Telecommunications History & Policy into the 21st Century

5 Telecommunications Act of 1996

93 CHAPTER 5 Telecommunications Act of 1996 After years of discussion, debate, and compromise, the telecommunications bills meandering through the House of Representatives and the U.S. Senate finally converged to a final bill acceptable to both houses of Congress and which the President agreed to approve. On February 8, 1996, in the Library of Congress reading room, President Clinton signed the bill into law. The Telecommunications Act of 1996 was then a reality . To quote an FCC.gov posting in 1996 soon after passage of this law: The Telecommunications Act of 1996 is the first major overhaul of telecommunications law in almost sixty-two years. The goal of this new law is to let anyone enter any communications business–to let any communications business compete in any market against any other. The Telecommunications Act of 1996 has the potential to change the way we work, live, and learn. It will affect telephone service–local and long distance, cable programming and other video services, broadcast services and services provided to schools. The Federal Communications Commission has a tremendous role to play in creating fair rules for this new era of competition.83 The year 1996 was a time of promise and great anticipation for many in the U.S. telecommunications arena. Interexchange carriers (IXCs) like AT&T and MCI anticipated getting into the local telecommunications market, which was estimated to be worth about $100 billion 94 Telecommunications History & Policy per year84 . They actually had to anticipate that because, once the goliath like RBOCs met certain requirements for opening up their local markets for competition, they would be allowed into the still-lucrative, long-distance market and that, too, was worth about $100 billion per year. On the other side of this coin was the RBOCs’ concern about losing their protected local exchange market to the many who coveted a share of it. Now local exchange companies must open that market up to any and all competitors. Entrepreneurs of all types eyed the local telecommunications market. Telecommunications attorneys expected considerable work due to the many battles that would be waged regarding the new detailed rules that the FCC would put into place, and consumers hoped that providers might actually fight over them to win their business. There seemed to be a whole new world opening up to many within the telecommunications environment. Here are two interesting quotes from those days: Patricia Eckert, Former President of the California Public Utilities Commission, said, The excitement surrounding the passage of the Telecommunications Act of 1996 is surpassed only by the uncertainty over what it all means. Right now no one knows for sure.85 William H. Gaik, Deloitte & Touche National Practice Director for Telecommunications and Electronic Services, said: While the pace and scope of implementing the new Act are unpredictable , the direction is clear. As a society, we believe fundamentally that competition brings out the best in people, but we also understand that competition should be fair. While we value a free and efficient marketplace, the system of subsidies and transfer payments cannot, in its current form, lead us there. The road ahead will not be smooth and we will not locate it on any map. The competing interests among the incumbents and new entrants ensure that there will be no shortage of cases before regulatory agencies and courts for many years to come.86 As we look back at 1996, it is very important to understand the basic climate of the United States and how it had significantly changed over time. Unlike the time leading up to the passage of the Telecommu- Telecommunications Act of 1996 95 nications Act of 1934, the United States no longer thought that the provision of services like telecommunications was best served by the monopoly model. Now, the U.S. sought a competitive market model that would yield consumer choice and a variety of levels of service, features , and options. Within the telecommunications environment, the divestiture of the Bell System in the previous decade had demonstrated that a highly competitive marketplace appreciably reduced consumer long-distance calling costs and generally created great opportunities for start-up companies that sought a share of what had been a highly protected and closed market for the Bell System. It is certainly understandable that legislators, regulators, and consumers would desire a similar situation for the local telephone service market. Also, it is very important to understand the things that were not prevalent at...