NCPA - National Center for Policy Analysis

Telecom Law Leads To Little Competition

February 6, 2001

Five years after Congress passed the 1996 Telecommunications Reform Act to give consumers more choices, most people still buy their local service from the same company they always have. The law required large local phone companies, created by the AT&T breakup, to open up monopolies to rivals. If they did, they could sell long-distance services on a state-by-state basis.

  • Observers believe Congress left too many unanswered questions for regulators to determine.
  • Depending on the issue, the Telecom Act has been attacked by state regulators, industry trade groups and local and long-distance phone companies.
  • The Bell companies have surrendered only about six percent of local phone lines to rivals in five years.
  • The Bells are now able to sell long-distance service in four states, New York, Texas, Oklahoma and Kansas -- far fewer than expected in 1996.

Many of the questions may be decided in court. In the highest-profile case challenging the telecom act's constitutionality, SBC Communications filed suit in 1997 claiming the Bells were being unfairly singled out and should be let into the long-distance market without preconditions. SBC won the first round in U.S. District Court in Texas, but later lost in the 5th U.S. Circuit Court of Appeals. It eventually gained entrance to long-distance markets in three states after its merger with Ameritech Corp.

Source: Reinhardt Krause, "Telecom Act? More Like Lawyers' Full-Employment Law," Investor's Business Daily, February 5, 2001.


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