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Reflecting on twenty years under the Telecommunications Act of 1996: a collection of essays on implementation.

JONATHAN E. NUECHTERLEIN *

I was a new telecommunications lawyer at the FCC when the 1996 Act (1) was passed. Within the Commission, people greeted the event with two distinct reactions. In public, they revered the far-sighted magnificence of this landmark legislation. In private, they began puzzling over the details and became more and more confused. For example, no one could tell exactly what role Congress wanted the Commission (as opposed to the states) to play in the pricing of network elements and interconnection. This was a glaringly obvious question, so why was it so hard to discern Congress's answer from the text of this highly detailed law?

The 1996 Act and its interpretive conundrums followed me when I left the FCC later in the year to join the Solicitor General's office. There I prepared briefs explaining to the Supreme Court why the FCC was right to read the 1996 Act as it did. I spent many long hours staring hard at the cryptic turns of phrase in Sections 251 and 252. (2) What I found was uncanny. For almost every major dispute, Congress had given each side almost equivalent statutory ammunition. An oblique phrase in one corner of the statute would balance a seemingly contradictory phrase in another. The Supreme Court noticed this too, calling the 1996 Act "a model of ambiguity or indeed even self-contradiction." (3)

This self-contradiction may have been no accident. The legislative enterprise often requires compromise. Sometimes compromise takes the form of a clearly articulated middle-ground solution. But sometimes, as in the 1996 Act, legislators compromise by enacting statutory ambiguity. Such ambiguity consigns important policy issues to years of legal uncertainty and punts their ultimate resolution to agencies and courts. But ambiguity also comes with a political benefit: each legislator can tell disparate constituencies that he or she had their best interests in mind and can blame someone else for any contrary interpretation that wins out.

Of course, Congress faces acute political challenges whenever it enacts major legislation with high commercial stakes. In the telecommunications sector, however, Congress also faces the equally difficult challenge of seeing around the technological bend. The 1996 Act was passed mainly to increase competition among circuit-switched providers of landline telephone services. Congress acknowledged the Internet but did not clearly foresee the broadband revolution and thus had little to say about broadband Internet access (fixed or mobile). By the time I rejoined the FCC in 2000, that statutory omission had become painfully clear, as stakeholders began arguing about whether and how the FCC should regulate broadband Internet access. Sixteen years later, that dispute has only intensified.

All this said, it would be unfair to criticize Congress too harshly for politically expedient compromises and lapses of technological foresight. Arguably, the 1996 Act was among the better legislative packages Congress could have been expected to pass in the mid-1990s, given the political constraints and widespread technological assumptions. For example, by centralizing various policy issues at the national level, the 1996 Act enabled the FCC (eventually) to rationalize an increasingly chaotic intercarrier compensation regime and bring universal service support into the modern era. Congress also wisely gave the Commission forbearance authority to undo statutory mandates that outlive their usefulness.

If and when Congress considers new telecommunications legislation of comparable scope, it should draw two main lessons from the 1996 Act and its aftermath. First, as with the forbearance provision, Congress should continue legislating on the premise that competition, when effective, promotes consumer welfare more effectively than traditional regulation can and that policymakers should retain broad discretion to deregulate as appropriate.

Second, because this is a field characterized by unpredictable technological flux, Congress should enact mainly high-level principles and leave most of the details for the Commission and the marketplace to address as industry conditions evolve. There will always be room to question and litigate the wisdom of the FCC's regulatory choices. Ideally, however, that litigation should concern whether those choices make economic and technological sense in today's marketplace, not whether they comport with obscure statutory phrases written many years ago with different regulatory problems in mind.

* Jonathan Nuechterlein is General Counsel of the Federal Trade Commission. The views expressed here are his own and not necessarily those of the FTC or any Commissioner. He served as Special Counsel at the Federal Communications Commission from 1995 to 1996, as Assistant to the Solicitor General from 1996 to 2000, and as FCC Deputy General Counsel from January 2000 to early 2001.

(1.) Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (codified as amended in scattered sections of 47 U.S.C.).

(2.) 47 U.S.C. [section][section] 251, 252 (2012).

(3.) AT & T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 397 (1999).

COMMISSIONER MICHAEL O'RIELLY *

I will be forever grateful for the opportunity to work on the Telecommunications Act of 1996, (1) albeit as a very junior staffer. That legislative experience laid a solid foundation for the rest of my congressional career and eventually helped lead to my current position.

Generally, I believe that it is extremely helpful when Congress speaks on a particular issue, especially those that are communications-related, because it clarifies what is expected of regulators and industry participants. Appropriately, Congress should be complimented for enacting the 1996 Act, since it was the first comprehensive overhaul of the statute in over 60 years. And many of its fundamental principles still hold true, especially the idea that competition and free markets should reign over monopolies and regulation.

But in many regards, as can be the case with ambitious legislative efforts, the Act was a melding of different themes and compromises. Certain central provisions that seemed paramount at the time were somewhat backwards-looking and perhaps, in retrospect, naive. For instance, responding to the judicial breakup of AT&T (2) by opening the then-existing long distance market in exchange for local switched access voice competition. (3) The relevance of those markets quickly faded, but some of those provisions have taken on an unforeseen life of their own. Equally important, the adoption of general and vague statutory language in order to reach consensus has enabled many practitioners and the Commission to abuse such provisions for unrelated, unintended or ulterior purposes.

It is important to note that, at the same time the Act was being implemented, the unregulated tech economy rushed ahead, making many statutory provisions and assumptions obsolete, and leaving the Commission in the dust or even on the sidelines. While certainly there were discussions regarding the nascent Internet during the Act's formation, no one could have envisioned the colossal role it would eventually assume in the communications regulatory environment or Americans' daily lives. Since then, the disruptive effect of the Internet has blurred the lines between telecommunications, media and technology industries, and the Commission seems intent on dangerously flexing its regulatory muscle to impose legacy rules on modern technology to avoid being made irrelevant in the future.

My central lessons from the 1996 Act experience add up to this advice for my friends on Capitol Hill: be specific, include sunset provisions where appropriate to keep new technologies free from old rules and bargains that have nothing to do with them, and be forward-looking. There used to be greater trust between the Congress and the Commission with regards to executing the provisions of a law. That no longer holds, and it is all-important that Congress write exactly what it wants and does not want from the Commission. Do not leave it up to chance. At the same time, spending a majority of energy on the hot topics of the moment, like imaginary net neutrality problems, prevents real focus on shaping the law for decades to come, rather than on the past.

* Commissioner Michael O'Rielly is currently serving his second term as a Commissioner of the FCC. In 1996, he was a Telecommunications Policy Analyst for the House Committee on Energy and Commerce.

(1.) Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (codified as amended in scattered sections of 47 U.S.C.).

(2.) See United States v. AT & T, 552 F. Supp. 131 (D.D.C. 1982), consent decree terminated sub nom., United States v. W. Elec. Co., No. 82-0192, 1996 WL 255904 (D.D.C. 1996) (terminating consent decree nunc pro tanc, as of Telecommunications Act's February 8, 1996, effective date).

(3.) 47 U.S.C. [section][section] 251, 271 (2012).

MICHAEL PELCOVITS *

The Telecommunications Act of 1996 (1) provided two important, and very different, mechanisms for increasing competition in wireline telecommunications markets. First, it removed barriers to entry, such as the legal prohibitions and obstacles (such as access to right-of-way) that were essential to new entrants. (2) In the same category, I also include the Act's imposition of very basic market rules, such as interconnection obligations that were a necessary foundation to introducing competition in previously monopolized markets. (3) Second, the Act enabled a regulation-intensive path to competition, whereby incumbents were required to offer unbundled network elements ("UNEs") at regulated rates. (4) I believe the first mechanism was a great success and the second a great failure. As the success is relatively obvious, let me focus on the failure.

The concept behind the "regulation-intensive" UNE approach was that certain elements, or components, of the local exchange network were much more difficult for entrants to duplicate than others. This was generally attributed to large economies of scale in the subscriber loop plant. The reasoning went that the only way that the entrants could succeed was by gradually building their own network, and in the interim, they would "lease" the monopoly components of the network still controlled by the incumbents. So much for theory--in practice the new entrants competed successfully only when they leased the entire local network of the incumbents (the so-called UNE platform), and this strategy was yanked out from under the entrants after extended legal and regulatory wrangling. The largest new entrants in the local market at that time, namely the long distance companies, were unable to find another strategy to compete against the incumbents and eventually faded away, in some cases by merging with the Regional Bell Companies.

The moral of the story is that policymakers must keep it simple. Detailed regulation of conduct, i.e. the transactions between a firm with significant market power and its fringe competitors, does not work. It is not simple. My own experience as the Chief Economist of MCI, which was a major player in this process, has left me convinced that regulation is too blunt a tool, and is subject to too time-consuming and too costly a legal process, to improve on the functioning of a market that will otherwise function reasonably well, especially if the market is technologically complex and changing at a rapid pace. I think this is mostly due to the asymmetry in information between the players and the regulators, and the formality of the procedures that govern regulation in the United States.

The role of government in these industries, even where there is a significant potential for monopolistic behavior, should be limited to basic structural controls and simple market rules. An example of basic structural controls would be the denial of mergers with significant competitive overlap (as opposed to merger approval with complex regulatory conditions attached). An example of simple market rules would be requirements on dominant providers to interconnect with horizontal competitors. The FCC did a good job developing and monitoring the rules that governed traffic exchange between incumbent and entering local telephone companies.

Have regulators learned this lesson? Obviously not, as the FCC reclassification decision proves. The FCC is once again leaping into the thicket of highly-detailed conduct regulation, albeit with the fig leaf of forbearance covering up the return of old-fashioned conduct regulation.

* Michael Pelcovits was Vice President and Chief Economist of MCI Communications (later WorldCom) during the 1990s and early 2000s. Since then he has been a consultant, for many years with MiCRA, and presently with Pelconomics LTD, Jerusalem, Israel. He can be reached at pelconomics@gmail.com

(1.) Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56(codified as amended in scattered sections of 47 U.S.C.).

(2.) See 47 U.S.C. [section]251(b)(4) (2012).

(3.) See 47 U.S.C. [section] 251(c)(2).

(4.) See 47 U.S.C. [section] 251(c)(3).

CHAIRMAN MICHAEL K. POWELL *

YES OR NO

When I was FCC Chairman I frequently testified before Senator John McCain's Commerce Committee. The Senator always began with a pointed question to me: "Was the 1996 Telecommunications Act a success, yes or no?" He wanted me to say no, given that he voted against the Act. I always answered emphatically, "Yes."

The Act, (1) to my mind, had a single compelling virtue. It rejected the longstanding view that communications services were natural monopolies and, as such, there should be a single, heavily regulated provider in each sector. Instead, the 1996 Act placed its faith in markets and lighter regulation as a way of unleashing competitive forces that would lead to increased innovation and better consumer outcomes. This single organizing principle provided a guiding light toward resolving issues, whether looking backward or looking forward. It was a blueprint for untangling the legacy of classic telecommunications regulation by allowing local companies to finally enter long distance markets (and vice versa). (2) It also invigorated competition by aligning incentives and removing restrictions for cable companies to enter telephone markets, telephone companies to enter video markets, and opening pathways for new companies to enter. (3) As regulatory success goes, this one was exceptional.

Looking forward, the amended Communications Act (4) was also a lodestar for addressing the emerging world of the Internet. Congress declared: "It is the policy of the United States to preserve the vibrant and competitive free market that presently exists for the Internet ... unfettered by Federal and State regulation." (5) This directed regulators to resist the temptation to treat the Internet as a mere improvement of the telephone system and to avoid the reflexive instinct to regulate it as such. My office door was visited by untold numbers of Internet entrepreneurs asking anxious questions as to whether instant messaging, or Skype, or Vonage, or interactive gaming were regulated telecommunications services. Statutory words are rarely crystal clear when applied to emerging services. But the overarching principles of the statute gave direction to interpret this ambiguity in a manner consistent with the goal of not saddling the Internet with burdensome regulations. The bet was that by not doing so, the Internet would grow and reach Americans more quickly. And, by making the Internet more ubiquitous, give sustenance to the budding industry just starting to squeak on the west coast. Again, the results were stupendous. The Internet has deployed faster than any technology in history and many of those squeaks heard in the Valley now roar with global ferocity.

Sadly, the exceptional bipartisan consensus that gave birth to the 1996 Act and its liberating regulatory framework is breaking down. Now, the ambiguity of the Act--only getting worse with time--is being used to resurrect a muscular regulatory model that places renewed (and unfounded) faith in regulators to manage the Internet. The trends are ominous and cause me to rethink how I would answer Senator McCain today. I confess, I am wavering.

* Michael K. Powell served as a Commissioner of the FCC from 1997 to 2001 and as Chairman of the FCC from 2001 to 2005. Today, he is President and CEO of the National Cable & Telecommunications Association.

(1.) Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56, 118 (codified as amended in scattered sections of 47 U.S.C.).

(2.) See 47 U.S.C. [section][section] 251, 271 (2012).

(3.) See Telecommunications Act, [section] 202(i) (amending cable and telephone company cross-ownership restrictions contained in 47 U.S.C. [section] 533(a)).

(4.) Communications Act of 1934, Pub. L. 73-416, 48 Stat. 1064 (codified as amended in 47 U.S.C.).

(5.) 47 U.S.C. [section] 230(b)(2) (2012).

SENATOR LARRY PRESSLER *

The Telecommunications Act of 1996 (1) is one of the finest and most successful pieces of legislation passed during my three terms in the United States Senate. It is certainly not perfect and needs to be updated. It was the product of nearly twenty years of options papers, debate, and struggle. Under the leadership of Senators Jack Danforth and Fritz Hollings, it did pass in the Senate once before but failed in the House; thus, when I became chairman of the Commerce Committee in the 1990s, I inherited the fruits of years of hard labor by many people.

We had sort of a magical moment in late 1995 when all the parties finally seemed in agreement to this massive document. During the two years before this, I personally visited all one hundred United States senators to try to get their input and to tell them we needed to pass this on a bipartisan basis, which we finally did with a 97-3 vote.

Basically, the Telecommunications Act of 1996 tried to deregulate (or re-regulate) the whole communications industry. Our goal was to let everyone get into everyone else's business if they wanted to. (2) We also tried to recognize that new technologies require large international firms. For example, it takes a big international company to put a satellite up or to lay fiber-optic cable in places such as India; thus, we were criticized for giving too many breaks to big companies.

On the other hand, we tried to create a whole host of new opportunities for smaller businesses to sometimes sell the products of a bigger company within their former domain.

And we worked on a daily basis with the labor unions, as they had to be on board for passage. Due to their demands, we had to accept limitations of out-sourcing on a lot of functions that a complete deregulation bill would have allowed. And believe it or not the labor unions were adamantly opposed to our putting any anti-trust language into the bill.

There were many strange twists in the tortuous path to passage. Vice President Al Gore usually spoke for the administration on this bill. Al and I had worked out a fairly complicated set of parameters for regulation of the cable industry, but then suddenly without any fanfare President Clinton returned from a cable convention in Las Vegas and word was sent over to me that the administration would only sign the bill if it only had complete deregulation of cable. I was astounded and disappointed, but most of my Republican colleagues were delighted; thus, the cable industry probably became the most deregulated were industry in the United States.

In terms of geography, the whole broadcast industry was turned upside down. Whether we like it or not, it is virtually impossible for players such as Sirius Radio to provide local news and local weather; thus, many people outside of urban areas feel they have lost their local radio news reporter and local radio news. This is unfortunately probably true, but we hope that gap has been filled by newer technologies.

Many people who complain about the Telecommunications Act of 1996 are concerned about lack of antitrust enforcement. In my opinion, no president during or since the 1996 Act has aggressively enforced antitrust laws. I have always been a "Teddy Roosevelt-type Republican" and am now an Independent. I believe in a more rigorous enforcement of the antitrust laws. I had not foreseen all of the consolidations that were to occur, particularly in radio, since the '96 act. The '96 act had almost nothing to do with anti-trust enforcement. The whole media industry benefits from a laxer enforcement of antitrust laws because the media falls under the Federal Trade Commission. The Federal Trade Commission does not have the staff or the expertise to successfully enforce antitrust laws and the Congress, presidents of both Democratic and Republican parties, and the public have been sound asleep about the enforcement of antitrust laws. We need stronger enforcement, but that is not the fault of the '96 Act.

We carefully avoided regulating the Internet going forward. We did not fully foresee how big the Internet would become, but leaving it deregulated has probably worked out better than having onerous government regulation.

The Act has worked out well. One economist called it the greatest industrial reconstruction of modern times. Others have said that it allows powerful companies and labor unions to take advantage of a struggling public. We do need a new updated Telecommunications Act to deal with the completely new technologies that we were not aware of in 1995-1996. And we were totally unaware of the national defense challenges that will have to be dealt with in a new telecommunications act.

* Senator Pressler served South Dakota for three terms in the United States Senate, from 1979 until 1997. Between 1995 and 1997, he chiared the Senate Commerce Committee, overseeing the T elecommunications Act's enactment. Prior to his time in the Senate, he served in the United States House of Representatives for two terms, from 1975 to 1979. Today, Senator Pressler is a lawyer, speaker, professor, and volunteer for homeless veterans.

(1.) Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (codified as amended in scattered sections of 47 U.S.C.).

(2.) See, e.g., 47 U.S.C. [section][section] 251, 271 (2012).

MICHAEL PRYOR *

I was in the Policy Division of the then Common Carrier Bureau from January 1996 through 1999. From this perspective, the FCC's primary task was to utilize the framework contained in the 1996 Act (1) to jump start competition in the local telecommunications market. The Act gave the FCC just six months to flesh out a novel regulatory regime establishing the conditions for competition. (2) The resulting Local Competition Order (3) was truly an amazing achievement. It established ground rules for interconnection, identified the incumbent local exchange carrier (LEC) network elements that were to unbundled and offered to new entrants, and created a cost-based pricing methodology (TELRIC).

The 1996 Act's directive to jump start local competition seemed to compel entry through the use of incumbent LEC, and particularly Bell company, unbundled network elements (UNE). 4 Facilities-based entry did not seem viable in the near term, particularly for residential consumers. The emphasis on UNE-based entry not only seemed consistent with the statutory directive to open quickly local telecommunications markets to competition, but was also seen as the only practical grounds by which the Bell Companies could satisfy the competitive entry showing required by section 2715 that Bell Companies needed to provide in-region long distance service. Although some Bell companies attempted early on to demonstrate competitive entry through de minimis wireless substitution, practically the only route to section 271 authority ran though UNE-access, and hence the extraordinary focus on the Bell Company back office (OSS) processes through which competitive carriers gained such access.

Of course, we will never know whether broad, UNE-based competitive entry would have resulted in consumer enhancing competition. The District of Columbia Circuit rejected the FCC's interpretation of the so-called impairment standard by which UNEs were to be identified. (6) The FCC's policy migrated toward a preference for facilities-based competition, and over time, facilities-based competition, at least for voice services, arrived through wireless and VoIP services.

* Michael Pryor is special counsel in Cooley LLP's Regulatory Communications practice and resident in its Washington, DC office. He served as Deputy Chief of the Policy Division in the FCC's Wireline Competition Bureau from 1996-1999, where he drafted rules implementing local competition provisions of the 1996 Act.

(1.) Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56, 118.

(2.) See 47 U.S.C. [section] 251(d)(1) (2012).

(3.) Implementation of the Local Competition Provisions in the Telecomms. Act of 1996, First Report and Order, 11 FCC Rcd 15499 (1996).

(4.) See 47 U.S.C. [section][section] 251,271 (2012).

(5.) 47 U.S.C. [section] 271.

(6.) See U.S. Telecom Ass'n v. FCC, 290 F.3d 415, 422-428 (D.C. Cir. 2002).

GREGORY L. ROSSTON * & BRADLEY S. WIMME ([dagger])

The Telecommunications Act of 1996's (1) (the Act) goal was to open telecommunication markets to competition. The Act provided mechanisms and safeguards that were intended to replace heavy-handed regulations with the discipline and incentives provided by competition. Long distance companies wanted access to local voice networks so they could provide onestop shopping, while the Regional Bell Operating Companies (RBOC) wanted relief from the line of business restrictions imposed on them at the time of the break-up the old AT&T. (2) The Act required the RBOCs to open their local markets to competition before such relief would be granted. As a result, the main focus of the Act's implementation was on rules and regulations that governed competitive entry into local voice markets. Neither the regulators, nor the firms their rules governed, could foresee how the rise of the Internet and advances in computing and wireless technologies would transform telecommunication markets over the next twenty years.

The Act provided mechanisms and regulatory safeguards intended to open markets to competition. Allowing RBOCs to enter the market for long distance services was easy--the law eliminated the line of business restrictions imposed on them a decade earlier once they were found to have opened their markets to competition. (3) Opening local markets, however, was viewed as a difficult proposition. The provision of local telephone services using traditional technologies benefited from economies of density, and the Act determined that incumbents should be required to provide competitors access to their local networks.

The Act determined that competitors should have three avenues of entry into local markets: as a facilities-based provider that built its own network; as a reseller of RBOC services; or by leasing pieces of the RBOC network. (4) The third mechanism, which required RBOCs to lease Unbundled Network Elements (UNEs) to their competitors garnered the majority of the attention. Which parts of networks should be unbundled? What prices should be charged for these elements? These and other related questions were debated intensely. Millions of dollars were spent on these fights, both at the FCC and in state regulatory proceedings.

The remaining forms of entry were less controversial. The Act's method for setting resale rates resulted in rates that exceeded the prices associated with UNEs, and this avenue was largely ignored by competitors. Very few carriers provided facilities-based competition for local service at the time of the Act. The majority of competitive facilities was for long-distance business service in dense downtown areas. Potential entrants that intended to use their own facilities assumed that they would be able to interconnect with the incumbent using arrangements similar to those used by long distance companies and competitive access providers.

There were only 34 million cell phone subscribers and price of cell phone service was much higher than even long distance services in 1996. State regulators viewed cellular service as a luxury and taxed it heavily so they could keep the price of local residential services low. Most cellular traffic originated on a cell phone and terminated on a landline phone. Fees for terminating cellular calls tended to be high, one to three cents per minute, and it was not uncommon for charges to only be levied on cellular providers; cellular carriers, in such cases, were not allowed to collect fees from landline companies when a call originated on landline phone and terminated on a cellular phone. Wireless services were not able to compete effectively with landline services under these conditions.

While the contentious UNE debates were under way, regulators addressed the Act's mandate that interconnection agreements must include "reciprocal compensation for the transport and termination of traffic." One RBOC economist suggested that "If we pay the 1 cent and they pay us 3 cents; that is 'reciprocal.'" The FCC did not agree and changed "reciprocal" to "reciprocal and symmetric" in its Order implementing the Act. (5) This subtle change went through unchallenged. The RBOCs, with the understanding that eighty percent of cellular traffic terminated on their networks, went to state PUCs and argued for high termination fees and got them. But they did not see the Internet coming. AOL, and other Internet service providers (ISPs), became favorite customers of competitive providers because ISPs generated billions of terminating minutes and virtually no originating minutes. High terminating charges resulted in entrants that specialized call termination. Soon the RBOCs awoke to this problem and tried to carve Internet access calls from the symmetric model, but failed.

The RBOCs' inability to use the regulatory process to protect their inflated termination fees resulted in a push towards cost-based termination charges. These low charges affected more than competitors serving ISPs. Low termination charges allowed wireless carriers to introduce plans such as "Free nights and weekends" and AT&T's "Digital One Rate" plan. The reduction in the price of wireless services, along with the introduction of VoIP service, was the beginning of consumer substitution away from traditional landline phones to wireless and other alternatives.

It now seems anachronistic that so much attention was paid to the local voice telephone market when we worked on the Act twenty years ago. The rise of the wireless and data services has resulted in a rapidly decreasing share of landline voice services, and the time for regulating local telephone services has likely passed. Less than fifty-five percent of households have a landline telephone according to the Centers for Disease Control. These changes were not widely foreseen twenty years ago, when the Act envisioned a market with long distance companies competing against the RBOCs using UNEs.

Looking back, it may seem easy to see that wireless and Internet would be the key to communications competition, but at the time the necessary advances were not clear. That is why regulators should not limit markets to a single means of entry, and that they should craft rules that do not favor one technology over another. Advances in technology and the creation of new services suggest that the intense lobbying over rules and regulations that governed the provision of landline voice services were ultimately meaningless. The main benefit of the Act and its implementation is that it outlawed the ability of regulators to block competitive entry the source of competition was unknown at the time. The Act laid the groundwork for facilities-based entry of services and technologies that were not fully developed at that time. While the Act's focus on voice telephony and unbundled elements may have been misplaced, its rules governing the entry conditions and the exchange of traffic ultimately allowed new technologies and services to find their way to the marketplace.

* Gregory Rosston is Deputy Director and Senior Fellow at the Stanford Institute for Economic Policy Research and Director of the Public Policy program at Stanford University. He worked as Deputy Chief Economist at the FCC during the initial implementation of the Telecommunications Act of 1996.

([dagger]) Bradley Wimmer is Professor of Economics at the University of Nevada, Las Vegas. He worked as an economist at the FCC during the initial implementation of the Telecommunications Act of 1996.

(1.) Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (codified as amended in scattered sections of 47 U.S.C.).

(2.) See United States v. AT & T, 552 F. Supp. 131 (D.D.C. 1982), consent decree terminated sub nom., United States v. W. Elec. Co., No. 82-0192, 1996 WL 255904 (D.D.C. 1996) (terminating consent decree nunc pro tanc, as of Telecommunications Act's February 8, 1996, effective date).

(3.) See 47 U.S.C. [section][section] 271-76 (2012).

(4.) See 47 U.S.C. [section] 251, 271 (2012).

(5.) See Implementation of the Local Competition Provisions in the Telecomms. Act of 1996, First Report and Order, 11 FCC Rcd 15499, paras. 1085-88 (1996).

GIGI SOHN *

I will remember the Telecommunications Act of 1996 (1) foremost as the first instance of broad, robust and impactful public interest stakeholder engagement in communications and Internet policy. Even though the Cable Act of 1992 (2) was a pro-consumer and competitive triumph with its provisions, among others, on program access, (3) program carriage, (4) vertical and horizontal ownership limits (5) and other consumer protections, public interest engagement was limited mostly to a handful of public interest and consumer organizations with expertise in communications law and policy. By contrast, from the earliest days of debate over the 1996 Act, nonprofit organizations from the education, children's, library, arts, disability, civil rights, civil liberties, religious and other fields joined with communications policy public interest organizations to make their mark on the last significant rewrite of our communications laws.

As early as 1993, it became clear that Congress had both the motivation and the support to pass a major revision of the Communications Act of 1934. At the time, I was a young lawyer at the Media Access Project (MAP), one of the very few communications policy advocacy organizations in existence at the time. The "field" largely consisted of MAP, Consumer Federation of America, the Center for Media Education, Action for Children's Television and the Office of Communications of the United Church of Christ. But as it became clear that Congress was looking to tackle privacy, disability rights, media ownership deregulation, indecent speech online and the deployment of "advanced telecommunications services," the larger public interest community became engaged. To better organize the different interests, the Center for Media Education formed the Telecommunications Policy Roundtable, where representatives of nonprofit stakeholders met monthly to discuss the draft bill du jour and develop strategies to ensure the protection of competition, consumer rights and democratic values. (6) Among the notable participants in the almost 200 member "TPR" were the American Library Association, the American Civil Liberties Union, People for the American Way, the National Education Association and American Council of the Blind.

While the members of the TPR didn't get everything they wanted from the Telecommunications Act of 1996, their impact was unquestionable. Among other things, the '96 Act placed into law consumer privacy protections for telecommunications services; (7) universal service mandates for schools, libraries, health care facilities, rural residents and the poor; (8) requirements that equipment, telecommunications services and video programming be accessible to the disabled; 9 a requirement that the Commission examine and eliminate market entry barriers for small businesses; (10) a requirement that the FCC promote competition in "competitive navigation devices"; (11) and a mandate that the FCC examine the state of advanced telecommunications services and take whatever steps necessary to ensure that they are deployed "on a reasonable and timely basis." (12) Not a bad public interest result for a law that was portrayed at the time as largely a wish list for communications industry interests.

* In 1996, GiGi Sohn was Deputy Director of the Media Access Project. She currently serves as Counselor to Chairman Tom Wheeler. This article was written in her personal capacity. The views expressed therein are hers and not those of the FCC or Chairman Wheeler.

(1.) Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (codified as amended in scattered sections of 47 U.S.C.).

(2.) Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 102-385, 106 Stat. 1460 (codified as amended at 47 U.S.C. [section][section] 521-555).

(3.) See 47 U.S.C. [section] 548 (2012).

(4.) See 47 U.S.C. [section] 536 (2012).

(5.) See 47 U.S.C. [section] 533 (2012).

(6.) See Patricia Aufderheide, Communications Policy and the Public Interest: The Telecommunications Act of 1996, 45-46 (1999).

(7.) See 47 U.S.C. [section] 221 (2012).

(8.) See 47 U.S.C. [section] 254 (2012).

(9.) See 47 U.S.C. [section] 255 (2012).

(10.) See 47 U.S.C. [section] 257 (2012).

(11.) See 47 U.S.C. [section] 548 (2012).

(12.) See 47 U.S.C. [section] 1302 (2012).

DAVID SOLOMON *

The FCC's implementation of the 1996 Telecommunications Act (1) transformed a great institutional challenge into a great institutional success. Congress required the agency to complete dozens of rulemaking proceedings to implement the bipartisan congressional vision for pushing telecommunications markets toward competition and deregulation. Congress imposed strict deadlines, directing the Commission to complete numerous major rulemakings within six months.

While one can certainly disagree with some of the FCC's specific decisions, the agency rose to the occasion. Virtually everyone at every level--from junior staff to the Chairman and Commissioners--worked extraordinarily hard as a team to meet the congressional deadlines. The FCC produced decisions at a record pace, with nearly five hundred full Commission decisions in 1996 and over four hundred in 1997. The Commission met all the congressional deadlines and also completed numerous related rulemakings not mandated by the Act (e.g., access charge reform) within the same short time frames. The FCC acted unanimously in virtually all its early 1996 Act implementation decisions, and the courts affirmed the majority of them. The agency did all of this in a technological era very different from today; for example, its "master tracking system" was a huge, hand-written flow chart on the Chief of Staff's wall.

Implementation of the 1996 Act also led to important structural change at the FCC. Policymakers and stakeholders understood the significance of effective FCC enforcement to ensure compliance with the competitive rules of the road and to protect consumers against any side effects of an increasingly competitive market. Accordingly, in 1999, the Commission established the Enforcement Bureau. (2) I am proud to have served as the first leader of the Enforcement Bureau, from 1999 to early 2005.

The FCC viewed enforcement as a central complement to deregulation. In the words of Chairman Kennard, "in an increasingly competitive communications marketplace," enforcement was of "enormous importance" in the FCC's "transition from an industry regulator to a market facilitator." 3 Chairman Powell also underscored the link between enforcement and deregulation, saying the FCC would "shift from constantly expanding the bevy of permissive regulations to strong and effective enforcement of truly necessary ones." (4) Consistent with this bipartisan approach to enforcement, the Enforcement Bureau focused in the early years of 1996 Act implementation on "firm, fast, flexible, and fair" enforcement of the rules adopted by the Commission to help implement Congress's procompetitive, deregulatory vision.

From a personal perspective, being part of the FCC's implementation of the 1996 Act was an exciting and invigorating experience. While debate can and will continue about the wisdom of various FCC decisions, the agency has a right to be proud of its accomplishments.

* David H. Solomon is a partner at Wilkinson Barker Knauer LLP. He was FCC Deputy General Counsel from 1994 to 1999 and Chief of the Enforcement Bureau from 1999 to early 2005.

(1.) Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (codified as amended in scattered sections of 47 U.S.C.).

(2.) See Establishment of the Enforcement Bureau & the Consumer Info. Bureau, Order, 14 FCC Rcd 17924, passim (1999).

(3.) Press Release, FCC, Chairaman Kennard Delivers to Congress Draft Strategic Plan for 21st Century, 1999 WL 606942 (Aug. 12, 1999).

(4.) Hearing on Agenda and Plans for Reform of the FCC Before the Subomm. Telecom. & the Internet of the H. Comm. on Energy & Commerce, 2001 WL 310970 (opening statement of Chairman Michael K. Powell, FCC) (Mar. 29, 2001).

LAWRENCE J. SPIWAK *

At the time the 1996 Act (1) was enacted, I was an attorney in the now-defunct Competition Division in the General Counsel's Office at the Federal Communications Commission. An inter-disciplinary unit formed by then--Chairman Reed Hundt, our job as lawyers and economists was to bring (to the extent practicable) greater analytical rigor to, and cohesion across, the various bureaus of the Commission. As with the rest of the talented staff of the FCC, we were all looking forward to the opportunity to implement such a sweeping piece of legislation to facilitate the transition from monopoly to competition.

Despite our enthusiasm, there were many of us at the Commission who recognized that it would be a challenge to find a readily-available facilities-based competitor to take on the local Regional Bell Operating Company ("RBOC") for retail voice service (which was the only service of relevance at the time). Just as now, facilities-based entry into the local market is extremely expensive, and in 1996 there were few comers on the horizon. Indeed, it is important to remember that in February 1996, mobile was a luxury service provided by a duopoly (one of which was the incumbent RBOC), and VoIP technology was still a glimmer in someone's eye at Bell Labs. (In fact, I can recall conversations with senior folks at the Commission in which we wishfully thought that if only the cable industry would wrap a twisted copper pair around their coaxial cable then all of our competitive problems would be solved.)

Given such skepticism, the Commission dedicated significant staff to implementing the unbundling paradigm set forth in Section 251. (2) I, however, was not among them. Instead, given my background as a former electric utility attorney, I was tasked with shepherding the rulemaking to implement Section 103 of the 1996 Act, which amended the Public Utility Holding Company Act of 1935 ("PUHCA") to allow registered public utility holding companies to enter into the telecommunications business without prior Securities and Exchange Commission approval through an unregulated "Exempt Telecommunications Company" or "ETC." (3) The hope was that electric utilities, with their significant "spillover" effects (i.e., rights of way, billing systems, access to capital, culture of customer care, etc.), would provide a strong candidate for that elusive second wire to the home. I am proud to say that this was the very first rulemaking the Commission voted on to implement the 1996 Act. (4)

So how did it work out for investor-owned utilities becoming the proverbial "second wire" into the home? Unfortunately, not well. To begin, the notion of an ETC was a bit ridiculous in the first instance, because rather than just repeal PUHCA entirely, Congress essentially decided to set up a paradigm where you needed more regulation at one agency (the FCC) just to be deregulated at another (the SEC). (To Congress's credit, it eventually saw the light and repealed PUHCA nearly a decade later in 2005. (5)) Still, because investor-owned utilities were (and continue to be) subject to aggressive regulation at both the state and federal levels that restricts their use of spillovers, utility entry into the "last mile" was, and is, unprofitable from a "greenfield" perspective. (Significantly, the investor-owned utility experience differs vastly from the municipal entry story, where self-regulation permits municipal utilities to engage in massive cross-subsidization between their electric and telecom businesses. (6)) In the mean time, the march of technology moved on: the cable companies realized that they could add a VoIP box (and eventually a cable modem) to their existing plant for relatively little cost and, as such, easily beat the utilities in the race to become the proverbial "second wire" to the home. Given that the economics of the last mile make for a difficult business case for a third wireline provider, it seems that the boat has sailed for investor-owned utilities to get into the facilities-based local telephone business. (7) Which brings me to the important (and broader) question of "lessons learned" from the 1996 Act. At bottom, although I understand enacting legislation is a political process, if my academic research and personal experience over the last twenty years have taught me anything, it is that while the 1996 Act may have contained some innovative ideas, perhaps policymakers should have given a bit more thought to the consequences of the proposed legislation before they voted on it. While this caveat certainly applies to Congress's choice of legislative language (see, e.g., the on-going kerfuffle of whether Section 7068 provides the FCC with an independent grant of authority (9)), the 1996 Act is replete with provisions that I have no doubt somebody thought was a great idea but paid little attention to the details.

For example, as we demonstrate in our paper about the 1996 Act's unbundling paradigm, which is published in this commemorative issue of the Journal, the unbundling paradigm collapsed upon itself due to (a) a failure of policymakers to understand the economics of the last mile, (b) the paradigm's failure to correctly align the incentives among the stakeholders, and (c) policymakers' failure to account for the possibility of technical change. (10) The exact same factors also led to the FCC's billion dollar policy dud to try to implement Congress's desire to create a retail market for set-top boxes under Section 629 (11)--a stand-alone market for set-top boxes is inefficient, and markets abhor inefficiency. (12) And, let's not forget the "Open Video System" paradigm of Section 653, (13) which magnanimously allows telephone companies to enter into the video business without having to obtain a franchise provided that they set aside up to two thirds of their channel capacity for their competitors at regulated rates.

Still, despite its warts, we cannot say the 1996 Act was a total failure. First, the 1996 Act "primed the pump" in consumers' minds that it was possible to have a competitive market, so for that I suppose we should all be a bit grateful. Second, although there were certainly hiccups, the market has moved from monopoly to competition (although I'm not sure how much corresponding deregulation has occurred with the increase in such competition (14)). Indeed, for those of us who were at the Commission in 1996, if you would have told us twenty years ago that we would have, in most markets, two wireline firms and four national wireless firms, we would have thrown a party.

So will there be an update to the 1996 Act? I have absolutely no idea. In 1996, the stars and the moons all aligned for a once in a lifetime opportunity, and whether that can happen again in today's toxic political environment remains to be seen. We should also remember that in 1996, the fight was essentially an "intra-family" squabble--i.e., RBOCs, IXCs, CLECs, cable companies and broadcasters; now, we have a plethora of nontraditional players added to the mix, which will probably make achieving consensus more difficult. Still, if we do get to a point of new legislation, I can only hope that we avoid the temptation of cutting an expedient political deal and instead take a few moments to contemplate what we have learned from the amazing experiment of the last twenty years. Given the tenor of the current telecom debate, however, I am not particularly optimistic.

* Lawrence J. Spiwak is the President of the Phoenix Center for Advanced Legal & Economic Public Policy Studies (www.phoenix-center.org), a non-profit 501(c)(3) research organization that studies broad public-policy issues related to governance, social and economic conditions, with a particular emphasis on the law and economics of the digital age. From 1994-1998, he served as a senior attorney in the Competition Division of the Office of General Counsel at the Federal Communications Commission.

(1.) Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (codified as amended in scattered sections of 47 U.S.C.).

(2.) 47 U.S.C. [section] 251 (2012).

(3.) 15 U.S.C. [section] 79z-5c (2000) (repealed 2005).

(4.) See In the Matter of Implementation of Section 34(A)(1) of the Public Utility Holding Company Act of 1935, Report and Order, 11 FCC Rcd 11377 (1996).

(5.) See Energy Policy Act of 2005, Pub. L. 109-58, 119 Stat. 594.

(6.) See, e.g., George S. Ford, Why Chattanooga Is Not the "Poster Child" for Municipal Broadband (Phoenix Ctr. Pol. Perspective No. 15-01, 2015), http://www.phoenix-center.org/ perspectives/Perspective 15-01F inal.pdf.

(7.) George S. Ford et al., Competition After Unbundling: Entry, Industry Structure and Convergence, 59 Fed. Comm. L. J. 331 (2007).

(8.) 47 U.S.C. [section] 1302 (2012).

(9.) See Lawrence J. Spiwak, What Are the Bounds of the FCC's Authority over Broadband Service Providers?--A Review of the Recent Case Law, 18 J. Internet L. 1 (2015); see also Verizon v. FCC, 740 F.3d 623, 638 (D.C. Cir. 2014).

(10.) See George S. Ford & Lawrence J. Spiwak, Lessons Learned from the U.S. Unbundling Experience, 68 Fed. Comm. L. J. 95 (2016).

(11.) 47 U.S.C. [section] 549 (2012).

(12.) See T. Randolph Beard, George S. Ford, Lawrence J. Spiwak, & Michael Stern, Wobbling Back to the Fire: Economic Efficiency and the Creation of a Retail Marketfor SetTop Boxes, 21 CommLaw Conspectus 1 (2012).

(13.) 47 U.S.C. [section] 573 (2012).

(14.) George S. Ford & Lawrence J. Spiwak, The Unpredictable FCC: Politicizing Communications Policy and its Threat to Broadband Investment (Phoenix Ctr. Pol. Perspective No. 14-05, 2014).

JOHN THORNE *

The story is told of a European immigrant to the United States, the great inventor Nikola Tesla, who arrived in New York City in the 1880s. Tesla looked around New York, remembered his beloved Europe and said: "What I had left was beautiful, artistic, and fascinating in every way." And what were his impressions of America? "What I saw here was machined, rough, and unattractive. America is a century behind Europe in civilization."

His assessment of America, of course, was a bit harsh. Why, in just a few years alone, American civilization would already be hard at work inventing the hamburger, the hot dog, and the ice cream cone....

And yet, a few years after Tesla's arrival, this rough civilization would soon adopt one of the world's first wide-ranging antitrust laws, followed in subsequent decades by industry-specific regulatory statutes and agencies. One of the early targets of the Sherman Act was J.P. Morgan, banker, uber-industrialist and a man so wealthy that he served as a kind of one-man Federal Reserve Board.

Morgan typified the initial response of American business to regulation. "I don't want a lawyer to tell me what I cannot do," he said. "I hire him to tell me how to do what I want to do." At some time or another, most lawyers have had a client like that.

Here's the point of these two stories: Curiously enough, Tesla--the eccentric, shaggy-headed European inventor, intersected with Morgan--the glowering, bulbous-nosed American tycoon. At one of their meetings around the turn of the century, Tesla proposed something tantalizing to Morgan, something he called a "world system" of wireless communications. This global web could not only relay telephone calls across the ocean. It could give consumers instant access to news, music, stock market reports, electronic letters and even pictures. Morgan, mesmerized, listened as Tesla predicted: "When wireless is fully applied the earth will be converted into a huge brain, capable of response in every one of its parts."

I like this story because it reminds us that law can govern progress, but law cannot create it. Trust-busters would force Morgan to sell off his companies, and patent attorneys would bedevil Tesla. But no lawyer could have imagined a prototype of the wireless Internet like Tesla, or would have had the vision to finance early research into it like Morgan.

In regulating competition, a balance is needed between protecting society from abusive practices, and protecting the inventive impulses that create wealth and social progress.

The 1996 Telecom Act (1) should have been a landmark in American deregulation. Instead--its potential was adulterated by the FCC under Chairman Reed Hundt. We now know that its forced sharing created two classes of companies--those that built facilities, and those that sought rents off those facilities. Even the startup CLECs were victimized by this scheme. Those that wanted to build out, couldn't make an economic case for it--not when the facilities of others were free for the asking.

Despite this heavy regulatory thumbing of the scales--one that required Chairman Hundt's FCC to add more than 10,000 pages to the Federal Register--in the end the only companies that prevailed were the ones that owned and operated facilities.

In the meantime, the industry had to deal with what my friend Peter Huber has called "a stupefying complex labyrinth of rules" that "suppressed competition rather than promoting it" and that "enriched no one but legions of lawyers." (2) All of these actions, Huber adds, were done with the conceit that they would somehow lead us back to deregulation.

The rules that governed which broadband medium would be regulated, over which part of its length, and toward what purpose, often seemed to emerge from a sausage factory operated by a fractious band of intoxicated butchers. The consequences of their handiwork were the infliction of a living hell on American workers, investors, and telecom companies. As lessons go, you would think that would be one to remember.

Not everyone was taken in of course. Alfred Kahn, the father of deregulation, referred to Chairman Hundt's TELRIC as TELRIC-BS, the last two words he assured us with a straight face, standing for "blank slate." (3)

So what were the fruits of Chairman Hundt's TELRIC-BS and other forms of trying to game the future? An industry that had been responsible for the lion's share of the productivity gains of the 1990s lost, within the span of four years, 900,000 jobs, $2 trillion in market capitalization, and $280 billion in capital investment. (4) Hardest hit were the makers of telecom equipment, in particular, those betting on a broadband future. At the time, one Corning manager said, "[w]e have been through a hell worse than the Great Depression." (5)

The implementation of the 1996 Act leaves us, then, with two lessons. The first is that legal prohibitions on entry, no matter how fevered the dreams of regulators, are absolute poison for the deployment of technologies and the development of markets.

The second lesson learned is that respect for property rights encourages investment. If we leave the markets alone, as we mostly have with wireless and with cable, they will amaze us.

It may seem paradoxical to look for wisdom from J.P. Morgan, the arch-monopolist. But a man who could have pondered the creation of the wireless Internet more than a century ago is someone worth listening to. Morgan said: "No problem can be solved until it is reduced to some simple form. The changing of a vague difficulty into a specific, concrete form is a very essential element in thinking." In other words, the more complex a regulatory solution, the less likely it is to be a solution. (6)

As we look ahead, we must avoid the kind of anticipatory thinking about technologies that move faster than any human can anticipate. We must avoid the arrogance that we are smart enough to be able to impose legal entry barriers or property piggybacking arrangements without them leading to the sort of calamity the 1996 Act teaches us will occur.

* John Thorne is a partner in the Washington, DC office of Kellogg, Huber, Hansen, Todd, Evans & Figel PLLC.

(1.) Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (codified as amended in scattered sections of 47 U.S.C.).

(2.) Peter Huber, Telecom Undone, Manhattan Inst. (Jan. 26, 2003), http://www. manhattan-institute.org/html/_comm-telecom.htm.

(3.) Id.

(4.) Opinion, The Telecom Follies, Wall St. J. (Mar. 26, 2004).

(5.) William C. Symonds, Corning: Back From The Brink, BusinessWeek (Oct. 17, 2004), http://www.bloomberg.com/bw/stories/2004-10-17/corning-back-from-the-brink.

(6.) Cf. Verizon Comm'ns, Inc. v. Law Offices of Curtis V. Trinko LLP, 540 U.S. 398, 415 (2004) ("We think that Professor Areeda got it exactly right: 'No court should impose a duty to deal that it cannot explain or adequately and reasonably supervise.'").

GERARD J. WALDRON *

If one dug into the annals of the House of Representatives in search of how the Telecommunications Act of 1996 (1) came to pass, you would find buried under many layers of forgotten bills and unread hearing transcripts the first evidence of what evolved into parts of the 1996 Act in early 1984, shortly after the Bell System was broken up. The question arises of how long did it take to pass the 1996 Act, and the honest answer is twelve years and scores of bills and compromise drafts, thousands of hours of hearings, and generations of Members and staff. That long slog served a purpose, however, for it became increasingly clear to all stakeholders at the start of the 1990s that major statutory changes were needed in order to let key players get into new lines of business, and that those new entrants would benefit consumers by promoting competition and innovation.

Today many companies try to claim the mantle of "disrupter," but they are only the latest incarnation of that concept. Because that is exactly what we were discussing in the early 1990s: how to encourage new entrants to disrupt the monopoly cable companies (monopolist by law in most of the country); to disrupt the monopoly local telephone company (same); to disrupt the cozy cellphone duopoly (by FCC design); and to disrupt the weakly competitive long distance industry (a legacy of AT&T's longstanding de facto monopoly). What is remarkable is that those discussions turned into action, and it all happened fairly quickly.

** In October 1992, Congress passed the 1992 Cable Act; (2) though that vote went down in history as the only to override President George H.W. Bush's veto, what is forgotten is that the bill had broad bipartisan support including from the Republican leadership in the Commerce Committees and floor leadership. That bill can be credited as giving birth to the DBS industry and to the disruptive force that DISH and DIRECTV and their corporate antecedents have brought to the monopoly cable companies.

** In August 1993, Congress passed the 1993 Omnibus Budget Act, (3) which directed the NTIA to free up 200 MHz of spectrum for next-generation cellular ("Personal Communications Service"), and for the FCC to use auctions to quickly assign the spectrum. That marked a radical change: Congress was taking spectrum away from government users and designating it for private use; the FCC was directed to take valuable beachfront spectrum away from microwave users and reallocate to PCS; and instead of this process taking years of comparative hearings, Congress mandated it would be done in several months with spectrum auctions. A look at the history books suggests that the vote was partisan (no Republican voted for the 1993 Act). But that is misleading: building on the bipartisan nature of communications policy in the House Commerce Committee, every page of the spectrum bill was negotiated with Ranking Member Jack Fields and his staff, even though the majority staff knew no Republican would support the bill. That was the proud tradition in the Committee then, it endured right through the 1996 Act, and (thankfully, from my perspective) it exists today.

** In 1994, these same staff and policymakers also passed the Communications Assistance for Law Enforcement Act (CALEA). (4) Perhaps not the proudest accomplishment of that time frame, but still it represented major legislation that was passed on a bipartisan basis in less than twenty-four months.

One bill from that time that did not become law during this two-year flurry of legislating, but did set the stage for a transformative law, was the Telecommunications Act of 1994. (That is not a typo.) In the course of House Subcommittee Chairman Ed Markey and Ranking Member Jack Fields working together in 1992, on cable legislation; in 1993, on spectrum legislation; and in early 1994, on CALEA, it became increasingly clear to them that comprehensive legislation was needed. As a result, they worked collaboratively, along with full Commerce Committee Chair John Dingell and Judiciary Committee Chair Jack Brooks, to construct comprehensive legislation that would remove the local telephone company monopoly, set up a process to allow the Bell companies into the long distance and manufacturing businesses, remove obstacles to allow the cable companies to enter the telephone business, eliminate legal barriers keeping local telephone companies out of the cable business, and create mandates and incentives for local telephone companies to promote deployment of "ISDN," or Integrated Services Digital Network)--at the time, that was the only technology available to allow for (relatively) high speed information services. The Telecommunications Act of 1994 (Markey-Fields) (5) and Antitrust and Communications Reform Act of 1994 (Dingell-Brooks) (6) were passed in June 1994 by overwhelming bipartisan votes: 423-4 and 423-5.

So why do we not celebrate the Telecommunications Act of 1994? Because when those bills went to the Senate in mid-1994, Minority Leader Dole put a hold on them since he was (rightly) convinced that Congress was about to flip to Republican control and he would revise the bills more to the Republicans liking. And that is what happened. The core of the 1994 Act can be found in the 1996 Act--parts, such as Section 2547 on universal service, were copied almost intact. Other provisions were flipped from a tilt one way to a tilt the other way, but that is the nature of bipartisan compromise. And many more parts were added, including all the provisions affecting broadcast ownership as well as many other provisions that were added on when it appeared to all the broad range of communications stakeholders that the Telecommunications Act presented a once-a-generation opportunity. So the new chairmen, who took over the telecommunications committees in 19951996, had confidence they could pass comprehensive legislation; because so many important bills had been passed in the previous three years, the bipartisan legislating muscles were well trained. And that's what they did.

* Gerard J. Waldron is a partner at Covington & Burling LLP. From 1991 to 1995, he served as Majority Staff Senior Counsel on the House Subcommittee on Telecommunications and Finance; and from 1982-1987 he served in various capacities handling telecommunications issues for then-Congressman Ed Markey.

(1.) Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (codified as amended in scattered sections of 47 U.S.C.).

(2.) Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 102-385, 106 Stat. 1460 (codified as amended at 47 U.S.C. [section][section] 521-555).

(3.) Omnibus Budget Reconciliation Act of 1993, Pub. L. No. 103-66, 107 Stat. 312 (codified as amended at 47 U.S.C. [section][section] 921-927).

(4.) Communications Assistance for Law Enforcement Act, Pub. L. No. 103-414, 108 Stat. 4279 (1994) (codified at 47 U.S.C. [section][section] 1001-1010).

(5.) H.R. 3636, 103d Cong. (1994).

(6.) H.R. 3626, 103d Cong. (1994).

(7.) 47 U.S.C. [section] 254 (2012).

PHILIP J. WEISER *

THE FORGOTTEN CORE OF THE TELECOMMUNICATIONS ACT OF 1996

Twenty years ago, I entered the world of telecommunications law and policy. In 1996, I joined the Department of Justice's Antitrust Division as senior counsel to Assistant Attorney General Joel Klein. In that role, I focused on what was then a--if not, the--central issue in telecommunications policy: how to evaluate the prospective entry of the local Bell Companies into long distance markets. Because the Justice Department had played an essential role in overseeing the AT&T consent decree, which restricted the Bell Companies to providing local telephone service, it was afforded the right to weigh in on Bell Company applications to long distance under "any standard the Attorney General considers appropriate." (1) At the Justice Department, we implemented that mandate by developing a standard that conditioned Bell entry into long distance on a showing that local markets were "irreversibly opened to competition." (2)

From today's standpoint, it is easy to forget that the Telecommunications Act of 1996 (3) was passed in considerable part to remove the then-formidable barriers between local and long distance providers. As a result, market-opening processes, which enabled entry into local markets (4) and Bell Company entry into long distance, (5) were at the very heart of the Act, including a now forgotten "fourteen-point checklist." (6) To implement these measures, the Act relied on a cooperative federalism regulatory regime that ended the legacy of the rigid "dual federalism" regime that held sway under the Communications Act of 1934. (7) In line with the cooperative federalism model, the Federal Communications Commission smartly enlisted state public utility commissions to develop factual records and judgments (on compliance with the fourteen-point checklist, among other things), leveraging their capabilities to make the process more manageable. (8)

From the vantage point of twenty years later, Bell Company entry into long distance is a foreign concept to those who no longer think of telecommunications markets in terms of local or long distance services or even think of any of today's providers as Bell Companies. There are, nonetheless, three lessons that can be learned from the experience of the Telecom Act's Bell entry provisions. First, we should recognize that, for future reforms of the Communications Act, the model of a broad standard grounded in economics (such as the one used by the Justice Department in evaluating Bell entry) provides for a more effective model of regulatory oversight than relying on specific statutory criteria like the fourteen-point checklist. Notably, with technology changing so quickly in this area, any specific criteria risk becoming outdated and, worse yet, hindering sound competition policy. Second, the development of flexible institutional arrangements, such as the cooperative federalism model of working with the states to implement Section 271, needs to be a priority for telecommunications policy going forward. 9 And, finally, as the overshadowing of the once-central Section 271 demonstrates, humility is a central value in developing regulatory strategies for a fast-changing industry. (10)

* Philip J. Weiser is Dean and Thomson Professor of Law, University of Colorado. In 1996, he worked in the US Department of Justice's Antitrust Division as Senior Counsel to Assistant Attorney General Joel Klein.

(1.) 47 U.S.C. [section] 271(d)(2) (2012).

(2.) The standard was also explained in an affidavit by Marius Schwartz, which was later published in an article. See Marius Schwartz, The Economic Logic for Conditioning Bell Entry into Long Distance on the Prior Opening of Local Markets, 18 J. Reg. Econ. 247 (2000); see also Marius Schwartz, Econ. Enforcement Dir., U.S. Dep't of Justice, Address at the Robert Schuman Centre of the European University Institute: Conditioning the Bells' Entry into Long Distance (Sept. 9, 1999), http://www.justice.gov/atr/speech/ conditioningbells-entry-long-distance-anticompetitive-regulation-or-promoting; Joel Klein, Address at the American Enterprise Institute: The Race for Local Competition (Nov. 5, 1997), http://www.justice.gov/atr/speech/race-local-competition-long-distance-run-not-sprint.

(3.) Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (codified as amended in scattered sections of 47 U.S.C.).

(4.) See 47 U.S.C. [section] 251 (2012).

(5.) See 47 U.S.C. [section] 271.

(6.) See 47 U.S.C. [section] 271(c)(2)(B).

(7.) See AT & T Corp. v. Iowa Utils. Bd., 525 U.S. 366 (1999); see also Philip J. Weiser, Cooperative Federalism, Federal Common Law, and The Enforcement of the Telecom Act, 76 N.Y.U. L. Rev. 1692 (2001).

(8.) See Implementation of the Local Competition Provisions in the Telecomms. Act of 1996, First Report and Order, 11 FCC Rcd 15499, paras. 53-62 (1996).

(9.) For a discussion of the institutional side of telecommunications policy, see Philip J. Weiser, Institutional Design, FCC Reform, and the Hidden Side of the Administrative State, 61 Admin. L. Rev. 675 (2009), and Jonathan E. Nuechterlein & Philip J. Weiser, Digital Crossroads: American Telecommunications Policy in the Digital Age 376-88 (2013).

(10.) See Nuechterlein & Weiser, supra note 9, at 386-88.

KEVIN WERBACH *

WordPerfect kept crashing.

We were at the moment of truth, assembling the Interconnection Order (1) from separate files that teams had worked on frantically for weeks. To our horror, the massive, heavily-footnoted document choked the underpowered PC.

In hindsight, the scene was ironic. The FCC staff implementing the 1996 Act (2) had none of the broadband-based tools--cloud storage, online document collaboration, mobile messaging, video chat--which grew out of the digital infrastructure we helped to enable. And I had personally set aside my mostly-completed working paper on internet issues, Digital Tornado, (3) to plunge into the minutiae of local unbundling. The FCC's number one job was to implement the telephone-focused statute Congress passed.

Yet we were not ignorant of the coming technological transformations. It was during the immediate aftermath of the 1996 Act that the FCC put off requests to ban VoIP, declined the Justice Department's invitation to bolster the Communications Decency Act, refused to allow per-minute access charges for internet service providers, articulated a policy of avoiding knee-jerk legacy regulation of online services, helped lay the groundwork for internet governance with the transition of the domain name system, created favorable regulatory environments for cable and wireless data services, helped the Clinton Administration develop a landmark framework for global electronic commerce, and pioneered open government as one of the first federal agencies to offer electronic comment filing. Not a bad record.

For all the competitive shortcomings (and there are many), today's communications marketplace is far more dynamic than it was twenty years ago. The even more extraordinary ecosystem of networked digital platforms and services on top was never a foregone conclusion; it owes something to the FCC's actions during that formative period.

And thankfully, we eventually got WordPerfect to process the order.

* Kevin Werbach is Associate Professor of Legal Studies and Business Ethics at the Wharton School, University of Pennsylvania. In 1996 he served as Counsel for New Technology Policy at the Federal Communications Commission.

(1.) Implementation of the Local Competition Provisions in the Telecomms. Act of 1996, First Report and Order, 11 FCC Rcd 15499 (1996).

(2.) Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (codified as amended in scattered sections of 47 U.S.C.).

(3.) Kevin Werbach, Digital Tornado: The Internet and Telecommunications Policy (FCC Office of Plans & Pol., Working Paper No. 29, 1997), http : //www. fcc. gov/Bureaus/OPP/ working_papers/oppwp2 9pdf. html.

CHAIRMAN RICHARD E. WILEY * & THOMAS J. NAVIN ([dagger])

On February 8, 1996, in an event that brought together the nation's political leadership, the Librarian of Congress, titans of the communications industry and, in fact, the two of us, President Clinton signed the Telecommunications Act of 1996 (1) into law. President Clinton told the story of how Thomas Jefferson filled the Library of Congress with his own books after the British burned the Library in the War of 1812 in order to facilitate public access to essential knowledge. The President expressed the hope of all gathered that the new statute would bring the Library's voluminous ideas to every child in America. In spite of the many legal battles waged over the past twenty years in implementing this landmark legislation, the Telecommunications Act of 1996 has ushered in a new era of Enlightenment in which most Americans instantly can access a world of information equivalent to visiting every library in the world.

At the time of its enactment, many believed that the most important issues addressed by the 1996 law were legal balkanization and technological convergence--issues that demanded regulatory parity. For example, at the signing ceremony, President Clinton emphasized that the Act would open the "local exchange" markets to competitive entry and increase competition in the "long distance" services market. As such, lawyers and regulators devoted considerable attention to regional entry of the Bell Operating Companies (RBOCs) into the long distance market as well as the legislation's necessary market opening provisions, including the interconnection and unbundling provisions of Section 251. (2) The RBOCs filed over seventy voluminous Section 271 (3) applications to enter the long distance market, which the FCC resolved over the course of seven years. Additionally, over an eight-year period, the Commission wrote five different orders interpreting Section 251's unbundling provisions, which the U.S. Court of Appeals for the DC Circuit eventually sustained in 2006. Today, however, there is almost no discussion of the "inter-LATA" or "long distance" telephone markets. This is so because lightly regulated mobile wireless and Internet platforms have supplanted wireline voice as the primary means of communications. These platforms make jurisdictional and geographical regulatory limitations seem antiquated.

Therefore, the greatest success of the 1996 Act has been its enduring light-touch regulatory approach to broadband Internet access and wireless markets. Information services and the Internet were excluded from the market-opening provisions of the statute and, as a result, cable companies, incumbent telephone carriers, competitive entrants, and mobile wireless providers were able to invest billions of dollars into broadband networks and offerings. Regulatory forbearance and platform parity were keys to making good on the promise of the Act's preamble: "[t]o promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunications technologies." (4) Thus, the genius of the 1996 Act turned out to be that it focused policymakers' attention on delivery of wireline voice telephony while the Internet, mobile wireless, and broadband developed and eventually supplanted the heavily regulated markets at the core of the legislation.

* Richard E. ("Dick) Wiley is Chair Emeritus of Wiley Rein LLP's Telecom, Media & Technology Practice and a founding partner of the firm. Mr. Wiley is a former Chairman, Commissioner and General Counsel of the Federal Communications Commission from 19701977.

([dagger]) Thomas J. Navin is a Partner in Wiley Rein LLP's Telecom, Media & Technology Practice. Mr. Navin is a former Federal Communications Commission Wireline Competition Bureau Chief from 2005-07 and held FCC staff positions in the Wireline and Wireless Bureas from 1999-2005. In 1996, Mr. Navin was an associate at McDermott, Will & Emery in its Telecommunications Practice Group.

(1.) Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (codified as amended in scattered sections of 47 U.S.C.).

(2.) 47 U.S.C. [section] 251 (2012).

(3.) 47 U.S.C. [section] 271 (2012).

(4.) Telecommunications Act, prmbl.

JOHN WINDHAUSEN, JR. *

The 1996 Telecommunications Act (1) has often been criticized, including by the Supreme Court, for its lack of clarity. Yet, the Act adopted a balanced approach to communications regulation that is both relevant and, properly understood, a model for the future.

While the Act encouraged facilities-based competition, it also recognized that interconnection, unbundling and resale were necessary "raw materials" that could allow facilities-based competition to develop. (2) Building competitive, stand-alone networks from scratch could only be done in stages, and access to the incumbents' networks (at fair prices) was necessary to provide nascent competitors the stepping stones to deploying their own competitive networks.

While the Federal Communications Commission (FCC) properly focused on opening markets to new technologies and established a solid framework to expand universal service, its TELRIC pricing and UNE-P (3) decisions tilted the balance created by Congress. These decisions treated the incumbents as natural monopolies, rather than as participants in a newly competitive market. They fueled unrealistically high expectations of competitive players, which contributed to the Dot-Com bust of 2000-2002, and a political dynamic that reverberated against competition. The FCC then over-corrected, withdrawing competitors' access to fiber, (4) the most essential stepping stone, notwithstanding the Act's explicit directive that unbundling should be technologically-neutral. A more careful and consistent approach from the beginning would have worked more slowly but more effectively.

The universal service provisions were not contrary to these pro-competitive goals. Rather, the Act continued the movement begun with the FCC's access charge regime established after the AT&T divestiture to identify and make the previously implicit subsidies more explicit and rational. Subsidies for rural areas, schools and libraries, rural health and lifeline are making progress in part because they are subject to healthy debate in the public arena.

While broadband was in its infancy at the time, the Act presaged the future by encouraging "advanced" services in both the universal service provisions of Section 2545 and in Section 706. (6) At the staff level, we debated long and hard how to reconcile the Modification of Final Judgment (MFJ) (7) and FCC definitions of telecommunications ("basic") and information services ("enhanced"), but ultimately concluded that the FCC's Computer II (8) and III (9) definitions, even though flawed and overlapping, would allow the FCC the flexibility needed to respond to future change.

The fact that all parties can point to portions of the statutory language in their favor is a reflection of the Act's balance, not its inconsistency. Democrats agreed to the hortatory, deregulatory preamble sought by Republicans in exchange for the more meaningful regulatory provisions embedded in Title II and Section 706, (10) which directed the FCC to open new markets to competition. The balance we needed to secure votes from both sides of the aisle was also the right policy. We sought to foster entrepreneurship and new entrants while also encouraging incumbents to invest in new markets, such as long distance, wireless and video. In so doing, the Telecom Act of 1996 created an environment that fostered technological innovation and economic growth and established a foundation for the broadband ecosystem that is thriving today.

* John Windhausen Jr. served as Staff Counsel and Senior Counsel to the Democratic Members of the Senate Commerce Committee from 1987 to June of 1996. He previously worked at the Federal Communications Commission after graduating from Yale University and the UCLA School of Law. He is now Executive Director of the Schools, Health & Libraries Broadband Coalition (SHLB Coalition) (www.shlb.org).

(1.) Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (codified as amended in scattered sections of 47 U.S.C.).

(2.) See 47 U.S.C. [section] 251 (2012).

(3.) See Implementation of the Local Competition Provisions in the Telecomms. Act of 1996, First Report and Order, 11 FCC Rcd 15499, para. 672 (1996).

(4.) Appropriate Framework for Broadband Access to the Internet over Wireline Facilities, Report and Order and Notice of Proposed Rulemaking, 20 FCC Rcd 14853, para. 86 (2005).

(5.) 47 U.S.C. [section] 254 (2012).

(6.) 47 U.S.C. [section] 1302 (2012).

(7.) United States v. AT & T, 552 F. Supp. 131, 189-90 (D.D.C. 1982), consent decree terminated sub nom., United States v. W. Elec. Co., No. 82-0192, 1996 WL 255904 (D.D.C. 1996) (terminating consent decree nunc pro tanc, as of Telecommunications Act's February 8, 1996, effective date).

(8.) Amendment of Section 64.702 of the Comm'ns Rules & Regulations (Second Computer Inquiry), Final Decision, 77 FCC 2d 384 (1980).

(9.) Amendment of Section 64.702 of the Comm'ns Rules & Regulations (Third Computer Inquiry), Report and Order, 104 FCC 2d 958 (1986).

(10.) 47 U.S.C. [section] 1302.

CHRISTOPHER J. WRIGHT *

The central goal of the market-opening provisions of the 1996 Act (1) was to provide mass-market consumers with a choice of multiple wireline telephone companies providing local as well as long-distance service. In particular, Sections 2512 and 2523 of the Act established rules permitting long-distance companies such as AT&T and MCI to use "unbundled network elements" to enter local markets. Once that happened, Section 271 (4) established rules under which the seven regional Bell Operating Companies ("BOCs") would be permitted to provide long-distance service. This central goal of the Act was not achieved, largely on account of litigation by the BOCs. The BOCs speak of the litigation following the enactment of the 1996 Act as a sweeping victory for them, but in fact they won a war of attrition. They mostly absorbed losses while winning just enough to hold off competitive entry.

As the Commission was drafting the Local Competition Order that implemented the market-opening provisions of the 1996 Act, my colleagues and I in the Office of General Counsel ("OGC") were identifying important legal issues and attempting to ensure that the Commission's implementation of the Act would be upheld in court. One important issue was whether the FCC or the state regulatory commissions had primary authority to adopt rules implementing the Act. This was critical in part because, as Justice Scalia famously stated in his 1999 decision for the Supreme Court in AT&T v. Iowa Utilities Board, (5) the Act was "a model of ambiguity, even selfcontradiction." (6) (Congressman Billy Tauzin famously said in response that, "If you had a law that everybody understood completely, nobody would like it.") Accordingly, there was a lot of room for disagreement about how to implement the Act, and therefore (a) who had rulemaking authority mattered a lot, and (b) implementation under different rules in every state would, as a practical matter, favor incumbents rather than new entrants. It was no surprise to anyone that this jurisdictional issue would be the focus of litigation concerning the FCC's implementation of the Act.

In addition, there were three important issues relating to "network elements" that were sure to be litigated. One concerned the pricing rules for network elements, which were required by the statute to be "cost-based" to encourage competitive entry. (7) The second issue was whether competitors ought to be required to provide at least some network element themselves or could lease the "UNE platform" of transport, switching, and the loops. The third issue was how to implement the statutory provision requiring competitors to show that they would be impaired without access to a network element in order to be entitled to lease the element. (8)

An issue that OGC did not spot that turned out to be important was whether Section 271 of the Act was a bill of attainder. Bills of attainder are unconstitutional laws that single out persons for punishment, (9) and historically the only laws struck down as bills of attainder have been those punishing confederate supporters after the Civil War and communists during the height of the Cold War. I will not fault us for failing to foresee an argument that Section 271--which benefitted the BOCs by authorizing them to enter long-distance markets closed to them on account of their ability to extend their local monopolies into those markets--in fact unconstitutionally punished them within the meaning of the bill of attainder clause.

After the Commission released the Local Competition Order in August of 1996, the state commissions, the BOCs, and GTE (the eighth large incumbent local telephone company, which merged with Bell Atlantic to form Verizon) quickly challenged the Order in court. Petitions for review were filed in numerous circuits and the Eighth Circuit won the lottery to hear the case. Judges Bowman, Wollman, and Hansen would hold five separate oral arguments over the next few years as the case bounced back and forth between the Eighth Circuit and the Supreme Court.

The Eighth Circuit's first and most consequential decision was to issue a stay in October 1996 on the ground that the FCC lacked jurisdiction to issue rules concerning most of the provisions of the Act. (10) That decision was reversed by the Supreme Court in Iowa Utilities Board. (11) The government advanced two different jurisdictional arguments. One focused on the various provisions of the 1996 Act itself, which pointed in different directions concerning who had rulemaking authority. The other focused on Section 201(b), (12) the provision of the Communications Act adopted in 1934 that gives general rulemaking authority to the FCC. The Eighth Circuit focused on the contradictory provisions in the 1996 Act, but the Supreme Court emphasized Section 201(b) in holding that the Commission had rulemaking authority with respect to every provision in the Communications Act of 1934, as amended, including provisions added by the 1996 Act. Nevertheless, the stay, while overturned, significantly delayed implementation of Commission's rules.

Another consequential decision was a decision by District Court Judge Joe Kendall of the Northern District of Texas on New Years' Eve 1997 striking down Section 271 as an unconstitutional bill of attainder. (13) It was as irrational as it sounds to strike down a law that benefited the BOCs as a bill of attainder. But three different court of appeals decisions followed before the issue was dead and buried. (14) Because the BOCs would have been able to enter long-distance markets without satisfying the requirements of Section 271 if their bill of attainder argument had somehow prevailed, they had less motivation to attempt to do so until the argument was finally rejected by the courts.

Regarding the pricing rules for network elements, on remand from the Supreme Court's Iowa Utilities Board decision the Eighth Circuit struck down those rules on the merits. (15) But the Supreme Court reversed in its 2002 Verizon (16) decision and upheld the Commission's decision to apply a total element long run incremental cost ("TELRJC") model to determine the prices for leasing network elements. But six years elapsed between adoption of the rules and the Supreme Court's decision upholding them.

With respect to the other network elements rules, the Eighth Circuit upheld both (a) what the Supreme Court called the "all elements" rule permitting competitors to lease the "UNE platform" and (b) the FCC's "impairment" rule that essentially presumed that competitors were necessarily impaired without access to any network element they wanted to lease because they would choose to buy rather than lease if they could. In Iowa Utilities Board, the Supreme Court upheld the all elements rule. But the Court reversed the Eighth Circuit's decision upholding the FCC's interpretation of the impairment requirement. The Supreme Court did not suggest that the statutory impairment requirement set a high hurdle, but rather faulted the FCC for not requiring any showing of need.

When new unbundling rules were issued in 1999, review occurred in the District of Columbia Circuit. In 2002, Judge Williams sent the revised standard back to the Commission in the first United States Telecommunications Association v. FCC (17) decision. Chairman Michael Powell then issued another set of unbundling rules, which Judge Williams vacated in 2004. (18) The court's key decision was to overturn the Powell Commission's conclusion that competitors would be impaired without access to unbundled switching on the ground that an extremely granular and time-consuming analysis was required to justify unbundling.

There had been relatively little competitive entry into mass market telephone markets in the eight years since the Act was passed. The entry that had occurred was primarily by cable operators, who were low-hanging fruit because they already had broadband connections to consumers' homes. Entry by other would-be competitors depended on access to unbundled network elements, and there was no realistic prospect of competitive entry into the mass market without access to switching. MCI and AT&T, whose stock values had collapsed, gave up and sought to be acquired after the D.C. Circuit's 2004 decision. Verizon bought MCI and SBC bought AT&T (and adopted its name).

The BOCs had ground out a victory by outlasting and then acquiring their two main potential competitors. To recap, in the Eighth Circuit, the BOCs won a jurisdictional victory and overturned the TELRIC rules, but ultimately lost in the Supreme Court on both issues. Similarly, they initially prevailed on the bill of attainder argument that would have let them provide long-distance service without even attempting to open their local markets, but ultimately lost on that issue as well. The BOCs lost the all elements rule in the court of appeals and the Supreme Court. They won the impairment issue in the Supreme Court after losing in the Eighth Circuit, but that should not have been a victory that prevented competitive entry. As the FCC concluded, the statute requires unbundling of network elements when competitors would be impaired without them and nothing in the Supreme Court's decision is to the contrary. The fact that no mass-market competition developed after the D.C. Circuit struck down the Powell Commission's unbundling rules shows that competitors were in fact impaired without access to unbundled switching.

Could it have been different? Under considerable congressional pressure, the Commission granted the BOCs authority to enter the long-distance markets before there had been any substantial competitive entry into local mass markets. Here the Commission relied on determinations that local competition was possible rather than that it had been actual competitive entry on a significant scale. With 20-20 hindsight, that was a mistake. In my view, an ounce of empirical evidence is worth a pound of theory. Moreover, in hindsight it was a mistake to rely on competition that depended on the availability of unbundled network elements when the litigation concerning the availability of unbundled switching had not concluded.

But if any one change might have led to mass-market competition by multiple competitors, it would have been to require the BOCs to actually enter other local markets themselves to a significant extent in order to obtain authorization to provide long distance. Thus, for example, Bell Atlantic might have been required to compete with Nynex in the New York metropolitan area rather than acquire it. In order to successfully compete in another BOC's region, the BOCs would have been forced to support rules that would have permitted competitive entry using network elements, including unbundled switching. Of course, Congress did not require competitive entry by the BOCs, so the FCC could not have imposed such a requirement. The FCC nevertheless attempted to force a BOC to compete in other local markets by conditioning SBC's acquisition of Ameritech on SBC's promise to enter multiple local markets outside its territory, but SBC chose to pay the fines imposed by the FCC rather than compete.

A common view of the rise and fall of the market-opening provisions of the 1996 Act is that it is good as a policy matter that the Act failed to achieve its central goal. That is because there was and is a pressing need for deployment of broadband loops and, it is argued, such deployment was unlikely to occur if unbundling were required. As an initial matter, it should be noted that this argument is an attack on the statute, which provides that competitors are entitled to lease network elements if they would be impaired without them. In any event, if the BOCs had been required to compete with each other, it seems likely that they would have devised rules that supported broadband deployment while permitting competitive entry--otherwise, they would not have been able to compete with the cable operators. And a healthy MCI and AT&T might have spurred rather than deterred deployment.

* Christopher J. Wright was the FCC's Deputy General Counsel from 1994 to 1997 and General Counsel from 1997 to 2001. Since then, he has been the head of the Appellate Group at Harris, Wiltshire & Grannis LLP.

(1.) Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (codified as amended in scattered sections of 47 U.S.C.).

(2.) 47 U.S.C. [section] 251 (2012).

(3.) 47 U.S.C. [section] 252 (2012).

(4.) 47 U.S.C. [section] 271 (2012).

(5.) AT & T Corp. v. Iowa Utilis. Bd., 525 U.S. 366 (1999).

(6.) See id. at 397.

(7.) See 47 U.S.C. [section] 252(d).

(8.) See 47 U.S.C. [section] 251(d)(2).

(9.) U.S. Const. art. I, [section] 10, cl. 3.

(10.) Iowa Utilis. Bd. v. FCC, 109 F.3d 418 (8th Cir. 1996).

(11.) See Iowa Utilis. Bd., 525 U.S. at 397 (1999).

(12.) 47 U.S.C. [section] 201 (2012).

(13.) SBC Comm'ns, Inc. v. FCC, 981 F. Supp. 996 (N.D. Tex. 1997).

(14.) See, e.g, BellSouth Corp. v. FCC, 162 F.3d 678, 683 (D.C. Cir.1998); BellSouth Corp. v. FCC, 144 F.3d 58, 62 (D.C. Cir.1998); SBC Comm'ns, Inc. v. FCC, 154 F.3d 226 (5th Cir. 1998).

(15.) Iowa Utilis. Bd. v. FCC, 219 F.3d 744 (8th Cir. 2000).

(16.) Verizon Comm'ns, Inc. v. FCC, 535 U.S. 467 (2002).

(17.) U.S. Telecomms. Assn. v. FCC, 295 F.3d 1326 (D.C. Cir. 2002).

(18.) U.S. Telecomms. Assn. v. FCC, 359 F.3d 554 (D.C. Cir. 2004).
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Title Annotation:Jonathan E. Nuechterlein through Christopher J. Wright, with footnotes, p. 44-82
Author:Wright, Christopher J.; Boucher, Rick; Casserly, James L.; Cicconi, Jim; Davidson, Charles M.; Farqu
Publication:Federal Communications Law Journal
Date:Dec 1, 2015
Words:15296
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