The N.Y. PSC proposed to develop a framework for rate deregulatio...
The N.Y. PSC proposed to develop a framework for rate deregulation of that state’s 38 small incumbent telcos. Apart from Verizon and Frontier of Rochester, all are under rate-of-return regulation. Since Sept. 2006, the small telcos had the option…
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to petition the PSC for rate deregulation case by case, and 12 small incumbents have such petitions pending. Verizon and Frontier are under price caps for basic local service, with all other retail rates deregulated. The PSC wants to set up 4 “dimensions” with explicit standards for judging whether to deregulate small incumbent rates -- level of competition, revenue status, network investment and operational efficiency. In general, the PSC said, small telcos would have to show the presence of multiple competitors, erosion of revenues from competition, efforts to keep existing customers and investment to expand and improve services. Proposal author Charles Dickson, dir. of the PSC accounting & finance office, said that under the proposed 4 dimensions, only 5 of the 12 pending applicants would have a case for deregulation, and none of the other 26 companies would qualify. But he said the proposed framework would put all the small incumbents on the same field and hold all to the same standards for deregulation. Robert Mayer, dir. of the PSC telecom office, said many small telcos generate a return on equity under 5%, and that the PSC should worry about small telcos’ financial health. He said big phone and cable companies can afford the infrastructure investments needed to deliver advanced services, but the small companies may not be able to keep pace.