20 Years After the Telecom Act of 1996

Though it hardly seems possible, two decades ago on Feb. 8, 1996, the Telecommunications Act of 1996 was signed into law. Though the Act largely focused on methods believed to improve competition for voice services, there were a few clauses that were relevant for develop of Internet apps.

Section 230 made clear that app providers are not legally responsible for content and speech of their users, which arguably helped make Facebook, Twitter and other apps built on user-generated content possible.

Without section 230, such platforms would have been held liable for the speech of their users.

In an effort to stimulate competition for “local access services” for the first time, the Act did legalize telco entry into the entertainment video business. In 1984, Congress had prohibited telcos from providing video service.

Congress also outlawed the issuance of exclusive video franchises. The Act also removed price regulation of video services, in place since 1992.

To stimulate investment, the Act directed the Federal Communications Commission to institute a new unbundling (wholesale) access program with very-large mandated discounts for wholesale customers.

Unfortunately, some would argue, the Act did not clarify whether such wholesale obligations would apply to new fiber to home networks telcos wanted to build. Not until 2003 was the matter resolved, allowing telcos to build fiber to home facilities without mandatory unbundling obligations.

Also, some would say, the Act did not harmonize regulations applying to contestants from different regulatory silos. The Act maintained the legacy framework whereby broadcasting (Title III), telephone (Title II) and cable (Title VI) services were regulated differentially.

Title I continued to apply to data services, which were essentially unregulated.

Tech Freedom, which argues the Act has to be updated, especially to encourage more facilities-based competition. Tech Freedom  has produced an informative podcast on this subject.
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