The Impact of Incentives in the Telecommunications Act of 1996 on Corporate Strategies

Rules are necessary to provide or shape the incentives of individuals and organizations. This is particularly true when free markets lead to undesirable outcomes. The Telecommunications Act of 1996 attempted to create incentives to foster competition. Ambiguity as well as the timing of the Act has led to delays in the clarification of rules and the rapid obsolescence of the document. The paper presents the strategies that common carriers adopted to try to tilt regulation in their favor, slow the entry of competitors, maintain their market leadership, and expand into other segments. Some of the strategies analyzed include lobbying efforts, court challenges, and lack of cooperation with new entrants.