FCC to Change Local Phone Rules: The...
From Times Staff and Wire Reports
FCC to Change Local Phone Rules: The Federal Communications Commission will end rate-of-return regulation of the interstate part of major local phone companies’ operations, effective 1991. The local firms, including Pacific Bell, are paid by long-distance carriers for completing their customers’ calls. (The FCC regulates only telephone traffic that crosses state lines.) Instead of setting rates and a fixed profit, the FCC plans to impose “price caps” on current rates, which allow a 12% return. By capping prices and dropping a limit on profits, the FCC maintains that carriers will seek to cut costs, ultimately allowing rates to fall.