e UNE-P had reached $2.4 billion by mid-2002. By mid-2004 the number of UNE-P lines had more than doubled, suggesting a loss of $5 billion a year for the Bell companies. However, the federal appeals court reversal of the FCC's unbundling rules in early 2004 has probably brought an end to this source of erosion of Bell revenues. Second, all wire-based local telephone carriers are likely to suffer increas- ing losses in lines to wireless carriers, cable television companies, and broad- band services. The decline in wireless rates and the national pricing plans first introduced in 1998-99 have already led some households to drop their wireline service altogether. Broadband services, whether in the form of DSL, cable modem services, or wireless services, reduce the need for residences to subscribe to second lines. Since 1997 the number of U.S. fixed lines has declined by 11 million, from 192.5 million to 181.4 million. 14 Equally important, the cable television companies are steadily expand- ing their telephone service over their own coaxial cable networks. As cable modem service spreads, they will begin to offer their subscribers voice over Internet protocol (VoIP) services at very low rates. 15 The potential advan- tages of VoIP are substantially enhanced by current regulatory policies. If Effect of the 1996 Act on Incumbent Local Companies the VoIP services do not have to pay federal universal service charges, which are now 9 percent of interstate and international revenues, and can avoid regulated interstate and intrastate switched access charges on long distance, they will have a sizable cost advantage over traditional wire-based local and long-distance carriers. As a result, the growth of VoIP threatens the incumbent local carriers with revenue losses, not only from declining numbers of local access lines, but also from the loss of switched access charge revenues that are used to cross-subsidize local service. Even as recently as 2003, the Bell companies realized more than 7 percent of their local revenues from