Ten years ago last week, Bill Clinton signed what was sold to the public as a landmark telecommunications law.
So are consumers and the telecommunications industry better off today, thanks the Telecommunications Act of 1996? Or are they better off in spite of it?
There has, obviously, been massive change. But to say there has been a revolution, as Clinton predicted, might take it a bit far.
One of the law’s most attractive provisions was the possibility of introducing competition where none had been before. Former Sen. Larry Pressler, a Republican from South Dakota who was one of the lawmakers who wrote the bill, figured a tidal surge of innovation would follow because the law would be “getting everybody into everybody's business.”
It hasn’t worked as Pressler expected, though. While competition and innovation have indeed increased, the telecommunications act, which is filled with regulation, has not been responsible for much of it — aside from the local telephone companies thrashing of the long-distance carriers after the entry barriers had been taken down.
Most of the change has been in the Internet and wireless sectors, both of which were virtually left alone by the law and both of which have exploded because of it.
Those areas are constantly changing, always challenging the players in the established telecommunications sectors (think of Voice over Internet Protocol changing the dynamic of telephone service through broadband access, for one example), attracting investment capital, and continually fighting over a growing customer base that is clamoring for new products and services.
Therein is the simple lesson provided by the Telecommunications Act of 1996: When businesses are free of the heavy hand of state regulation, they tend to prosper.
But when the government tries to manage competition, as it has with the 1996 law, competition and innovation languish. Congress has an obligation to rewrite the law. But this time hang up on the regulators.