wmartin@st-louis-emh2.army.mil (Will Martin) (06/29/89)
The following item was in the St. Louis Post-Dispatch of Wednesday, June 24, 1989, page 3C: FCC CLEARS WAY FOR NEW AT&T RATES Washington (AP) -- The Federal Communications Commission denied a request to delay a new pricing scheme scheduled to go into effect July 1 for the nation's largest long-distance company, AT&T, the agency said Tuesday. The requests for a stay had been filed in June by the Puerto Rico Telephone Co. and La Telefonica Larga Distancia, which had said the new plan to place a "cap" on the prices AT&T can charge would put the two companies at a competitive disadvantage. They also said the plan would harm the public interest. But the FCC, in a decision reached Friday and made public Tuesday, said that the companies failed to provide adequate reasons for a stay and that the public would benefit from the new pricing. The so-called "price cap" plan, which the FCC adopted in March after a two-year study, replaces a 20-year-old "rate of return" regulatory scheme that had placed limits on what AT&T could earn above costs. Most recently that limit was 12.2%. FCC spokeswoman Patricia Chew said the commission also was reviewing other petitions to suspend the price cap plan, so it was not immediately known if the plan would go into effect July 1. AT&T spokesman Herb Linnen said the company was confident it would prevail. "We expect price caps will go into effect July 1," Linnen said. AT&T last month told the commission it would lower its prices by $140 million on July 1, through reductions in its basic long-distance rates and its special Reach Out America calling plan. In its decision, the FCC said "Price cap regulation offers significant consumer benefits that do not exist under rate of return regulation... In light of the proposed decreases, we believe that the public interest weighs strongly in favor of proceeding with the implementation of our price cap rules." The price cap plan allows AT&T, which in 1988 controlled 68% of the US long-distance market, to raise rates three percentage points less than the rate of inflation in three categories of service: residential and small business; 800 calls; and other business services, mainly for large customers. The FCC has said that the plan is intended to give AT&T an incentive to cut costs and that consumers could save $900 million in charges over four years. ***End of article*** I recall the original announcement of this did appear in the Digest, so I hope this follow-up is worthwhile... Will