With the passage of the Telecommunications Act of 1996, the pace of regulatory change related to telecommunications increased exponentially. The impact on rural areas is significant; the issues specific to southern states and communities are unique. This paper begins with a chapter on the importance of telecommunications technology to rural citizens, then provides a brief history of telecommunications regulation, from regulated monopoly to the increasing trend towards competition which is supported by the Act. A chapter on key elements of the Act covers definitions and principles of universal service, the role of information services, and implicit vs. explicit subsidies. Actions by the Federal-State Board on Universal Service include models for determining costs in rural areas, support mechanisms for low-income consumers and rural public and nonprofit health care providers, and discounts for schools and libraries based on economic conditions and rural/urban characteristics. Innovations in state telecommunications regulations and a summary of actions taken by southern states since the 1996 Act are also discussed. Key technology innovations that hold promise for rural areas and the importance of providing education and training on how and when to use them are described. The final chapter presents a checklist of items that state and local decision makers need to consider when defining telecommunications policy for their regions. (Contains 41 references.) (TD)