A Somewhat Better Connection

Robert W. Crandall

Twenty-five years is a very long
time in high-technology industries like
telecommunications. In 1977, none of us
owned a personal computer or a cellular telephone.
That same year, state and federal regulators
were trying to use the federal courts
to block competition in telephone handsets
and long-distance services. At the same time, AT&T was defending
itself against monopolization charges brought by the U.S. Justice
Department, despite the fact that its monopoly had been conceived,
nurtured, and protected by the government itself.

Today, the very same regulatory commissions that were
once working to protect AT&T’s monopoly in long distance and
telephone terminal equipment have been converted, at least
rhetorically, into advocates for competition and consumer welfare.
They have come a long way—or have they?


Unlike transportation, the change in atmosphere has not
led to deregulation in telecommunications. Most telecom service
rates are still regulated or at least subject to the filing of regulatory
tariffs. AT&T and WorldCom cannot selectively cut
prices without running afoul of rules that require geographically
uniform rates. Local telephone companies are more
highly regulated today than 25 years ago because they are now
required to sell services to their competitors at (regulated) costbased

There has been progress, though: long-distance providers
compete for service, wireless rates are fully deregulated, and
consumers can purchase equipment at unregulated prices. It
is disappointing that deregulation has not spread much further
across the telecom landscape.