telecom@bu-cs.BU.EDU (TELECOM Moderator) (02/05/89)
A decision by the Federal Communications Commission on a rate-cap method of pricing for AT&T long distance services had been scheduled for last week, but after getting pressured by a few congressmen, Commissioner Dennis R. Fitzpatrick has decided to defer action on the proposed changes for at least two months. Since the early 1960's, the government has allowed AT&T a certain profit beyond its costs. The FCC had proposed replacing this 'rate of return' regulation with one which would place absolute ceilings on the cost of calls via AT&T. The new plan would have also been used by the seven Bell companies as well. Under the new plan, AT&T and the Bells would have been allowed to raise or lower their rates at will. Raises would have been limited to an amount 3 percent less than annual inflation. In return, the companies would have been allowed to keep any internal cost-cutting as profit. The FCC believes that this plan will encourage greater efficiency and innovation in the telephone industry. Other carriers besides AT&T/Bell would be invited to set their rates by the same formula, and the Commission believes that if all the carriers opted for this method, the savings to the customers would be about $1.6 billion over four years. AT&T had been strongly hoping for a decision one way or the other this past week. In a press release, they expressed their disappointment and frustration at Dennis Patrick's latest decision to wait at least until March before ruling. Patrick admitted earlier this week he had been approached by 'some' members of Congress and strongly urged to defer any decision on changes. Now why do you suppose 'some' members of Congress would feel so strongly against the plan? Perhaps some of you can tell me. Sign me a curious young whippersnapper, Patrick Townson