Thus, there is one regulatory regime for carriers providing voice telephone service and another regime for cable television providers. Information services are not subject to either regulatory regime. The subsequent deployment of digital broadband technologies in telephone and cable networks has resulted in these networks providing services that compete with one another, but that sometimes are subject to different regulatory requirements. Voice and video services can now be provided using Internet protocol and thus might be classified as unregulated information services, but these services compete directly with regulated traditional voice and video services. There is consensus that the current statutory framework is not effective in the current market environment, but not on how to reform that framework. That debate focuses on how to foster investment, innovation and competition in both the physical broadband network and in the applications that ride over that network while also meeting the many non - economic objectives of U.S. telecommunications policy : universal service, homeland security, public safety, diversity of voices, localism, consumer protection, etc. Digital technologies are being deployed in and carried over wireline, cable, and wireless networks that are increasingly capable of providing voice, data, and video services over a single broadband platform. Given the distinct, service-specific networks then in use, the 1996 Act created distinct vertical regulatory "silos" that equated specific services with specific network technologies. The physical network providers (local exchange carriers and cable system operators) argue that they will be discouraged from undertaking costly and risky broadband network build-outs and upgrades if their networks are subject to open access and/or non-discrimination requirements that might limit their ability to exploit vertical integration efficiencies or to maximize the return on (or even fully recoup) their investments. On the other hand, the independent applications providers argue that in order for them to best meet the needs of end users and offer innovative services in competition with the vertically integrated network providers and, in some cases, services not offered at all by network providers. Background: The 1996 Act

In 1996, Congress passed the Telecommunications Act, the first major rewrite of our nation's telecommunications law since the enactment of the 1934 Communications Act. The general objective of the 1996 Act was to open up markets to competition by removing unnecessary regulatory barriers to entry. The market convergence currently underway will not result in a multitude of broadband networks because the underlying cost structure for such networks (the huge sunk up-front fixed costs that can only be recovered if the company can exploit significant economies of scale and scope) will only support a limited number of networks. Approaches to Regulating Access to Broadband Networks

There are four general approaches to the regulation of broadband network providers vis-a-vis independent applications providers:
structural regulation, such as open access; ex ante non-discrimination rules; ex post adjudication of abuses of market power, as they arise, on a case-by-case basis; and reliance on antitrust (and unfair methods of competition) law and non-mandatory principles as the basis for self-regulation. The debate about how best to allocate spectrum, however, is beyond the scope of this report. Those provisions were intended to foster intramodal competition with the understanding that new entrants could not instantaneously build out ubiquitous networks like those of the incumbent monopolies.
In 1996, Congress enacted comprehensive reform of the nation's statutory and regulatory framework for telecommunications by passing the Telecommunications Act, which substantially amended the 1934 Communications Act. The general objective of the 1996 Act was to open up markets to competition by removing unnecessary regulatory barriers to entry. At that time, the industry was characterized by service-specific networks that did not compete with one another: circuit-switched networks provided telephone service and coaxial cable networks provided cable service. The act created distinct regulatory regimes for these service-specific telephone networks and cable networks that included provisions intended to foster competition from new entrants that used network architectures and technologies similar to those of the incumbents. This "intramodal" competition has proved very limited. But the deployment of digital technologies in these previously distinct networks has led to market convergence and "intermodal" competition, as telephone, cable, and even wireless networks increasingly are able to offer voice, data, and video services over a single broadband platform. However, because of the distinct regulatory regimes in the act, services that are provided by different network technologies, but compete with one another, often receive different regulatory treatment. Also, the act created a classification, "information services," that was not subject to either telephone or cable regulation. Today, some voice and video services that are provided using Internet protocol technology may be classified as information services and therefore not subject to traditional voice or video regulation.
There is consensus that the current statutory framework is not effective in the current market environment, but not on how to modify it. The debate focuses on how to foster investment, innovation, and competition in both the physical broadband network and in the applications that ride over that network while also meeting the many non-economic objectives of U.S. telecommunications policy: universal service, homeland security, public safety, diversity of voices, localism, consumer protection, etc. Given the underlying cost structure of broadband networks—huge sunk up-front fixed costs—the marketplace will likely support only a limited number of such networks. Today, the market is largely a duopoly: the telephone company network and the cable company network. The physical network providers argue that they will be discouraged from undertaking costly and risky build-outs if their networks are subject to open access and/or non-discrimination requirements. On the other hand, independent applications providers argue that in order for them to best meet the needs of end users and offer innovative services they must have nondiscriminatory access to the physical network. There is much debate over the advantages and disadvantages of structural regulation (such as open access), ex ante non-discrimination rules (such as mandatory network neutrality requirements), ex post adjudication of abuses of market power on a case-by-case basis, and reliance on non-mandatory principles. There is general agreement that there would be great consumer benefits from entry by a wireless broadband network to compete with the telephone and cable networks. There also is debate about how to modify the universal service program and intercarrier compensation rules in light of the major market changes. This report will be updated as warranted.