Date: Sun, 08 Nov 92 08:29:08 CST
From: Leroy.Donnelly@ivgate.omahug.org (Leroy Donnelly)
Newsgroups: comp.dcom.telecom
Subject: California PUC Sets Limit on Reseller Wholesale Rate 
Reply-To: leroy.donnelly%drbbs@ivgate.omahug.org
Organization: DRBBS Technical BBS, Omaha
X-Submissions-To: telecom@eecs.nwu.edu
X-Administrivia-To: telecom-request@eecs.nwu.edu
X-Telecom-Digest: Volume 12, Issue 830, Message 9 of 9

 From the November 9, 1992 issue of RCR (Radio Communications Report)
by Bill Maguire
 
VIEWPOINT       
 
    The California Public Utilities commission is going to drive
cellular carriers in the state batty.

    The CPUC, in an effort to foster competition, recently voted
unanimously to set limits on wholesale rates charged to resellers, and
to let the resellers construct and operate their own switches.

    Needless to say, the carriers aren't pleased.

    Pacific Telesis Group, McCaw Cellular Communications Inc., US West
Inc. and GTE Corp. reportedly have all filed petitions to overturn the
CPUC's decision.  However, the petitions likely will only temporarily
delay the decision from taking effect.

    It would be difficult to accuse the California commission of being
too hasty in making its decision: It came after four years of study,
and numerous hours of hearings and filings.  It seems the CPUC has
been bent on maximizing competition among the state's cellular
providers; it's unlikely to change its collective mind.

    The resellers say the decision is a major victory for them and
consumers, and it would appear they're right.  They claim basic
charges for cellular service will drop drastically -- as much as $18 a
month and 12 cents a minute.  Not bad.  I may have finally found a
reason to move to California.  Current charges levied by the carriers
are running about $45 a month and 45 cents a minute during peak times.

    The trick, if you will, is in the switch.

    If the decision takes effect, resellers in California will be able
to construct their own cellular switches and connect directly into the
local and long-distance telephone network.  By doing so, they become
mini- carriers within themselves, able to buy large blocks of phone
numbers at substantially lower costs.

    David Nelson, president of the California Resellers Association
and vice president of Cellular Sales Inc., a reseller based in
Glendale, Calif., said he could buy a block of 10,000 numbers for
about $1.10 each if CPUC's decision is upheld, instead of the $32 he
currently spends to buy numbers piecemeal.  Nelson noted that
additional costs will include leasing phone lines, but nevertheless,
the customer will benefit.

    Cellular carriers say not so.  They believe the commission's
decision ultimately will hurt the customer because carriers won't have
incentive to invest in improved technologies.

    "If the decision stands, California telecommunications
infrastructure will fall behind those of other states and a more
flexible regulatory approach," said Mark Hamilton, executive vice
president of external affairs at McCaw Cellular.  McCaw feels the
rate-of-return approach adopted in the decision discourages capital
investment by carriers and is unworkable in an environment where
competing cellar carriers have different costs structures.

    Nevertheless, cellular carriers throughout the rest of the country
should take heed of what's going on at the California PUC.  In typical
trendsetting California fashion, the outcome of the CPUC decision will
have a far-reaching impact on the rest of the country.  Other state
commissions looking to regulate rates and stimulate competition will
be watching closely, if not already taking notes.

    Commissions at both the state and federal levels are aggressively
looking for ways to encourage competition.  In this case, what's good
for consumers in California may be good for consumers elsewhere.


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