FCC

Ma Bell's Legacy: Time for a Second Divestiture?

TWO YEARS HAVE ELAPSED SINCE CONGRESS PASSED THE Telecommunications Act of 1996 to "provide a pro-competitive, de-regulatory national policy framework designed to accelerate rapidly private sector deployment of advanced telecommunications and information technologies and services to all Americans." %n1%n

Today, however, telephone deregulation has reached an impasse. Few customers enjoy competitive alternatives for local exchange service. Concentration in long-distance markets appears to be increasing.

Investor Beware: Don?t Overestimate Financial Returns In a Restructured Electric Industry

TODAY THE ELECTRIC UTILITY INDUSTRY HURTLES TOWARD massive restructuring. This fervor is not surprising as it appears society has become convinced that market forces can work better than a centrally planned, regulated environment. This conviction draws strength from deregulation in other industries, such as the airlines, natural gas production and telecommunications.

News Digest

Federal Agencies

ELECTRIC RETAIL PRICES. The Energy Information Administration has released a new report finding that the average retail price of electricity has declined for the third year in a row and remained stable for the first nine months of 1997. According to Electric Sales and Revenue 1996, average residential electric prices declined slightly in 1996, the first drop for that consumer class since the EIA began collecting data in 1984.

Texas Judge Rips Telecom Act Finds Prejudice Against Baby Bells

ON THE LAST DAY OF 1997, A U.S. DISTRICT COURT IN Texas struck down sections of the Telecommunications Act of 1996 that prevent former Bell System operating companies (BOCs) from entering certain lines of business, including interstate (and interLATA) long-distance. Some see the case as a clear victory for the BOCs. Others say it disrupts the delicate compromise forged by Congress among many diverse interests. In truth, the court's decision prompts a single question: Can Congress single out the BOCs for special treatment?

Courts & Commissions

WITH DIRECT ACCESS SCHEDULED TO BEGIN ON Jan. 1, 1998, California regulators are moving quickly to set up their long-considered policies on electric restructuring. The restructuring actions touch nearly every aspect of electric regulation in the state from financing decisions and rate design to the sale of generating assets and monitoring new capital additions.

In addition, restructuring has affected ongoing regulatory activities such as the development of performance-based rate making plans and pricing and rate designs for large incumbent utilities.

In Brief...

Sound bites from state and federal regulators.

Area Code Overlays. Colorado adopts overlay plan to ease telephone-number shortage in Denver area, and will introduce a single new area code over the area served by 303 code. PUC says the approved plan meets FCC requirements to ensure new area codes do not disadvantage new providers. Docket No. 97A-103T, July 29, 1997 (Colo.P.U.C.).

Water Main Extensions. Interpreting a recent policy statement, state regulators approve proposal by Pennsylvania-America Water Co.

Winners' Curse: Why Spectrum Bidders Overpaid

(And why power plant buyers may follow suit.)

"WINNERS' CURSE" IS IMPORTANT TO THE UTILITY ASSET AUCTIONS. Winners' Curse is the tendency for the "rookies" and the wide-eyed visionaries to overbid in auctions with uncertain valuations.

The spectrum auctions at the Federal Communications Commission reveal the Winners' Curse even in the more "successful" rounds, despite the agency's elaborate precautions.

FCC's 14 spectrum auctions booked almost $23 billion in license fees (em almost $10 billion in broadband personal communications services (PCS).

Spectrum Auctions at the FCC: A Lesson for Utilities?

When the fanfare dies down, winners face the same challenge as with any new start-up but may enjoy more options than incumbent licensees.

The Federal Communications Commission's auctions of spectrum should concern two types of energy utilities: those who participate in the auctions and those who don't.

Initially, these auctions were viewed as a spectacular new regulatory tool (em able to raise billions of dollars for the public, without troubling the overburdened taxpayer. As of late, however, a dark side has emerged. Bidders have cried fraud.

States Win Right to Set LEC Interconnection Rates

In a long-awaited opinion, the U.S. Court of Appeals for the Eighth Circuit has ruled that the Federal Communications Commission exceeded its authority in approving pricing regulations to open the telecommunications local exchange market to competition.

The court upheld, however, major portions of the FCC regulations governing the duty owned by incumbent local exchange carriers to provide access to the public switched network for new market entrants.