Washington-based chairman of economic and regulatory consulting firm CapAnalysis, Jeff Eisenach, said he was first to experience the failures of unbundled local loop (ULL) regulation when it was mandated by the Federal Communications Commission for all US telecommunication services in 1996.

ULL regulation was introduced as a means to prevent incumbents from stifling access by other carriers to last-mile networks, and hence competition. But in reality, Eisenach claims, ULL regulation failed to provide a "stepping stone" for other carriers which opted to rent the incumbent network and invest in marketing rather than building their own.

"Virtually all went bankrupt but our cable sector, which was not threatened with unbundled requirements, has [had investment] in converting to digital and been successful," he said. "The same phenomenon is happening in Australia where carriers are moving customers from their own networks and reselling Telstra's to get higher profits."

Eisenach declared the only verdict of ULL regulation is that it was a failure that reduced investment.

"There is now a new approach in US with scaled back ULL and we now have deregulated the broadband infrastructure," he said.