Telecommunications Act of 1996

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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.
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The 1996 Telecom Act (1) should have been a landmark in American deregulation.
Many in the telecom industry have called for a rewrite of the 1996 Telecom Act, and Congress began this process in 2012 with hearings on video issues.
And while the time for mandating line sharing (as the 1996 Telecom Act did) has passed, there are some great ideas that can be taken from the other side of the Atlantic.
So, without much controversy, Computer II's "basic" and "enhanced service" definitions were included in essentially the same form in the 1996 Telecom Act as "telecommunications" and "information services."
Here are a few things that might be on such an agenda: First, Congress should rewrite the 1996 telecom act to preserve existing limits on media ownership and reinstate tighter limits in radio.
"What we are seeing is predicted by both economic texts and the 1996 Telecom Act -- companies that have to compete for customers work harder, invest more, and deliver better services than monopolies."
"Alaska continues to lead the nation in delivering the benefits (high-speed access and availability of high-speed access) promised by the 1996 Telecom Act," says David Morris, spokesperson for GCI.
Circuit also held that the 1996 Telecom Act "carries with it a presumption in favor of repealing or modifying the ownership rules."
Donovan Bezer is a telecom consultant and former auditor of the 1996 Telecom Act. He recently graduated from Rutgers Law School and welcomes any feedback via dbezer@hotmail.com.
Chairman Powell responded that NPRM was "not a product of regulatory free will," but that Congress had designed the classifications in question in the 1996 Telecom Act. "Information service is, as a category, found throughout the statute ...