The Nation - News from Nov. 27, 1988

The government has postponed until January consideration of a plan to stop regulating long-distance telephone profits in favor of capping rate increases, a Federal Communications Commission official said. James Schlichting, an aide to FCC Chairman Dennis R. Patrick, said Patrick had hoped for a vote on the proposal next month but that he could not gain a consensus among the commissioners. Schlichting said the decision to delay consideration of the proposal centered on the complexity of the issues involved as well as opposition in Congress. Commission members have said the already bad relations between Congress and the FCC will be worsened if the agency adopts the proposal before lawmakers return to Capitol Hill. The proposal would lift limits on the profits that American Telephone & Telegraph Co. and regional Bell companies can earn on the interstate long-distance portions of their businesses. Instead, the commission would set a ceiling on rates, limiting increases to 3 percentage points less than annual inflation. Phone companies could choose to stay with the rate-of-return regulation or switch to price caps.