Yellow Pages Ruling Reversed

Fortnightly Magazine - April 15 1996
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According to the Arizona Court of Appeals, the state Corporation Commission has violated an agreement with U S WEST Communications, Inc., governing the spinoff of the company's Yellow Pages publishing business as an unregulated enterprise.

DC PSC RFP Technical Consultant for Formal Case (FC) No. 1156

The court agreed with U S WEST that the commission erred when it imputed $60.684 million in directory publishing profits to the carrier's regulated operations (em a move that had captured all profits earned by the publishing company above the rate of return of 11.4 percent authorized for regulated services.

According to the court, the commission had agreed earlier to take no further action in challenging a spinoff of yellow pages from the local exchange telephone carrier (LEC) to U S WEST Direct, the carrier's publishing affiliate. Moreover, said the court, the commission had agreed to calculate future profits based on fees and services received by the LEC from its publishing affiliate. Thus, to impute any supposed excess profits to regulated operations "pretends that the transfer did not occur," the court said.

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