A landmark piece of legislation -- the Telecommunications Act of 1996 -- turned seven years old on Saturday.
But some members of the telecom industry weren't celebrating.
Plagued by mass layoffs, increased competition and uncertain market conditions, some telecom lobbying groups continued their quest before the Federal Communications Commission to change certain parts of the law, which was intended to promote competition in the sector and provide as many Americans as possible with phone and Internet service.
"We are asking the FCC to draw a line in the sand and promote economic principles and good policy that create incentives to invest in (telecom) technology," said Grant Seiffert, vice president of external affairs and global policy for the Telecommunications Industry Association.
On the other side, industry observers such as Reed Hundt, who served as FCC chairman during the Clinton administration when the law passed, scoffed at the notion that this piece of legislation was hurting the industry.
"The winners would like to win more," Hundt said. "The current agenda is to reduce the competition."
The Telecommunications Act of 1996, which was signed into law by former President Clinton on Feb. 8, 1996, requires local phone companies to open their networks to competitors. The law also imposed a tax on telephone customers' bills to help pay for Internet and phone service in all classrooms, libraries and hospitals. The law requires that cable carriers and Internet service providers keep sexually explicit adult programming away from viewers under 18 years of age. The legislation also contains a provision limiting the number of radio and television stations that media companies and individuals can own in any given market.
Ultimately, the goal of the bill was to force the Baby Bells -- the seven phone companies formed after the breakup of AT&T -- to open their networks to competitors, thus allowing anyone to enter the telecommunications business, Hundt said. With increased competition, it was hoped, new and cheaper products would eventually reach the hands of consumers.
Reed and the Telecom Act's proponents are convinced that the law has already done exactly that: Shortly after the bill was made into law, the number of jobs in the telecom sector increased by 35 percent, Reed said. Capital spending by phone companies and the Nasdaq went way up, while Americans were introduced to new services like wireless Internet and broadband connectivity.
"As of Feb. 8, 1996, not a single person had DSL service even though the Bell companies had the technology," said Colin Crowell, spokesman for Rep. Ed Markey (D-Mass.). "Some 75 percent of Americans have access to that technology today. That is remarkable."
"Even if you get your DSL service from a Bell company, you have the Telecom Act to thank for it," he said.
Hundt said, "This general trend of introducing competition and innovation has been, up to this date, spectacularly successful."
But not everyone shares Hundt and Crowell's euphoria.
Local telephone service providers and telecom infrastructure companies have been hammered in this economy. In the last two years, the telecom industry has laid off more than 500,000 employees, Seiffert said.
The Telecommunications Act of 1996 is partly responsible for the industry's woes because it forces local carriers to share their networks with competitors, Seiffert said. This discourages businesses from building their own networks when they can simply piggyback on their competitors' networks at a low cost, he added.
The FCC is currently reviewing public comment on whether it should excuse broadband providers -- what the telecoms are banking on as the future of their industry -- from sharing their networks. The commission is expected to rule on the proposal, which is favored by FCC chairman Michael Powell and several high-ranking Republicans in Congress -- this Thursday.
"We believe that capital expenditure numbers will go up," Seiffert said. "They will not go up through the roof the next day, but they will go back to normal spending levels."
But even industry analysts, who sympathize with the telecoms on this network-sharing rule, were quick to point out that such regulation wasn't the only reason the industry was in a slump.
A worldwide telecom recession, added competition from the burgeoning cell-phone industry, overblown expectations and optimism from the dot-com era, poor business plans, a glut of fiber-optic infrastructure and even "the worst part of human nature" like illegal fudging of numbers at WorldCom, contributed to some telecoms' demise, said Robert Atkinson, director of policy research for the Columbia Institute for Tele-Information.
"I suppose it is possible that the simultaneous nature of the meltdown might be just a coincidence and that the U.S. meltdown could be largely attributable to the peculiarities of U.S. regulation," Atkinson said. "However, it is more likely that regulation played a relatively minor role, and that other common factors such as the laws of physics and the laws of human nature -- which are the same in all countries -- are more responsible."
Another highly contested provision of the Telecom Act is a rule that prohibits media companies from owning a certain amount of radio and television stations in a single market. Again, media companies say the law is hurting their businesses and that they need the rule tweaked by the FCC to grow and flourish in the current state of the economy.
But critics warn that weakening the law on media ownership would mean fewer voices over the air and fewer companies dictating what Americans watch and listen to.
"Our experience has been that monopolies do not deploy new services because they do not need to," Crowell said.
