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Press Release

    Issue Analysis 104 - Costs and Benefits of the Bells' InterLATA Data Prohibition

    05/25/2000

    The Telecommunications Act of 1996 prohibits Bell Operating Companies from offering service between “Local Access and Transport Areas” (LATAs) until they demonstrate that local telephone service is open to competition and satisfy a vague “public interest” test. The principal purpose was to keep the Bells from offering long-distance phone service until they could prove that they could not use monopoly control of local phone lines to keep other long-distance companies from reaching their customers.

    Since then, a new debate has arisen over whether the Bells should be permitted to carry data across LATA boundaries. The Telecommunications Act prohibits them from doing so, but several bills in Congress would change that:

    H.R. 2420, sponsored by Rep. Billy Tauzin (R-La.) and John Dingell (D-Mich.), would permit the Bells to offer interLATA data services while prohibiting them from using their data networks to offer voice service. The legislation forbids regulators from requiring local phone companies to “unbundle” or sell access to their advanced data networks to competitors at wholesale prices, but it does require the phone companies to connect their conventional voice and data networks to all Internet Service Providers who request interconnection.

    A pair of bills, H.R. 1685 and H.R. 1686 sponsored by Reps. Rick Boucher (D-Va.) and Robert Goodlatte (R-Va.) respectively, repeal the prohibition on interLATA data services. These bills contain additional provisions that clarify how the antitrust laws apply to the broadband communications market, outlaw certain types of bulk e-mail, and address other Internet-related issues.

    Should advanced interLATA data services be treated like voice telephony, or should the federal government follow the same policy of “unregulation” it has applied to other segments of the Internet market, where the Bell companies compete directly? A careful look at the benefits and costs of letting the Bells compete in interLATA data services can help ascertain which approach best serves consumer interests.

    Full Study:

    Citizens for a Sound Economy Foundation
    Issue Analysis 104:
    Costs and Benefits of the Bells' InterLATA Data Prohibition
    (PDF format, 9 p. 167 Kb)