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Citing heightened competition and lower earnings in the state's local exchange telephone market, the California Public Utilities Commission (CPUC) has frozen price caps for local exchange carriers (LECs) for most noncompetitive local services, and has suspended the 5-percent "x-factor" services for an intermediate level of competition. (The x-factor had allowed LECs to raise prices more rapidly than the general inflation rate to reflect increases in productivity.)
Nevertheless, the CPUC declined to accept proposals by Pacific Bell and GTE California, Inc., to eliminate the price-cap plan entirely with the onset of local exchange competition, but said it would review the matter in three years.
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