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Initial ISDN Agreement


Southwestern Bell, 1986 Annual Report:

"At the forefront of new technology is ISDN. Scheduled for commercial availability in 1988, ISDN will revolutionize day-to-day communications by allowing simultaneous transmission of voice, data and images over a single telephone line."

Zane E Barnes, 1988, Chairman and CEO, stated:

            "Southwestern Bell company, the subsidiary that provides telephone network service, is bringing high tech home to millions of people.

            "Our regional telephone operation continues in leadership in development of Integrated Services Digital Network (ISDN). With more than 17,000 lines under contract, we're the nation's number one producer of this advanced technology capable of simultaneously transmitting voice, data, video services over the telephone line."

As previously stated, these promises from the Bells were in return for "adjustments" in their rate-of-return.  For example,
Telefuture 2000, the plan for
, froze rates of local service, and required a $180 million dollar investment in the advanced technology. This $180 million was garnered by allowing Southwestern Bell to retain more profits than it was previously allowed.  This five year plan was approved October 1989:


Southwestern Bell's TeleFuture 2000, 1989

           freeze on the rates for local telephone service

           Local exchange prices would be tied to the Consumer Price index

           an investment in Missouri of $180 million in advanced  technology for
             its customers.

               Source: Southwestern Bell Telephone Company 10-K, 1991


TeleKansas was another five year incentive plan and was approved by the Kansas Corporation Commission on February 1990. This plan also froze rates, reduced some rates, required networks upgrades, but also allowed for flexible pricing for some, not all "discretionary" products.  


Southwestern Bell's TeleKansas, 1989

           Freeze basic local rates for five years,

           a reduction of other annual rates approximately $22 million,

           a network modernization plan at an estimated cost of $160,

           a flexible pricing for a specific list of discretionary services.

               Source: Southwestern Bell Telephone Company 10-K, 1991


If you are interested in the actual, technical numbers, they are:

Anything under 14.1% Return-on-equity was the phone company's profits. From 14.1% to 14.5% the company shared the revenues with the customers on a 60%-40% split, from 14% to 17% the company split it 50-50, and anything over 17% was  returned to the customer.