Telecommunications Market Regulation


Even though telecommunications services are more important than ever in the information age, many consumers face limited choices for telephone and internet services. This is especially true for people who live in rural areas and urban communities with low incomes. They often lack any high-speed internet providers or affordable service options. In addition, many providers bundle services together and only offer new services in those bundles. As a result, some consumers pay for services they do not need or want. And competition is virtually non-existent for stand-alone voice service, which many older adults on fixed incomes rely on. In many states, the largest telecommunications carriers are required to provide basic landline service to all parts of their service area. This is known as being a carrier of last resort. However, many are attempting to be released from this obligation. 

Traditional landline telephone companies are also migrating their copper-wire infrastructure to internet protocol (IP) fiber infrastructure. The new infrastructure has greater capacity than older technology. Companies use the new infrastructure to provide high-speed internet services, with voice services (sometimes known as Voice over Internet Protocol or VoIP) and video services offered as an add-on. This technology transition is happening gradually. Services provided in whole or in part over the existing copper infrastructure will continue to serve many customers in all parts of the country for years to come. However, if the copper infrastructure is not appropriately maintained, basic phone service quality will deteriorate. One unique characteristic of traditional phone service is that it usually supplies its own power source. Because of this, traditional phone service will work even when the power is out. The new infrastructure is dependent on electricity unless there is a backup battery. 

As telecommunications markets and technology change, appropriate regulations are needed. Universal service, access to 911, and basic oversight functions must be ensured. These aspects have been protected by long-established consumer protections and public-interest principles. But large phone companies have argued they will no longer be necessary after the transition. Eliminating consumer protections could endanger vital communications services. Essential service could become unaffordable, unreliable, or unavailable altogether. 

Consumer choice in multifamily dwelling units (MDUs): The Federal Communications Commission has banned exclusive provider contracts in MDUs, such as apartment complexes, condominiums, and housing cooperatives. In practice, residential tenants have limited utility and landline telecommunications choices. Typically, the homeowners association or the landlord contracts with one provider to serve the entire MDU. Neither entity can prohibit tenants from using alternative telecommunications providers. However, some landlords have found loopholes, such as refusing to allow alternative providers to access their properties. 



Essential telecommunications services

Policymakers should ensure that all consumers have access to essential telecommunications services in their residences. This service should be affordable, reliable, and high-quality. It should be available to consumers regardless of where they live (see also Consumer Protections, Service Quality, and Reliability in this chapter). 

Policymakers should ensure that all households have access to basic local phone service from a carrier of last resort. If legislation or rulemaking relieves any incumbent local-exchange carrier or successor service provider of these obligations, measures should be adopted to mitigate consumer harm. 

All consumers should be able to subscribe to stand-alone basic telephone service with affordable rates, reliable service, and consumer protections. Providers should be prohibited from requiring subscribers to purchase one service (such as high-speed internet access) in order to obtain another (such as local telephone service). Rates should be just, reasonable, and affordable. Consumers should be able to obtain this service without a contract and unfair early termination penalties. Providers should be accountable to regulators regarding the quality of service they offer, especially those offered over copper networks. Copper networks typically serve rural areas and are at risk of inadequate maintenance. 

Effective competition

Policymakers should relax or remove laws and regulations only when there are clear consumer benefits. They should ensure true and effective competition to the fullest extent possible, including: 

  • lower prices and better-quality service, 
  • appropriate consumer protections to address ineffective or insufficient competition, and 
  • rigorous regulatory action and oversight to maintain and enhance competition. 

Federal and state policymakers should first establish clear standards for effective competition. At a minimum, they should include: 

  • a range of accessible, comparable, and useful consumer options at just, reasonable, and affordable rates; 
  • equitable distribution of the benefits of competition across all residential consumer groups, including consumers with low incomes and rural consumers; 
  • low switching barriers to ensure consumers are unimpeded in their ability to change service providers; and 
  • clear, reliable, and meaningful price and service-quality information that is easily accessible and comparable across providers. 

Policymakers should conduct monitoring, oversight, and enforcement over competition and service-provider performance across all providers and technology platforms. If promises or predictions regarding effective competition, prices, service quality, reliability, and overall consumer protections are not realized, policymakers should impose and enforce sanctions, introduce strict regulatory controls, reconsider regulatory flexibility previously granted, or a combination of these. 

Consumers should be protected from bearing the cost and risk of telecommunications carriers’ entry into new markets. 

Federal and state policymakers should ensure that all occupants of multifamily dwelling units have access to the energy and telecommunications providers of their choice. 

Internet protocol (IP) technology transition

Policymakers should ensure that the transition to IP-based services results in high-quality communications services for all consumers (see also the policy on consumer protections in the Consumer Protections, Service Quality, and Reliability section of this chapter). Service should be reliable and affordable. This should be the case regardless of the technology platform that carriers use to deliver the services. 

This transition should preserve all essential capabilities and functions of the existing network. It should also produce demonstrated benefits for residential consumers in the form of new services, better-quality service, and affordable prices. 

Policymakers should prevent efforts by incumbent telecommunications carriers to dismantle or retire any portion of the copper-wire network if such actions would limit effective competition and customer choice, degrade service, or raise public-interest concerns.