Impact of the Telecommunications Act 1996 on Local Telephone Service

Abstract

Through the 1980s and the early 1990s, the U. S. telecommunications industry experienced rapid technological change, which failed to deliver expected cost reductions to users. In 1996, Congress passed the Telecommunications Act 1996, which substantially deregulated the telecommunications industry with the intent of increased competition and increasing benefits to consumers. This paper examines the impact of the Telecommunications Act 1996 on local telephone markets. Key findings are that the Telecommunications Act 1996 reduced local residential and business monthly telephone rates and connection charges, reduced the cross subsidization of residential telephone customers by business telephone customers, increased the number of fixed line telephone connections, improved labour productivity in the fixed line and wireless segments and led to modest increases in entry in local telephone markets.