the telecommunication act 1996

7/28/2019 The Telecommunication Act 1996

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The telecommunication act 1996

History

In the early part of the twentieth century, the general idea was that all Americans should have phone

service. The other general idea regarding phone service was that the government should assist inpromoting this as well. As a result of these general ideas the telecommunications industry became a

natural monopoly. AT&T, which traces its routes to the founding of the telephone, promoted a Single

Policy, Single System geared towards Universal Service. Thus by 1920, AT&T emerged as the dominant

telecommunications company. Until 1934 AT&T was highly regulated by the states with price control per

the government's request to protect consumers from abuses often associated with monopolies. The

Telecommunications Act of 1934 created the Federal Communications Commission, which took

regulation to the federal level.

AT&T retained its natural monopoly status for years until the government realized that AT&T was

partaking in monopolizing the telecommunications industry with no controlling factors. The problems

began with the accusation that AT&T practiced illegal exclusion because they only purchased equipment

from Western Electric. This was the first of two anti-trust suits against AT&T. As a result of the suit United

States vs. Western Electric filed in 1949, AT&T retained ownership of Western Electric with the restriction

and promise of not entering into the computer industry.

The second anti-trust suit filed in 1974, United States vs. AT&T, had two major issues. The first was that

AT&T's relationship with Western Electric, which AT&T retained in the 1956 settlement, was illegal. The

second issue ignited by MCI who was attempting to penetrate the large business market was the fact that

AT&T monopolized the long distance market. In 1982, as a result of the lawsuit, AT&T agreed to spin off

the regional local telephone companies into seven Regional Bell Operating Companies (RPOCS) in

exchange for retaining its Long Distance services and the ability to enter the computer services industry.

Breakthroughs in microwave transmissions led to great profits for AT&T. The microwave transmitters

significantly reduced costs in the long distance services. The local companies requested permission from

the government to be able to compete in the long distance industry from which they found themselves

excluded by the settlement in 1974. The government approved the request and the Regional BellOperating Companies were able to begin competing in the long distance markets if they proved to have

opened their local markets to competition. This ruling is the building block of the Telecommunications Act

of 1996. The government felt that the telecommunications industry needed a makeover to modernize with

the new telecom technologies of the late 20th century and to encourage competition in the local areas of

the Regional Bell Operating Companies

General Description of Effect

On February 8, 1996, President Bill Clinton signed the Telecommunications Act of 1996 into law. The new

law, which was the first major Telecommunications related change in law in over 60 years, encouraged

new competition and competition between the Regional Bell Operating companies. The new law also

removed state restrictions in local and long distance service and set forth rules for "Universal Service"

This law paved the way for companies like MCI and Sprint to begin offering local telephone service and

companies like SBC and Bell Atlantic to offer Long Distance. . Local Exchange Carriers could alsoprovide long distance service if they met a 14-point checklist.

Items included in the 14-point checklist included interconnection, access to network elements, access to

poles, conduits, and poles. Unbundled services, directory listings, emergency services, numbering

administration, number mobility, local dialing parity, reciprocal compensation, and resale are included in

the 14-point checklist.

Interconnections forced RBOCs to open their networks to those carriers requesting access. Carriers can

connect to the RBOC network by any means, at any available connection on the network, and must be


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the same quality offered by the RBOC.

The telephone network consists of many network elements like loops, circuit switches, and devices for

interfacing. The RBOC must provide access to these elements at reasonable and just rates. The RBOC

has to provide access to the poles, conduits, and ducts that house the wires and cables for the network

for competitors.

The RBOCs are required to offer unbundled local loop service. This allows competition to purchase only

the elements they need to provide their own service. The RBOCs are also required to offer accurate

access to emergency and directory services for competitors. This ensures that all customers will have

access to these services regardless of their provider. White page listings must also be correct and

nondiscriminatory.

Summing up the last of the 14-points, the RBOC must provide the same access to NXX codes for

assigning new customer phone numbers as they have for themselves. Telephone numbers must be

portable and can be transferred to any provider chosen by the local consumer. Customers should be able

to dial local numbers in the same manner regardless of the carrier. The RBOC must compensate local

carriers for calls transported and terminated for the RBOC unless an agreement to waive charges is in

place. Finally, the RBOC has to offer all retail services to other carriers at wholesale costs.

Not only did the Telecommunications Act of 1996 open up competition in both local and long distance

services, but it also provided rules for "Universal Service".Universal Services rules require that quality services are available at reasonable and affordable rates.

Access to these services is in all regions of the nation even in rural and high cost areas. This helped the

smaller companies and "up starts" to ease into the RPOC territories with less cost. All long distance calls

are preceded by a "1" to retain equal access by all carriers.

Current Status

Since the signing of the Telecommunications Act of 1996 into law, the local carriers known as Baby Bells

have fought for easement in the requirement to offer discount rates for competitors. However, in 2004, the

FCC revised the rules stating that carriers like BellSouth and Verizon Communications are not required to

share their switches with competitors, such as MCI or AT&T. The rules dismantle one element of the

FCC's overall line-sharing rules, forcing competitors to pay more for their local services in the RPOC

traditional territories with the exception of Business lines in large urban areas.

On June 16, 2006, the United States Court of Appeals upheld the FCC's decision. With this decision, the

court has up held the FCC's requirements to keep competitive rules in the telecommunications industry.

The rules surrounding network bundling have made strides in competitive rates in the long distance and

local industry.

Although the original intent was to encourage new competition in the traditional RPOC territories and to

permit these same RPOCs expansion in to new markets and services, a majority of the "Baby Bells' spun

off from AT&T are no longer in existence through a series of mergers and acquisitions. These various

mergers, which require FCC approval, were a direct result of the Telecommunications Act of 1996. The

most recent of these mergers ends the era of one of the last of the Baby Bells Bellsouth who is in the

process of being acquired by AT&T, formerly SBC Communications,

References

(1996). Telecommunications Act of 1996, Pub. LA. No. 104-104, 110 Stat 56. Retrieved June18,2006,

from http://www.fcc.gov/telecom.html

(2006, June 16,2006). A Brief History: The Bell System. Retrieved June 19,2006, from

http://www.att.com/history/history3.html

Economides, N. (1998, September 1998). The Telecommunications Act of 1996 and its Impact. Retrieved

June 18,2006, from http://raven.stern.nyu.edu/networks/telco96.html


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Reuters, (2006, June 16,2006). Appeals court backs FCC on telephone network unbundling. Retrieved

June 20, 2006, from

http://news.com.com/Appeals+court+backs+FCC+on+telephone+network+unbundling/2100-1037_3-

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