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Consumer representation and local telephone rates.

Consumer Representation and Local Telephone Rates

With the increasing complexity of issues concerning telephone, electricity, and other utility services, participation by consumer groups in state utility commission proceedings has become more difficult and more expensive. For a brief period, consumer-funded citizens' utility boards (CUBs) promised more effective representation of consumer interests, but recent legal developments have slowed the growth of CUBs (The Consumer Affairs Letter 1988). The direct election of state utility commissioners is another alleged means of increasing sensitivity to the concerns of average ratepayers, but research does not support its effectiveness (Costello 1984). As a result, a large portion of the burden of representing the interests of residential customers and small businesses has fallen on "proxy advocates" (Gormley 1983), that is, government officials who play the role of consumer advocate in public utility proceedings.

Proxy advocates come in three forms: (1) an independent consumer counsel or utility advocate, (2) a division within the state attorney general's office, or (3) a special staff within the state utility commission, The primary objective of the research reported here is to assess the extent to which the political environment affects flat-rate residential telephone rates, with particular attention to the relative effects of the three forms of proxy advocacy. The analysis controls for additional factors that could influence telephone rates, including aspects of the political environment other than proxy advocacy.

PREVIOUS RESEARCH

Escalating electricity rates during the 1970s stimulated research on the influence of political factors on utility rates. The general model underlying the diverse studies of electricity rates is that rates are a function of three types of conditions: (1) supply, (2) demand, and (3) political/regulatory. The supply and demand conditions are included as control variables in the study of the political/regulatory influences on electricity rates. A number of different factors have been included in past studies to measure supply-related influences on the price of electricity: the cost of acquiring fuel, the proportion of total generation obtained from low-cost hydroelectric sources, population density, degree of competition from publicly-owned electricity companies, the ratio of residential to business sales volume (also possibly interpretable as a demand factor), and tax payments per kilowatt-hour of sales. In most studies, demand for electricity has been measured in terms of a state's per capita income.

Among the many possible political influences on state electricity regulation, the direct election of utility commissioners received the most research attention, but results have been equivocal. A few studies showed that elected commissioners dampen electricity rates (Crain and McCormick 1978; Mann and Primeaux 1986). The majority of studies, however, conclude that there is no relationship between rates (or related dependent variables) and method of commissioner selection (Costello 1984; Gormley 1983; Hagerman and Ratchford 1978; Harris and Navarro 1983; Pelsoci 1979).

A number of other political variables have been tested for their relationships to electricity rates (or related measures). As in the case of method of commissioner selection, the results are often contradictory. Pelsoci (1979) found that the higher the number of commissioners, the higher the electricity rates. However, Hagerman and Ratchford (1978) reported that the number of commissioners had no bearing on rates. Larger utility commission staffs were related to lower rates in one study (Pelsoci 1979), but a more inconclusive measure of commission resources (i.e., commissioner salaries, budget size, and data processing capacity in addition to staff size) was positively related to the percentage of rate requests granted (Gormley 1983).

Additional political factors have been scrutinized in single studies. Shorter commissioner terms were related to lower rates of return (Hagerman and Ratchford 1978), and certain types of proxy advocates (i.e., utility consumer counsels and special staffs under the attorney general) were related to lower percentages of rate requests granted (Gormley 1983). The number of years since the establishment of a commission, the level of grassroots advocacy, and a state's political culture were found to be unrelated to the dependent variable under study (Pelsoci 1979; Gormley 1983).

To sum up, virtually none of the political variables included in models of residential electricity rate determination has been consistently related to electricity rates. Moreover, the greatest amount of attention has been given to the method of selecting commissioners, to the exclusion of other possible means of enhancing consumer representation. Gormley (1983) recognized the potential importance of two additional factors: grassroots advocates and proxy advocates. He found that grassroots advocates were effective when issues were not technically complex and proxy advocates were effective when all classes of consumers (including business customers) had the same interest. However, Gormley did not investigate differences among the three types of proxy advocates in terms of their influence on electricity rates. Differences might have been expected since proxy advocates vary with respect to their exposure to public pressure, the constituencies to whom they are accountable, and the expertise and financial resources they can bring to bear.

Since the early 1980s, electricity rates have stabilized, and interest has shifted to rising local telephone rates. Prior to telephone deregulation and the divestiture by AT&T, local telephone rates were reportedly subsidized by long-distance calling and equipment charges. Because rates were low, state regulators were largely spared from political pressure from consumer advocates. Furthermore, rate policy was influenced directly by the Bell System and the Federal Communications Commission in addition to the various state commissions. Since the deregulation of the telephone industry, state regulators have begun to face the unpleasant task of ruling on substantial rate increase requests from local telephone companies. Just as state-level political influences became important when local electricity rates were rising, these same determinants may now be evident with respect to local telephone rates.

The research conducted here tests the general hypothesis that state-level political variables affect residential telephone rates and examines the role of proxy advocates in particular. It is recognized that the level of local rates constitutes only one possible indicator of consumer welfare. Other possible indicators could refer to the quality of service (e.g., the amount of time it takes to install a new line after it has been ordered). In addition, it is not clear that low rates at one point in time are beneficial to residential customers in the long run. It is possible, but by no means documented (Costello 1984), that low rates will discourage investors and make it more expensive for utility companies to raise capital. The difficulty of obtaining multiple and long-run measures of consumer welfare has limited operationalization to a single, cross-sectional measure of consumer welfare both in past work and in this study.

MODEL

In a traditional supply-demand analysis, the dependent variable of interest is the quantity of the good/service rather than its price. In regulated utility markets, prices are set by the public service commission, while consumer demand and producer supply adjust accordingly until the market clears. The analysis done here focuses on the factors that influence the commissioners' decisions about price setting. In this spirit, it is posited that commissioners' decisions are based, in part, on their assessment of the current market environment and how a price change might alter supply and demand for the utility in question.

While supply and demand factors clearly play a major role in setting prices for regulated utilities, a state's political institutions may be important as well. Referring to the post-divestiture environment, Noll (1985) makes the extreme observation that considerations of "economics, efficiency, and cost causation play a tiny role in intra-state rate-making" (p.54). To test for the possible influence of the state political environment on the pricing of local telephone services, a reduced form model is estimated where rates for residential telephone service are posited to be a function of supply, demand, and political factors.(1)

In the empirical work that follows, rate group is the unit of analysis. A rate group is a combination of one or more operating exchanges that charge the same basic rate for all subscribers in a classification (e.g., business, single-party residential, multi-party residential). Rate groups are commonly used by public service commissions to differentiate classes of subscribers for the purposes of evaluating requests for rate changes. They are usually defined by the number of other local subscribers that can be called. For example, if the range of a rate group is identified as 100,000 to 200,000, a subscriber in any one of the exchanges included in this group will have a calling network that is somewhere between 100,000 and 200,000 other subscribers. Rate data in the present analysis refer to December, 1985.(2) At that time all but five states had more than one flat-rate residential rate group, with one state having as many as thirty.

The residential flat-rate one-party subscriber rate for a rate group is the dependent variable in the analysis. Of the various residential rates available, flat-rate service was used (rather than lifeline rates, for example) because (1) these rates are the most comparable among states and (2) residential flat-rate subscribers are the largest classification of ratepayers. Residential flat-rate subscribers represent, depending on the state, between 52 and 84 percent of all subscribers. The average percentage of single-party residential flat-rate subscribers in the 41 states where such information is available is 74 percent of all subscribers.

Data on residential flat-rate monthly service charges for rate groups in 47 states are included in this study. Omitted due to insufficient information or the absence of Bell Operating Companies are Alaska, Hawaii, and Rhode Island. These rates exclude taxes, extended area service charges, and any other miscellaneous charges. Altogether, data on 356 rate groups are analyzed here.(3)

Supply Factors

Telephone company representatives argue that the most important determinant of the price of local telephone service should be the cost of providing service. This, in turn, is highly dependent on the geographical dispersion of customers within a local telephone exchange (more specifically, the average distance between subscribers and their switching center). Holding other factors constant, the average cost of serving customers is lower in more densely populated exchanges than in less densely populated ones. In our empirical work, the number of single-party, flat-rate residential subscribers divided by the number of exchanges in a rate group constitutes a density measure directly relevant to the cost of providing flat-rate residential service.(4)

Other supply factors influence the cost of providing service, especially the ratio of long-distance use to local use. Through a complex system of separations and settlements, the costs of using the local network are allocated to intrastate and interstate carriers (Reece 1987). Heavy usage of long-distance services covers a greater proportion of the fixed costs of the local network. While this complex system of cost allocation operates as a supply factor from the point of view of the local telephone company, the system itself is highly influenced by political considerations (i.e., who should subsidize whom). Therefore, separations and settlements are likely to be very imperfect as measures of supply factors. In any event, data on the ratio of long-distance to local calls within each rate group (another possible supply factor) were not available at the level of rate groups.

Demand Factors

The demand factor that has been included most frequently in past studies of utility rate determination is per capita income. The effect of consumer income on commissioners' pricing decisions is presumed to be positive. It can be argued that the lower consumer income is in a state, the more likely people are to drop off the system if there is an increase in the price of basic telephone service. Because basic phone service has historically been viewed by society as a necessity, commissioners should be reluctant to set higher telephone service prices in states where household income is low. Pelsoci (1979) found state per capita income to be related positively to average residential electrical rates, but Crain and McCormick (1978) found no relationship between per capita income and electricity prices. Thus, findings regarding the relationship between income and electricity rates are equivocal and, in any event, may not be applicable to telephone rates. In testing the role of state-level per capita income in this study, data were taken from the 1984 calendar year (U.S. Bureau of the Census 1986).

Commissioners' decisions regarding the pricing of local telephone service may also be influenced by their perceptions of the availability of basic phone service substitutes. In particular, if an area has a reduced rate for low income consumers ("lifeline"), the commissioners may view this as a low-cost alternative that poorer households can use in the event of an increase in the price of basic flat-rate service. Similarly, a local measured service (LMS) option, whereby customers pay on the basis of the number and distance of their calls, provides another cost-reducing alternative in the event of increases in the price of flat-rate service. In areas where lifeline or LMS is not available, commissioners may be reluctant to increase may cause some households to drop off the telephone system entirely. Thus, it is anticipated that basic flat-rate service will be priced higher in areas where lifeline or LMS is available compared with those areas where low-cost options are not available, all other factors held constant.

Local measured service is far more common than lifeline rates. Although there are minor variations among LMS plans, for the purposes of this analysis, only the presence or absence of an LMS option is measured. A dummy variable reflecting the presence or absence of LMS in a rate group is constructed based on information obtained from the National Association of Regulatory Utility Commissioners (1986). Lifeline rates are relatively uncommon, and there is no standardized source of data regarding their existence. Accordingly, no measure of lifeline availability is included in the analysis.

In addition to ratepayer income and the availability of low-cost options, demand for local service is likely to be influenced by the value of that service. Regulators typically judge the value of receiving service in terms of the number of individuals and businesses who can be reached with a local telephone call. Given that the cost per subscriber is lower in relatively dense local dialing areas, charging based on value of service has the effect of subsidizing rural customers and helping approximate the ideal of "universal service."

The total number of all subscribers in a rate group is used in the empirical analysis to represent the value of service variable. For large rate groups, this is the appropriate measure (National Association of Regulatory Utility Commissioners 1986). In smaller rate groups, several separate communities are sometimes grouped together. For subscribers in these small communities, the total number of people in the rate group tends to overstate the value of service and, therefore, constitutes a conservative bias on the expected relationship between greater value of service and higher rates.

Political Factors

Three elements of the political environment are hypothesized to affect the pricing of local telephone service. The first factor is whether or not the state public utility commissioners are appointed or elected directly by the public. Some consumer advocates have argued that, if commissioners are elected by the public, they will be more likely to represent consumers' interests and take a hard line on utility companies' requests for rate increases. If this is true, then basic telephone rates will be higher in those states where the commissioners are appointed rather than elected, ceteris paribus. In our analysis, state commissioners are classified as elected only when they are directly elected by the citizens. All other means of selection are classified as "not elected." This latter category includes those states where the commissioners are chosen by the governor or the legislature, and the one state where commissioners are selected by the state supreme court.(5)

The second political variable included in the model is the length of the public utility commissioners' terms measured in years (Regulatory Focus 1986). Commissioners' terms vary form four to ten years depending on the state. Hagerman and Ratchford (1978) found that longer terms of office were related to higher allowed rates of return for electric companies. They reasoned that longer terms insulate commissioners from public pressure and allow them to be less concerned about public approval. While this interpretation is possible, it should be pointed out that longer terms also insulate commissioners from utility industry pressure. Thus, the relationship between commissioner terms and utility rates could be either positive or negative.

Finally, it is hypothesized that the type of proxy advocates representing the consumers' interests in rate cases before a commission will influence the price of basic telephone service. Some types of proxy advocates may be better able to present the consumer's perspective in a rate hearing than others. In particular, it is hypothesized that the strongest proxy representation exists in those states where the designated agency is an independent consumer counsel or utility advocate. Such agencies combine specialized knowledge regarding utility issues with an unencumbered mandate to represent the interests of residential consumers (and sometimes small businesses as well). They have no other competing goals that might compromise their representation of the consumer's interests in rate cases. Special staffs within the state public service commission are likely to be highly knowledgeable on utility matters. They may find it difficult, though, to represent the residential consumer's interests because their superiors, the commissioners, are required to balance many competing interests (e.g., utility companies, large and small business customers, and residential consumers).

While the state attorney general's staff is free from the utility commission's difficult task of balancing competing interests, the attorney general often serves as the utility commission's legal representative in court. This close relationship with the commission may blunt the attorney general's aggressiveness in challenging a commission that is too sympathetic to utility interests. Moreover, the attorney general's office must divide its resources among many disparate concerns and may not develop the specialized expertise necessary to argue the consumer's position effectively in rate cases. Therefore, it is posited that the basic price for telephone service will be lowest in those states that have independent consumer counsels and highest in states where proxy advocacy is performed by the attorney general's staff, holding other factors constant. The type of proxy advocacy is measured here by two dummy variables, with the independent counsels being the omitted category.(6)

The selection process of state utility commissioners, the length of their terms, and the type of proxy advocacy are potential influences on residential telephone rates. A fourth factor, the quality and extent of consumer advocacy by private consumer groups, may be an important political variable as well. A few states have citizen's utility boards, and most other states have some form of grassroots consumer advocacy for telephone issues. Unfortunately, measuring the strength of private consumer advocacy across states is difficult and beyond the scope of the present study.

Descriptive statistics for all of the variables used in the analysis appear in Table 1. It should be noted that for most of the independent variables the most recent data were for the 1984 calendar year, whereas the dependent variable, the price of basic residential flat-rate service, was measured as of December, 1986. This allows for the possibility of regulatory lag whereby commission rate decisions take time to reflect economic and political conditions. [Tabular Data Omitted]

ESTIMATION AND RESULTS

The central hypothesis in this research is that political factors have a measureable effect on local telephone rates. To this end, two regression equations are estimated. In the full model specification, the supply, demand, and political variables have been included. In the restricted model specification, the political variables have been omitted. A series of state dummies have also been included in both equations to control for state specific effects. The parameter estimates for the two equations appear in Table 2. [Tabular Data Omitted]

A test of the significance of the total impact of the political factors on the price of residential flat-rate service can be made by comparing the unadjusted R(.sup.2s) between the full- and restricted-model equations. This test indicates that by adding the political variables to the model, the explanatory ability of an already powerful equation is significantly increased.(7)

A more detailed assessment of the role that the political environment plays in the setting of basic residential telephone rates can be gleaned by examining the estimated coefficients in the full-model specification. Virtually all of the estimated coefficients in this equation are statistically significant. The two exceptions are the coefficients associated with the density measure and the dummy variable that reflects whether the commissioners are appointed or elected. If indeed denser exchanges are less expensive to serve, regulators ignore this fact when setting rates. Also, the election versus appointment of public service commissioners seems to have no impact on the basic flat-rate charge for residential telephone service, ceteris paribus. This finding is supported by most studies of the relationship between method of commissioner selection and residential rates for electricity. [Mathematical Express Omitted]

The other political variables in the model fared better than the method of commissioner selection in explaining variation in the prices charged for basic residential telephone service. The coefficient associated with the length of the commissioners' terms indicates that basic telephone rates set by commissioners with longer terms are lower than those set by commissioners with shorter terms, other factors held constant. This is contrary to a finding with respect to allowed rates of return on equity for companies providing electricity (Hagerman and Ratchford 1978). In the case of telephone service, longer terms seem to insulate commissioners from utility pressure, while in the case of electricity, longer terms seem to allow commissioners to ignore public pressure.

Considering the coefficients of the two consumer representation dummies, recall that the estimated coefficients are interpreted relative to the omitted category - those states where an independent agency represents the consumer's interest in telephone rate cases before the commission. Holding other variables in the equation constant, the estimated coefficients show that basic residential rates are $6.65 higher when the state public utility commission staff acts as the proxy consumer advocate, and $8.23 higher when the task of proxy advocacy falls under the mandate of the attorney general's office. This relative ranking of proxy advocate effectiveness conforms with the a priori hypothesis (although the difference between representation by the attorney general and commission staffs is not statistically significant).

This analysis emphasizes the role of the political environment in the setting of local telephone rates, but the estimated impact of the supply and demand factors that are included in the equation warrant some discussion. It has already been noted that the single supply measure, number of residential flat-rate subscribers per exchange, is not related to local rates. However, each of the three demand factors - per capita income, the presence or absence of an LMS rate option, and value of local service - is related to local rates.

The estimation indicates that if per capita income rises by $1,000, local telephone rates drop by $3.65, ceteris paribus. This statistically significant negative relationship is contrary to the initially hypothesized relationship. One possible explanation for this finding is that households in high income states make more long-distance calls, both intrastate and interstate, than households in low income states. The telephone revenues produced from the added long-distance calling in these high income states might then be used to subsidize the provision of local telephone services at lower basic rates. Regardless of the explanation, the unexpected direction of this relationship suggests the need for additional empirical research.

The LMS coefficient shows that rate groups having an LMS option pay $2.38 more for one-party, flat-rate local telephone service than those rate groups where no LMS option is offered, ceteris paribus. This estimate supports the hypothesis that commissioners will be more willing to raise basic rates when a low-cost option is available for low income households.

Finally, the total number of subscribers in a rate group is intended to measure the value of service in a rate group, given the caveat that it overstates the value of service in rural areas. The hypothesis that rates would reflect value of service is supported by the positive coefficient for the variable measuring the total number of residential and business subscribers in a rate group. Given the positive relationship between value of service and density, this may explain the absence of a relationship between density and local rates.

DISCUSSION AND CONCLUSIONS

Public utility regulation has a long history of modifying economic considerations in light of political ones. Nowhere has this been more true than in the case of telecommunications services, where the concept of universal service and a complex system of subsidies have required a departure from cost-based approaches to pricing. The increasing deregulation of the telecommunications industry will inevitably increase the role of cost considerations in rate determination, but it will not necessarily eliminate or even diminish the role of political factors. This study has attempted to explore the impact of several political factors on rates for residential flat-rate local telephone service, while controlling for supply and demand factors.

One of the study's overall conclusions is that emphasis on the political determinants of telephone rates is justified but that contemporary proposals for reform may have selected the wrong target. Whereas direct election of public utility commissioners continues to be proposed as a means of holding down telephone rates (Chandy 1986), the method of commissioner selection had little relationship to local residential rates in this study. Rather, the length of commissioner terms and the form of proxy advocacy employed by a state government appear to be important influences on telephone rates. Judging from the study's findings, consumer advocates ought to be pursuing longer commissioner terms and the establishment of an independent consumer counsel as means of holding down rates for flat-rate residential service.

What factors explain the relationship between longer commission terms and lower telephone rates? One possibility is that longer terms allow commissioners to ignore political pressure exerted by local telephone companies. Another is that longer terms help commissioners develop the technical expertise needed to challenge successfully the complex and amply documented rate requests filed by telephone companies. Still a third alternative is that, all other things held constant, states with longer commissioner terms are more likely to have commissioners who are holdovers from the predivestiture era. Because they are accustomed to low rates, these commissioners may have found it less palatable to approve a rapid increase in local rates than commissioners with shorter histories of service. Given that an earlier study (Hagerman and Ratchford 1978) found that longer commissioner terms were associated with higher allowed rates of return for electric companies, future research needs to resolve these discrepancies in the relationship between the length of commission terms and commission decisions regarding utility rates.

The findings regarding the relative influence of the three forms of proxy advocates on local residential rates also call for further investigation. Two dimensions of proxy advocacy - technical expertise and commitment to the interests of residential consumers - were used here to predict differences among independent consumer counsels, utility commission staffs, and attorney general staffs. Other differences among proxy advocates might exist as well. For example, the three types of proxy advocates may vary in the resources at their disposal, including staff size and compensation. Also, some state attorneys general have gained recent attention as vigorous champions of the consumer (Barrett 1988; Gordon 1988; Moore 1987). It is possible that the efforts of a small but visible number of proconsumer attorneys general are counterbalanced by the indifferent efforts of a majority.

The relationship between proxy advocacy by government entities and private advocacy by consumer groups also needs to be examined. It is possible that levels of private advocacy account for both the type of proxy advocacy found in a state and the rates allowed by its utility commission, with no inherent relationship existing between the latter two.

Another of the major conclusions of this study is that economic factors of supply and demand still do not tell the whole story, even in an increasingly deregulated environment. Room for improvement certainly exists in the way that supply and demand factors were measured in this study, but the presence of counterhypothetical results is striking. On the demand side, local residential telephone rates were lower, not higher, in states with higher per capita incomes. One might have expected that commissioners in less wealthy states would have held down the price of local telephone service to prevent subscribers from dropping off the system. It is not plausible to argue that low income states are more rural and, therefore, more expensive to serve; the cost factor of density was controlled in the analysis and, curiously, was not related to local rates.

The relationship between the availability of local measured service and the price of flat-rate service is of the hypothesized sign, but a question can be raised about the causal direction of the relationship. It was argued that the availability of LMS makes it easier for commissioners to approve rate increases. It could be argued, however, that the imposition of LMS is a response to high rates. Longitudinal research designs are needed to resolve these competing interpretations.

Future research might also depart from the practice of measuring the impact of political variables on a single kind of utility regulation. This study focused only on local telephone rates, while most other research has concentrated solely on the electricity industry. It is possible that commissioners systematically discriminate among the various utilities they regulate, compensating for their leniency with some industries by being tough with others. If this occurs, the relationship between political factors and utility rates may be obscured when observing a single type of utility regulation.

Apart from measurement and modeling issues, the unexpected nature of the relationship between some economic factors and residential telephone rates might be the legacy of a period of regulation in which political and social considerations overwhelmed economic ones. If so, one would expect the dominance of supply and demand factors to become nearly total as telecommunications markets are further deregulated. As economic considerations are weighted more heavily in commission decisions, proxy advocacy (and other forms of consumer representation) will nevertheless remain important as a means of tempering efficiency with considerations of fairness in the pricing of local telephone service.

(1)The reduced form approach is consistent with past research (Costello 1984; Harris and Navarro 1983; Pelsoci 1979). The present approach differs from previous studies in its focus on local residential telephone rates rather than electricity rates and by its inclusion of proxy advocacy as a relevant political factor.

(2)The data for the dependent variable were taken from the Nationa Association of Regulatory Utility Commissioners' (NARUC) publication, Bell Operating Companies' Exchange Service Telephone Rates (1986). Rate data for companies other than Bell Operating Companies are not included in this publication, thus non-Bell companies are omitted from the analysis that follows. Given that Bell Operating Companies serve over 86 percent of the telephone subscribers in the United States, it is, therefore, quite likely that the data used here represent state utility commissions' general price setting patterns. If public service commissions weigh different factors (or weigh the same factors differently) when judging the merit of rate change requests made by non-Bell Companies, then the analysis done here may have limited generalizability to the larger regulatory environment.

(3)Three states (Iowa, Nebraska, and South Dakota) had two different residential flat rates for the same rate group. One rate was charged if local measured service (LMS) was available to the subscribers, and another basic residential flat rate was charged when there was no LMS option. In all three states the basic residential flat rate was higher when LMS was available. For the purposes of the analysis done here, when there were two residential flat rates for one group, the one rate group was treated as two groups with the "LMS available" rate used for one group and the "LMS not available" rate used for the other group.

(4)The data on total number of subscibers, the total number of residential subscribers, and the number of exchanges were derived from the 1986 publication, Bell Operating Companies' Exchange Service Telephone Rates.

(5)Data on each state's method of commissioner selection and length of commissioner term were taken from Regulatory Focus (1986).

(6)The classification of proxy consumer advocates is derived from information provided in a National Association of State Utility Consumer Advocates' publication (NASUCA 1985). In Alabama, Illinois, and New York, more than one agency was listed by NASUCA as representing the consumer's interest in rate cases before the public service commission. Furthermore, in California, Oregon, and Wisconsin, CUBs/Bill Access was recorded as the proxy advocate for residential telephone subscribers. In this study proxy advocates are defined as those agencies that receive a budget directly from the state and are an officially recognized agency within the state government. Although CUBs may have intervenor status in rate hearings, they are basically independent of state control and thus cannot be identified as proxy advocates. In those few cases where more than one state agency was listed or when a CUB was listed as the consumer representative, a second publication, Regulatory Focus (1986) was used to identify the primary proxy advocate in the state.

REFERENCES

Barrett, Paul M. (1988), "Attorneys General Flex Their Muscles," Wall Street Journal, July

13:21. Chandy, P. R. (1986), "Utility Commissioner Selection Method: Implications for Consumers,

Investors and Firms," Arkansas Business and Economic Review, 19 (3): 26-30. Costello, Kenneth W. (1984), "Electing Regulators: The Case of Public UtilityCommissioners,"

Yale Journal of Regulation, 2 (1): 83-105. Crain, W. and R. McCormick (1978), "Regulators as an Interest Group," University of Rochester, Working Paper Series No. 8004. Gordon, Richard L. (1988), "Power Grabbers? Attorneys General Test RegulatoryMuscle,"

Advertising Age, March 14: 12.

Gormley, William T., Jr. (1983), The Politics of Public Utility Regulation,

Pittsburgh, PA:

University of Pittsburgh Press. Hagerman, Robert L. and Brian T. Ratchford (1978), "Some Determinants of Allowed Rates

of Return on Equity to Electric Utilities," Bell Journal of Economics, 9 (Spring): 46-55. Harris, Malcolm C. Peter Navarro (1983), "Does Electing Public Utility Commissioners

Bring Lower Electric Rates?" Public Utilities Fortnightly, 112 (5) September 1: 23-27. Kmenta, Jan (1986), Elements of Econometrics, 2nd edition, New York: MacMillan

Publishing. Mann, Patrick C. and Walter J. Primeaux (1986), "Regulator Selection Methods and Electricity

Prices," Land Economics, 62 (1) (February): 1-13. Moore, John (1987), "New Cops on the Beat," National Journal, May 23: 1338-1342. National Association of Regulatory Utility Commissioners (1986), Bell operating Companies'

Exchange Service Telephone Rates, Washington, D.C., December 31. National Association of State Utility Consumer Advocates (1985), "Consumer Representation

in Commission Proceedings," addendum to manual, Washington, D.C. Noll, Roger G. (1985), "`Let Them Make Toll Calls': A State Regulator's Lament," American

Economic Review, 75 (2) (May): 52-56. Pelsoci, Thomas M. (1979), "Organizational Correlates of Utility Rates," in Energy and

Environmental Issues, Michael Steinman (ed.), Lexington, MA: Lexington Books:

101-115. Reece, William S. (1987), "Consumer Welfare Implication of Changes in Interstate Telephone

Pricing," Journal of Consumer Affairs, 21 (Summer): 141-154. Regulatory Focus (1986), Annual Review of State Activity, Jersey City, NJ: Regulatory

Research Associates, Inc. The Consumer Affairs Letter (1988), "CUB Idea Gets New Lease On Life," (February): 8. U.S. Bureau of the Census (1986), Statistical Abstract of the United States: 1987, 107th edition,

Washington, D.C.: U.S. Government Printing Office.

Robert N. Mayer, Cathleen D. Zick, and John R. Burton are Associate Professors in the Department of Family and Consumer Studies, University of Utah, Salt Lake City, Utah. All three authors contributed equally in the preparation of this manuscript. An earlier version of this paper was presented at the 1988 Annual Meeting of the American Council on Consumer Interests.
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Author:Mayer, Robert N.; Zick, Cathleen D.; Burton, John R.
Publication:Journal of Consumer Affairs
Date:Dec 22, 1989
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