> The "competitive tide" under unbundling is a fiction. In the early 1990's, you could order DSL from a large number of ISP's . . . all of which used the same copper wire the AT&T monopoly had put in the ground decades before. It was not accompanied by increased investment into the actual wires that ran into peoples' homes. Indeed, it eliminated any incentive to invest in those wires--why pour billions of dollars into infrastructure you'll have to lease out at cost to your competitors?

ATT (SBC at the time) was pouring billions into infrastructure that they were required to lease out at tariffed rates to competitors. They weren't running new copper, but they were actively building out remote terminals, and rerouting the existing copper to shorter paths. Example press release from 1999 http://www.internetnews.com/xSP/article.php/220301

<y understanding is the wholesale price is to be set 'at cost, plus a reasonable profit,' not simply at cost. However, regulatory action was pretty week here: in the 2003-2004 time frame, SBC/ATT was routinely charging more for wholesale access than for retail customers, even though providing wholesale access is less expensive (simplified billing, collection, support, reduced/zero marketing, no IP transit, etc).

Incidentally, in the past month, ATT has started allowing reselling of U-Verse (although it's at Layer 3, instead of Layer 2 with DSL, so IP transport is provided by ATT instead of the reseller); so, they must have found it to be economically viable to wholesale, in the absence of regulatory compulsion. (I don't find a wholesale Layer 3 product to be as compelling as a wholesale Layer 2 product though; ATT is fine for last mile, but I don't want their peering and transit)