lem for the new competitors is their proliferation in a given market. This is particularly true of the larger, national CLECs in the major metro- politan areas. For this reason, the most successful entrants may be those who target a particular class of customers in medium-sized cities that are still unexplored by the larger national entrants. 27 Local Competition under the 1996 Act So far scholarly analysis of the effect of state regulation on the extent of local entry has provided mixed results. Some studies have found that rate- of-return regulation reduces UNE-based entry, because regulated UNE rates tend to be higher in such states, but that price-cap regulation tends to produce more entry in general. 28 Using number of entrants rather than extent of penetration to measure entry, one study has shown that local access and transport areas (LATAs) in states with price-cap regulation attract fewer entrants than those without such incentive-based regulation. 29 This model does not include wholesale or retail prices and does not ac- count for the effects of cable telephony or wireless competition. Still oth- ers report that UNE rates, as well as the resale discount, have little effect on total CLEC lines when the effect of Bell company entry into long distance is taken into account. 30 However, they do find a mild positive effect on entry from the regulated retail residential rate. 31 At this stage, as mentioned earlier, no one really knows what drives suc- cessful entry. In the first eight years, entrants typically offered virtually the same services as the incumbents did, particularly to residential customers. They also went after small to medium-sized businesses, but their instabil- ity made them dubious candidates for providing such an essential service to this market. The next section documents the entrants' struggle. How Have the Entrants Fared? Given the limited experience with rivalry in local telephone markets and the time it would take to develop entry strategies, it is hardly surprising that entry has no