Telecom Competition and the 1996 Act: Reflecting Back and Looking Forward

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Lessons from the Telecom Wars (Mini-Conference September 28, 2006). Marius Schwartz, Professor of Economics, Georgetown University.

This talk: Reflects back on the premises underlying the 1996 Act, its key provisions — especially on network sharing — and the track record. Summarizes briefly some of the lessons and their implications for policy going forward. The 1996 Act: Underlying Premises and Key Local Competition Provisions.  Status quo is highly inefficient. Local access phone networks still predominantly a monopoly, with presumed inefficiencies. Monopoly invites costly and intrusive regulation: of rate Level (creating problems for incentives) and of rate Structure (inefficient cross subsidies). Artificial separation of “local” from “long-distance” (LD) services to prevent leverage from monopoly local into potentially competitive LD.

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