The Truth About Telecommunications Investment after the Telecommunications Act of 1996

Abstract

An analysis of investment by telecommunications firms before and after the 1996 Telecommunications Act reveals substantial increases in the level of investment and capital stock for this sector following the enactment of this important legislation. There is no evidence that the 1996 Act reduced investment, and capital stock in the industry is at its historical peak. Indeed, the data shows some $267 billion in additional investment, more than $95.3 billion annually, in the five years following passage of 1996 Act. Despite recent declines in investment in the industry caused in part by the near total collapse of facilities-based CLECs, telecommunications investment remains well above historical levels.

Keywords: Telecommunications, Competition, Unbundling, Investment

JEL Classification: K23, L10, L50, L96, O33, 038