How Government Regulations Impact the Telecommunications Sector

The U.S. government has regulated the telecommunications sector for decades, though it took some time to catch up after Samuel F.B. Morse first demonstrated the telegraph in 1837, then later connected a 35-mile stretch between Washington, D.C., and Baltimore, Maryland with the message, “What hath God wrought!”

These days, government-protected monopolies dominate the landline phone business. As of January 2025, net neutrality is dead, at least in the U.S., to the delight of critics who warned the policy would stifle capital investment and innovation. Here’s a short history of how the government has attempted to regulate the telecom sector.

Key Takeaways

• The telecommunications sector today includes radio and television broadcasting, and telephone, cable, and internet service providers.
• Service varies from wired to wireless, land-based to satellites.
• The Federal Communications Commission (FCC) was established under the 1934 Communications Act to regulate monopolies in the radio and telephone industries.
• The FCC’s regulation of internet service providers (ISPs) via a policy called net neutrality was volleyed from one administration to the next over 15 years, finally ending in January 2025 with a federal appeals court decision that sided with a trade group that represented ISPs.

Early Regulations

Most federal communications laws have their roots in the 1912 and 1927 Radio Acts. The latter established a Federal Radio Commission and mandated radio stations only operate in accordance with “public interest, convenience, and necessity.” This language was borrowed, almost verbatim, from the railroad laws of the 1880s.

The 1934 Communications Act created the Federal Communications Commission or FCC. The FCC was initially established to control the government monopolies in the radio and telephone industries. In the decades that followed, the FCC evolved as a special-interest vehicle of entrenched telecom companies, much like the Interstate Commerce Commission before it.

The 1996 Telecommunications Act

Key elements of the 1996 Telecommunications Act were meant to contain the FCC and establish fair deregulation of the telecom industry. Unfortunately, the act did not establish the means or provide substantive legal authority to enforce its intentions of removing government-protected monopoly franchises in local phone services.

Note

In the years that followed, the FCC created more than 10,000 new pages of rules and regulations.

The market share of leading providers grew in major cities. By only repealing part of the 1934 Communications Act, the Telecommunications Act created a litigious and often contradictory regulatory environment.

Net Neutrality

The Obama administration pushed to use FCC regulations against major internet service providers (ISPs). The U.S. government then proposed and eventually passed a rule called net neutrality to reclassify broadband internet access as Title II, or a “common carrier.”

The move made it unlawful for ISPs to deliberately speed up or slow down traffic to and from websites based on business preferences or user demand. In other words, according to net neutrality, traffic should be treated indiscriminately. This decision also meant that broadband providers were no longer able to provide different services or charge different fees to users or creators of web content.

Under the Trump administration, FCC chair Agit Pai spoke out against net neutrality. The commission gutted the policy, leaving ISPs to govern themselves. In October 2019, the D.C. Circuit Court of Appeals upheld the FCC’s plan to repeal most of the provisions of net neutrality. However, it came short of blocking states from adopting open internet rules. In response, many states responded by introducing their own net neutrality legislation.

During the Biden administration, though, net neutrality rules were reinstated. Then the Ohio Telecom Association, a trade group representing ISPs, filed suit. In January 2025, the Sixth Circuit of Appeals in Cincinnati sided with the group, effectively ending net neutrality in the U.S.

What Is the Telecommunications Sector?

Telecommunications is the transfer of data via text, voice, or video.

How Did the Telecommunications Sector Begin?

The sector is nearly two centuries old. It began in the 1830s and 1840s with the invention of the telegraph.

Where Does Net Neutrality Stand Today?

In the U.S., net neutrality was delivered a final blow in January 2025, when a federal appeals court found that the Federal Communications Commission (FCC) could not regulate internet service providers (ISP) in this way. However, elsewhere around the world, net neutrality is in effect: for example, in India and the European Union (EU).

The Bottom Line

The telecommunications sector has a long history, with regulation picking up speed with the 1912 and 1927 Radio Acts. Government oversight hasn’t been a straight line—far from it—but instead has varied with each presidential administration. Net neutrality, for example, had a 15-year journey from 2010 to 2025. First championed by the Obama administration, it was gutted under the Trump administration, reinstated by the Biden administration, and finally ended with a federal appeals court decision. The future of government regulation of the telecommunications sector will likely take a similarly circuitous path.