Telecommunications Regulation: An Introduction

This paper examines the justifications, history, and practice of regulation in the US telecommunications sector. We examine the impact of technological and regulatory change on market structure and business strategy. Among others, we discuss the emergence and decline of the telecom bubble, the impact on pricing of digitization and the emergence of Internet telephony (VOIP). We also examine the impact of the 1996 Telecommunications Act on market structure and strategy in conjunction with the history of regulation and antitrust intervention in the telecommunications sector. After discussing the impact of wireless technologies, we conclude by venturing into some short term predictions. We express concern about the derailment of the implementation of the 1996 Act by the aggressive legal tactics of the entrenched monopolists (the local exchange carriers), and we point to the real danger that the intent of Congress in passing the 1996 Act to promote competition in telecommunications will never be realized in local telecommunications in the fashion that the 1996 prescribed. The decision of AT&T to stop marketing both long distance and local services to residential customers is a direct result of the derailing of the 1996 Act that has allowed the local service monopolists (1) to enter long distance while the local market was still monopolized; and (2) to leverage their monopoly power in the local market to the long distance market. We also discuss the wave of mergers in the Telecommunications and cable industries, the telecom meltdown of 2000-2003, and issues that arose from the triennial review by the FCC of implementation of the 1996 Act.

U.S. Telecommunications Today, April 1999

This short essay examines the current conditions in the US telecommunications sector (April 1999). We examine the impact of technological and regulatory change on market structure and business strategy. Among others, we examine the impact on pricing of digitization and the emergence of internet telephony. We briefly examine the impact of the 1996 Telecommunications Act on market structure and strategy in conjunction with the history of regulation and antitrust intervention in the telecommunications sector. After discussing the impact of wireless technologies, we conclude by venturing into some short term predictions. We express concern about the derailment of the implementation of the 1996 Act by the aggressive legal tactics of the entrenched monopolists (the local exchange carriers), and we point to the real danger that the intent of Congress in passing the 1996 Act to promote competition in telecommunications will not be realized. After discussing the impact of wireless technologies, we comment on the wave of mergers in the Telecommunications and cable industries.

Enhancing Competition:Are Proposed Federal Communications Commission Rules That Treat Local Exchange Carrier Access To Multiple Tenant Environments a Taking?

The Telecommunications Act of 1996 marked a fundamental change in the attitudes of Congress and the Federal Communications Commission toward local telephone exchange carrier policy. This change affected local exchange carriers in many ways, including their relationships with the owners of multiple tenant environments, such as office buildings and apartment complexes. Under the Act, FCC rulemaking increased competitive local exchange carriers\u27 access to the facilities of incumbent local exchange carriers by removing competition barriers. However, owners of of multiple tenant environments can also act as barriers to local exchange carrier competition. This Note will first review the general purpose behind the 1996 Act. It will then outline the history of local exchange carrier access to of multiple tenant environments. Finally, this Note will examine questions related to proposed FCC rules for nondiscriminatory local exchange carrier access to multiple tenant environments

The Antitrust-Telecom Connection

This Article discusses the Telecommunications Act of 1996, which requires local telephone service providers to provide certain services to competitive local exchange carriers, and its relation to the Sherman Antitrust Act. The author begins by examining the Telecommunications Act and the allegations in the telecom-antitrust cases. In these cases, some courts have held that the antitrust laws apply to local telephone companies as if the Telecommunications Act did not exist, other courts have dismissed identical antitrust claims. The author attempts to explain these conflicting results by showing court\u27s reliance on two different lines of doctrine: implied immunity and antitrust state action. The author goes on to determine the proper way to account for a competition-enhancing regulatory statute like the, Telecommunications Act, when considering an antitrust challenge. The author argues that new doctrinal tools are needed for this task because the Telecommunications Act\u27s single goal is to enhance competition, whereas most anti-trust laws seek to advance policy goals other than competition. The author concludes by applying these doctrinal tools to the Telecommunications Act

Ideas of the Marketplace: A Guide to the 1996 Telecommunications Act,

The Telecommunications Act of 1996 represented an enormous experimental step towards deregulating the telecommunications marketplace while opening it up to competition. With an eye towards breaking up the telecommunications monopolies held by local telephone service providers, the Act created regulations that forced local carriers to share their market and their resources with other telecommunications providers. The Telecommunications Act of 1996 itself is extremely complex. This article is a guided tour through the major provisions of the Act. The first step in understanding the Telecommunications Act of 1996 is to understand how the telecommunications industry operates. Part two of this article explains the telecommunications landscape for telephone companies, from the role of Local Exchange Carriers to Bell Operating Companies. Part two of this article also explains how the Act affects the players in the telecommunications world and encourages competition in their spheres of influence. Finally, part two of this article explains the incentives that the Act gives to local monopolies to conform to regulations and the standards that local carriers must meet in order to qualify for these incentives. Part three of this article explains how the Act impacts upon cable television and video programming. This section enumerates the various deregulation efforts in the cable industry, including rate deregulation, loosening of cable ownership rules, and the elimination of the ban on cable-telephone cross ownership and cable companies providing local telephone service. It also explains which regulations remain, including the ban on mergers between cable operators and local telephone companies. Part four of the article addresses how broadcasters are affected by the Telecommunications Act of 1996. This includes eased restrictions on broadcasters in terms of licensing and multiple ownerships of single broadcast licenses. Part five of the article deals with the Act\u27s potentially controversial treatment of explicit materials on television through the Communications Decency Act of 1996. Some available means of monitoring content carry potential Constitutional violations. Others simply run the risk of being ineffective. This section posits creative solutions involving non-government actors making use of the Act\u27s Good Samaritan provision and explains the limitations of the Good Samaritan provision

The Telecommunication Act of 1996 and its Impact

This paper analyzes the effects on the implementation of the Telecommunications Act of 1996 (“Act”) on US telecommunications markets and is based on my forthcoming book with the same title. The Act is a milestone in the history of telecommunications in the United States. Coming 12 years after the breakup of AT&T, the Act attempts to move all telecommunications markets toward competition. The Act envisions competition in all telecommunications markets, both in the markets for the various elements that comprise the telecommunications network, as well as for the final services the network creates. Building on the experience of the long distance market, which was transformed from a monopoly to an effectively competitive market over the last 12 years, the Act attempts to promote competition in the hitherto monopolized local exchange markets. The Act recognizes the telecommunications network as a network of interconnected networks. Telecommunications providers are required to interconnect with entrants at any feasible point the entrant wishes. Most importantly, the Act requires that incumbent local exchange carriers (“ILECs”) (i) lease parts of their network (unbundled network elements) to competitors “at cost”; (ii) provide at a wholesale discount to competitors any service the ILEC provides; and (iii) charge reciprocal rates in termination of calls to their network and to networks of local competitors. Moreover, the Act requires that ILECs that came out of the Bell System meet a number of requirements, including a public interest test, before they may enter into the long distance market. Thus, the Act provides some safeguards against the export of ILEC monopoly power to other parts of the network. Numerous legal challenges to the Act and its implementation have been raised by the ILECs resulting in very slow implementation of the Act, and, in many cases, in no substantial implementation of the provisions of the Act. Thus, more than two years after the passage of the Act, there is very little entry and competition in local exchange markets. In response to the apparent failure of the implementation Act, there has been a wave of mergers in the US telecommunications industry

Hit and Miss: Leverage, Sacrifice, and Refusal to Deal in the Supreme Court Decision in Trinko

Under the rules of the Telecommunications Act of 1996, incumbent local exchange carriers, including Verizon, were obligated to lease parts of their local telecommunications network to any firm at “cost plus a reasonable profit” prices which could combine them at will, add retailing services and sell local telecommunication service as a rival to the incumbent. AT&T, an entrant in local telecommunications, leased parts of Verizon’s network. Trinko, a local telecommunications services customer of AT&T, sued Verizon alleging various anti-competitive actions of Verizon against AT&T, including that Verizon raised the costs of AT&T, its downstream retail rival. The Supreme Court held that Trinko’s complaint failed to state a claim under § 2 of the Sherman Act, and dismissed the complaint. I argue that Verizon had two monopolies in local telecommunications: a monopoly of the local telecommunications network, as well as a monopoly in retail local telecommunications services. The 1996 Act allowed for competition in retail services and also imposed cost-based pricing on leases of Verizon’s network. Verizon, unable to increase the lease price on its network, reverted to raising-rivals-costs strategies against its retail competitors. Thus, Verizon used its monopoly of the network infrastructure to disadvantage entrants in retail. In doing so, Verizon lost short term profits that it would have earned from leasing its network to entrants, since the 1996 Act had set the lease price at cost plus “reasonable profit.” Thus, Verizon is liable if the “sacrifice principle” is applied. According to the sacrifice principle, a defendant is liable if its conduct “involves a sacrifice of short-term profits or goodwill that makes sense only insofar as it helps the defendant maintain or obtain monopoly power.”Vertical Leverage, Refusal to Deal, Monopoly, Sacrifice Principle, Trinko

Telecommunications Regulation: An Introduction

This paper examines the justifications, history, and practice of regulation in the US telecommunications sector. We examine the impact of technological and regulatory change on market structure and business strategy. Among others, we discuss the emergence and decline of the telecom bubble, the impact on pricing of digitization and the emergence of Internet telephony (VOIP). We also examine the impact of the 1996 Telecommunications Act on market structure and strategy in conjunction with the history of regulation and antitrust intervention in the telecommunications sector. After discussing the impact of wireless technologies, we conclude by venturing into some short term predictions. We express concern about the derailment of the implementation of the 1996 Act by the aggressive legal tactics of the entrenched monopolists (the local exchange carriers), and we point to the real danger that the intent of Congress in passing the 1996 Act to promote competition in telecommunications will never be realized in local telecommunications in the fashion that the 1996 prescribed. The decision of AT&T to stop marketing both long distance and local services to residential customers is a direct result of the derailing of the 1996 Act that has allowed the local service monopolists (i) to enter long distance while the local market was still monopolized; and (ii) to leverage their monopoly power in the local market to the long distance market. We also discuss the wave of mergers in the Telecommunications and cable industries, the telecom meltdown of 2000-2003, and issues that arose from the triennial review by the FCC of implementation of the 1996 Act

U.S. Telecommunications Today

This paper reviews the current conditions in the U.S. telecommunications industry. It first examines the impact of technological and regulatory change on market structure and business strategy, and then the impact on pricing of digitization and the emergence of internet telephony. Then the paper considers the effects of the 1996 Telecommunications Act on market structure and strategy in conjunction with the history of regulation and antitrust intervention in the telecommunications sector. After discussing the impact of wireless technologies, the paper concludes with some short-term predictions, as well as concern about the derailment of the implementation of the 1996 Act by aggressive legal tactics of entrenched monopolists (the local exchange carriers), and the real danger that the intent of Congress in passing the 1996 Act to promote competition in telecommunications will not be realized.Information Systems Working Papers Serie

U.S. Telecommunications Today

This paper reviews the current conditions in the U.S. telecommunications industry. It first examines the impact of technological and regulatory change on market structure and business strategy, and then the impact on pricing of digitization and the emergence of internet telephony. Then the paper considers the effects of the 1996 Telecommunications Act on market structure and strategy in conjunction with the history of regulation and antitrust intervention in the telecommunications sector. After discussing the impact of wireless technologies, the paper concludes with some short-term predictions, as well as concern about the derailment of the implementation of the 1996 Act by aggressive legal tactics of entrenched monopolists (the local exchange carriers), and the real danger that the intent of Congress in passing the 1996 Act to promote competition in telecommunications will not be realized.Information Systems Working Papers Serie