The Telecommunications Act of 1996 - Analysis a Decade Later. The Rise and Fall of Universal Solutions, Inc.

Abstract

The Telecommunications Act of 1996 ("The '96 Telco Act") opened the door to companies like Universal Solutions, Inc. (USI) to provide engineering, furnishing and installation services (EF&I) to the telecommunications industry. The '96 Telco Act triggered significant speculation by venture capitalists to profit from the entry of competition for the Regional Bell Operating Companies (RBOCs). In addition, The '96 Telco Act facilitated spending by start-ups to provide telecommunications services by co-locating with the RBOCs. The '96 Telco Act forced RBOCs to lease their private facilities to co-location customers below cost. USI supported Competitive Local Exchange Carriers (CLEC). When The '96 Telco Act was passed, the industry witnessed the rise of RBOCs, and Universal Solutions was in the enviable position to support all of them. Shortly thereafter, USI landed contracts with all the major CLECs and then the all of RBOCs [end-users]. The '96 Telco Act moved RBOCs - which enjoyed operating as a local region monopoly to compete with cable companies, co-location customers and other RBOCs nationwide. The competition resulted in mass consolidation of telecommunication providers and the number of RBOCs quickly shrunk from eight to four