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How Did The Telecommunications Industry Become So Complicated?

By July 6, 2018No Comments

In 1984, following the historic break-up of AT&T as a monopoly providing most of the local and long distance telephone services throughout the United States, long distance theoretically became a competitive industry. In 1996, Congress passed the Telecommunications Act to open local exchange to competition through facilities-based entry, sale of unbundled network elements and resale.

Since 1984, the FCC has issued hundreds of rulings, and implemented hundreds of regulations, to facilitate market entry for competitive newcomers trying to carve out a share of business from the incumbent carriers. The FCC set out to change the telecommunications business through a seemingly simple concept – interconnection. New technology was born, new opportunities arose, and new nomenclature evolved – CLEC, ILEC, RLEC, CABs billing, least cost routing, portability, access stimulation, and LEC billing.

In addition to the dramatic regulatory changes, the telecommunications industry witnessed equally dramatic technological changes in the past 30 years with the development of cellular technology, the explosion of the internet, the demand for data services and ever increasing bandwidth, and the provision of voice calling through the internet (VoIP). We have seen the conflation of traditionally separate telephone companies and cable television companies through the bundled offering of telephone, cable television and internet/data on ever more sophisticated broadband networks. The industry saw new income opportunities arise, some of which seem quaint and obsolete now – such as pay phones, collect calling services, and pre-paid calling cards. Entrepreneurs have come and gone with long distance companies, competitive local exchange carriers, broadband network providers, inmate calling services, conference bridges and billing services.

The FCC and Congress have remained busy. They are trying to shift a highly regulated industry toward deregulation, allowing market forces to create competition to formulate pricing. Regulatory hurdles remain formidable, driven by carrier disputes and customer complaints. New compliance requirements pop up periodically, sometimes with little warning but at great consequence for non-compliance. We have witnessed epic legal battles involving interconnection issues and disputes over terminating access charges and allegations of “traffic pumping.”

We saw great diversity and competition initially, followed by a consolidation in both the long distance and local exchange markets. The industry is again dominated by a few national companies who have captured a significant market share of long distance and local customers.

So the Telecommunications Industry has become extraordinarily complex as the combination of an ever shifting regulatory landscape and continuous technological advances.

At Nowalsky & Gothard, we keep current with regulatory requirements and industry trends to assist our clients – typically smaller local, long distance and resale carriers – to operate properly, and profitably, in this endlessly fascinating and complicated industry.

Nowalsky & Gothard, APLLC

1420 Veterans Memorial Boulevard, Metairie, Louisiana  70005

Phone: 504-832-1984    Fax: 504-831-0892

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