earbook 2000: Going Going Gone!" Observatoire des Straté- gies de Technologie de l' Information et de la Communication, http://www.int- evry.fr/lfh/ressources/Ostic/3G_Auction.htm Competitive Access Providers, the Costly Way to Local Competition Although local telephone competition is often said to have begun in the United States after the passage of the Telecom Act of 1996, its roots go back more than a decade earlier. It was the AT&T divestiture, after all, that locked in the two- tier industry structure, with an ironclad wall-the LATA boundary-between local and long distance service providers. Divestiture's restrictions applied to the RBOCs themselves but not to other providers. Long distance companies could create as many Points of Presence as they wished, and they were not prohibited from directly connecting their facilities to their customers. It just was not practi- cal very often. RBOC Prices to Large Customers Were Out of Line The FCC's MTS and WATS Market Structure decisions, which laid out the rules for the postdivestiture industry, created the access charges that interex- change carriers paid to the local exchange carriers. The newly minted RBOCs and the independent operating companies alike looked to these charges as a way to replace the heavy subsidies that had come from the historical separations and settlements process. Politically, they saw the advantage in minimizing increases in their basic monthly residential rates. So they instead looked to other sources of revenue, and the IXCs were an obvious target. The IXCs, of course, merely passed these charges along to their subscribers-in a competitive market, they were not likely to want to swallow major losses from some The Great Telecom Meltdown customers in the hope of making it up elsewhere. (Monopolies do operate like that. The newly divested AT&T had to learn quickly how to act in a competi- tive market.) In the case of switched access, LEC access charges were averaged in to the IXC's per-minute rates. The FCC did not permit the IXCs to explici