Telecommunications Act of 1996 - Claims Made in Opposition To The Act

Claims Made in Opposition To The Act

When the smaller CLECs faced financial problems, the trend toward competition slowed, turning into a decade of reconsolidation. The two largest CLECs, Teleport Communications Group (TCG) and Metropolitan Fiber Systems (MFS) were acquired by AT&T and MCI/WorldCom.

Looking back five years after the bill, the Consumers Union reported that wire to wire competition, the reason that sold the bill, had not succeeded as legislators had hoped. CLECs had captured just under seven percent of total lines in the country, and only three percent of homes and small businesses. Wire to wire competition only accounted for one percent of total lines nationwide.

The Consumers Union also raises one other major point. The Telecommunications Act of 1996 did not foster competition among ILECs as the bill had hoped. Instead, of ILECs encroaching on each other, the opposite occurred - mergers. Before the 1996 Act was passed, the largest four ILECs owned less than half of all the lines in the country while five years later the largest four local telephone companies own about 85% of all the lines in the country.

Robert Crandall has argued that the forced-access provisions of the 1996 Act have had little economic value, and the primary, sustainable competitive forces in phone and related, non-'radio', telecommunications are the wireline telephone companies, the cable companies, and the wireless companies.

The Act was claimed to foster competition. Instead, it continued the historic industry consolidation reducing the number of major media companies from around 50 in 1983 to 10 in 1996 and 6 in 2005. An FCC study found that the Act had led to a drastic decline in the number of radio station owners, even as the actual number of commercial stations in the United States had increased.

Consumer activist Ralph Nader argued the act was an example of corporate welfare spawned by political corruption, because it gave away to incumbent broadcasters valuable licenses for broadcasting digital signals on the public airwaves. There was a requirement in the act that the FCC not auction off the public spectrum which the FCC itself valued at $11–$70 billion.