The Telephone Local Loop and Why it Should Still be a Monopoly

As the United States and the other Western Industrialized Nations advance to the Twenty-first Century, questions arise about how telecommunications policy is to evolve. The recent advances in computers in the Information Age has heralded a need for a regulatory telecommunications policy that is consistent with technical advances in communications, Satellites, digital transmission, digital switching, and the recent maturation of fiber optics technology, all provide increasing opportunities to communicate heretofore not possible. The continuing saga of the Bell Consent Decree and Judge Greene\u27s constant decision making, show the difficulty in balancing policy and technology. The divestiture of the Bell System, in effect, opened the door for competition in the markets of long distance The Consent Decree, though, did not deregulate the local loop, which provides the telephones access to switches and the toll facilities. Moreover, the Consent Decree did not specifically prevent competition in the local loop. The question of policy now is should the· Marsh 2 local loop be deregulated and competition introduced into the local loop? The purpose of this thesis is to prove that the telephone local loop is still a natural monopoly and should not be deregulated at this time. This thesis shows that there are five basic reasons why the local loop should not be competitive: 1. Drawing a parallel from history, in the early 1900\u27s phone companies actually competed for business on the same street. This was a chaotic affair that was not satisfactory with the technology at the time. 2. Over the past 100 years, telephone companies have developed a successful culture without competition. 3. As a total contribution, or drain, on the economy, more that one local phone company is not cost effective. 4. Public right of way corridors are too restricted for use by an overabundance of competing utility companies. 5. Cellular radio can provide competition to improve technology and service from the local phone company monopoly. When considered together, the above five factors prove that allowing competition in the local loop is unwise. Moreover, some of the problems associated with competition cannot be overcome