Market Analysis of Competition in US Local Telephony

This paper analyzes the effects of Telecommunication Act 1996 on US telecommunication market. The focus is on local telephony market segment which was subjected to strict monopoly controls before the Act. The Act was considered as a milestone in the history of US telecommunications as it tried to move all telecom markets towards competition. The Act envisioned telecom network as a network of interconnected networks, where competition is possible not only at element level but also at final service level An other goal of the Act was to increase investment in local infrastructure by creating competition. Despite all efforts, the pace of competition has been very slow. Even after 10 years questions are still raised about the success of the Act. This paper tries to determine quantitatively whether the Act has failed or not by examining the state of competition in local telephony markets. For this purpose Market conditions are examined to judge the success or failure of the Act.