Telecommunications Act of 1996

Telecommunications Act of 1996

Telecommunications legislation passed by the U.S. Congress in 1996. Although it covers many aspects of the field, the most controversial has been the deregulation of local phone service, allowing competition in this arena for the first time. Long-distance carriers (IXCs) and cable TV companies can get into the local phone business, while local telcos (the LECs) can get into long distance. Some of the major provisions follow.

Section 251 - Allows states to regulate prices in the local access market.

Section 254 - Extends universal service to everyone no matter how rural, even if others have to subsidize the expense. See traffic pumping.

Section 271 - Provides a 14-point checklist of requirements for RBOCs to offer intrastate long-distance service.

It Wasn't a Picnic
The RBOCs thought the Act would be a road map for getting into long distance in exchange for ending their local monopolies. What they got were 700 pages of dubious rules that made "deregulating" as complicated as any regulated industry could be. The RBOCs claimed that the Act discriminated against them and that other large telephone companies received more favorable treatment. Complaints and lawsuits ensued.

The Act required that the RBOCs offer competitors access to their local networks at reasonable rates, but both the Supreme Court (1999) and appeals court (2002) said that the FCC should not be deciding how the RBOCs should foster their own competition by unbundling their network services. In 2003, the FCC decided not to force the RBOCs into leasing high-speed lines to competitors. In March 2004, the appeals court upheld that ruling and also overturned a ruling that required the RBOCs to give wireless companies access to their networks. The 2004 rulings were applauded by the RBOCs.