Competition For Local Telephone Service example essay topic

The Telecommunications Act of 1996 The Telecommunications Act of 1996 can be termed as a major overhaul of the communications law in the past sixty-two years. The main aim of this Act is to enable any communications firm to enter the market and compete against one another based on fair and just practices ("The Telecommunications Act 1996", The Federal Communications Commission). This Act has the potential to radically change the lives of the people in a number of different ways. For instance it has affected the telephone services both local and long distance, cable programming and other video services, broadcast services and services provided to schools. The Federal Communications Commission has actively endorsed this Act and has worked towards the enforcement and implementation of the various clauses listed in the document. The Act was basically brought into existence in order to promote competition and reduce regulation so that lower prices and higher quality services for the Americans consumers may be secured.

Of particular importance is the deregulation of the telecommunications industry as mentioned in the act ("Implementation of the Telecommunications Act", NTLA). This reflects a new thinking that service providers should not be limited by artificial and now antique regulatory categories but should be permitted to compete with each other in a robust marketplace that contains many diverse participants. Moreover the Act is evidence of governmental commitment to make sure that all citizens have access to advanced communication services at affordable prices through its "universal service" provisions even as competitive markets for the telecommunications industry expand. Prior to passage of this new Act, U.S. federal and state laws and a judicially established consent decree allowed some competition for certain services, most notably among long distance carriers.

Universal service for basic telephony was a national objective, but one developed and shaped through federal and state regulations and case law ("Telecommunications Act of 1996", Technology Law). The goal of universal service was referred to only in general terms in the Communications Act of 1934, the nation's basic telecommunications statute. The Telecommunications Act of 1996 among other things: (i) opens up competition by local telephone companies, long distance providers, and cable companies with each other; and (ii) reconfirms the U.S. commitment to universal service -- in part by helping connect all school classrooms, libraries, and hospitals to the information superhighway by the end of this decade. Additional provisions include those giving families control of the television programming that comes into their homes through the use of 'V-Chip' technology, and prevent undue concentration in television and radio ownership so that a diversity of voices and viewpoints can continue to flourish, through modified ownership limits ("Telecommunications Act of 1996", Federal Communication Commission).

The response in the telecommunications market, soon after the Act was passed, was tremendous. For one thing four of the seven Bell Regional Holding companies announced mergers (as recommended and encouraged by the Act). Bell Atlantic acquired NY NEX, and SBC acquired Pacific Telesis. As time went by more and more companies falling in the jurisdiction of the Bell regional companies began to announce proposed mergers and followed them through. It is important to note here that some of the mergers were among Bell companies and local carriers e.g. Bell Atlantic and GTE, SBC and Ameritech (pending) and AT&T and the video cable giant TCI.

Some of these changes of course are a direct result of the changes in the regulatory practices mentioned in the Act of 1996. The rest of them can only be called a preparation of sorts for the competitive market environment to come in the near future if the Act of 1996 is fully realized by that time. This will not only increase the convergence of services and markets but will also enable the globalization of economic markets. Mergers, however, were only the earliest and most visible industry developments following passage of the Act ("Implementation of the Telecommunications Act", NTLA).

The larger and more long-term effects will come over time as the many provisions of the Act are implemented. These effects may defy prediction. For example, some observers early on expected cable television firms to lead the way to local competition through upgrades in their networks, but activity in this area has been spare. To the surprise of some, wireless firms have moved quickly to develop 'wireless local loop' and other wireless technologies that compete with traditional wire line telephony in urban as well as rural markets.

To promote competition for local telephone service, the Act contains provisions to encourage competitors to provide local service. It explicitly forbids any state or local government from prohibiting any entity from providing telecommunication services be it local or otherwise. The act requires that local exchange carriers' interconnection, un bundling and resale obligations be made via negotiated agreements with other carriers. Interconnection agreements negotiated between a local exchange carrier and other telecommunications carriers must be approved by a state within the Act's deadlines. The new act also allows for local exchange carriers to enter other markets but this is subject to regulatory constraints. For instance for long distance purposes a Bell company may apply to the Federal Communications Commission for authorization to provide in-region long distance services if it has entered into an approved interconnection agreement and meets the requirements of a competitive checklist and other requirements in the act ("Telecommunications Act of 1996", Technology law).

The FCC may approve the authorization if the company meets these requirements and the authorization is in the public interest. The company must provide such service through a separate affiliate for three years after enactment. The company may also, upon enactment, provide out-of-region and incidental long distance services, as well as already authorized long distance services. Nevertheless, although Bell companies have requested that FCC authorization to provide long distance services originating within a state, the FCC has yet to find that any Bell Company has met the requirements above.

The Act gives telephone companies the option of providing video programming on a common carrier basis or as a conventional cable television operator. If it chooses the former, the Telephone Company will face less regulation but will also have to comply with FCC regulations requiring what the Act refers to as 'open video systems. ' The Act generally bars, with certain exceptions including most rural areas, acquisitions by telephone companies of more than a 10 percent interest in cable operators (and vice versa) and joint ventures between telephone companies and cable systems serving the same areas. There has been little development in this area since passage of the Act in 1996. Despite early optimism, open video systems have not materialized. Companies such as Time Warner and Pacific Telesis (now part of SBC) have discontinued their market trials of open video systems.

The Telecommunications Act of 1996 can be termed as a revolutionary step in the field of communications especially when it came to deregulating the telecommunications industry. The new law was expected to bring radical changes to the communications industry, providing high quality services to the masses at minimal cost. The act was also designed with the specific purpose of ensuring that advanced telecommunications will be available to every citizen as part of the policy for universal service. The FCC and the states, as the regulatory bodies, implement the law. Its been over three years since the law was passed and most critics have claimed that nothing worthwhile came out of the act besides the mergers of course. Ultimately however, the services brought to the public will depend on the providers of those services and their success in the marketplace.

Bibliography

1. "The Telecommunications Act of 1996". Available online at: web "Implementation of the Telecommunications Act". Available online at: web act. htm 3.