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1996 Telecom Act Turns 10: Reflections on the Old, Predictions for the New

Ten years ago today, President Clinton signed the Telecommunications Act of 1996, legislation intended to spur new models of competition and result in lower prices and more choices for consumers.

And yet, if popular opinion is any gauge, the act failed to account for the onslaught of the Internet and broadband, as well as slow pace at which the cable companies geared up to compete against the telcos.

Now, a decade later, Congress is again at work to rewrite the industrys laws, and seems prepared make sure a new act encompasses communications as a whole, rather than telecommunications in part. Such legislation would address telecommunications and information services, as well as the entrance of new industry players called applications providers, made up of companies including Google and Yahoo! Inc. Of the many questions surrounding a likely rewrite, the most pertinent ones include how long it will take to pass such an act, and when that might occur.

Lawmakers might not get it worked out for years and years, said Carol Mattey, a former FCC deputy chief who now works for Deloittes Regulatory Consulting Practice. Mattey moved to the FCC from another government agency in 1994 because she wanted to be in the midst of efforts to write the 1996 act.

That act was like a tidal wave in the sense that it brought about a lot of change in the legal and regulatory arenas, she said. At the time the act passed, Congress thought it was comprehensively addressing the issues related to telecom. The greatest failing of the act is that it did not fully anticipate the development of the Internet and broadband and the impact of telecom versus information services, she added.

The Telecommunications Industry Association (TIA), which represents a number of carriers, meanwhile, said the act initially helped expanded Internet access, promoted facilities investment by the cable industry and fostered expansion of wireless services. But, it also showed the short-term apparent successes of micro-managed competition on the telephone side of the industry were outweighed by the resulting disincentives for investment in telecom networks and the lack of sustainable facilities-based competition, the association said in a statement.

Policy makers are trying to address all of these disparities now, but their work might not pay off for some time. Even as Senate Commerce Committee Chairman Ted Stevens (R-Alaska) holds a number of hearings this month and next, those testimonies are not creating consensus or highlighting one solid way to write new legislation. Everyone holds differing opinions on issues including net neutrality, privacy and video franchising, and it is difficult to move forward on contentious issues in an election year, Mattey said.

I dont think legislation will pass this year, she added. I think both the House and Senate will make progress, but given the election cycle it is very difficult for both houses to pass legislation.

Besides, she said, some people assert the Telecommunications Act of 1996 took 20 years to formulate, starting back in the 1970s. The same scenario could happen again. I dont see why this would be any easier, to be honest, Mattey said. She explained, The 96 Act was a significant accomplishment, but it took Congress years to reach a consensus on how to address the then-prevailing policy issues. It quickly became outmoded, which illustrates the difficulty of making public policy when the marketplace is quickly changing. No sooner do you make one decision then the choice youve made has to be reevaluated. And neither Congress nor the FCC is well-suited to reacting quickly.

In the meantime, then, the challenge for carriers and service providers is that they must build business plans based on knowns and unknowns. There are firms that help companies manage such strategies, and Mattey said executives have to formulate strategies that tie into current requirements, but added they cant throw up their hands and go into hiding while waiting for Congress to resolve these issues.

The anniversary of the 96 Act is shadowed by government and business efforts to make up for the shortcomings and growth areas not foreseen 10 years ago. Bell companies are lobbying for changes to video franchising rules, for example, and praising last years deregulation of DSL classification as a telecommunications service. Competitive carriers, on the other hand, decry the FCCs decision on DSL and see their industry becoming less competitive as unbundled network element platform pricing rules become obsolete next month. Yet, these changes also push companies to innovate, as evidenced by the industry move to IP technologies. If the 96 Act was intended to spur competition, it has done that, although not necessarily in ways that were anticipated.

For more stories and interviews on the tenth anniversary of the Telecommunications Act of 1996, go to

Telecom Act Hits 10-Year Mark

,

Comstock Opines About the 96 Act, Current Reg Issues and More

,

And Congress Said, Let There Be Competition

and

Communications Act Of 2006?


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