THE BROOKINGS INSTITUTION 1775 Massachusetts Avenue, N.W., Washington, D.C. 20036 www.brookings.edu All rights reserved All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without written permission from the Brookings Institution Press. Library of Congress Cataloging-in-Publication data Crandall, Robert W. Competition and chaos : U.S. telecommunications since the 1996 Telecom Act / Robert W. Crandall. p. cm. Includes bibliographical references and index. Summary: "Examines how the 1996 Telecommunications Act and its antecedents have affected the major telecommunications providers and analyzes the act's effect on economic welfare in the United States"-Provided by publisher. ISBN 13: 978-0-8157-1617-4 (pbk. : alk. paper) ISBN 10: 0-8157-1617-6 1. Telecommunication policy-United States. 2. Telecommunication- Deregulation-United States. 3. Competition-Government policy-United States. 4. Telecommunication-Law and legislation-United States. 5. United States. Telecommunications Act of 1996. I. Title. HE7781.C667 2005 384'.0973-dc22 2005001648 987654321 The paper used in this publication meets minimum requirements of the American National Standard for Information Sciences-Permanence of Paper for Printed Library Materials: ANSI Z39.48-1992. Typeset in Adobe Garamond Composition by R. Lynn Rivenbark Macon, Georgia Printed by R. R. Donnelley Harrisonburg, Virginia Contents Preface Acknowledgments 1 Introduction 2 Opening Telecom Markets: The 1996 Telecommunications Act 3 The First Eight Years under the New Law 4 Local Competition under the 1996 Act 5 Effect of the 1996 Act on Incumbent Local Companies 6 The Death of Distance and of the Long-Distance Carriers 7 The Rapid Growth of Wireless Telecommunications Contents 8 The Broadband Revolution 9 Telecom Reform in Other Countries 10 A Look Back and a Look Forward Appendix: Estimates of Bell Company Cumulative Capital Expenditures across States, 1996-2003 Notes Index Preface he last five years have not been kind to inve