ss, Qwest offers complex bundles of switched transport, local switching, and carrier common lines. As part of its national and international service, Qwest offers direct local access to its network that enables "wholesale customers to maximize advanced communications Economic Effects of Regulating Access to Networks services, including dedicated Internet access (DIA), asynchronous transfer mode (ATM), frame relay, and dedicated private lines" (Qwest Web site). In other situations, wholesale access is mandated by regulation. For exam- ple, the 1996 Act requires all local exchange carriers (LECs) to permit resale of their telecommunications services without imposing any "unreasonable and dis- criminatory conditions or limitations." Incumbent LECs (ILECs), which are LECs providing service at the time of the 1996 Act's enactment, are further required to allow resale at wholesale rates. The statute requires that wholesale rates be based on retail rates "excluding the portion thereof attributable to any marketing, billing, collection, and other costs that will be avoided by the local exchange carrier."2 The FCC defined avoided costs as "those that an incumbent LEC would no longer incur if it were to cease retail operations and instead provide all of its services through resellers" (FCC 1996a, p. 15956). 3. Interconnection Access Mandated interconnection access refers to reciprocal connections between networks that provide access to each other's facilities, forming a larger network in the process. Interconnection is a dominant characteristic of most network industries. For exam- ple, practically all telecommunications networks allow a telephone call originating from any wireless or wireline telecommunications system to reach anyone on any other system around the world. A classic instance is the interconnection between independent telephone systems and the Bell System, such as previously occurred when both GTE and Pacific Bell (now Verizon and SBC) served customers within the same calling area in California. Some type of