Rules of engagement

While last year's hype over telecommunications reform promised to let the market reign supreme, today's headlines blare news of court cases, federal hearings, and 700-page government rulebooks on how to deregulate.

It's no small job to create sufficient incentives for competition to dispense with the need for regulation of monopolies. -- Reed Hundt, FCC chairman

These apparent contradictions beg an obvious question: In spite of its professed intent to get government out of the way, is the Telecommunications Act of 1996 just another example of heavy-handed Washington bureaucracy?

The answer lies in the understanding that the historic legislation was not as much about deregulation as it was about increasing competition. And while it will surely reduce the government's regulatory role in the long run, it requires the one agency in particular--the Federal Communications Commission--to take on a Herculean task until that time.

In the few short years immediately following the law's enactment, the FCC is charged with the massive responsibility of creating fair rules for a new era of competition and market-driven prices. Those regulations will determine how much of the world communicates, from telephones and cable transmissions to the Internet, and will reorient the dynamics of an industry that is fast approaching one-sixth of the entire U.S. economy.

"I understand why people are asking why the FCC hasn't gone out of existence yet," said Jim Casserly, legal counsel to the commission. "But there is whole lot that we have to do to get to the point where the market can provide lower prices and more choice. One needs to be realistic about how long it takes the seeds of competition to be sown, and then to grow and flower."

That realistic timetable is certain to be more than the 12 months since the Telecommunications Act became law. Take as an example the long distance phone industry, the first communications market to be deregulated. MCI, the first long distance carrier authorized to compete with AT&T, filed an application to provide service in 1963. The long distance business wasn't declared truly competitive until 1995, more than 30 years after the FCC opened the market to new players.