Abstract
Currently, the FCC is refining a proposal to regulate the access services of the local exchange carriers (LECs) under a price-cap scheme, modifying rate-of-return regulation. See FCC (1988, 1989). One element of the proposal is that new services be treated for tariff review purposes in a manner quite similar to the FCC’s Optional Calling Plan Order, which set out a net revenue test for approval. This net revenue test would require that (1) a new service must be projected to increase net revenue for the service subject to price-cap regulation and that (2) this increase be projected to occur within the lesser of two time periods: 24 months from the incorporation of the new service into a price filing, or 36 months from the introduction of the services. This showing must be accompanied by net revenue projections which include marginal costs, price elasticity, and cross-elasticity effects.1
See FCC (1989), page 393, paragraph 891.
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Sibley, D.S., Heyman, D.P., Taylor, W.E. (1991). Optional Tariffs for Access under the FCC’s Price-Cap Proposal. In: Einhorn, M.A. (eds) Price Caps and Incentive Regulation in Telecommunications. Topics in Regulatory Economics and Policy Series, vol 6. Springer, Boston, MA. https://doi.org/10.1007/978-1-4615-3976-6_10
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DOI: https://doi.org/10.1007/978-1-4615-3976-6_10
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