panies were state-owned monopolies, performing much like the post offices from which they had sprouted in the early decades of the twentieth cen- tury. Those in the United States were different: they had never been gov- ernment-owned, and the private national operator, AT&T, was broken up in 1984 to ensure greater competition in long-distance and equipment markets. Twelve years after the breakup of AT&T, Congress passed the 1996 Telecommunications Act, opening all telecommunications to com- petition and launching a new era in the sector.¹ No one could have guessed how this era would unfold. As I describe in this book, "competition and chaos" have enveloped the sector as it gropes toward a new order. This is not to say that the U.S. expe- rience is unique, for similar tumult has descended on most of the world's telecom sector over the past six to eight years. It differs, however, in that U.S. regulators were the first to venture into this brave new world of heav- ily regulated competition. 2 Furthermore, many of the regulators apparently thought that they could steer a steady course in this direction, with limited disruption. As I demonstrate, they not only failed to achieve this objective, but they contributed-and continue to contribute-to the chaos. 4 Con- gress invited them to manage competition, and they did SO with a vengeance. As this book goes to press, there is little indication that regula- tors have learned any lessons from the past nine years. 5 Introduction Regulation, Deregulation, and Competition For decades, the Federal Communications Commission (FCC) and state public utility commissions had regulated telecommunications through an uneasy division of responsibilities. The state commissions oversaw intrastate services-local connections and messages that traveled wholly within a state's borders-and the FCC interstate services. It was not until the late 1970s that the courts clarified the role of the FCC in regulating (or deregulating) the terminal equipment used by businesses and households to connect 