protective measures were included in the court For the D.C. Circuit decision overturning the FCC's refusal to order AT&T to open its local telephone network to MCI, see MCI Telecomms. Corp. V. FCC, 580 F.2d 590 (D.C. Cir. 1978). For the Seventh Circuit decision holding that AT&T's local telephone network constituted an essential facility, see MCI Commc'ns Corp. V. AT&T, 708 F.2d 1081, 1132-44 (7th Cir. 1983). 9 The FCC's earlier regulatory proceedings (most notably the Computer Inquiries) referred to these types of services as "enhanced services." Like the FCC, we use the phrase "information services" to include all of the services included with the term "enhanced services" (FCC 1996e). Network Regulation Basics order that led to the breakup of AT&T as well as in the Telecommunications Act of 1996. 10 4. Ruinous/Managed Competition Policymakers have not confined their regulatory activities to situations in which sustainable competition was impossible. Throughout much of the late 19th and 20th centuries, policy makers have intervened to curb the perceived problems caused by "ruinous," "excessive," or "destructive" competition.1 11 The concern was that industries characterized by high fixed costs would be plagued by excess capacity, resulting in a surfeit of new entrants. The argument was that entrants would rush in to invest in a new technology without anticipating the level of investment made by other competitors. Once having sunk the fixed costs needed to enter, producing firms would not exit the industry SO long as they could charge prices sufficient to cover their variable costs. The resulting competition would drive prices down to variable cost, which would prevent firms from generating sufficient revenue to recover their capital investments. Some sort of coordinated action, either through collusion or government regulation, was viewed as the only viable solution to endemic overproduction and eventual collapse into a natural monopoly (New York V. United States, 331 U.S. 284, 346 (1947); ICC V. Inland Waterway