During the past 20 years, the U.S. telephone industry has undergone a remarkable evolution from a set of government-enforced monopolies to a much more competitive environment. Long-distance service, private-line service, data communications, and terminal equipment once were available only from the telephone monopolist. Now they are freely available from numerous competitive suppliers due to a series of regulatory and judicial decisions. But despite this veritable explosion in competition, the telephone industry still is regulated at both the federal and state levels. Only the provision of terminal equipment is totally deregulated. Copyright 1991 Western Economic Association International.