Vermont Questions Telco, Competition, Network Investment

In approving a stipulated rate increase of $7.5 million for NYNEX for local exchange telephone service, the Vermont Public Service Board (PSB) nevertheless has cited several unanswered issues, including: 1) stranded investment in copper-loop facilities, 2) expenses for corporate restructuring and downsizing, and

3) improvements to network infrastructure in the state.

The PSB added that NYNEX had failed to take advantage of falling local-exchange access charges

(a primary reason for the current hike in local service rates) to cut its long-distance calling rates. It described such pricing behavior as "less consistent with effective competition than with price leadership among a limited number of competitors."

The PSB zeroed in on whether NYNEX was investing enough in local infrastructure for captive customers to justify prior rate hikes granted for just that purpose. It observed that NYNEX tied its investment decisions principally to customer demand (em which would not necessarily guarantee any direct connection between a board-authorized rate hike and network modernization for Vermont's captive customers. The PSB called that fact "perplexing and disappointing." Re New Eng. Tel. & Tel. Co. dba NYNEX, Docket No. 5853, Feb. 13, 1996 (Vt.P.S.C.).