The Future of the Regional Bells

By Judi Clark

NetAction Advisory Board Member

 

Introduction

As soon as people developed ways of communicating, they needed ways to communicate over distances. Yelling and messengers worked for a long time, but were not destined to be a final solution.

The original Bell Telephone Company was formed in 1877, and was followed by the formation in 1885 of the American Telephone and Telegraph Co. (AT&T). Since that time, the communications industry has been engaged in a cycle of mergers and judicially enforced divestments.

The four remaining regional Bell telephone companies: SBC, Verizon, BellSouth, and Qwest Communications, emerged from one such cycle. It started in the mid 1980s when the first monopoly, AT&T, agreed to split into one long distance company and seven Regional Bell Operating Companies (called RBOCs) that would offer local phone service. The subsequent merger of those seven companies into the four that exist today was largely a result of regulatory changes implemented as a result of the Telecommunications Act of 19961 (the 1996 Act).In passing the 1996 Act, Congress was attempting to encourage additional competition in telecommunications services, including local phone service, thereby improving services and lowering prices. Under the 1996 Act, the Bells were deemed Incumbent Local Exchange Carriers, or ILECs), and the many competitors who were positioned to jump in to provide local phone services were deemed Competitive Local Exchange Carriers (CLECs). The CLECs included cable TV providers, utility companies and municipalities, as well as rival companies.

But six years after passage of the 1996 Act, true competition has yet to emerge and the Bells monopolistic abuses continue. The 1996 Act did not take into account the formidable monopolistic forces of incumbent telephone service providers, the ineffectiveness of the penalties for non-compliance, or the impact of relaxed governmental oversight on the industry.

Simply put, the Bells have flaunted government regulations to maintain their monopoly on local phone service, and their actions and interests are not likely to yield the best outcome for the public. However, the Internet arrived at their door as an unexpected guest, bringing sweeping changes to the telecommunications industry. These changes may well be the beginning of the end for the Bells.

Part I: The Last Mile

Part II: The Cost of Doing Business

Part III: End Notes

This paper is available as a single HTML file, a Microsoft Word 5.1 document, and a PDF document.


About the Author

Judi Clark is currently a law student and President of ManyMedia, a Graphics Communication and Information Services Consultancy. She is also the force behind WomensWork.org, and a member of the NetAction Advisory Board. She has been an instructor in the University of California, Santa Cruz's corporate training department, past treasurer and member of the Board of Directors of Computer Professionals for Social Responsibility (CPSR), and served on the Steering Committee for several annual Computers, Freedom, and Privacy (CPF) conferences. She has been involved with many professional and businesswomen's conferences and web sites, and is creator of the Role Model Project for Girls.

May 2002