incumbent's central offices represented precisely the type of permanent physical occupation that constituted a per se taking under Loretto. As a result, the physical collocation requirement ran afoul of the principle that statutes should not be construed to create "an identifiable class of cases in which application of a statute will necessarily constitute a taking" (Bell Atl. Tel. Cos. V. FCC, 24 F.3d 1441, 1445-47 (D.C. Cir. 1994), quoting United States V. Riverside Bayview Homes, Inc., 474 U.S. 121, 128 n. 5 (1985)). The FCC responded to this decision by ceasing to make physical collocation mandatory and by giving the incumbent local telephone companies the option of providing virtual collocation instead. The FCC continued to maintain that manda- tory physical collocation did not constitute a per se taking, but argued that, regard- less of whether that were true, offering virtual collocation as an option eliminated any such constitutional infirmity (FCC 1994). Before the courts could address the validity of these revised regulations, the entire scheme was rendered moot by the enactment of the Telecommunications Act of 1996. 4. The Telecommunications Act of 1996 The Telecommunications Act of 1996 was designed to "open [ all communica- tions services to competition," including local telephone service (U.S. House 1995, p. 48). Policymakers envisioned that competition in local telephone markets might emerge through one of three paths. First, a new entrant might obtain all of the necessary elements from the incumbent local telephone company and resell them. Resale rates would be based on retail rates less "any marketing, billing, collection, The Regulation of Local Telephone Networks and other costs that will be avoided" when local telephone services are provided by another carrier (47 U.S.C. §S 251(c)(4), 252(d)(3)). Second, a new entrant might construct an entirely new network. Because any new entrant would need to be able to place calls to and receive calls from the incum- bent local telephone companies' custome