The economic impact of the telecommunications of competition and deregulation act of 1996

The Telecommunications Competition and Deregulation Act of 1996 is the first comprehensive rewrite of the Communications Act of 1934. It changes the ground rules for competition and regulation in almost all sectors of the communications industry. The sectors of the communications market which will be affected include: the local and long distance telephone market; the cable television market; the broadcasting market; and the equipment manufacturing market. The main purpose of the Act is to increase competition in all telecommunications markets and to provide an orderly transition from regulated markets to competitive and deregulated telecommunications markets. The purpose of this project is to analyze the economic impact of the Act. The first section includes a summary of the Act. This summary shows the importance of the Act and the breadth of its scope. The second section focuses on the economic effects of the Act. This section focuses on the effects competition will have on a formerly regulated market. The different types of competition that can be expected following deregulation are analyzed. These include oligopolistic and monopolistic competition. Competition within the cable TV industry, the telephone industry, and the broadcasting industry are analyzed. A broad analysis of the competitive effects at three levels is also given. The three levels analyzed are the firm, the industry and the economy. This paper concludes the Act will almost certainly increase competition in the telecommunications industry. It is likely, however, that the competitive impact of the Act will be smaller and take longer to materialize than initially expected. There are two kinds of competition likely to emerge within the telecommunications industry. They are oligopolistic and monopolistic competition. The recent wave of mergers in the telecommunications industry is evidence that a few very large players might dominate the entire industry. If competition is realized within the telecommunications industry, then the economy should definitely benefit. If competition is not realized, then the economy will be hurt.