After conducting a series of hearings on AT&T’s growing dominance over American telephoning, Congress determined that AT&T and its competitors were public service corporations whose facilities and instruments were devoted to public use, which made them subject to two kinds of legislative control, state and federal. States may regulate the transmission of telephone communications wholly within state boundaries, Congress said, so long as such intrastate communications do not substantially affect interstate commerce. Once a telephone communication crosses state boundaries or substantially affects commerce in more than one state, Congress observed, the Commerce Clause of the U.S. Constitution gives only federal authorities the power to regulate such interstate communications. U.S.C.A.Const.Art. I, section 8, clause 3. Congress formalized these findings in the Communications Act of 1934.
The Communications Act of 1934 establishes a dual system of state and federal regulation for telecommunications services. 47 USCA sections 151 et seq. The act grants the FCC broad authority, but also clearly delineates a strict separation between interstate and intrastate jurisdiction, and denies the FCC authority over most intrastate communications. The act also establishes the Federal-State Communications Joint Board to hear disputes that involve questions concerning both interstate and intrastate telephone transmissions, and any other telecommunications dispute deemed to involve a mixture of state and federal concerns.
In determining whether the FCC has jurisdiction to regulate a particular telephone service provider, the focus is on the nature of the service at issue, since the FCC may regulate telephone services only to the extent of their interstate use. However, purely intrastate telephone facilities and services that are used to complete even a single interstate call can fall under FCC jurisdiction depending on the nature of that phone call. Thus, the FCC has authority to regulate use of an intrastate call made on a Wide Area Telecommunications Service (WATS) when that service is used as part of an interstate communications network. National Association of Regulatory Utility Commissioners v. F.C.C., 746 F.2d 1492 (D.C. Cir. 1984). Similarly, where a telephone company has all of its facilities within one state and solely engages in intrastate telephone communication except for its physical connection with carriers doing business in other states, it is still subject to federal regulation under the Communications Act as a connecting carrier. At the same time, the FCC does not have authority to order connecting carriers to continue interconnection agreements with interstate telecommunication service providers. Accordingly, connecting carriers are free to remove their interconnection with any interstate carrier, and thereby remove themselves completely from jurisdiction of the FCC.