The main purposes of this Act were to reopen competition in the telecommunications markets, to local, long distance, and cable companies, and to reaffirm and rescope the commitment to universal service. Specifically the Act delineated the need for all schools, hospitals, and libraries to be connected to the internet by the year 2000. The Act also repealed the effects of the Modified Final Judgement, or Consent Decree of 1982 which forced the breakup of AT&T and the Bell system.

To encourage local competition the Act prevented state and local governments from inhibiting a competing carrier from providing telecommunications services. Local Exchange Carriers (LECs) were also required:
-To interconnect their network services to those of their competitor. -Unbundle their services and make those services available to other carriers for a fair and non-discriminatory price.
-Allow the resale of their services by another carrier for a fair discount to consumers.
-Provide number portability to consumers.
-Incumbent Local Exchange Carriers had to make a concerted effort to move in the direction of fulfilling all of these requirements.

In order to accomplish these tasks fairly each firm would enter into negotiations with one another and attempt to work out a contract. If no appropriate contract could be reached then the state regulatory commission could intervene and determine what actions to take. If no state regulatory commission took action then the FCC had jurisdiction over the case and they could determine the appropriate path to take.

Prior to the 1996 Act it was unlawful for any local exchange carrier to enter into the long distance market. However, the 1996 Act allowed for LECs to competitively enter into the long distance market under some regulatory confinements. In order to enter into the market each LEC had to submit an application to the FCC in order to enter into the long distance market. The FCC then checks to see if the company meets a competitive requirements checklist that will determine whether or not the company will be granted a license to offer a long distance service.

Local Exchange Carriers were also given the ability to enter into the cable television market. However, in metropolitan areas the Act prohibits telephone companies from having more than 10% interest in companies serving the same area. Simply, they could not monopolize an area unless it was in a rural setting, where the restrictions would not apply.

Rural LECs were also not subject to any of the regulation unless two things happened. If they received a request for interconnection in writing from the competing company and if the state regulatory commission determined that the introduction of a competitor into the rural market would not cause undue burden on the economic feasability of the telcommunications services. After the request is made the state regulatory commission has 120 days to determine if the Rural LEC's exemption should be revoked.

The Telecommunications Act of 1996 also contained provisions that outlined the decent use of telecommunications services. Also known as the Communications Decency Act, it afforded regulations for the propogation of indecent materials over the internet under certain circumstances. However, the Communications Decency portion was modified at the Supreme Court and the provisions were reproposed to institute a "goodwill" approach from companies to effectually protect minors. The Act also inacted the legislation that made the V-Chip a requirement in all television sets by 1998. It also instituted the requirement for a rating system that would be used for all television programs in accordance with the V-Chip, thus allowing consumers to control what they, or their children watched on television. Therefore, establishing the goodwill approach to censorship and decency.