By the end of 2000, the companies stated they would spend $53.4 billion on 36.1 million
homes.
In virtually every state, Verizon, AT&T and Qwest applied for and received major
financial incentives through changes in state laws, sometimes referred to as “alternative
regulations”, “incentive regulations”, “price cap regulation” or “AFOR”, “Alternative
Form of regulation”.
Though each state had a different regulatory series of requirements and incentives, an
example of alternative regulations is Indiana Bell’s changes in state law. Originally
regulated through ‘rate-of-return’, which examined profits, in this case, the company
profits were no longer examined and the company received “market based pricing” for
”competitive” services using “pure price regulation” --- meaning that the price of a
competitive service can be changed to what the market allows and that the state
commission can not examine or restrict profits. In this state, the commission would no
longer be allowed to examine “depreciation rates”, and the company would invest $120
million to wire schools, hospitals, and government centers.
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Pacific Bell announced it would be spending $16 billion over the period of 5 years
for fiber optic upgrades to 5.5 million homes.
Estimated total expense in California: $250 million.
Ratio of announcements and expenditures: 1.6%
Benefits from state Incentive regulations: Estimated $1 billion in extra profits.
Pacific Bell also took a $3.4 billion tax deduction for accelerated depreciation in
1995.
Bell Atlantic announced $11 billion dollars in expenditures for 8.75 million homes.
Estimated total expense in California: $200 million.
Ratio of announcements and expenditures: 1.8%
Benefits: Bell Atlantic (and NYNEX) took a $5.1 billion tax deduction for
accelerated depreciation. State by state alternative regulations (deregulation)
had been implemented for fiber optic upgrades.
US West said it will spend at least $750 million to upgrade 750,000 homes by
1995 and businesses in the four cities, on top of the Omaha Nebraska project.
Estimated total expenditures: $40 million.
Ratio of announcements to expenditures: 5.3%
Benefit: In 1993, the company took a $3.1 billion dollar tax deduction for accelerated depreciation.