INDIRECT SUCCESS

By many standards, the Telecom Act failed to achieve its purpose of creating local competition. It did result in unprecedented investment in telecom and related high-tech industries. New carriers provided alternative business plans, wireless and cable operators paid for expensive network upgrades, and equipment vendors poured money into honing existing technologies and developing new ones. Many of the companies didn't survive, but the market impacts did. Most building local exchange carriers and pure-play DSL providers are ancient history, but they helped develop the appetite for affordable broadband that is critical for future success. On a more granular level, “free” ISPs with business plans propped up by unrealistic estimates for advertising and reciprocal-compensation revenues created headaches in the industry but made the Internet accessible to everyone, helping establish a broad-based market that is being tapped today. We are now at the cusp of legitimate local competition based on bundled services that are affordable because of technological advances — some of which were made in the labs of companies that no longer exist. In the near future, most Americans should have multiple choices for their primary phone line via voice over IP, wireless or traditional circuit-switch technology. It would be folly to say this circumstance is a result of the Telecom Act, because Congress certainly didn't envision this environment in 1996. However, it's hard to imagine that this imminent intermodal competition could have evolved so quickly without the Telecom Act and the investments it helped spawned. So, maybe the Telecom Act worked, at least indirectly. It didn't happen in the manner intended by its authors, but it worked.