FCC Slaps Record $1.4-Million Fine on NYNEX Units

The Federal Communications Commission on Thursday fined New York Telephone Co. and New England Telephone & Telegraph Co. a record $1.4 million for alleged improper dealings with an affiliated company and ordered them to refund about $35 million to customers.

The fine against the two units of NYNEX Corp. was the maximum allowed under law and involved an alleged $118.5 million in overcharges made to New York Telephone and New England Telephone by Material Enterprises Co., an unregulated NYNEX affiliate that provides equipment and services to the two phone companies.

The action--the largest federal penalty imposed on a telephone company--was seen as a warning to the nation’s regional Bell companies that the FCC is committed to regulating the industry.

Critics claim that the FCC cannot effectively regulate the giant phone firms, particularly if Congress bows to their requests that they be freed from federal rules barring them from the manufacturing, information services and long-distance businesses.

FCC Chairman Alfred Sikes said the FCC’s action demonstrates the commission’s “capability and commitment to regulate even the largest” telephone companies.