llowed incum- bent LECs to extend new fiber to residences free of such regulation, while still requiring the ILECs to provide competitors with wholesale voice-grade services over such facilities. These decisions to end line sharing and reduce the threat of regulation for fiber to the home are surely a step in the right direction and may have had at least a temporary effect on ILEC investment (see figure 8-6). In the case of broadband in the United States, the existence or threat of regulation has reduced the incentive to develop the necessary infrastructure to deliver broadband. The response of the Bell companies has been to slash capital spending, which had been rising steadily in 1998-2000 (see figure 8-6). Capital spending per line in 2002 and the next few years had been projected to be far below even its pre-1996 level despite the considerable capital requirements to complete the rollout of DSL, which had been stalled at about two-thirds of U.S. residential and small business locations (figure 8-6). 43 However, estimates published after the FCC's February 2003 decision to end line-sharing regulation suggest a rebound in the incum- bents' capital spending plans. The downturn in incumbent capital outlays may have been arrested by the FCC's apparent move toward modest dereg- ulation. Similarly, forecasts of ILEC rollout of DSL, measured in terms of "addressable locations," also increased after the FCC decision (figure 8-7). Using Regulation to Promote Broadband Competition The new local entrants that specialize in offering DSL services over incumbent loops have fared very badly. Only one of the three largest of these new carriers-Covad-remains in operation after its reorganization in bankruptcy. A few others, such as 60Networks and DSL Net, also sur- vive, but their prospects seem bleak. Covad reported that it had 517,000 subscribers at the end of 2003, but its future growth is now in doubt because it relied heavily on those entrants (AT&T and MCI) that pro- vided local service through the UNE-P. Given the court