| Abstract: | We review the original rationale for the line-of-business restrictions faced by the RBOCs and discuss changes in the conditions that motivated them. These changes include: (1) reduced incentives for local exchange carriers (LECs) to shift costs from unregulated to regulated businesses; (2) improved deterrence and monitoring of discrimination in providing network access; and (3) recognition that antitrust laws apply to abuse of market power in local exchange. We also analyze trends in prices charged by RBOCs and other LECs which suggest that the opportunity to engage in cost shuting is of little or no significance today. We conclude that eliminating the remaining line-of-business restrictions is not likely to raise significant new competitive concerns but consumers are likely to benefit from entry by RBOCs into now-prohibited businesses, many of which are highly concentrated. |
