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.