NCPA - National Center for Policy Analysis

Regional Phone Companies Still In Control

December 18, 2000

In the five years since Congress ordered local phone monopolies to open their markets to rivals, fewer than seven percent of customers nationwide use the rivals' services. Consumers are still several years away from getting the lower prices and better service promised by the Telecommunications Act of 1996.

  • The seven percent total is up from about one percent shortly after the Act was passed.
  • Only two states -- New York and Texas -- have met the 1996 law's standards for opening the market to competition.
  • The main hurdle, long-distance companies claim, is that regional Bells, which own the lines into people's homes, charge competitors too much for access to the lines.

Verizon Communications and SBC Communications, which operate in New York and Texas, respectively, say the rates meet federal standards and were created with input from rivals. But Sprint is pulling out of the local business in New York, Texas, Georgia and California because the business wasn't profitable. AT&T might back off plans to expand.

Verizon and SBC contend their local markets are competitive, however, some observers believe true competition won't occur until competitors can leapfrog local phone networks with cable TV, satellite and wireless connections. AT&T, for example, is using upgraded cable networks to sell phone service in major markets.

Source: Andrew Backover, "Despite Competition, Regional Bells Still Rule Local Lines." USA Today, December 18, 2000.


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