Case Overview, Legislation Affecting the Deployment of Broadband Technology

This document provides background information and summarizes the debate over broadband deployment during the 106th Congress. The links to the left will lead you to public documents that we have found.

           Not too many years ago there was one phone company: Ma Bell (or what we know today as AT&T). The Bell system provided phone equipment, local service, and long distance service. In short, it was a complete monopoly. In 1973, the Ford administration filed a lawsuit against the monopoly and a decade later the government and the phone company finally reached an out of court settlement that broke up Ma Bell. Seven regional Bell operating companies (or RBOCs) were created, each of which was given the local phone service business in their geographic area. (Verizon, SBC, and Qwest are examples of the RBOCs.) Long distance service was deregulated and any company could enter other than the RBOCs.
           Once the genie was out of the bottle, pressure built for even more deregulation. The local and long distance markets are huge and were a lucrative target for telecommunications companies eying new markets to enter. Moreover, the initial court settlement in 1982 took place at the dawn of a technology revolution that still shows little signs of abating. As personal computers became as common as cars and the Internet fundamentally altered the way we communicate, legislators and regulators were put in a position of playing catch-up to regulate new technologies and new products already firmly in place in the market. A particularly troublesome issue has been broadband technology-the wiring of homes and offices for high-speed Internet connections. For home users this service has become intertwined with cable television as those providers can use the same wiring to bring telephone, cable, and Internet hook-ups to a residence.
           These issues made for a complex stew in the 106th Congress (1999-2000). At the heart of the conflict was really an old-tech issue: who else could offer local phone service besides the RBOCs? The telecommunications industry recognized that the ultimate winners in all these markets would be the companies that could package together local phone, long-distance, cable, and high speed Internet. This way the consumer had just one bill to pay each month and ever more importantly, the customer knew who to call when something went wrong. In other words, when Mr. Jones had a problem he wouldn't have the phone company tell him to call the Internet company, only to have the Internet provider tell him to call the phone company. The bundling of services was clearly the wave of the future.
           In an effort to sort out local and long-distance markets, Congress passed the Telecommunications Act of 1996. The legislation provided conditions under which local companies could enter the long distance market, and long distance companies could enter the local phone market. Since the long distance market was already largely deregulated, this law created much more risk for the RBOCs, each of which still dominated its service area. As a result the RBOCs dragged their heels and did not take the steps necessary that allowed long distance carriers access to the "last mile" of wire into people's homes. This, in turn, meant that they couldn't enter the long distance market. A lobbyist for a long distance company remarked derisively, "They [the RBOCs] have no intention of opening up their local markets."
           The RBOCs' strategy instead was to lobby Congress to give them relief from the requirements of the 1996 law. There was no consensus in the Congress to do this, though, as members were lobbied relentlessly by corporations and trade associations on all sides of the issue. Legislation favoring the RBOCs stalled and the fight would be resumed in the 107th Congress.