1925, p. 262). Federal regulation of interstate rates was similarly unsuccessful. In the words of Gerald Brock (2002, p. 53), "The early FCC was an ideal regulatory agency from AT&T's perspective. It provided very little control or restriction on AT&T's interstate rates and activities but it did help prevent competition from arising." For the first three decades following the enactment of the 1934 Act, the FCC failed to undertake any formal investigations or to create any systematic basis for evaluating the reasonableness of AT&T's rates. Instead, the FCC engaged in a system of "continuing surveillance," in which long-distance rates were established through informal negotiations between AT&T and the agency. The experience of the early telephone industry eloquently demonstrates why the conventional economic wisdom now uniformly rejects ruinous competition as the basis for regulation, as we noted in Chapter 4. Eventually, regulated monopoly was justified by the ability to use cross subsidies to support providing service in areas that would not otherwise have service. Although the conventional wisdom holds that Networks in Telecommunications promoting universal service in this manner was an objective since the enactment of the Communications Act of 1934, 24 such cross subsidies were not mentioned during the legislative deliberations over the Act and did not emerge until the 1970s, when AT&T began to face competition from new long-distance providers. The timing suggests that relying on cross subsidies is better understood as a flight from competition than as a principled justification for regulated monopoly. Although policymakers have rejected ruinous competition as a justification for using regulation to eliminate competition altogether, they have attempted to manage competition for the purpose of facilitating entry. For example, the FCC has long imposed asymmetric regulation that subjected incumbents to rate regulation even after competition had emerged, although refusing to subject new entrants to the same strictu