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Paul Sparks
- Online English Lesson Plans, Lesson Material and Ideas for "Culture of
English Speaking Countries Lessons" for Xiangtan Normal University...
WESTERN CULTURE AND SOCIETY: THE UNITED STATES OF
AMERICA (USA) -
American Business
AMERICAN BUSINESS ORGANISATIONS:
Americans have always believed they live in a land of opportunity, where
anybody who has a good idea, determination, and a willingness to work hard
can start a business. Small enterprises account for 52 percent of all U.S.
workers, according to the U.S. Small Business Administration (SBA). Some
19.6 million Americans work for companies employing fewer than 20 workers,
18.4 million work for firms employing between 20 and 99 workers, and 14.6
million work for firms with 100 to 499 workers. By contrast, 47.7 million
Americans work for firms with 500 or more employees.
A particular strength of
small businesses is their ability to respond quickly to changing economic
conditions. They often know their customers personally and are especially
suited to meet local needs.
Small companies that
rapidly became major players in the national and international economies
include the computer software company Microsoft; the package delivery
service Federal Express; sports clothing manufacturer Nike; the computer
networking firm America OnLine (AOL); and ice cream maker Ben & Jerry's.
Congress created the
Small Business Administration in 1953 to provide professional expertise and
financial assistance to persons wishing to form or run small businesses. In
a typical year, the SBA guarantees $10,000 million in loans to small
businesses, usually for working capital or the purchase of buildings,
machinery, and equipment. SBA-backed small business investment companies
invest another $2,000 million as venture capital.
The Sole Proprietor: Most businesses are sole
proprietorships, they are owned and operated by a single person. In a sole
proprietorship, the owner is entirely responsible for the business's success
or failure. He or she collects any profits, but if the venture loses money
and the business cannot cover the loss, the owner is responsible for paying
the bills, even if doing so involves their personal assets.
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Advantages of Sole
Proprietorships: They suit people who like
to exercise initiative and be their own bosses. They are flexible, since
owners can make decisions quickly without having to consult others. By
law, individual proprietors pay fewer taxes than corporations. And
customers often are attracted to sole proprietorships, believing an
individual who is accountable will do a good job.
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Disadvantages of
Sole Proprietorships: A sole proprietorship
legally ends when an owner dies, although someone may inherit the assets
and continue to operate the business. Also, since sole proprietorships
generally are dependent on the amount of money their owners can save or
borrow, they usually lack the resources to develop into large-scale
enterprises.
The Business
Partnership: One way to start or expand a
venture is to create a partnership with two or more co-owners. Partnerships
enable entrepreneurs to pool their talents; one partner may be qualified in
production, while another may excel at marketing, for instance. States
regulate the rights and duties of partnerships. Co-owners generally sign
legal agreements specifying each partner's duties. Partnership agreements
also may provide for "silent partners," who invest money in a
business but do not take part in its management.
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Advantages of
Partnerships: They are exempt from most
reporting requirements the government imposes on corporations, and they
are taxed favorably compared with corporations. Partners pay taxes on
their personal share of earnings, but their businesses are not taxed.
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Disadvantages of
Partnerships: Each member is liable for all
of a partnership's debts, and the action of any partner legally binds
all the others. If one partner looses money from the business, for
instance, the others must share in paying the debt. Another major
disadvantage can arise if partners have serious and constant
disagreements.
Corporations:
Although there are many small and medium-sized companies, big business plays
a dominant role in the American economy. In the United States, most large
businesses are organized as corporations. A corporation is a specific legal
form of business organization, chartered by one of the 50 states and treated
under the law like a person. Corporations may own property, sue or be sued
in court, and make contracts. By the mid-1990s, more than 40 percent of U.S.
families owned common stock, directly or through mutual funds or other
intermediaries. But widely dispersed ownership also implies a separation of
ownership and control. Because shareholders generally cannot know and manage
the full details of a corporation's business, they elect a board of
directors to make broad corporate policy. Corporate boards place day-to-day
management decisions in the hands of a chief executive officer (CEO), who
may also be a board's chairman or president. The CEO supervises other
executives, including a number of vice presidents who oversee various
corporate functions, as well as the chief financial officer, the chief
operating officer, and the chief information officer (CIO). The CIO came
onto the corporate scene as high technology became a crucial part of U.S.
business affairs in the late 1990s. As long as a CEO has the confidence of
the board of directors, he or she generally is permitted a great deal of
freedom in running a corporation.
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Advantages of
Corporations: Large companies can supply
goods and services to a greater number of people, and they frequently
operate more efficiently than small ones, they often can sell their
products at lower prices because of the large volume and small costs per
unit sold. They have an advantage in the marketplace because many
consumers are attracted to well-known brand names, which they believe
guarantee a certain level of quality. Because a corporation has legal
standing itself, its owners are partially sheltered from responsibility
for its actions. Owners of a corporation also have limited financial
liability; they are not responsible for corporate debts. Because
corporate stock is transferable, a corporation is not damaged by the
death or disinterest of a particular owner. The owner can sell his or
her shares at any time, or leave them to heirs.
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Disadvantages of
Corporations: Large corporations at times
have shown themselves to be inflexible in adapting to changing economic
conditions. As distinct legal entities, corporations must pay taxes. The
dividends they pay to shareholders, unlike interest on bonds, are not
tax-deductible business expenses. And when a corporation distributes
these dividends, the stockholders are taxed on the dividends.
There are many ways for
corporation to raise money, or capital, such as:
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Issuing Bonds: A
bond is a written promise to pay back a specific amount of money at a
certain date or dates in the future. Bondholders receive interest
payments at fixed rates on specified dates. Corporations benefit by
issuing bonds because the interest rates they must pay investors are
generally lower than rates for most other types of borrowing and because
interest paid on bonds is considered to be a tax-deductible business
expense. However, corporations must make interest payments even when
they are not showing profits.
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Issuing Preferred
Stock: A company may choose to issue new "preferred" stock to
raise capital. Buyers of these shares have special status the company
encounters financial trouble. If profits are limited, preferred-stock
owners will be paid their dividends after bondholders receive their
guaranteed interest payments but before any common stock dividends are
paid.
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Selling Common
Stock: If a company is in good financial health, it can raise capital by
issuing common stock. Typically, investment banks help companies issue
stock, agreeing to buy any new shares issued at a set price if the
public refuses to buy the stock at a certain minimum price. Some
companies pay large dividends, offering investors a steady income. In
general, the value of shares increases as investors come to expect
corporate earnings to rise.
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Borrowing: Companies
can also raise short-term capital by getting loans from banks or other
lenders.
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Using profits:
Companies also can finance their operations by retaining their earnings.
Some corporations, especially electric, gas, and other utilities, pay
out most of their profits as dividends to their stockholders. Others
distribute, say, 50 percent of earnings to shareholders in dividends,
keeping the rest to pay for operations and expansion. Still other
corporations, often the smaller ones, prefer to reinvest most or all of
their net income in research and expansion, hoping to reward investors
by rapidly increasing the value of their shares.
Franchising:
Successful small businesses sometimes grow through a practice known as
franchising. In a typical franchising arrangement, a successful company
authorizes an individual or small group of entrepreneurs to use its name and
products in exchange for a percentage of the sales revenue. The founding
company lends its marketing expertise and reputation, while the entrepreneur
who is granted the franchise manages individual outlets and assumes most of
the financial liabilities and risks associated with the expansion. While it
is somewhat more expensive to get into the franchise business than to start
an enterprise from scratch, franchises are less costly to operate and less
likely to fail. That is partly because franchises can take advantage of
economies of scale in advertising, distribution, and worker training. It is
estimated that the United States had about 535,000 franchised establishments
in 1992 -- including auto dealers, gasoline stations, restaurants, real
estate firms, hotels and motels, and dry cleaning stores. Franchise
companies were expected to account for about 40 percent of U.S. retail sales
by the year 2000.
A NATION OF FARMERS:
Agriculture in the United States has changed dramatically over the last 200
years. At the time of the American Revolution (1775-83), 95 percent of the
population were farmers. Today that figure is less than 2 percent. Today
individuals or families own only 64 percent of the farmland. The remainder
is owned by corporations, large and small, and farming and its related
industries have become big business -- "agribusiness."
Farming is very
successful in America mainly because of the quantity of land and the good
weather conditions. Desert only exists in a small part of the western United
States. Elsewhere, rainfall ranges from modest to plenty, and rivers and
underground water allow for irrigation where needed. Large stretches of
level or gently rolling land, especially in the Midwest, provide ideal
conditions for large-scale agriculture.
American farmers have
always accepted new technology, throughout the 19th century one new tool or
invention followed another in rapid succession. By the time of the American
Civil War (1861-65), machines were taking over the work of haying,
threshing, mowing, cultivating, and planting, in doing so they brought big
increases in productivity.
Another factor in the
rise of agricultural output was the rapid flow of settlers across the
Mississippi River in the late 19th century. The federal government promoted
the internal migration in several ways, including the Homestead Act. Enacted
in 1862, the act perpetuated the existing pattern of small family farms by
offering a "homestead" of 65 hectares to each family of settlers
for a nominal fee. For a time inventions and pro-farming policies were
almost too successful. Overproduction became a serious problem after the
Civil War. With demand unable to keep pace with supply, the prices farmers
received for their products fell. The years from the 1870s until about 1900
were especially hard for the American farmer.
THE GOVERNMENT'S ROLE IN
FARMING: Beginning with the creation of the
Department of Agriculture in 1862, the federal government took a direct role
in agricultural affairs, going so far as to teach farmers how to make their
land more productive. After a period of prosperity in the early 20th
century, farm prices declined in the 1920s. The Great Depression of the
1930s drove prices still lower, and by 1932 farm prices had dropped, on
average, to less than one-third of their 1920 levels. Farmers went bankrupt
by the tens of thousands.
The government pays
farmers to plant fewer crops to stop over production.
Price supports and
payments apply only to such basic commodities as grains, dairy products, and
cotton; many other crops are not federally subsidized. Farm subsidy programs
have been criticized on the grounds that they benefit large farms most and
accelerate the trend toward larger -- and fewer -- farms.
Overall, American
agriculture has been a success story. American consumers pay less for their
food than those in many other industrial countries, and one-third of the
cropland in the United States produces crops destined for export. In 1995
agricultural exports exceeded imports by nearly two to one.
THE AMERICAN STYLE OF
MASS PRODUCTION: Thanks to several waves of
immigration, America gained population rapidly throughout the 19th and early
20th centuries, when business and industry were expanding. Population grew
fast enough to provide a steady stream of workers.
In the late 18th
century, American manufacturers adopted the factory system, which gathered
many workers together in one place. To this was added something new, the
"American system" of mass production, which originated in the
firearms industry about 1800. The new system allowed the final product to be
made in stages, with each worker specializing in a different task.
By 1890 America's
factories production was bigger than the production from farms. By 1913,
more than one-third of the world's industrial production came from the
United States.
Lower costs made
possible both higher wages for workers and lower prices for consumers. More
and more Americans became able to afford products made in their own country.
During the first half of the 20th century, mass production of consumer goods
such as cars, refrigerators, and kitchen stoves helped to revolutionize the
American way of life.
By the end of World War
II in 1945, the United States had the greatest productive of any country in
the world, and the words "Made in the U.S.A." meant high quality.
The 20th century has
seen the rise and decline of several industries in the United States. The
car industry has struggled to meet the challenge of foreign competition. The
clothing industry has declined in the face of competition from countries
where labor is cheaper. But other manufacturing industries have appeared,
including airplanes and cellular telephones, microchips and space
satellites, microwave ovens and high-speed computers.
As high-tech industries
have grown and older industries have declined, the proportion of American
workers employed in manufacturing has dropped. Service industries now
dominate the economy, selling a service rather than making a product, these
industries include entertainment and recreation, hotels and restaurants,
communications and education, office administration, and banking and
finance.
Some Americans are
concerned that by investing abroad, American business is making future
competitors. The American government policies improved Japan's economy. The
North American Free Trade Agreement in 1993, however, confirmed the
continuing American commitment to international trade.
INDUSTRIAL DEPRESSION:
At the start of the 1920s there was a Communist revolution in Russia ,
which lead to a fear that revolution might also break out in the United
States. Meanwhile, workers in many parts of the country were striking for
higher wages.
President Franklin
Roosevelt vowed to help "the forgotten man," the farmer who had
lost his land or the worker who had lost his job. Congress guaranteed
workers the right to join unions and bargain collectively, and established
the National Labor Relations Board to settle disputes between unions and
employers.
Not long after, skilled
craftsperson's and industrial workers led to the founding of a new labor
organization, the Congress of Industrial Organizations (CIO).
The Depression's effect
on employment did not end until after the United States entered World War II
in 1941. Factories needed more workers to produce the airplanes, ships,
weapons, and other supplies for the war effort. By 1943, with 15 million
American men serving in the armed forces, the United States had a labor
shortage, which women (in a reversal of societal attitudes) were encouraged
to fill. Before long, one out of four workers in defense plants was a woman.
THE AMERICAN ECONOMIC
SYSTEM: The capitalist system means people are
naturally selfish, they are involved in manufacturing and trade in order to
gain wealth and power. It leads to increased production and sharpens
competition. As a result, goods circulate more widely and at lower prices,
jobs are created, and wealth is spread.
Most Americans believe
that their nation could not be a great economic power without capitalism,
also known as free enterprise. Meaning that government should interfere in
business as little as possible.
THE PAST PROBLEMS IN
AMERICAN BUSINESS: Factory owners often
required them to put in long hours for low wages, provided them with unsafe
and unhealthy workplaces, and hired the children of poor families. There was
discrimination in hiring: Black Americans and members of some immigrant
groups were rejected or forced to work under highly unfavorable conditions.
Entrepreneurs took full advantage of the lack of government oversight to
enrich themselves by forming monopolies, eliminating competition, setting
high prices for products, and selling shoddy goods.
In 1890, the Sherman
Antitrust Act took the first steps toward breaking up monopolies. In 1906,
Congress enacted laws requiring accurate labeling of food and drugs and the
inspection of meat. During the Great Depression, President Roosevelt and
Congress enacted laws designed to ease the economic crisis. Among these were
laws regulating the sale of stock, setting rules for wages and hours in
various industries, and putting stricter controls on the manufacture and
sale of food, drugs, and cosmetics.
New federal agencies,
such as the Environmental Protection Agency, have come into being. And new
laws and regulations have been designed to ensure that businesses do not
pollute air and water and that they leave an ample supply of green space for
people to enjoy.
The sum total of these
laws and regulations has changed American capitalism. There is scarcely
anything a person can buy in the United States today that is not affected by
government regulation of some kind.
Political conservatives
believe there is too much government regulation of business. They argue that
some of the rules that firms must follow are unnecessary and costly. In
response to such complaints, the government has tried to reduce the
paperwork required of businesses and to set overall goals or standards for
businesses to reach, as opposed to dictating detailed rules of operation.
THE WORK FORCE TODAY:
After the war a wave of strikes for higher wages swept the nation.
The American work week
typically amounts to between 35 and 40 hours, but there are many
differences: people working part-time or on "flexi-time" or
"telecommuting" from their homes with the assistance of phone,
computer, and fax machine.
MONOPOLIES & MERGERS:
The corporate form clearly is a key to the successful growth of numerous
American businesses. But Americans at times have viewed large corporations
with suspicion, and corporate managers themselves have wavered about the
value of bigness.
In the late 19th century, many Americans feared that corporations could
raise large amounts of money and harm smaller ones or could combine and
collude with other firms to stop competition. People said that business
monopolies would force consumers to pay high prices and deprive them of
choice. The concerns lead to two major laws aimed at taking apart or
preventing monopolies: the Sherman Antitrust Act of 1890 and the Clayton
Antitrust Act of 1914. Government continued to use these laws to limit
monopolies throughout the 20th century. In 1984, government
"trustbusters" broke a near monopoly of telephone service by
American Telephone and Telegraph (AT & T). In the late 1990s, the
Justice Department sought to reduce dominance of the computer software
market by Microsoft Corporation.
In general, government
antitrust officials see a threat of monopoly power when a company gains
control of 30 percent of the market for a commodity or service. While
antitrust laws may have increased competition, they have not kept U.S.
companies from getting bigger.
The 1980s and 1990s
brought new waves of friendly mergers and "hostile" takeovers in
some industries, as corporations tried to position themselves to meet
changing economic conditions. Mergers were prevalent, for example, in the
oil, retail, and railroad industries, all of which were undergoing
substantial change. Many airlines sought to combine after deregulation
unleashed competition beginning in 1978. Deregulation and technological
change helped spur a series of mergers in the telecommunications industry as
well.
Also in the late 1990s,
Travelers Group merged with Citicorp, forming the world's largest financial
services company, while Ford Motor Company bought the car business of
Sweden's AB Volvo. Following a wave of Japanese takeovers of U.S. companies
in the 1980s, German and British firms grabbed the spotlight in the 1990s,
as Chrysler Corporation merged into Germany's Daimler-Benz AG and Deutsche
Bank AG took over Bankers Trust. Marking one of business history's high
ironies, Exxon Corporation and Mobil Corporation merged, restoring more than
half of John D. Rockefeller's industry-dominating Standard Oil Company
empire, which was broken up by the Justice Department in 1911. The $81,380
million merger raised concerns among antitrust officials, even though the
Federal Trade Commission (FTC) unanimously approved the consolidation.
Instead of merging, some
firms have tried to improve their business through joint ventures with
competitors. Because these arrangements eliminate competition in the product
areas in which companies agree to cooperate, they can pose the same threat
to market disciplines that monopolies do.
A spectacular example of
cooperation among fierce competitors occurred in 1991 when International
Business Machines (IBM), which was the world's largest computer company,
agreed to work with Apple Computer, the pioneer of personal computers, to
create a new computer software operating system that could be used by a
variety of computers. A similar proposed software operating system
arrangement between IBM and Microsoft had fallen apart in the mid-1980s, and
Microsoft then moved ahead with its own market-dominating Windows system. By
1999, IBM also agreed to develop new computer technologies jointly with Dell
Computer, a strong new entry into that market.
THE STOCK MARKET:
Very early in America's history, people saw that they could make money by
lending it to those who wanted to start or expand a business. To this day,
small American entrepreneurs usually borrow the money they need from
friends, relatives, or banks. Larger businesses, however, are more likely to
acquire cash by selling stocks or bonds to unrelated parties. These
transactions usually take place through a stock exchange, or stock market.
Europeans established
the first stock exchange in Antwerp, Belgium, in 1531. It was introduced to
the United States in 1792. The stock market was a great success, especially
at the New York Stock Exchange, located in the Wall Street area of New York
City, the nation's financial hub.
Americans pride
themselves on the efficiency of their stock market and other capital
markets, which enable vast numbers of sellers and buyers to engage in
millions of transactions each day. These markets owe their success in part
to computers, but they also depend on tradition and trust -- the trust of
one broker for another, and the trust of both in the good faith of the
customers they represent to deliver securities after a sale or to pay for
purchases.
Companies are required
by law to issue quarterly earnings reports, more elaborate annual reports,
and proxy statements to tell stockholders how they are doing. In addition,
investors can read the market pages of daily newspapers to find out the
price at which particular stocks were traded during the previous trading
session. They can review a variety of indexes that measure the overall pace
of market activity; the most notable of these is the Dow Jones Industrial
Average (DJIA), which tracks 30 prominent stocks. Investors also can turn to
magazines and newsletters devoted to analyzing particular stocks and
markets. Certain cable television programs provide a constant flow of news
about movements in stock prices. And now, investors can use the Internet to
get up-to-the-minute information about individual stocks and even to arrange
stock transactions.
The Stock Exchanges:
There are thousands of stocks, but shares of the largest, best-known, and
most actively traded corporations generally are listed on the New York Stock
Exchange (NYSE). The exchange dates its origin back to 1792. The smaller
American Stock Exchange, which lists numerous energy industry-related
stocks, operates in much the same way and is located in the same Wall Street
area as the New York exchange. Other large U.S. cities host smaller,
regional stock exchanges.
The largest number of
different stocks and bonds traded are traded on the National Association of
Securities Dealers Automated Quotation system, or Nasdaq. This so-called
over-the-counter exchange, which handles trading in about 5,240 stocks, is
not located in any one place; rather, it is an electronic communications
network of stock and bond dealers. The National Association of Securities
Dealers, which oversees the over-the-counter market, has the power to expel
companies or dealers that it determines are dishonest or insolvent. Because
many of the stocks traded in this market are from smaller and less stable
companies, the Nasdaq is considered a riskier market than either of the
major stock exchanges. But it offers many opportunities for investors. By
the 1990s, many of the fastest growing high-technology stocks were traded on
the Nasdaq.
The Regulators: The
Securities and Exchange Commission (SEC), which was created in 1934, is the
principal regulator of securities markets in the United States. Before 1929,
individual states regulated securities activities. But the stock market
crash of 1929, which triggered the Great Depression, showed that arrangement
to be inadequate. The Securities Act of 1933 and the Securities Exchange Act
of 1934 consequently gave the federal government a preeminent role in
protecting small investors from fraud and making it easier for them to
understand companies' financial reports.
Companies issuing
stocks, bonds, and other securities must file detailed financial
registration statements, which are made available to the public. The SEC
determines whether these disclosures are full and fair so that investors can
make well-informed and realistic evaluations of various securities. The SEC
also oversees trading in stocks and administers rules designed to prevent
price manipulation; to that end, brokers and dealers in the over-the-counter
market and the stock exchanges must register with the SEC. In addition, the
commission requires companies to tell the public when their own officers buy
or sell shares of their stock; the commission believes that these
"insiders" possess intimate information about their companies and
that their trades can indicate to other investors their degree of confidence
in their companies' future.
The agency also seeks to
prevent insiders from trading in stock based on information that has not yet
become public. In the late 1980s, the SEC began to focus not just on
officers and directors but on insider trades by lower-level employees or
even outsiders like lawyers who may have access to important information
about a company before it becomes public. The SEC has five commissioners who
are appointed by the president. No more than three can be members of the
same political party; the five-year term of one of the commissioners expires
each year.
TELECOMMUNICATIONS:
Until the 1980s in the United States, the term "telephone company"
was synonymous with American Telephone & Telegraph. AT&T controlled
nearly all aspects of the telephone business. Its regional subsidiaries,
known as "Baby Bells," were regulated monopolies, holding
exclusive rights to operate in specific areas. The Federal Communications
Commission regulated rates on long-distance calls between states, while
state regulators had to approve rates for local and in-state long-distance
calls.
Government regulation
was justified on the theory that telephone companies, like electric
utilities, were natural monopolies. Competition, which was assumed to
require stringing multiple wires across the countryside, was seen as
wasteful and inefficient. That thinking changed beginning around the 1970s,
as sweeping technological developments promised rapid advances in
telecommunications. Independent companies asserted that they could, indeed,
compete with AT&T. But they said the telephone monopoly effectively shut
them out by refusing to allow them to interconnect with its massive network.
Telecommunications
deregulation came in two sweeping stages. In 1984, a court effectively ended
AT&T's telephone monopoly, forcing the giant to spin off its regional
subsidiaries. AT&T continued to hold a substantial share of the
long-distance telephone business, but vigorous competitors such as MCI
Communications and Sprint Communications won some of the business, showing
in the process that competition could bring lower prices and improved
service.
A decade later, pressure
grew to break up the Baby Bells' monopoly over local telephone service. New
technologies -- including cable television, cellular (or wireless) service,
the Internet, and possibly others -- offered alternatives to local telephone
companies. But economists said the enormous power of the regional monopolies
inhibited the development of these alternatives. In particular, they said,
competitors would have no chance of surviving unless they could connect, at
least temporarily, to the established companies' networks -- something the
Baby Bells resisted in numerous ways.
In 1996, Congress
responded by passing the Telecommunications Act of 1996. The law allowed
long-distance telephone companies such as AT&T, as well as cable
television and other start-up companies, to begin entering the local
telephone business. It said the regional monopolies had to allow new
competitors to link with their networks. To encourage the regional firms to
welcome competition, the law said they could enter the long-distance
business once new competition was established in their domains.
At the end of the 1990s,
it was still too early to assess the impact of the new law. There were some
positive signs. Numerous smaller companies had begun offering local
telephone service, especially in urban areas where they could reach large
numbers of customers at low cost. The number of cellular telephone
subscribers soared. Countless Internet service providers sprung up to link
households to the Internet. But there also were developments that Congress
had not anticipated or intended. A great number of telephone companies
merged, and the Baby Bells mounted numerous barriers to thwart competition.
The regional firms, accordingly, were slow to expand into long-distance
service. Meanwhile, for some consumers -- especially residential telephone
users and people in rural areas whose service previously had been subsidized
by business and urban customers -- deregulation was bringing higher, not
lower, prices.
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