Irby William

Date of Award


Document Type


Degree Name

Master of Business Admin


Executive MBA


There is $2.3 Billion riding on the answer to a very critical question in the Virginia Telephone Industry. The question concerns who should pay for the embedded investment in jointly used wire and equipment connecting telephone customers to switching offices. This plant, many argue, is needed for access to the local and long distance network regardless of whether a call is made. Answering this question is a two step process. First these, costs must be allocated to the proper jurisdiction (intrastate or interstate) and the proper class of service (toll or local) within the jurisdiction. Second the costs must be recovered from customers (local customers, long distance customers, and interexchange carriers). In the days before long distance competition, a large portion of these costs were allocated to and recovered from toll so local rates were kept affordable. Competitive pressures and changes in the industry are forcing this practice to cease. There is no consensus and a large degree of controversy over the new allocation and recovery process.