of Western Union with respect to the probable impact of expanded sharing of private microwave systems on Western Union. In its petition for reconsideration, Western Union explained that it did not argue in its comments that wider sharing would have a direct adverse impact on its revenues because "*** it does not have any information which would sustain the conclusion that further liberalization of the Commission rules so as to permit sharing would result in a loss of any business by Western Union to concerns which would substitute private microwave for existing Western Union services. It did not so argue or state in its comments." Instead, Western Union claimed that expanded sharing would have an indirect adverse effect on its revenues, if A.T. & T. were to expand the sharing provisions of Telpak to conform with those for private microwave. Accordingly, the first sentence of par. 7 of the report and order is corrected to read "Western Union argued that shared private microwave systems would have indirect

7. With respect to A.T. & T.'s contention that there has been "no change of circumstances" justifying a change in policy, we think the report and order clearly indicates the reasoning which led to the Commission's decision in this regard. Without repeating the details of that document it suffices to reiterate that the accumulation by the Commission of several years of experience under a policy of permitting some sharing of private microwave facilities indicated that further permissive sharing would serve the public interest. This conclusion was not based on a failure of the carriers to meet an "unjustified burden of proof." Rather it resulted from the fact that such shared systems as had been established had worked well and the further fact that the possible undesirable consequences predicted by the carriers in Docket No. 11866 had not materialized. 8. A.T. & T. also argued that we reached our decision on "seemingly" inconsistent grounds. It claimed that we found on one hand that there is a need for more shared microwave systems and on the other that the comments did not indicate that there will be a surge of shared systems in the immediate future. But in our report and order we pointed out that there is a need for making possible further sharing of private microwave systems which should be satisfied. We also found no ground upon which to base a finding that there "would be a proliferation of 'pseudocommon carriers' along high density, low-cost routes to the substantial detriment of the carriers and to communications users in general," as the carriers had claimed. We see no inconsistency in this.

9. The total thrust of Western Union's argument seems to be that since the sharing provisions of A.T. & T.'s Telpak tariff are patterned after the sharing provisions for private microwave systems adopted in Docket 11866, our decision to expand the sharing privileges would lead A.T. & T. to make like changes in the Telpak tariff which would adversely affect Western Union. Therefore, Western Union apparently urges the Commission to keep in mind this aspect of the proceeding and postpone the effective date of the new rules until after the Telpak rate structure is established, and in any event not "* * * permit the discriminatory and perhaps unlawful Telpak tariff to be amended to incorporate such expanded sharing." We think that Western Union's argument is premature. Whether like sharing provisions in the Telpak tariffs would meet the statutory test of justness and reasonableness should be considered in connection with that tariff.

10. Accordingly, since neither of the petitioners have shown substantial error in law or policy in our report and order under consideration, their petitions for reconsideration are denied, except as indicated in paragraph 4, above.

STATEMENT OF COMMISSIONER ROBERT T. BARTLEY, CONCURRING IN PART AND DISSENTING IN PART

I concur in the holdings on the Western Union petition (paragraph 4, footnote 3, and paragraph 9).

I dissent to not limiting the proceeding as requested by A.T. & T. to issues presented in RM-533 which would limit extension of eligibility to the sharing of microwave systems in the petroleum industry, which was authorized prior to issuance of the order in Docket No. 11866.

BEFORE THE FEDERAL. COMMUNICATIONS COMMISSION, WASHINGTON, D.C.

[Docket No. 17457]

In the matter of Telpak tariff-sharing provisions of American Telephone & Telegraph Co., and the Western Union Telegraph Co.

MEMORANDUM OPINION AND ORDER

Adopted May 19, 1967; released May 19, 1967

By the Commission: Commissioner Bartley dissenting and issuing a statement; Commissioner Loevinger concurring and issuing a statement in which Commissioners Lee and Wadsworth join; Commissioner Johnson absent.

1. The Commission has under consideration (a) the provisions appearing in Tariff FCC No. 260 of the American Telephone & Telegraph Co. (A.T. & T.) and