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Regulatory & Legislative Environment
Through statutory authority granted by the General Assembly, the Missouri Public Service Commission (PSC) has historically regulated the rates, profits, general operations and quality of service of local telephone companies. In addition, the Federal Communications Commission (FCC) oversees the regulation of interstate, long distance communications. The FCC regulates the operations of wireless carriers, including the allocation of the communications spectrum, as well. The goal of both federal and state regulation in general is to protect consumer interests and maintain affordable rates.
Under state legislation adopted in 1996 (SB 507, Chapter 392), certain large carriers are regulated as price cap companies. Under this form of regulation, the Commission sets a cap or ceiling on the prices a carrier can charge for basic service. Revenues resulting from improved efficiencies in operations, increased customer base or sale of unregulated services are not regulated. Other carriers are regulated as rate-of-return companies. Rate-of-return regulation sets the percentage of net profit a carrier can earn on regulated operations. Rates are allowed to be adjusted in order to produce this return to the company.
Under both the federal Telecommunications Act of 1996 and SB 507, the local telecommunications market was opened to a number of new competitors. These new providers, referred to as competitive local exchange carriers, must receive approval from the Missouri Public Service Commission to offer service in Missouri. These carriers offer local services to businesses and residential customers around the state.
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