No clear consensus has emerged. Should regulators hold to a hard line?
Regulators have wrestled for decades with transactions between vertically integrated monopoly utilities and their...
impaired services, 3) operator and directory assistance, and 4) telephone directories at a reasonable price. LECs other than South Central Bell are protected from competition until the earlier of three years or two years after the carrier receives authority to compete outside the existing local exchange area. Re South Central Bell et al., Docket Nos. 24499 et al., Sept. 20, 1995 (Ala.P.S.C.).
The Iowa Utilities Board (IUB) has rejected an attempt by GTE Midwest, Inc., an LEC, to raise some basic local-service rates while lowering others, and to increase access-service rates under its newly elected price regulation plan. The IUB ruled that state law required LECs choosing price regulation to reduce local rates an average of 3 percent and access-service rates by at least 25 percent of the difference between intrastate and interstate charges. According to the IUB, the new state law leaves no room for initial basic-service price increases without notice to customers and requires the LEC to reduce some or all of its rates for basic local service an average of 3 percent of revenues from basic service. Similarly, access-charge increases are not allowed under the statute's provisions for initial rate changes. The IUB said that price-regulated carriers could opt for a full rate proceeding if an LEC believes increased charges are required. Re GTE Midwest, Inc., Docket Nos. TF-95-305; TF-95-306, Sept. 1, 1995 (Iowa U.B.).
The Wisconsin Public Service Commission (PSC) has adopted rules allowing telecommunications utilities to elect a price regulation plan under a 1993 state law designed to encourage transition to a competitive marketplace in the telecommunications industry. The rules address the mechanics of calculating allowable annual price increases for services covered under price regulation, including the productivity factor, annual Gross Domestic Product Price Index, quality-of-service penalty, and infrastructure penalty or incentive. The plan does not include an earnings sharing feature. Telecommunications carriers electing the new form of regulation may not increase prices for any service until one year after implementing a price regulation plan. To qualify, utilities must show that access charges will be reduced according to existing approved schedules, and must file an investment plan for PSC review and approval. Re Rules Governing Telecommunications Utilities Electing Price Regulation, No. 1-AC-156, Aug. 8, 1995 (Wis.P.S.C.).
Finding that benefits associated with increased competition outweigh concerns over a reduction in the abilities of existing carriers to subsidize basic service rates, the Arkansas Public Service Commission (PSC) has approved an application by American Communication Services of Little Rock, Inc. to provide intrastate nonswitched special-access and private-line services in competition with LECs. The PSC dismissed a claim by Southwestern Bell Telephone Co., an LEC, that competition for private-line service would jeopardize the system of residual pricing currently used to subsidize and maintain lower rates for basic telephone service for residential customers. The PSC said that the newly approved competition would affect only a minimal portion of the LEC's statewide revenues, and that the rate effect would be dampened by the recent trend in its own rulings favoring cost-based pricing for telecommunications services. Re American Communication Services of Little Rock, Inc.,