[*] 1996 Florida State University Law Review Ausley Scholarship paper. Return to text.

[**] The author thanks Mr. Dubose Ausley for his financial support. This Comment is dedicated to the memory of the author's father, Dr. William O. Hughes. Return to text.

[1] Michael E. Kanell, New Era of Telecommunications: Who'll Survive Storm of Competition?, ATLANTA J. & CONST., Feb. 11, 1996, at F5. Return to text.

[2] Leo Rennert, Clinton Dials in New Era, Signs Telecom Bill, Touts Services, Jobs, SACRAMENTO BEE, Feb. 9, 1996, at A1. Return to text.

[3] A natural monopoly is "[o]ne which is created from circumstances over which the monopolist has no power. For example, a market for a particular product may be so limited that it is impossible to profitably produce such except by a single plant large enough to supply the whole demand." BLACK'S LAW DICTIONARY 1007 (6th ed. 1990). Return to text.

[4] See United States v. American Tel. & Tel. Co., 552 F. Supp. 131, 141 (D.D.C. 1982), aff'd sub nom. Maryland v. United States, 460 U.S. 1001 (1983). Return to text.

[5] See discussion infra part II. Return to text.

[6] See Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (1996) (to be codified in scattered sections of 47 U.S.C.); 1995 Fla. Laws ch. 95-403. Return to text.

[7] See sources cited supra note 6. Return to text.

[8] Ch. 652, 48 Stat. 1064 (1934) (codified as amended at 47 U.S.C. §§ 151-613 (1994)). Return to text.

[9] Id. Return to text.

[10] 47 U.S.C. § 151 (1994). Return to text.

[11] Id. Return to text.

[12] See Greater Fremont, Inc. v. City of Fremont, 302 F. Supp. 652, 658 (D. Ohio 1968). Return to text.

[13] See American Broadcasting Co. v. F.C.C., 191 F.2d 492, 498 (D.C. Cir. 1951). Return to text.

[14] 47 U.S.C. § 151 (1994); see also United States v. Southwestern Cable Co., 392 U.S. 157, 167-68 (1968). The broad jurisdiction of the FCC resulted from the consolidation of various regulatory functions of the Interstate Commerce Commission, the Federal Radio Commission, and the Postmaster General. See Robert B. Friedrich, Note, Regulatory and Antitrust Implications of Emerging Competition in Local Access Telecommunications: How Congress and the FCC Can Encourage Competition and Technological Progress in Telecommunications, 80 CORNELL L. REV. 646, 648 (1995). Return to text.

[15] 47 U.S.C. § 152(b) (1994). Congress did not intend the Communications Act to preempt the field of state telecommunications regulations. Ceracche Television Corp. v. Kelly, 364 N.Y.S.2d 276, 280 (Sup. Ct. 1974), aff'd, 376 N.Y.S.2d 217 (App. Div. 1975). Return to text.

[16] 47 U.S.C. § 152(b) (1994). Return to text.

[17] Patricia Diaz Dennis & Gary M. Epstein, Panel Discussion: The Future of Telecommunications, in PRACTICING LAW INST., 12TH ANNUAL INSTITUTE ON TELECOMMUNICATIONS: POLICY AND REGULATION 1994 (Patents, Copyrights, Trademarks, and Literary Property Course Handbook Series No. G4-3930) (Dec. 1994), available in WESTLAW, PLI Database, at *93. Return to text.

[18] See id.; see also discussion infra parts II.A.2.a-b. Return to text.

[19] Friedrich, supra note 14, at 649. Return to text.

[20] Id. at 655. Before 1983, "[t]he combined operations of AT&T . . . exercised monopoly power over nearly every sector of the telecommunications industry within the United States." Id. In 1980, AT&T's operating revenues equalled approximately two percent of the country's gross national product. United States v. American Tel. & Tel. Co., 552 F. Supp. 131, 152 (D.D.C. 1982), aff'd sub nom. Maryland v. United States, 460 U.S. 1001 (1983). Return to text.

[21] At the time of the lawsuit, Western Electric manufactured telecommunications equipment exclusively for AT&T. American Tel. & Tel. Co., 552 F. Supp. at 135 n.3. Return to text.

[22] Id. at 135-36 (citing 15 U.S.C. § 1-3). The purpose of the Sherman Antitrust Act of 1890 is to pursue unimpeded competition as a means of advancing consumer prosperity:

The Sherman Act was designed to be a comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade. It rests on the premise that the unrestrained interaction of competitive forces will yield the best allocation of our economic resources, the lowest prices, the highest quality and the greatest material progress, while at the same time providing an environment conducive to the preservation of our democratic, political and social institutions. But even were that premise open to question, the policy unequivocally laid down by the Act is competition.
Northern Pacific Ry. v. United States, 356 U.S. 1, 4 (1958). Return to text.

[23] American Tel. & Tel. Co., 552 F. Supp. at 135. Return to text.

[24] Id. Return to text.

[25] Id. Return to text.

[26] Id. at 136. A number of AT&T executives were involved with national defense projects and thus the Department of Defense assisted AT&T because it feared that prosecution of the case would impede the Korean War effort. Id. at 136 n.8. Return to text.

[27] Id. at 137. In 1959, the House of Representatives Committee on the Judiciary appointed the Antitrust Subcommittee to investigate the negotiation process that led to the 1956 Consent Decree. Id. at 136. The subcommittee reported that the willingness of the Attorney General to forego the original goals of the antitrust action demonstrated "partiality toward the defendants incompatible with the duties of his public office." Id. at 137 n.11. The Antitrust Subcommittee also was dismayed by the unwillingness of the Justice Department to disclose information necessary for the investigation. The subcommittee reported that the Justice Department's defiance was the result of its "desire to cover up those facts which the Department considered to be embarrassing." Id. The Department's obstinacy forced the subcommittee to obtain the needed information from other sources. Id. at 136-37. Return to text.

[28] Id. at 137. Return to text.

[29] Id. at 137-38. The consent decree imposed upon AT&T certain minimal line-of-business restrictions that permitted the company to provide only telecommunications services. Id. at 138. Return to text.

[30] Id. at 137. Through the district court's ratification of the 1956 Consent Decree, AT&T agreed to engage in only common carrier communications services, and Western Electric agreed to manufacture equipment solely for use by AT&T. Id. at 138. Return to text.

[31] PUBLIC SERV. COMM'N, TELECOMMUNICATIONS POLICY: YESTERDAY AND TODAY 5-9 (1994) (on file with the Florida Public Service Commission). Return to text.

[32] Id. The antitrust actions included the "Above 890" decision of 1959, Bendix Aviation Corp. v. FCC, 272 F.2d 533 (D.C. Cir. 1959); the Carterphone decision of 1968, Carterphone v. American Tel. & Tel. Co., 13 F.C.C.2d 571 (1968); the Specialized Common Carrier decision of 1971, Establishment of Policies and Procedures for Consideration of Applications to Provide Specialized Common Carrier Servs., 24 F.C.C.2d 318 (1970); and the Execunet decision of 1975, M.C.I. Telecommunications Corp. v. F.C.C., 561 F.2d 365 (D.C. Cir. 1977), cert. denied, 434 U.S. 1040 (1978). PUBLIC SERV. COMM'N, supra note 31, at 7-9. Return to text.

[33] PUBLIC SERV. COMM'N, supra note 31, at 5-11. Return to text.

[34] American Tel. & Tel. Co., 552 F. Supp. at 139. Return to text.

[35] See id. at 131. Return to text.

[36] Id. at 139. Return to text.

[37] Id. The 22 BOCs were wholly-owned subsidiaries of AT&T that provided local telephone services throughout the United States. Id. at 139 n.19. By 1983, approximately 80 percent of the nation's telephone subscribers received local and long-distance services from AT&T and the BOCs. Marc W. Dunbar, Comment, Telecommunications Competition in Florida: A Look at House Bill 1531, 21 FLA. ST. U. L. REV. 663, 666-67 (1993). Return to text.

[38] American Tel. & Tel. Co., 552 F. Supp. at 139-40. The scope of the trial proceedings was enormous. Id. at 140. The case was initially divided into 82 segments. Id. The government presented over 250 witnesses and many thousands of pages of documents in its case-in-chief. Id. The trial record contained over 24,000 pages of transcripts. Id. Return to text.

[39] Id. at 140. Return to text.

[40] Id. at 225. Judge Greene retained jurisdiction over the matter to enforce and modify the MFJ and plan of reorganization. Id. at 231. The MFJ was reviewed triennially to allow the regional Bell operating companies to seek entry into other telecommunications markets. Daniel F. Spulber, Deregulating Telecommunications, 12 YALE J. ON REG. 25, 27 (1995). Return to text.

[41] American Tel. & Tel. Co., 552 F. Supp. at 222-32. Return to text.

[42] Id. at 223. Return to text.

[43] Id.; see also Friedrich, supra note 14, at 659. Return to text.

[44] American Tel. & Tel. Co., 552 F. Supp. at 223; see also Friedrich, supra note 14, at 659 (describing BOC networks as "natural monopolies" because of prohibitively high capital costs necessary for market entry and rapidly declining average costs of operating networks in long-term). AT&T provided its long-distance competitors with more inferior and costly connection to the BOCs than it saved for its subsidiaries. Spulber, supra note 40, at 29. This practice was known as "discriminatory access." Id. Return to text.

[45] See American Tel. & Tel. Co., 552 F. Supp. at 223. Return to text.

[46] Id. Return to text.

[47] Id. The MFJ mandated that divestiture of the BOCs from AT&T was to occur through the following steps:

The transfer from AT&T and its affiliates to the BOCs . . . of sufficient facilities, personnel, systems, and rights to technical information to permit the BOCs to perform, independently of AT&T, exchange telecommunications and exchange access functions . . . ;
The separation within the BOCs of all facilities, personnel and books of account between those relating to the exchange telecommunications or exchange access functions and those relating to other functions . . . provided that there shall be no joint ownership of facilities, but appropriate provision may be made for sharing, through leasing or otherwise, of multifunction facilities so long as the separated portion of each BOC is ensured control over the exchange telecommunications and exchange access functions; The termination of the License Contracts between AT&T and the BOCs . . . and the Standard Supply Contracts between Western Electric and the BOCs and other subsidiaries; and The transfer of ownership of the separated portions of the BOCs providing local exchange and exchange access services from AT&T by means of a spin-off of stock of the separated BOCs to the shareholders of AT&T, or by other disposition . . . . Id. at 226-27. Return to text.

[48] Id. at 223. The MFJ sanctioned the broad provision of computer and information services and equipment by AT&T with one exception: AT&T was precluded from participating in electronic publishing until Judge Greene determined the field was competitive and incapable of monopolization. Id. Judge Greene feared that allowing AT&T to participate in both the transmission of information by providing telephone services and the generation of information by providing electronic publishing services could lead to a news media monopoly. Id. "Such a development would strike at a principle which lies at the heart of the First Amendment: that the American people are entitled to a diversity of sources of information." Id. at 223. Return to text.

[49] Id. Return to text.

[50] Id. Return to text.

[51] BellSouth, the nation's largest RBOC upon enactment of the Telecommunications Act of 1996, provides local exchange services to Florida telephone subscribers through its subsidiary, Southern Bell. Southern Bell provides service within seven LATAs. Fla. H.R. Comm. on Com., CS for SB 1554 (1995) Staff Analysis 2 (final May 18, 1995) (on file with comm.) [hereinafter Fla. H.R. Staff Analysis]; Kanell, supra note 1, at F5 (describing size of BellSouth). Return to text.

[52] Spulber, supra note 40, at 27. Return to text.

[53] See United States v. Western Elec. Co., Inc., 569 F. Supp. 990, 1011, 1016, 1026-27, 1035, 1048-49 (D.D.C. 1983) (LATA Opinion). Return to text.

[54] See id. at 993-94; see also United States v. Western Elec. Co., Inc., 969 F.2d 1231, 1233 (D.C. Cir. 1992), cert. denied sub nom. Ameritech Corp. v. American Tel. & Tel. Co., 507 U.S. 951 (1993). Return to text.

[55] United States v. American Tel. & Tel. Co., 552 F. Supp. 131, 224 (D.D.C. 1982), aff'd sub nom. Maryland v. United States, 460 U.S. 1001 (1983). Return to text.

[56] Id. Return to text.

[57] Id.; Dunbar, supra note 37, at 668. Return to text.

[58] See generally In re Regulatory and Policy Problems Presented by the Interdependence of Computer and Communication Services and Facilities, 28 F.C.C.2d 267 (1971), aff'd in part and rev'd in part sub nom. GTE Serv. Corp. v. FCC, 474 F.2d 724 (2d Cir. 1973) (First Computer Inquiry); In re Amendment of Sections 64.702 of the Commission's Rules and Regulations (Second Computer Inquiry), 77 F.C.C.2d 384 (1980); In re Amendment of Sections 64.702 of the Commission's Rules and Regulations (Third Computer Inquiry), 104 F.C.C.2d 958 (1986) (Third Computer Inquiry I); In re Amendment of Sections 64.702 of the Commission's Rules and Regulations (Third Computer Inquiry), 2 F.C.C.R. 3072 (1987) (Third Computer Inquiry II). Return to text.

[59] See Fla. S. Comm. on Com., CS for SB 1554 (1995) Staff Analysis 1 (Apr. 6, 1995) (on file with comm.) [hereinafter Florida Senate Staff Analysis]. Return to text.

[60] PUBLIC SERV. COMM'N, supra note 31, at 9. Return to text.

[61] 28 F.C.C.2d 267 (1971), aff'd in part and rev'd in part sub nom. GTE Serv. Corp. v. FCC, 474 F.2d 724 (2d Cir. 1973). Return to text.

[62] Id. at 305. Return to text.

[63] Id. Return to text.

[64] 77 F.C.C.2d 384 (1980). Return to text.

[65] 104 F.C.C.2d 958 (1986); 2 F.C.C.R. 3072 (1987). Return to text.

[66] See Second Computer Inquiry, 77 F.C.C.2d at 387; Third Computer Inquiry I, 104 F.C.C.2d at 968; Third Computer Inquiry II, 2 F.C.C.R. at 3074. Second Computer Inquiry was decided before the MFJ, while Third Computer Inquiry I and Third Computer Inquiry II were decided after the MFJ. Return to text.

[67] See Second Computer Inquiry, 77 F.C.C.2d at 387; Third Computer Inquiry I, 104 F.C.C.2d at 968; Third Computer Inquiry II, 2 F.C.C.R. at 3074. Return to text.

[68] See Dunbar, supra note 37, at 670. Return to text.

[69] See id. at 671; PUBLIC SERV. COMM'N, supra note 31, at 9-10. Return to text.

[70] See United States v. American Tel. & Tel. Co., 552 F. Supp. 131, 138 n.17 (D.D.C. 1982), aff'd sub nom. Maryland v. United States, 460 U.S. 1001 (1983). Return to text.

[71] See Second Computer Inquiry, 77 F.C.C.2d at 420. Return to text.

[72] 1914 Fla. Laws ch. 2, §§ 2829-2829z (codified as amended in scattered sections of FLA. STAT. ch. 364); see also Florida Interexchange Carriers Ass'n v. Beard, 624 So. 2d 248, 251 (Fla. 1993). Return to text.

[73] See 1995 Fla. Laws ch. 95-403. For a discussion of the 1995 revision of chapter 364, Florida Statutes, see infra part V. Return to text.

[74] See FLA. STAT. ch. 364.01 (1993) (amended 1995). Return to text.

[75] Florida H.R. Staff Analysis, supra note 51, at 2. Return to text.

[76] Id. Incumbent LECs come in "large" and "small" varieties. The four large incumbent LECs are Southern Bell, GTE, Sprint United, and Sprint Centel. The nine small incumbent LECs are ALLTEL, Florala, Gulf, Indiantown, Northeast, Quincy, St. Joseph, Southland, and Vista-United. Id. at 7. Return to text.

[77] FLA. STAT. § 364.02(7) (1993) (amended 1995). Return to text.

[78] Id. § 364.339 (amended 1995). STS providers were limited to offering services to commercial tenants located within a single building. Id. Return to text.

[79] Id. § 364.337(3) (amended 1995). AAVs were restricted to providing private line service between a facility and its other buildings at separate locations. Id. These private lines are colloquially known as "tie lines." Return to text.

[80] Id. § 364.3375 (amended 1995). Return to text.

[81] See id. §§ 364.03-.3381 (amended 1995). Return to text.

[82] See Fla. H.R. Staff Analysis, supra note 51, at 2, 3; Florida Senate Staff Analysis, supra note 59, at 2, 3; see also Charles W. Murphy, Public Service Commission Practice, 69 FLA. B.J. 30, 31 (1995) (describing required and recommended method of practice for utility appearing before PSC); United Tel. Co. of Fla. v. Mayo, 345 So. 2d 648, 653 (Fla. 1977) (holding that company's rate of return cannot be so low as to confiscate its property, nor so high as to be unreasonable). Return to text.

[83] FLA. STAT. § 364.05 (1995). Return to text.

[84] FLA. STAT. § 364.035 (1993) (amended 1995). Return to text.

[85] See 1990 Fla. Laws ch. 90-244. Return to text.

[86] FLA. STAT. § 364.01(3)(c)-(e) (1993) (amended 1995). Return to text.

[87] Id. § 364.01 (amended 1995). Return to text.

[88] See Dunbar, supra note 37, at 682-91 (criticizing PSC's inaction as contributing to continued monopolization of local exchange services). Return to text.

[89] See discussion supra part II.A.2.b. Return to text.

[90] See United States v. American Tel. & Tel. Co., 552 F. Supp. 131, 222-24 (D.D.C. 1982), aff'd sub nom. Maryland v. United States, 460 U.S. 1001 (1983). Return to text.

[91] Joseph A. Pantoja, Desirable Economic Cooperation Among High-Technology Industries: A Look at Telephone and Cable, 1994 COLUM. BUS. L. REV. 617, 651 (1994). Return to text.

[92] Antitrust Issues in Telecommunications Legislation: Hearings Before the Subcomm. on Antitrust, Business Rights and Competition of the Senate Comm. on the Judiciary, 104th Cong., 2d Sess. (1995) (statement of Howard H. Baker, U.S. Senator from Tennessee) [hereinafter Baker Statement]. Return to text.

[93] Michael Schrage, Let the Baby Bells Ring in Some Long-Distance Rivalry, WASH. POST, Aug. 20, 1993, at B3 (describing decrease in long-distance basic rates); Dennis & Epstein, supra note 17, at *44 (describing expensive advancements to telecommunications infrastructure). Return to text.

[94] Pantoja, supra note 91, at 651; Schrage, supra note 90, at B3. Senator Howard H. Baker said the decrease in long-distance rates following divestiture was almost 70 percent. Baker Statement, supra note 92. Return to text.

[95] See Schrage, supra note 93, at B3 (noting that "[p]eople are making more calls for less money"). Return to text.

[96] Gautam Naik, Costs of Control: Long-Distance Rates, After Falling for Many Years, Have Started Heading Higher, WALL ST. J., Mar. 20, 1995, at R10. AT&T's share of the long-distance market is approximately 60 percent, MCI's is about 20 percent, and Sprint's is roughly 10 percent. Id. Return to text.

[97] See Baker Statement, supra note 92. Return to text.

[98] Dennis & Epstein, supra note 17, at *44. Return to text.

[99] Id. Return to text.

[100] See KEVIN MANEY, MEGAMEDIA SHAKEOUT 108-09 (1995). Return to text.

[101] Basic rates for long-distance service decreased from 1983 to 1991, while AT&T began building fiber-optic networks in 1984. See Dennis & Epstein, supra note 17, at *44-45 (discussing years of construction for advanced networks); Naik, supra note 96, at R10 (discussing years that long-distance rates began to increase). Return to text.

[102] See Baker Statement, supra note 92. Return to text.

[103] See id. Return to text.

[104] See discussion supra part II.A.2.b. Return to text.

[105] United States v. American Tel. & Tel. Co., 552 F. Supp. 131, 224 (D.D.C. 1982), aff'd sub nom. Maryland v. United States, 460 U.S. 1001 (1983). Return to text.

[106] Id. Return to text.

[107] Id. at 194. Return to text.

[108] Id. at 231. Return to text.

[109] Spulber, supra note 40, at 27. Return to text.

[110] See American Tel. & Tel. Co., 552 F. Supp. at 224-25. Return to text.

[111] United States v. Western Elec. Co., 673 F. Supp. 525, 587 (D.D.C. 1987). Return to text.

[112] United States v. Western Elec. Co., 714 F. Supp. 1, 22 (D.D.C. 1988). Return to text.

[113] United States v. Western Elec. Co., 993 F.2d 1572, 1578 (D.C. Cir. 1993); see Spulber, supra note 40, at 227. Return to text.

[114] See Spulber, supra note 40, at 227. Return to text.

[115] See, e.g., id.; Friedrich, supra note 14, at 684-88; William J. Baumol & J. Gregory Sidak, The Pricing of Inputs Sold to Competitors, 11 YALE J. ON REG. 171 (1994). Return to text.

[116] See The Telecommunications Agreement, 104-8 CONG. Q. HOUSE ACTION REP. 3 (1996). Return to text.

[117] See United States v. American Tel. & Tel. Co., 552 F. Supp. 131, 223 (D.D.C. 1982), aff'd sub nom. Maryland v. United States, 460 U.S. 1001 (1983). Return to text.

[118] Id. Return to text.

[119] See id. at 131. Return to text.

[120] Spulber, supra note 40, at 34-38. Return to text.

[121] Id. at 34-35. Return to text.

[122] See infra note 122 and accompanying text . Return to text.

[123] Spulber, supra note 40, at 35. Return to text.

[124] Id. at 35. Return to text.

[125] Id. The needs of modern consumers cannot be satisfied through a single best telecommunications technology, but instead require an array of technologies. Id. Thus, the competing telecommunications companies of the future will provide a variety of telecommunications services, as opposed to the traditional and rudimentary services of telephone, television, and data. Id. at 35-36. Return to text.

[126] Id. at 35. Return to text.

[127] Id. at 39; Dunbar, supra note 37, at 675-77. Return to text.

[128] Spulber, supra note 40, at 38. Cable television companies were originally humble operations that were limited to providing community antenna television services (CATV). Eric T. Werner, Something's Gotta Give: Antitrust Consequences of Telephone Companies' Entry into Cable Television, 43 FED. COMM. L.J. 215, 217-18 (1991). In those early years, the FCC feared that predatory telephone companies had the ability to monopolize the emerging industry. Id. Accordingly, the FCC passed rules in the 1970s restricting telephone companies from entering the market. Id. Congress later codified most of the FCC rules as part of the Cable Communications Policy Act of 1984, Pub. L. No. 98-549, 98 Stat. 2779 (codified in scattered sections of 47 U.S.C.). Return to text.

[129] Spulber, supra note 40, at 39. A coaxial cable modem hooked to a personal computer can transmit data at a rate up to 1,000 times faster than a phone line. MANEY, supra note 100, at 109. Return to text.

[130] Pantoja, supra note 91, at 650-57; Friedrich, supra note 14, at 674. Return to text.

[131] MANEY, supra note 100, at 108. Return to text.

[132] See Alexander C. Larson & Douglas R. Mudd, Collocation and Telecommunications Policy: A Fostering of Competition on the Merits?, 28 CAL. W. L. REV. 263, 265 n.5 (1993); Friedrich, supra note 14, at 675; Spulber, supra note 40, at 44; Dennis & Epstein, supra note 17, at *46. Return to text.

[133] See Larson & Mudd, supra note 132; Friedrich, supra note 14, at 675; Spulber, supra note 40, at 44; Dennis & Epstein, supra note 17, at *46. Return to text.

[134] Thus, the goal of the CAP is known as "cream skimming." Larson & Mudd, supra note 132, at 287-91. Return to text.

[135] See Friedrich, supra note 14, at 667-78; Spulber, supra note 40, at 40-41. Return to text.

[136] See Friedrich, supra note 14, at 673; Dunbar, supra note 37, at 677 n.89. Return to text.

[137] MANEY, supra note 100, at 53. "Portability" refers to the capability of consumers to access telecommunications services anywhere and at all times, free from a wire-based system. Id. The most fantastic example of a portable wireless telephone system is Motorola's proposed Iridium satellite phone system, which will "allow calls to be made from absolutely anywhere in the world, even in the middle of the Sahara Desert." Id. This system will consist of 66 low-orbit satellites that possess the combined ability to convey a signal to any point on the globe. Id. Special antennae constructed around the earth will receive the satellites' signals. Id. Thus, to complete the Iridium venture, Motorola will need the consent and cooperation of the governments of hundreds of countries. Needless to say, "Iridium is an unbelievably huge undertaking." Id. at 294. Return to text.

[138] Cellular networks consist of a series of interlocking cells, each of which contains one radio transceiver for telecommunications transmissions. Friedrich, supra note 14, at 662. Central switching services link these transceivers to wired telephone systems. Id. at 663 Thus, cellular technology is an extension of wire-based technology. Id. at 663-64. Return to text.

[139] PCSs employ microcellular technology, which is less expensive than cellular technology but also less powerful. Id. at 671. PCS companies shoulder large capital costs to install their networks. Id. However, once a PCS network is in place, these capital costs rapidly decrease as the marginal costs of adding subscribers to a PCS network are significantly lower than the costs of adding subscribers to the traditional local exchange network. Id. at 672-73. Return to text.

[140] See Richard E. Wiley, The Telecommunications Act of 1995?, in PRACTICING LAW INST., COMMUNICATIONS LAW: 1995 (Patents, Copyrights, Trademarks, & Literary Property Course Handbook Series No. G4-3945) (Nov. 1995), available in WESTLAW, PLI Database, at *50-53. Return to text.

[141] Friedrich, supra note 14, at 662-63. Return to text.

[142] Id. Return to text.

[143] Id. at 671. Return to text.

[144] Id. Return to text.

[145] See, e.g., Gail Garfield Schwartz & Jeffrey H. Hoagg, Virtual Divestiture: Structural Reform of an RHC, 44 FED. COMM. L.J. 285, 294 (1992); Spulber, supra note 40, at 38-40; Friedrich, supra note 14, at 669-74. Return to text.

[146] Spulber, supra note 40, at 40. Return to text.

[147] Friedrich, supra note 14, at 674. Return to text.

[148] See 47 U.S.C. §§ 151-613 (1994); see also WOKO, Inc. v. FCC, 109 F.2d 665, 671 (D.C. Cir. 1939) (holding that the policy of the Communications Act of 1934 is the public's protection). Return to text.

[149] Wiley, supra note 140, at *12. Return to text.

[150] MCI Comm. Corp. v. American Tel. and Tel. Co., 462 F. Supp. 1072, 1087 (D. Ill. 1978). Return to text.

[151] See H.R. CONF. REP. NO. 458, 104th Cong., 2d Sess. 130-34 (1996). Return to text.

[152] Dennis & Epstein, supra note 17, at *59. These subsidies commonly came in two forms. First, the federal government allowed the LECs to charge fees the long-distance companies seeking access to the local exchange network. Id. at *60. Second, state governments had the ability to allocate a portion of the costs of maintaining the local exchange network to the long-distance companies operating within the state. Id. at *60-61. Return to text.

[153] Wiley, supra note 140, at *12; Dennis & Epstein, supra note 17, at *62. Return to text.

[154] Wiley, supra note 140, at *13; FLA. S. COMM. ON COM. & ECON. OPP., A REVIEW OF TELECOMMUNICATIONS TECHNOLOGY AND REGULATION, 14-15 (1994) (on file with comm.) [hereinafter TELECOMMUNICATIONS TECHNOLOGY AND REGULATION]. Return to text.

[155] TELECOMMUNICATIONS TECHNOLOGY AND REGULATION, supra note 154, at 14. Return to text.

[156] Id. at 15; Dennis & Epstein, supra note 17, at *64-65. Return to text.

[157] Dennis & Epstein, supra note 17, at *65. Return to text.

[158] For example, should public policy dictate that LECs provide all consumers the telecommunications technology necessary for the transmission of video, data, and interactive services? Wiley, supra note 140, at *12. Return to text.

[159] Id. at *13 (stating that congressional proposals divided the task between federal and state "joint boards"); TELECOMMUNICATIONS TECHNOLOGY AND REGULATION, supra note 154, at 15 (recommending that the task be performed by state commissions). Return to text.

[160] TELECOMMUNICATIONS TECHNOLOGY AND REGULATION, supra note 154, at 15. Return to text.

[161] Id. Return to text.

[162] Id. Return to text.

[163] President Bill Clinton, Remarks at the Signing Ceremony for the Telecommunications Act Conference Report of 1996 (Feb. 9, 1996). The signing ceremony was appropriately located at the Library of Congress. Id. Return to text.

[164] Pub. L. No. 104-104, 110 Stat. 56 (1996) (to be codified in scattered sections of 47 U.S.C.). The Act is the product of a conference agreement between the Senate and the House of Representatives. The Senate passed its bill (S. 652) in June 1995, by a vote of 81 to 18. Edmund L. Andrews, Senate Approves Far-Reaching Bill on Media Industry, N.Y. TIMES, June 15, 1995, at A1. The House passed its version of the measure (H.R. 1555) in August 1995, by a vote of 305 to 117. Mark Landler, House Passes Bill Curtailing Rules on Phones and TV, N.Y. TIMES, Aug. 4, 1995, at 1. President Clinton signed the resulting conference agreement into law on February 8, 1996. Edmund L. Andrews, Communications Bill Signed, And the Battles Begin Anew, N.Y. TIMES, Feb. 9, 1996, at A1. Return to text.

[165] See 142 CONG. REC. E204 (daily ed. Feb. 1, 1996) (statement of Rep. Forbes); 142 CONG. REC. S686, S686-87 (daily ed. Feb. 1, 1996) (statement of Sen. Pressler); 142 CONG. REC. S1172 (daily ed. Feb. 9, 1996) (statement of Sen. Lott). Return to text.

[166] See 47 U.S.C.A. §§ 251-61 (West Supp. 1996). Return to text.

[167] Id. §§ 271-74. The line-of-business restrictions that bar the incumbent LECs from providing long-distance services and equipment manufacturing are continued until actual competition is present within the local exchange. Id. Return to text.

[168] Id. § 521-573. Return to text.

[169] Pub. L. No. 104-104, 110 Stat. 56, 110-112 (1996) (uncodified directive to FCC to amend their broadcasting regulations). Return to text.

[170] 47 U.S.C.A. §§ 223, 303. (West Supp. 1996). This Comment does not explore the Act's patent infringement upon the freedom of expression guaranteed by the First Amendment. See American Civil Liberties Union v. Reno, 929 F. Supp. 824, 883 (E.D. Pa. 1996) (preliminarily enjoining Department of Justice from enforcing sections 223(a)(1)(B), 223(a)(2), and 223(d)(1)-(2) of Act). Return to text.

[171] Pub. L. No. 104-104, 110 Stat. 56, 143-144 (1996) (uncodified elimination of various consent devices). Return to text.

[172] 47 U.S.C.A. § 253 (West Supp. 1996). Return to text.

[173] Id. § 251. Return to text.

[174] Id. § 253. Return to text.

[175] Id. § 251(a)(1). Essentially, "interconnect" refers to the interface of telecommunications systems. Return to text.

[176] Id. §§ 251(a)(2), 256(a). Return to text.

[177] Id. § 256(b). Return to text.

[178] Id. §§ 251(b)-(c). Return to text.

[179] Id. § 251(b)(2). Return to text.

[180] Id. § 153(30). Return to text.

[181] Id. §§ 251(b)(3), 153(15). Return to text.

[182] Id. § 251(b)(1). Return to text.

[183] See id. § 251(c)(4) (explaining analogous resale requirement placed specifically upon incumbent LECs). For example, an alternative LEC can purchase switching services from the incumbent LEC and resell those services to its customers. This facilitates competition by enabling the alternative LEC to provide switched-access services such as call-waiting without having to purchase multi-million dollar switching equipment. Return to text.

[184] Id. § 251(b)(4). Return to text.

[185] Id. § 251(b)(5). Return to text.

[186] See Wiley, supra note 140, at *10-12. Return to text.

[187] 47 U.S.C.A. § 251(g) (West Supp. 1996). Return to text.

[188] Id. § 251(c)(6). Return to text.

[189] Id. Return to text.

[190] Id. § 251(c)(3). Return to text.

[191] See discussion supra part III.D. Return to text.

[192] Id. Return to text.

[193] 47 U.S.C.A. § 254 (West Supp. 1996). Return to text.

[194] Id. § 254(c)(1). FCC Commissioner Andrew Barrett suggested that the industry costs associated with such an expansive definition of universal service could be onerous. FCC Launches Universal Service Joint Board, Rulemaking Proceeding, COMM. TODAY, Mar. 11, 1996, available in WESTLAW, COMTD Database, at *3. Return to text.

[195] 47 U.S.C.A. § 254(c)(1)(A) (West Supp. 1996). Return to text.

[196] Id. § 254(c)(1)(B). Return to text.

[197] Id. § 254(c)(1)(C). Return to text.

[198] Id. § 254(c)(1)(D). Return to text.

[199] Id. § 254(a). Return to text.

[200] Id. Return to text.

[201] Id. § 254(b). Return to text.

[202] Id. § 254(b)(1). Return to text.

[203] Id. § 254(b)(2)-(4). Return to text.

[204] Id. § 254(b)(7). Return to text.

[205] Hundt Seeks State Input on Universal Service Notice, WASH. TELECOM NEWS, Mar. 4, 1996, available in WESTLAW, ALLNEWS Database, at *2. Return to text.

[206] H.R. CONF. REP. NO. 458, 104th Cong., 2d Sess. 198 (1996) (citing Plaut v. Spendthrift Farm, Inc., 115 S. Ct. 1447 (1995)). Return to text.

[207] Id. (citing Robertson v. Seattle Audubon Soc'y, 503 U.S. 429 (1992)). Return to text.

[208] Id. Return to text.

[209] Id. at 91. Return to text.

[210] See DOJ and Bells Agree MFJ is Moot; Fight Over Documents Begins, COMM. TODAY, Mar. 1, 1996, available in WESTLAW, COMTD Database, at *1. Judge Greene reportedly supports the federal Act and believes it will successfully bring competition to local exchange and long-distance markets. However, he fears that the recent avalanche of mergers and acquisitions in the telecommunications industry could result in a monopolistic concentration of ownership. Ma Bell Judge Backs Telecommunications Bill, NEWSDAY, Feb. 18, 1996, at 5. Return to text.

[211] Congress did not intend for the Act to preempt implicitly any federal, state, or local regulations. H.R. CONF. REP. NO. 458, 104th Cong., 2d Sess. 92 (1996). Return to text.

[212] See The Telecommunications Agreement, 104-8 CONG. Q. HOUSE ACTION REP. 8 (1996). Return to text.

[213] 47 U.S.C.A. § 253(a) (West Supp. 1996). Return to text.

[214] See id. § 253(b); see also id. § 254(f) (describing the ability of states to promulgate universal service regulations); id. § 253(b) (describing the ability of states to impose regulations concerning quality of service and consumer protection). Return to text.

[215] Id. § 253(c). Return to text.

[216] Id. § 253(d). Return to text.

[217] Id. Return to text.

[218] Preemption Concerns Remain, But States View FCC Outreach as Sincere, COMM. TODAY, Feb. 29, 1996, available in WESTLAW, COMTD Database, at *1. Return to text.

[219] Id. Return to text.

[220] See discussion supra part III. Return to text.

[221] 1995 Fla. Laws ch. 95-403. This bill easily passed each house of the Florida Legislature. Vicki McCash, New Law Opens the Lines to Local Phone Competitors, FT. LAUD. SUN-SENT., June 18, 1995, at 11A. Governor Chiles opposed the bill, fearing that it did not contain enough consumer protection measures. Id.The Governor allowed the bill to become law without his signature, however, because he believed the Legislature would override his veto. Id. Return to text.

[222] Fla. H.R. Staff Analysis, supra note 51, at 2. Upon enactment, Florida became one of only nine states to open its local exchange market to competition. McCash, supra note 221, at 11A. Return to text.

[223] FLA. STAT. § 364.337 (1995) (alternative LEC certification section); id. § 364.051 (1995) (price regulation section). Return to text.

[224] See discussion supra part IV.D. Return to text.

[225] FLA. STAT. § 364.337(1) (1995). Return to text.

[226] 47 U.S.C.A. § 253(a) (West Supp. 1996). Return to text.

[227] See discussion supra part IV.D. Return to text.

[228] See id. Return to text.

[229] 1995 Fla. Laws ch. 95-403, § 37, at 3350. Return to text.

[230] See discussion supra part IV.D. Return to text.

[231] See discussion supra part IV.B. Return to text.

[232] FLA. STAT. § 364.025 (1995). Return to text.

[233] 47 U.S.C.A. § 253(b) (West Supp. 1996). Return to text.

[234] FLA. STAT. § 364.025(1) (1995). Return to text.

[235] Id. § 364.02(2). Return to text.

[236] Id. § 364.025(1). Return to text.

[237] Id. § 364.025(2). Return to text.

[238] Id. § 364.025(4). Return to text.

[239] Fla. H.R. Staff Analysis, supra note 51, at 10. Return to text.

[240] FLA. STAT. § 364.025(2) (1995). Return to text.

[241] Id. § 364.025(4)(a). Return to text.

[242] Id. § 364.025(4)(d). Return to text.

[243] Opponents to the Florida Act include Attorney General Robert A. Butterworth, the Public Service Commission, the Florida Consumer Action Network, the American Association of Retired Persons, and the Consumer Federation of America. See John Kennedy, Phone Deregulation Rife with Uncertainty, ORLANDO SENT., Nov. 20, 1995, at 10 [hereinafter Kennedy, Phone Deregulation]; John Kennedy, Groups Oppose Phone Measure, ORLANDO SENT., May 19, 1995, at C3 [hereinafter Kennedy, Groups Oppose Phone Measure]; Rene Stutzmand & Michael Griffin, Communications Bill Gets a Pass—The Law is Expected to Give Floridians a Choice of Local Phone Service Providers, Better Service and Lower Bills, ORLANDO SENT., June 17, 1995, at A10. Surprisingly, AT&T, soon to be an alternative LEC, also opposed the Florida Act. McCash, supra note 221, at 11A. AT&T believed the Act did not fully open the local exchange market to competition. Id. Their concern now appears to be unwarranted because the preemptive federal Act goes further in seeking a fully competitive market. See id. Return to text.

[244] See Kennedy, Groups Oppose Phone Measure, supra note 243, at 11A. Return to text.

[245] McCash, supra note 221, at 11A. Return to text.

[246] FLA. STAT. § 364.051(2) (1995). Return to text.

[247] See Fla. H.R. Staff Analysis, supra note 51, at 9. Return to text.

[248] FLA. STAT. § 364.051(2)(a) (1995). Return to text.

[249] Id. § 364.051(2)(b). Return to text.

[250] Id. § 364.051(2)(a). Return to text.

[251] See Fla. H.R. Staff Analysis, supra note 51, at 9. Return to text.

[252] FLA. STAT. § 364.051(3)(b) (1995). Return to text.

[253] Id. § 364.051(3)(a). Return to text.

[254] Id. § 364.051(3)(c). Return to text.

[255] Id. § 364.051(5)(c). Return to text.

[256] See discussion supra part III.D. Return to text.

[257] 1995 Fla. Laws ch. 95-403, § 32, at 3348. Return to text.

[258] Id. Return to text.

[259] Id. Return to text.

[260] FLA. STAT. § 364.10(2) (1995). Return to text.

[261] Id. § 364.24(2). Return to text.

[262] Id. Return to text.

[263] Id. § 364.386(1)(d). Return to text.

[264] E.g., President Bill Clinton, Remarks at the Signing Ceremony for the Telecommunications Act of 1996 (Feb. 9, 1996); United States Representative Thomas J. Bliley, Jr., Remarks on the Occasion of the President's Signing of the Telecommunications Act of 1996 (Feb. 9, 1996); 142 CONG. REC. H1145-06, H1146 (daily ed. Feb. 1, 1996) (statement of Rep. Linder); 142 CONG. REC. S1172-01 (daily ed. Feb. 9, 1996) (statement of Sen. Lott). Return to text.

[265] E.g., Robert W. McChesney, Telecommunications Law: Corrupt, Disastrous, CAP. TIMES, Feb. 12, 1996, at 1C; Eli M. Noam, Congress Sweeps it All Under One Big Top, L.A. TIMES, Feb. 15, 1996, at 9. Return to text.

[266] See, e.g., Kanell, supra note 1, at F5; McChesney, supra note 265, at 1C; Noam, supra note 265, at 9; Robert Reno, Expect Some Potholes on the Road to Telecommunications Reform, MINN. STAR- TRIB., Feb. 19, 1996, at 12A; Edwin Yoder, Feeling Wary About Telecommu nications Act; GREENSBORO NEWS & REC., Feb. 7, 1996, at A9. Return to text.

[267] See discussion infra part VI.B. Return to text.

[268] Neal Weinberg, Telco Managers Dial for Reform Dollars, COMPUTERWORLD, Feb. 5, 1996, at 1A; Katia Hetter, Dialing for Dollars Consumers Benefits, U.S. NEWS & WORLD REP., Feb. 12, 1996, at 51. The first consumers to experience these benefits will be corporations and individuals residing in areas of high subscriber concentration. Luther Turmelle, Law Gives AT&T Boost in Local Phone Market, COURIER- NEWS, Feb. 9, 1996, at A1 (describing which customers will be among the first to benefit from competition); Shannon Henry, Telecom Supercarriers Set to Battle for Your Business, WASH. TECH., Mar. 7, 1996, available in WESTLAW, WASHTCH Database, at *4 (predicting that businesses will benefit the most from competition). Return to text.

[269] Weinberg, supra note 268, at 1A (quoting James Georgakis, assistant vice president of NatWest Bank); Hetter, supra note 268, at 51; Turmelle, supra note 268, at A1. Return to text.

[270] See FLA. STAT. § 364.051(2) (1995). Return to text.

[271] Henry, supra note 268, at *1. Return to text.

[272] Hetter, supra note 268, at 51. Return to text.

[273] Henry, supra note 268, at *2. Return to text.

[274] Id. Return to text.

[275] Id.; Hetter, supra note 268, at 51. Return to text.

[276] Henry, supra note 268, at *3. Return to text.

[277] AT&T Tries for Local Service, ARIZ. REP., Mar. 5, 1996, at C1. AT&T plans to offer local telephone services in some locations by as early as the summer of 1996. Id. Return to text.

[278] Alan Johnson, Ameritech Hits Ruling by PUCO, COLUMBUS DISPATCH, Mar. 2, 1996, at 1A. Return to text.

[279] Christopher Stern, Cable Has Uphill Road to Telco Entry, BROADCASTING & CABLE, Feb. 19, 1996, at 58. Return to text.

[280] BellSouth Files to Offer Local Service in Orlando, COMM. TODAY, March 5, 1996, available in WESTLAW, COMTD Database, at *1. Return to text.

[281] See Noam, supra note 265, at 9. Return to text.

[282] See Stern, supra note 279, at 58. Of course, an alternative LEC has the option to construct its own highly expensive local infrastructure to provide local telephone services. Return to text.

[283] Id. (discussing difficult negotiation process cable companies will have with incumbent LECs). One jaded cable official predicted the incumbent LECs will only open their markets to competition after "[n]egotiation, regulation, [and] litigation." Id. Return to text.

[284] 47 U.S.C.A. § 251(c)(1) (West Supp. 1996). Return to text.

[285] Id. Return to text.

[286] See Stern, supra note 279, at 58. Return to text.

[287] See 47 U.S.C.A. § 271 (West Supp. 1996). Return to text.

[288] A.T. KEARNEY, AN ASSESSMENT OF THE TELECOMMUNICATIONS ACT OF 1996 AND ITS IMPACT ON COMPETITION AND THE CONVERGING COMMUNICATIONS, INFORMATION, AND ENTERTAINMENT INDUSTRIES 2 (1996) (predicting the Telecommunications Act of 1996 will result in "$100 billion plus 'convergence companies' "); Henry, supra note 268, at *2; Kanell, supra note 1, at F5; McChesney, supra note 265, at 1C. Return to text.

[289] See Henry, supra note 268, at *2. Return to text.

[290] Id. Return to text.

[291] US West Pursues Cable Strategy with $10.8 Billion Continental Cablevision, ELECTRONIC MARKETPLACE REP., Mar. 5, 1996, available in WESTLAW, ELMKTPR Database, at *1; Henry, supra note 268, at *5. Another huge consolidation in the industry occurred when SBC Communications Inc. purchased Pacific Telesis Group for approximately $16 billion. SBC and PacTel Merge to Create Second Largest Telecom Company, COMM. TODAY, Apr. 2, 1996, avail able in WESTLAW, COMTD Database, at *1-2. Upon the acquisition, SBC Communications became the second largest telecommunications company in the world, behind AT&T. Id. Other recent telecommunications consolidations include the Walt Disney Corporation's acquisition of Capital Cities/ABC and the Westinghouse Electric Corporation's acquisition of CBS Inc. Telecom Mergers Feared, TULSA WORLD, Sept. 14, 1995, at B6. Return to text.

[292] Henry, supra note 268, at *5. Return to text.

[293] See Reno, supra note 266, at 12A; Kanell, supra note 1, at F5; McChesney, supra note 263, at 1C. Return to text.

[294] See Reno, supra note 266, at 12A; Kanell, supra note 1, at F5; McChesney, supra note 263, at 1C. Return to text.

[295] See Reno, supra note 266, at 12A. Return to text.

[296] Id. Return to text.

[297] See Naik, supra note 96, at R10. Return to text.

[298] See Reno, supra note 266, at 12A (observing that Congress and the FCC must carefully mind progress of telecommunications deregulation). Return to text.

[299] 142 CONG. REC. E204-02 (daily ed. Feb. 23, 1996) (statement of Rep. Forbes). Return to text.

[300] MANEY, supra note 100, at 348-49; Henry, supra note 265, at *4. Return to text.

[301] See MANEY, supra note 100, at 348 (describing Nextel Communications' association with MCI as a design to attract consumers). Return to text.

[302] Id. at 348. Return to text.

[303] Kanell, supra note 1, at F5 (predicting that the companies that will thrive in the local exchange market are those that currently have wires in subscribers' homes and businesses). Return to text.

[304] Id. Return to text.

[305] See Pantoja, supra note 91, at 660. Return to text.

[306] Turmelle, supra note 268, at A1. Return to text.

[307] MANEY, supra note 100, at 186. Return to text.

[308] Naik, supra note 96, at R10. Return to text.

[309] MANEY, supra note 100, at 186. Return to text.

[310] Id. Return to text.

[311] Id. Return to text.

[312] Id. Return to text.

[313] AT&T Tries for Local Service, supra note 277, at C1. Return to text.

[314] See discussion supra part VI.B. Return to text.

[315] MANEY, supra note 100, at 186. Return to text.

[316] "[W]hen you have 100 percent of the local dial-tone (business) in the market, there's only one way to go, and that's down." Rene Stutzman, Phone-Service Providers Plan to Answer Call for Competition; Change Expected to Expand Industry by Adding Jobs, ORLANDO SENT., Jan. 8, 1996, at 29 (quoting Sprint/United vice president of finance Rick McRae). Return to text.

[317] Stern, supra note 279, at 58. Return to text.

[318] MANEY, supra note 100, at 66. Return to text.

[319] Pantoja, supra note 91, at 660. Return to text.

[320] MANEY, supra note 100, at 65-66. Return to text.

[321] Pantoja, supra note 91, at 660. Return to text.

[322] MANEY, supra note 100, at 112. The major telephone companies do not consider cable companies a threat in the competition for local exchange services. Speaking before a cable television conference, one commentator noted that "cable should remember that 'telephone companies don't look at cable companies as equals. . . . Don't even question [the telephone companies'] manhood.' " Marcia H. Pounds, Cable's Tough Fight Starts at the Bells, FT. LAUD. SUN- SENT., Mar. 15, 1996, at 1D. Return to text.

[323] Pantoja, supra note 91, at 662. Return to text.

[324] Id. at 661. Return to text.

[325] See discussion supra part V.C. Return to text.

[326] Pantoja, supra note 91, at 661. Return to text.