”Firms are not passive recipients of regulation.” That’s...

It was “one of the most ambitious regulatory experiments in American history,” but the experiment ended less than a decade later, the paper said. Three main factors led to its “demise,” it said: “unrealistic” expectations of policymakers for greenfield competitive facilities-based entry into the local wireline market; the lack of incentive for ILECs to “surrender market share” to CLECs without permanent offsetting benefit; and the rise of new telecom technologies like cable, that led to more competition. “While unbundling may have been a sensible policy for the monopoly communications world of 1996, the presence of inter- and intra-modal competition and the inherent incentive problems with unbundling make it unsuitable for today’s marketplace,” the paper said. CLEC attorney Thomas Jones of Willkie Farr agreed that from the perspective of the mass residential market, unbundling is “not really available” anymore since the FCC got rid of unbundled switching. But unbundling is still used widely by competitive carriers to serve the business market, Jones said. “Reports of the demise of unbundling or last mile wholesale offerings mandated for the ILEC are greatly overstated in this paper. It’s alive and very, very important in the business market.” But its continued viability, Jones cautioned, is “subject to the key qualification that the FCC needs to update its rules so they apply to packet-based IP services.”