Reach out, but not too far.

• Author: Boerner, Robert D.

When it comes to local telephone competition are consumers getting a busy signal?

When President Clinton signed the Telecommunications Act of 1996 into law, it was widely praised by lawmakers and telephone industry analysts. Many of them promised that the landmark legislation would bring about technological innovations, more consumer choices and more competition.

Few people, however, predicted that local telephone competition would arrive any time soon. Two years later, it's uncertain if it has arrived at all. It depends on whom you ask.

The federal law was the first major overhaul of federal telecommunications policy in 62 years. It removed the barriers that kept companies from getting into each others' businesses. Long-distance companies, such as AT&T, MCI and Sprint, are now free to compete for local calling customers. Likewise, the regional Bell operating companies (Ameritech, Bell Atlantic, BellSouth, Pacific Telesis, Southwestern Bell Communications and US WEST) are free to compete for long-distance customers if they first allow competitors into the local markets they once controlled. One of the act's goals is to change the landscape of the telecommunications industry from a regulated monopoly to an open and fair competitive field.

The competition can take several forms, including new and old firms providing either long-distance or local telephone services. Section 253 of the act declares that "no state or local statute or regulation, or other state or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service." This section preempts state restrictions on local competition. And Section 251 provides that all telecommunications providers must "interconnect directly or indirectly with the facilities and equipment of other telecommunications carriers." Interconnection is the linking of a communications channel, facility, service or piece of equipment with another from a different network.

President Clinton called the law "truly revolutionary legislation that will bring the future to our doorstep." Industry experts say that Clinton's vision is still mostly just that - a vision. Few consumers have tasted the fruits of competition.

"In spite of all the regulatory activity taking place at both the federal and state levels, the local telephone companies continue to have a monopoly over local markets," says Mark Phigler, president of...