The Network Letter: Monopolies Without Mandate

摘要

I'm amazed at the speed and magnitude of the consolidation taking place among the telecom carriers today. Seems like if you don't catch the morning news then you might miss something big. These developments are moving very fast, at least in telco time. Moreover, some of these moves are unprecedented in their scope and scale. Billion of dollars are on the table. Clearly, the biggest carriers are getting even bigger at the expense of smaller players. However, there is one key aspect of the changing carrier landscape that seems to be left out of the reporting in the business and trade press - the Universal Service mandate that was the hallmark of the telephone industry since the Communications Act of 1934. Back then, Congress granted AT&T monopoly status in exchange for a promise to build out the telephone network to every home and business in the country. The break-up of the Bell System in 1984 and the Telecommunications Act of 1996 (TA96) led to long distance, followed by local competition. MCI and the other upstart long distance carriers seemed to be the winners in 1984. TA96 ushered in an era of furious competition for the local business, with the apparent winners being the myriad of competitive local exchange carriers (CLECs) that sprang up in the years following 1996. And, there is no doubt that the consumers of telecommunications services won, too. We pay a tiny fraction of what we paid for long distance service in 1983. Sometimes we get it free!