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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Even then, the modern-day legislative environment may not be capable of producing legislation as comprehensive as the 1996 Telecom Act.
The government tried to solve this problem in the 1996 Telecom Act, which required the incumbent monopolists to lease their infrastructure to competitors.
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.
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.
In another twisted outgrowth of the 1996 Telecom Act, a federal appeals court rules that the Federal Communications Commission erred in exempting advanced data services from the requirement that Bell companies sell their services "unbundled" from other pricey add-ons.
He cited the 1996 Telecom Act as an example of what these new measures will accomplish.
Why create massive new regulations where none are needed, or create the same problem the 1996 Telecom Act was intended to prevent: costly delays in business access to new communications technology?
Gold, senior vice president of external affairs for XO Communications, said, "Competitors have made important progress since passage of the 1996 Telecom Act, delivering the benefits of choice, savings and innovation to customers.
The authors say their findings are telling for lawmakers attempting to update the 1996 Telecom Act.
The appeals court's opinion examined whether the 1996 Telecom Act "contains a comprehensive remedial scheme sufficient to preclude a separate action" under sec.