Telecommunications Act: Competition, Innovation, and Reform [August 12, 2005]   [open pdf - 377KB]

"There is consensus that the current statutory framework is not effective in the current market environment, but not on how to modify it. The debate focuses on how to foster investment, innovation, and competition in both the physical broadband network and in the applications that ride over that network while also meeting the many non-economic objectives of U.S. telecommunications policy: universal service, homeland security, public safety, diversity of voices, localism, consumer protection, etc. Given the underlying cost structure of broadband networks - huge sunk up-front fixed costs - the marketplace will likely support only a limited number of such networks. Today, the market is largely a duopoly: the telephone company network and the cable company network. The physical network providers argue that they will be discouraged from undertaking costly and risky build-outs if their networks are subject to open access and/or non-discrimination requirements. On the other hand, independent applications providers argue that in order for them to best meet the needs of end users and offer innovative services they must have nondiscriminatory access to the physical network. There is much debate over the advantages and disadvantages of structural regulation, such as open access, ex ante non-discrimination rules, ex post adjudication of abuses of market power on a caseby- case basis, and reliance on non-mandatory principles. There is general agreement that there would be great benefits from entry by a wireless broadband network to compete with the telephone and cable networks. There also is debate about how to modify the universal service program and intercarrier compensation rules in light of the major market changes."

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CRS Report for Congress, RL33034
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