Doc Searls asked me to put the argument for total telecoms deregulation into a nutshell, then blog it so he could point at it. Here it is.
Telecoms regulation, to the extent it was ever justified, was justified on the basis of preventing or remedying market failures — such as, in particular, lack of market incentives to provide universal coverage.
The market failures in telecoms all derive from the high fixed-capital costs of conventional wirelines. These have two major effects: (1) incentives to provide service in rural areas are weak, because the amount of time required to amortize large fixed costs makes for poor discounted ROI; and (2) in higher-density areas, the last mile of wire is a natural monopoly/oligopoly.
New technologies are directly attacking this problem. Wi-Fi, wireless mesh networks, IP over powerlines, and cheap fenceline cable dramatically lower the fixed capital costs of last-mile service. The main things holding these technologies back are regulatory barriers (including, notably, not enough spectrum allocated to WiFi and UWB).
The right answer: deregulate everything, free the new technologies to go head-to-head against the wired last mile, and let the market sort it all out.