According to the Adam Smith, invisible-hand of the marketplace ideal, should Congress completely let competition determine pricing in the telecommunications industry, rates would decrease, as more servers would proliferate. However, this is not necessarily the case. The Telecommunications Act of 1996 brought an end to local telephone companies" franchised monopolies and replaced these protective policies with the requirement that state regulatory commissions to admit new entrants into local telephone services. But within the act, there were still regulatory prohibitions to ensure competition that encouraged the states to take over some of the regulatory roles of the federal government, and other laws that attempted to force the states to encourage competition. An example of the later can be found in the act"s requirement that the states, guided by the FCC, be required to allow new telecommunications entrants to lease any and all required facilities on an "unbundled" basis from the existing local companies at cost-based rates. Unbundled means that companies can pick and chose what they offer to customers, to facilitate competition, but without this regulation existing local companies could still effectively create monopolies by bundling so many services together, no one could purchase the lease. (Crandall, 2000).

             Thus, deregulation does not always promote competition-sometimes laws must be put in place to facilitate competition when one wishes to deregulate an existing monopolistic marketplace, as existed before 1996. Moreover, monopolistic protections can create lower costs for consumers. State regulators can still force existing local companies to offer local telecommunications services to many customers in small towns and rural areas at rates that are substantially below their own costs while charging others, such as business customers and residences in large cities, rates that are substantially above costs, to ensure that the poor have communications services.