On This Day

Telecommunications Act of 1996, Telecommunications Act signing, clinton telecom act
Erica Wissolik/Library of Congress
Flanked by monitors that displayed the signing in real time on the Internet, President Clinton
delivers an address on the Telecom Act of 1996 as Vice President Gore watches.

On This Day: Telecommunications Act of 1996 Signed

February 08, 2012 05:00 AM
by findingDulcinea Staff
On Feb. 8, 1996, President Bill Clinton signed the Telecommunications Act of 1996, which deregulated the telecommunications industry in an attempt to foster competition.

The Telecom Act of 1996

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The Telecommunications Act of 1996 was the first major piece of legislation on the telecommunications industry since 1934. It was designed to increase competition in local and long-distance telephone service and cable television by reducing regulation, thereby making it easier for companies to enter the communications business or to enter new markets.

In his remarks at the act’s signing ceremony, President Bill Clinton declared, “Today, our world is being re-made yet again by an information revolution … . But this revolution has been held back by outdated laws, designed for a time when there was one phone company, three TV networks, no such thing as a personal computer. Today, with the stroke of a pen, our laws will catch up with our future. We will help to create an open marketplace where competition and innovation can move as quick as light.”

The Telecom Act allowed the seven Regional Bell Operating Companies (RBOC), nicknamed the “Baby Bells,” to enter the long-distance market if they agreed to share their local networks with other companies. This would create competition in local markets that had been dominated by the Baby Bells and in the long-distance market dominated by AT&T, MCI and Sprint.

The act has failed to reach its intended effect. Instead, it has allowed large corporations to strengthen their dominance through mergers and buyouts. In a 2001 criticism of the act, the Consumers Union writes, “Competition in local telephone markets has failed to materialize because the local telephone monopolies have refused to open their networks to new entrants who must rely on parts of the monopoly network to provide local service. The major telephone companies have not sought to provide local telephone service outside of their home territories. The Bell operating companies, instead of competing with each other for local customers, bought each other, creating a small number of dominant national firms with regional monopolies that are even more immune to competitive entry.”

The radio industry, in particular, has seen a drastic reduction in competition due to a provision that ended restrictions on the number of radio stations a single company could own. Large radio stations such as Clear Channel immediately began buying up thousands of smaller radio stations and today a majority of stations are owned by fewer than 10 companies.

The act also included a section, known as the Communications Decency Act, that attempted to regulate pornography and use of obscenities on the Internet. Civil liberties organizations challenged the Decency Act in court and in 1997 the Supreme Court ruled unanimously that the indecency provisions of the act violated the First Amendment.
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