Telecommunications Act of 1996

The Telecommunications Act of 1996 attempted to bring more competition to the telephone market for both local and long distance service. It permitted firms that served competitive local markets to enter the long distance market, and it attempted to implement a single layer of regulation at the federal level. However, some state and local regulation will exist for years to come.

The deregulation that was brought about by this act enabled competition within the local exchange areas that had been effectively monopolies for many years. It also provided new regulations such as forcing the local carriers to share their communications facilities with competitors at rates established under the act's guidelines and ensuring that each competitor was treated in a fair and equitable manner.

Additional provisions of the act removed restrictions on media ownership and resulted in immediate consolidation within that segment of the industry. Yet another provision provided guidelines for Internet indecency, but the Supreme Court ruled that provision was unconstitutional under the First Amendment. Another significant provision also protected Internet service providers from liability for content of third parties on their service.

This act had many far-reaching effects. It eliminated the firmly entrenched monopoly that had been in existence on local and long distance telecommunications services. This provision effectively opened the local markets to long distance carriers, cable television providers, and other local carriers. The act permitted local telephone companies to provide long distance services when they could prove that local competition existed in their existing markets.

As a result of this legislation, many direct benefits are being realized today. Businesses have seen a reduction in communications costs as they have leveraged the competitive environment to restructure their communications platforms and services. Along with the reductions, these businesses have purchased new tools and services to increase productivity. These new services have forced the adoption of and adherence to many new standards. These standards make it easier for consumers to move between carriers and to be assured that mobile devices can work wherever the user is located, even worldwide.

The act has addressed some ethical implications as well. It has restricted advertising and marketing [Page 2067]campaigns by the larger companies to foster competition. Another stipulation required that services between carriers be provided on a cost-plus basis and that those costs be the same to all carriers in the area. It also required wholesale services to be unbundled, which forced the local carriers to provide only the specific service needed. To ensure a truly competitive environment, carriers were required to allow the consumers to take their phone number with them as they changed carriers. Other provisions required reciprocal compensation for calls between carriers.

Finally, the act called for all carriers to maintain equal quality and timeliness or parity among all carriers in providing local services including directory assistance, operator assistance, E911, new telephone number access, installation time frames, repair services, and repair time frames. All have to be provided under the same conditions as the incumbent will provide these services to direct customers. Violation of this provision results in heavy fines and potentially the denial of the right to provide other services.

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