From Telephone Unbundling to Digital Bottlenecks
What the Telecommunications Act of 1996 Can Teach Us About Platform Power
Today’s dominant digital platforms present a problem that American communications law has confronted before: how can competition survive when entry depends on infrastructure controlled by an incumbent?
In 1996, Congress confronted a practical obstacle to competition in local telephone service. New carriers could not realistically reproduce the physical networks already controlled by incumbent telephone companies. Congress responded by requiring incumbents to provide competitors with interconnection, access to specified network elements, resale opportunities, and other forms of regulated access.
Today’s dominant digital platforms present a related, though not identical, problem.
Search engines, mobile operating systems, app stores, digital advertising exchanges, and online marketplaces can become essential routes between businesses and their customers. A platform may control this route while also competing against the businesses that depend upon it. That dual role can create opportunities for self-preferencing, discriminatory technical restrictions, excessive fees, tying arrangements, and limits on data portability.
Traditional antitrust law remains essential for challenging unlawful monopolization and exclusionary conduct. But antitrust cases are retrospective, fact-intensive, and often take years to resolve. Courts must define markets, determine whether monopoly power exists, identify unlawful conduct, establish causation, and fashion a remedy. Even after liability is established, a generalist court may struggle to supervise rapidly changing software interfaces, advertising auctions, data-sharing systems, or application-programming interfaces.
The Telecommunications Act offers an institutional lesson. When competition depends upon continuing access to infrastructure controlled by an incumbent, Congress can define access obligations in advance and entrust their administration to a specialized regulatory process.
My Article, From Telephone Unbundling to Digital Bottlenecks: The Telecommunications Act of 1996, Antitrust Enforcement, and a Function-Specific Access Regime, proposes applying that lesson cautiously to digital markets.
The proposal does not treat an entire technology company as a public utility or common carrier. Instead, regulation would attach only to a particular digital function after an agency makes reviewable findings that the operator:
- possesses durable market power;
- controls a material route to market;
- benefits from substantial switching or interoperability barriers; and
- can use that position to foreclose competition.
Once designated, the specific bottleneck function could become subject to carefully defined requirements involving interoperability, nondiscriminatory technical access, commercial terms, and data portability.
Any such law must also respect constitutional and practical limits. The First Amendment protects editorial choices involved in selecting, ranking, and presenting speech. A workable access regime must therefore distinguish protected expressive activity from primarily technical or commercial conduct. It must also permit legitimate restrictions needed to protect cybersecurity, system integrity, personal privacy, and user consent.
The Article further proposes economic measures that regulators could use to identify dependence and evaluate foreclosure. These measures are screening tools rather than automatic answers. Their weights, thresholds, and assumptions would require empirical validation, public explanation, and judicial review before they could support legal consequences.
Antitrust enforcement can punish unlawful conduct, but it does not automatically create or supervise continuing access rights. Where a digital platform controls a durable and competitively significant bottleneck, Congress should consider a narrowly tailored, function-specific framework directed at the bottleneck itself.
The experience of telephone unbundling does not provide a model that should simply be copied. It does, however, show that Congress can build an access institution when ordinary litigation cannot maintain competition quickly or predictably enough.