Summary of the Telecommunications Act of 1996

Much of my summary is based on reading this:

Goal:  promote competition / prevent monopolies
Reality:  gridlock and legal battles over what's 'fair' and 'reasonable'

The goal of the Telecommunications Act of 1996:  TO PROMOTE COMPETITION IN TELECOMMUNICATION MARKETS.  Specifically:

The breakup of AT&T's monopoly 12 years earlier was seen as a good example of how competition can benefit the consumer in a market.  AT&T had a monopoly on long-distance phone calls, and after the breakup of AT&T's monopoly consumers witnessed local competition for their business, resulting in cheaper long distance rates.

As computer and network equipment (new fiberoptic cable, etc.) becomes cheaper - it should be fair that consumers see an equivalent drop in price of service.

So, how will we accomplish the task of allowing small companies to compete with large companies (without being bought out, pushed aside, etc)??

Incumbent Local Exchange Carriers (ILEC's) must:

  1. lease parts of their network to competitors "at cost"

  2. provide at a wholesale discount to competitors any service the ILEC provides

  3. charge reciprocal rates in termination of calls to their network and to networks of local competitors

In addition, members that came out of the 'Bell' monopoly must pass a 'public interests' tests that will test their ability to try to mitigate the problem of passing monopolistic power to subsidiaries

As to be expected, the large ILEC's have fought tooth and nail to oppose this Act (competition is a threat to their customer base and profit margin). 

This Act was somewhat successful at introducing new competition into local markets, and application / implementation of the Act was somewhat difficult.  Many criticize this Act for over-complicating policy (not cutting the 'Gordian knot')

The semi-failure of the Act has resulted in many mergers in the telecommunications industry (a step backwards towards larger conglomerates).