The Long Distance Telephone Networks and Partial Deregulation

Abstract

This chapter analyzes the performance of incumbent local and long-distance telephone networks, which provide the predominant service in “mass” and “business” wireline service markets. The chapter reveals that the price cap policies of the Federal Communications Commission (FCC) for local access services provided to long distance carriers, when combined with the strategies of three dominant, long-distance carriers, resulted in a pattern of corporate behavior that rendered the local exchange carriers unwilling to invest in broadband technologies for rapid access to the Internet. The FCC was totally involved in every aspect of network element pricing for each of the four regional, local service providers providing access to long distance. The chapter discusses, in detail, the business cycle and changes in interexchange carrier performance; it also elaborates on shortages of broadband capacity and deregulation.