Meddling Through: Regulating Local Telephone Competition in the United States

After a brief history of telecommunication policies and the development of local competition in the United States, this paper analyzes the Telecommunications Act of 1996 and subsequent FCC and state regulatory decisions. Unfortunately, these recent policy changes have generated pervasive, intrusive regulations, undermining the objectives the Telecom Act was intended to promote: competition, innovation, and investment in telecommunications infrastructure. States should allow incumbent local carriers to rebalance their retail rates and set interconnection prices based on actual costs. Federal policymakers should reduce and liberalize regulations, allowing market forces more freedom to allocate resources and shape industry structure.