BPEA | 1996: Microeconomics

The Welfare Impacts of Competitive Telecommunications Supply: A Household-Level Analysis

Frank A. Wolak
Frank A. Wolak Stanford University and National Bureau of Economic Research

Microeconomics 1996

THE TELECOMMUNICATIONS ACT of 1996 defines a regulatory framework
for increasing the intensity of competition in all aspects of telecommunications
supply. The act requires all regional Bell operating companies
(RBOCs) to provide interconnection, unbundled access to their
basic network elements, and resale of any retail services that they offer
to potential competitive local exchange carriers. Once an RBOC meets
a checklist of standards for providing access and interconnection services,
the act allows it to ask the Federal Communications Commission
(FCC) for permission to provide interLATA (Local Access and Transport
Area) long-distance service. The entry of competitive local change carriers and, eventually, of RBOCs into the interLATA longdistance
market should exert significant pressure on the cross-subsidies
that currently exist in the pricing of telecommunications services.