Cable television and telephony in the telecommunications act of 1996: Economics, law, regulation and politics

Abstract

Though reasonable people may argue about whether cable television and local telephone services are natural monopolies in theory, historically they have developed with infrastructures that make them more likely to have important declining cost characteristics in reality. Additionally, common carriage issues, especially for telephones, may necessitate regulatory oversight. Though touted as deregulation, and certainly eliminating many cross‐industry barriers, the Telecommunications Act of 1996 is better understood as reregulation. The act maintains a common carriage philosophy while attempting to promote competition. However, evidence indicates it is unlikely that the new regulatory regime will result in efficient prices or true competition. Instead, duopoly in cable and oligopoly in telephony are probably the best that can be achieved under the act.