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Tech Industry

Telecom empires emerge

A year after the Telecommunications Act was signed, many question whether it is creating new monopolies instead of achieving deregulation.

As they lobbied for passage of the Telecommunications Act of 1996, supporters portrayed a landscape of deregulated nirvana: Baby Bells could get into video. Cable operators could offer phone service. Broadcast firms could get free airwave spectrum. And all could venture into any territories they wanted, including cyberspace, giving consumers greater choices and lower prices.

Seen as a natural sequel to the breakup of the AT&T monopoly a decade earlier, the law was intended to complete the competitive process in the communications industry. But since the act was signed, exactly one year ago tomorrow, just the opposite has occurred.

Driven in no small part by the lure of the Internet, some companies are looking to take over huge portions of the telecommunications market to eventually offer everything from high-speed online access to digital video and long distance phone service. That means merging and forming alliances--or, in other words, creating monopolies.

At the other end of the scale, some are simply dropping out of this mega-battle, finding that competition is easier said than done. In the meantime, the government--which was supposed to get out of way under the bill--is more involved than ever, with the Federal Communications Commission left to oversee the details of the transition from regulation to unbridled capitalism.

Still, it is too soon to determine whether telecom reform will succeed or fail. History shows that it takes years, if not decades, for the effects of market deregulation to trickle down to consumers.

In this multimedia special report, NEWS.COM examines how the new landscape will change the way we communicate and how free-market principles will evolve in cyberspace:

The old guard: Phone companies
The rebels: Cable operators
Rules of engagement: The FCC
Colonizing the markets