In the case of Verizon Communications Inc. v. Federal Communications Commission (2001), the US Supreme Court upheld a law that required incumbent local exchange carriers (ILECs) to share their networks with competitors at regulated rates. The Telecommunications Act of 1996, aimed at promoting competition in local telephone markets, was challenged by ILECs including Verizon who argued that it violated the Takings Clause of the Fifth Amendment which prohibits government from taking private property for public use without just compensation. However, Justice Souter writing for a unanimous court ruled that this did not constitute a physical taking as ILECs were compensated through regulated rates and thus there was no violation of Fifth Amendment rights.

In the dissenting opinion of Verizon Communications Inc. v. Federal Communications Commission, Justice Scalia disagreed with the majority's interpretation of the Telecommunications Act of 1996. He argued that it was incorrect to allow incumbent local exchange carriers (ILECs) to charge new entrants based on forward-looking economic cost rather than historical cost or actual investment made by ILECs in their networks. According to him, this approach would lead to unjust enrichment for ILECs as they could recover more than what they had invested and thus create a barrier for competition in telecommunications services market which is against the spirit of Telecommunications Act itself designed to promote competition and reduce regulation.