Incentives to Speak Honestly About Incentives: The Need for Structural Reform of the Local Competition Debate

This essay marks the occasion of my fourth trip to Boulder to participate in one of Phil Weiser’s justly celebrated conferences on the state of the telecommunications industry. I’m happy to report that all is well in the industry for lawyers, because the same basic arguments rage on in all the usual forums and show little sign of abating. All is well for academic commentators too, because the arguments that keep the lawyers busy are as theoretical and interesting as they are intractable. The problem is that what is good for lawyers and academics is not necessarily good for the public at large. The very debates that prove so intriguing to telecommunications professors impose enormous costs on society as a whole. Those costs include not just the expense of all the lawyering about implementation of the Telecommunications Act of 1996 (‘‘1996 Act’’),1 but also the more insidious costs that regulatory uncertainty inflicts on us all. For example, since the passage of the 1996 Act, participants in the greater telecommunications community---lawyers, lobbyists, academics, economic consultants, and the like----have been arguing about whether it is appropriate to make incumbent local exchange carriers (ILECs) lease out to their competitors, at low regulated rates, all network elements needed for the provision of basic telephone service. This arrangement is known as the ‘‘unbundled network element (UNE) platform.’’ We are no closer to a resolution of that question than we were in 1996. Indeed, as I write this, the FCC has just gravely