The Telecommunications Act of 1996 was highly touted at the time of its enactment, but it has, unfortunately, changed very little in the U.S. telecommunications market--and Gartner does not expect it to lead to significant changes any time soon.
That the Telecommunications Act would
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By 1997, Gartner was forecasting that this competition would be slow in coming. That year, Gartner wrote: "By 2002, the overwhelming majority of large enterprises with revenue of more than $1 billion per year will not replace their current IXC services with services provided by the RBOCs."
This forecast has proved truer than Gartner expected. Since 1996, not one major enterprise has changed interexchange carriers as the primary or sole provider of long-distance services. Moreover, since 1996, not one major corporation has tapped its Baby Bell as the primary or sole provider of long-distance as well as local service.
A number of factors contributed to this situation. Above all, however, the U.S. Congress provided an opportunity for major carriers to play on a brand-new field, but they chickened out. Rather than Baby Bells opening their local networks to interexchange competitors in return for the opportunity to get into the long-distance business, the two groups often ended up in court disputing the terms of the Telecommunications Act. Bell Atlantic (now Verizon) became the first Baby Bell to receive permission to offer long-distance service in a state (New York)--four years after the Telecommunications Act became law.
On the 10th anniversary of the Telecommunications Act, Gartner expects that competition will not be much further along. The major beneficiaries of the act have been attorneys and investment bankers.
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