The Magnificent Seven: American Telephony's Deregulatory Shootout

82 Pages Posted: 23 Apr 2013

See all articles by James Ming Chen

James Ming Chen

Michigan State University - College of Law

Date Written: 1999


The Telecommunications Act of 1996 promised the world. It has would "promote competition and reduce regulation," "secure lower prices and bigher quality services... and encourage the rapid deployment of new telecommunications technologies." On its first occasion to review the Act's provisions on local and long-distance telephony, the Supreme Court spoke in far less glamorous terms. "[M]ost unfortunate," lamented the Justices, "for a piece of legislation that profoundly affects a crucial segment of the economy worth tens of billions of dollars," the Telecommunications Act "is in many important respects a model of ambiguity or indeed self-contradiction."

The most vociferous critics of telecommunications deregulation argue that the Act has produced nothing but a cascade of megamergers. Consumers Union, for instance, protests that as "telephone monopolies continu[e] to merge rather than compete," the Act "will not deliver on its promise of broad-based competition and lower telephone prices." Implicit in this cry is the assumption that the telecommunications mergers that have occurred since 1996 have done little or nothing to reduce prices, spur innovation, or otherwise enhance consumer welfare.

This Article will address questions of law and policy raised by these megamergers. The very fact that I will be discussing "telecommunications" as an industry distinct from broadcasting and other forms of mass communications is a signal that the Act has not succeeded in "opening all telecommunications markets to competition." Most of the commentary still focuses on "[t]he two most noteworthy and most controversial changes in the status quo, authorizing competition in local telephone markets and, reciprocally, authorizing Bell operating company ... entry into long distance."

Suggested Citation

Chen, James Ming, The Magnificent Seven: American Telephony's Deregulatory Shootout (1999). Hastings Law Journal, Vol. 50, pp. 1503-1584,1999. Available at SSRN:

James Ming Chen (Contact Author)

Michigan State University - College of Law ( email )

318 Law College Building
East Lansing, MI 48824-1300
United States

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