From Clones to Packets: The Development of Competition in Local Residential Telecommunications

Abstract

his paper explores the development of local telecommunications competition and the role of regulation in North America, from the original expectation that new entrants would look like the incumbent local exchange carriers (ILEC clones) to the current, and more promising, entry by companies using the Internet’s packet technology to provide telephone service (Voice over Internet Protocol or VoIP). Policies were put in place by federal and state regulators that were sometimes consistent, and sometimes inconsistent, with permitting facilities-based entry by ILEC clones, and these polices are now being reconsidered in light of the experience with this type of entry. New policies are now required to permit entry by VoIP service providers, and these policies must be reconciled with the previous local telecommunications competition policies that were put in place. Comparing and contrasting U. S. and Canadian regulatory policy can often provide some useful insights into the development of local exchange competition. The paper offers a framework for analyzing VoIP service that illuminates the regulatory and policy issues that must be addressed.