Telecommunications Act

To understand the Telecommunications Act of 1996 we must first know what the Act was brought on by. In 1974 a major antitrust case was brought on by the United States opposing AT&T. The government believed that AT&T was running a monopoly because they felt the relationship between AT&T and Western Electric was illegal. The United States proved to be right and judgment resulted with AT&T breaking up into seven companies. Another contributing factor to the Act was that telecommunications had not been changed in terms of law in over 60 years. Over those 60 years technology had dramatically impacted and changed the market and way of business. In 1996 President Bill Clinton signed the Telecommunications Act of 1996 and it became law. The 1996 Act aims to "preserve and advance universal service [254(b)].” This means:
(1) High quality at low rates.
(2) Access to advanced services in all States.
(3) Access in rural and high cost areas at comparable prices to other areas.
(4) Supported by "equitable and nondiscriminatory contributions" by "all providers of telecommunications services."
(5) Specific and predictable mechanisms to raise the required funds.
(6) Access to advanced telecommunications services for schools, health care, and libraries. (Economides, 1998) The Act was made to form a highly competitive and consumer friendly market. The way this is accomplished is by mandating interconnection of telecommunication networks. This means that big companies are required to lease parts of their network to smaller providers at low wholesale rates. In doing so the door is left wide open for competition. Competition in long distance has been a great success. ***The market share of AT&T fell from 85% to 53% at the end of 1996. The reason for this is that smaller companies were now able to provide the exact same services. ***the Act requires that competition be established in local markets before the incumbent local exchange carriers are allowed in long