The Telecommunications Act of 1996 (P.L. 104-104): A Brief Overview

CRS Report for Congress
The Telecommunications
Act of 1996 (P.L. 104-104): A Brief Overview
Angele A. Gilroy
Specialist in Telecommunications
Science, Technology, and Medicine Division
The melding of telecommunications, video, and computers is having an impact on
telecommunications industry structure, as traditional telecommunications providers such
as telephone and cable television companies expand their capabilities to become more
generic multi-faceted “information providers.” Digital technologies make it possible to
distribute voice, data, and video on the same communications channel. Combined with
new alternative telecommunications delivery systems, competition is developing in many
markets previously considered to be monopolistic. Telecommunications market structures
are responding through consolidations in both the telephone and cable industries,
telephone/cable alliances, wireless telecommunications mergers, and a variety of joint
The Telecommunications Act of 1996 (P.L. 104-104)
The “Telecommunications Act of 1996,” signed into law on February 8, 1996,1
represents the first major rewrite of our nation’s telecommunications policy to address this
changing environment. The 1996 Act redefines and recasts the 1934 Communications Act
to address the relationship among the growing list of communications services, service
providers and users. In doing so it establishes a single, comprehensive, blueprint for
telecommunications policy that addresses our changing telecommunications/information
environment. The 1996 Act attempts to develop a regulatory framework that will capture
the benefits of competition while ensuring that the users and suppliers of a developing and
diversified information industry will be protected from exploitative practices and abuse.
The general policy objective of the 1996 Act is to open up markets to competi-
tion by removing unnecessary regulatory barriers. Removal of such barriers, supporters
claim, will permit competition to flourish and ultimately benefit the public interest. Some

Congressional Research Service, Telecommunications Act of 1996: info pack IP257T, by the1
Congressional Reference Division. Washington. (Updated as needed).
Congressional Research Service ˜ The Library of Congress

of the long-term benefits most often cited include: increased consumer choice; decreased
consumer prices; increased efficiency; technological advances; and increased investment
in our developing information infrastructure. Also, as these markets transform and the
benefits of competition develop, it is assumed that the need for government regulation and
oversight will diminish. Provisions also address the redefinition of universal service
objectives to incorporate the growing needs of the information age and ensure that we do
not develop into a nation of information “haves and have-nots.” Special considerations
are also established to address the telecommunications needs of schools, libraries, and rural
health care providers.
Although the 1996 Act passed by overwhelming margins in both the House and
Senate, the legislation is not without its detractors. Some Members of Congress expressed
concerns that the 1996 Act is still too regulatory. They point to the numerous rulemakings
that the 1996 Act requires to support their claim. Perhaps of greater importance is the fact
that the Act contains provisions that require new regulations for the television and
computer industries. In addition, some parties such as the American Civil Liberties Union
(ACLU), have denounced the Act because of its provisions, known as the
Communications Decency Act (CDA), that restrict the free flow of certain types of
information over the Internet. These provisions became a subject of a court challenge and
the U.S. Supreme Court, by a 7-2 vote, declared unconstitutional two provisions of the2
CDA that prohibited indecent communications to minors on the Internet. Some major
consumers groups, such as the Consumer Federation of America, have also opposed the

1996 Act, stating that it “does not do enough to stimulate competition.”

Whether the 1996 Act will live up to its stated goals is yet to be determined. Action
has now shifted to the Federal Communications Commission (FCC) and to the states, as
the task of interpreting and implementing numerous provisions is undertaken.
Congressional action has focused on oversight as selected committees continue to monitor
the FCC as it attempts to implement the numerous rulemakings required in the 1996 Act.
Congressional review of the effectiveness of the 1996 Act is expected to continue in the

106 Congress, particularly in conjunction with the reauthorization of the FCC. Issuesth

such as Bell operating company (BOC) entrance into long distance within their service
areas, cable rate deregulation, and implementation of universal service provisions will
continue to be of interest.
Action continues in the courts, as well, where selected provisions of the 1996 Act
remain subject to court challenge. Included among the provisions under court review are
those that: require the scrambling, or time shifting, of “sexually explicit” cable
programming channels; impose line of business restrictions on the BOCs; implement
universal service provisions; and establish guidelines to open up, and enable competitors
to interconnect to, the local telephone network. Finally, how the various players and con-
sumers will react in the marketplace and how conditions will unfold in individual markets
continues to evolve.

See: Congressional Research Service, Internet Indecency: The Supreme Court Decision on the2
Communications Decency Act, by Henry Cohen, CRS Report 97-660, 4 p.