Telecommunications Act of996 2
In February of 1996, the U.S. Congress enacted the Telecommunications Act of 1996. The Act was one of the most substantial changes in the regulation of any industry in recent history. The Act replaced all current laws, FCC regulations, and the consent degree and subsequent court rulings under which AT&T was broken into the "baby Bells." It also overruled all existing state laws and prohibited states from introducing new laws. Practically overnight, the telecommunications industry went from a highly regulated and legally restricted monopoly to open competition. Or almost open competition. It has been more than three years since the Act became law, and while we have seen some changes, they have not been as substantial as many analysts, law- makers, and regulators had anticipated. The Act addressed five major areas of telecommunications: 1) Local telephone service, 2) Long distance telephone service, 3) Cable television service, 4) Radio and television broadcasting, 5) Censorship of the internet. The primary goal of the Act was to promote competition for local telephone services, long distance telephone services, and cable TV services. Inter-exchange carriers (IXC) (such as AT&T, Sprint, and MCI)
To date, several RBOCs (e.g., GTE and SNET) have moved aggressively into the long distance market. They have focused exclusively on out-of-region long distance by buying long distance services from IXCs and reselling them, usually to large corporate accounts. However, none have moved into the in-region long distance market because none face real local competition. All of the RBOCs claim to have plans to offer in-region long distance, but because they have been aggressively fighting court battles to keep competitors out of their local telephone markets. While more competition in the long distance markets has occurred in recent years, it is still an open question whether most people will see competition in the long telephone market. Many analysts believe that local competition will focus on business customers, not the more common household customer. Even with competition reaching households, most analysts believe it will be another few years for all customers to have a viable option for local telephone service. I believe that the Act made the most impact on Local telephone service. Local telephone service had been a regulated monopoly for almost 100 years. Local telephone services are currently controlled by a handful of RBOCs who have not been known for innovation or cost cutting. Under this new Act, local service was now open for competition. Other companies are permitted to build their own local telephone facilities and offer services to customers. However, building entirely new facilities are prohibitively expensive. Under the Act, existing RBOCs would have to offer their telephone services to other companies (e.g., AT&T) at wholesale prices. These other companies will then resell the services to consumers at retail prices in competition with the RBOC. The wholesale prices are set by state regulatory agencies and typically are around 20% under the RBOCs current retail prices (but some states have set them as low as 40% under retail). Therefore, the Act contained a universal service requirement, which mandated RBOCs to provide rural and other hig
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Approximate Word count = 1395
Approximate Pages = 6 (250 words per page double spaced)
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