Wireline Post 1996

1
Wireline Post 1996

• TC 310
• May 20, 2008

2
But First...

• Questions From Reviews
• Invisible Hand
• Convergence
• Economies of density
• Direct v Indirect network effects
• Cooperative federalism
• Unitary and Confederation (democracies)?
• Who wants some extra credit?

3
Overview of 1996 Telecom Act

• Amendment of 1934 Communications Act
• Very broad, limited in scope
• Competition Oriented
• Enforceable

4
Deregulation of LEC

• 1984 Modified Final Judgment
• Competition in LD and data services
• Local is monopoly
• Why?
• 1996 Act attempts to end monopolies period
• ILECs vs. CLECs
• Leased vs. Facilities-based competition
• Big CLECs vs. mass market customers

5
Lifting of Restrictions

• ILECs (BOCs) freed from Modified Final Judgment
• Compete in long distance big prize
• Have to convince FCC they are in accordance with
  sections 251 and 252 of 1996 Act
• Specific checklist
• Most detail in Act

6
Checklist

• Duty to interconnect
• Duty not to impede network interconnectivity
• Duty to offer resale services
• Number portability
• Local Dialing Parity
• Access to Rights-of-Way
• Reciprocal Compensation
• Unbundle

7
But wait, there's more

• Collocation
• 911 services
• ILECs (BOCs) must create affiliate company for
  other market
• Section 252 states how to negotiate, mediate, get
  approval for previous requirements
• ILEC then goes to FCC and asks to enter new
  markets (Section 271).

8
TELRIC Pricing

• Wholesale rates will be based on actual costs
• Forward projections, not based on past
• Total Element Long Run Incremental Cost
• Not based on actual network, infrastructure
• What would most efficient, brand new network cost
• Verizon Communications Inc. v. FCC (2002)?
• Concerns about TELRIC
• Slows innovation/upkeep
• State Regulator guideline

9
Punishments

• Rescind 271 authorization
• Prevent future marketing of long distance
• Impose Fines
• Which is most likely to occur pragmatically?

10
Jurisdiction Concerns

• Does Dual model still work?
• 1999 ATT Corp. v. Iowa Utilities Board
• Section 251 and 252 imply federal authority to
  preempt.
• Cooperative model
• Distinction between intra and interstate dead
• FCC creates general rules, States enforce,
  implement

11
Monopoly Concerns

• Modified Final Judgment imposes line-of-business
  restrictions
• 1996 Act imposes statutory line-of-business
  restrictions
• What is the difference?

12
Cross Platform Competition

• 1996 Act frees up regulatory grounds for cross
  platform competition
• Internet Service
• DSL, Cable, Satellite, Wireless
• Phone Service
• Traditional v. VoIP
• Video Services
• Broadcast, Cable,....telephone?

13
Why Important

• Fundamental paradigm shift regarding
  telecommunications
• Law of the Land
• What's next?
• Applications of Act to actual scenarios
• Struggles over authority