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Evolution of Telecommunications: From Monopoly to Competition

Explore the impact of the Telecommunications Act of 1996 on breaking barriers, the dominance of AT&T, MFJ rulings, mergers, fiber optics, and the emergence of ancillary services like LNP and DSL.

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Evolution of Telecommunications: From Monopoly to Competition

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Presentation Transcript

  1. Telephony & Satellite Technologies

  2. Telecommunications Act of 1996 • Removed entry barriers between local, long distance, and cable service providers • Designed to stimulate competition in the telephone business • So far, not much competition has emerged

  3. Telephone Penetration • More than 95% in United States • $83 a month • $36 for local service • $12 for long distance • $35 for wireless

  4. LATA • Local Access Transport Area

  5. Local Telephone Network • Traditional: all lines go back to central office • Fiber-to-feeder: all lines go to fiber remote terminal and then to central office

  6. AT&T • 800 pound gorilla • Communication Act of 1934 • Immunity from antitrust actions • Promise to provide universal phone service • “Natural monopoly”

  7. 1956 Consent Decree • Law suit against AT&T dropped when they agreed to stay out of computer business

  8. 1974 Lawsuit • AT&T • Denied use of non-Bell equipment • Denied interconnection with Bell network • Held a bias toward Western Electric for equipment • Engaged in predatory pricing

  9. MFJ in 1982 • Seven RBOCs formed (baby bells) • AT&T kept long distance business • AT&T kept Western Electric • AT&T entered the computer market

  10. MFJ Ban Removed • Telecommunications Act of 1996 removed ban of phone companies getting into the cable business • To this day, telcos are more interested in pursuing markets in telephony than in cable

  11. New Services? • New types of content? • Value-added services complementing basic service? • New mechanisms for delivering existing and emerging services? • New uses not feasible under the technical limitations of old networks?

  12. No • Over 90% of fiber optic capacity went unused in 2005

  13. Ancillary Services • Mass-audience applications for the telephone • 800 and 900 numbers • Bundled packages • LNP – Local Number Portability • DSL (Digital Subscriber Line) • Developed in 1989 • Sat on a shelf for about a decade

  14. Media Merger • Verizon bought MCI in 2005 • SBC bought AT&T – then became AT&T • New AT&T has a local telephone service in many parts of the county • AT&T wants to buy BellSouth

  15. Telecommunications Act of 1996 and Bigness • Rate competition • Service quality • Public access • Freedom of speech

  16. What Will Happen? • Greater bandwidth • Is cable Internet a telecommunications service? • Voice over IP will continue to grow

  17. Baby Bells • SBC = Southwest Bell + Pacific Telesis + Ameritech • Verizon = NYNEX + Bell Atlantic + GTE • Qwest = U.S. West • BellSouth = BellSouth

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