Economic analysis of Federal Communications Commission decisions for implementing local telephone competition

This paper presents art analysis of the rules developed by the Federal Communications Commission (FCC) to implement the local competition provisions of the Telecommunications Act of 1996. Positions of primary stakeholders, such as incumbent local exchange carriers and interexchange carriers, on crucial issues are analyzed from an economic efficiency perspective. Key issues analyzed include the division of power between federal and state regulators, The scope of unbundling and the ability to rebundle network elements, and the pricing methodologies for interconnection, unbundled network elements, collocation, and resale. This paper concludes that there is art appropriate role for the FCC to develop federal guidelines to govern state arbitrated interconnection agreements, that an important FCC pricing methodology is flawed and can he viewed as anticompetitive, that the criteria for unbundling should include an essential facilities analysis, and that some of the complaints about FCC rules represent dissatisfaction with the federal legislation.