Ideas of the Marketplace: A Guide to the 1996 Telecommunications Act
39 Pages Posted: 5 Mar 2009
Date Written: February 1, 1997
The Telecommunications Act of 1996 represented an enormous experimental step towards deregulating the telecommunications marketplace while opening it up to competition. With an eye towards breaking up the telecommunications monopolies held by local telephone service providers, the Act created regulations that forced local carriers to share their market and their resources with other telecommunications providers. The Telecommunications Act of 1996 itself is extremely complex. This article is a "guided tour" through the major provisions of the Act.
The first step in understanding the Telecommunications Act of 1996 is to understand how the telecommunications industry operates. Part two of this article explains the telecommunications landscape for telephone companies, from the role of Local Exchange Carriers to Bell Operating Companies. Part two of this article also explains how the Act affects the players in the telecommunications world and encourages competition in their spheres of influence. Finally, part two of this article explains the incentives that the Act gives to local monopolies to conform to regulations and the standards that local carriers must meet in order to qualify for these incentives.
Part three of this article explains how the Act impacts upon cable television and video programming. This section enumerates the various deregulation efforts in the cable industry, including rate deregulation, loosening of cable ownership rules, and the elimination of the ban on cable-telephone cross ownership and cable companies providing local telephone service. It also explains which regulations remain, including the ban on mergers between cable operators and local telephone companies.
Part four of the article addresses how broadcasters are affected by the Telecommunications Act of 1996. This includes eased restrictions on broadcasters in terms of licensing and multiple ownerships of single broadcast licenses
Part five of the article deals with the Act's potentially controversial treatment of explicit materials on television through the Communications Decency Act of 1996. Some available means of monitoring content carry potential Constitutional violations. Others simply run the risk of being ineffective. This section posits creative solutions involving non-government actors making use of the Act's "Good Samaritan" provision and explains the limitations of the Good Samaritan provision.
Keywords: competition, telecommunications industry, regulation, deregulation, cable tv, telephone service, broadcasting, Telecommunications Act of 1996
JEL Classification: K1, K23
Suggested Citation: Suggested Citation