Now that incumbent LECs must offer all services for resale, state regulators must decide the appropriate level of discount for the new resale tariffs.
Discounts could put incumbent LECs at a disadvantage, since many local exchanges already price below the cost of service, particularly for basic residential access.
On the other hand, resale carriers might lose a fair chance at establishing themselves if resale rates simply reflect the current retail charge minus costs avoided by the LECs in providing the services at wholesale (i.e., individual customer billing, marketing, and customer-service costs). Also, regulators must consider other policy goals, such as encouraging facilities-based competition.
CALIFORNIA
Requires Pacific Bell and GTE California, Inc., to discount wholesale rates 17 and 12 percent, respectively. Also discounts basic service rates by 10 and 7 percent, respectively. Expects smaller approved margins to "spur the development of competing networks." Rejects LEC request for pricing flexibility, citing continuing market advantage. Re Competition for Loc. Exch. Serv., Decision 96-03-020, R. 95-04-043, I. 95-04-044, Mar. 13, 1996, 169 PUR4th 83 (Cal.P.U.C.).
IOWA
Sets rates and terms that U S WEST must offer competing carriers. Authorizes "appropriate markup" as well as contribution toward the shared and common costs of the local loop. Re U S WEST Comm., Inc., Dkt. No. RPU-95-10, May 17, 1996. Approves an experimental facilities-based competition plan but finds that resale options are needed. Re McLeod Telemanagement, Inc., Dkt. No. TCU-94-4, Mar. 31, 1995, 160 PUR4th 473.
MARYLAND