The North Carolina Utilities Commission (NCUC) has approved price-cap regulation plans for four major telecommunications local exchange carriers (LECs) in the state: BellSouth Telecommunications Inc. (BellSouth), Carolina Telephone and Telegraph Co. (Carolina), Central Telephone Co. (Central), and GTE South, Inc. (GTE). The NCUC rejected allegations by AT&T Communications of the Southern States, Inc., an interexchange carrier (IXC), that a separate "general rate case" was needed to gauge how the shift to price regulation affected LEC earnings. The NCUC declared that a scheduled review of each plan after five years and a requirement that the LECs file annual earnings surveillance reports adequately protected the public. Further, it directed IXCs in the state to reduce long-distance rates to reflect reduced access charges under the price-cap plans.
A wide-ranging telephone reform bill passed by the state legislature in 1995 directed the NCUC to open the local telephone market to competition and to permit LECs to switch from traditional rate-base/ rate-of-return regulation to price regulation.