ffect could be modeled more directly by using the actual Effect of the 1996 Act on Incumbent Local Companies CLEC share of lines rather than one of the contributors to it, the UNE-P rate. When I use this measure of competition as a substitute for the various estimates of the UNE-P rate, I find that competition has no statistically sig- nificant effect on Bell company capital spending in 1996-99 or 2000-03. Why had competition not yet stimulated a Bell company investment response by 2002? The answer must be that regulatory uncertainty offset the influence of rivalry and the threatened loss of retail customers. More- over, if additional capital spending simply made the company's infrastruc- ture more attractive for entrants to lease at low UNE-P rates, the benefits of additional capital expenditures would surely be attenuated. This latter threat has now been removed by the courts. The Bell Companies in a More Competitive Market The Bell companies had been trapped in a regulated, stagnant, and even declining market for the first six years under the new act. Banned from interLATA services in their own regions, they could not participate in long- distance services or in services delivered over the Internet. As they wrestled free from the vertical quarantine imposed by the 1996 act, the Bell com- panies became much more aggressive in competing with their new cable, wireless, and (to a lesser extent) CLEC rivals, offering a variety of bundled plans and lower-priced DSL services (see table 5-7). Whether this more aggressive pricing strategy has succeeded in stem- ming the Bell companies' losses in revenues is far from clear. These com- panies certainly have garnered a substantial share of residential long- distance customers and are now able to compete for the larger business customers. By early 2004 the courts had all but stopped the growth of the UNE platform, and the FCC had reversed its position on mandating line sharing for broadband connections. Nevertheless, the prospects for Bell company revenue growth from their