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Telecommunications industry

NYNEX Announces Historic Plan to Eliminate Rate-Of-Return Regulation and Increase Pricing Flexibility

Strategic Insights

— 1 min read

A significant shift in the telecommunications industry has been announced by NYNEX, as the company has agreed to adopt a seven-year plan that will eliminate rate-of-return regulation and provide increased pricing flexibility. This historic plan, offered by the New York State Public Service Commission, will also freeze or reduce basic exchange rates and reduce other rates by $100 million in the first 12 months. The plan marks a new era for NYNEX, enabling the company to create more value for its customers and shareholders.

Key Takeaways:

  • The plan will eliminate rate-of-return regulation, allowing NYNEX to have significantly more flexibility to price, package, and introduce services.
  • The plan includes a freeze on basic exchange rates and a reduction in other rates by $100 million in the first 12 months.
  • Consumer benefits include the elimination of Touch-tone charges, a freeze on prices for home and business Message Rate service, and reductions in Flat Rate charges affecting nearly 1 million residence customers.
  • The plan calls for ever-increasing service quality targets, with a schedule of customer rebates if NYNEX fails to meet these requirements.
  • NYNEX will also reduce access charges that are paid by long-distance companies and further open its markets to competition.
  • The company will introduce simplified dialing for consumers who wish to use competing companies for toll and inter-region calls by March 1996.

Statistics:

  • The plan will result in a reduction of $100 million in rates in the first 12 months.
  • Almost 1 million residence customers will benefit from reductions in Flat Rate charges.
  • NYNEX will reduce access charges that are paid by long-distance companies.
  • The company will have significantly more flexibility to price, package, and introduce services.
  • 95% of NYNEX's service territory in the Northeast will be operating under incentive regulation.

Sources:

  • "NYNEX Announces Historic Plan to Eliminate Rate-Of-Return Regulation and Increase Pricing Flexibility," Business Wire, July 5, 1995.
  • "NYNEX Chairman Ivan Seidenberg Comments on Historic Plan," Business Wire, June 1, 1995.
  • "New York State Public Service Commission Offers NYNEX Seven-Year Plan," Business Wire, June 1, 1995.
  • "NYNEX, Government, Industry, Labor and Consumer Leaders Reach Settlement to Change Regulation in New York," Business Wire, September 1, 1994.

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