Local and Long Distance Competition: Replacing Regulation with Competition

Abstract

For more than 60 years, United States telecommunications policy was guided by the Communications Act of 1934. Despite the incredible changes that occurred in the telecommunications sector during this long period, very few changes were made in the law. Indeed, it was the failure of the 1934 Act to provide the Federal Communications Commission (FCC) with the necessary guidance in dealing with one of these changes — competitive entry — that forced antitrust authorities to wrest control of the sector from the FCC in the 1980s.¹ In 1996, partly in response to controversies created by the resulting AT&T antitrust decree, the Congress passed a new Telecommunications Act that opened all markets to entry, but evidenced a misguided belief in the efficacy of regulation to achieve this result.² Rather than freeing the entire sector from government regulation, the 1996 Act established a new, more complicated regulatory regime that has created controversy, litigation, and only modest progress.