to the network. Subsequently, the FCC grudgingly admitted competitors into interstate long-distance services, but most states stead- fastly continued to refuse to allow competition for most intrastate services. Although regulation might be designed to control monopoly pricing, in telecommunications it was used primarily to redistribute income from businesses to residences and from urban areas to rural areas. 7 This redistri- bution, which has been defended as "universal service" policy but in fact contributes little to the universality of telephone subscription, continues more than twenty-five years after the FCC began allowing competition, twenty years after AT&T was broken up, and nine years after the 1996 act was passed. 8 Moreover, the implicit subsidies built into the regulated rate structure can continue only if regulators prevent competition. Many discussions of recent U.S. and other telecom policies begin with the notion that the sector is in turmoil because of "deregulation." On the contrary, U.S. policy since 1996 has been far from deregulatory. Local retail telephone rates, intrastate long-distance rates, carrier connection rates, and even high-speed business rates are still highly regulated in most states. More important, the "deregulation" introduced by the 1996 act ushered in a complex new set of regulations involving the provision of wholesale ser- vices by incumbent local carriers to their new competitors. Since that time, a large number of other countries have followed the United States in erect- ing similar wholesale-access regulations to promote competition. In a later chapter, I analyze the effect of the new regulatory regime on competition and prices in local telecommunications in the United States, but for now it is worth noting that telecom liberalization has diverged from earlier policies in the transportation and energy industries. In the 1970s and 1980s, the United States opened the airline, air cargo, trucking, and railroad industries to competition without increasing regulation. Indeed