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The Telecommunications Act of 1996 and its impact1

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  • Economides, Nicholas

Abstract

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 year

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Bibliographic Info

Article provided by Elsevier in its journal Japan and the World Economy.

Volume (Year): 11 (1999)
Issue (Month): 4 (December)
Pages: 455-483

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Handle: RePEc:eee:japwor:v:11:y:1999:i:4:p:455-483

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Web page: http://www.elsevier.com/locate/inca/505557

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Cited by:
  1. Nicholas Economides, 2004. "Telecommunications Regulation: An Introduction," Working Papers 04-20, NET Institute, revised Aug 2004.
  2. Vahagn Jerbashian, 2011. "The Telecommunications Industry and Economic Growth: How the Market Structure Matters," CERGE-EI Working Papers wp431, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  3. Giovannetti, E., 2000. "Interconnection, Differentiation and Bottlenecks in the Internet," Cambridge Working Papers in Economics 0011, Faculty of Economics, University of Cambridge.
  4. Bijl, P.W.J. de & Peitz, M., 2004. "Unbundling the Local Loop: One-Way Access and Imperfect Competition," Discussion Paper 2004-025, Tilburg University, Tilburg Law and Economic Center.
  5. Economides, Nicholas, 2003. "Competition Policy in Network Industries: An Introduction," Working paper 279, Regulation2point0.

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