No sight like hindsight: the 1996 Act and the view ten years later.

• Author: Lampert, Donna N.
• Position: Telecommunications Act of 1996: Ten Years Later Symposium

1. INTRODUCTION II. THE 1996 ACT: TRULY LANDMARK LEGISLATION III. CONGRESS LOOKED BACK AND THOUGHT AHEAD IV. WHAT WE CAN SEE IN HINDSIGHT: PITFALLS ON THE COMPETITIVE ROAD V. WHERE TO NOW? PRINCIPLES TO KEEP IN MIND GOING FORWARD A. Technology Will Not Solve All Problems B. Duopoly Does Not Amount to Competition C. Consumer Choice Should Govern Service Deployment D. Effective Enforcement is Vital to Successful Regulatory Implementation VI. CONCLUSION I. INTRODUCTION

   Ten years is not long in the span of human history, which is now estimated to be anywhere from 40,000 to 100,000 years old or more. It is not even long in the history of human communications or even in the history of electronic communications. Telephony is well over 100 years old and last century's so-called "new" services such as wireless, cable, and satellite services have already been around for far more than a single decade. Yet, in reflecting upon the ten years that have elapsed since the passage of the Telecommunications Act of 19961 ("1996 Act"), it seems almost an eternity. Whether we knew it or not (and, no question, technological change as well as the rapid growth of the Internet were contemplated in 1996), the fact remains that the communications world that we are confronted with in 2006 looks vastly different than what was contemplated in the 1996 legislation.

   This commentary does not offer an exhaustive review of what we knew and what we did not back then or a delineation of the litany of unexpected consequences post-1996. Indeed, the focus here is not even as broad as the scope of issues of the 1996 Act itself. For such an endeavor, far more space and time would be required, especially to address the intricate and important issues that still swirl around many areas such as the future of the broadcast industry in the digital world, the proper role of the FCC and/or Congress in addressing content and media, or the specifics of convergence, a term that has been used far longer than the now outmoded "information super highway." Instead, the goal in this commentary is far more modest: to offer some perspective on how the 1996 Act impacted wireline services and particularly competitive wireline services. Especially as the possibility of a congressional rewrite of the 1996 Act looms, we will be well served by bearing in mind the lessons of the past.

2. THE 1996 ACT: TRULY LANDMARK LEGISLATION

   Despite its many critics (one wonders how an Act that passed almost unanimously could suddenly find itself virtually orphaned), the 1996 Act was a landmark statute that reflected congressional understanding of a new communications landscape. Congress rightly understood that monopoly was not the best form of service provision for American consumers in terms of innovation, service quality, and pricing. Consequently, Congress codified changes that it believed, implemented swiftly, would move us to a competitive world. At the same time, however, there were blind spots where past lessons were forgotten or where it was easier or more expedient to ignore the changes that the emerging Internet was almost certain to bring or the likely difficulties caused by disruptive change.

   The 1996 Act substantially moved communications law and regulation forward by codifying for the first time the notion that wireline communications services should operate in a competitive market. This action was taken, of course, against the backdrop of AT&T divestiture implementation, which itself formally launched the idea that long-distance services could and should be competitive if split off from the "natural monopoly" sector of local services. (2) While there was some nascent "local" competition that the FCC helped jump start with its Expanded Interconnection and related dockets, it was the 1996 Act that took the first statutory step to recognize affirmatively the goal of wireline services competition across all markets.

   The core of the statute's market opening provisions represented a type of trade-off between the local competition interconnection and access provisions and the opening of the long-distance services market to the former Bell Operating Companies ("BOCs"). In fact, Sections 251-52 and 271-72, concerning local competition and long distance, were designed as a roadmap that in effect rewarded BOCs that complied with the statute's directive to open their lines so that consumers could have access to competitive carriers for their telephone services. (4) Given that the incumbent carriers at that time controlled almost all last mile loops, Congress recognized that the market opening would be more of a prying than a happily negotiated arrangement. Under the law's framework, local service competition was premised not only on unbundling piece parts of the network ("UNEs"), but upon resale as well, with the express goal not to dictate to would-be competitors how best to woo consumers with their competitive services. (5) In today's parlance, the Act expressed no preference for either intermodal or intramodal competition; to the contrary, it affirmatively sought to promote both.

   In addition to codifying a procompetitive direction, the 1996 Act also took critical steps to tackle the difficult issues of universal service and intercarrier compensation, including for wireless services. (6) Though these issues are still far from resolved, it is notable that Congress understood sufficiently the interconnectedness of pricing, service availability, and leverage; these key provisions were designed to address the practical realities of an emerging industry in formerly monopoly territory. Put more directly, the law was informed by real-world accounts of incumbent carrier practices that could surely kill competitors without some oversight. While it is hard to know how the legislature envisioned implementation, and it is likely that no one foresaw the Jarndyce versus Jarndyce (7) nature of the subsequent legal wrangling that ensued, the 1996 Act remains a milestone in communications...