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The Telecommunications Act of 1996 is a
United States federal law The law of the United States comprises many levels of Codification (law), codified and uncodified forms of law, of which the supreme law is the nation's Constitution of the United States, Constitution, which prescribes the foundation of the ...
enacted by the
104th United States Congress The 104th United States Congress was a meeting of the legislative branch of the United States federal government, composed of the United States Senate and the United States House of Representatives. It met in Washington, D.C. from January 3, 19 ...
on January 3, 1996, and signed into law on February 8, 1996, by President
Bill Clinton William Jefferson Clinton (né Blythe III; born August 19, 1946) is an American politician and lawyer who was the 42nd president of the United States from 1993 to 2001. A member of the Democratic Party (United States), Democratic Party, ...
. It primarily amended Chapter 5 of
Title 47 of the United States Code Title 47 of the United States Code defines the role and structure of the Federal Communications Commission, an independent agency of the United States government, and the National Telecommunications and Information Administration, part of the Un ...
. Heavily supported and
lobbied Lobbying is a form of advocacy, which lawfully attempts to directly influence legislators or government officials, such as regulatory agencies or judiciary. Lobbying involves direct, face-to-face contact and is carried out by various entities, in ...
for by major corporations in the telecommunications sector, the act was the first significant overhaul of United States telecommunications law in more than sixty years. It amended the
Communications Act of 1934 The Communications Act of 1934 is a United States federal law signed by President Franklin D. Roosevelt on June 19, 1934, and codified as Chapter 5 of Title 47 of the United States Code, et seq. The act replaced the Federal Radio Commission w ...
, and represented a major change in that law, because it was the first time that the
Internet The Internet (or internet) is the Global network, global system of interconnected computer networks that uses the Internet protocol suite (TCP/IP) to communicate between networks and devices. It is a internetworking, network of networks ...
was added to American regulation of
broadcasting Broadcasting is the data distribution, distribution of sound, audio audiovisual content to dispersed audiences via a electronic medium (communication), mass communications medium, typically one using the electromagnetic spectrum (radio waves), ...
and
telephony Telephony ( ) is the field of technology involving the development, application, and deployment of telecommunications services for the purpose of electronic transmission of voice, fax, or data, between distant parties. The history of telephony is ...
.The Telecommunications Act of 1996. Title 3, sec. 301. Retrieved fro
fcc.gov
(2011)
The stated intention of the law was to "let anyone enter any communications business – to let any communications business
compete Competition is a rivalry where two or more parties strive for a common goal which cannot be shared: where one's gain is the other's loss (an example of which is a zero-sum game). Competition can arise between entities such as organisms, individ ...
in any market against any other." In practice, it gave way to one of the largest consolidations of the telecommunications sector in history - as such, it is often described as an attempt to
deregulate Deregulation is the process of removing or reducing state regulations, typically in the economic sphere. It is the repeal of governmental regulation of the economy. It became common in advanced industrial economies in the 1970s and 1980s, as a ...
the American
broadcasting Broadcasting is the data distribution, distribution of sound, audio audiovisual content to dispersed audiences via a electronic medium (communication), mass communications medium, typically one using the electromagnetic spectrum (radio waves), ...
and
telecommunications Telecommunication, often used in its plural form or abbreviated as telecom, is the transmission of information over a distance using electronic means, typically through cables, radio waves, or other communication technologies. These means of ...
markets due to
technological convergence Technological convergence is the tendency for technologies that were originally unrelated to become more closely integrated and even unified as they develop and advance. For example, watches, telephones, television, computers, and social media ...
. The Telecommunications Act of 1996 has been praised for incentivizing the expansion of networks and the offering of new services across the United States. At the same time, it is often criticized for enabling market concentration in the media and telecommunications industries, going against its very stated intention by indirectly restricting newcomer access to broadcasting.


Background


Development

Previously, the
Communications Act of 1934 The Communications Act of 1934 is a United States federal law signed by President Franklin D. Roosevelt on June 19, 1934, and codified as Chapter 5 of Title 47 of the United States Code, et seq. The act replaced the Federal Radio Commission w ...
was the statutory framework for American communications policy, covering
telephony Telephony ( ) is the field of technology involving the development, application, and deployment of telecommunications services for the purpose of electronic transmission of voice, fax, or data, between distant parties. The history of telephony is ...
,
broadcasting Broadcasting is the data distribution, distribution of sound, audio audiovisual content to dispersed audiences via a electronic medium (communication), mass communications medium, typically one using the electromagnetic spectrum (radio waves), ...
, and (via later amendments)
cable television Cable television is a system of delivering television programming to consumers via radio frequency (RF) signals transmitted through coaxial cables, or in more recent systems, light pulses through fibre-optic cables. This contrasts with bro ...
. The 1934 Act created the
Federal Communications Commission The Federal Communications Commission (FCC) is an independent agency of the United States government that regulates communications by radio, television, wire, internet, wi-fi, satellite, and cable across the United States. The FCC maintains j ...
(FCC), the agency assigned to implement and administer the economic regulation of the interstate activities of telephone companies (then dominated by the AT&T monopoly) and the licensing of spectrum used for broadcasting and other purposes. Starting in the 1970s, a combination of technological change, court decisions, and updates to American policy goals enabled competitive entry by new companies into some telecommunications and broadcasting markets. In this context, the 1996 Telecommunications Act was designed to allow smaller companies to enter those markets and for existing companies to operate across market sectors, via the relaxation of cross-ownership rules, multi-sector prohibitions, and other
barriers to entry In theories of Competition (economics), competition in economics, a barrier to entry, or an economic barrier to entry, is a fixed cost that must be incurred by a new entrant, regardless of production or sales activities, into a Market (economics) ...
.Guy Lamolinara
''Wired for the Future: President Clinton Signs Telecom Act at LC''
Library of Congress The Library of Congress (LOC) is a research library in Washington, D.C., serving as the library and research service for the United States Congress and the ''de facto'' national library of the United States. It also administers Copyright law o ...
, (accessed November 13, 2008)
One specific provision empowered the FCC to preempt all attempts by state or local governments to prevent telecommunications competition. A report by the House of Representatives stated that the goal of the new legislation was to "provide for a pro-competitive, de-regulatory national policy framework designed to accelerate rapidly private sector deployment of advanced information technologies and services to all Americans by opening all telecommunications markets to competition".


New policy developments

One purpose of the Telecommunications Act of 1996 was to foster competition among companies willing to provide multiple communications services (such as voice calls and Internet connectivity) within network technologies that has previously been confined by law to one type of service. Therefore, the act created precise regulatory regimes based on type of network architecture, with companies subjected to different regulations depending on whether they operated in telephone, cable television, or Internet networks. The act makes a significant distinction between providers of telecommunications services and information services, with the different regulations to be followed by companies in each sector leading to confusion when those sectors technologically converged in later years. In order to enable competition, the 1996 Act required incumbent telecommunications companies to
interconnect In telecommunications, interconnection is the physical linking of a carrier's network with equipment or facilities not belonging to that network. The term may refer to a connection between a carrier's facilities and the equipment belonging to its ...
their networks with new competing companies, and to provide wholesale access to materials and components as those smaller companies build their networks. The act also clarified intercarrier compensation rates for communications requests that are handled by multiple firms.
Regional Bell Operating Companies A Regional Bell Operating Company (RBOC) was a corporate entity created as result of the antitrust lawsuit by the United States Department of Justice against the Western Electric Company and American Telephone and Telegraph Company (AT&T) in 194 ...
, who were previously subjected to strict regulations to provide only local telephone service, were allowed to enter the long-distance market. The 1996 Act also introduced more precise and detailed regulations for the funding of
universal service Universal service is an economic, legal and business term used mostly in regulated industries, referring to the practice of providing a baseline level of services to every resident of a country. An example of this concept is found in the US Tel ...
programs via subsidies generated by monthly customer fees. This was intended to reduce the tendency of smaller telephone firms to charge above-market rates for underserved users, and to provide more transparency of fees charged to customers.. However, universal service subsidies were only used to build
landline telephone A landline is a physical telephone connection that uses Metal wire, metal wires or optical fiber from the subscriber's premises to the network, allowing multiple phones to operate simultaneously on the same phone number. It is also referred to a ...
networks until the early 2010s. In the media and broadcasting sector, most media ownership regulations were eased, and the cap on radio station ownership was eliminated. The act also attempted to prohibit indecency and obscenity on the Internet, via a section that was separately titled as the
Communications Decency Act The Communications Decency Act of 1996 (CDA) was the United States Congress's first notable attempt to regulate pornographic material on the Internet. In the 1997 landmark case '' Reno v. ACLU'', the United States Supreme Court unanimously stru ...
, though most of this section was ruled unconstitutional by the
U.S. Supreme Court The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate appellate jurisdiction over all U.S. federal court cases, and over state court cases that turn on question ...
for violating the
First Amendment First most commonly refers to: * First, the ordinal form of the number 1 First or 1st may also refer to: Acronyms * Faint Images of the Radio Sky at Twenty-Centimeters, an astronomical survey carried out by the Very Large Array * Far Infrared a ...
. Portions of Title V remain, including
Section 230 In the United States, Section 230 is a section of the Communications Act of 1934 that was enacted as part of the Communications Decency Act of 1996, which is Title V of the Telecommunications Act of 1996, and generally provides immunity for on ...
, which shields Internet firms from liability for the speech of their users, and has been widely credited for enabling the growth of the Internet and
social media Social media are interactive technologies that facilitate the Content creation, creation, information exchange, sharing and news aggregator, aggregation of Content (media), content (such as ideas, interests, and other forms of expression) amongs ...
.


Opposition


Early criticism

Some smaller telecommunications companies and consumer groups stated their opposition to the new statute during Congressional hearings. For example, smaller firms predicted that they would experience difficulty in competing financially even if they faced fewer barriers to entry, and this would result in
market consolidation Market is a term used to describe concepts such as: *Market (economics), system in which parties engage in transactions according to supply and demand *Market economy *Marketplace, a physical marketplace or public market *Marketing, the act of sat ...
in favor of incumbent firms. This prediction was correct, and by 2001 concentration of the American telephone market had increased with four major companies owning 85% of all network infrastructure, rather than the increased competition that the act intended. Critics warned that the same would happen in the media content industry.SFBG.com
/ref> Consumer activist
Ralph Nader Ralph Nader (; born February 27, 1934) is an American lawyer and political activist involved in consumer protection, environmentalism, and government reform causes. He is a Perennial candidate, perennial presidential candidate. His 1965 book '' ...
argued that the act was an example of
corporate welfare Corporate welfare refers to government financial assistance, Subsidy, subsidies, tax breaks, or other favorable policies provided to private businesses or specific industries, ostensibly to promote economic growth, job creation, or other public b ...
spawned by political corruption, because it gave away to incumbent broadcasters valuable licenses for digital broadcasting frequencies on the public airwaves. The act was also unpopular with early Internet activists, and was named specifically in EFF founder
John Perry Barlow John Perry Barlow (October 3, 1947February 7, 2018) was an American poet, essayist, cattle rancher, and cyberlibertarian political activist who had been associated with both the Democratic and Republican parties. He was also a lyricist for th ...
's essay,
A Declaration of the Independence of Cyberspace "A Declaration of the Independence of Cyberspace" is a widely distributed early paper on the incompatibility of current governments with the rapidly growing Internet. Commissioned for the online project '' 24 Hours in Cyberspace'', it was written ...
, as an act "which repudiates your own
merican ''Merican'' is an Extended play, EP by the American punk rock band Descendents, released February 10, 2004. It was the band's first release for Fat Wreck Chords and served as a pre-release to their sixth studio album ''Cool to Be You'', released ...
Constitution and insults the dreams of Jefferson, Washington, Mill, Madison, DeToqueville, and Brandeis." On the other hand, a
Brookings Institution The Brookings Institution, often stylized as Brookings, is an American think tank that conducts research and education in the social sciences, primarily in economics (and tax policy), metropolitan policy, governance, foreign policy, global econo ...
study concluded that the act incentivized upgrades to telecommunications infrastructure and new construction, despite increased industry concentration. In the long term, this helped to spread broadband access to more of the country.


Later criticism

Critics have maintained that many of the purported goals of the Telecommunications Act of 1996 did not come to fruition in the years and decades after its passage. The act's structure of regulations based on type of network infrastructure failed to predict
technological convergence Technological convergence is the tendency for technologies that were originally unrelated to become more closely integrated and even unified as they develop and advance. For example, watches, telephones, television, computers, and social media ...
and created awkward regulatory burdens for companies operating in multiple segments of media and telecommunications markets. This may prohibit innovation or make the law unable to handle evolving market conditions. The law also fails to provide a guideline for regulating previously separate network technologies that have since converged (e.g. voice calls can now be delivered over Internet networks via services like
VoIP Voice over Internet Protocol (VoIP), also known as IP telephony, is a set of technologies used primarily for voice communication sessions over Internet Protocol (IP) networks, such as the Internet. VoIP enables voice calls to be transmitted as ...
).Digital.library.unt.edu
CRS Report
According to some critics, this situation has in fact created re-regulation of the marketplace with contradictory and inconsistent rules for companies to follow. Critics have also claimed that the act has failed to enable the competition that was one of its stated goals, instead exacerbating the ongoing consolidation of the media marketplace that had commenced in the decades before the act's passage by allowing large corporations to buy out as many stations as desired. The number of American major media content companies shrank from about fifty in 1983 to ten in 1996, and to just six in 2005. An FCC study found that the act led to a drastic decline in the number of radio station owners, even as the actual number of stations in the United States increased. This decline in owners and increase in stations has resulted in
radio homogenization Radio homogenization is the shift in which previously locally programmed and hosted radio stations increasingly air remotely pre-recorded program material and central-cast via Internet or satellite. Background of corporate consolidation Deregul ...
, in which local programming and content has been lost and content is repeated regardless of location. Activists and critics have cited similar effects in the television industry. In the 2003 edition of his book ''
A People's History of the United States '' A People's History of the United States'' is a 1980 nonfiction book (updated in 2003) by American historian and political scientist Howard Zinn. In the book, Zinn presented what he considered to be a different side of history from the more ...
'', historian
Howard Zinn Howard Zinn (August 24, 1922January 27, 2010) was an American historian and a veteran of World War II. He was chair of the history and social sciences department at Spelman College, and a political science professor at Boston University. Zinn ...
named the act as a significant factor in the loss of alternative and community media, and possibly the loss of public control of information: There have been attempts by the United States Congress to update the 1996 Telecommunications Act or address some of its shortcomings, such as the
Communications Opportunity, Promotion and Enhancement Bill of 2006 The Communications Opportunity, Promotion and Enhancement (COPE) Act of 2006 () was a bill in the U.S. House of Representatives. It was part of a major overhaul of the Telecommunications Act of 1996 being considered by the US Congress. The Act w ...
and Internet Freedom and Nondiscrimination Act of 2006, but neither became law.


See also

*
Communications Act of 1934 The Communications Act of 1934 is a United States federal law signed by President Franklin D. Roosevelt on June 19, 1934, and codified as Chapter 5 of Title 47 of the United States Code, et seq. The act replaced the Federal Radio Commission w ...
*
Consolidation of media ownership Consolidation may refer to: In science and technology * Consolidation (computing), the act of linkage editing in computing * Consolidation (locomotive), popular name of a steam locomotive with a 2-8-0 wheel arrangement * Consolidation (soil), a g ...
*
Open access (infrastructure) In the context of infrastructure, open access involves physical infrastructure such as railways and physical telecommunications network plants being made available to clients other than owners, for a fee. For example, private railways within a st ...


References

Federal documents *
Library of Congress The Library of Congress (LOC) is a research library in Washington, D.C., serving as the library and research service for the United States Congress and the ''de facto'' national library of the United States. It also administers Copyright law o ...

S.652.RS — 27/30 March 1995 — 104-23
Initial text of proposed legislation. * Library of Congress
Senate Report 104-23, 7 June 1995
Document, description of the intentions for each section of S.652. * Library of Congress
S7881-7912 — 7 June 1995 — S.652
Measure laid before the Senate. Speeches made by senators. * Library of Congress
S.652 - All Congressional Actions w/Amendments
All speeches, amendments on the Senate Floor, 23 March 1995 through 8 February 1996. *
U.S. Senate The United States Senate is a chamber of the bicameral United States Congress; it is the upper house, with the U.S. House of Representatives being the lower house. Together, the Senate and House have the authority under Article One of the ...

104th Congr. 2nd Sess. Vote 8 — 1 February 1996
Senate passes the final revision of S.652, sent to President Clinton who signed it into law on 8 February 1996. * U.S. G.P.O.
Public Law No: 104-104
Telecommunications Act of 1996. *
Securities and Exchange Commission The United States Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street crash of 1929. Its primary purpose is to enforce laws against market m ...
.

Teleport Communications Group TCG, Quarterly Report (10-Q), March 5, 1998, pages 3, 6–7. *Securities and Exchange Commission.
MCI Inc., Quarterly Report (10-Q)
November 14, 1997, page 20. MFS


External links


Telecommunications Act of 1996PDFdetails
as amended in the GPObr>Statute Compilations collection
. This article by Fritz Messere (Associate Professor of Communication Studies at SUNY Oswego) describes the impact of the Act on radio and television broadcasting, Internet and on-line computer services, and provides sources and suggested further reading. {{DEFAULTSORT:Telecommunications Act Of 1996 United States federal communications legislation Acts of the 104th United States Congress Act